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Volume 405: debated on Wednesday 14 May 2003

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4.28 pm

Last year, the Home Office commenced its consultation on the review of the Race Relations Act 1976. That included taking into account the proposals to implement European Union equality directives. Within that consultation, the total repeal of section 9 of the 1976 Act was recommended. The consultation was due to be completed by the end of January, and the Government are to make a decision on the matter imminently. Since then, I have led a number of delegations on behalf of the RMT parliamentary group to the Department for Transport and the Home Office. The repeal of section 9 has the support of the RMT and the TUC.

For the record, I shall explain the contents of section 9. It is a curious anachronism, left over from our racist and colonialist past. It is one of the last bastions of legislative racism yet to fall in the fight to secure a fair society. It is one of the last elements of a racist foundation of law.

Let us go back to the battle for anti-racist legislation in this country. The first major breakthrough was enacted by a Labour Government. The Race Relations Act 1968 outlawed racial discrimination generally, but focused particularly on employment. Shipowners at the time exerted considerable pressure on Parliament with the result that there were three exemptions within the legislation, especially for the shipping industry. The exemptions were that shipowners could refuse to employ a person on board a ship if that would result in people of a different colour, race or ethnic or national origin being compelled to share sleeping, eating or sanitary accommodation.

The second exemption was that shipowners could discriminate in such a way as not to force passengers of a different colour, race or ethnic or national origin to share cabins. The third exemption was that shipowners could engage seamen abroad at lower rates and on different terms than United Kingdom-domiciled seamen. A later Labour Government introduced the new Race Relations Act 1976, under which they outlawed the first and second disgracefully discriminating measures, but left the abuse to discriminate on pay on the statute book.

However, that Labour Government recognised that race discrimination was unacceptable in a modern society and set up a working group of industry representatives, employers and trade unionists to study ways in which to overcome problems in outlawing the practice. The working group recommended that race disparity be removed on a staged basis, over five years. There was an attempt to make agreements with certain countries, such as the Philippines, Pakistan, Bangladesh and others but, in reality, there was no movement towards removing the practice. There was increasing recognition that voluntary agreements would not work and that the only way in which to eradicate the practice would be to require legislative amendment. There was an expectation that when a Labour Government were elected, the legislation would most certainly be amended.

Since then, we have seen the effect of the legislation. We have seen the disparity between the wages paid to UK seafarers and those from other countries when they work alongside each other in the same job. Sometimes, the disparity is that non-UK seafarers will be paid less than half the wage of the others. On some ships, they are paid less than the minimum wage. We have also seen the behaviour of some companies, such as P & O Ferries, where UK seafarers have been dismissed and replaced by Filipinos to reduce wage rates. I have one contract of employment in front of me. It shows that the Lapthorn Group are employing a Filipino seafarer for 48 hours a week at less than $500 a month.

Twenty-seven years on, another Labour Government have now arrived, and we expect change; 110 MPs have signed an early-day motion urging the Government to implement change as soon as possible. We believe that it is time to act, but we are fearful that the Government are about to halt the forward march of equality commenced by previous Labour Governments. Why do we believe that? The powerful lobby of shipowners has used every form of influence that it can exert via No. 10 and the Department for Transport to block reform. Rumours abound in the industry and elsewhere that the Government have succumbed to such pressure. There are real fears that, once again, a progressive measure to tackle unfairness in the workplace has been vetoed by No. 10 as a result of lobbying by business interests. I desperately hope that the Government are not about to sell out some of the poorest paid workers in the seafaring industry.

What arguments are the shipowners putting forward? Their basic argument for the past 40 years is that, if British shipping companies were forced to pay all their crews a fair wage, they would become uncompetitive, with the result that companies would be forced to flag out, register under another company or move offshore. That would lead to a reduction in British seafaring and registration under a UK flag. Let us examine those arguments. We have had no estimate based on an objective analysis of the implications for British shipping provided by the Chamber of Shipping. We have heard some hysterical statements that the whole British seafaring industry will be wiped out, but there has been no objective study into such matters.

At present, wage costs are not significant to British shipping. Wages comprise a small percentage of operating costs—most studies say between 2 per cent, and 3 per cent. Increasing wages to a fair level would not be a disproportionate burden on shipowners. It would be offset by some of the advantages of UK flagging.

4.35 pm

Sitting suspended for a Division in the House.

4.46 pm

On resuming

I was arguing that wages were a small percentage—2 per cent, to 3 per cent, in our last cost analysis—of operating costs for most shipowners, so increasing wages to fair levels would not be a disproportionate burden. Also, the increases would be offset by the fact that UK flagging, and the employment of seafarers, adds to the reputation of any company for safety and reliability. It may also lead to lower insurance premiums and savings as a result of increased efficiency and the skills of the British seafarers operating their ships.

A significant factor in the flagging decision of any company is national taxation arrangements. The Government have put UK shipping companies in their best competitive position for decades by developing a set of support proposals under their "charting a new course" initiative in 1998. That resulted in a raft of proposals for British shipping, including a tax concession of £15 million under the tonnage tax regime.

However, the result is that the same British shipping companies that opposed the reforms under the Race Relations Act 1976 on the grounds of loss of jobs have taken the tax concession and replaced British seafarers with lower-paid, poverty-waged foreign nationals. Since 1998, although more vessels have been registered in the UK, the number of British seafarers, particularly ratings, has continued to decline. The shipowners have clearly taken the Government's tax concession and run.

UK ratings and officers face mounting redundancies, despite the incentives provided to British shipping. I believe that the eradication of the discriminatory clause would protect, and not cause a loss of, British seafarer jobs. Clearly, shipping companies that pay decent, fair wages would not be affected, other than in the fact that they would be assisted in protecting against UK-flagged operations employing seafarers on exploitative pay and conditions. If problems are associated with the repeal of the legislation, owners, the Government and unions should sit down to work out a further programme of support initiatives in order to minimise any drawbacks and promote the advantages of the repeal for the long-term future of the industry.

Despite the spuriousness of the shipowners' arguments, it seems that they have been able to mobilise key support, associated with No. 10, to block the repeal of section 9. The word on the departmental and parliamentary street is that the section will merely be amended to state that discriminatory treatment can continue on the basis of the place of domicile of the seafarer. That is exactly the wording put forward by the Chamber of Shipping in the recent edition of Lloyds List. What do those words mean? If the amendment were accepted, a shipowner could continue to discriminate against someone by paying lower, exploitative wages and employing them on poorer conditions, based on where they live ashore—their place of domicile. In effect, that means no change.

Shipowners will be able to discriminate against seafarers and pay them lower wages if they live in the Philippines, Pakistan, Bangladesh, India or Africa, just as they do now. Those seafarers will do the same job as the person from the UK working next to them or on another ship. They will have exactly the same role, but they will still be paid a quarter or a half of the other seafarer's pay. Many of them will have no paid leave and no employment protection rights even as they do the same job as the British seafarer.

The Government's proposed amendment will make it clear that discrimination under the Race Relations Act 1976 will be exempted on the basis of race, colour, nationality or ethnic origin, but will be allowed on the basis of domicile. No matter how clear the drafting of the clause, there is no doubt that that will embed racist treatment of seafarers for a generation, if not for generations to come. We have the opportunity to change. We have had the consultation, we have heard the message from the representatives of the seafarers themselves and, as a Government, we should put some weight behind this major reform.

The argument that has been put forward by the shipowners that their industry would be crippled by paying fair wages is the same argument that has been mobilised for every reform measure that the Labour and the trade union movement have put through, from the abolition of slavery through to the proposal for sanctions against apartheid South Africa, the introduction of the minimum wage, minimum standards for working conditions, changes to the length of the working day or even equal rights.

The moral case is overwhelming. We need to act now, because we have the opportunity to act. I expect a Labour Government to do the right thing by British seafarers and by those seafarers from other countries throughout the world who are currently so exploited by shipowners.

4.52 pm

I congratulate my hon. Friend on securing the debate and on setting out the issues so clearly, especially as he had an interruption because of a vote in the House. I hope that we can progress without an interruption in the next 20 minutes or so.

I have long associated myself with campaigns to remove discrimination on the grounds of race and colour. None of us in our party has a monopoly of care on that issue. Many of us have had worries in that respect over a long period. My hon. Friend and I share the same views. Such discrimination on the grounds of race or colour undermines our ambition for a fair and just society. That is important to understand because it underpins what I am about to say.

Over the past few years, we have seen a substantial revival in the UK merchant fleet, with an increase of about 90 per cent, in UK-registered shipping since 1997. The introduction of the tonnage tax in 2000 and the reforms introduced by the Maritime and Coastguard Agency to make the UK register more customer friendly have helped to produce a favourable environment for shipping, and we are determined to ensure that that continues. After years of decline and decay in our UK fleet under the Conservative Government, our fleet has grown in a way that it has not done in perhaps 100 years.

As an important maritime nation, the UK has continued to play a major role in the International Maritime Organisation and, in particular, we continue to give our full support to the international quality shipping campaign, which focuses on the problems caused by sub-standard ships. I think that my hon. Friend would agree with me that the greatest hazard to any seafarer, whether he be officer or rating, is working on a sub-standard ship where there could be loss of life and cargo. This country has a proud record in helping to push up international standards in that regard. We can proudly boast a sound maritime administration that maintains a high-quality flag. The United Kingdom is currently top of the Paris memorandum of understanding white list, having the best port state control record in Europe. It does not feature as a targeted flag in any other port state control region. I am proud that the fleet under the United Kingdom flag is rated the best in the world

The conditions of employment on UK-registered ships are high—certainly higher than those for ships under flags of convenience—and all UK registered ships are required to have crew agreements approved by the MCA. For example, MCA surveyors assess safety, accommodation on board ship and pollution prevention. In February, the United Kingdom ratified the International Labour Organisation convention 178 concerning seafarers' working and living conditions, which will require more regular inspections of ships. In addition, the United Kingdom is one of only a small number of ILO member states to have ratified ILO convention 180 on limiting seafarers' working hours. The measures show the Labour Government's strong commitment to protecting seafarers' interests.

That is the background against we have laid an order to amend the Race Relations Act 1976. Until now, under that Act, there has been retained the ability to discriminate on grounds of race, ethnic or national origins and colour and nationality against seafarers recruited abroad to work on UK registered ships. My hon. Friend described that as a curious anachronism, and I agree.

For most of the period in which the 1976 Act has been in force, there has been a sharp decline in the number of UK-registered ships, and, therefore, in the number of ships that can be subject to United Kingdom legislation, so the number of people covered by our legislation has declined until recent years. However, as I said, there has been a huge increase in UK registered shipping since 1997. That has highlighted the fact that foreign seafarers do not have the protection that UK seafarers enjoy under the Act.

The European Community race directive adopted under article 13 of the EC treaty establishes the principle of equal treatment between persons irrespective of racial or ethnic origin, of which we are very supportive. In many respects, it accords with the race relations legislation that this country has had for many years— many other European Union countries have not had such legislation. As part of a package of measures implementing the race directive and the EC article 13 employment directive, the Government want to amend section 9 of the Race Relations Act 1976 to eliminate the ability to discriminate on the grounds of race, ethnic or national origin or colour. I am pleased to announce that there is an order before the House to remove those anachronisms to which my hon. Friend referred. However, in respect of section 9 of the Act, by virtue of a separate order-making power in the measure, we have decided to outlaw discrimination on the basis of colour and national origin as well as on the basis of the grounds required by the directive.

An order has been laid giving effect to the changes. Nationality is the only ground on which to justify paying people differently, including their retirement and death benefits. It is also important to remember that foreign seafarers qualify for the national minimum wage on UK flagged ships when they are in UK waters. Parallel legislation will be laid for ships registered in Northern Ireland.

The Government are persuaded that regulating to prevent pay differentiation on UK-registered ships for seafarers who are recruited abroad would be ineffective and, indeed, counter-productive. It would also be out of line with what is being done by our European Union partners, even though we intend to go further than the directive requires. My hon. Friend made a point about the proportion of crewing costs. They are a substantial part of overall shipping costs. He will know that shipping is a highly competitive industry and that the cost of wages is important to operators' margins. The shipping companies operate in a globally liberalised and highly competitive sector.

The Chamber of Shipping estimates that the additional costs to shipowners of paying foreign seafarers at UK rates could be up to £40 million a year. That would drive many companies to register their ships abroad. As many as 400 ships could leave the UK register, thus removing them from our jurisdiction and carrying the risk that they could move to less safety-conscious registers. If those owners move their ships to other flags, there could be a deterioration in the terms and conditions of work on board those ships for all the people who work on them, whether they be UK or foreign seafarers.

May I ask exactly where the estimate of 400 ships came from and whether it has been objectively tested by anyone?

That was an estimate from the Chamber of Shipping, but the number could be higher or lower. There are substantially more ships on our register, but the indications that we have had from discussions suggest that that is probably the number of ships that would flag out.

We must remember that flagging out is not a difficult process. Indeed, it can be done virtually overnight. Part of the evidence that we have used comes from the Maritime and Coastguard Agency, which is an independent agency that advises us on such matters. It has already received approaches from shipping companies asking which other flag state it would recommend in the circumstances.

The marine officers' union, the National Union of Marine, Aviation and Shipping Transport Officers, has expressed concern that the total repeal of section 9 would lead to flagging out to other registers, thereby leading to a reduction in the employment of UK officers at UK pay levels. The Government have listened very carefully to the officers' union.

We have also considered carefully the views of the RMT, which represents the seafarer ratings. I believe that it supports the total repeal of section 9, but I hope that it will at least welcome our decision to take the matter even further than the EU directive. We are not convinced by the argument that to oblige shipowners to pay foreign seafarers at UK rates would remove the cost differential that encourages the replacement of UK seafarers by cheaper foreign crews. We have not seen any evidence that there would be more jobs for UK seafarers. In fact, as I have indicated, there could well be fewer jobs if many ships flagged out from the UK register.

I congratulate my hon. Friend the Member for Hayes and Harlington (John McDonnell) on securing this important debate. I also congratulate the Minister on his announcement.

Does he agree that it is very important in discussing world trade and the world economy to distinguish between equity and equality? The flip side of the coin is that if there were not substantial flagging out, the net effect would be to reduce the jobs that are available in places such as the Philippines and the Baltic states on UK-flagged ships. The fact is that retaining the nationality exemption enables us to transfer knowledge and finances to those economies.

Thank you, Mr. Deputy Speaker. I very much agree with what my hon. Friend said. That is exactly our fear.

I shall move on to wage rates, particularly the rates paid to those on ships that fly the UK flag, many of which never come anywhere near the UK. I firmly refute the claim that paying foreign seafarers local rates amounts to unfair exploitation. The rates paid to foreign seafarers on United Kingdom ships often compare favourably with rates for other jobs in the countries concerned. This is an important matter, so I have taken the trouble to find statistics for comparable rates paid to seafarers in a number of countries, to discover whether that is the case. For example, a Filipino chief officer earns an average $2,400 per month; that may not be as much as a UK officer, but that figure should be compared with an average of $298 for a computer programmer living onshore in the Philippines. That is a huge difference. Similarly, a Polish able seaman's average monthly salary of $1,053 compares with an average of $550 for a shore worker in Poland.

May I give an example that is nearer to home? Salaries for British motormen on the North sea are £20,000 per annum. Filipino seafarers on the Pride of Hull receive approximately £10,365 a year for doing the same job, with no pay for leave.

Of course, if they are in UK waters, they are subject to UK law. Whatever we do, even if we keep the nationality issue, it would not make any difference to that circumstance. My hon. Friend makes a good argument, but that sort of thing needs to be taken up with the union. Nothing that we do here would change that circumstance for those people.

I shall give another example. I am told that the Filipino able seaman is paid an average of $1,100 a month, whereas a qualified nurse in the Philippines earns only $130 a month. My hon. Friend said that we are selling out the poorest paid workers, and paying them lower, exploitative wages. They may be lower wages than United Kingdom wages, but in the countries where those who earn them are supporting families, where they are buying goods and housing themselves, the wages are anything but exploitative. In fact, for many of those people, the wages are good. We have had to take that into consideration.

The Labour Government are firmly committed to removing discrimination wherever possible, and we are convinced that the continued payment of local wage rates to seafarers recruited abroad to serve on UK ships is necessary to ensure the continuing success of our shipping policy, and of the UK register, which is a beacon of quality in the global shipping industry. Our proposals will mean that seafarers of all nationalities employed on UK-registered ships will enjoy greater protection under the Race Relations Act 1976 than has been the case. They will also enjoy the advantages of being employed on ships registered under a high-quality UK flag. That will be particularly relevant in regard to safety, conditions of work and contractual arrangements.

I am grateful to my hon. Friend for raising the subject and for giving me the opportunity to put the Government's case, which is strong. I am proud of the order that we are putting forward today, which ends certain discrimination that has been in place since 1976. If the order is agreed to, we shall see an end to some of that discrimination—and I am proud to put my name to that.

Question put and agreed to.

Adjourned accordingly at nine minutes past Five o 'clock.