My Lords, the Government have condemned the appalling way that P&O Ferries has treated its staff. These loyal employees have been working tirelessly to keep our country supplied with essential goods, particularly through the pandemic. We wrote to P&O Ferries seeking information on the decisions it took, to determine whether it had breached UK employment law. We are carefully considering its reply, which the Secretary of State and BEIS have just received. If the rules have been broken, we will not hesitate to take further action.
My Lords, let us look at the facts. P&O has abused the employment rights of its workers. It took public money while its parent company paid £270 million in dividends. Its UK operating profits are almost wiped out by unexplained administrative expenses. The company is engaged in profit shifting and pays little or no corporation tax. Its 2020 accounts show a pension deficit of £95 million. Any responsible Government would immediately investigate P&O’s abuses. Can the Minister explain why this Government have not begun an independent inquiry?
We are taking a number of steps. We are engaged with the Insolvency Service regarding the steps P&O Ferries took in this whole restructuring and redundancy exercise. The £15 million received by P&O was part of the furlough scheme and therefore to the benefit of the employees rather than the company. I know that P&O will still be accountable for the deficit in the pension contribution to the Merchant Navy Ratings Pension Fund. The Government are working very hard in a fast-moving situation to get answers to all those questions and to take the appropriate action.
My Lords, I apologise that I was not here yesterday: my wife had a very bad fall and fractured her head, so we spent two days in the hospital, but I wanted to be here today. I hope noble Lords will bear with me.
The most important thing for everybody in this House —or any house, individuals or otherwise—is your reputation. I am today wearing the tie of the Peninsular and Oriental Steam Navigation Company, which goes back nearly 200 years. My predecessor served at the Battle of Trafalgar and, as a matter of interest, my noble friend Lord Lamont is a direct descendant of the first chairman, who was in the Shetland Islands.
What I want to say is this—
I will issue a statement separately from this, but I wanted to ask this. People from all over the world are deeply upset and concerned about the reputation of a company that has been one of the greatest companies, and of which I have had the honour to be a part for nearly 40-odd years. I stood down in 2005—
No, I have to say this, because it is very important. Dubai has had the company for 16 years. Does the Minister agree that the way Dubai has handled this is totally unforgivable to its reputation but, most of all, for all those who serve this country?
I thank the noble Lord for reminding the House of his career in P&O, which was one of my first clients in the 1980s, when I joined the shipping department of Bank of America, and I remember him well. The Government are absolutely shocked by the actions of P&O Ferries, and we must make the point here that there is no relationship between P&O Ferries and P&O Cruises, which are entirely separate organisations. We are shocked by its actions over the past week. We have been angered by the lack of empathy and consideration that P&O Ferries has demonstrated towards its employees. The way that these workers were informed was completely unacceptable, especially as P&O Ferries received millions of pounds of British taxpayers’ support through furlough.
My Lords, as the Minister knows, multi-divisional companies such as DP World use a legal corporate veil so that they can hide behind the deeds of those subsidiaries. However, there is no moral corporate veil and DP World is morally implicated in the activities of P&O Ferries. How can the Government continue to do business with DP World, how can they continue to give it £50 million in tax breaks and why are they not suspending immediately the involvement of DP World in the two freeports that it has been granted?
The noble Lord is right and, as Ministers stated in the other place, we are reviewing existing arrangements and working with all government departments to consider what relationships we have with DP World. This includes my honourable friend in another place, Minister Scully, saying that the company should be on notice that it had fundamentally changed the relationship with government, including a £25 million subsidy the company received to help develop London Gateway as a freeport. It needs to realise that the relationship between the companies and the Government has changed as a result of its absolutely callous conduct.
My Lords, if P&O Ferries’ disgraceful action of sacking its workforce and bringing in agency workers to replace them on £2 an hour, with its ships being re-flagged outside the UK is not illegal, it certainly should be. What happened to taking back control? The Government could have prevented this, had they supported a Labour Private Member’s Bill that would have outlawed such fire and rehire practices. How will the Government stop this ever happening again? Will they now, as the noble Lord, Lord Fox, said, review DP World’s suitability for the £50 million freeport contracts it has recently been awarded?
My Lords, I answered the last question with the words of my right honourable friend in the other place. The noble Lord is quite right that there is some truth in Barry Gardiner’s Private Member’s Bill, but I am not sure that it would have helped in this case, given that the fire and rehire may not apply to the replacement of British workers with lower-paid workers from overseas in a maritime context, as their contracts were with Jersey and therefore may not have been subject to UK law. However, we are looking at all these things and working out how we can take this matter forward and stop companies taking advantage of a loophole in the minimum wage legislation as it stands.
My Lords, can the Government take a very strong line on this? Many trade unionists will be looking very carefully to see how strong the government reaction is. Can the Minister take up with the DWP the fact that P&O was in the pension scheme of the Merchant Navy in a “last man standing” scheme, so if there is a deficit in this scheme, it could affect seafarers from all over the seafaring world, far beyond P&O?
I assure my noble friend that P&O is still accountable for its deficits in the pension scheme, particularly in the Merchant Navy ratings reserve fund. Regarding interaction with the trade unions on the situation, we are working closely with them to understand their concerns and act in support of their aims where possible, including to establish the legality—or lack thereof—of the actions of P&O. Minister Courts held a round table with maritime unions last week to discuss how Governments can best support maritime workers. We will continue to engage with unions as appropriate.
My Lords, I am glad that Her Majesty’s Government are considering changes to the law to prevent this sort of outrage happening in the future. However, one thing is clear. Simply tightening up the loopholes exploited by P&O, or increasing the financial compensation caps, will not be enough with an employer who has long pockets. I suggest three steps which would have real teeth. First, as the Minister has mentioned, Barry Gardiner’s fire and rehire Bill would allow an injunction to compel consultation. Secondly, we should amend the Equalities Act to allow an injunction to prevent what is clearly discrimination on grounds of nationality. Thirdly, trade unions should once again be allowed to take solidarity action.
My Lords, we are committed to reviewing and monitoring the impacts of minimum wage legislation—including for seafarers—very closely, to ensure that it meets modern employment practices. Two years ago, the Government pledged to conduct a review of all NMW law in relation to seafarers and a working group was formed to explore this. I am sure that we will be looking at its results in responding to this crisis.
The contracts that the seafarers were subject to were for international waters; land-based employers will still be subject to minimum wage legislation here, but there is a difference between many of the staff. The problem we have is that the 800 who were made redundant have received rather good packages, perhaps more than they would get through a tribunal, so it may be up to them to be supported by their trade unions.