Times today21 Feb 2021 11:14
Times today part1
Boohoo’s makeover leaves Leicester factories tattered
The city ran on sweatshop wages driven by fast-fashion retailers. Can it come up with a new model?
By 2003, it was already clear to Santoshan Sangha that it was impossible to earn a living making clothes in Leicester.
The introduction of the minimum wage had driven up labour costs, yet high street retailers were still beating him down on price. Rather than pay his workers less than the legal minimum, Sangha switched to importing textiles from Asia, reluctantly bringing down the curtain on 20 years of manufacturing in his home town.
Over the next two decades, he watched in horror as Leicester’s once-thriving garment industry morphed into a hotbed of criminal activity. Now, the 64-year-old believes positive change is finally on the horizon.
Boohoo, one of the biggest beneficiaries of the rampant exploitation in Leicester, told suppliers this month they had until March 5 to bring all manufacturing in-house, leaving corrupt suppliers with few options to conceal illicit activity. At a stroke, the move puts hundreds of factories at risk of closure and endangers thousands of jobs. That could in turn lead to renewal.
“Everyone’s running around in panic mode now, trying to get their factories set up properly,” said Sangha, who now owns the Dry Ice and Antonio Falcone fashion brands. “Boohoo were the only ones putting the volumes in [to Leicester]. I don’t see a way back for a lot of them. This will let Leicester prosper and allow other retailers to move in. Boohoo should have done it a long time ago — they knew what was going on and just turned a blind eye.”
Long-standing problems in Boohoo’s Leicester supply chain became a matter of critical importance last July, when The Sunday Times revealed that workers were being paid as little as £3.50 an hour, prompting investors to dump their shares. Asos and Next pulled Boohoo’s ranges from their websites. Boohoo launched a QC-led independent investigation into its supply chain.
The company’s belated efforts to clean up its supply chain will reveal two things: the extent to which its profits were supported by corrupt activity, and whether Leicester’s garment industry can compete with cheaper overseas production hubs on a legitimate basis.
Yet the criminality in Leicester’s textiles quarter extends well beyond underpaying workers. Despite there being legitimate factories, some owners routinely evade taxes by subdividing their companies into different entities and dumping the one with the biggest tax liabilities into administration. Importers minimise duties by providing incorrect commodity codes. Not surprisingly, the National Crime Agency has launched an investigation into the city’s garment industry.
Continued....l
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