Dyes that do so are a failure (7)
I believe the answer is:
washout
'a failure' is the definition.
(I know that washout is a type of failure)
'dyes that do so' is the wordplay.
I cannot really understand how this works, but
'do' could be 'ut' (synonyms) and 'ut' is found in the answer.
'so' could be 'as' (e.g. phrases like 'not as tall' and 'not so tall') and 'as' is found in the answer.
'that' could be 'who' (the person that..., the person who...) and 'who' is present in the leftover letters.
This accounts for all the letters.
This may be the basis of the clue (or it may be nonsense).
'are' is the link.
Can you help me to learn more?
(Other definitions for washout that I've seen before include "A complete failure - too much rain" , "Cancelled test, for example" , "Failure - cancellation" , "Disappointing failure" , "match abandoned due to rain?" .)