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P&O Ferries Redundancies

Volume 730: debated on Tuesday 28 March 2023

[Relevant document: Oral evidence taken before the Transport Committee and the Business, Energy and Industrial Strategy Committee on 24 March 2022, on P&O Ferries, Session 2021-22, HC 1231.]

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In a moment, I will call Ian Lavery to move the motion. I will then call the Minister to respond to the debate, but I think that in between the two Mr McDonald will make a very short speech. There will not be an opportunity for the Member in charge to wind up, as is the convention in our 30-minute debates.

I beg to move,

That this House has considered lessons learned from redundancies at P&O Ferries.

I refer to my entry in the Register of Members’ Financial Interests, with regard to my trade union membership. It is a pleasure, as always, to speak under your chairmanship, Sir Gary.

It is worth looking back at what actually happened to the 786 staff who were dismissed by P&O Ferries and DP World on 17 March 2022. We remember watching staff on the television who reported being sacked in a pre-recorded Zoom call, without prior warning or indeed any consultation whatsoever. P&O had callously prepared beforehand, recruiting handcuff-trained private security guards in balaclavas to frogmarch employees off the P&O vessels.

The P&O chief executive, Peter Hebblethwaite, admitted to the Transport Committee that the company had deliberately ignored the law and that some of the agency crew replacing those sacked would be paid below the minimum wage; and astonishingly, he said that the company would do it again, given the opportunity.

I commend the hon. Gentleman for securing this debate. Does he not agree that the disgraceful treatment of P&O Ferries staff, which he outlined, has reminded this House of the importance of employment legislation, that any loopholes must be sealed, and that no one should be able treat decent and hardworking people so contemptuously, with no redress and complete legal impunity? As I say, I commend the hon. Gentleman; he does well and congratulations to him on securing this debate.

I thank the hon. Gentleman very much for that intervention; I will cover the points he has raised.

To get back to Mr Peter Hebblethwaite: Minister, how on earth is he still in position? I must ask that, as my first and probably most interesting question. A man who agreed that he was breaking the law; a man who said that he would not expect the trade unions to agree with what he was doing; a man who said, despite the fact that he was breaking the law, he would do it again —and he is still in position. Why? That is the question.

The right hon. Member for Uxbridge and South Ruislip (Boris Johnson), the former Prime Minister, claimed from the Dispatch Box on 23 March last year that the Government were taking legal action against P&O Ferries, but they have not done so as yet. So my next question to the Minister must be: why has no action been taken against P&O for how it acted back on 17 March 2022? Parliament must correct that injustice. The purpose of today’s debate is to learn the right lessons from P&O’s breathtaking act of corporate aggression against British workers, and to take the right actions, particularly where they are missing from the Government’s response.

My concern and that of colleagues is that the Government’s responses to date will neither close loopholes nor, crucially, challenge the anti-trade union mindset at the heart of P&O and DP World’s despicable actions. Ex-P&O seafarers and their trade unions—the National Union of Rail, Maritime and Transport Workers, and Nautilus—are increasingly frustrated at the Government’s failure to penalise P&O Ferries, DP World or the flag states involved in this injustice, as early-day motion 954 highlights. As a result, UK seafarers and trade unions across the maritime industry cannot be certain that a similar assault on jobs and employment rights will not happen again.

The first anniversary of the Government’s nine-point plan in response to P&O Ferries is on Thursday. Although the Seafarers’ Wages Act 2023 is welcome, it is unnecessarily narrow and will not come into full legal effect until next year. The Transport Committee has correctly observed that, on its own, the Act

“will not be sufficient to ensure proper treatment of seafarers.”

I ask the Minister: where is the review of the Equality Act 2010 (Work on Ships and Hovercraft) Regulations 2011, which provide limited protection for seafarers from nationality-based pay discrimination? That is what P&O, Irish Ferries and Condor Ferries and other businesses base their model on. That review was supposed to have started by the end of 2020. Minister, when will it start?

For all other employment conditions, including tackling roster patterns of up to 17 weeks on P&O’s fleet, the Government propose a voluntary seafarers charter. The agreement was to base standards in the charter on the collective agreements between the RMT, Nautilus International, Stena Line and DFDS. The charter still has not been agreed, and there are very real concerns among the unions that it is not fit for purpose. Repeated efforts to amend the Seafarers’ Wages Bill to give the charter legal force were defeated by the Government on the grounds that it would effectively mandate collective bargaining. In reality, that is what we need now, and not another review in a year’s time.

As the Transport Committee’s excellent report on the “Maritime 2050” strategy observes of the seafarers’ charter,

“the Government’s current plan to ask operators to sign up voluntarily will not give the assurances and protections that seafarers want and deserve. We therefore call on the Government to make signing up to the charter a mandatory requirement for all UK maritime operators.”

Labour’s prescription of mandatory rights and standards cuts to the heart of the problem. Restoring trade union collective bargaining agreements, safe roster patterns and dislodging the supply of cheap agency labour on flag of convenience vessels is the way forward and will increase seafarer jobs in this country.

I would like to ask the Minister a whole number of questions. Forgive me; I am sure he will not have the time to respond to every one from the Dispatch Box, but I will put them in writing so that we can get a written response. When will the Government make the seafarers’ charter a mandatory requirement for all other operators in the ferry sector? Will the Minister give the trade unions a formal role in assessing the compliance of operators’ policies with the standards in the charter? What assurances can he give that the charter will not undermine existing collectively agreed terms and conditions in the ferry industry? When will the independent research on roster patterns from the Department for Transport report to Ministers?

The P&O scandal affects the 19,000 mainly retired seafarers in the merchant navy ratings pension fund, a multi-employer scheme to which P&O Ferries owes around about £130 million. It is a liability that it is trying to avoid. What are the Government doing to ensure that DP World meets its liabilities to the members of the MNRPF?

P&O Ferries knowingly and unashamedly breached section 188 of the Trade Unions and Labour Relations (Consolidation) Act 1992. It has benefitted from weaknesses elsewhere in the Act, especially in the Government’s interpretations of sections 193, 194 and 285. Section 285 was cited in the Insolvency Service’s decision not to proceed from the evidential test to the public interest test of prosecuting P&O Ferries for criminal offences, because it was said that section 285, in the judgment of the Insolvency Service, provided only an “even chance” of a successful prosecution. Yet there is nothing in the nine-point plan to close the loopholes in the 1992 Act, despite the urgent need to equalise redundancy rights, as a starter, for land-based workers and seafarers.

The protections that P&O breached were introduced in 2018, with the support of the trade unions, with the express intention of strengthening seafarers’ basic employment rights. There were no protections before, which is why P&O Ferries’ decision to breach them must be the start of a fightback against this despotic approach to industrial relations in the ferry industry. Will the Government therefore commit today to strengthening the Trade Union and Labour Relations (Consolidation) Act 1992 by amending section 188 to ensure that it clearly applies to seafarers working regularly from UK ports on international routes, and commit to outlawing ex gratia payments to employees connected with an intentional breach of section 188 of the Act ?

Will the Government amend section 193A(2) to legally require employers to notify the Secretary of State for Transport, regardless of the flag of the vessel, of an intention to make more than 20 seafarers redundant, and amend section 194(3) to ensure that the definition of “body corporate” applies to overseas owners, such as DP World? Will they also amend section 285 to provide these protections against instant dismissal for all seafarers working regularly from a UK port, regardless of nationality or the flag of the vessel? Will the Minister make absolutely sure that the Retained EU Law (Revocation and Reform) Bill does not strike out these minimal protections for seafarers in the 1992 Act?

I return to the shocking decision of the Insolvency Service not to pursue criminal damages and charges against P&O Ferries, effectively letting the company and its chief executive Peter Hebblethwaite off absolutely scot-free. It is essential that we get to the bottom of this chronic regulatory failure, so will the Minister commit to looking at that? Will the Minister commit to reforming the Insolvency Service so that a public interest test informs the evidential tests in cases like P&O where a company director blatantly breaks the law to dismiss directly employed seafarers in collective bargaining agreements, and even say they would do the same again? When do the Government expect the Insolvency Service’s civil investigation of P&O Ferries to conclude? The RMT estimates that UK seafarers hold around only half of the 5,300 ratings jobs on cargo and passenger ferries regularly working on a number of international routes, including Crown dependencies. The union believes we are heading in the wrong direction.

The picture across all sectors of shipping is still worse. The Government’s own impact assessment for the Seafarers’ Wages Act 2023 observed that over the past decade UK-resident seafarers have held, on average, 17% of the total number of ratings jobs across the UK shipping industry. That is a national scandal. This rampant profiteering from exploitative crewing contracts is a fundamental lesson from the P&O scandal, and it has serious safety implications. We need to know what action has been taken to assess seafarer fatigue levels on the P&O Ferries fleet, and what the Maritime and Coastguard Agency is doing to monitor the effectiveness of DP World’s safety incident reporting tool, H-SEAS?

P&O Ferries moved its fleet of six ROPAX—roll-on roll-off passenger—ferries from the UK ship register to the Cyprus register in 2019. The Cyprus register has said nothing on the unlawful sackings, in a clear indication of the effects of deregulated shipping registers on decent employment standards. Will the Minister tell us why the Government have signed an agreement with the Shipping Deputy Ministry of Cyprus to co-operate on shipping matters, including seafarer employment and welfare conditions? The Cyprus register is increasingly popular with ferry operators, which is a real source of concern for those UK seafarers working on Cyprus-registered vessels. Is the Minister promoting the Seafarers’ Wages Act 2023 and the seafarers’ charter as part of this agreement?

It is hard to square that with the ambition in the nine-point plan to grow the UK ship register, unless Ministers intend to further deregulate the red ensign. Earlier this month, DP World reported record profits with £3 billion in dividend payments and £15 million in bonuses to directors, including those at P&O Ferries. It is a scandal that the £11.5 million that P&O Ferries received in furlough payments from the UK taxpayer has not been repaid and that DP World will benefit from lucrative Thames Freeport contracts. I also ask the Minister to investigate urgently the delay in P&O Ferries Ltd submitting accounts for the year to 31 December 2020-21, as my hon. Friend the Member for Sheffield, Heeley (Louise Haigh) raised in a written question.

The future of the UK as a maritime nation, with secure ferry operations supporting full seafarer employment, is at stake here. P&O is introducing new sailings and ferries, and others, such as Cobelfret, are introducing new services that are likely to fall outside the scope of the Seafarers’ Wages Act. How can anyone have faith that the correct lessons will be learned from last year’s scandal while this injustice is allowed to persist?

I refer the House to my entry in the Register of Members’ Financial Interests. I thank the Minister and my hon. Friend the Member for Wansbeck (Ian Lavery) for his forensic speech, and for granting me permission to say a few words about the appalling redundancies of those 800 seafarers, and the lessons that have not been learned from the experience.

My hon. Friend outlined the outrage we all felt when Peter Hebblethwaite, the CEO, made an incredibly shocking admission in Parliament that he knowingly decided to break the law. I was on the Joint Committee when he told us:

“There is absolutely no doubt that we were required to consult with the unions. We chose not to do so.”

They made a calculated decision to break the law because they reckoned, rightly, that the unions would not accept an offer that would slash workers’ wages. They considered it more expedient to absent themselves from their legal obligations and price in the cost of law-breaking, and engage agency staff on pay as low as £1.80 an hour. They did that safe in the knowledge that any compensation that they would have to hand out to former unionised workers would be offset by the benefits of paying poverty wages to their replacements. They belong in the pages of a Dickens novel, not in 21st-century Britain. The fact that Mr Hebblethwaite remains in post at P&O is staggering. He should be disqualified from being a company director.

Does my hon. Friend share my concern that agency crews are working unsafe roster patterns, being at sea for up to 17 weeks? That has implications for everybody who travels on those ferries.

My hon. Friend is absolutely right. It is utterly staggering that those are the terms and conditions that these major companies are prepared to inflict on workers. It does not matter whether they are from Britain, Poland or wherever in the world. That they would treat human beings in that way is beyond barbaric. Sadly, the Government have simply not learned the lessons from that scandal. The action taken has been insufficient. The Secretary of State passed the buck to the Insolvency Service, which, after months of prevarication, said it would take no further action.

In lieu of that, Ministers could have imposed an unlimited fine on the company. The Opposition made it clear that we would have supported any necessary changes to legislation, but the Tories let P&O off the hook, I am afraid. Thanks to that inaction, we are witnessing a race to the bottom, which is likely spelling the end of any residual UK maritime workforce. All the while, P&O’s parent company, DP World, announced earlier this month that it had received record profits and a £3 billion final dividend for 2022. It also gets financial help from the Government for the berth at London Gateway.

I fear it is not just companies in the maritime industry that will follow suit; there will be others. Businesses across the economy will know that they can blithely commit such crimes of corporate thuggery, and decimate workers’ rights and protections in the process. I am going to finish, because I want to give the Minister the opportunity to respond. The events of the P&O Ferries scandal serve to underscore how much we need reform of employment rights and protections in this country.

It is a pleasure to speak with you in the Chair, Sir Gary. I thank the hon. Member for Wansbeck (Ian Lavery) for bringing forward this important debate.

G. K. Chesterton said:

“Too much capitalism does not mean too many capitalists but too few capitalists”.

I absolutely agree with that. I think there is agreement across the House that the vast majority of employers are decent people who treat their employees properly. However, some of the egregious behaviour we have seen in this case, and in others as well, happens when there is too much power in the hands of a few very large operators that dominate certain sectors. The title of this debate is absolutely right, in that there are lessons we can learn from the case of P&O.

The hon. Member for Wansbeck made lots of points. He said to me before that he did not expect me to respond to them all today, and I probably cannot, but I will write to him about the ones I do not pick up on. Some are dealt with by other Departments such as DFT, but I am keen to facilitate responses on all his points where I can. We are in total agreement here: the behaviour of P&O and its chief executive was disgraceful and gratuitous, running roughshod over UK legislation, as I saw in the testimony referred to by the hon. Member for Middlesbrough (Andy McDonald). That is absolutely appalling, and we must deal with it. Yes, we need to learn the lessons, and we have learned some already. We are determined to look at this issue carefully and to go further where we need to. I think the hon. Member for Wansbeck knows that we have taken some action already, but I fully understand that he might want us to go further.

So much attention has been drawn to this appalling behaviour because it is very unusual. I was an employer for 30 years, and most employers would never have considered not carrying out the requirements around consulting the workforce. That is because it was the right thing to do and because we wanted to have a good reputation as an employer with our existing staff and any staff who would join us in future. There is something fundamentally wrong when an employer can set aside the clear requirements to consult the workforce in these instances.

It is fair to say that the Government were very clear in their condemnation early on. The Secretary of State wrote to P&O to ask it to reverse its decision and asked the Insolvency Service to investigate whether the law was complied with. That investigation has not yet concluded. The criminal side of the investigation has reported back. A senior prosecution barrister looked at the matter and decided there were not sufficient grounds to take forward a criminal prosecution. The civil investigation is still live, and it is important we give it the opportunity to run its course.

We all believe in the principle of due process in these cases. Certainly, there is still a chance, as the hon. Member for Middlesbrough noted, of an up to 15-year ban of a director if there are sufficient grounds, so we should let the Insolvency Service conduct its work. Like others, I urge the service to do that work as quickly as possible so that it can come to a resolution and more lessons will hopefully be learned. Indeed, if lessons are learned, I am keen to take further action where necessary to clamp down on such behaviour.

Does the Minister accept that we were told that action would be taken urgently and it was not? In that vacuum, there is no reason why DFDS, Stena and other ferry services could not do the exact same thing and more seafarers could lose their jobs.

The hon. Gentleman raises an important point. I do not accept that no action has been taken, and we are consulting on some things now to try and beef up the requirements in terms of consultation. We have already done some things.

The hon. Member for Wansbeck referred to the Seafarers’ Wages Act and the requirement to pay a minimum wage in UK waters. He is right to say that the seafarers’ charter is a voluntary code for now, and we want to see how that operates. I fully respect his perspective that this should be mandatory across the piece, but when there is a proportionate approach—we do not feel at this point that it is. Nevertheless, we have legislated in that area. That legislation has received Royal Assent and is now law, but the hon. Member for Wansbeck is right that some secondary legislation is required for it to be fully and effectively implemented.

On the Thames freeport, let me clear: we have not given any money to DP World, but we have given money to Thurrock Council. However, some of the land needed to operate a Thames freeport includes land owned by DP World. It would be cutting off noses to spite faces if we said, “You can’t use that land, because of its ownership,” and we do not believe in compulsory purchase, except in certain circumstances. I think that would be the wrong—

Well, that is a slightly different case.

It was interesting that none of the contributions suggested that we would ban fire and refire. Interestingly, the deputy leader of the Labour party, the right hon. Member for Ashton-under-Lyne (Angela Rayner), said Ministers would not ban the behaviour, judging that it is “acceptable in some circumstances”. So I think we are probably all on the same page in terms of making sure the bar is high on the requirements for anybody using these kinds of tactics and making sure that people cannot just run roughshod over them.

New guidelines from ACAS in 2021 were clear that this kind of action should be taken only as a last resort. In terms of a statutory code of practice, there is a 12-week consultation from January 2023. The principle behind that is that there is a 25% compensation uplift in employment tribunals if consultation requirements are not adhered to. We think that sets a sensible balance between the two. Having said that, I am keen to go further, where we can, and to look at the different provisions we can put in place to make sure that the requirements on employers work in practice. It is clear that has not been the case in this case, which is why we have gone further.

To conclude, I thank the hon. Member for Wansbeck again. He knows I am as incensed as he is by the actions of this employer because they bring into disrepute the good name of many other employers, which cannot be right.

Just briefly, on fire and rehire, we have to be clear about what we are talking about here. This was not firing and rehiring the same workers; this was firing workers and replacing them with cheaper workers. That is the point that concerns us. If companies get into financial difficulties, there has to be a proper mechanism for protecting people if they have to have lower terms and conditions. That is the point we are making.

We are totally on the same page. The fire element is the worry here. Setting aside the consultation requirements, hon. Members will remember the case of British Airways, which threatened fire and rehire during the pandemic. It did not go ahead with that tactic, as P&O did, but consulted the workforce and found a way through. That shows why the consultation period is so important. Making sure that the provisions we have work in practice is key.

As I say, we already have the Seafarers’ Wages Act. We will keep the issue under review. We are keen to see the outcome of the Insolvency Service investigation and, as far as I am concerned, where action can be taken, it will be taken. We should bear it in mind that we want to act in a proportionate way. Most employers do the right thing. I have never heard of a case like this one before. Most employers do adhere to consultation requirements. We should celebrate the good employers we have in this country, as well as clamping down on the bad ones, and I am determined that we do so.

Question put and agreed to.