Seafarers’ Wages Bill [HL]

Baroness Vere of Norbiton Excerpts

Wednesday 20th July 2022 Lords Chamber

Moved by

[Baroness Vere of Norbiton]

That the Bill be now read a second time.

[The Parliamentary Under-Secretary of State, Department for Transport (Baroness Vere of Norbiton) (Con)]

My Lords, earlier this year, P&O Ferries shamefully sacked almost 800 members of its workforce, without notice and without consultation. At that time, the Transport Secretary responded with a nine-point plan, aiming to prevent companies from benefiting further from such underhand and unacceptable moves. This legislation is part of our response. It is important to stress that this is but one part of the plan, which covers much wider aspects of seafarer welfare that do not require legislation.

This Bill delivers on the Secretary of State’s commitment to deliver on the first point of the nine-point plan: changing the law so that seafarers with close ties to the UK are paid at least an equivalent to the UK national minimum wage while they are in UK waters. Quite simply, it is unacceptable for companies such as P&O Ferries to lay off hard-working employees, with no notice and no consultation, only to replace them with less costly workers. This legislation will remove the incentive for other operators to follow suit and ensure that all seafarers will receive the equivalent of the national minimum wage in UK waters, preventing a race to the bottom that would damage this vital industry.

Under the existing national minimum wage legislation, not all seafarers who regularly call at UK ports are currently entitled to the UK national minimum wage. It cannot be right that seafarers who frequently work in the UK are not entitled to the same remuneration as other workers simply because they work on an international, rather than a domestic, service. In every practical sense, the seafarers who work on routes such as Dover to Calais are working in the UK, and they should not face exploitation by unscrupulous employers who seek to use this gap in the law to avoid paying fair wages.

The purpose of the Bill is to right this wrong. It will do this by making access to UK ports conditional on operators of frequent services providing evidence that the seafarers on board are paid a rate equivalent to the UK national minimum wage for time spent in UK waters. This will bring hundreds of millions of pounds of extra pay to thousands of seafarers over the next 10 years.

It is important to note that this legislation does not amend the National Minimum Wage Act. It instead refers to “national minimum wage equivalence”. I should point out that the Bill has been the subject of a public consultation, where we invited views on both its scope and the proposed compliance process. We have taken enormous care to consider the consultees’ views and have taken these into account in designing the new legislation.

The legislation will apply to services calling at UK ports at least once every 72 hours, on average, throughout the year. This equates to 120 times a year. The operators of such services will be required to provide a declaration to the relevant harbour authority that they are paying their seafarers no less than a rate equivalent to the national minimum wage. This rate will be calculated according to regulations made using powers in the Bill.

This scope definition has been carefully designed to ensure that it includes those seafarers who have close ties to the UK. We listened to those in the industry who told us that inclusions or exclusions based on service type would create market distortion and ambiguity. Fishing and leisure or recreation vessels are therefore the only specific exclusions retained on the face of the Bill. Our analysis shows that this definition captures, for example, the vast majority of ferries on the short straits, without including services such as deep sea container services or cruises. These less frequent services remain out of scope as those seafarers cannot be said to have as close a link to the UK. This definition has been formulated to account for the complexity of categorising vessel and service types, and to ensure that those seafarers with the closest ties to the UK are captured. We will continue to engage with industry throughout the passage of the Bill, and through consultation on the subsequent secondary legislation and guidance.

Ports are our main contact point with these vessels. In order to keep focused on this domestic link, the legislation will make access to ports ultimately conditional on compliance with its requirements. Harbour authorities will be empowered to request declarations from operators within scope that confirm they will pay their seafarers a rate equivalent to the national minimum wage. If they do not comply with the requirement, harbour authorities will be empowered to levy a surcharge against those operators, or they may be directed to do so by the Secretary of State. The purpose of the surcharge is to ensure that not paying the national minimum wage equivalent is not a financially viable option for the operator.

We intend to consult on regulations and guidance on the framework within which the level of the surcharge will be calculated and the exercise of the harbour authorities’ powers in due course. The harbour authority may retain such money as may be raised in this way for the discharge of its functions or for the provision of shore-based seafarer welfare facilities. We are clear that this will not be a profit-making exercise.

On non-payment of a surcharge, the harbour authority will be empowered to deny access to the port, either of its own volition or by direction from the Secretary of State. We intend these powers to provide sufficient deterrent to ensure compliance by operators. We have engaged extensively with the ports industry on this role, and while we accept that this will be an extra administrative burden on ports, we are satisfied that it is proportionate and effective, particularly taking into account the resources and capabilities of the ports and their existing transactional relationship with visiting vessels.

I am clear that this is not an enforcement role for the harbour authority. Beyond accepting declarations, they will not be responsible for checking that operators are complying with the requirement to pay national minimum wage equivalence. This enforcement role will be fulfilled by the Maritime and Coastguard Agency, or MCA, which will undertake inspections and investigations. It will also be empowered to prosecute operators who are found to be operating inconsistently with a declaration or who do not comply with investigations. Those found guilty of an offence will be liable to a fine on summary conviction.

As I stated earlier, this Bill is only one part of the Government’s nine-point plan to improve seafarer welfare. We are clear that this legislation will not solve all the issues brought to light by P&O Ferries’ actions, but it is an important step, and it is the right one to take given the parliamentary time available. The Bill is inevitably of limited application as we cannot legislate outside UK jurisdiction and therefore cannot make provision for time spent outside UK waters. This is why we are discussing bilateral minimum wage corridors with other countries to encourage the payment of fair wages on the entire route. As part of the plan, the Department for Business, Energy and Industrial Strategy will bring forward a new statutory code on so-called fire and rehire when parliamentary time allows. The Department for Transport is also taking steps to encourage more ships to operate under the UK flag, and to improve the long-term working conditions of seafarers beyond pay protection. So, although this legislation is concerned only with wages, the Government remain focused on the whole gamut of seafarer welfare and taking non-legislative steps to make much-needed improvements. This legislation is vital as part of our efforts to ensure that hard-working seafarers, who play a critical role in our economy, can no longer be mistreated or exploited by unscrupulous employers.

In closing, I also recognise that some noble Lords may have a slightly more nuanced reason for participating in today’s proceedings: a hugely experienced and deeply committed parliamentarian and public servant will be making his valedictory speech. I know that this House, and so many people beyond it, hold my noble and learned friend Lord Mackay of Clashfern in the highest esteem, and we are incredibly grateful for his many years of service to our country. I am looking forward to contributions from noble Lords on the retirement of my noble and learned friend and, of course, to their wise words on the Bill before your Lordships’ House today. I beg to move.

--- Later in debate ---

[Baroness Vere of Norbiton (Con)]

My Lords, the Bill is clearly not the star of the show today. We have heard so many wonderfully warm words, and I was touched by so many of them, not only from my noble and learned friend Lord Mackay but from all noble Lords who paid him tribute. But I must at least try to get the House back to focus on the Bill, and that is what I intend to do.

I am very grateful to all noble Lords for their contributions and, as ever, I feel a letter coming on. We will try to get it out as soon as we can. I do not know that it will be before recess, but perhaps by the end of next week. I will try valiantly to answer as many of the questions raised as possible. I know that we will be heading into Committee on the Bill on, I think, 5 September, so it will be upon us before we know it. Thinking about it over the recess might be a very wise idea.

I cannot agree with the noble Lord, Lord Tunnicliffe, that the Bill is too narrow. We must balance that with the statement of the noble Baroness, Lady Scott, who said, “Oh, the Government are always reaching for legislation”. That is what we are trying not to do in this case; we are reaching for this legislation because it is necessary and fills a gap, but many of the other things we will be delivering in our nine-point plan do not need legislation, so we will not put them in legislation. Noble Lords know that we are overwhelmed with legislation; do not even get me on to secondary legislation, which we must also make sure is completely fit for purpose so that we do not end up overregulating and having too many debates on things that, frankly, do not need legislating. I am content with the scope of the Bill and the extent to which it applies.

There is always that very interesting balance in maritime between the Government being very focused on domestic priorities, for the protection of domestic workers operating with very close ties to the UK, and what is an extremely international market for maritime but which is governed by international laws, conventions, agreements, all sorts of things that make up the maritime ecosystem. We are very clear that we do not want to be upsetting that ecosystem and we are content that this Bill does not do that. We are also very clear when it comes to, for example, access to ports in an emergency or for the welfare of the people on board, a vessel would never be barred from entering a port in such circumstances. Therefore, I am content that this reaches that appropriate balance between the domestic priorities and the broader maritime framework, which is set mostly internationally.

The noble Lord, Lord Tunnicliffe, asked why there was no longer a harbours Bill. There was a name change. It is nothing more significant than that. I was expecting something called a “harbours something-or-other”, but there was a name change and, lo and behold, we are calling it something which much better reflects the intention, since our target is the seafarers, not the harbours. We are all after the people, and therefore it was quite right that we changed the name.

I think that I have covered the issues raised by the noble Lord, Lord Mountevans, as well. I take his point, and he is hugely experienced regarding our international reputation. As we have set out in our nine-point plan, we will be working with international partners. We will not be putting this in the Bill because it is not within our gift to deliver it. That does not mean that we will not work extremely hard; at the moment we are engaging with eight European countries on seafarers protections and welfare more generally, and to explore the creation of the minimum wage equivalent corridors. I do not say that this will necessarily be easy, but there are many like-minded seafaring nations which would want to see certain agreements being reached. Discussions are currently at an early stage, but we are pursuing them as a matter of priority.

A number of noble Lords mentioned the conflict that might exist between ports’ commercial interests and their statutory duties. We are clear that we must be cognizant of that but also, because the Secretary of State has the power to issue directions, it is the case that in the event of any doubt that those two things were not being performed correctly, I am afraid that the MCA and probably the Secretary of State would have things to say. However, I must reiterate that when it comes to the ports, we do not really want them to do very much at all. By the time that we have passed the secondary legislation for the declarations, the declarations will be standard, they will have been consulted on, and we will have discussed them with the various stakeholders, so it will be a very transactional relationship. They have a transactional relationship with visiting vessels already, so it is just one more cog in that particular transactional relationship.

Therefore, the ports will not be performing any sort of enforcement function at all. I note the comments from my noble friend Lord Balfe but, as I said, we are quite clear on what we want the ports to do. I look forward to talking through the secondary legislation when we discuss the process in more detail. If we get the secondary legislation right, if the process is really effective, then the role of ports will be minimised.

The noble Baroness, Lady Bakewell, asked about the term “non-qualifying seafarers”. This is going to get a little complicated, because we are trying to capture non-qualifying seafarers; they do not qualify for the national minimum wage and we want to make them qualify for the equivalent, which we are setting up. We want all workers on vessels with close links to the UK to be covered. I reassure the noble Lord, Lord Tunnicliffe, that we are focused on improving the rights of seafarers, both in the UK and by working with international structures.

The noble Lord, Lord Mann, mentioned some quite broad elements around workers’ rights and pay and conditions. The Bill seeks to amend the law in a limited and specific way. I will come back to this again and again in Committee: it is about workers with close ties to the UK, in UK waters. That is our focus in getting the Bill through Parliament. He mentioned a Bermuda judgment on pensions, but he is testing my knowledge so I will have to write on that matter.

I sense that we may have some discussions in Committee on the question of services as well. We considered all sorts of different frequency definitions, various types of vessel and the sorts of services they offer. It all got bogged down very quickly and could have ended up causing significant distortions to the market, as people try to change what their vessel does to fit into a different category. We do not want that; we are after simplicity here. We really are.

We decided on 120 days, which is equivalent to once every 72 hours, because we felt it was the right balance between workers on board having a close tie to the UK—I will come back to that a lot—and capturing as many of the vessels that we want to capture. We have analysed past data, which suggest that a large majority of ferry services would be captured in this scope. DfT statistics suggest that, had the policy been in effect in 2019, approximately 98% of passenger ferry voyages would have been captured and 70% of non-passenger ferry voyages carrying freight would have been in scope. Very few bulk, container and other such services would have fallen in scope—for example, for 1999, 7% of fully cellular container voyages to and from UK ports and a tiny proportion of the dry/liquid bulk services would have been in scope. I think we have the right balance.

The noble Lord, Lord Berkeley, mentioned cruises. If it is a UK cruise that stays in UK waters, it will be paying the minimum wage, because that is already in the regulations. However, if the cruise ship is going far away, it will not be covered, because it does not have close ties to the UK, is not back and forth or visiting our shores very frequently. That is the distinction we have made.

[Lord Berkeley (Lab)]

I am very grateful for the noble Baroness’s comments. She spoke about ships that do not have close ties to the UK, but we are talking about workers on those ships and whether they have close ties. It would be helpful if she could define that now or in writing.

[Baroness Vere of Norbiton (Con)]

Is it not really about the service? We cannot legislate for UK workers working in international waters or in any country in the world. That is what we must balance here. If we wanted to include cruises, we would have to include every vessel that pops into UK waters. The administration of that would blow up; it is not going to work. We will debate this in Committee, but I think we have reached the right balance. I do not know that noble Lords will be able to convince me that we have not, but I am willing to let them try.

I turn briefly to enforcement, which is a really important point. This is where the MCA will step up to enforce the system as a whole. We expect the cost of enforcement to be about £359,000 over 10 years. That is a relatively small amount in the context of the work of the MCA, because it can be done alongside its many other inspections.

The framework around the surcharges will be set out in secondary legislation. The noble Baroness, Lady Bakewell, was concerned about the ports setting the surcharge, but they will not. If a port for whatever reason had a ship approach and thought, “That’s a friendly ship; we’re not going to charge it a surcharge”, the Secretary of State could direct it to charge the surcharge. That gets round the issue where you might have a port and a ferry service operated by the same operator. The Secretary of State’s beady eye will be there to make sure that it does as it should.

I will come to the point made by the noble Lord, Lord Tunnicliffe, about minimum fines. The noble Lord, Lord Shipley, raised a point about a port being an enforcement authority; it definitely is not going to be. The noble Baroness, Lady Scott, asked about criminal charges. It will be for the ship operator, which is standard for maritime, to suffer any penalties relating to the Bill.

I am going to finish off with my favourite topic—secondary legislation. I think someone said “good”; I am not sure who it was. I am really offended, but I am going to talk about secondary legislation just so we can suffer a little longer. This is important because I have noted that Grand Committee is on 15 September, and we will not have full draft regulations by then. I am sort of thinking that this is probably not the worst idea in the world. We will have detailed policy notes, but as we go through Committee and debate the sorts of things we are proposing to put into secondary legislation, I think having detailed policy notes will be sufficient to aid our thinking, and issues may certainly come up in the discussion that we may want to reflect in the regulations or perhaps draft the regulations in a slightly different way.

I believe I have covered some of the questions asked by noble Lords today.

Bill read a second time and committed to a Grand Committee.