Equality Act 2010 (Work on Ships and Hovercraft) Regulations 2011

Monday 27th June 2011 Grand Committee

Considered in Grand Committee

17:11

Moved By

[Earl Attlee]

That the Grand Committee do report to the House that it has considered the Equality Act 2010 (Work on Ships and Hovercraft) Regulations 2011.

Relevant Documents: 23rd Report from the Joint Committee on Statutory Instruments.

[Earl Attlee]

My Lords, the power to make these regulations is in Section 81 of Part 5 of the Equality Act 2010. The regulations were not introduced when most of Part 5 was commenced because further consideration was necessary on the issue of seafarers’ pay. The draft regulations, if approved, will serve two purposes: applying the Part 5 work provisions of the Act to work on ships and hovercraft and to seafarers, and addressing the European Commission’s concerns regarding differential pay for seafarers. I shall explain briefly how Part 5 would apply to work on ships and hovercraft and to seafarers, and then say a few words about seafarers’ differential pay.

The proposals aim to ensure that the level of protection afforded to land-based workers under Part 5 is extended to those at sea, creating as consistent as possible an approach. The Act has many benefits, providing a cross-cutting legislative framework to protect individuals’ rights and to advance equality of opportunity for all. It delivers an accessible framework of discrimination law, protecting individuals from unfair treatment and promoting a fairer, more equal society. Part 5 deals with work, giving protection in respect of specified protected characteristics from discrimination, harassment and victimisation, these being: age, disability, gender reassignment, marriage, civil partnership, pregnancy, maternity, race, religion or belief, sex and sexual orientation.

Broadly speaking, the regulations would apply Part 5 to seafarers, irrespective of nationality, working on board a UK-registered ship operating wholly or partly in GB or adjacent waters; and to EEA and designated state seafarers, where the legal relationship of their employment is located in or closely linked to Great Britain, working on board EEA-registered ships or hovercraft operating wholly or partly in British or adjacent waters. For ships operating wholly outside those waters, the regulations would apply on UK-registered ships only. Just to be clear, the designated states in question are those countries having various specific agreements with the EU, such as association agreements. They include various European states such as Russia, Mediterranean states such as Algeria and Morocco, and the countries of the African, Caribbean and Pacific group of states, with the exception of Cuba.

On a point of detail, while most of the obligations within the Equality Act are underpinned by EU law and therefore EEA states are also bound by those obligations, because the protected characteristic of marriage and civil partnership is a domestic provision not required by EU law, that protected characteristic is excluded as regards ships registered in EEA states other than the United Kingdom.

The United Nations Convention on the Law of the Sea—UNCLOS—restricts a state’s ability to apply legislation to foreign-flagged ships but, where a seafarer works wholly or partly in Great Britain, these regulations will apply Part 5 to seafarers on ships registered in an EEA state other than the UK, provided the criteria that I have just mentioned are met. The regulations will ensure compliance with European law and provide clarity to employers and employees while achieving the intended effect of applying Part 5 to as broad a range of ships, hovercraft and seafarers as possible without breaching UNCLOS or European law, or placing additional burdens on UK-registered vessels alone.

17:15

On differential pay, under current law—the Race Relations Act 1976—it is not unlawful for seafarers to be paid differently on the basis of their nationality if they were recruited outside Great Britain. That includes seafarers from EEA states and designated states. The European Commission has investigated a complaint that UK law on differential pay for seafarers does not comply with European law and has issued a reasoned opinion upholding that complaint. These regulations address that by providing that it is not unlawful to pay, or offer to pay, different rates to seafarers other than those from EEA or designated states, if a person applied for work as a seafarer or was recruited as a seafarer outside Great Britain. If the seafarer later became a British citizen or national of another EEA or designated state then the exception would no longer apply.

The Equality Act defines what constitutes indirect discrimination. The effect of these regulations in respect of seafarers’ differential pay is that, where an apparently neutral provision, criterion or practice has an effect which particularly disadvantages seafarers from EEA or designated states in terms of different pay, it will nevertheless continue to be lawful if the employer can show that the provision, criterion or practice is objectively justified. If differential pay were challenged by a seafarer from an EEA or designated state, it would be for the employer to satisfy an employment tribunal that the provision, criterion or practice could be objectively justified as a proportionate means of achieving a legitimate aim in the particular circumstances of the case. To help ensure the continued competiveness of the UK shipping industry, it will remain lawful for employers to pay different rates of pay to seafarers from countries that are outside the EEA and not designated states.

Addressing this issue was a conundrum, difficult to resolve to the total satisfaction of both the shipping industry and maritime trades unions. We have found the right balance in taking the minimum necessary measures to satisfy the European Commission’s concerns. The Government will remain vigilant as to any negative impact on the UK flag, the competitiveness of UK shipping and the wider maritime cluster. Should Parliament approve these regulations, the Government will watch developments in this area carefully. Even if no immediate impact ensues, the review clause within the regulations allows a suitable opportunity for the Government to reassess any impact. I look forward to noble Lords’ contributions to the debate. If I do not manage to address all the points raised, I shall do so in writing before the Motion to approve these regulations is considered by the House. I commend these regulations to the Committee.

[Lord Moynihan]

My Lords, I have a brief question for the Minister. I assume that Northern Ireland is making its own regulations in the context of this order. Can the Minister give us the background as to why this applies only to England, Scotland and Wales, and not Northern Ireland, yet the definition of “United Kingdom waters” is those waters adjacent to Great Britain or, under paragraph 3(c),

“the legal relationship of the seafarer’s employment is located within Great Britain or retains a sufficiently close link with Great Britain”?

What would “a sufficiently close link” mean in this context?

[Lord Higgins]

My Lords, it is a very long time indeed since I qualified as a member of the Institute of Chartered Shipbrokers. Since then, I have taken a strong interest in the industry, both as a Minister and Opposition spokesman on trade, in Select Committees and so on. This is an extremely important order. The Minister has set out clearly why it is before us: as a result of European legislation. However, I have always considered it important that the number of ships on the British register should be as large as possible. It has considerable advantages to the UK, not least because, generally speaking, if ships are registered here, the headquarters, operating offices and so on tend also to be in the UK; the Treasury, in particular, benefits as far as taxation and other things are concerned. In addition, it encourages other, related, industries such as insurance, which have traditionally been located in London.

That is very important, but there are other aspects such as the training of officers, which again builds up the link with the UK. We remain a major maritime nation. None the less, the size of the register has, for reasons such as taxation, varied over the years. However, we have always played an important role in the IMO and so on.

This proposal, the extremely helpful Explanatory Memorandum and the impact assessment really examine two possibilities. They rightly reject the idea that we could do nothing, because, as the Minister has pointed out, we are under considerable duress from the European Union to deal with the matter. So the alternatives are either to change the position on differential pay for employees from the European Union, the EEA and the designated states—the designated states are of course really quite expensive in this context—or simply to say that you cannot differentiate at all, regardless of where the employees come from. The Government have opted for the first of these options and, I believe, rightly so. I have received some assessments from the Chamber of Shipping, and the impact assessment also deals with these matters as far as both options are concerned. They say that if one were to do it for seafarers from the EEA and designated states, the average percentage increase in wage costs, which range between 6 per cent and 32 per cent, would impact on a ship’s overall running costs by up to 7.2 per cent. On the other hand, if one were to take the widespread option, the range would be an increase of 10 per cent to 130 per cent; it would depend, of course, on the type of ship and so on. The increase in the overall cost could be as high as 56 per cent.

The industry is highly competitive. If we are compelled to pay higher rates, as would be the case in the international market generally, that would obviously have a serious effect on our position and be likely to result in a considerable reduction in overseas earnings. While it appears that there is no choice but to go for the European option rather than the global one, that would seem to be the right solution. I hope that the Minister will give us an assurance that he is certainly not proposing to consider any further a wider option, which would have a very serious economic effect at a time when the British economy is obviously under considerable strain.

There is a provision in the order for a review after five years. I hope that the Minister will say that if it turns out to be the case that the percentage increase in wage costs that I have indicated under the provisions of the order is having a more serious effect than the one that we anticipate at the moment—which is already serious—a review might be carried out earlier to see whether, in the light of experience, some change ought to be made in the order. However, overall, this is probably the best compromise that can be effected. None the less, it will have an adverse effect on the British economy.

[Lord Lester of Herne Hill]

My Lords, 50 years ago in Worthing I had the privilege of arguing with the noble Lord, Lord Higgins, when I stood against him for the Labour Party and he won resoundingly. I disagreed with him then and, 50 years later, I disagree with what he has just said. I hope that in the long run the outcome might be different from what he hopes. The regulations are welcome—

[Lord Higgins]

The noble Lord should not worry unduly: my majority was only 32,000.

[Lord Lester of Herne Hill]

Yes, it was so great that the votes could have been weighed rather than counted. However, I got the highest vote Labour ever got in Worthing—which was still quite low.

The regulations are welcome in so far as they apply the provisions of the Equality Act 2010 to employment on ships and hovercraft so as to forbid discrimination, harassment, victimisation and other unlawful conduct in relation to the protected characteristics of age, disability, gender reassignment, pregnancy and maternity, race, religion or belief, and sex and sexual orientation. They are welcome also because they bring the law into line with our EU obligations so as to avoid liability in the pending Commission infringement proceedings. Because of the technical nature of some of the issues and their public importance, I gave the Minister notice of what I will say so that he might be well advised in his response. I hope that what I wrote to the noble Lord, Lord McNally, was passed on to my noble friend who is handling the matter.

It is most regrettable that these regulations are designed to permit some forms of racial discrimination by the British shipping industry to be outside the protection of the Equality Act, where the discriminatory treatment involves paying seafarers less because of their nationality in a way that may amount to direct or indirect race discrimination on grounds of ethnicity or national origin. I pause to mention that the designated states do not include those of Commonwealth Asia: namely, India, Pakistan, Bangladesh and the Philippines.

It is worth recalling the history. Under the Merchant Shipping Act 1894,

“the master or owner of any ship, or his agent, may enter into an agreement with a lascar, or any native of India, binding him to proceed either as a seaman or as a passenger … to any port in the United Kingdom, and there to enter into a further agreement to serve as a seaman in any ship which may happen to be there, and to be bound to any port in British India”.

If the lascar refused to enter into the second agreement, under which he was employed on blatantly discriminatory terms, he should,

“be liable to the same consequences, and be dealt with in all respects in the same manner, as if he had voluntarily entered into the same”.

In other words, he could be punished under the criminal provisions of the Act for desertion or indiscipline.

Much of the 1894 act was repealed by the Merchant Shipping Act 1970, which did not re-enact the unsightly lascar clauses. However, under the Race Relations Act 1968, the practice of making racially discriminatory agreements with non-white seamen brought to Britain for this purpose was given fresh statutory blessing. During the passage in 1968 of the Race Relations Bill—I was watching at the time—Ben Whittaker MP attempted in Committee to remove provisions that permitted race discrimination on board merchant ships. He was supported by Eric Heffer MP, who pointed out that if the exemptions were not removed, 35,000 Asian seamen would be outside the Bill's protection. But the Home Secretary, James Callaghan, recalled his personal experience as a Cardiff MP and said that there was a long tradition in the United Kingdom that seamen of mixed races were segregated according to race and that lascars continued to be employed on British ships on terms and conditions of service which were dissimilar to those pertaining to British crews. Mr Callaghan, as he then was, said that he wanted to see this discrimination ended, but he would not make an amendment, which no doubt would have been a great advance in race relations, but would have upset a great many other things.

17:30

The Race Relations Act 1976 failed to deal with the problem and contained exemptions permitting race discrimination on ships. Subsequent anti-discrimination legislation contained similar exemptions. The Equality Act 2010 repealed the 1978 Act, but Section 81, as we have heard, provides that the employment provisions in Part 5 will apply to seafarers and the crew of hovercraft only in the way set out in these regulations. That is the purpose of the regulations we are now being asked to consider for approval.

As paragraph 4.2 of the Explanatory Memorandum explains, although Part 5 of the 2010 Act was commenced by SI 2010/2317, that order saved the legislation listed within it as regards work on ships and hovercraft and seafarers—see Article 11 and Schedule 3—and exempted shipping provisions in the context of race, sex, equal pay and disability discrimination in previous legislation.

The effect of these regulations is that the only discrimination within the scope of the Equality Act that will be permitted against seafarers, other than in relation to marriage and civil partnership, is different rates of pay for seafarers because of nationality, and only if the seafarer applied for work or was recruited outside Great Britain and is not a British citizen or a national of another EEA state or designated state. But that means—I ask the Minister again to confirm that this is so—that, subject to what I shall say about the meaning of race discrimination as a matter of law, it will be lawful to pay an Indian or Filipino seafarer less because of his nationality since he is not a British citizen or a national of another EEA state or designated state. That seems to me a highly problematic state of affairs. The House of Lords has decided that racial discrimination is contrary to a binding rule of customary international law—in Latin, jus cogens—in the case of R (European Roma Rights Centre) v Immigration Officer, Prague Airport 2005, a case where I acted for the ERRC. That means that the prohibition against racial discrimination on ships gives effect to and is not contrary to international law whatever traditional custom or practice might have evolved historically and whatever the right of innocent passage to and from our waters.

The Equality Act 2010 defines unlawful racial discrimination to include direct or indirect discrimination on racial grounds. Racial groups are broadly defined and the current case law indicates that “immigrants” or “foreigners” constitute racial groups—see Attorney-General’s Reference No. 4 of 2004, [2005] of the Weekly Law Reports 2810, in which I appeared as amicus curiae. The Court of Appeal has also held that place of birth may found a claim to indirect national origins discrimination—see R ex parte Elias v Secretary of State for Defence 2006, in the Weekly Law Reports 3213. There is also the case of Mandla v Lee where discrimination against a boy for wearing a turban was held to constitute race discrimination, although the ground was ostensibly that of the turban. In a case held long ago, in which I was involved; namely, Race Relations Board v Ealing Borough Council ex parte Zesko, the House of Lords unanimously held that discrimination on grounds of nationality was not the same as discrimination on grounds of national origin. In that case, Ealing Borough Council refused to allow Irish people into council houses and said it was a matter of nationality and not national origin.

I apologise for that citation of the cases, but I hope it is useful to have it on the record. As I say, I have given notice of the general point. To explain, although the regulations deal with discrimination because of nationality, that does not end the argument. Discrimination because of nationality may also be discrimination because of ethnicity or national origins, as those cases all indicate. By excluding discrimination on grounds of nationality, one does not exclude at all the possibility that an Indian or Filipino seaman could come forward under the Equality Act as it stands and say, “This is not because of nationality. It is because of my colour, my ethnicity or my national origins”. It is that problem to which I draw attention.

In my opinion, there is a serious risk that the payment of lower wages to, for example, Indian or Filipino seafarers recruited outside Great Britain will be unlawful under the Equality Act despite the exception made in these regulations in favour of the British shipping industry. It would involve either direct discrimination or a discriminatory adverse impact on that group or groups and would not be objectively justifiable. That real risk was not alluded to at all in the impact assessment or consultation. It means, if I am right, that the regulations will fail in that important respect to achieve the object declared in paragraph 7.1 of the Explanatory Memorandum of advancing equality “for all” and delivering,

“a simple, modern and accessible framework of discrimination law which protects individuals from unfair treatment and promotes a fair and more equal society”.

As my noble friend said, the Department for Transport put forward two main options for consultation. Option A would have outlawed the practice of nationality-based differentials altogether, which the noble Lord, Lord Higgins, said he does not favour. Option B is what is in these regulations. It may not be appreciated—it is not referred to in the Explanatory Notes or anything else—that in May 2010, Susan Carter of IHPC, the reputable research institute, published for the department her external Review of Stakeholder Evidence on Differential Pay in the Shipbuilding Industry. On behalf of the shipbuilding industry, she examined all the arguments that the noble Lord, Lord Higgins, has put forward so eloquently today. Unfortunately, there is no reference to this important and highly relevant external review in the Explanatory Memorandum.

Taking the evidence as a whole, the main and most certain finding by this external review is that,

“there are currently very extensive and significant pay differences on grounds of nationality in the ‘relevant’ UK international commercial fleet”.

In her conclusions and recommendations, the external reviewer for the Government—not for some NGO but for the Government—wrote in paragraph 10.4 that:

“The Department for Transport has accepted the need to outlaw differentials with respect to EU/EEA and designated states (option B) in order to comply with EU law. The issue is whether to go further and outlaw differentials altogether (option A), bringing the shipping industry in line with other industries. I could find no reason for making a special case for the shipping industry”.

The Carter report continued in paragraphs 10.5 and 10.6 that:

“While option A could involve significant short-term costs for some shipping companies, the immediate benefit would be ‘better outcomes for those who experience disadvantage’ as the Equality Act 2010 intends. In the long-term, greater equality is expected to bring economic benefits … On the basis of the evidence submitted, I recommend outlawing the practice of nationality-based pay differentials for seafarers altogether (option A)”.

As I say, this was after a careful review in her report of all the evidence, which if I may say so has not really been dealt with either in the Explanatory Memorandum or so far in debate.

[Lord Higgins]

I am trying to follow my noble and learned friend, and it may well be that I have misunderstood the situation. Incidentally, he refers to the shipbuilding industry, when it is the ship operating industry. However, as I understand it, although I may be quite wrong, the order is purely concerned with pay differentials; all the legislation with regard to discrimination in other areas and so on is not effective. No doubt the Minister can clarify whether that is the case. In all events, if, as a result of the change on the pay differential, the vessel is flagged out to, say, Liberia, any protection they may have from UK law is lost.

[Lord Lester of Herne Hill]

First, I apologise for saying “shipbuilding industry”, which is of course not what was intended at all; one is concerned with the shipping industry. Secondly, my noble friend is perfectly right that we are concerned with racial discrimination in pay and nothing else, which is preserved by these regulations. It is that and nothing else which Susan Carter of the external panel was considering in her careful review of stakeholder evidence on differential pay in the shipping industry, where she goes through the consequences of outlawing differential pay on five types of ship based on a Chamber of Shipping survey of its members. She looks at 229 ships and estimates what may happen about change of flag and so on. I have been quoting from her report. I submit that, being an external reviewer who has looked at all the evidence, her report should be given careful consideration. I respectfully agree with the report and wish that the Department for Transport would follow the wise and objective advice of the external panel instead of creating considerable legal uncertainty and continuing unfairness which our courts and employment tribunals may have to resolve. That may be to the benefit of my profession, but it is not in the public interest. I wish that the Government had taken the advice of their own external reviewer and I hope that these points can be considered before we come to the debate to approve the regulations.

[Lord Tunnicliffe]

My Lords, I thank the Minister for his explanation of these regulations and other noble Lords for their thoughts. The point of the noble Lord, Lord Lester, is well made. The regulations will leave an unsatisfactory piece of law on our statute book. They will regularise discrimination by nationality on British vessels. There are no two ways about that: they are designed to do so. They are designed to be compatible with European law and, for appropriate individuals, with UK law, and are designed to except those who are not in the protected group: some 12,700 overseas seamen.

Option 2 in the impact assessment simply says that it is option 1, but also makes it unlawful for employers to pay seafarers differential rates of pay on the basis of their nationality. The argument against it is made by the Chamber of Shipping, and it is the argument that the Government seem to have accepted. It goes something like this: if we make discrimination illegal, our costs will go up, so we will deflag and that will be bad for the economy.

We are not going to oppose the regulations because we think it is better to get the first bit right, which is the option in front of us, and perhaps debate later the second bit, which is whether all seamen should be involved. But I am concerned that the report by Susan Carter, from which we have had extensive quotes from the noble Lord, Lord Lester, seems to have been ignored in the regulations, the memorandum and the impact statement. She makes a basic statement:

“On the basis of the evidence submitted, I recommend outlawing the practice of nationality-based pay differentials for seafarers altogether”.

So I hope that the noble Earl will respond to the noble Lord, Lord Lester, and myself on why this report was ignored before this goes in front of the House.

17:45

The argument in favour of not extending the anti-discrimination provisions to all seafarers is set out in the impact assessment, but the weakness in that assessment—I would like to know from the Minister whether this was tested in any way—is that the evidence comes solely from the Chamber of Shipping. It has produced some pretty dramatic figures. The worst-case argument is that on a worldwide container vessel, the costs of operation would go up by 22 per cent, which is a significant figure. The chamber goes on to argue, and the Government seem to have taken the case, that operators will deflag. That is the argument against pressing for the inclusion of all seamen: it will protect few people because operators will avoid the law by deflagging. Unfortunately, the Chamber of Shipping seems to shoot itself because in its submission to the analysis by Susan Carter, its members were asked how many would “flag out”, as I believe the process is called, under the two options. The response was that under the option set out in the regulations, 122 ships—some 53 per cent of the fleet, would flag out—while only 27 ships, 12 per cent, would flag out if the regulations were extended to cover all seamen. So the evidence of its own reaction seems to be a bit iffy.

I hope that, in supporting the regulations so as at least to clean the European area, which is a good thing, and being a responsible Opposition we welcome all good things, we nevertheless would welcome comments or a response in writing from the Minister on why the Government have so readily accepted the evidence of the Chamber of Shipping but do not seem to have considered at all the report they commissioned from Susan Carter.

[Earl Attlee]

My Lords, this has been an interesting and, as usual when the noble Lord, Lord Lester of Herne Hill, is involved, well informed debate. I thank all noble Lords for their contributions. Gathered here today is a wealth of transport and equal rights experience, and I am grateful for the points made by the noble Lord, Lord Tunnicliffe, that we should solve the immediate problem first of all and then consider the wider issues.

On 2 March 2010, in a debate during the Report stage of the Equality Bill, the noble Lord, Lord Rosser, made an impassioned plea on behalf of seafarers in respect of both differential pay and the UK national minimum wage. Unfortunately, the noble Lord cannot attend the Committee today due to duties in the Chamber.

In response to that earlier debate, the then government Minister, the noble Baroness, Lady Thornton, said:

“The Government must carefully consider the implications of ending the practice of differential pay”.—[Official Report, 2/3/10; col. 1384.]

This Government have carefully considered the issue and I pay tribute to my colleague in another place, the Maritime Minister. Since taking office, he has demonstrated a hitherto unseen level of determination to address the issue. He has consulted extensively with the shipping industry and with the unions.

As I said in my opening remarks, the Government accept that the regulations on differential pay do not go far enough for some, while for others they go too far. The noble Lord, Lord Lester of Herne Hill, is clearly embedded in the first camp. However, the Government are determined to protect the future of the UK shipping industry and with it the Red Ensign. The regulations that we are considering do the least possible to avoid a substantial fine being imposed by the European court.

The UK national minimum wage for seafarers is also a highly complex area and the Government are very familiar with the concerns expressed by the maritime trade unions. A legal working group that includes these unions was set up to look into how far international and EU law would allow the Government to apply the UK national minimum wage to non-UK ships. The conclusions of the working group will be submitted to Ministers in due course, after which all interested government departments, including the Department for Business, Innovation and Skills, which is responsible for the national minimum wage policy, will give further consideration to the issue.

I am grateful to the noble Lord, Lord Lester of Herne Hill, for giving me advance notice of what he intended to say. I, too, picked up the “shipbuilding” typo but rapidly translated it into “ship owners”. In reply to the noble Lord, and with all due respect, indirect discrimination is not the issue here. The regulations allow discrimination on grounds of nationality. That is direct discrimination, excused by paragraph 1 of Schedule 23, “General Exceptions”, and by Section 81, which says that Part 5 of the Act applies to seafarers only in such circumstances as are prescribed. These regulations prescribe the circumstances.

I confirm that it will continue to be lawful to pay some seafarers differently because of their nationality if they were recruited outside Great Britain and are not British citizens or nationals of another EEA state or designated state. That will include Filipino seafarers.

[Lord Lester of Herne Hill]

I fear that I have not explained my point clearly. Something may be discrimination on grounds of nationality and also direct or indirect race discrimination. It may involve discrimination based on nationality and ethnicity or on national origins, for example—that would be direct discrimination—or it may be indirect discrimination based on nationality, national origins and ethnicity. I will not go through the definitions in the Equality Act to explain what I have just said, but the definition is very large and the case law makes what I have just said crystal clear, whether it applies to “no turbans”, “no Irish” or discrimination using other foreign epithets. It is quite clear from court rulings that discrimination may be ostensibly on one ground but in fact is on others. I do not want to see litigation on this matter because we have not dealt properly with it.

[Earl Attlee]

My Lords, I fully understand my noble friend's desire to avoid litigation. These extremely complex issues are well beyond my understanding, but I will give the noble Lord a detailed response in writing. My noble friend’s argument is an essentially legal one and I hope that the Committee will forgive me if I write to him.

There remains the question of whether it is immoral to allow differential pay in any circumstances. That is a rather simpler question to answer. The short answer is no. The world is not that simple. That is why, traditionally, seafarers from around the globe have tended to be paid amounts commensurate with the domestic job market in their own countries. If seafarers from countries with generally low-paid workforces were paid at higher rates, this could seriously distort the job market in their own country. Imagine, for example, a situation in which highly skilled surgeons or other professionals find themselves better off serving as ratings on ships than using all their training, skills and knowledge to help to cure people and solve their problems. This would be damaging at a far deeper level, and I suspect that there could be other serious unintended consequences.

My noble friend Lord Lester asked me why the protected characteristic and civil partnership were excluded.

[Lord Lester of Herne Hill]

I am sorry; I have not asked that. Although I put it in my draft, I am satisfied with what the Minister said on that.

[Earl Attlee]

I am obliged to the noble Lord.

The aim is to apply the regulations to as many ships as possible of whatever flag, in so far as this is consistent with international law, to limit the effects being felt by the UK flag alone. The extension of the application of Part 5 to EEA ships is therefore limited to those protected characteristics which are underpinned by EU law. A ship flagged to EEA states would be under the same obligations. The characteristic of marriage and civil partnership is not an EU obligation and so is excluded.

My noble friend Lord Higgins made several important points. I accept his points about the importance of the UK register, and I hope that that came out in my comments. On the effect on the UK flag, leaving aside the issue of differential pay for the moment, the effect of applying the new consolidated equality legislation to work on ships is not very burdensome. Indeed, it should bring benefits through greater clarity for employers and employees.

As to the effect caused by the need to change the law in respect of seafarers’ pay, we cannot say with absolute certainty what the effect will be on the UK-flagged fleet, although many noble Lords have suggested what it could be. We have consulted closely with all sides of the shipping industry on the likely effect and will monitor it closely. We are regulating in a way that will be least disruptive to the industry while allowing it to comply with EU law. We are also seeking undertakings from the European Commission that it will be vigilant in ensuring that other EU member states are also following EU law.

My noble friend Lord Higgins asked me about the review provided for in the regulations, and asked whether we would review earlier. As I indicated in my opening remarks, we will keep the implementation and the situation under close observation.

My noble friend Lord Moynihan asked me why the regulations did not appear to apply to Northern Ireland. Northern Ireland has been asked to introduce its own parallel legislation at the earliest opportunity. Until that legislation is also approved, the UK will remain in breach of EU law. The European Commission has been informed that action in Northern Ireland was necessarily delayed due to recent elections, but that the matter is in hand. My noble friend also asked me a rather detailed question about the definition of “sufficiently close link”. It is a basket of measures as set out in Regulation 2(2)(b). It will be determined by reference to all relevant factors including those set out in the regulations.

Noble Lords asked me particularly about the Carter report. I agree that it is a significant report. Susan Carter reviewed all of the evidence submitted by stakeholders and came to the conclusion that she did. She was not asked to consider any other evidence, such as that from government. Maybe Susan Carter’s report was a comment on the industry’s evidence to maintain the status quo. As I have already indicated, my honourable friend Mr Penning, the Shipping Minister, has consulted extensively.

I am grateful to all noble Lords for their contributions. The wider issues are indeed complex. As indicated, I will write to all noble Lords who have contributed to the debate.

[Lord Tunnicliffe]

Will the noble Earl write specifically on the consideration that the department has given to Susan Carter’s report and say why it does not share her conclusion? He seems to give a partial explanation which I do not think is valid. Susan Carter consulted as widely for her report as the department has for the regulations.

[Lord Lester of Herne Hill]

While the noble Earl is dealing with that, I should add that Ms Carter states at the beginning of her report:

“This report reviews evidence submitted by key stakeholders in the shipping industry about differential pay for seafarers on grounds of nationality. The Department for Transport invited them to submit financial estimates of the likely impact of either: option A … or option B”.

That the department did not give evidence is, with respect, not the point; the point is that the department asked her to do this job on the basis of evidence submitted by—that ghastly phrase—“key stakeholders”. Therefore, I am mystified as to how anyone reading her report could fault her findings or her conclusion. I would be very grateful if the Minister would write to us about that as well.

[Earl Attlee]

My Lords, paragraph 8.4 of the Explanatory Memorandum states that a summary of the evidence submitted can be found on a website. I will not read out the website address, but when I write to noble Lords I will discuss the Carter report. As indicated, I will write to all Members of the Committee before seeking the House’s approval of the affirmative instrument.

Motion agreed.