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Seafarers’ Wages Bill [HL]

Volume 824: debated on Wednesday 12 October 2022

Clause 1: Services to which this Act applies

Amendment 1

Moved by

1: Clause 1, page 1, line 5, at end, insert—

“(1A) This Act also applies to a service for the carriage of persons or goods by ship, with or without vehicles, between—(a) a place in the United Kingdom and another place in the United Kingdom;(b) a place in Crown Dependencies and a place in the United Kingdom;(c) an offshore oil and gas installation on the UK Continental Shelf and a place in the United Kingdom; and(d) an offshore renewable energy installation within the UK Exclusive Economic Zone and a place in the United Kingdom.”

My Lords, I begin by apologising for not being able to be present at Second Reading on 20 July. I am not just sorry to have missed your Lordships’ contributions on the Bill; it is a deep personal regret that I did not hear the valedictory speech of Lord Mackay, who was in my view one of the greatest of our Lords Chancellor. Of course, I was able to read the proceedings in Hansard and watch them on television. I thank the Minister for her Teams seminar yesterday. Again, I apologise that my equipment failed me and I was able to participate for only the first two minutes.

Naturally, the Bill is to be welcomed but it is a matter of regret that it is confined to the national minimum wage equivalent. This is just one of the nine points in the Government’s response to the P&O Ferries calamity on 17 March and, even in that regard, it may not achieve the purpose stated by the Minister in point one of her letter of 31 March, which said that this will ensure that P&O can derive no benefit from the actions it has taken in paying staff less than the minimum wage and it must reverse the decision. The fact is that, even paying the national minimum wage equivalent, P&O will in fact save money over the previous regime.

Apart from the egregious flouting of the law on 17 March, one striking feature of the P&O Ferries saga is that it also threw overboard all the collective agreements that the company had reached with the trade unions over the previous 100 years or so. These contained provisions about, among other things, procedures to achieve changes to terms and conditions, dealing with redundancies, and procedures to resolve disputes. That is why the Minister’s ninth point in the letter was so gratefully received: the creation of “minimum wage corridors” and asking unions and operators to agree a common level of seafarer protection on ferry routes. The Bill could have given legislative support to these excellent proposals and I ask the Minister, first, how the Government will achieve them and, secondly, where she and her department have got to in their bilateral discussions.

Noble Lords need not fear—I have just another couple of sentences to say before I introduce the amendments. The Bill could have gone a lot further in re-establishing terms and conditions beyond the minimum hourly rate, including those that were provided for in previous collective agreements, such as training, pensions, rostering, crewing levels, recognition, disputes, and so on. I wonder whether the Minister and the department have any plans for legislative support in that regard.

One other obvious thing the Bill could have done was to stop up the loophole in Section 193 of the Trade Union and Labour Relations (Consolidation) Act, which excludes any penalty to enforce the duty of a ship operator sacking UK workers for redundancy to notify the authorities in the flag state of the vessel. We know this is a loophole because on 19 August this year the Insolvency Service said that a prosecution of P&O Ferries in this regard was not possible. I wonder whether the Minister will be able to say something about filling that lacuna.

With that digression, I turn to the first group of amendments, which concern the territorial scope of the Bill and an aspect of the application of international law. I will speak to my Amendments 1, 15 and 16, while Amendments 5, 23 and 38 deal, respectively, with minimum wage corridors, preventing breaches of maritime law and upholding international agreements to which the UK is party.

I will of course withdraw my first amendment, but it was put in on the footing that I would move an amendment to expand the scope of the Bill from dealing with not just the national minimum wage but the protection of other terms and conditions as well. However, I was advised quite properly by the Public Bill Office that that was not possible within the scope of the Short Title. I am therefore left simply asking the Minister to confirm my understanding that the national minimum wage already applies on vessels working on domestic routes, that those seafarers in the offshore oil and gas maritime supply chain are also covered by the National Minimum Wage (Offshore Employment) (Amendment) Order 2020 and that vessels sailing between the UK and Crown dependencies will be covered either by the Bill or existing legislation.

It is known—or so I am advised by RMT—that Condor Ferries, a low-cost operator contracted by the Governments of Jersey and Guernsey, pays less than the national minimum wage at present. It was not paying that national minimum wage up to 2014. Since then, I understand that Condor has denied union access to the Bahamas and Cyprus-registered vessels and therefore it is not known what rates of pay are operable. Presumably we are right in thinking that the Bill will apply to such vessels.

The one area where no protection is offered, as I understand it, even by the Bill is for the supply chain to offshore renewable installations in the exclusive economic zone, because they are not covered by the National Minimum Wage (Offshore Employment) (Amendment) Order 2020. The amendment that I propose should therefore close that loophole, but it may be that the noble Baroness has another way of dealing with that issue. Again, I am advised by RMT that there has been a recent case of a UK-flagged offshore facility utility vessel in the Port of Sunderland, where seafarers were working 12-hour days at a daily rate of €55, which comes to €4.58, or just over £4, an hour. In effect, by moving this amendment I simply ask the Minister to confirm that all those cases will be covered either by existing legislation or by the Bill.

The second of my amendments is Amendment 15, the purpose of which is to expand the phrase “territorial waters” to include

“the UK Continental Shelf and the UK Exclusive Economic Zone”,

both of which should be covered. What we are considering is the seafarers working on project vessels, floating hotels and other vessels that can be anchored at sites outside the UK’s territorial waters but within the continental shelf and UK economic zone. That is important, because the production of clean energy from offshore renewable sources and the storage of carbon in subsea facilities will see an increase in seafarer employment associated with this work, particularly in the North Sea.

My third amendment in this group is Amendment 16, which would delete Clause 5(3). Its purpose is to discourage operators of vessels from seeking to avoid the obligations under the Bill of providing data relating to the wages of their crew by registering vessels in countries or territories where not so restrictive data protection laws apply. I note that the Bill’s impact assessment does not consider the possibility of operators breaching the data protection laws of a flag state. I wonder whether that is because it was not thought to be a significant problem, but it might well become one if there are operators, such as P&O Ferries, that are quite happy to evade British law.

Those are my three amendments in this group. I beg to move.

My Lords, I will speak to my Amendment 38. Noble Lords might remember that at Second Reading the noble Lord, Lord Mountevans, and I raised the compatibility of this Bill with international agreements to which the UK is a signatory. Regrettably, the Minister did not address that issue in her reply, nor in her follow-up letters to participating Peers. It is really important that we give this issue an airing today.

There are many long-standing and recognised international conventions, including the United Nations Convention on the Law of the Sea and the international Maritime Labour Convention 2006, to which the UK is a signatory. Earlier this year, the International Labour Organization reached an agreement on minimum levels of wages for seafarers for 2023, 2024 and 2025. This was broadly welcomed by all stakeholders, including social partners. When the National Minimum Wage (Offshore Employment) (Amendment) Order 2020 was published, the department’s Explanatory Memorandum made it clear that these conventions precluded the provisions being applied to seafarers from non UK-flagged vessels, yet that is exactly what this legislation will do. I would like the Minister to clarify for the Committee what has changed between the publication of that memorandum in 2020 and today.

The fact of the matter is that, no matter how well- intentioned the legislation—these Benches do support a better deal for seafarers—a measure that appears to be contrary to the long-established norm that port states should not interfere with the internal running of foreign-flagged vessels, provided they conform with internationally agreed conventions, is something we should avoid. All these agreements were developed over many years, and they reflect the complexities of operating in multiple jurisdictions with very different legal systems and with an international workforce, with many nationalities on the same vessel.

These agreements are not really drafted like legislation —nor could they be, because they come from so many legal jurisdictions. They are about intent, and the intent is pretty clear. I hope the Government will think very carefully about whether they wish to risk disrupting these global agreements, or be seen to be thought of as disrupting them, because it would not be in the interests of the UK, or of any other country, for this established order to start to become undermined; nor would it be in the interests of seafarers.

There is a particular issue for the UK. We have enjoyed strong leadership in the maritime sector; that is something we should protect and preserve. The Government’s own impact assessment says that there is

“a reputational risk that the UK may be seen to be moving unilaterally on seafarer welfare issues rather than seeking improvements exclusively via multilateral channels.”

Does the Minister acknowledge that risk? Can she explain to the Committee what the Government intend to do to mitigate it?

Finally, many noble Lords were struck by the letter from the International Chamber of Shipping, which did not hold back on its concerns about the Bill. Again, I would be interested to hear about persuading not just Members of this House but the wider shipping community that we are still fully on board with these international conventions.

My Lords, the noble Baroness, Lady Scott, has made the case well. This is from somebody who, I imagine, has not spent her whole life in maritime as I have, so I congratulate her; her points were made well.

We have the IMO close to us here in Parliament. It is just across the way, up the river and on the other bank. We are privileged to have it. If we do not abide by, for example, UNCLOS resolutions and agreements, it will be damaging to our position. I am sure that many maritime people would agree. It is extremely important that we do not behave irresponsibly here, particularly at a time when Britain is open for business. With all the other splendid slogans we have heard, it is important that we abide by international agreements. These were carefully worked out over a long period involving all parties, so I support the amendment.

I say in passing that I also support Amendment 23 in the name of the noble Lord, Lord Tunnicliffe, which is in the same space but on a more restricted, faute de mieux basis and also holds good in that situation.

My Lords, I do not have any amendments in this group but I think it is appropriate for me to speak to some of the clause stand part amendments I have tabled. Basically, they result from a discussion during the International Chamber of Shipping’s briefing, to which the noble Baroness, Lady Scott, referred, about whether this Bill is compatible with international law.

Last night, I had the pleasure of joining many people from the maritime sector at an event in Greenwich. I must have spoken to more than a dozen experts in the field who questioned why the Government are doing this at all. They said, almost to a person, that the Bill will not deliver what the Government want. I certainly support its purpose—to protect the employment and remuneration of seafarers—but all the experts said to me that it will not do that.

One useful comment has come from Nautilus about the Insolvency Service work on assessing whether P&O had acted in a criminal manner when it did. Basically, the Insolvency Service is not going ahead with the criminal case while the civil investigation is still under way, but what it is really saying is that it does not think this Bill will deliver. This is from a union that represents many seafarers. It is worth quoting the information from the British Ports Association to put on record that it and other associations are not convinced that the Bill is compatible with the international commitments under the UN Convention on the Law of the Sea. If we take this uniliteral action, we risk other people who are possibly less responsible than the UK—I do not know whether that is still the case these days—doing the same thing and providing justification for doing things that adversely affect our ships, our seafarers and everyone else.

I hope the Minister can explain why this is being done at all. I will go into details on some later amendments, but will finish on this matter of principle. Presumably, the Government believe that this is compatible with international law, because Governments should not be breaking the law; I am sure the Minister agrees. But two people said to me last night that, within a few weeks of this Bill receiving Royal Assent—if it does—judicial reviews will start flowing. That is a terrible thing to say at this stage of the debate, and I hope it does not happen.

As a matter of principle, whether the Government think that this Bill complies with international law or not, it would be good to hear the Minister tell us about this and particularly about Articles 21, 38 and 42 of UNCLOS, in which the British Ports Association is particularly interested. I look forward to her comments.

My Lords, the amendments in this group relate to the territorial scope of the Bill and the vessels to which this legislation applies. Seafarers across the board deserve proper compensation for their work and I welcome the opportunity to consider whether the Bill, in its present form, achieves this. To this end, I hope the Minister will clarify that all workers on the vessels listed in these amendments are already covered. When we landlubbers think of seafarers, we often picture those who directly control vessels, but the definition is incredibly wide and covers everyone from cleaners to the administrative staff on board. I hope the Minister comments on the Government’s approach to supporting better wages and conditions for all seafarers.

Amendment 5 in my name is a probing amendment and it is key. It seeks information from the Minister on the state of negotiations, particularly those with France and the Republic of Ireland, on the corridor concept. This Bill, which we support, is one small step towards addressing the issue of seafarers’ terms and conditions.

I respect what my noble friend Lord Berkeley just said but, at the end of the day, if these international conventions have achieved utopia for seamen, I would hate to see hell. Wages seem incredibly, unacceptably low in an international world. Perhaps that is not so true in the wider world, but they seem unacceptably low in Europe. I hope the Government put all possible energy into negotiations with other European states to establish these corridors. It sets a precedent for the worldwide consideration that seafarers deserve a better deal than they are getting.

Amendment 23 would prevent the refusal of harbour access where doing so would break international maritime law. In any situation in which harbour access is refused, in framing the appropriate guidance, a Government must have considered the safety and environmental implications of refusal. It moves to the general view that we must work on the international agreements in parallel and seek to ensure, as does the amendment in the name of the noble Baroness, Lady Scott, that the various conventions not only exist but are universally and even-handedly implemented.

My Lords, I am grateful for the careful consideration of this Bill by all noble Lords. I reiterate what I have already said to noble Lords in private sessions: the Government are listening to concerns and will endeavour to answer in full all the questions raised by your Lordships today. I suspect that some will certainly be in writing, and I may well try to develop on some on some of the things I am able to say today so that we have full information as we head towards Report.

I sense that there are slightly differing views around the Committee, where some people want this to go much further and others are very cautious. Of course, both of those views potentially risk the Bill itself. I therefore just want to make sure that everybody has as much information as I can get out, particularly around the Government’s intent with the Bill and why it is drafted as it is. Noble Lords will have heard the previous Secretary of State speak about the nine-point plan many times, which was in response to the P&O decision that was made back in March. We recognise that this Bill is narrow in scope and potentially also in effect, as we cannot legislate outside UK territorial waters. It is none the less an important part of the nine-point plan that this sits hand in glove with the other work that we are doing to improve the welfare of seafarers to make sure that their terms and conditions are as good as they can be.

The amendments in this first group cover territorial scope and international law and I will try to address them in turn. Amendment 1 from the noble Lord, Lord Hendy, seeks to probe the application of the Bill in various circumstances. I completely accept the way that he introduced this and that he had intended some separate amendments that were deemed to be out of scope. It is worth making sure that the different groups of seafarers who he identified in his amendment are indeed covered. To look at it in more detail, on proposed new subsection (1A)(a), seafarers working or ordinarily working in the UK, including UK internal or territorial waters if the vessel is not exercising a right to innocent passage, are already entitled to the national minimum wage. That stems from Section 1(2)(b) of the National Minimum Wage Act 1998 and Article 2 of the National Minimum Wage (Offshore Employment) Order 1999. That change is therefore unnecessary, and I think the noble Lord would agree.

On proposed new subsection (1A)(b), voyages to or from the Crown dependencies would already be in scope of this Bill under the service definition in Clause 1. Of course, I recognise at this point that the UK Government can legislate only in the waters of the UK; therefore, it would be a similar circumstance as one would have, for example, with a journey to France.

On proposed new subsection (1A)(c), under Article 2 of the National Minimum Wage (Offshore Employment) Order 1999, a worker working or ordinarily working in connection with the exploration of the seabed or subsoil or the exploitation of natural resources in the UK sector of the continental shelf is treated as if they are working, or ordinarily work, in the UK. Those workers are therefore already entitled to the national minimum wage, so, again subject to the caveat about UK territorial waters, those workers are covered—ditto those who are working on services to offshore renewable energy installations. Again, I note that some of those may be far away from UK territorial waters. I hope that that reassures the noble Lord.

I note the point raised by the noble Lord, Lord Tunnicliffe, that it is not only the people who are in control of the ship. When I think about this, I do not think about the people in control of the ship but of all the other people on board, who do the really important day-to-day tasks that are sometimes forgotten. I accept that this is about making sure that we cover everybody on board, and I am satisfied that we do.

The important Amendment 5, in the name of the noble Lord, Lord Tunnicliffe, is probing about how we are getting on with the minimum wage equivalent corridors. I am not entirely sure that he necessarily seeks to remove those declarations, because it is the case that any national minimum wage equivalent corridor would have a memorandum of understanding—a bilateral agreement between two nations—but it would need to be put into each nation’s domestic legislation to ensure that it could be enforced.

To update the Committee on the national minimum wage corridors, they were, as I noted earlier, introduced by the previous Secretary of State and we are continuing that policy. We are liaising with our near European neighbours to explore these corridors; conversations are progressing. Obviously, I am not able to give a running commentary on how they are going, but we are pursuing that, and as soon as further information becomes available, we will update noble Lords. Nevertheless, in the absence of those corridors, which is currently the case, we are progressing the legislation for your Lordships today. To clarify: we are working with the Governments of Denmark, Belgium, France, Germany, Ireland, Norway, the Netherlands and Spain.

Amendment 15 would expand the territorial application of the Bill. Again, we are bumping up against the fact that we cannot legislate outside our territorial waters. That is why we would seek to reject that change; it is not appropriate for any Government to define wage rates beyond their waters.

Amendment 16, in the name of the noble Lord, Lord Hendy, probes whether a loophole might exist which would prevent the provision of information to ports. It is well spotted and a good challenge. I took it away to make sure that our view was that it would not. The information that we would request from operators under the Bill’s provision is not likely to encompass material subject to data protection laws. The material would be in aggregate; it would not be detailed enough to fall under most data protection laws, so we do not believe that that is a significant risk. It is unlikely that an operator would seek to reflag specifically for this purpose. But the UK Government would of course not require anybody to breach the laws of another jurisdiction, so if the noble Lord has any further evidence as to what sort of information might break data protection laws, I would be very happy to see it. At the moment, we believe that we are well within the bounds of what normal and usual information would be.

Amendment 23 seeks to prevent the refusal of harbour access. This is incredibly important. The Government agree that we must not give ports the right to refuse access pursuant to the UK’s international obligations. To this end, Clause 9(3) provides for circumstances in which a harbour authority may not refuse access and replicates the conditions under which the United Kingdom permits otherwise prohibited ships from entering United Kingdom ports under the United Kingdom’s port state control regulations. We are satisfied that the circumstances provided for comply with our international obligations. This being so, there is no need to add a further broad condition necessitating interpretation of our international obligations, because we believe that we already meet them.

I turn finally on this group to Amendment 38. I am grateful to all noble Lords for their contributions and note the comments from the noble Lord, Lord Berkeley, who was at a maritime party last night, which sounds great fun. He clearly had some interesting conversations. If people want to share their views and thoughts on this matter with us, we are very much open to receiving them, because this Government do not consider that the Bill proposals interfere with the rights and obligations under international law, in particular the United Nations Convention on the Law of the Sea, or UNCLOS. Therefore, we do not deem it necessary to state as much in the Bill.

Measures taken under the Bill will not interfere with the right of innocent passage so as to breach the obligation reflected in Article 24(1) of UNCLOS. The Bill requirements will apply and be enforced only as a condition of entry to UK ports in which the UK has jurisdiction over visiting ships and where the right of innocent passage does not apply. This harks back to why I am particularly cautious about expanding its scope and looking for ways to make it less well-defined. We have got to a spot in which we think we are meeting our international obligations, so I am cautious not to get us into a situation where that might not be the case. As vessels visiting a port are not then in innocent passage and not merely passing through the territorial sea, the associated restrictions on the exercise of jurisdiction, as set out in UNCLOS, do not apply. That is an important statement, and I would be grateful if noble Lords would reflect on it afterwards and potentially seek the advice of others on why it may not be the case.

The measures that may be taken under the Bill can be applied only to a narrow subset of operations with a close connection to the UK—services on a regular schedule, determined by clear, objective criteria, such as those for the carriage of persons or goods by ship between a place outside the UK and a place in the UK, which will have entered the harbour on at least 120 occasions in the previous year. This goes back to the link to the UK being critical in the framing of the Bill.

The noble Baroness, Lady Scott, read out something from the Explanatory Memorandum that referred to risk. Obviously, as it is in the Explanatory Memorandum, the Government continue to recognise that risk. However, we are fully on board with our international agreements; we play a leading role when it comes to maritime on the world stage. We will continue to do so and to seek better conditions for maritime workers, but we must also respect that shipping is an international industry, which is why the Bill is scoped as it is.

I am grateful for all the contributions to this short debate. As I mentioned, we will study Hansard and make sure that we return with further information, as needed.

My Lords, I am grateful to all noble Lords who contributed to the debate and to the noble Baroness for her response, in particular her reassurance that all the seafarers mentioned in my Amendment 1 are covered by the provisions of the Bill. The minimum wage corridors are clearly important and I am grateful to the noble Baroness for her update on the continuing negotiations. Is she able to say whether embedding minimum wage corridors in the legislation of bilateral states is under contemplation? She did not mention one matter: the progress towards collective agreements between ship operators and trade unions.

I hear what the noble Baroness said about legislating outside our territorial waters, but I wonder whether the department has considered other ways in which seafarers might be protected. It may be the case that operators in the North Sea will deliberately anchor hotel vessels and so on outside territorial waters to avoid the obligations of the Bill. I am also grateful to the noble Baroness for saying that she or the department will look again at the problem—if there is one—of operators with ships flagged in other states with less strict or stricter data protection laws saying, when they come to harbours in this country, “I cannot tell you what my seafarers’ wages are, because I am prohibited by the data protection laws of the state in which the vessel is flagged”.

We heard what the noble Baroness said on international law and international agreements, which everybody in the Room considers should be upheld in every way. There may be more discussion on this subject later today. I beg to withdraw my amendment.

Amendment 1 withdrawn.

Amendment 2

Moved by

2: Clause 1, page 1, line 8, at end insert—

“(c) a service performed by a ship which is not required to have a national minimum wage equivalence declaration.”Member’s explanatory statement

This amendment seeks to clarify the scope of the bill from the outset.

My Lords, the amendments in this group all broadly relate to the question of the ships, or the services, that are within the Bill’s scope. I hope the Minister will acknowledge that there is a bit of confusion around. I spent some of the summer talking to various stakeholders—sadly, not at parties. Through the conversations I had, it became clear that there are concerns about confusion and practicality.

Clause 3 will empower harbour authorities to request that operators of services within the Bill’s scope provide the declaration that they are paying seafarers the national minimum wage. The Bill also says that they cannot do the reverse: they cannot make requests if the vessel is not in scope. So far, so good, but the British Ports Association, which, after all, will be doing this, is arguing that in practice it might actually be quite difficult for a statutory harbour authority to determine with certainty whether a service will call more than 120 times a year. It is not difficult to imagine ways in which operators could perfectly legitimately alter their schedules to take them outside the scope. A harbour authority that is directed to make such a request but is not actually sure, or in a position to be sure, that the vessel is in fact in scope could be placed in an extremely difficult position and could be subject to legal challenge. My Amendment 27 is designed to deal with that: to give the Government a chance to reassure harbour authorities that they can stay on the right side of the law.

The situation is further complicated by some uncertainty that has arisen as to whether the Bill applies to vessels or to services. If it is services—from the Minister’s use of the word “services” on the previous group of amendments, I suspect it is—how does one define a service? Is it something that runs to a published timetable? How will the Bill’s provisions work where there is a regular service that occasionally makes a call to another port? How exactly is a harbour authority to establish with some certainty exactly what the position is?

The Chamber of Shipping is arguing that using “services” and not “ships” would bring into scope vessels with minimal ties to the UK beyond calling in to UK ports. I know that that is not the Government’s intention. The Chamber of Shipping’s fear is that, in a highly competitive industry, operators will simply reduce their calls to the UK, which it argues could have implications for supply chain costs and the competitiveness of UK ports. It would be very helpful if the Minister could clarify this services/vessels issue and talk about the assessment that has been made of the potential implications described by the Chamber of Shipping. Those are covered by my Amendments 2 and 6.

Finally, my Amendment 37 relates to the report of the Delegated Powers and Regulatory Reform Committee, which has looked at Clause 3, particularly Clause 3(4), which would give the Secretary of State power to make regulations that set out the form of the declarations and the manner in which they are provided. The committee had no problem with that. It was not happy with the provision by negative instrument in which the Secretary of State could restrict the circumstances in which a harbour authority could exercise its power. It says in its report:

“We consider that the Government have failed to justify the inclusion of this power in the Bill and that, even if its inclusion could be justified”,

it merits “affirmative procedure scrutiny”. It has said that because, in effect, this power could almost negate the whole Bill if that is what the Secretary of State so chose, which seems a very odd power to give under negative powers. I beg to move.

My Lords, I will speak to Amendments 7 and 9 in my name, which cover the same ground that the noble Baroness, Lady Scott, outlined so well. I still get confused—I know that some associations are also confused—as to whether it is one ferry or a service. As the noble Baroness said, how do you define a service? For example, does it matter where the ship is registered? I do not think it does, but it would be interesting to hear the Minister’s response. Where the contract of employment with the seafarers is concerned, does that make any difference?

I suppose my purpose in putting down the amendment to change the number of visits to a harbour—or the harbour—from 120 to 50 was also to probe whether it matters which harbour it is and what a harbour is. I know that this Bill is designed to support ferry workers, which of course I support, but a lot of other ships go around the coast. Coasters, for one, move china clay, cement, aggregates and other things. I am a former member of the harbour board of the port of Fowey in Cornwall. These ships go backwards and forwards; their crew are probably employed in UK contracts but they might not be. Are they included? If not, should they be?

Ditto with cruise ships. We read about many employees on cruise ships not being well paid. Most cruise ships probably move internationally; they certainly do not come to a particular port even 50 times a year. On the other hand, some smaller ones go around more often. Why should those employees not be protected in the same way as ferry operators? I asked one or two people why they thought it was so important to protect ferry operators. The answer was, “Well, they’re a particular type of crew who usually go home after their shift”. That is an odd definition. I am sure that it is not true when you look at the services to Spain and up to Scandinavia; they certainly do not go home every night. It is important that the Minister sets out the limits of this clause, why it is that way and whether it relates to the ships or the crews.

In relation to ships going across the channel—P&O might have three or four going across; I am sure that the crew get moved from ship to ship—is it a matter of making sure that the ship or the captain produces the documents? How is it recorded that crews who have gone from one ship one week on to another ship another week are covered by this Bill? It is a pretty complicated solution, but it is terribly important for people who may be on one side of the fence or the other. I am sure the Minister can give me a wonderful answer on this; if not, she can write to me.

My Lords, I will speak to Amendment 8, which is simply an elaboration of the points that my noble friend Lord Berkeley has already made. The proposal here is to delete “the harbour” and insert “a harbour”. What lies behind that is catching those vessels that might do what I understand is referred to as harbour-hopping, where, in order to decrease the frequency with which they are recorded in any particular port, they go to a nearby port every so often to reduce the number.

My second point, which my noble friend Lord Berkeley and I have addressed, and my noble friend Lord Tunnicliffe has a slight variant on, is whether 120 occasions a year is far too high. It will exclude a lot of vessels that do weekly ferrying, which we would want to catch. If I may speak for my noble friend Lord Berkeley as well as myself, the reason we think it should be 50 is that, quite often, a ship may be serviced for a couple of weeks a year and it may not therefore achieve the full 52 occasions, even if it is running a weekly service.

My Lords, I want to clarify what the debate has thrown up so far. I fear that the Government are guilty of mission creep on this, which may have occurred with the very best of intentions, but there is certainly confusion as a result. As outlined by the noble Lord, Lord Berkeley, a move from 120 calls to 52 would inadvertently bring in a much broader range of shipping.

The noble Lord, Lord Hendy, just touched on another issue that needs clarity, and I have three specific questions that it is important that the Minister answers clearly. If she cannot do that at this moment, we would all appreciate correspondence on this. First, on the move from “ships” to “services”, can we have absolute clarity on what a service is? How would it be covered if, for example, there is a refitting such as that just referred to by the noble Lord, Lord Hendy? I anticipate all sorts of ways in which companies will seek to avoid inclusion through the way they configure services, so we need clarity on the definition of “services”.

Secondly, in summing up the first group of amendments, the Minister again used the phrase

“close ties to the UK”.

This is at the core of the whole thing. Can we have a definition that will stand up in a court of law of exactly what the Government mean by that?

Thirdly, I am sure we would all be grateful if the Minister could address the concerns of the DPRRC, to which my noble friend Lady Scott referred.

My Lords, I apologise; I have only just arrived, because I was detained elsewhere. I want to pick up on the point of the noble Lord, Lord Berkeley, about ferries. Ferries have been referred to, so maybe the Minister can clarify this later. I need to read the Bill again, line by line, but nowhere does it refer to “ferries”. It refers to “ships”. In the current energy crisis, for example, you may have a service of tankers of diesel fuel coming in with the required regularity. They might be caught by the Bill, because of the frequency with which they call on the UK as part of their service, but they are certainly not ferries. The Minister will confirm this later, but I do not believe we should use the language of “ferries”, when we are in fact talking about ships.

My Lords, this is a useful set of amendments to clarify some of the points. I hope that the Minister will either be able to provide that clarification or, if she wants to worry about the syntax of her reply, supply it in a careful letter.

I have two amendments in this group. Amendment 10 seeks to replace 120 with 52 in Clause 3(3), so I sit alongside my noble friend Lord Berkeley and the noble Baroness, Lady Scott. My noble friend made a persuasive case for 50, as opposed to 52, and I will need considerable persuasion not to press this point on Report, unless the Minister is able to create a very powerful argument that there would be unintended consequences from that.

Amendment 36 seeks, in essence, to stop the effects of the Bill being, in a sense, destroyed by repeated regulations. Surely the Bill’s minimum requirements are in the primary legislation, and the adjustments to them should really be only upwards, not reducing the requirements.

I also join the noble Baroness, Lady Scott, in her concern about the DPRRC’s concerns. In my day, if it produced a recommendation, we used to shake in our boots and recognise that some deal or other had to be made with it because of the authority it carried. Once again, I hope the Government will recognise the authority and wisdom of that committee and accede to its suggestions.

My Lords, I am again grateful to noble Lords for sharing their thoughts on this group of amendments. The thrust of the amendments in this group is very much around probing the scope of the Bill in terms of the services and ships to which it applies. As the noble Lord, Lord Tunnicliffe, noted, I will write. I do not think he was implying that my oral replies are not carefully thought through—maybe he was—but the letter will be perfect. Noble Lords should await further information in the letter, but I will try to cover as many points as I can.

I look at this borderline, grey-area conversation that noble Lords are having, and at the back of my mind I keep thinking, “What sort of an operator are you if you will go to a different port in order to drop your frequency down to be just under or over any particular target so that you don’t have to pay your seafarers the national minimum wage equivalent in UK waters?”

Well, because of that we will come on to why it is so important that the Bill refers to services rather than ships; otherwise, quite frankly, you could do that, and all sorts of very interesting things. I will try to go through some of the amendments and think carefully about how we make sure that we reassure operators and trade associations about what a service is. Indeed, there is a question about what a harbour is. The good thing is that we have a definition of a harbour, in the Harbours Act 1964 and the Harbours Act (Northern Ireland) 1970. That is what a harbour is, so I will put that one to bed.

I turn to Amendment 2 in the name of the noble Baroness, Lady Scott of Needham Market. We are satisfied that the Bill as drafted makes implicit that the scope of the Bill is limited to a particular subset of services. The Bill

“applies to a service for the carriage of persons or goods by ship, with or without vehicles, between a place outside the United Kingdom and a place in the United Kingdom.”

Clause 3(3) confirms that a declaration is not to be requested

“unless it appears to the authority that ships providing the service will … have entered the harbour on at least 120 occasions in the year.”

In order to consider whether a national minimum wage equivalent declaration is required, harbour authorities need to assess whether it appears to them that any service in scope of the Bill—one that falls within Clause 1—will meet the frequency requirement. Of course, after a period of time, one will know whether there was a very big ship in one’s harbour 120 times per years because that is beyond doubt. Therefore, the Bill applies to all services in scope of Clause 1. However, not all services in scope are required to provide a declaration, due to the operation of the frequency requirement in Clause 3(3). I think that is quite clear. The amendment from the noble Baroness simply says that the Bill does not apply to a service to which the Bill does not apply. I know it is a probing amendment, just trying to get us focused on what we think “services” actually are.

Turning to Amendment 6, the Government’s view is that adopting this position would radically change the way the Bill operates. This amendment does not clarify the scope of vessels to which the Bill applies; rather, it fundamentally changes it. The Bill is concerned with the service and not individual ships. The ship is simply a tool for carrying goods or passengers on a particular service. A service, as noble Lords will all know, may be made up of one or more ships, particularly on the short straits, where there might be a number of ships plying the same service every single day. Really, the service has to be run by the same operator and on the same route. Obviously, by “route” one means from one particular harbour to another particular harbour: it is not a random harbour.

The seafarers in scope of the legislation are those working on the services and obviously, as noted, we have the frequency requirement of 120 times a year. Seafarers can, of course, move ships, so they could be on vessel A on one day and on vessel B on another. I slightly dispute that being able to provide a national minimum wage equivalent declaration in those circumstances would be particularly difficult. I have done quite a lot of HR processing in my time, and I think it would be perfectly feasible to make sure that one knows where one’s staff are and that they are being paid the right rate when they are in UK territorial waters. So, we are content that we stay with “services”. Of course, when we had the consultation, we considered whether “ships” was a more appropriate way forward, and it did not work. We do not want something to drop out of being covered because of some sort of refitting or maintenance, so the fact we refer to “services” is really important.

The noble Lord, Lord Berkeley, looks as though he wants to ask a question.

I just want to comment on the Minister’s last statement, which was very helpful. I think she needs to recognise that the maritime industry has probably got very good PR, but some of what goes on on the ships is highly dubious. I have been honorary president of the United Kingdom Maritime Pilots’ Association for about 25 years—heaven knows why so long, it is very nice of them—and I hear stories about what pilots find when they get on the ships. It is not just that the pilot ladder might break, which sadly does happen occasionally, but that there is a language problem within the ships, or that the master sometimes cannot control the crew and that they will do anything to save tuppence ha’penny. So, I appreciate what she is saying, and in a normal business, she is probably right, but in this sector, it may not be the ferry or the short-haul freight services, but we have to recognise that every penny seems to count and usually it is very bad for some of the crew.

Of course, the noble Lord has much more experience aboard such vessels than me, and I will take his word about some of the conditions on ships. Indeed, we heard during Covid how what happened on ships was very distressing for some people and extremely disappointing. I take all of that on board but I go back to: I cannot fix the entire world today but what I can fix is what is before the Committee in terms of the scope of this Bill.

The noble Lord, Lord Berkeley, mentioned specific types of services, such as coasters—which apparently take English clay around the coast, et cetera—and cruise ships. This is why it is so important to do this based on the service and its frequency rather than what it is actually providing. Coasters might be caught but if they are doing only domestic work they will be caught anyway because they are in UK waters and they are caught if it is port to port within the UK, but if they are doing a run frequently—say three times a week across to France—they will be caught, and I do not see why they should not be. I have no problem with that. Let us catch them. The people working on such vessels most likely have close ties to the UK and those vessels clearly have close ties to the UK because they dock here so frequently, so it does not matter where the ship is flagged or where the employment contract is. It is the fact that it spends a lot of its time in UK waters and enters UK ports on a very frequent basis. This frequency is important.

I note that two noble Lords have tabled amendments to go down to 52 occasions from 120. We looked at this very carefully during the consultation. My current view—and of course we are going to go away and consider this—is that 52 would catch too many vessels that we did not intend to catch and would be overreach in terms of the current settlement with the international shipping community. Again, we might be entering the sort of territory where the unintended consequences would be quite significant. I go back to the fact that this is a narrow Bill, it has a narrow scope, it does a very specific thing, and I would like it to do that specific thing on services which dock here 120 times a year.

Amendments 7 and 8 refer to this issue of “a harbour”, “the harbour” or “harbours”. We have established what “a harbour” is—so that is done—and we are very clear that the service is to a particular harbour. It is not to “a harbour” within the UK because Calais-Dover is not the same as a service running from Calais to any other harbour. The route is specified. It is the same route, not using the same ships, high frequency to a specific harbour. We think that is quite clear.

The noble Baroness, Lady Randerson, asked for a definition of “close ties”. I do not think I will ever be able to get to that but we have been able to define what a “service” is. Those services have close ties. It is descriptive language to define what these services are, but it is merely that. It is not something that will be legally defined and taken forward.

The Government are very willing to define what these services are and, by implication, those have close ties to the UK. I can probably come up with lots of other clever descriptors to define these sorts of services. A large container ship stopping at the UK once a month does not have close ties to the UK; it is an international container ship, shipping around wheat or whatever it might be shipping. We can think of some other language, but once we have nailed what the service is, where it goes, how frequently it goes and which ships it utilises, then we have defined it. That is it, we are done. That is the definition that works legally because it has hard boundaries and can be fairly well defined, I think.

I absolutely appreciate that Amendment 27 is a probing amendment. We intend to provide guidance to harbour authorities, and that guidance will be consulted on. We can define what the service is but we need to help harbour authorities to fully understand those definitions. We will consult with the industry to make sure that there is absolute clarity. I would not say that the guidance should be put on a statutory footing; that is not entirely necessary in this particular case.

I turn finally to Amendment 37. I have of course seen the DPRRC report. It was published only a few days ago so I beg your Lordships’ leave just to say that, at this stage, we are considering what is in it. We are taking it very seriously; I reassure the noble Lord, Lord Tunnicliffe, that we take all DPRRC reports very seriously. We will publish our response to it before Report so noble Lords will have the opportunity to peruse that. I have no doubt that we will be able to have further conversations about that.

I absolutely shall cover Amendment 36. My apologies, I slightly went off-beam so I thought I had already covered it.

Regarding Amendment 36, the clause as drafted does not allow a Government to amend or reduce the overall extent of services in scope of the Bill. It provides only that regulations may make different provisions for different cases, including for different descriptions of service to which the Bill applies or non-qualifying seafarers. This power cannot be used to amend the Bill and is not intended to be used to alter the scope of the Bill. I slightly thought that I would need to come back to this particular issue to make sure that noble Lords are in agreement as to what we are trying to achieve here. I will give that further consideration.

I am grateful to noble Lords for their comments and to the Minister for hers. This set of amendments really comes down to the practicalities of statutory harbour authorities trying to manage this legislation, which, we have to recognise, is taking them into a completely new area of endeavour. They are comfortable with environmental and shipping things but we need to remember that this is new. Uncertainty at this stage about fundamentals, such as ships and services and what close ties are, is quite concerning. I hope that the Minister will ensure as a matter of urgency that the conversations that ought to take place with the harbour authorities will take place fairly soon so that we can clear up some of these issues and put them in a position where they feel a little more comfortable with what they are being asked to do.

With that, I beg leave to withdraw my amendment.

Amendment 2 withdrawn.

Clause 1 agreed.

Clause 2: Non-qualifying seafarers

Amendment 3

Moved by

3: Clause 2, page 1, line 18, after “of” insert “section 40 of”

My Lords, this group of amendments seeks to extend the protections given by the Bill. My noble friend Lord Berkeley will speak to the question of whether Clauses 4 and 9 should stand part of the Bill and my noble friend Lord Tunnicliffe will speak to Amendment 25, which seeks an impact assessment in relation to roster patterns, pensions and wages, and Amendment 26 on engagement with trade unions.

My amendments are Amendments 3, 13 and 14. I have now convinced myself that Amendment 3 is completely unnecessary. I was trying to ensure that the protection in Section 40 of the National Minimum Wage Act 1998, which deals with residency of seafarers, or lack of it, would still be a condition for engaging the Act where the seafarer was a regular visitor to UK ports but not resident in the UK. On reflection, it seems that it is not necessary to refer to Section 40 because Clause 2(c) specifically engages the National Minimum Wage Act as a whole, and therefore Section 40.

Amendment 13 relates to Clause 4. It seeks a specific inclusion of the prohibition in the National Minimum Wage Regulations that prevents deductions from pay of the costs of providing seafarers’ accommodation, food and water. In fact, those regulations have detailed provisions about how accommodation is to be taken into account. The proposition I put to the Minister is that these should be included in the national minimum wage equivalent that the Bill intends to confer on seafarers. She questioned whether ship operators would really bother treating seafarers’ wages in a way that sought to remove every penny available but that is in fact the reality. I am told by the RMT that there have been occasions when seafarers’ accommodation and food have been deducted from their pay. That is obviously a completely unacceptable practice that should be outlawed; this is the purpose of Amendment 13.

Amendment 14 is also to Clause 4. Clause 4(2) says:

“For the purposes of this Act, the national minimum wage equivalent is an hourly rate specified in regulations.”

Subsection (5) then says that

“a non-qualifying seafarer is for the purposes of this section remunerated at a rate equal to the national minimum wage equivalent only if their remuneration is in all the circumstances broadly equivalent”.

I would make it “at least” equal to the national minimum wage equivalent in order to preclude ship operators simply confining wages to the national minimum wage equivalent, although I accept that that will be the general practice. I beg to move.

My Lords, I speak briefly to oppose Clauses 4 and 9 standing part of the Bill. Again, this goes back to what I spoke about earlier in terms of the legality of this legislation. It comes from the International Chamber of Shipping, which says:

“The vessel declaration requirements envisaged in the Bill … contravene the international frameworks and principles governing seafarers’ remuneration, which confer jurisdiction to the flag State. Notwithstanding the fact that NMWe”—

national minimum wage—

“payments and declarations would be limited to work done while a ship is in UK waters / ports (to address ‘extraterritorial reach’ concerns), this would still amount to an excessive claim to prescriptive jurisdiction, contrary to the fundamental principle of flag State jurisdiction, i.e., that a vessel’s flag State has overall responsibility for the employment conditions aboard a vessel. UNCLOS Article 94 (Duties of the flag State), specifies that the flag State shall ‘exercise its jurisdiction and control in administrative, technical and social matters over ships flying its flag’. It would further be contrary to the universal norm that port States will not regulate the ‘internal affairs’ or ‘internal economy’ of visiting foreign vessels (a principle that includes employment conditions).”

This may seem a long way away from ships going between the UK and close waters, but it indicates that what vessels from further afield—which may or may not get tied up in this—will do may be something that the UK finds unpalatable. In other words, if they start doing this to show up the UK as not complying with the UNCLOS requirements, it could be difficult. Again, I would be grateful if the Minister could write to me on this; indeed, we may need a meeting with our legal experts to see how important this is and what can be done about it.

My Lords, we do not have any amendments in this group, but I take this opportunity simply to make the point that we share the concern of those noble Lords who do have amendments in this group. These are important issues that reflect the reasonable fear that employers could use tactics that circumvent the measures in the Bill.

One thing that has been speculated on is that seafarers could be paid at a lower rate when they are outside UK waters to compensate for the higher rate that they must be paid in UK waters. There are things about which the Government can do nothing, but it is really important that the things that can be got right are looked at carefully to ensure that they are absolutely on the nail. I point in particular to Amendment 26 in the name of the noble Lord, Lord Tunnicliffe, to emphasise the importance of monitoring the effectiveness of this legislation and engaging with the trade unions. P&O’s tactics—the audacity with which they were announced surprised everyone, I think—exposed the weakness of the current safeguards. However, if the Government attempt to plug the loophole but fail to do so effectively, I fear that P&O would not be alone and other owners would attempt to do something similar—perhaps not as blatantly as the way in which P&O did it, but it certainly could undermine legislation further if the Government’s efforts here are not fully effective.

My Lords, I will speak on the two amendments in my name in this group, but I commend the other amendments to the Minister’s study, because it is important to achieve clarity on some of these issues.

On Amendment 25, my original involvement with these sorts of issues was in an analogous industry—transport—where I was a shop steward and subsequently an industrial relations manager. In the crew situation, issues with roster patterns and pensions are every bit as important as wages. The way that rosters are handled in particular can have a serious impact on remuneration and a massive impact on quality of life. It is important that there is a proper impact report on these issues, ideally within 90 days.

This leads on to Amendment 26, because this and other issues would be much enhanced if we could develop a proper relationship with the trade unions. The importance of this from the point of view of the trade union movement is exemplified by an appeal—for want of a better term—to the International Labour Organization from the general secretary of Nautilus; the general secretary of the RMT, Mick Lynch; the general secretary of the TUC, Frances O’Grady; the acting general secretary of the European Transport Workers’ Federation; the general secretary of the International Transport Workers’ Federation; and the general secretary of the International Trade Union Confederation. I read those out to emphasise that this is a heavy coalition of the trade union movement. Their appeal is set out in a document that I hope the Minister has seen, which centres on what happened at P&O. It helps one to understand how broad detailing and managing the employment conditions of crew is and how important it is to get a hold of this to make sure that crews are properly looked after, both in their remuneration and conditions of work. I therefore commend Amendment 26 to the Minister.

My Lords, this third group of amendments is broadly concerned with the relationship of this Bill to the domestic national minimum wage. The noble Lord, Lord Hendy, has already decided that Amendment 3 is not necessary; I agree with him so, if noble Lords agree, I shall just move on.

Amendment 13, also in the name of the noble Lord, Lord Hendy, relates to the calculation of the national minimum wage equivalence and deductions. We have been clear that this will be covered by regulation and is not for the Bill. This also allows us a little more flexibility decades hence, should changes need to be made. Nevertheless, Section 2(5)(c) of the National Minimum Wage Act 1998 does not prohibit deductions from pay of costs for providing seafarers’ accommodation, food or water, but simply provides for regulations on the matter. We will very much be matching up.

Regulations under the Bill will need to be consistent with the provisions within the Maritime Labour Convention, or MLC, whereby requiring seafarers to meet the cost of food and water is expressly forbidden. We therefore do not need to amend the Bill to account for this. Perhaps the noble Lord might remind the RMT about that, if it feels that seafarers out there are being charged for those things. That is clearly and expressly forbidden.

Regarding deductions for accommodation, under the National Minimum Wage Regulations 2015, employers on domestic services are permitted to apply a reduction of up to £8.70 per day in respect of the provision of living accommodation, without that affecting the assessment of the worker’s pay for national minimum wage purposes. The MLC does not make express provision for reduction for accommodation, and shipping industry practice is not to charge seafarers for accommodation. It is not our intention that operators should be encouraged to make such reductions for accommodation to reduce their overall wage fee, so we will be considering this in the regulations in due course.

I am grateful to the noble Lord, Lord Hendy, for his well-explained Amendment 14, relating to the insertion of “at least” the minimum wage. Of course, it is not our intention that the wages should be limited to the national minimum wage. I commit to him that we will consider further whether the wording is clear, making sure that any improvements to the wording indicate that it is the national minimum wage or above, but recalling that we have this strange situation because of the way that the Bill works, with this thing called the national minimum wage equivalence. I do not want, by putting in “at least” the national minimum wage, to end up inadvertently dropping the link to equivalence. I understand where the noble Lord is coming from; we will look at it again and make sure that we are not constraining the ability of operators to pay fair wages and over the national minimum wage.

Amendment 25, in the name of the noble Lord, Lord Tunnicliffe, seeks to assess the impact of the Bill within 90 days. The anticipated impact of the Bill is already set out in the impact assessment. The Government’s view is that 90 days is far too early to see the real impacts of this legislation on these issues. More time will be needed to draw realistic conclusions on how the legislation has influenced employer behaviour and potentially influenced how services have adjusted, or not—one would hope. As a matter of course, we will conduct a post-implementation review of the Act, but I am afraid that I am not entirely sure that we would learn anything useful from a review within 90 days.

The noble Lord mentioned the impact on rostering. The Bill is necessarily narrow in scope; it is very much focused on the national minimum wage. I accept that there is potentially a link between rostering and pay, but we are not seeking to influence roster patterns. In due course, I am sure that the unions that he is in contact with will be able to provide evidence of changes to rostering, and the Government will be pleased to see it when it appears.

Amendment 26, also in the name of the noble Lord, Lord Tunnicliffe, would require the publication of an engagement strategy with trade unions. The Government have engaged extensively with trade unions on the Bill and the other elements of the nine-point plan, and we will continue to do so across all manner of issues impacting their members. The Government’s view is that it is beyond the scope of the Bill to legislate for union engagement, and indeed that might be counterproductive if any strategy is drawn too tightly or is not able to consider matters which could not be foreseen at the time when the strategy was drawn up.

We are very keen to continue to work with the unions. They provide a good source of evidence surrounding what is happening on wages, but legislating to publish a strategy may not be the best way to ensure that that engagement happens. I am sure that the noble Lord, Lord Tunnicliffe, will be on my case if he feels that we are not engaging properly with the unions. It is not in the Government’s interest not to do so: good consultation and engagement are critical to good law.

Lastly, I will address the comments from the noble Lord, Lord Berkeley, once again on international law. I do not have any further comments to make on international law as regards the way that he framed it, but of course I will look back through Hansard and will consider it in due course.

My Lords, I am grateful to all noble Lords who spoke in the debate, and to the noble Baroness for her explanations and her undertaking to look at certain matters again. I share my noble friend Lord Tunnicliffe’s regret that she could not go a little further with his Amendments 25 and 26, because we know from the experience with P&O Ferries that the collective agreements were torn up and the role of the trade unions abolished by that employer. Those amendments would have been quite useful to see what the impact would be on industrial relations and whether trade unions would be left with any role, whether over pensions, rostering or any other matter concerning terms and conditions. I beg leave to withdraw my amendment.

Amendment 3 withdrawn.

Clause 2 agreed.

Clause 3: Power to request declaration

Amendment 4

Moved by

4: Clause 3, page 2, line 4, leave out “may” and insert “must”

My Lords, these amendments also concern enforcement of and compliance with the Bill’s provisions. I have Amendments 4 and 11 but, to deal with this generally, Amendments 12 and 24 seek to impose much higher penalties—detention of a ship or a minimum £1 million fine. Amendments 31 to 34 deal with the Delegated Powers and Regulatory Reform Committee’s report. Amendments 20 to 22 and 31 deal with transferring tariffs from harbour authorities to the Secretary of State. Amendments 30, 35 and 39 depend on the removal of earlier clauses. Amendment 17 deals with naming the particular inspector.

My Amendment 4 is to Clause 3(1), which provides:

“Where ships providing a service to which this Act applies use the harbour of a harbour authority, the authority may request the operator … to provide a … declaration”.

I seek to change “may” to “must”, because it does not seem appropriate that the harbour should be left with any discretion at all. I appreciate that there are to be regulations later on that would give the Secretary of State power over harbour authorities, but one might have thought that it would not be unreasonable to demand in the Bill that harbour authorities demand an equivalence declaration.

My Amendment 11 is also to Clause 3, this time to Clause 3(5). As it stands, it requires that the operator must inform the harbour authority that there is an inconsistency with a declaration. I am seeking for the Maritime and Coastguard Agency likewise to be informed, because it will, essentially, be the regulator. I beg to move.

My Lords, this is a bit of a humdinger of a group, but a lot of the amendments are mine. Only four are of substance and the rest are consequential, so it is not as bad as it looks.

The first set of amendments I tabled concern the duty for setting a tariff of surcharges and moving it from the harbour authorities, as currently provided for, to the Secretary of State. I will explain why I think this is important. The practice of harbour authorities surcharging is well established. When I was on the board of Harwich Haven we created surcharges as a way of funding specific objectives, such as channel deepening. They are always done after a process of negotiation with the shipping companies that will pay them. I am not going to say that they are always popular but they are generally accepted. At the end of it all, harbour authorities always have to be mindful of the competitiveness of their own ports. That holds them in check.

The problem is that what is being called a surcharge is not; it is a fine. There is a danger of muddying the water by taking a tried and tested system of surcharging, which is generally positive, and then turning it into something negative when it is really a fine. As I and the BPA understand it, the rate of surcharge or fine will be set by the harbour authorities with reference to the national living wage deficit—in other words, the difference between the actual amount paid to seafarers and the amount they should have been paid under the national minimum wage. The problem with that is that it makes it impossible to do what one normally would with fines and produce a tariff in advance. In the interests of transparency, that is pretty much always the case but in this the authorities could almost make it up as they went along. This puts harbour authorities in quite a difficult position. It would be much better to have a system of fines—and call them fines—and a tariff set by the Secretary of State.

That is linked with my amendment on conflicts of interest. It is really to try to get a sense from the Government about how harbour authorities are to manage this conflict of interest, given that port ownership in this country is very much a mixed model: Holyhead is privately owned, Dover is an independent trust and Portsmouth is owned by the local authority, while it is of course quite common for shipping companies to seek ownership of a harbour or terminal. The Committee can see that there would then be a direct conflict of interest in setting the surcharge or fine, so I would be interested in hearing more from the Government about that.

Then I have a group of amendments about the consequences of a shipping company failing to meet its obligations or to pay. What I envisage is that harbours would still request the declarations and pass them on to the MCA for enforcement. The Government would require HMRC to have the power to investigate vessel operators, and the MCA could levy fines for non-payment. Importantly, in the event of repeated infringements the MCA would have the power to detain the vessel. It sounds much more draconian to detain a vessel—does it not?—rather than deny access, as proposed in the Bill. In fact it is standard practice by port state control. I would not say that the MCA does it all the time, because it rarely comes to that, but it has that power and it is a way of dealing with vessels which do not meet their legal obligations.

Denial of access to harbours is an extremely important matter. It would require a derogation from the open port duty on harbour authorities but, even then, it would be a very draconian step. The International Chamber of Shipping has cited the OECD’s Understanding on Common Shipping Principles, which refers to

“non-discriminatory treatment … in … the assignment of berths and facilities”

and so on. It goes on to promote the freedom for shipping companies to promote the interests of “maintaining a competitive environment”. Can the Minister say whether she has had specific legal advice on compliance with these OECD common principles?

Finally, I have amendments which return to the Delegated Powers and Regulatory Reform Committee’s report. In Clause 11(2), the Bill gives the Secretary of State power to give directions to the harbour authorities to exercise their powers, or not to do so, or to exercise them in a particular way. It is worth quoting from the report. The committee says

“it is capable of being exercised not only in individual cases but generally, so as to have legislative effect: it would allow the Secretary of State to direct all harbour authorities that they must not, for example, impose surcharges or indeed exercise any of their powers”.

The committee finds this “startling”, and goes on to say that this clause

“should be removed from the Bill”.

I would be very interested to hear what the noble Baroness says about that.

My Lords, I have a number of amendments in this group, including some clause stand part notices, but first I must say that I support everything the noble Baroness, Lady Scott, said about these issues. It will be very hard for ports to be responsible for setting tariffs when they are in competition with the ports next door—it does happen. The other thing that worries me about the ports being involved in this is that, again, it is not unknown for crew members to disappear off a ship or come on to a ship when they are in harbour. We do not need to go into detail, but it is all part of the competition, the regulation and the enforcement, which is terribly important.

On the question of conflicts of interest, again, the noble Baroness is absolutely right that a number of ports are owned by shipping lines, but of course there are also other parts of ports—different quays or wharves—that are owned by a shipping line or by a different company that owns the actual harbour. My question then is, who will be responsible: the competent harbour authority or someone else? Take the Port of London Authority, which is the authority for the whole port, and Thamesport, which now has two or possibly three massive quays there: will the PLA be responsible, and would it like to be seen to be going in, interfering and getting information? I do not know the answer, but there is a conflict there.

Retaining vessels, as the noble Baroness again said, is actually quite common. It happened to us in Fowey about five years ago when a Russian vessel came in. It sat there, the tide went out and I suppose it probably ran aground on the bottom. Somebody went by in a small boat and found a hole in the side of the ship, well below the waterline, into which a dirty rag had been stuffed. The harbour authority, with the MCA’s support, quite rightly prevented that ship leaving until it had blocked up the hole with something better than a rag. Okay, that is not something you see every day, but it does happen.

Things happen to affect the proper management of a port. Sometimes ports are in competition, but they do not want to get into the position where they act as policeman to their own possible part owners, possible customers or anything else. I am sure the MCA and HMRC, as necessary, ought to be involved, so I support the amendments that the noble Baroness has tabled as well as my own.

I shall finish, again, on the legal questions and the scope of the UK port state control powers, which is to do with the ability to levy surcharges—these, as the noble Baroness said, are like a fine—or issuing suspensions via the SHA. The advice from the international chamber is that the Government could potentially be exceeding the powers conferred on them under the Merchant Shipping (Port State Control) Regulations 2011, which implement the UK’s international obligations under the IMO’s Paris memorandum of understanding on port state control in UK law. It suggests that the enforcement measures contemplated in the Bill should be aligned with and adhere to title 5 of the ILO MLC convention, which relates to “compliance and enforcement”. That is the third of what might be called my legal challenges to the Minister, which I hope I have put correctly. I can send her the briefing if she would like it; I am sure it would be useful to have a discussion about this when she has had a chance to read it.

My Lords, the case for the Secretary of State being responsible for surcharges was very well made by the noble Baroness, Lady Scott, and the noble Lord, Lord Berkeley. To summarise, it sits much better with the Secretary of State. We have a situation in which the port authority is normally providing a service to the owner; the owner-operator is therefore a customer. To be, in effect, levying a fine on your customer is an unnatural state of affairs. In the interests of transparency and consistency, we should have one entity in the land deciding these things. They can vary from port to port and there may be special circumstances, but it is desirable to have one authority making the surcharge across the land.

My Lords, I start by thanking the noble Lords, Lord Berkeley and Lord Mountevans, for joining us on some of these amendments. I will briefly underline some of the points that my noble friend and those noble Lords made.

The complexity of expecting ports to do what is essentially the Government’s job for them will undermine the effectiveness of this legislation. Think about the use of the term “surcharge”. You pay a surcharge when you use a service voluntarily; it has no implication of illegality. If, however, a company finds itself paying a surcharge according to the rubric of this Bill when it becomes legislation, it will have broken the law. In other words, it is paying a surcharge as a fine—and a fine should be called a fine. I urge the Minister to look again at the phraseology here. Let us be clear: if companies are going to be fined, let us call it a fine.

The other issue is the complexity of expecting ports to deny access to the harbour. The international law on denying access to a harbour is complex and it would be difficult for them to do so. They would have to be absolutely sure that there is no question of danger to life. As a result, they will err on the side of caution and it will not happen. As both the noble Lord, Lord Berkeley, and my noble friend Lady Scott said, detaining ships is a normal course of events. It is not done frequently but it is done, and for safety reasons as well. I urge the Government to have the courage of their convictions and give these powers to the Secretary of State, because they are much more appropriately those of the Secretary of State.

It is not as if the Government do not want to be involved, because Clause 11 gives them wide-ranging powers of direction. It essentially gives them control, so the Government want that control behind the scenes but do not have the courage to put their name on the notices. That is a strange approach, so I urge them to rethink the way this is to be done. The impact would be that well-meaning and very important legislation could be undermined. At the same time, it would put our ports in a difficult position, make their relationship with ship owners more complex and create for them, as other noble Lords said, a conflict of interest.

My Lords, I have a couple of amendments in this group. The first is Amendment 12, which would create a minimum fine of £1 million. Whether that is the right figure, I am not sure, but the real concern is about the size of the owners; I believe that P&O’s owners have made $721 million in the past six months. There is a real risk that, if businesses of this size take an almost doctrinal opposition to the measure—the P&O debacle showed such a doctrinal opposition to reasonable conditions on board ships—a fine that is not substantial becomes just a cost of business. That would be regrettable; I am sure that it is not the Government’s intention but I would value some feedback from the Minister. How does one assure oneself that the fines are sufficiently large to impinge on the decision-making of these companies? There is a concern that good companies do the right thing anyway. The trouble is that we have a very real example in the recent past of one of these companies not doing the right thing; that is what provoked this legislation.

The second area concerns naming the inspector or inspectors. I tabled my amendment here to draw out how the world will know that this is happening. Organisations that have either a principal inspector or someone like that as a named individual are so much clearer as to who will be held to account for appropriate levels of activity. As a minimum, I hope that the Minister will be able to give me a feel for how quickly inspectors will be appointed and how many of them there will be, as well as assure us that there is adequate inspection capability. We know that this whole issue of minimum wage enforcement is pretty difficult in a land situation; at sea, it will be much more difficult to get the details to know whether an offence or the wrong charge has been committed.

With that, I come to the amendments in the name of the noble Baroness, Lady Scott, regarding the Secretary of State having the authority to determine the tariff, which will really be a fine. I think that harbour authorities are about harbours. I can see why they perhaps must be drawn in at one level but when it comes to becoming a policeman, in essence, that is what the state should be doing. I agree with the general thrust that this should be the Secretary of State’s responsibility.

Finally, I hope that the Government will give careful consideration to the amendments addressing the DPRRC’s concerns.

My Lords, this fourth and final group of amendments is concerned broadly with incentives, enforcement and compliance. There is a wide range of amendments herein. It has been helpful to have this discussion today.

I will start with Amendment 4, with which the noble Lord, Lord Hendy, seeks to make requesting a national minimum wage equivalent declaration a duty rather than a power that can be used with some discretion. The payment of national minimum wage equivalent would be a condition of port entry and so should be a matter for the harbour authority to decide. Furthermore, by making this a “may” rather than a “must”, we are allowing for flexibility in circumstances where there might be overlapping harbour authorities, for example where a vessel transits through one harbour authority’s area of jurisdiction to call at a port within another harbour authority area of jurisdiction. There may be other circumstances that noble Lords can think of where it is not necessary that this declaration is shared every single time. It should be noted that the Bill provides the Secretary of State with the power to direct harbour authorities to request a declaration, so there are necessary safeguards against harbour authorities not discharging this function properly.

I am grateful to the noble Lord, Lord Hendy, for Amendment 11, which would require operators to inform the Maritime and Coastguard Agency—the MCA—if a service is operating inconsistently with the NMWE declaration. The MCA’s role is to investigate inconsistencies between the declaration and the actual rates of pay. We had considered that, given the operator’s relationship with the harbour authority, the information of a change in circumstance would be better passing through it. However, I take note of this amendment, and we will consider with the MCA what information would be useful to it in fulfilling the enforcement role it would have.

Amendment 12 in the name of the noble Lord, Lord Tunnicliffe, seeks to specify a minimum fine of £1 million. There are two issues worth drawing out on this. The first is that there is limited legal precedent for specifying a minimum fine in legislation and it would not be consistent with the sentencing guidelines for criminal fines. I also note that the breaches could be of a variety of types, including relatively minor matters for which a very significant fine would be disproportionate.

The Government’s position is that it is far better to allow a court to determine the appropriate fine according to the standard scale applicable in each jurisdiction, if indeed the matter came to that point. Fundamentally, incentives to pay an equivalent to the national minimum wage are based on surcharges and, ultimately, the possibility of suspension of service rather than court proceedings. Any suspension of service, for example, would have far-reaching consequences for an operator and should therefore act as a significant deterrent. It is worth noting that there are different sentencing guidelines in Scotland and Northern Ireland so introducing a minimum fine in England and Wales would be inconsistent with other parts of the UK.

I understand a bit better than I did previously the thinking behind Amendment 17 in the name of the noble Lord, Lord Tunnicliffe. We will take it away and consider it. I understand the need for transparency so I undertake to set out a little further in writing the MCA’s plans both to carry out its enforcement role and to make sure that officers are properly recruited and trained and have the resources. Of course, the MCA carries out inspection functions all the time, but I will get greater clarity as to how it proposes to do that and also ensure that we have the right level of transparency such that people can see that the MCA has had to take action—indeed, that is what happens.

Amendments 18 to 22 and 31, from the noble Baroness, Lady Scott, relate to the role of the ports in the compliance process, specifically the proposed surcharge for non-compliance. I think noble Lords will understand where the Government are coming from on this. I appreciate the contribution from the noble Baroness, Lady Randerson, about the terminology “surcharge” and what that may mean. We envisage that a schedule of rates for the surcharge—we will call it that—will be set by the harbour authority but with reference, as noble Lords have noted, to the difference in what they should have been paying had they been paying the national minimum wage equivalent in the first place.

However, it will not be an exact calculation. We will of course set out in regulation what the calculation, or indeed the bandings, might look like. To my mind, there is probably still a bit of flexibility around how we ensure that this does not lead to a loss of competitive advantage by any particular harbour authority. I understand that we do not want a race to the bottom in terms of calculating a surcharge—that would be nuts. It would go against what we are trying to achieve in the Bill. We will take that away and potentially give further reassurance about how we envisage the calculations will be set out in regulations. We need to maintain the correct balance, such that operators have the correct and appropriate surcharge levied against them versus putting everything in the laps of the harbour authorities so that they basically end up looking like the bad guys, which is not at all our intention. We will probably come back to that in writing.

Now I come to the big one: the clause stand part notices and Amendments 30, 35 and 39. Obviously many noble Lords have an interest in this group. These amendments would fundamentally change the entire compliance mechanism of the Bill. The Government’s proposed mechanism has been carefully designed; we believe that it is a proportionate and appropriate balance of roles between the ports, which will fulfil an essentially administrative role of ensuring that access to ports is conditional on payment of the equivalent to national minimum wage, and the MCA, which will be the body responsible for enforcement and prosecutions. The whole mechanism of the Bill relies on the national minimum wage declarations being a condition of access to ports.

It is for harbour authorities to set surcharges—subject to the regulations—and deny access in order to establish the condition of access connection. If the surcharge and refusal of access provisions were to be replaced with inspections and detentions only, the connection to the port would be lost. This is important, because vessels visiting a port are not in innocent passage. This means that associated restrictions on the exercise of jurisdiction, as set out in UNCLOS, do not apply. The Bill requirements will therefore apply only where the UK has jurisdiction over visiting ships and where the right of innocent passage does not apply. This would not be the case if the connection to the port is lost, as these amendments propose.

This role is not beyond the realms of harbour authorities’ capabilities, as they administer charges across many other issues. Beyond this, harbour authorities will not have to play a very significant enforcement role at all. The MCA will be the government agency responsible for detailed inspections, investigations and prosecutions, on behalf of the Secretary of State—in Scotland, that power would lie with the Lord Advocate. The harbour authorities will not be responsible for checking whether national minimum wage equivalent is actually being paid. As noted, harbour authorities can be directed by the Secretary of State to exercise their powers, or indeed not to exercise their powers, accordingly. The Bill simply would not work if we were to alter the compliance process in the way suggested. It has been designed to respect our international obligations, while assigning appropriate roles to ports and the MCA.

I turn to Amendment 24 on the detention of vessels. The Government’s view is that the detention of vessels would be a disproportionate and inappropriate mechanism in these circumstances. Detention provisions are provided for in legislation implementing international conventions dealing largely with matters relating to health and safety and pollution. It would therefore be inconsistent to use detention provisions in this case. Indeed, we are satisfied that we have the right compliance process of surcharges and refusal of access by ports, which means that any detention provisions would not be necessary.

On Amendment 28, regarding conflicts of interest and guidance, the Government are confident that there are no conflicts of interest. I would be very grateful if noble Lords want to send further information drilling down into how those conflicts of interests would manifest. Harbour authorities’ primary role under this Bill is to receive declarations—to receive a piece of paper. They will not be involved in checking the validity of those declarations. The form and nature of the declarations will be set out in secondary legislation, so they will not be defined by the harbour authority. This will, of course, all be following consultation. It is not envisaged that these declarations will include commercially sensitive information. The Secretary of State will have the power to direct the harbour authority in the exercise of its powers under the Bill. That also will safeguard against any potential conflict. It is not new to have a duty that is perceived to be in conflict with a harbour authority’s commercial position. Harbour authorities are well versed in fulfilling their wide and varied existing statutory functions and duties independently of their commercial interests, or those of associated companies.

Finally, Amendments 29 and 32 to 34 relate to the powers of direction that would be available to the Secretary of State. We have touched on these before. We are seeking back-up powers for the Secretary of State to issue directions to exercise their powers, or not, in line with the wider policy intention. A particular area in which it is expected that the direction-making power may be needed is in respect of the surcharges under Clause 7. For example, if a harbour authority declines to charge a surcharge, the Secretary of State may need to step in.

In addition to the powers to require a harbour authority to exercise its powers, the Secretary of State also has the power to direct that the harbour authority does not exercise its powers. I think I have already said that, so forgive me for repeating it. I do not think that adds anything further to the debate.

That being said, now that we have the DPRRC report we need to go back through the concerns it raised to ensure that we are content with what we are proposing, and indeed whether alternatives might keep the DPRRC happy—and of course, more importantly, to keep your Lordships happy. We will look at that again and we will write back to the DPRRC ahead of Report. We will have further discussions on that.

There have been a number of further mentions of different international considerations—the OECD common principles, for example. I will address those in writing. Obviously, as your Lordships know, the Government’s intention is not to share their legal advice, but we will be able to set out our position on how we feel this Bill works with other international obligations that we have.

Yes. I tend to do one letter addressed to all noble Lords present. A copy will be placed in the Library. It will be lengthy, but it will be set out by topic and cover, with as much detail as I can, things that I have not been able to cover today and any additional information that would be helpful to noble Lords.

My Lords, I am grateful to all noble Lords who have spoken in the debate, and to the noble Baroness for her explanation and response to the points raised in this group of amendments. I am very grateful in particular that she will look again at the Delegated Powers and Regulatory Reform Committee’s recommendations. I should have said earlier that I am a member of that committee.

I wonder whether, having heard the almost unanimous view expressed this afternoon about the effective delegation of authority to harbour authorities, the Government would be prepared to look at that a little further. Having said that, I beg leave to withdraw my amendment.

Amendment 4 withdrawn.

Amendments 5 to 12 not moved.

Clause 3 agreed.

Clause 4: Nature of declaration

Amendments 13 to 15 not moved.

Clause 4 agreed.

Clause 5: Requirement to provide information

Amendment 16 not moved.

Clause 5 agreed.

Clause 6: Inspections

Amendment 17 not moved.

Clause 6 agreed.

Clause 7: Imposition of surcharges

Amendments 18 and 19 not moved.

Clause 7 agreed.

Clause 8: Objections to surcharges

Amendments 20 to 22 not moved.

Clause 8 agreed.

Clause 9: Refusal of harbour access for failure to pay surcharge

Amendments 23 and 24 not moved.

Clause 9 agreed.

Amendments 25 and 26 not moved.

Clause 10 agreed.

Clause 11: Guidance and directions

Amendments 27 to 35 not moved.

Clause 11 agreed.

Clause 12: Regulations

Amendments 36 and 37 not moved.

Clause 12 agreed.

Clause 13 agreed.

Amendment 38 not moved.

Clause 14: General interpretation

Amendment 39 not moved.

Clause 14 agreed.

Clause 15 agreed.

Bill reported without amendment.

Committee adjourned at 6.32 pm.