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Lindsey Oil Refinery

Volume 487: debated on Monday 2 February 2009

With permission, Mr. Speaker, I should like to repeat a statement being made by my noble Friend the Secretary of State for Business, Enterprise and Regulatory Reform in the other place about the industrial action at the Lindsey refinery and elsewhere in the country.

On Thursday and Friday last week, contract workers at the Lindsey refinery in north Lincolnshire and elsewhere took part in unofficial industrial action. That has been followed today with further such action at Sellafield power station and other sites around the UK. The stated reason for such action is said to be that a contract awarded at the Lindsey site to an Italian contractor, IREM, has resulted in discrimination against British workers through the exclusive employment of Italian and Portuguese workers. On the Lindsey site, the great majority of the workers are British. I understand that all the striking workers are from maintenance or enhancement projects on the sites; and as of this afternoon there is no disruption of production at any of the sites where this unofficial industrial action is taking place.

On Friday, my Department asked ACAS, the independent arbitration service, to meet the employers and the unions to examine the various accusations being aired and to establish the facts—we expect its report very quickly. ACAS was in touch with the parties over the weekend and I understand that the first meeting is taking place today. ACAS’s first responsibility is to report to us on whether laws have been broken; if they have we will take action. We are determined to see robust enforcement of the employment rights legislated for by this Parliament, and the fair and proper application of the European rules that govern the operation of companies throughout the EU and the mobility of labour, which has always been an intrinsic part of membership of the EU and has been supported by successive British Governments.

In a statement issued yesterday, the energy company Total, which runs the Lindsey site, said:

“It has never been, and never will be, the policy of Total to discriminate against British companies or British workers.”

It went on to say that it subcontracts on a fair and non-discriminatory basis and that the wage rates are the same as for equivalent jobs on the site.

Two key accusations have been made in recent days. The first is that the use of labour from overseas leads to an erosion of wages and conditions for all concerned because these workers are paid less than UK workers. The second is that there is discrimination in recruitment practice against British workers. The statement issued by Total last night confirmed that workers from overseas are paid at the same rate as other workers on site, and it further confirmed that Total does not operate any policy of discrimination with regard to tendering or recruitment.

The same rules apply here as with UK companies bidding for work overseas, and I would remind the House that there are some 300,000 UK companies operating elsewhere in Europe. Subcontracts can be bid for by UK or overseas-based companies. Of course, if an overseas company wins a contract it can use its permanent employees to carry out the work, but Total has confirmed that where new vacancies are advertised, it will work with subcontractors to ensure that UK workers are considered in the same way as anyone else.

The workers coming here from Italy and Portugal are protected by the EU posting of workers directive, which the UK has implemented fully. It guarantees those workers minimum standards, for example on pay and health and safety, and facilitates the free movement of services within the European Union—a vital market for British companies. In the case of the Lindsey refinery, we have been informed that all subcontractors adhere to the national agreement for the engineering construction industry, which governs terms and conditions, working hours and pay.

Membership of the European Union and taking advantage of the opportunities for trade presented by the EU are firmly in the UK’s national interest. Free movement of labour and the ability to work across the EU have been a condition of membership for decades. It is important that we respect and guarantee that principle, not least because it guarantees the right of hundreds of thousands of British workers and companies to operate elsewhere in Europe. It illustrates the importance of Europe to the UK that half our £370 billion of exports per year go to the EU, half our £315 billion inward investment comes from the EU and between 3 million and 3.5 million UK jobs are linked both directly and indirectly with our trade with the EU.

At a difficult economic time, we fully understand the anxieties that people have about their jobs. That is why we have been taking the measures that we have to support people through these difficult times. We strongly believe in fair opportunities for everyone in this country and in ensuring that British people have access to advertised job vacancies. It would be quite wrong, and indeed against the law, for companies to advertise vacancies and exclude British people from them. Equally, it would run contrary to the principles of the single market and harm British people working abroad if we were to exclude foreign workers from employment in the UK.

Of course, we understand the concerns of workers at a time of economic difficulty, and we have now established a mechanism through the ACAS process to examine those concerns. It is through that strong and independent process that we should proceed, not through the continuation of the unofficial industrial action that has been taking place. Our aim is to get through the economic difficulties that we face with Britain continuing as a great trading nation, with our companies able to operate worldwide and our workers equipped for the jobs and industries of the future. I commend this statement to the House.

May I first ask, for the sake of clarification, for reassurance that this is a statement of the whole Government, not just the Department for Business, Enterprise and Regulatory Reform, and that the Secretary of State for Health has now recanted and been enlightened, and accepts what has been said? Most importantly, will the Minister confirm with clarity whether the Government believe that the posting of workers directive is satisfactory and working fairly in our interests, or whether they are seeking amendments to it? That has been left quite unclear in all the interviews given by Ministers so far.

Does the Minister accept that all responsible people will agree with him that however aggrieved people feel, industrial action at power stations and oil refineries at the present time of national crisis is not the way to take forward any of their arguments? The unions should help to get people to desist from that. Does he accept also that we do not want to see riots in Italy about British workers there at a time when British companies are seeking contracts on the continent for their British workers to engage in employment there?

However, does the Minister also accept that understandable worries at the present time have been turned into direct action as a result of the Prime Minister’s irresponsible use of the phrase “British jobs for British workers”? Is it not clear that that phrase was populist nonsense at the time when he used it—it was part of some curious Britishness agenda, which I seem to recall he was pursuing for reasons of his own at the time—that he was concerned more with his job security than with anybody else’s job security in this country, and that we will all welcome the fact if he never repeats it, no Minister ever repeats it and no such irresponsible statements are made by any member of the Government at any time in the future?

I should take this opportunity to welcome the right hon. and learned Gentleman back to the Conservative Front Bench. He brings great experience to his role. I always feel that, particularly when we are discussing issues of European competence, he may have more in common with Labour Members than with some Members behind him, but we will see how the debate develops.

The right hon. and learned Gentleman asked a couple of specific questions. As I said in the statement, we have fully implemented the posting of workers directive. It has been in place for some years, and as for many such directives, the European Commission has established a group to look at its operation, and we will see if it makes any recommendations.

As for the statements of the Prime Minister to which the right hon. and learned Gentleman referred, never at any time has the Prime Minister said or implied that he or the Government are opposed to the free rights of British companies to operate throughout the European Union or of European companies to operate here in the UK. What the Prime Minister said, quite rightly, was that, as a country, we needed to do more to equip the British work force for the jobs, skills and industries of the future. That is precisely what we are doing. That is why, while apprenticeships declined when the Conservative party was in power, we will grow apprenticeships to some 0.5 million, and we will stand by our commitment to equip British workers for the future.

As I am sure the whole House can appreciate, I have spent the past few days taking part in many discussions about the situation affecting the refinery in my constituency. I welcome the promise that ACAS is now to be involved and will be meeting both sides in the dispute to examine the accusations that have been made on both sides. However, does my right hon. Friend appreciate that for skilled engineering and construction workers who are currently out of work, seeing contracts going elsewhere can be very toxic? What can he say to those people, of whom there are many in my constituency and others, who have such skills and who are out of work? What can be done to assist them to get jobs, which they so desperately want at the moment?

I know that my hon. Friend has been closely engaged with this issue in recent weeks, and that she is doing everything she can to help her constituents in a positive and responsible manner. On future employment, I would say two things to her. The first thing we have to do is maintain our investment in infrastructure, and not cut it, as the Conservatives would, and that means continuing with rebuilding our energy and transport infrastructure, and with other important projects of national significance. The other thing that will support employment for her constituents, and those of all hon. and right hon. Members, is for this country to maintain its positive stance as a positive member of the European Union, to continue to look outwards and trade globally, and, in so doing, to increase wealth for the UK and employment in the UK.

We welcome the statement, but it has been made necessary because of the reaction to the cynical and undeliverable statement by the Prime Minister at the Labour party conference in 2007 that there would be British jobs for British workers. That statement was as misleading as the Prime Minister’s other promise to abolish boom and bust. That economic failure caused the understandable anxiety in the country at the moment, with Britain plunging deeper into recession, unemployment soaring and the final hallmark of all Labour Governments—increasing industrial unrest.

Pulling up the drawbridge cannot be the right response. British companies and citizens benefit from the free movement of goods and services across the European Union. Does the Minister agree that many in Germany and France who see a falling pound feel it is unfair that British businesses are gaining a competitive advantage as a result of changing exchange rates? I agree with the right hon. Gentleman and accept his comments that all new jobs must be open to all workers and that employment law must be upheld, but does he agree that protectionism, whether it is being advanced by the new President of the United States or by isolationist right-wing commentators in Britain, would be ruinous for our country and must be avoided?

I appreciate the hon. Gentleman’s welcome for the statement and his positive comments on Britain’s role as a member of the European Union. I agree that unofficial industrial action is not the way to resolve the concerns that have been expressed. We have set up a process through ACAS, which will involve the employers and the trade unions, to air the concerns that have been expressed, and as I said, the statement issued last night by the energy company Total addressed some of those concerns.

The hon. Gentleman is right about protectionism. If we look at past history and the economic problems of the last century, we can see that a retreat from looking outwards and a retreat from world trade would indeed mean that protectionism became a sure-fire way of turning recession into depression.

Does my right hon. Friend accept that this is not an attack on the mobility of labour in the EU, but an objection to the fact that one contractor—the Italian contractor—is bringing in its entire work force of several hundred people for one particular contract? This is a plea: in all the other jobs that will come into being with the contract for the closure and reconstruction of the Lindsey oil refinery, preference should be given to British workers, and to local workers, in an area of high unemployment where the skills are available. As well as sending in ACAS, should not my right hon. Friend be convening a meeting in London of the big oil companies, contractors and unions to allay the workers’ fears for British jobs and to see that the posting of workers directive is working properly?

As I said, the vast majority of workers on the site are British. It is legal for a European company to contract for work and to say that it will use its permanent employees to carry it out. The issue of discrimination arises if new vacancies are advertised, and the statement issued last night by Total, which runs the site, made it clear that if new vacancies are advertised the company will work with all its subcontractors to make sure that UK workers are considered in the same way as anyone else.

Although this dispute relates to the employment of European workers under European law, about which little can be done—at least in the short term—does the Minister accept that the reason why it has had such tremendous resonance across the country is people’s concern about the huge flux of immigration into the UK in recent years, a large part of it from outside the EU, which has accounted for a majority of the new jobs of people of working age? Last year, the total number of work permits issued was a record, at about four or five times the level when the Government were elected, so can he assure us that from now onwards far fewer work permits will be issued and, in particular, that people for whom no job is immediately available will not be issued with work permits allowing them to come to the UK just looking for jobs as, extraordinarily, the Government now permit?

The issue at the Lindsey oil refinery, of course, involves European workers coming here, as I said, under the rules of labour mobility that have existed for some decades. The right hon. Gentleman asks about non-EU immigration; on that issue, the Home Secretary and my colleagues at the Home Office have set out the new points-based immigration system, which is intended precisely to gear our needs more closely to immigration from outwith the EU. I would also say to the right hon. Gentleman that immigration from outwith the EU has made a tremendous contribution to this country. That is true of my constituency, and I am sure it is true of many others.

Will the Minister use this opportunity to dissociate himself from the remarks made on this morning’s “Today” programme by the Secretary of State, who made what I thought was a rather silly comment implying that the answer to all the workers who are worried because they are not getting these jobs was for them to go off and get a job abroad?

I am afraid that I disagree with my hon. Friend; that is not what the Secretary of State has said. What he said was that the rules of trade across the EU benefit EU companies and British companies and that we, as a positive member of the EU, gain by that, which is why we do not intend to change those rules of open trade. He was certainly not harking back to comments made at another time about people getting on their bikes. That is not what he said or what he meant; it is a distortion of what he said.

May I congratulate the Minister first on not quite being able to bring himself to defend the Prime Minister’s cheap populism, and secondly on rightly expressing the importance of the free movement of workers within the EU, from which this country and British workers have benefited? If he wants to lower the temperature out there in British industry, however, may I commend to him the policy of having an explicit annual limit on work permits issued to those coming in from outside the EU, because that would do a great deal to restore confidence in the fact that our immigration system is actually under control, as opposed to the current feeling in the country that for years it has been out of control?

Once again, the hon. Gentleman tries to tempt me away from the operation of the EU rules, into a general discussion on immigration policy. I am not sure quite what cap or number he wants, but as I said, this Government have set out a points-based immigration system for non-EU immigration, which is aimed precisely at matching our needs to the flow of immigration from beyond the EU.

Will my right hon. Friend ensure that ACAS talks not just to Total, but to Alstom, the subcontracting company, which subcontracts again to another company? It is that company that is causing the problem; it has a record of trying to breach the national agreement in respect of agency workers. That loophole was closed through the agency workers directive, and it is critical in this situation that ACAS looks into what is happening with Alstom as well as with Total.

In the coming weeks and months, as this is resolved, and there is a procurement process involving millions of public opportunities, a corporate social responsibility clause should be agreed by the Government to ensure that subcontractors as well as main contractors work to the national agreement, and that there is a commitment to creating local jobs and services in these big contracts, so that communities benefit, not just big companies.

My right hon. Friend has tremendous experience in these issues and his words should always be listened to seriously. With regard to ACAS talking to Alstom, I am sure that it will talk to all the major employers in this field that it can. With regard to the national agreement, Alstom has informed us that it abides by the agreement, but that is precisely why we asked ACAS to look at the issue. A number of claims have been aired in the past few days, and it is right to get ACAS to take a dispassionate and impartial look at those claims, so that we can establish the facts.

To what extent have skills shortages contributed to the difficulty of filling those British jobs with British workers?

As the Prime Minister has said, we need to do more as a country to improve our skills base, but this is not just about the skills of individual workers, but about the companies that apply to do the work, some of which may do so with a permanent work force whom they deploy to do the work. It is not just about the skill of the individual worker, but about the whole package that a company brings when it bids for a contract.

I congratulate my right hon. Friend on the statement and his comments that he is determined to ensure the robust enforcement of employment rights in this country. Other hon. Members and I attended a meeting a few weeks ago at which we considered the economic climate in this country, in Europe and across the world. Comparisons were made with the difficulties that arose in Europe in the late 1920s and early 1930s in order that we may learn from history and ensure that history does not repeat itself. What we have heard in recent days worries me greatly. We all need to be very temperate in our language and ensure that we do not again see what happened in the late ’20s and early ’30s and play into the hands of and pander to the extreme right in any country.

I quite agree with my hon. Friend that we should not pander to the extreme right. He refers to history, and that is relevant on two counts. First, in response to an earlier question, a retreat into protectionism would be a mistake for us and for the rest of the world economy if it was repeated in countries elsewhere. He is absolutely right that, since the end of the second world war, the establishment and growth of the European Union has helped to ensure not only peace but far greater prosperity for its citizens, and we should seek to maintain that in the future.

The right hon. Gentleman opened his statement with some so-called statistics about the benefits of the European Union that, in my view, are at the very least open to debate. Does he not accept, as many trade union leaders believe, that there is problem with the labour mobility directives? The UK Government have not on all occasions stuck up for British interests. If he is interested in seeking to reduce tension on this subject, perhaps he will produce a balance sheet of the number of projects that UK companies are carrying out in France, Germany and Italy, for example, as against the number of projects that are being carried out by those countries in the UK. Perhaps that would give people the facts of the case. Will he do that?

I appreciate that for certain hon. Members any positive statement about the European Union can sometimes be difficult to digest. It is very clear that membership has been good for our trade and growth and for the other matters hinted at by my hon. Friend the Member for Dumfries and Galloway (Mr. Brown). The labour mobility rules have been part of the EU for decades—they have not been invented in the past year or two. Labour mobility—the freedom to work throughout the EU in different member states—is one of the basic conditions of EU membership. That is worth bearing in mind in the current circumstances.

My right hon. Friend will be well aware that two large liquefied natural gas terminals are being constructed in Milford Haven and that there are Polish and Portuguese workers on those sites, but that they are seen as being in addition to local and UK skilled Labour. Does he agree that something is seriously wrong if, in the case at Lindsey and other cases around the country, the national agreement is being abided by, yet local UK-based companies are not successful in their tenders? My hon. Friend the Member for Great Grimsby (Mr. Mitchell) suggested a meeting with all parties to consider the issue. It is absolutely essential that major clients, main contractors, the trade unions and the engineering construction industry sit down with the Government to work out why foreign companies are able to outbid British companies.

I must take issue slightly with my hon. Friend. What is important is an open and fair bidding process for contractors to win the work. We cannot put ourselves in a position whereby every time a non-British company wins a contract, we say that it is unfair. British companies are operating successfully throughout the rest of Europe and throughout the world. What is important is that the rules are applied fairly and properly.

I agree with my hon. Friend about dialogue and interested parties. It was for precisely that reason that, over the weekend, we established the ACAS process to examine some of the claims. Let us see whether the law has been broken. Let us see whether European rules have somehow been contravened. That is what ACAS is doing, and that is why the first meeting was held today.

It seems to me that much of this depends on Total’s statement and what has been said by its subcontractors. Are we expecting ACAS to audit the statement, or should other parties do it?

I believe that ACAS is the right body to examine the statement. I believe that it is perfectly capable and perfectly qualified to do so, and that it is respected by both employers and trade unions. That does not mean that we accept every statement made by everyone at face value. It was precisely in order to establish the facts properly that we asked ACAS to look into the issue.

The Minister may know that this morning, on a television programme, Derek Simpson said that the Prime Minister had had meetings regarding the three rulings of the European Court only about a month ago, and that some action was expected as a result of those discussions. He added, in reply to a question, that it appeared that that action had been dropped. Can the Minister tell us what action was proposed, and whether it was in line with what the Secretary of State for Health said on the programme yesterday?

Will the Minister also ensure that if it is impossible to overcome the European Court rulings—which we all know is the case—we will legislate in the House of Commons to ensure that we provide proper and fair treatment for the workers and trade unions of this country?

I am sure that the workers and trade unions of this country will welcome the hon. Gentleman’s strong support. I believe that he was referring to a series of European Court judgments issued over the past couple of years on pay differences between posted workers and workers employed locally. If the statements that have been made are true and, in the subcontracting cases that have been cited in recent days, the same pay rates apply throughout the site, it would appear that the issue of a race to the bottom in wages does not apply in this instance. As for the judgments themselves, as I have said, a European Commission body is examining the operation of the Posting of Workers Directive, and a social partners dialogue on the judgments is in progress at European level.

Does the Minister accept that there are some very nasty undertones to the discussions surrounding the disputes? In times of difficulty, the traditional role of the Labour party, the labour movement and the trade unions has been to oppose xenophobia and discrimination and to try to engender a sense of solidarity among all workers to enable them to face the difficulties together. Will the Minister convey the message that we want people to be united in the face of economic difficulties, rather than some turning against others on the basis of their passports or ethnicity?

I certainly agree that the rules of labour mobility, to which I have referred, and the rights to work across the EU have been in place for decades. I also agree, and have said, that workers from the EU and from outwith the EU have made a strong contribution. I understand that in times of economic difficulty there will always be heightened concerns about jobs. If those concerns include an allegation that the law or rules are being broken, we will look at them, and that is precisely what ACAS has been charged with doing. However, we will not turn our back on trying to reach out, trade openly and grow our wealth through our links throughout the world. We will take a positive stance on world trade and UK companies operating abroad, because that benefits our country.

Given the union complaint that it is the transport and accommodation of these workers that may be unfairly subsidised, will the Minister clarify the Government’s position? Is it that he wants to be sure that the directive is not being broken, or is he at all concerned to improve its working?

Our concern is twofold. First, we want to ensure that the domestic employment laws passed by this Parliament are properly observed and enforced. On that subject, we have put increased resources—for example through minimum wage enforcement—in place in recent years. Secondly, we want to ensure that the European rules that apply both to UK companies operating elsewhere in Europe and to European companies operating here in the UK are properly and fairly applied. In recent days, there have been allegations on both counts that that may not be the case, and that is precisely what we have asked ACAS to look at.

I agree with the Minister that right-wing anti-Europeanism and protectionism would be disastrous for British workers. Do I understand from his statement that ACAS will investigate the implementation of employment rights in respect not just of statutory minimum standards such as the minimum wage, but the national collective bargaining agreements that apply at all of those sites? The wages there are many times higher than the minimum wage. I still find it puzzling that European companies can bring their labour in, meet all the costs of accommodating and transporting them—both to this country and to and from work—and still claim to abide by national pay rates and conditions of service. That does not seem to add up, and I wonder whether the real answer to that puzzle is to be found in the fact that these subcontractors subcontracted all the way down the line to a point at which nobody really knew whether the workers concerned were being exploited or whether local workers were getting the justice and fairness to which they are entitled.

My right hon. Friend asks several questions, which I will try to answer. He asks about the national agreements setting standards that are higher than the basic minimum wage. He is right about that. Claims have been made that the subcontractors on the Lindsey site abide by the national agreement, and that is a legitimate issue for ACAS to look at. He mentioned the costs involved and I suggest that employers may not always choose the cheapest tender, and that speed or the overall package that a subcontractor offers may be strong factors. The statement issued last night said that the subcontractors did abide by the national agreement, and ACAS will doubtless examine that claim with the employers and the unions involved.

Is it not a sad fact that whatever changes the Government or the House may wish to make to the laws governing foreign contracts or the conditions attached to foreign workers, we are unable to make those changes because they are entrenched in superior EU law? Since that powerlessness is undoubtedly an element in the present frustrations, is the Minister aware that changes are on their way, because my right hon. Friend the Member for Witney (Mr. Cameron) has recently confirmed that it will be

“a top priority for the next Conservative Government to restore social and employment legislation to national control.”

The right hon. and learned Member for Rushcliffe (Mr. Clarke) clearly knew what was coming and thought that he had better get out before hearing that statement. If the time ever came when the Opposition were to get into power, I would be interested to see whether the right hon. and learned Gentleman would be able to support the policy that the right hon. Member for Wells (Mr. Heathcoat-Amory) just outlined. The right hon. Gentleman knows that the policy that he outlined—to resile from the European legal settlement that goes with membership—would end in a clash and that, ultimately, it would lead to withdrawal from the European Union. If that is his policy, he can defend it. I have set out a policy today of positive membership of the EU and positive trade throughout the EU that brings wealth and employment to our country. Although that can be difficult, it is not something that we will turn our backs on.

Will the Minister allow me to express my dismay at the way in which he has interpreted the law, which allows European companies to win contracts here and to put up restrictive barriers against employing local people? Can he assure the House that his interpretation is shared by the German, French and Italian Governments?

All the countries are signed up to the European posted workers directive. It is legal under the directive for a company to bid for work and to use its permanent employees as part of the fulfilment of that contract. That is not just a British right; it is part of the directive.