Seafarers' Wages Bill [ Lords ] (First sitting)

Richard Holden Excerpts

Committee stage
Tuesday 17th January 2023 Public Bill Committees

[Karl Turner (Kingston upon Hull East) (Lab)]

I do not want to detain the Committee for long, but I want to speak briefly to this issue. The rapidly falling number of British ratings in the maritime industry is a crying shame, and the former Minister, the right hon. Member for South Holland and The Deepings, is right: all Governments of all political persuasions have failed to address that issue. They have addressed officers, to an extent, but they have not anywhere near sufficiently addressed ratings.

The Bill could be dramatically improved were the Government to agree to include energy installations. That area is growing exponentially. The Bill is a golden opportunity to recruit, train and encourage kids in schools in my constituency who live in the shadow of the docks, looking over at those vessels going out to sea and wondering whether they could possibly dream of having a job in that industry.

I commend the Government on bringing forward this legislation in good time. The former Transport Secretary, the right hon. Member for Welwyn Hatfield (Grant Shapps), and the former Minister, the hon. Member for Witney, must have worked incredibly hard to put together this complex legislation—this area is particularly complex. However, we could go further and do better, and I call on the Government to think carefully about including energy installations in the Bill.

[The Parliamentary Under-Secretary of State for Transport (Mr Richard Holden)]

It is a pleasure to serve under your chairmanship today, Mr Davies, and I thank all right hon. and hon. Members present for taking part. It was particularly gracious of the hon. Member for Wythenshawe and Sale East, and indeed the hon. Member for Kingston upon Hull East, to note the complexities around international maritime law relating to this piece of legislation. I will address some of those points a little bit further when I address some of the amendments later on.

Broadly, the Bill will play an important role in improving seafarers’ welfare and working conditions, and I am pleased that, today, we are taking another step towards it becoming law. There is broad support for the Bill, and I hope that during the course of our discussion, I will be able to address colleagues’ concerns and questions relating to the amendments. I have tabled several broader amendments in my own name: while they may appear great in number, the majority of them—as Members will see when we go through them—are consequential on a small number of changes to the Bill that will improve the functioning of the legislation.

To address hon. Members’ concerns, following on from our continued stakeholder engagement, particularly as we develop our secondary legislation, we have identified some areas of the Bill that would benefit from the improvements made by our amendments. As hon. Members have said, the Bill was introduced at pace to respond quickly to P&O’s disgraceful treatment of its seafarers. It is right that we continue to listen to stakeholders and examine how the Bill will function, and I make no apology for taking every opportunity to ensure the right outcome for seafarers.

Clause 1 sets out the services to which the Bill will apply, namely services for the carriage of persons or goods by ship, with or without vehicles, between a place outside the United Kingdom and a place in the United Kingdom. In other words, the Bill applies to international services, as the majority of seafarers on domestic services between places within the UK will be entitled to the UK minimum wage under existing legislation.

[Grahame Morris]

I recognise that this is a complex piece of legislation and that trying to understand its finer points is quite testing, but could I seek a point of clarification in relation to apprentices? As I am sure the Minister will recall, when Peter Hebblethwaite, the chief executive of P&O Ferries, dismissed those 800 seafarers, he also dismissed the apprentices. Will the Minister indicate whether the wage bands in the UK national minimum wage, to which clause 2 refers, will apply to apprentices as well as the hundreds of directly employed seafarers? The apprentice wage is £4.81 per hour, which does not seem like a princely sum to me.

[Mr Holden]

I thank the hon. Member for raising that point. The banding is an issue that we will address fully through the UK national minimum wage equivalence in the regulations that will come forward at a later stage. We intend for it to mirror the national minimum wage in the UK, and will set that out through secondary legislation. There are exemptions for services provided by fishing vessels and services for the purpose of leisure or recreation, in line with other maritime employment legislation and to account for the different remuneration practices in those areas.

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[Grahame Morris]

I do not mean to be picky, but can I just point out a contradiction? The scope of the Bill covers seafarers who are working on the continental shelf on oil and gas installations and the servicing of those, but not seafarers who are in the offshore wind turbine energy sector or those working on the continental shelf. It seems a contradiction to leave out that whole section of seafarers.

[Mr Holden]

I thank the hon. Member for his point. Everybody will be covered if on a boat that moves to and from those platforms at least 120 times a year, but the expansion of the UK’s exclusive economic zone to cover that area would bring, as other hon. Members have said, particular complexity regarding international maritime law. I will come to that when we address the amendments to clause 2.

[Gavin Newlands]

I hear what the Minister is saying—that workers will be covered under the Bill if they visit a harbour 120 times or more per year—but that might not be the case for some. Clearly, the hon. Member for Easington and I are not going to get what we desire in this Committee this morning. Would the Minister commit to the Department for Transport looking at this issue six months after the passage of the Bill to see who is actually being covered by the legislation?

[Mr Holden]

I will happily write to the hon. Gentleman before Report with any further details.

For the reasons I have set out, we cannot accept amendment 67, but I do understand the concern about the national minimum wage entitlement for workers on energy platforms in the EEZ. Offshore wind farms and the renewables sector are critical to meeting our net zero target. The Department for Business, Energy and Industrial Strategy regularly reviews the national minimum wage legislation to ensure that it is fit for the current workforce and businesses. We hope that this national minimum wage equivalence legislation will also reflect those changes over time as well.

[Virginia Crosbie (Ynys Môn) (Con)]

I thank the Minister for bringing forward this important Bill. We in Ynys Môn, like others across the UK, were very shocked by the actions of P&O in Q1 last year. Holyhead is the second busiest ro-ro port in the UK, and Stena is one of the island’s largest employers. It is working with the Isle of Anglesey County Council on its freeport bid.

I wanted to sit on this Bill Committee because Anglesey is known as energy island. We have a significant amount of renewable energy. We have Morlais and Minesto, as well as BP Mona and BP Morgan looking at offshore wind. The Bill is focused on improving protections and welfare for seafarers, which is important in these challenging times, and is particularly important for Anglesey, which certainly needs investment in apprenticeships and skills. In terms of this amendment, will the Minister confirm that those who are looking to invest in the renewable sector and in ports can be reassured?

[Mr Holden]

I thank my hon. Friend for that intervention—[Interruption.] I did not quite catch what the hon. Member for Glasgow East was saying from a sedentary position. My hon. Friend the Member for Ynys Môn raises some important points. I know she has been a massive campaigner, whether on that nuclear power station in her patch or, as she has raised more specifically today, on the issues around the freeport and the port of Holyhead, which is crucial for our work across the Irish sea. I can confirm to her that the sector is incredibly important, and we recognise how important such jobs are for her community and for coastal communities around the country. That is one of the reasons we are bringing forward this legislation today.

Clause 2 sets out what is meant by a non-qualifying seafarer. This is a person who

“(a) works on a ship providing a service to which this Act applies”—

as defined in clause 1—

“(b) whose work on the ship is carried out in relation to the provision of the service, and

(c) who fails to qualify for the national minimum wage in respect of that work merely because, for the purposes of the National Minimum Wage Act 1998, the person does not work, or does not ordinarily work, in the United Kingdom.”

Paragraph (c) clarifies why they are referred to as “non-qualifying”—they do not meet the criteria—and that is why they need the protection that this Bill provides.

I appreciate that the intention of amendment 43 is to bring the definition of seafarer into line with the definition of “seaman” under the Merchant Shipping Act 1995, as is the intention of the amendments to clause 1 in the name of the hon. Member for Paisley and Renfrewshire North. However, it is vital that we maintain consistency with the terms used in other employment legislation, such as the National Minimum Wage Act 1998 and the National Minimum Wage Regulations 2015. That is where the terminology in the Bill comes from.

There is a risk of incorrect interpretation if we were to accept the amendment, as it may lead to the Bill being interpreted differently from other employment legislation, which is not our intention. Therefore, we need to retain the word “work” in this Bill, rather than moving to “employed or engaged”, as the amendment seeks. There are lots of different connotations of the word “employed” in particular. I hope the hon. Member for Paisley and Renfrewshire North can see from what the Government are proposing that we do intend to cover all the issues he raises.

Amendment 48 seeks to extend the application of the Bill to the exclusive economic zone. Although we hope that appropriate wage rates will extend beyond our waters—indeed, we are having international conversations with partners, particularly those around the North sea, to try to ensure that—this Bill has been carefully calibrated after thorough consultation to focus on work undertaken close to the UK as part of ensuring that the Bill does not interfere with rights and obligations under international law, in particular the United Nations convention on the law of the sea. However, as discussed on amendment 67, seafarers on services from UK ports to offshore wind installations in the EEZ would be covered by the Bill for the portion of their journey that takes place in UK territorial waters, provided that the service calls at a UK port 120 times a year.

[Gavin Newlands]

I thank the Minister for his comprehensive response. I hear what he is saying on the definitions. The amendments on the definition of vessel and seafarer were intended as probing amendments to ascertain why there was a difference. We will keep an eye on any potential unintended consequences, but I will withdraw the amendment. I am disappointed by what the Minister said about those in the offshore renewable industry. I hear what he said: he thinks that they will be covered. He has promised to write to me before Report; if the issue is not dealt with satisfactorily, we may well revisit it on Report. However, on the basis of his answers and his promise, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 1 ordered to stand part of the Bill.

Clause 2 ordered to stand part of the Bill.

Clause 3

Power to request declaration

[Mr Holden]

I beg to move amendment 1, in clause 3, page 2, line 3, leave out subsections (1) to (3) and insert—

“(1) Subsection (2) applies where a harbour authority has reasonable grounds to believe that ships providing a service to which this Act applies will enter, or have entered, its harbour on at least 120 occasions during a relevant year.

(2) The harbour authority must, within such period as is determined by regulations, request that the operator of the service provide the authority with a national minimum wage equivalence declaration (in the rest of this Act, an ‘equivalence declaration’) in respect of the service for the relevant year.

(3) The duty under subsection (2) is subject to any direction given by the Secretary of State under section 11(2)(a).

(3A) A harbour authority which fails to comply with subsection (2) is guilty of an offence and liable on summary conviction to a fine not exceeding level 4 on the standard scale.”

This is the first of a number of amendments concerning national minimum wage equivalence declarations. Taken together, they impose a duty on harbour authorities to request declarations (as it stands, the Bill confers a power to do so). Declarations are to be requested in respect of years determined by regulations and must be provided within a period set out in regulations. Also, as a drafting change, “national minimum wage equivalence declaration” is abbreviated to “equivalence declaration”.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 44, in clause 3, page 2, line 15, leave out “the harbour” and insert “any UK Harbour”.

Amendment 45, in clause 3, page 2, line 15, leave out “120” and insert “52”.

Government amendments 2 to 6.

Amendment 46, in clause 3, page 2, line 23, leave out “the harbour authority” and insert

“all relevant harbour authorities to which the declaration is applicable”.

Clause 3 stand part.

Government amendment 7.

Amendment 47, in clause 4, page 3, line 6, at end insert—

“(c) pension and other payments to be made that formulate a part of seafarer remuneration in relation to a service to which this Act applies.”

Amendment 62, in clause 4, page 3, line 10, at end insert—

“(c) provision prohibiting deductions from remuneration for accommodation costs, food or other entitlements.”

Amendment 49, in clause 4, page 3, line 16, at end insert—

“(5A) The national minimum wage equivalent must not be adjusted to account for accommodation, food, or other items exempted from being charged to seafarers under international convention”.

This amendment will mean that deductions cannot be made for food, accommodation or other exempted items under convention and will facilitate future changes being made with respect to changes in permissible deductions.

Clause 4 stand part.

Amendment 39, in clause 14, page 9, line 13, at end insert—

“‘equivalence declaration’ has the meaning given by section 3(2);”.

See Amendment 1.

Amendment 40, in clause 14, page 9, line 25, at end insert—

“‘relevant year’ has the meaning given by section 3(4A);”.

See Amendment 1.

Clause 13 stand part.

Government new clause 1—Offence of operating service inconsistently with declaration.

[Mr Holden]

As currently drafted, clause 3 confers on harbour authorities the powers to provide that the operator of a service within scope of the Bill provides a national minimum wage equivalence declaration. The nature of the declaration is set out in clause 4, so I will address it when we turn to that clause, but it is essentially a declaration to the effect that they pay any seafarers on board who do not qualify for the national minimum wage at least the national minimum wage equivalent for the time that they worked in the UK or its territorial waters.

A harbour authority may not request an equivalence declaration in respect of any year unless it appears to the authority that ships providing the service will have used the harbour on at least 120 occasions in that year. Clause 3 also includes a power for the Secretary of State to make regulations as to the form of the national minimum wage equivalence declarations and the manner in which declarations are to be provided. Finally, it makes it an offence for an operator to operate a service inconsistently with the declaration and fail to inform the harbour authority within a certain period.

Clause 4 sets out the nature of an equivalence declaration. As it stands, subsection (1) provides that an equivalence declaration in respect of a service to which the Bill applies is a declaration to the effect that either

“there will be no non-qualifying seafarers working on ships providing the service”

or non-qualifying seafarers working on ships providing the service will be paid at least the national minimum wage equivalent for their work on that service in the UK or its territorial waters.

The national minimum wage equivalent will be at an hourly rate specified further in regulations—the hon. Member for Easington asked about that earlier. Regulations may make provision for the hourly rate at which non-qualifying seafarers are remunerated in any period in respect of any work, which may include any provision referred to in subsections 2(2) to (6) of the National Minimum Wage Act 1998, or provision relating to currency conversion. Regulations may also make provision for whether, or the extent to which, a non-qualifying seafarer’s work in relation to a service is carried out in the UK or its territorial waters.

In making regulations under clause 4, the Secretary of State must

“seek to secure that a non-qualifying seafarer is…remunerated at a rate equal to the national minimum wage equivalent only if their remuneration is in all the circumstances broadly equivalent to the remuneration they would receive if they qualified for the national minimum wage.”

That essentially means that we will seek to ensure that the total pay that a seafarer receives for time worked in the UK and its territorial waters is, as a result of the regulations, no less than if they had qualified for the national minimum wage.

We will run a public consultation on the regulations, and my officials are working closely with stakeholders and officials in the Department for Business, Energy and Industrial Strategy and His Majesty’s Revenue and Customs to draft them. As the public consultation takes place, I hope that hon. Members will be able to see what happens.

[Mrs Natalie Elphicke (Dover) (Con)]

The port of Dover is one of those directly affected and, given the situation in relation to P&O, which affected so many seafarers in my constituency, it is a particular concern. In relation to clauses 3 and 4, I would be grateful if my hon. Friend the Minister could confirm that he will take into account the considerable concerns of port operators about how the declarations—with the regulations underpinning them—will be managed and administered, because that is not within the usual business of port operators; it is an exception to the way in which they ordinarily operate. I know—I say this on behalf of the port of Dover in particular—that although of course they will play their part in ensuring that seafarers have the right terms and conditions, they want to ensure that they know what they have to do and how they are supposed to do it, that there is no room for dispute and that they are given the support that they need to be able to administer this.

[Mr Holden]

I thank my hon. Friend for those points. They are particularly important. I do not think that we would be here today if it was not for her huge campaigning efforts on behalf of her constituents in relation to the awful actions of P&O. I absolutely agree with her that how this is implemented must be taken into account. I am sure that her port will be consulted as part of the broader consultation as regulations are brought forward, and I urge her and other interested hon. Members to take part in the consultations as we move forward.

Amendment 1, tabled in my name, turns the discretionary power to request an equivalence declaration into a mandatory duty—this is quite an important change, which hon. Members mentioned at earlier stages—where the harbour authority has reasonable grounds to believe that ships providing a service will enter, or have entered, its harbour on at least 120 occasions during a relevant year. Reasonable grounds may include a service’s schedule in previous years, or may arise from the normal communications that a harbour authority would have with operators using its ports.

The period within which a harbour authority must request an equivalence declaration will be determined by regulations, which will come forward. A harbour authority that fails to comply with its duty to request an equivalence declaration will be guilty of an offence and liable on summary conviction to a fine not exceeding level 4 on the standard scale. The duty will be subject to directions made by the Secretary of State, which I will discuss in further detail when we come to clause 11, which has an important bearing on this aspect of the legislation.

This amendment is part of a larger set of amendments that will also make the formerly discretionary powers for harbour authorities to impose surcharges, and to refuse access to their harbour, into duties, which is something that Opposition Members raised extensively at earlier stages. As things currently stand, where a harbour authority does not exercise its powers in the circumstances provided for in the Bill, the Secretary of State has powers to direct harbour authorities to do that. We want to see it turned into a duty because, through continued engagement with port stakeholders, we have been informed that harbour authorities are unlikely to exercise their powers without being directed to, and the direction-making power actually was intended as a back-up power and was not intended to be used as the primary means of ensuring that the regulations are met and a minimum wage equivalent is paid. It would be a significant administrative burden on the Department if every instance had to have an imposition from the Secretary of State, and that would undermine the effective functioning of the legislation.

The change from discretionary powers to duties will strengthen the Bill by ensuring that harbour authorities must request declarations, impose surcharges and refuse access to their harbour where appropriate, without requiring the intervention of the Secretary of State at every juncture. The intention is that we will ensure that operators of services in the scope of the Bill are made subject to the requirements, and the process will be made simpler for harbour authorities.

Amendments 2 and 5, tabled in my name, are consequential on amendment 1. Amendment 2 expands the existing power in clause 3(4) by adding a new paragraph that allows regulations to make provision

“as to the period within which equivalence declarations are to be provided”

by operators. Where an operator does not provide an equivalence declaration within that period, the harbour authority must impose surcharges under the new clause 2. This ensures that the point at which their duty begins to apply is clear to harbour authorities.

Amendment 5 makes provision for declarations to relate to a fixed relevant year, starting on a date to be set out in regulations. Providing a fixed relevant year will ensure that harbour authorities and operators are all working to the same period, providing consistency and certainty for harbour authorities to comply with their duties, reducing administrative burdens and making enforcement much more straightforward.

[Gavin Newlands]

On amendment 5, was any thought given to the possible unintended consequence of setting a specified date in regulation, namely that it might allow operators to consider means of circumventing the legislation through port hopping? As was passed on to me, it is Nautilus’s belief that, for that reason, it should be a 12-month rolling period. Has the Department considered that?

[Mr Holden]

The hon. Gentleman makes a fair point. I will come to the broader concerns around port hopping that hon. Members have raised at previous stages. We do not think it will be an issue. I will come back to the hon. Gentleman at a later stage; if he continues to have an issue, perhaps he can raise it then.

Amendment 5 makes provision for declarations in a fixed year. These amendments are therefore necessary to ensure the effective functioning of the Bill, and will do just that.

Amendments 3 and 4, tabled in my name, abbreviate

“national minimum wage equivalence declaration”

to “equivalence declaration”—that is all. This is a minor drafting change intended to improve the Bill by simplifying a frequently used term.

Amendments 39 and 40 to clause 14 are consequential on amendments 1 and 5, and give the phrases “equivalence declaration” and “relevant year” the same meaning as in clause 3.

Amendment 7, tabled in my name, allows for equivalence declarations to be provided before, during or after the year to which they relate, and for declarations to relate to part of a year. The amendment will prevent any gaps in coverage in declarations and requires harbour authorities to request a declaration whenever it becomes clear to them that a service is in scope of the Bill. A harbour authority must request a declaration from an existing service before the relevant year starts if it has reasonable grounds to believe that a ship will call at its harbour 120 times during the year. In the event that, part way through a year, a harbour authority has reasonable grounds to believe that ships providing the service will have entered the harbour at least 120 times, it must request a declaration part way through that year, or at the end of the year if it was not clear until that point.

Amendment 6 removes subsections (5) and (6) of clause 3, which provide for the offence of operating inconsistently with an equivalence declaration. New clause 1 provides for an offence adapted to the proposed new system for equivalence declarations. Amendment 6 and new clause 1 therefore also cater for the fact that an equivalence declaration may, as a result of amendment 7, be provided before during or after the relevant year to which it relates.

Subsections (2)(a) and (3)(a) of new clause 1 mean it will be a criminal offence to operate a service inconsistently with a declaration from the start of the relevant year or at the time a declaration is provided during a relevant year. This will ensure that the new offence covers all circumstances in which an equivalence declaration may be requested, and provides legal certainty to operators as to when they may be guilty of an offence.

Clause 13 provides definitions of “harbour” and “harbour authority” that align with the definitions in the Harbours Act 1964 in England, Wales and Scotland, and the Harbours Act (Northern Ireland) 1970 in Northern Ireland. This will ensure consistency with existing legislation and help to clearly identify the relevant authorities for the purposes of the Bill. The clause also currently provides that where there is more than one harbour authority in respect of a harbour,

“the Secretary of State may by direction specify which of them is to be treated as the harbour authority in respect of the harbour”

for the purposes of the Bill. This provision is intended to avoid any uncertainty as to which is the relevant harbour authority for a particular harbour, and avoid multiple harbour authorities exercising powers in respect of a single service, which will help to ensure that the Bill’s provisions are applied consistently and effectively.

[Gavin Newlands]

I thank the Minister for giving way once again. Perhaps I should have intervened slightly earlier, as I have a query about amendment 7. The amendment allows for declarations to be made for part of the year. As it stands, declarations relate to 120 visits a year. If it is a partial year—say six months, for ease—will it still be 120 visits over those six months, or will it be a pro rata number of visits for that partial period?

[Mr Holden]

My understanding is that it is for the whole year. The schedules for these operators are based on a whole year; it is very rare that they are not. These are big operations that do not dip in and out. They are not easy to set up; they often involve long-standing arrangements with port authorities, and are based on the whole year. However, if the hon. Gentleman would like to write to me following this sitting, I will obviously respond to any particular issues or examples he wishes to raise.

[Grahame Morris]

I hope this intervention does not prejudice the fact that I would like to speak to amendment 67, which stands in my name and that of a number of colleagues.

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[Mr Holden]

I thank the hon. Member for the first point he made, about the amendment creating a duty rather than a power. That is exactly why we have done this; hon. Members from across the House made the point, and I am glad that we have got there.

I am fully aware of the issue around level 4 and the levels of fines. I will write to the hon. Member about the specifics, and we can discuss them during the Bill’s later stages, but my understanding is that there were specific reasons behind that decision, related to different fine levels in different parts of the United Kingdom; I raised that issue myself in earlier discussions with officials. We will happily look at it again, because as the hon. Member has rightly said, I do not want it to be a lesser offence for the port operator to not comply with its duty than to comply with its duty. That is a very sensible and important point, and I will happily write to the hon. Member to explain why we have arrived at our position.

Opposition amendments 44 and 46 aim to change the applicability of the Bill from “the harbour” to “any UK harbour”, and from “the harbour authority” to

“all relevant harbour authorities to which the declaration is applicable”.

As hon. Members will be aware, the Bill refers to “the harbour” rather than “a harbour” in order to keep the focus on particular services calling between two specific ports. The scope of the Bill encompasses services calling at the harbour in question at least 120 times a year. In particular, the effective enforcement of the Bill relies on there being one harbour authority responsible for monitoring and enforcement of a service. Individual harbours may be able to anticipate that a particular service will call in that harbour 120 times in the year, especially if that service has done so in previous years or via volume of a new service. However, it would be very difficult for a harbour to anticipate whether a particular operator will have services to other harbours that would amount to 120 calls in harbours in the UK per year.

The amendments would also create confusion about which harbour authority should request an equivalence declaration, and which is therefore responsible for imposing a surcharge. For example, if an operator operated two services using the same ships interchangeably, with one calling at one port 60 times a year and another calling at another port 60 times a year, which would be responsible for requesting a declaration or imposing a surcharge?

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We continue to believe, as the Government originally did, that calling at a UK port once a week is a sufficiently close tie between a seafarer and the UK economy. From experience, we know that rogue operators will do whatever they can to get round and exploit the rules. We should not let them. That is why we fully support amendment 45.

[Mr Holden]

I will not go over all the points that I made earlier, but I will address some of the specific issues raised by hon. Members. My hon. Friend the Member for Dover mentioned bilateral meetings between the Prime Minister and the President of the French Republic. There have been positive discussions between officials to date; I do not know if this will be raised specifically, but the discussions have been very positive. The Transport Secretary is also hoping to visit France at some point in the not-too-distant future.

My hon. Friend the Member for Dover and the hon. Members for Easington and for Wakefield mentioned deductions. We will have a proper public consultation on the draft regulations in this space. I have already noted—as I hope hon. Members have—the Low Pay Commission’s recent recommendations that this issue should be looked at. I hope hon. Members will take part in the consultation and contribute to the regulations as they are being drafted, without feeling the need to press specific amendments to a vote today.

The hon. Member for Paisley and Renfrewshire North raised the issue of the British Ports Association. We have not seen its legal advice—if he would like to share it with us, that would be lovely—but we do not believe it has a strong legal position.

[Sir John Hayes]

My experience as a Minister was that Government lawyers never assured us that we were in a strong legal position on anything—at most, they offer a 50:50 chance. The Minister might want to think again about the comments made in Committee; the terms and conditions seem to be critical. The Government—the Minister, in particular—deserve great praise for this legislation, but it would be a grave error to get pay right but not get terms and conditions right at the same time.

[Mr Holden]

My right hon. Friend makes an important point. We are looking into the terms and conditions, which will be there in the regulations, and we will have a wide public consultation. He is absolutely right: we want to get this right.

The legal issue raised by the hon. Member for Wakefield was about legal risk in the 52 versus 120 days element. When a ship stops at multiple points in Norway, for example, then has one trip a week to the UK, to argue that it should be covered by UK legislation rather than Norwegian legislation would put it into a very difficult international legal position. Under international maritime law, that would expose us to greater legal risk for the entirety of the legislation, rather than on specific points. I hope hon. Members understand.

The hon. Member for Glasgow East made a number of comments. On the broad issues, at least, I say to him that the Government have raised the threshold at which people pay income tax, taking millions of people out of tax. They have introduced the national living wage and reduced the age at which people qualify for it. Moreover, and in a massive and long-term benefit for huge numbers of people, they have expanded auto-enrolment in pensions to hugely benefit working people. His comments were broadly ill judged and, in a certain way, bringing forward this conversation today shows our commitment to delivering for working people. While I appreciate that everyone in the Scottish National party is an expert on ferries these days, I am not sure they are when it comes to this legislation.

[David Linden]

Will the Minister give way?

[Mr Holden]

I have finished my comments already.

Question put, That the amendment be made.

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Requirement to Provide Information

[Mr Holden]

I beg to move amendment 8, in clause 5, page 3, line 22, after “is” insert “or at any time was”.

This is consequential on Amendment 7.

[The Chair]

With this it will be convenient to discuss the following:

Government amendment 9.

Clause stand part.

Government amendments 10 to 12.

Amendment 63, in clause 6, page 4, line 37, at end insert—

‘(6A) An inspector may request information from—

(a) an officer of Revenue and Customs, or

(b) Maritime and Coastguard Agency,

if they consider it necessary for either of the purposes specified in subsection (2), and the authority to which the request was made must respond within 14 days.”

Clause 6 stand part.

New clause 8—Report: evidence of nationality-based pay discrimination—

‘(1) The Secretary of State must produce and publish a report setting out any evidence of nationality-based pay discrimination against non-qualifying seafarers.

(2) The evidence referred to in subsection (1) must include, but need not be limited to, aggregated data drawn from—

(a) minimum wage equivalence declarations requested by harbour authorities;

(b) information provided in response to notices under section 5;

(c) evidence from inspections under section 6; and

(d) any other sources of information as the Secretary of State considers appropriate.”

[Mr Holden]

As previously, I will address the clauses and speak to the amendments, including those from the Opposition. Clause 5 allows the Secretary of State—in practice, operating through the Maritime and Coastguard Agency—by notice to require operators to provide information for the purpose of establishing whether a service is being operated consistently with an equivalence declaration provided by the operator. It is an offence for an operator to fail to provide information required by the Secretary of State under this clause or to provide information that is false or misleading.

An offence under this clause is punishable on summary conviction by a fine in England and Wales, or by a fine not exceeding level 5 on the standard scale in Scotland and Northern Ireland. The sort of information that the Maritime and Coastguard Agency may request under this clause may include, but is not limited to, payslips, seafarer employment agreements and payroll information.

Clause 6 empowers an inspector appointed by the Secretary of State to board a ship in a harbour in the United Kingdom or enter any premises for the purposes of establishing whether a service is being operated consistently with an equivalence declaration, or of verifying information provided under clause 5. In practice, this will be an inspector from the Maritime and Coastguard Agency, which is responsible for enforcement in many areas in this sector and is the most appropriate agency for the job.

It is an offence for any person to intentionally obstruct an inspector in the exercise of their powers; to fail without reasonable excuse to comply with a requirement imposed by this clause, or to prevent another person from completing such a requirement; or to make a statement that the person knows is false or misleading, or recklessly make a statement which is false or misleading, in purported compliance with a requirement imposed under this clause. Such an offence is punishable on summary conviction by a fine in England and Wales, or a fine not exceeding level 5 on the standard scale in Scotland and Northern Ireland.

This clause, together with requests for information under clause 5, will allow the Maritime and Coastguard Agency to play an enforcement role in checking whether a service is being operated consistently with a declaration. In practice, this will be done through intelligence-based checks in the event of credible evidence suggesting a service may be being operated inconsistently with a declaration and random spot checks. It is important to distinguish the enforcement role from the harbour authority’s role in the compliance process, which is mostly administrative. Harbour authorities are not required to make inquiries as to whether a service is being operated consistently with a declaration.

Amendment 8, tabled in my name, is consequential on amendment 7 to clause 4, which allows for equivalence declarations to be provided before, during or after the year to which they relate and for declarations to relate to part of a year. Amendment 9 is a minor drafting change to abbreviate “national minimum wage equivalent declaration” to “equivalence declaration”, as discussed with respect to amendments 1, 3 and 4.

Amendment 10 to clause 6, tabled in my name, is consequential on amendment 7 to clause 4, which allows for equivalence declarations to be provided before, during or after the year to which they relate and for declarations to relate to part of a year. Amendments 11 and 12 to clause 6 are consequential on the abbreviation of “national minimum wage equivalence declaration” to “equivalence declaration”. In particular, amendment 12 changes the word “declaration” in clause 6(4)(c) to “statement”, so that this is not confused with the term “equivalence declaration”.

Opposition amendment 63 to clause 6 seeks to ensure that inspectors are able to access the appropriate information from Government agencies in order to exercise their enforcement powers. This is unnecessary, as the Maritime and Coastguard Agency will be the relevant enforcement agency and so will already have access to its own information. We have discussed data access with His Majesty’s Customs and Revenue, and it is considered unlikely that it would hold relevant information on seafarers in the scope of the Bill, as they are not already entitled to national minimum wage. As such, we do not consider it necessary to include information-sharing provisions in the Bill, as the MCA is the relevant authority.

Opposition new clause 8 would require the Government to produce and publish a report setting out any evidence of nationality-based pay discrimination against non-qualifying seafarers. Under the Equality Act 2010 (Work on Ships and Hovercraft) Regulations 2011, limited nationality-based discrimination is permitted. Under the Bill, we will not have the relevant evidence to which the new clause refers. Nationality is not relevant to whether someone is a non-qualifying seafarer, so we do not intend for declarations to require operators to provide information relating to nationality. Such information would also not be requested by a notice under clause 5, as it is not relevant to whether the national minimum wage equivalent is being paid. The Government are conducting a post-implementation review of the Equality Act 2010, which will consider nationality-based pay discrimination. I request that the Opposition do not press the new clause.

--- Later in debate ---

[Grahame Morris]

I support the arguments put forward by my colleagues on the Front Bench. Will the Minister give some clarification? I noted what I thought was an assurance in his comments. Our amendment 63 is an attempt to make the enforcement process clearer, in terms of ensuring that the inspectors have the requisite not just powers but information, from HMRC in particular, in order to carry out the task that the Bill assigns to them. I wonder whether the Minister could clarify—maybe I am missing something; I heard him say that it would be the Maritime and Coastguard Agency that would be the inspectors. Could that function be delegated to the harbour authority or to staff of the harbour authority acting on behalf of the MCA? I would appreciate if he could clarify that point in his summing up.

Nationality-based pay discrimination is the elephant in the room. We must get to grips with it. I realise that the issue is incredibly complicated because of international treaties, but we need to get to the kernel of the issue because this is what is happening. Unscrupulous ferry operators in the sector are displacing UK-based seafarers on a “fire and rehire” basis, which Labour finds anathema.

There were Conservative MPs who were incandescent at the tactics employed by P&O Ferries on 17 March—St Patrick’s day—in that terrible action it took. We must see if we can address that, and the hon. Member for Paisley and Renfrewshire North made a good suggestion about using the expertise from the International Transport Workers’ Federation as part of the collective effort, particularly where the issues relate to seafarers from overseas. I wonder if the Minister might consider not only that, but the suggestion to use the facilities that were built—at some cost to the public purse—for the Brexit customs processing facilities and consider whether those not being used adequately could also be used for that purpose.

[Mr Holden]

I would like to provide some clarification on the points made initially by the hon. Member for Easington. The Maritime and Coastguard Agency is the relevant enforcement agency, not the harbour authority. Furthermore, it would be unlawful to delegate powers in this space to harbour authorities, so I wanted to make that clear. In response to a point made by the hon. Member for Paisley and Renfrewshire North, the Maritime and Coastguard Agency does not need to be named in the Bill because it enforces on behalf of the Secretary of State. This is normal drafting for Government agencies that are subsidiaries of Departments.

The Department has obviously engaged extensively with HMRC on this issue. The truth is, as this is not enforcing national minimum wage legislation but trying to get the national minimum wage equivalent, the amount of information that HMRC holds in respect to many of these people is either nil or incredibly limited, as many of them will not be UK taxpayers. HMRC has been clear that it is happy to share anything it can to make enforcement easier, but it is not in the exact same space. HMRC already enforces national minimum wage for seafarers who qualify for it, but within this legislation we reflect that much of that falls out of the normal scope of UK legislation.

[Gavin Newlands]

On that point, if I can refer back to the point I made in my speech, does the Minister agree with HMRC—despite all the evidence to the contrary: not just P&O, but many other operators—that there is no disproportionate risk of seafarers not being paid the national minimum wage? Does he think that that is credible?

[Mr Holden]

Sorry, could I ask the hon. Member what the disproportionate risk was in reference to?

[Gavin Newlands]

Of seafarers particularly not being paid the national minimum wage compared to other sectors.

[Mr Holden]

Part of the issue here is that we are trying to address the national minimum wage equivalence. This is beyond normal UK territorial extent, which is the issue at stake here, which is why we are doing legislation that goes beyond our normal boundaries and does butt up against some of those international maritime obligations that we have, whether that is the case for inland ferries or anything else within the UK. I am not an expert on what HMRC has said, but I assume that what it has said is correct. I imagine there are other elements in the broader economy, where perhaps there are greater language barriers and piecework, where HMRC targets the normal national minimum wage legislation and where it sees the greatest abuses. That is why I am sure HMRC is quite clear in its thinking.

I urge Members, based on what I have said in response to the amendments, to withdraw them, and, if not, to support the Government and vote down the Opposition’s amendments.

--- Later in debate ---

[The Chair]

With the leave of the Committee, I will put a single question on these amendments.

Amendments made: 10, in clause 6, page 4, line 7, after “is” insert “or at any time was”.

This is consequential on Amendment 7.

Amendment 11, in clause 6, page 4, line 8, leave out “a national minimum wage” and insert “an”.

See Amendment 1.

Amendment 12, in clause 6, page 4, line 21, leave out “declaration” and insert “statement”.—(Mr Holden.)

This is consequential on Amendment 1.

Clause 6, as amended, ordered to stand part of the Bill.

Clause 7

Imposition of Surcharges

[Mr Holden]

I beg to move amendment 13, in clause 7, page 5, line 8, leave out subsections (1) to (4).

This is the first of a number of amendments and new clauses which, taken together, require harbour authorities to impose surcharges (as opposed to merely allowing them to do so) and set out the circumstances in which they must do so. The circumstances are related to the fact that equivalence declarations may be provided before, during or after the year to which they relate.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 64, in clause 7, page 5, line 32, leave out subsections (5) and (6) and insert—

‘(5) The Secretary of State must by regulations provide for a national tariff of surcharges by which the amount of the surcharge is to be determined.”

Government amendment 14.

Amendment 50, in clause 7, page 5, line 33, after “regulations” insert—

“, where the minimum surcharge to be imposed on an operator where Subsection (2) applies shall be no less than 300 per cent of the difference between the amount calculated as the national minimum wage equivalence for the operator and the amount in total paid by that operator”.

Government amendment 15.

Amendment 51, in clause 7, page 5, line 36, leave out “specified by a harbour authority”.

Amendment 52, in clause 7, page 5, line 37, leave out “the authority” and insert “each authority”.

Government amendments 16 and 17.

Amendment 65, in clause 7, page 5, line 43, leave out paragraph (e).

Government amendments 18 and 19.

Amendment 53, in clause 7, page 6, line 1, leave out subsection (8) and insert—

‘(8) Monies collected by a harbour authority under this section must be transferred to the Secretary of State at a frequency of not less than twice per calendar year for disbursement towards the costs of shore-based welfare facilities for seafarers.”

This amendment would ensure that revenue from surcharges is passed to the Secretary of State for Transport rather than being held by harbour authorities and would direct UK Government spending to welfare facilities.

Amendment 54, in clause 7, page 6, line 3, leave out paragraph (a).

Government amendment 20.

Clause 7 stand part.

Government amendment 21.

Amendment 55, in clause 8, page 6, line 10, leave out “specified by a harbour authority”.

This amendment is consequential on earlier amendments relating to the surcharge.

Amendment 57, in clause 8, page 6, line 14, at end insert—

‘(2A) Any objection must be made to the Secretary of State within a length of time which may be specified by regulations. Any objection made after this time period will be considered void.”

This amendment allows the Secretary of State to set a time limit for any objections to be lodged.

Government amendments 22 and 23.

Amendment 56, in clause 8, page 7, line 1, leave out “to direct the harbour authority”.

Clause 8 stand part.

Government new clause 2—Imposition of surcharges: failure to provide declaration in time.

Government new clause 3—Imposition of surcharges: in-year declaration that is prospective only.

Government new clause 4—Imposition of surcharges: operating inconsistently with declaration.

[Mr Holden]

I rise to speak to the Government amendments, the Opposition amendments, clauses 7 and 8 and Government new clauses 2 to 4.

As drafted, clause 7 empowers a harbour authority to impose a surcharge on an operator. The power applies in the event that the operator fails to provide an equivalence declaration under clause 3, or if it appears to the authority that the operator has committed an offence under clause 3(5). Where such a determination is made, the harbour authority may impose a surcharge on the operator on any occasion when a ship providing the service enters the harbour.

The amount of the surcharge is to be determined by a published tariff of surcharges set by the harbour authority in accordance with regulations made under the clause.

[Grahame Morris]

On that specific point, I am sure the Minister can clear up the issue I want to raise. The surcharge relates to ports and harbour authorities competing with one another. Will the surcharge be consistent or will it vary from one port and harbour authority to another?

[Mr Holden]

That will be clarified through the tariff regulations, which we will introduce. It will depend on the nature of the ship and the size of it, but we aim for consistency in terms of different vessels in different areas, and a tariff will be established.

The clause provides a power to make regulations that will make provision to—

[Grahame Morris]

rose—

[Mr Holden]

I hope that what I am about to say will answer the hon. Gentleman’s question. The clause will make provision for publication of a determination to impose surcharges; set out how the imposition of a surcharge is to be notified to the operator; set out the period within and the manner in which a surcharge must be paid; and make provision for notification of a surcharge to the Secretary of State and publication of the fact that a surcharge has been imposed. Surcharges paid under the clause may be retained by the harbour authority for the delivery of any of their functions, or for shore-based welfare facilities for seafarers.

I turn to Government amendments 13, 14, 16, 17, 19 and 20. As with the Government amendments to clause 3, these amendments, along with the amendments introducing new clauses 2, 3 and 4, will make the previously discretionary powers of harbour authorities to impose a surcharge mandatory duties, and set out the circumstances in which these duties should be exercised.

As discussed in relation to clause 3, from our continued engagement with port stakeholders we have been informed that harbour authorities are unlikely to exercise their power to impose a surcharge unless directed to. The direction-making power was intended as a back-up power and was not intended to be used as the primary means. However, this is all part of addressing that issue and ensuring the effective functioning of the Bill.

New clauses 2, 3 and 4 therefore set out the circumstances in which a harbour authority is under a duty to impose a surcharge. In summary, new clause 2 sets out surcharges to be imposed when an equivalence declaration is not provided in time; new clause 3 sets out when a declaration relates only to part of a year; and new clause 4 sets out when a service is operated inconsistently with a declaration.

Amendment 13 amends clause 7 to remove the discretionary power for harbour authorities to impose surcharges, which is now replaced with the new duties set out in new clauses 2, 3 and 4. As a result, there is no need for regulations that make provision as to the publication of a determination to impose surcharges and that will be removed by amendment 17. Subsections 1 to 4 of clause 7, which are removed by amendment 13, are replaced by new clauses 2, 3 and 4, which provide for duties to impose surcharges and the circumstances in which those duties apply. Amendment 14 is consequential on amendment 13.

Amendment 16 provides that a duty to impose a surcharge is subject to direction-making powers of the Secretary of State under clause 11, as amended by amendments 32 to 34, to not comply with their duties or to comply with their duties in a particular way. I will discuss the powers of direction in greater detail when we come to clause 11. It also provides that a harbour authority that fails to comply with a duty to impose a surcharge is guilty of an offence and liable, as previously mentioned, on summary conviction to a fine not exceeding level 4 on the standard scale. As with the offence for not requesting a declaration, this will be enforced by the Maritime and Coastguard Agency and is essential to ensure that the Bill functions properly.

Amendment 19 provides for regulations to make provision requiring a harbour authority that has imposed a surcharge to notify the Secretary of State if the surcharge is not paid in the required timeframe. It is necessary for the Secretary of State to be aware of circumstances where harbour access is likely to be refused, in order to monitor the operation of the Bill, take steps to mitigate disruption caused by the refusal of access if necessary, which will be pertinent in relation to very busy sea lanes, and consider if a direction should be issued to the harbour authority under clause 11(2), as amended by amendments 32 and 33, in circumstances where the refusal of access might cause damage to key passenger services or national resilience. Amendment 52 is consequential on amendment 44 to clause 3.

This group of amendments also relates to clause 8 of the bill, which provides a process for the making of objections to surcharges imposed by harbour authorities under clause 7. As the Bill currently stands, an interested party may make an objection to a harbour authority’s determination to impose a surcharge, the tariff of surcharges specified by a harbour authority, or the imposition of a surcharge or its amount.

The Secretary of State will then consider the objection and any representations made and may decide to approve the decision to which the objection relates, or to direct the harbour authority to revoke the determination, revise the tariff, revoke the imposition of a surcharge, or increase or decrease the amount of the surcharge. The Secretary of State will communicate the decision to the harbour authority and the objector and publish it online.

The Secretary of State may also direct the harbour authority to repay any surcharges required as a result of a decision under this clause. If a harbour authority does not comply with a direction given by the Secretary of State under the clause, they will be guilty of an offence and liable on summary conviction to a fine not exceeding level 4 on the standard scale. It should be noted that where an objection has been made to a harbour authority’s determination to impose a surcharge, an interested person cannot make another objection to that same determination. I shall respond to other amendments as they are moved.

[Mike Kane]

I rise to speak in favour of amendment 64, in my name and the names of all Opposition and SNP members of the Committee. I am fascinated that Government Members often like to talk about the Laffer curve and the nanny state.