Losing your rag at Fashion Week

One warehouse in Canning Town is home to a surprising beneficiary of Britain’s high-fashion credentials.

You wouldn’t expect an industrial park in the East End of London to have much to do with London Fashion Week, but one warehouse in Canning Town is home to a surprising beneficiary of Britain’s high-fashion credentials. Lawrence M Barry & Co (LMB) is one of just two London companies that still hand-sorts second-hand clothes – mostly from council recycling bins or the rejects from charity shops – for resale in Africa and eastern Europe.

In the five years to 2012, the price of one tonne of second-hand clothes almost tripled, from £220 to roughly £650, according to the trade publication, and each year the UK sells about 378,000 tonnes of used clothes abroad. At market stalls in Mombasa or in shops in Warsaw, customers are willing to pay a premium of as much as 30 per cent for British garments.

While the fashion press studies the catwalks in central London to divine next season’s trends, LMB has its own in-house fashion rules and seasonal fads. The most valued trousers across Africa have a pleat down the middle and turned-up bottoms, which is a problem, because “no one wears turn-ups these days”, says LMB’s business development manager, Ross Barry.

Zambians love corduroy trousers, which are also hard to find. In the past few years, Barry has started exporting ladies’ high heels, “because Africa’s changing – before, women just worried about their heels getting stuck in the mud”. And there has been an unlikely increase in demand for ski jackets, after some countries made it illegal to drive a motorbike without a jacket. Barry walks me around LMB’s factory floor, where “sorters” in high-visibility jackets rifle through piles of clothing, throwing some items down yellow chutes and others into big metal cages labelled “Children’s Winter” or “Silk Blouses”. The highest-quality 5 per cent of clothes will go to eastern Europe, 45 per cent will go to Africa and the lowest-grade 50 per cent will be recycled or turned into industrial rags.

A kilo of clothes destined for eastern Europe can be sold for £2 to £3, while a kilo of clothes heading for Africa will sell for half as much. The sorters are paid the minimum wage, plus a bonus depending on their performance, and the fastest sorters can sort through two tonnes of clothes – about a lorry-full – in one shift.

In some ways, LMB is just the kind of old-fashioned British firm that policymakers romanticise and that is slowly being undercut by nimbler multinationals. It is a family business, as are most other companies in the rag trade. “My dad always says it’s because no one grows up thinking, ‘I want to be a rag man,’” jokes Barry, who has a law degree and worked in the oil industry before joining his father in the business. Sorting clothes may be tough, menial work, but staff turnover is low. The average employee has worked here for nine years and LMB runs a project to employ ex-prisoners.

A lot has changed since Barry’s father, Lawrence, moved into the clothes trade in the mid-1980s, initially handing out flyers at Heathrow Airport to find potential buyers and shippers. The market has expanded, but that has made it tougher, too. Councils are charging more for second-hand clothes and rising labour costs have forced many to outsource their sorting to eastern Europe. Barry says six UK rag firms went out of business last year and eight have folded this year.


Piles of denim clothing. Image: Getty

Sophie McBain is a freelance writer based in Cairo. She was previously an assistant editor at the New Statesman.

This article first appeared in the 23 September 2013 issue of the New Statesman, Can Miliband speak for England?

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Q&A: What are tax credits and how do they work?

All you need to know about the government's plan to cut tax credits.

What are tax credits?

Tax credits are payments made regularly by the state into bank accounts to support families with children, or those who are in low-paid jobs. There are two types of tax credit: the working tax credit and the child tax credit.

What are they for?

To redistribute income to those less able to get by, or to provide for their children, on what they earn.

Are they similar to tax relief?

No. They don’t have much to do with tax. They’re more of a welfare thing. You don’t need to be a taxpayer to receive tax credits. It’s just that, unlike other benefits, they are based on the tax year and paid via the tax office.

Who is eligible?

Anyone aged over 16 (for child tax credits) and over 25 (for working tax credits) who normally lives in the UK can apply for them, depending on their income, the hours they work, whether they have a disability, and whether they pay for childcare.

What are their circumstances?

The more you earn, the less you are likely to receive. Single claimants must work at least 16 hours a week. Let’s take a full-time worker: if you work at least 30 hours a week, you are generally eligible for working tax credits if you earn less than £13,253 a year (if you’re single and don’t have children), or less than £18,023 (jointly as part of a couple without children but working at least 30 hours a week).

And for families?

A family with children and an income below about £32,200 can claim child tax credit. It used to be that the more children you have, the more you are eligible to receive – but George Osborne in his most recent Budget has limited child tax credit to two children.

How much money do you receive?

Again, this depends on your circumstances. The basic payment for a single claimant, or a joint claim by a couple, of working tax credits is £1,940 for the tax year. You can then receive extra, depending on your circumstances. For example, single parents can receive up to an additional £2,010, on top of the basic £1,940 payment; people who work more than 30 hours a week can receive up to an extra £810; and disabled workers up to £2,970. The average award of tax credit is £6,340 per year. Child tax credit claimants get £545 per year as a flat payment, plus £2,780 per child.

How many people claim tax credits?

About 4.5m people – the vast majority of these people (around 4m) have children.

How much does it cost the taxpayer?

The estimation is that they will cost the government £30bn in April 2015/16. That’s around 14 per cent of the £220bn welfare budget, which the Tories have pledged to cut by £12bn.

Who introduced this system?

New Labour. Gordon Brown, when he was Chancellor, developed tax credits in his first term. The system as we know it was established in April 2003.

Why did they do this?

To lift working people out of poverty, and to remove the disincentives to work believed to have been inculcated by welfare. The tax credit system made it more attractive for people depending on benefits to work, and gave those in low-paid jobs a helping hand.

Did it work?

Yes. Tax credits’ biggest achievement was lifting a record number of children out of poverty since the war. The proportion of children living below the poverty line fell from 35 per cent in 1998/9 to 19 per cent in 2012/13.

So what’s the problem?

Well, it’s a bit of a weird system in that it lets companies pay wages that are too low to live on without the state supplementing them. Many also criticise tax credits for allowing the minimum wage – also brought in by New Labour – to stagnate (ie. not keep up with the rate of inflation). David Cameron has called the system of taxing low earners and then handing them some money back via tax credits a “ridiculous merry-go-round”.

Then it’s a good thing to scrap them?

It would be fine if all those low earners and families struggling to get by would be given support in place of tax credits – a living wage, for example.

And that’s why the Tories are introducing a living wage...

That’s what they call it. But it’s not. The Chancellor announced in his most recent Budget a new minimum wage of £7.20 an hour for over-25s, rising to £9 by 2020. He called this the “national living wage” – it’s not, because the current living wage (which is calculated by the Living Wage Foundation, and currently non-compulsory) is already £9.15 in London and £7.85 in the rest of the country.

Will people be better off?

No. Quite the reverse. The IFS has said this slightly higher national minimum wage will not compensate working families who will be subjected to tax credit cuts; it is arithmetically impossible. The IFS director, Paul Johnson, commented: “Unequivocally, tax credit recipients in work will be made worse off by the measures in the Budget on average.” It has been calculated that 3.2m low-paid workers will have their pay packets cut by an average of £1,350 a year.

Could the government change its policy to avoid this?

The Prime Minister and his frontbenchers have been pretty stubborn about pushing on with the plan. In spite of criticism from all angles – the IFS, campaigners, Labour, The Sun – Cameron has ruled out a review of the policy in the Autumn Statement, which is on 25 November. But there is an alternative. The chair of parliament’s Work & Pensions Select Committee and Labour MP Frank Field has proposed what he calls a “cost neutral” tweak to the tax credit cuts.

How would this alternative work?

Currently, if your income is less than £6,420, you will receive the maximum amount of tax credits. That threshold is called the gross income threshold. Field wants to introduce a second gross income threshold of £13,100 (what you earn if you work 35 hours a week on minimum wage). Those earning a salary between those two thresholds would have their tax credits reduced at a slower rate on whatever they earn above £6,420 up to £13,100. The percentage of what you earn above the basic threshold that is deducted from your tax credits is called the taper rate, and it is currently at 41 per cent. In contrast to this plan, the Tories want to halve the income threshold to £3,850 a year and increase the taper rate to 48 per cent once you hit that threshold, which basically means you lose more tax credits, faster, the more you earn.

When will the tax credit cuts come in?

They will be imposed from April next year, barring a u-turn.

Anoosh Chakelian is deputy web editor at the New Statesman.