Seafarers’ Wages Bill [HL]

Baroness Scott of Needham Market Excerpts

Wednesday 12th October 2022 Grand Committee

[Lord Hendy (Lab)]

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.

[Baroness Scott of Needham Market (LD)]

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.

--- Later in debate ---

Moved by

[Baroness Scott of Needham Market]

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.

[Baroness Scott of Needham Market (LD)]

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.

--- Later in debate ---

[Baroness Vere of Norbiton (Con)]

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.

[Baroness Scott of Needham Market (LD)]

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.

--- Later in debate ---

[Baroness Scott of Needham Market (LD)]

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.