P&O Ferries

Lord Fox Excerpts

Tuesday 22nd March 2022 Lords Chamber

[Lord Rosser (Lab)]

The Statement is remarkably laid back. The decision

“is fundamentally a commercial decision for the company”.

So that is all right, then.

“I have asked my Department to liaise closely with counterparts in the Department for Work and Pensions to ensure that workers are being signposted to the most relevant support”.


The Government have accepted that 800 people have abruptly and probably unlawfully lost their jobs—and everything is hunky dory.

“I am intending to call the trade unions immediately after this statement to discuss the situation with them”.


Perhaps we could now be told what the outcome of that discussion was, how long it lasted, which trade unions were involved and how many subsequent discussions there have been between Government Ministers and the trade unions?

Finally, on P&O, the Statement meekly says:

“Their finances are matters for them, and them alone”.


Forget the furlough money it claimed from taxpayers; forget the wealth of its owners, DP World; and forget the approximately £140 million it splashed on sports sponsorship, despite the pension fund being saddled with a deficit of a similar amount.

In a nutshell, the Government’s Statement says that this a commercial decision by the company, its finances are nobody else’s business, and they will tell the 800 sacked seafarers which website or body to go to in order to inquire about job prospects. But yes, the Commons Minister also said:

“I would have expected far better for the workers involved”.—[Official Report, Commons, 17/3/22; cols. 1140-41.]


That Statement really will have shaken the company to the core, as will the demand from the Secretary of State that P&O rename its vessels to remove any suggestion of a link with Britain.

Beyond the ritual wringing of hands there is a deafening silence from the Government about what they intend to do now—yes, now—to pull this company up short, get this instant sacking decision reversed and send a loud and clear message to other companies to not even think of going down a similar road themselves. Doing that, though, is just not what this Government do when faced with a company treating its employees almost like criminals. A certain amount of wringing of hands, yes, but action, no.

Let us look what the Government’s priorities have been recently on industrial relations. The other week they forced through secondary legislation on compelling trade unions to fork out for the cost of certification officers, who have precious few complaints to deal with. Before that they had been opposing a Private Member’s Bill from a Labour MP to bring an end of the insidious practice of fire and rehire on inferior terms. There was no priority, one notes, for levelling up the playing field between employer and employee, as exposed by this episode, where in most situations the need of the employee for a job is greater than the need of the employer to employ that employee.

What the Statement reveals is the lack of any meaningful legal redress for the sacked 800. If there was clear and effective legal protection against the kind of action we have just seen, it would have been taken. But there is not, and the company knows that, which is why it carefully planned this far from spontaneous action over a period of time in the secure knowledge that what it was doing—even if in breach of the law—would be far more financially advantageous than abiding by recognised and established procedures.

A decisive majority of employers behave decently towards their employees, but there are still too many who do not, and one of those is clearly P&O Ferries and its owners DP World. The company refers to its losses as being unsustainable, but presumably this situation will now improve as the adverse impact of Covid on business and travel diminishes—or was the House of Commons Public Accounts Committee spot on in its recent report showing how our trade with the EU has declined following Brexit? Does P&O Ferries know that its traffic lost by Brexit will not return, with this abrupt mass sacking and employment of cheaper labour being an early example of the Brexit “dividend” we have heard so much about from the Prime Minister?

The abruptly sacked employees appear to have been offered an enhanced redundancy payment with a deadline of 31 March to accept, otherwise it will be withdrawn. It would appear that P&O is hoping that it will be difficult to advise the sacked employees that they have reasonable prospects of recovering more in an employment tribunal from an unfair dismissal claim.

The Government have been aware of this issue of sacking and then employing cheaper labour for some time. In a debate in this House on the National Minimum Wage (Offshore Employment) (Amendment) Order 2020 on 25 June 2020, the Minister responding said:

“We are aware that … ferry routes are largely not covered by the amendments and that some ferry services may be using low-cost employment models … We are committed to improving standards here and will consider other options in regard to these operations … The noble Baroness moved on to discussing differential pay. Maritime is the only sector in the UK that continues to permit this … The industry will still state that differential pay is the necessary requirement and that seafarers are paid a competitive rate when considered against the average salaries they could receive in their own countries. I acknowledge that this remains a difficult argument to accept when it would not be accepted in any other sector. The Government will consider whether further changes are required when the Equality Act regulations are reviewed towards the end of this year.”—[Official Report, 25/6/20; cols. 430-31.]


So, two commitments were made in June 2020: first, to

“consider other options in regard to these operations”—

that is, low-cost employment models—and, secondly, to

“consider whether further changes are required when the Equality Act regulations are reviewed towards the end of this year”.

Can the Government now say what the outcome was of those two commitments? Can they also say whether P&O Ferries had ever told them prior to last week that moving to what is euphemistically called a low-cost employment model was an option it was considering?

We now know that the Government were told by P&O Ferries and DP World of their actual intention the day before the 800 staff were abruptly told they were no longer required and that the Government took no action to try to stop it happening. What we want to hear tonight from the Government is what action they will take, first, to see that the 800 staff abruptly sacked are reinstated and, secondly, to ensure that a similar episode of abrupt mass sacking cannot happen again because the law will be tightened up as a matter of urgency and penalties for breaching it reviewed so that, financially, it would be a non-starter for any company to behave in the way that P&O Ferries and DP World have behaved towards their employees. The Secretary of State’s apparent priority of renaming ships as a remedy just will not suffice.

[Lord Fox (LD)]

My Lords, I want to talk about business culture, the culture of an organisation that takes action like this, the culture that led the management of P&O to turn these people out of their jobs with no notice because they could, or thought they could—Zoomed out of work after years, decades, of service to that company. There was no empathy or self-awareness in this action, and there was no understanding that it was wrong. The fact that the management was unwilling or unable to see this speaks volumes about the culture of P&O and that of its owner, DP World.

But how about closer to home? It is clear that government officials were warned about this act of corporate brutality, so can the Minister confirm to your Lordships’ House who knew in advance? Can she tell your Lordships why this knowledge rang no alarm bells? That it was apparently waved through also reveals the culture of this Government: they had time. If the Government allow this sort of behaviour to go unchecked, what sort of precedent does it set or reinforce? Will others, yet more in the shipping industry, argue that they are compelled to follow suit in order to remain competitive?

Speaking on the BBC’s “Today” programme on Friday 18 March, the spokesperson for the UK Chamber of Shipping, Peter Aylott, said at the end of an interview that he was content and very confident that P&O had acted properly. Does the Minister agree with the trade body?

Despite their knowing in advance, since the announcement, the Secretary of State and other Ministers have wrung their hands, as the noble Lord, Lord Rosser, pointed out. These displays of remorse are mere crocodile tears unless the Government actually do something. Ideally, the Government should cause P&O to think again. They should use their leverage on the parent company to make it make its company change its mind.

Assuming that that is not possible, here are a few ideas for the Minister and the Government. First, can the Minister say here and now that the Government will make sure that not one penny of the settlement to which these employees are entitled is withheld by P&O using legalistic threats and wrangles? Secondly, has the Minister spoken to the Pensions Regulator and can she assure your Lordships’ House that the pension fund it safe and will not need to be topped up by the Government or under the pension guarantee support scheme? Can she confirm that the huge amount of money P&O owes to the rating pension scheme is still on the hook and it will still pay it?

Thirdly, can the Minister undertake to ensure that every one of the new employees, if this has to go ahead, is reviewed for their qualifications? I fear that unqualified people will take these jobs, and that is a safety issue. P&O Ferries has obligations under the International Safety Management Code, which requires each vessel to have a safety management system. That system is then audited by the Maritime and Coastguard Agency, which produces a document of compliance. Can the Minister explain how on earth P&O can still comply with that vital safety certification if it has made a 100% change of crew?

Then there is the role of the corporate owner of P&O in the UK economy. Please will the Minister undertake to give a list of all the public contracts that are held by DP World, and can she explain how, on the one hand, her Secretary of State can say what he did about P&O and, on the other, those contracts can possibly be retained by its parent company?

Finally, there are freeports. DP World is at the forefront here. The Chancellor of the Exchequer, Rishi Sunak, personally opened the DP World-backed Thames Freeport. Speaking at the commercial launch, at the Saudi Arabian owned Savoy Hotel in London, the Chancellor said he was “thrilled” by DP World’s involvement. His level of thrill will no doubt have been doubled by the fact that DP World Southampton has also been awarded freeport status for the Solent Freeport. There is an inherent danger with freeports. They hold huge potential to be hotbeds of tax evasion and money laundering. For that reason, it is vital that organisations leading such ventures have an impeccable moral compass. After the events of last week, we now know that DP World presides over a culture that fails to understand the moral implications of its actions. It has a wonky moral compass. Is that really the sort of company that we want running our freeports?

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

My Lords, I thank the noble Lords, Lord Rosser and Lord, Lord Fox—the latter standing in for the noble Baroness, Lady Randerson, so well today—for their comments on this very regrettable and mishandled situation. The Government do not support the behaviour of P&O Ferries—clearly at the behest of its owner, DP World. It was an appalling situation for those workers to be in, and it will have had a devastating impact on the corporate reputation of P&O Ferries and DP World. I should like to point out that this is P&O Ferries, not P&O Cruises, which is owned under a different structure and has nothing to do with the ferries. I would not want this regrettable incident to bear too heavily—indeed, at all—on the cruises.

I will turn to the points raised by the noble Lords, Lord Rosser and Lord Fox, in due course, but I will first clearly set out that the Government are exploring all options to hold P&O Ferries and DP World to account. The circumstances are still unfolding. At this point, we need to get a clear understanding of what they are, what rights the seafarers have and what they are being offered by their very recent employer. It is also worth remembering that P&O Ferries still employs well over a thousand people—possibly up to nearly 2,000. We need to make sure that we understand what may happen to them and what P&O Ferries intends for them.

The world of employment law on international routes is hugely complicated. In many circumstances, the jurisdiction of the flag state applies on board vessels on international routes. Occasionally, that can also be a coastal state or the state under which the contract of employment was signed. We believe that was Jersey for some of these workers, but there is an awful lot of information to be found out about the circumstances surrounding the contracts and employment of these individuals. We are working very closely with officials in the department to press P&O Ferries and its owner, DP World, for the information we need to fully get to grips with some of the issues we want to proceed with. As mentioned by the noble Lord, Lord Fox, we are looking very carefully at our contracts with P&O Ferries and DP World. We will immediately review them all.

The noble Lord, Lord Rosser, mentioned furlough. It was, and remains right, that those employers received furlough. It is paid to the employee. It would be absolutely wrong to assume that P&O Ferries would have benefited from furlough, and those workers certainly had their jobs protected for longer because they got it. I still believe that providing furlough was the right thing to do in those circumstances. However, we will very closely consider the relationship of the UK Government with both organisations and put P&O Ferries and DP World on notice that their relationship with Her Majesty’s Government has now changed.

We have instructed all parts of government to do whatever they can to support the workers who have been impacted. Obviously, we are in touch with DWP, which will work with local employers. I am incredibly heartened by some of the messages we have had from local employers across the country looking for these highly skilled individuals and wanting to get them on board.

We have instructed the Maritime and Coastguard Agency to inspect all P&O vessels, including operational drills, to ensure that all new crews rushed through are safe to go to sea. They will not go to sea unless they have passed all those inspections. We have asked the Insolvency Service to look at the notification requirements and the specifics of the case, to consider whether action is appropriate. P&O has assured the maritime Minister that what it did was correct and legal. We are checking that that is the case and will seek further confirmation. There is a requirement to notify the BEIS Secretary of State if a redundancy notice is intended for more than 100 people. Again, we need to check which legislative framework that applies under.

We are calling on P&O Ferries to reconsider its actions, pause changes and start a meaningful dialogue with seafarers. The Transport Secretary has written to the company with an offer to facilitate discussions. There is quite a long way to go, but I share the anger expressed by both Front-Benchers about the manner in which this was carried out. We—the global we, as in my department and officials—were made aware on the afternoon of 16 March, the day before, which might have been a Wednesday, that this was happening. A very factual note was prepared—I often get factual notes telling me what is happening.

I think the noble Lord, Lord Fox, said it was waved through. Nothing was waved through. There was never a decision to be taken and Ministers were not aware of the note until matters became more urgent on the Thursday morning. It is the case that we are working very closely to understand exactly what has gone on here.

I want to point out at this stage because there has been much outrage—and I am outraged and think noble Lords should all be outraged—that the redundancies announced last week were actually much smaller than the redundancies announced in 2020 and in 2021. I missed the noble Lord’s outrage at that time. I am sure he probably felt it, but it did not appear. Why now and not the previous time? It is because it was done so badly and in such a poor fashion that it is outrageous that any company worth its salt would feel that it is okay to treat human beings in this way.

The noble Lord, Lord Rosser, referred to possible breaches in the law, and that is exactly what we are focusing on: which law might there have been breaches of and how are we going to address it? I have mentioned that the law is substantially different on international routes. We work on an international basis within the International Labour Organization’s Maritime Labour Convention, which sets out the minimum standards on some key employment and working conditions policy, but I absolutely accept that there is more to be done. This is an international workforce. It works globally. It works onboard. It is something that the UK Government can only influence internationally.

I will take the noble Lord’s point about the nationality-based pay differential. He noted that the regulations are due for review. I concede that the review has not been completed. The delay will have been due to Covid and other pressing needs on the legislative programme, but I will write to him with further details of what that review will be.

The noble Lord, Lord Fox, asked whether I felt that P&O acted properly. Clearly, I feel that it did not. There is an awful lot of work to be done. I do not know whether it will ever be able to rebuild its reputation because I fear that many people will vote with their feet. He also mentioned something important about the pensions. There is a deficit in the pension scheme and P&O will still be accountable for that deficit.

He asked whether the MCA will be reviewing the qualifications and the systems. As I have said, there will be a—how can I put this?—very thorough review by the Maritime and Coastguard Agency to make sure that these vessels are fit to go to sea. He mentioned a 100% change of crews. Again, I am not sure that there is a 100% change of crews. It could well be that certain crew members have been changed because, of course, P&O Ferries still employs well over 1,000—possibly up to 2,000—people.

I will check Hansard and go through any other points but, for the time being, I will move on to other questions.