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Industrial Action: Lindsey Oil Refinery

Volume 707: debated on Monday 2 February 2009

Statement

My Lords, with permission I would like to make a Statement about the current industrial action at the Lindsey oil 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. This 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 because 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 actually British, so clearly no policy of discrimination or exclusion of British nationals is being operated at the refinery. All the striking workers, I understand, 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, weather permitting. 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 fair and proper application of the European rules which 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 supported by successive British Governments.

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

“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 sub-contracts 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 the site. And it further confirmed that it does not operate any policy of discrimination with regard to tendering or recruitment. The same rules apply here as they do with UK companies bidding for work overseas and I would remind the House that there are 300,000 UK companies operating elsewhere in Europe.

UK or overseas-based companies can bid for sub-contracts. 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 sub-contractors 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. This guarantees these workers minimum standards, for example, on pay, health and safety. The directive 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 sub-contractors 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 has been a right and 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. To illustrate the importance of Europe to the UK, half of our £370 billion of exports per year go to the EU, half of 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 people have about their jobs. That is why we have been taking the measures we have been 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 indeed harm British people working abroad for us to exclude foreign workers from employment in the UK.

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 this strong and independent process that we should proceed, not through the continuation of the unofficial industrial action which has been taking place. Our aim is to get through the economic difficulties we face with Britain continuing as a great trading nation, with our companies able to operate in Europe and worldwide, and our workers equipped for the jobs and industries of the future. I commend this Statement to the House.

My Lords, I welcome the fact that the Secretary of State is here with us again making another important Statement to this House. I declare my interests as set out in the register. I am also grateful to him for allowing me advance sight of his Statement and for his courtesy, although I have only just had the opportunity to see it. I agree with him that it is very important that two crucial canards have been exposed. First, it would be illegal to discriminate against British workers and we now have clear assurances from him that no such discrimination has taken place. Secondly, there is the allegation of undercutting, which, too, has been exposed as specious. In terms of intellectual substance, this should be the end of the matter, but these are straitened times and the issues are not that simple. The immediate problem has been created by what was by and large an extraordinarily ill-judged turn of phrase used by the Prime Minister in his first party conference speech as Labour leader in September 2007. As everyone in this country must know by now, he stated his intention to create,

“British jobs for British workers”.

It is no good dancing on the head of a pin at this stage. This was deliberate, carefully calibrated mood music and everyone knew at once what the intention behind it was.

My right honourable friend David Cameron, the Leader of the Opposition, pointed out six weeks later in the debate on the Queen’s Speech in the other place that this was patently, overtly and unmistakably a crassly populist attempt to fend off the rising challenge coming from the extreme right. My colleagues did some digging to discover the source of the Prime Minister’s slogans about British jobs for British people. As my leader pointed out in November 2007,

“if only the Prime Minister could see how embarrassed his Labour MPs are, how they shudder when he utters those words. He borrowed one slogan off the National Front and he borrowed another off the British National Party”.—[Official Report, Commons, 6/11/07; col. 22.]

Where was his moral compass when he was doing that? All I would say is, “As ye sow, so shall ye reap”.

The Prime Minister has had plenty of opportunity to disown his ugly turn of phrase, once it had been pointed out to him by friend and foe alike. All these weasel words from the Prime Minister and his colleagues now are as ineffective as they are demeaning. Once again, it is a case of too little, too late. But I want to help the Secretary of State if at all possible, so let us go back to first principles. Once again I endorse the fact that the core principle of the free movement of goods, services and labour is crucial both to international trade and our domestic well-being. Overall, everyone benefits from this freedom, and delivering the single market has been the supreme achievement of the European Union. As the Secretary of State has just said, we are a great trading nation, but it is very sad that we now have the biggest trade deficit in goods since 1674. Paradoxically, at a time of economic downturn, free movement is more important than ever, but as jobs vanish and industries contract, more immediate concerns can cloud people’s judgment and make protectionism seem like a comfortable line of least resistance. We cannot allow that specious argument to win by default. We owe it to our country to stick to our principles and restate the case for free markets with even greater vigour and patience than ever before.

The Secretary of State does not need me to tell him that the economy is in a terrible state and that many people are understandably fearful about the future. When making the case for free and open markets and against protectionism, he will have to choose his language with great care and demonstrate a considerable degree of sensitivity. I know that Mr Humphrys at the BBC subjected him to a certain amount of antagonism and provocation this morning, as did his Cabinet colleague Alan Johnson with some naive and populist words over the weekend. However, while we cannot condone wildcat strikes and picketing of the kind we have been seeing, we do have to understand people’s fears. We must all choose our words with due care and attention. Although of course Alan Johnson did not condone wildcat strikes, it was surely inflammatory for him to speak in the terms he did.

So I ask the Secretary of State whether he thinks that the Secretary of State for Health now accepts that what he said was wrong. Secondly, is what the Secretary of State just said to us the unanimous view not only of his department, but also of the Government? Thirdly, what steps are the Government going to take to enforce the law, given the words of the Secretary of State this afternoon? Next, how does all this fit with Warwick 2, an agreement that we have never seen but which we all understand was reached between the trade unions and the Labour Party prior to the last general election? Could we now see the terms of Warwick 2?

Finally, as long as Ministers stand firm in defence of the rule of law and against any madcap rush to protectionism, we shall support them. There is no blank cheque, however, and we shall be paying close attention to everything the Secretary of State and his senior colleagues say and do in the days ahead. The sad fact is that if the Government do not wake up soon, the winter of discontent will turn into the spring of depression.

My Lords, I join the noble Lord, Lord Hunt of Wirral, in welcoming the Statement from the Secretary of State. I waited with eager anticipation, as did, no doubt, members of the other parties in your Lordships’ House, to discover what line the Conservative opposition would take on this issue and, although I would not necessarily have used the tone of some of the noble Lord’s questions, I agree with virtually everything he said. However, I wait with interest as to whether it emerges that he speaks for the whole of his party in relation to the glorification of the Euromarket. We on these Benches very much hope that he does, but whether the Eurosceptics have been delayed by the snow remains to be seen.

The noble Lord, Lord Hunt, is right that this matter, until today, has not been handled with felicity by Her Majesty’s Government. It was unfortunate that Alan Johnson made the remarks that he did on the television yesterday, shortly to be slapped down by the noble Lord the Secretary of State when he managed to get his retaliation in first. As the noble Lord, Lord Hunt, indicated, it is particularly unfortunate that the speechwriters for the Prime Minister two years ago pinched the slogans from the BNP in a pseudo-clever way that we should have British jobs for British workers. I note with interest that that remark is now being spun as meaning that we have to give British workers proper training and proper skilling. I did not attend the Labour Party conference but certainly on hearing that speech I did not hear it as meaning proper skilling or proper training; I took it as a straight attempt to eliminate any risk from the BNP in certain areas of the north and Midlands.

There is a suspicion that the noble Lord, Lord Mandelson, is here to take the hit for this because he is not standing for election and he is the person who should put his head over the parapet. I have never believed that suspicion about the noble Lord and we should take his Statement as being absolutely straight. There is not a word in it that either the noble Lord, Lord Hunt of Wirral, or I would disagree with. I emphasise, as did the noble Lord, Lord Hunt, the importance to our economy of the continuation of our trade with Europe. As we speak, British companies are contracting with organisations throughout Europe. Particularly given the reduction of the pound against the euro, British companies will enter into contracts that will employ British workers who would otherwise lose their jobs. It is absolutely vital, as the noble Lord, Lord Hunt, said, that we do not get into a round of protectionism and that we stand firm about the importance of the European market.

However, having said that, we ought to pause and reflect on why this is happening. Large numbers of people are either losing their jobs or are frightened that they will lose their jobs over the next month or two. They do not know how they can blame or kick out at the Conservative Party’s friends in the financial services community, or at the Government as no elections are coming up. They feel deeply frustrated.

To pick up on the final point made by the noble Lord, Lord Hunt, it is vital that the Government take whatever action they can to ensure that the situation does not disintegrate into riots on our streets, as is happening in a number of other European countries.

My Lords, I am grateful to the noble Lords, Lord Hunt of Wirral and Lord Razzall, for their responses to the Statement and the support that they offer the Government, on whose behalf I speak unanimously, as one person. I thank the noble Lord, Lord Hunt, for his welcome to me to the Dispatch Box. I fear that if I keep turning up like this every week I might start to test his patience; he might get fed up with seeing me.

It is important to say that when feelings run high in such a situation as this, it is often tempting for politicians to make political capital. I am glad that the opposition parties have resisted that temptation—I hope I do not speak too soon—and I commend that to all those who are party to this dispute. We should keep our sights set firmly not on the politics of xenophobia but on the economics of the recession, and we should continue to do all that is necessary to get us through it as quickly and painlessly as possible.

The noble Lord, Lord Hunt of Wirral, rather traduced my right honourable friend the Health Secretary, Alan Johnson. Incidentally, I was not slapping him down yesterday. Noble Lords will have to accept that I am now a fully reformed character; I do not do slapping down any more. The noble Lord also traduces my right honourable friend the Prime Minister. It is an important aim and aspiration of any Government to create the fullest possible employment for the people who elected them, and that is all that he was saying. He was not saying “only” British jobs “only” for British workers—of course not. He was not attempting to tear up the EU rule book as he spoke; that would have benefited absolutely no one.

The noble Lord asked me some questions. First, he asked whether I was offering the unanimous view of the Government. Of course I am. Secondly, he asked how we will enforce the law. We will always enforce the law, and if it comes to light that the law has been broken we will of course take action accordingly. In the first instance, however, it is for ACAS to report that to us, and on the basis of the facts that I have examined I see no instance in which UK law has been broken. Should that arise, we will of course take the appropriate action.

The noble Lord also asked me about Warwick Two. I have to admit that I have not seen Warwick Two either, but I am sure that it is only days, if not moments, away from finding itself on my desk. By way of explanation I can say only that I was away at the time, serving the country elsewhere.

The noble Lord made a good point, and the noble Lord, Lord Razzall, added his view on this as well: we do not want to turn the present economic circumstances facing the country into something even worse. As a general observation, I have no doubt that protectionism would turn this recession into a depression, and it is therefore the last thing we need.

My Lords, I welcome the assurances given by Total and the Minister about advertising and discrimination, but I seek clarification on one point. When foreign firms bring their own labour to fulfil a contract which they have won, could that in some circumstances infringe the principle of free movement of labour within the EC or does the present interpretation of the courts allow that?

My Lords, the original directive and its interpretation certainly allows for subcontracted companies to draw on their own permanent workforce to fulfil that contract. The posting of workers directive not only provides for free movement of labour in Europe but also puts in place very important protections for labour posted overseas, such that all workers’ statutory employment rights should be respected and upheld. That includes adherence to the statutory national minimum wage, equal pay, health and safety, and paid leave and it is absolutely right that that should remain the case. As a Government, we will do everything we possibly can to ensure that that is the case.

My Lords, my noble friend has just referred to the national minimum wage as being the wage guaranteed by the United Kingdom’s transposition of the posting of workers directive. That is a lot lower than the local collective bargaining benchmark standard. My noble friend will remember as well as I do the discussion that led up to the United Kingdom’s transposition into UK law in 1999 of the posting of workers directive. He will remember in particular that we had the option of a combination of collective bargaining standards as well as statutory standards. The only statutory standard in this country in that regard is the minimum wage. Given that, according to the Statement, we have still met the local collective bargaining standards for the area, would it not be a reassurance for people in this position if my noble friend could consider a small amendment to the regulations transposing the posting of workers directive so that in this country it can be collective bargaining standards as well as the minimum wage that are taken into account?

I say that because over the past 20 years it has been a tremendous challenge to reassure people in this country that the single market, free movement, and so on will be part of an enhancement of their living standards and rights. This would be a reassurance going back to Jacques Delors in 1988. It would be a tragedy now if the idea was to get around that the social dimension of the single market was no longer seen as important as when in 1988 it was a key factor that turned the Labour Party’s attitude towards support for the European Union.

My Lords, I understand very well the point being made and the case being argued by my noble friend Lord Lea. I accept that where rights or entitlements that have been collectively negotiated and bargained are higher than the statutory minima, of course it is possible for these collectively bargained standards to be accepted, operated and implemented by all sides, but they need to do so voluntarily. In many cases, they are operated in that way. As I said in the Statement, in the case of the Lindsey refinery, all subcontractors adhere to the national agreement for the engineering construction industry which governs terms and conditions, working hours and pay. However, I do not think it is reasonable for us to seek to change the law in respect of this European directive that would extend collectively bargained entitlements to all companies and employees in adjacent employment. That is not a right that is enjoyed in UK law, let alone EU law.

My Lords, I declare that I am a member of Unite. I completely agree with my noble friend that we must all be temperate in what we say, particularly as negotiations continue. However, I understood him to say that one of the contentious points was that British workers were not allowed to apply for any of these jobs but that he has now received assurances that in future both subcontractors and British workers will be given that opportunity.

My Lords, so much so is it the case that British workers were able to apply for these jobs that the subcontractor undertaking this work, prior to the letting of this contract to the Italian firm, was another subcontractor which, for whatever reason—I am not ascribing fault to either side—was unable to fulfil its contract. That is important, because I gather that most of the workers were indeed British, but the contract was not fulfilled. It was only in those circumstances that an alternative subcontractor, in this case an Italian subcontractor, was then recruited by the original company. So it is simply not the case to suggest that British workers have somehow been barred or excluded from the Lindsey refinery. Nothing could be further from the truth.

My Lords, is it not rather mischievous to make capital out of the phrase “British jobs for British workers”? Surely it would have been far more dangerous and controversial if he had said “British workers for British jobs”, but the Prime Minister never said that.

My Lords, I am grateful to my noble friend. We must all expect to have our phrases and soundbites misused from time to time, and taken up like a stick with which to beat us. Such are the trials of political life.

My Lords, does the noble Lord agree that the slogan “British jobs for British workers” is much older than the National Front or the BNP? It is a clarion call that has reverberated around this House on many occasions over the past 200 or 250 years, and, indeed, has as often come from the right or the left of politics. On an equally neutral note, perhaps I may ask the Minister whether he can give an indication of the reciprocity that exists between the movement of British workers toward the European Union, and in the other direction, and how that compares either in global or percentage terms.

My Lords, I am unable to provide the noble Lord, Lord Elystan-Morgan, with the figures that he asks for but I am happy to make inquiries of my officials. He is right to say that such an aspiration is a worthy clarion call and a noble policy objective, as long as it does not involve the infringement of either EU or UK law, and of course that was certainly not the Prime Minister’s intention.

My Lords, I declare an interest as a director of Sellafield Ltd, although what I am going to say has nothing to do with Sellafield. The Minister, in a very temperate and moderate Statement today which I think we can all agree with, laid great emphasis on the European directive that any subcontractor winning a contract within the European Union can quite reasonably bring forward its own permanent staff. Am I to believe that that is restricted to permanent staff, and that the subcontractor would not be allowed to recruit additional staff in the home country to the exclusion of people in the host country?

My Lords, my noble friend is right. You cannot advertise a job vacancy and say only people of one nationality need apply, or indeed one race, or one sex.

My Lords, is the national minimum wage that applies that of the UK or that of the subcontractor? If it is the subcontractor’s, or in either case, what powers do we have to check that it really is paying that national minimum wage, because we presumably do not see the tax returns of the country concerned?

My Lords, the point is they are not paying the national minimum wage in this case. They are paying the same rates as those that have been collectively bargained to benefit other workers at the refinery. As a general observation, of course we can establish this; were there a suspicion that posted workers were being paid below the national minimum wage and the situation that the noble Lord describes arose, then of course we would have no hesitation at all in sending in the wage inspectorate to ascertain the facts and take action.

My Lords, does the Minister therefore mean that the Italian workers at this refinery are being the paid the same wages as the British ones?