Slavery and human trafficking statement

3. Structure, Business and Supply Chains

3.1 Introduction

The Scottish Government is the devolved government for Scotland and has a range of responsibilities that include the economy, education, justice, health and social care, rural affairs, housing, the environment and many others, including several with elements reserved to the UK Government.

The public sector in Scotland has a Total Managed Expenditure in 2023-24 of £59,813 million, comprised of £41,944m in resource spending (day-to-day expenditure), £6,363 million in capital spend (infrastructure), £10,491 million in Annually Managed Expenditure (AME), and £1,015 million in non-cash. Within this, the Scottish Government's Resource and Capital allocations to Portfolios for 2023-24 total £48,307 million.

3.2 Public Procurement and Fair Work

The Scottish Government is responsible for public sector procurement policy and law in Scotland. We aim to ensure that this money is spent in a way that can deliver the most benefit to society and we are helping to achieve wider social and environmental benefits from public procurement through:

• The Procurement Reform (Scotland) Act 2014, underpinning statutory guidance and other tools and guidance.
• The promotion of fair work practices, including the real Living Wage.
• Guidance to help public bodies comply with their equality duties.
• Ensuring that public sector procurement activity contributes to our climate change targets and circular economy strategy.
• Facilitating access to public contract opportunities for SMEs, supported businesses and the third sector.

3.3 Scottish Government Procurement

The Scottish Government is responsible for developing public procurement policy and legislation in Scotland and, like all public bodies, its own procurement activity. As a result, when the Scottish Government buys goods, services or works, it must comply with these procurement rules. These functions are managed through the Scottish Procurement and Property Directorate (SPPD).

SPPD's role is to maximise impact and leverage for economic and social benefit, deliver a best-in-class Procurement and Property Service and provide leadership and influence impact on the wider sector. Our work is grounded in the National Performance Framework values: to treat all our people with kindness, dignity and compassion, to respect the rule of law, and to act in an open and transparent way.

The Scottish Government is also committed to using sustainable procurement to reach its ambition of becoming a leading Fair Work Nation by 2025. Fair Work, including Fair Work First conditionality, is our policy for driving high quality working practices across Scotland's labour market, in the absence of employment legislation (which is a matter that only the Westminster Parliament can legislate on). As of 1 July 2023, by default, public sector grant recipients are required to pay at least the real Living Wage and provide appropriate channels for effective worker voice. This supports our wider efforts to increase transparency in our employment practices and reduce the potential for labour exploitation.

Through our flagship Fair Work First approach, we are applying fair work criteria to public sector grants, other funding and contracts where it is relevant to do so, driving fair work practices across the labour market. In October 2021 we announced that any company bidding to win a Scottish Government contract will have to commit to paying at least the real Living Wage, where relevant and proportionate. We are engaging with relevant sectors to encourage this approach across the whole of the public sector in Scotland to ensure that public sector contracts tackle in work poverty and promote fair work practices. 94% of our suppliers with current live contracts have committed to paying at least the real Living Wage to those involved in performance of our contracts. Overall, Scotland remains the best performing of all four UK countries with the highest proportion of employees (18+) paid the Real Living Wage or more (91.0%).

We put in place frameworks and contracts for use by central government and the wider public sector, and we procure a range of goods and services for over sixty directorates within the organisation. During the period 1 April 2021 – 31 March 2022 the Scottish Government:

• Awarded 319 new regulated contracts with a total value of over £877 million (across all types of contracting activity).
• Spent £420 million and used 1,617 suppliers.
• Managed live contracts worth nearly £5.3 billion^[1] throughout their lifetimes.

The Scottish Government recognise that human rights are a concern particularly in the supply chain of certain goods, works and services. Businesses can play a significant role in promoting human rights in society by providing decent jobs, delivering services, generating economic growth and developing infrastructure. However, businesses can also risk having a negative effect on people's human rights through their operations, relationships or supply chains if insufficient attention is paid to the impact of their activities. We believe that those we contract with should adopt high standards of business ethics and this includes taking a robust approach to preventing human trafficking and exploitation in any part of their business and supply chain.

We will continue to promote a positive approach to ethical procurement and mitigate the potential risks of human trafficking and exploitation in our contracts through use of procurement legislation, policy and robust contract terms and conditions. Part of that approach includes publishing our first Slavery and Human Trafficking Statement.

All invitations to tender we issue include a provision to ensure that our supply chains are free from human trafficking and exploitation, permitting us to terminate contracts with suppliers for breaches of social, environmental or employment law, established by national law, international law, or collective agreements. These terms and conditions form part of every contract or framework awarded by us.

We consider human rights in all regulated procurements (from £50,000 and above), building in transparency and provision to commission independent third party audits in contracts where we have identified a risk of human rights abuses or trafficking and exploitation taking place.

In addition to guidance, our buyers are encouraged to undertake the Chartered Institute of Procurement & Supply (CIPS) Ethical Procurement and Supply e-learning and online test annually. This has been developed for all levels of procurement professionals. The eLearning and test explore the key issues of environmental procurement, human rights, and fraud, bribery and corruption, enabling procurement professionals to demonstrate their commitment to, and understanding of, acting ethically on behalf of their organisation.

3.4 Public Procurement Legislation

We have included a range of measures in the Public Contracts (Scotland) Regulations 2015 (PC(S) R 2015), the Utilities Contracts (Scotland) Regulations 2016, the Concession Contracts (Scotland) Regulations 2016, and the Procurement (Scotland) Regulations 2016 (P(S) R 2016) aimed at ensuring contractors' compliance with environmental, social, and employment laws when performing public contracts. For example, a specific ground for excluding a company from a procurement exercise is a conviction for any offence under Part 1 of the Human Trafficking and Exploitation (Scotland) Act 2015 or under any provision referred to in the Schedule to that Act. These measures can be used alongside our procurement policy to help reduce the risk of human trafficking and exploitation in the performance of public contracts.

3.5 Transparency

Section 54 of the Modern Slavery Act 2015 (Transparency in Supply Chains) stipulates that certain commercial and private sector organisations must publish an annual Slavery and Human Trafficking Statement which must be approved by the Board of Directors or equivalent, setting out the steps being taken to prevent modern slavery in their operations and supply chains. Section 54 applies in Scotland and takes the form of a written statement which is published on an organisation's website or via written copies on request.

The criteria for this requirement include the business being UK-based and having an annual turnover of £36 million or more. Guidance for businesses in Scotland, regarding the risk of trafficking and exploitation in supply chains, was issued by the Scottish Government in 2018.

Alongside commercial organisations, the public sector has a crucial role to play in addressing the risks of slavery and human trafficking in its supply chains, with £14.5 billion of procurement spend annually across the Scottish public sector alone. Many public sector organisations have already started to identify and address the modern slavery risks within their supply chains and beyond, and the UK Government propose that public sector bodies be included in the formal requirement to publish a Slavery and Human Trafficking Statement. As per the requirements for commercial organisations, this would extend to public sector organisations with an annual budget – as opposed to turnover – of £36 million or more, unless they are already captured by the existing legislation. The Scottish Government supports this proposal.

This would include, for example, Central Government Departments, including the Scottish Government, devolved public bodies and local government bodies - including Local Authorities, NHS bodies and non-market and market public bodies (such as public corporations) - which meet the budget threshold.

The Scottish Government undertook a consultation in 2022 on the UK Government proposals to extend the reporting requirements to include Scottish public bodies for the publication of modern slavery statements to improve Transparency in Supply Chains, and the associated reporting requirements and enforcement regimes. A consultation report was provided to the Home Office and the outcome, and responses, were then published in December 2022.

We are committed to being more transparent about how we spend public money and improving accountability by publishing information about our procurement activity. We:

• Publish our procurement strategy setting out how we intend to carry out our regulated procurements, including our general policy on procuring fairly and ethically traded goods and services.
• Publish our procurement annual report describing how our procurement activities have complied with these strategies.
• Publish a forward plan of our national and central government sector collaborative opportunities which may be advertised over the next 12-18 months.
• Advertise contract opportunities, and publish details of contracts we award on Public Contracts Scotland;
• Publish monthly reports of Scottish Government spend over £25,000; and
• Publish monthly reports of expenditure over £500 made via Scottish Government electronic Purchasing Cards (ePC), alongside the publication of Government spend over £25,000.

In addition, Scottish Ministers publish an annual report on procurement activity in Scotland. This is an overview of public procurement activity in Scotland, based on information contained in individual procurement reports prepared by public bodies.

These steps serve to demonstrate the Scottish Government's commitment to transparency in its internal procurement and contract processes as we strive to reduce exploitation within our supply chains.