New Clause 9 - Directors of companies operating services to which this Act applies: personal liability for non-compliance of operator

Seafarers’ Wages Bill [Lords] – in a Public Bill Committee am 3:45 pm ar 17 Ionawr 2023.

Danfonwch hysbysiad imi am ddadleuon fel hyn

‘(1) A director of a company operating a service to which this Act applies (the “operator”) commits an offence where—

(a) the operator has committed an offence under section 3(5); or

(b) the operator has failed to comply with a request for a national minimum wage equivalence declaration.

(2) A person guilty of an offence under subsection (1) is liable—

(a) on conviction on indictment, to a fine, or

(b) on summary conviction, to a fine not exceeding the statutory maximum.

(3) Where a person is guilty of an offence under subsection (1), the court may make a disqualification order against that person if that person is registered as a director of any company registered in the United Kingdom.

(4) The maximum period of disqualification under subsection (3) is 15 years.’—

Brought up, and read the First time.

Photo of David Linden David Linden Shadow SNP Spokesperson (Social Justice) 4:00, 17 Ionawr 2023

I beg to move, That the clause be read a Second time.

It is a great pleasure to serve under your chairmanship, Ms Harris. I am conscious that I am the only thing stopping people getting out of this room, but I want to reflect on the fact that the Minister said, “Let’s not look at commissioning reports.” I do not necessarily agree and I did not vote that way, and actually, new clause 9 is specifically about putting into statute how to deal with some of the directors. For the remainder of the debate, I will refer to the new clause as “the Hebblethwaite amendment”.

Throughout this Committee’s proceedings, we have spoken about the importance of teeth and of tightening things up. One reason why we have come to this point and why the legislation is necessary in the first place is the actions of company directors and bosses who have decided to act in such a way as to exploit the workers, as was the case at P&O. If we are going so far as to pass the Bill, which the SNP supports—although we would have liked to have seen more amendments to it—let us at least make sure that it has the teeth to deal with the some of these individuals, who are not exactly reputable.

Let us start with Peter Hebblethwaite, the CEO of P&O, who was paid £325,000 a year before bonuses. Let us remember that this is a man who admitted to a Select Committee of this House that he knew that the action he was undertaking as company director was illegal, but he proceeded anyway, and he had the gall to say that he would do it again.

I absolutely agree with the RMT’s general secretary, Mick Lynch, who said:

“Gangster capitalists should not be rewarded for their appalling employment practices; they should be punished with the full force of law.”

That is exactly what my new clause seeks to do: to make sure that we have in statute the ability to deal with these capitalist gangsters who seek to ride roughshod over seafarers, if hon. Members will pardon the pun.

Let us not forget that this man was responsible for the unlawful sacking of 786 seafarers by a pre-recorded message on Zoom in March last year. He is already out there promoting himself again, scot-free—I think he has had a promotion at DP World. The kind of person this legislation would manage to tackle, if they fell foul of it, is one who admitted breaking the law when questioned by members of a Select Committee, as I said, and who used handcuff-trained, balaclava-wearing security guards to remove dedicated, unionised seafarers, replacing them with non-unionised workers, many of whom are paid a fraction of the UK minimum wage. After experienced crew were fired, the UK coastguard repeatedly detained P&O Ferries’ ships for a lack of crew training, including fire safety and lifeboat drills. He was responsible for a non-unionised P&O Ferries crew from Malta working 17 weeks straight with no shore leave. Let us not forget that this is a gentleman whose company took millions of pounds from the British Government in subsidies during covid-19. I could go on about how utterly unfit Peter Hebblethwaite is, and how he has caused so much distress to many constituents of the hon. Member for Dover.

Photo of Karl Turner Karl Turner Llafur, Kingston upon Hull East

Is it right that an obvious calculation that would have been made about sacking 786 British seafarers and replacing them with exploited, poorly paid staff was that nothing was going to be done in terms of person liability? It was almost encouraged. Indeed, I would go further to say that it was done on the basis that, first, nothing would happen personally, and secondly, this particular Tory Government would turn a blind eye. That is the truth of what happened, is it not?

Photo of David Linden David Linden Shadow SNP Spokesperson (Social Justice)

The hon. Member is spot on. The reality is that this gentleman factored in that he would appear before a Select Committee, that it would be uncomfortable and that he would probably have to get some crisis comms advice. I rather suspect that Peter Hebblethwaite is walking around waving the fact that he has been able to withstand all this pressure from Parliament as a feather in his cap. He will see it as some sort of virtue that he can sell to future employers. The hon. Member is absolutely spot on: the fact that there is no personal liability means that these kinds of directors will behave with impunity.

New clause 9 does not mandate Members to vote for a report. It mandates us, on a moral basis, to vote for action to ensure that a company director who was as egregious as Peter Hebblethwaite can never again get away with that. Members of this House have a responsibility to stand up for their constituents. On that basis, I have tabled the new clause.

Photo of Natalie Elphicke Natalie Elphicke Ceidwadwyr, Dover

I wish to speak about this new clause, because we are all of the view that Peter Hebblethwaite should not be allowed to be a director. I made a formal complaint to the Insolvency Service on directors disqualification for the whole of that board. The Insolvency Service has still not completed its civil proceedings, although it has said that it is not minded to take criminal proceedings. It is clearly unacceptable that company bosses are allowed to act in that way and that directors disqualification does not apply.

This is a specific Bill dealing with a specific set of circumstances. I would like the relevant Department to look at why the Company Directors Disqualification Act 1986 and the criminal obligations in the Insolvency Service did not apply to this specific case. I have made representations to the appropriate Ministers accordingly.

I completely agree with the sentiments expressed by the hon. Member for Kingston upon Hull East, except his view that the Government have not taken any action. Throughout the P&O situation, we have walked literally shoulder to shoulder in support of people.

Photo of Karl Turner Karl Turner Llafur, Kingston upon Hull East

I think the hon. Lady misunderstood what I said; perhaps I was not clear enough. I did not say that the Government have not taken action. Of course they have—we have a Bill. That is a start. It is not strong enough by any stretch of the imagination, frankly, but it is a start, and I commend the Ministers who were responsible for putting it together on an incredibly speedy timescale. However, the fact is that the calculation was made that the Government would turn a blind eye. That is the suggestion that I put to the Committee, and I think it is right. That was the reality of it—that nothing would happen.

Photo of Natalie Elphicke Natalie Elphicke Ceidwadwyr, Dover

I thank the hon. Gentleman for that intervention. That is clearly rubbish, because the Government at the time, including the then Secretary of State, my right hon. Friend Grant Shapps, took immediate action—action that no one expected to be taken—as did the Minister at the time, my hon. Friend the Member for Witney. I was involved directly in that action along with the then Secretary of State, the then Prime Minister and a number of Government Ministers, including my hon. Friend the Member for Witney, in relation to this issue. That action is the reason why we have the nine-point plan and why we have the Bill.

Opposition Members will always say that whatever the Government do does not go far enough. However, I have to say, in representing the people in Dover who were specifically affected by P&O, that I am very proud of the action that we have taken across the Chamber and so far in this House. I want to see the Bill put on the statute book at pace.

Photo of David Linden David Linden Shadow SNP Spokesperson (Social Justice)

The hon. Lady is talking about the importance of taking action. Other than a pretty toe-curling Select Committee appearance and a couple of bad media interviews, the only action I have seen so far is that Peter Hebblethwaite has received a promotion. He is still able to act as a company director, so for the sake of the hon. Lady’s constituents, I ask her to reflect on the fact that until such a time as Peter Hebblethwaite is unable to act as a director and get away with such behaviour in future, that action will not be enough.

Photo of Natalie Elphicke Natalie Elphicke Ceidwadwyr, Dover

As I said, I do not think that Peter Hebblethwaite should be a director and I am taking steps to ask the Insolvency Service to remove him.

Photo of Natalie Elphicke Natalie Elphicke Ceidwadwyr, Dover

I will come back to the hon. Gentleman in a moment. What we have seen with P&O is why I think the right place for tackling this is through the Department for Business, Energy and Industrial Strategy, which I have been encouraging to look at this issue. P&O did not do this once or twice, but three times: it promoted someone to be chief executive who did what the bosses wanted, and then that person either got a payout and got moved on, or got a payout and got promoted. We have seen a pattern of behaviour where people at the senior level have been rewarded for doing what is in the owners’ interests, to the detriment of the company as a whole. We need to look at that, because that pattern of business behaviour is very clear on the face of it and it ought to have been clear to Companies House. We should look at that in relation to not just P&O, but other companies.

Photo of Karl Turner Karl Turner Llafur, Kingston upon Hull East

I am sorry that the hon. Lady thinks what I said was “clearly rubbish”. The point that I was making—I will try to be calm—is that there was no deterrent. That should be the test. If she is satisfied that the Bill will deter all the bad employers from potentially following suit and making the same calculation—that things cannot be affected in a way that deters them from taking such terrible actions—that is fine, and she is content with the Bill. My point is that the Bill does not provide a deterrent, but the new clause proposed by the hon. Member for Glasgow East definitely does by making that director personally liable.

Photo of Natalie Elphicke Natalie Elphicke Ceidwadwyr, Dover

I think we have already explored how adding the odd report here or there will not be the game changer that is needed to ensure that acts like this do not happen again. That is why the Bill is part of an overall strategy and a nine-point plan, as the Government have set out.

New clause 9 would go considerably further than the obligations that already apply to non-compliance with the minimum wage regime. That regime includes criminal and civil penalties, so I do not think that the new clause would sit with the existing provisions on the statute book for civil and criminal liability in relation to the minimum wage regime. It is important that enforcement is effective and that it works. New provisions should fit in with existing legislation, and not conflict with or confuse it.

I fully share the sentiment of making those responsible for P&O—not just Peter Hebblethwaite but other directors on the board—personally criminally responsible, but unfortunately the new clause does not get us to that position. Personal liability is not just about wages; we need to ensure that there is appropriate liability and responsibility for the very serious issues that we have discussed with respect to safety at sea. Although I support the sentiment behind the new clause, I do not think that it would achieve the objectives that have been expressed.

Photo of Karl Turner Karl Turner Llafur, Kingston upon Hull East 4:15, 17 Ionawr 2023

I had not intended to speak, but I am afraid that I have been motivated by the hon. Member for Dover to say a few words. I am confused. I am not trying to be awkward or to put her under any particular pressure, but I am truly confused by her suggestion that the new clause does not fit, as I think she said, with minimum wage legislation. Frankly, that is just nonsense. She will have to answer to her constituents who go on those ferries day in, day out—passengers, not crew.

The tragedy is that, because of what P&O Ferries did, the crew are exploited foreign workers. The passengers are probably worried, as I would be if I was travelling on one of those ferries, about seafarer fatigue. They are probably worried about the fact that people are doing 17 weeks with very few rest breaks. They are working seven days a week, for 12 and 13 hours a day, and might be charged for accommodation and grub. That is the problem that people will foresee. Respectfully, the hon. Member should think carefully about not supporting the new clause. It is no good saying that she respects the sentiment; she ought to agree with the new clause and vote with the Opposition.

Photo of Natalie Elphicke Natalie Elphicke Ceidwadwyr, Dover

I thank the hon. Gentleman for giving way, and I ask for a bit of latitude in responding. It is disappointing that Opposition Members are determined to get their headlines and try to make a point of difference. They are trying to say that we on the Government Benches are not working for the people and the seafarers when we are the people leading this legislation. I was clear that the new clause does not go so far as to work for safety. On rosters, asking for a report is not a serious attempt to deal with the issue. We know that a serious attempt will mean the rosters being dealt with outside this legislation. The Minister has set out issues in relation to—

Photo of Carolyn Harris Carolyn Harris Llafur, Dwyrain Abertawe

Order. We need to get back to the new clause.

Photo of Karl Turner Karl Turner Llafur, Kingston upon Hull East

Thank you, Ms Harris, but I have to answer the hon. Lady. After the terrible incident in which P&O Ferries sacked 786 men and women British seafarers with the deliberate intent of replacing them with exploited people who are on £2 or £3 an hour, what came next was the MCA tying vessels up—arresting those P&O ferries—because they were not considered safe. I am sticking within the scope of the new clause, Ms Harris. I think there are one or two of us here who are lawyers; there are at least two barristers on the Conservative Benches and, although it has been a long time since I was in practice, I am certainly qualified as a lawyer. To those of us who are lawyers, the very idea that those directors should not be held responsible in law and there is going to be no personal liability is just—[Interruption.] I am sorry if the Minister—the yawning Minister—is incredibly bored. He must forgive me if I am keeping him awake. This is an important point. The idea that personal liability should not apply is frankly pathetic. [Interruption.] I am not trying to make a political point. [Interruption.]

Photo of Carolyn Harris Carolyn Harris Llafur, Dwyrain Abertawe

Order. This is not appropriate behaviour from either side. I call Karl Turner to finish up.

Photo of Karl Turner Karl Turner Llafur, Kingston upon Hull East

I was accused of making a political point. I am not. I have to answer, Ms Harris; I cannot be accused of making a political point when I am not.

The reality is that the new clause would provide some deterrents. Currently, the Bill contains no real deterrent. I want to work with the Government.

Photo of Gavin Newlands Gavin Newlands Shadow SNP Spokesperson (Transport)

Does the hon. Gentleman not share my astonishment at some of the comments from the hon. Member for Dover and the right hon. Member for South Holland and The Deepings, who said they could not support new clauses and amendments because they did not go far enough—that ire should be directed at the Minister—yet here we have a new clause that confers personal liability and they cannot back that either?

Photo of Karl Turner Karl Turner Llafur, Kingston upon Hull East

I agree entirely with the hon. Gentleman. This new clause would provide an actual deterrent to prevent other bad employers from copying what happened with P&O Ferries. I can see that I am testing the patience of the Chair, so I am going to conclude there. Thank you for your indulgence, Ms Harris.

Photo of Richard Holden Richard Holden Parliamentary Under-Secretary (Department for Transport)

Just before we finish, I want to say that it is a pleasure to have served under your chairmanship this afternoon, Ms Harris. We are both virgins on the Bill Committee Front Benches in our respective ways, under the supreme guidance of Mr Davies, which has been superb.

The new clause would create criminal offences for directors of companies operating a service to which the Bill applies where the service is operated inconsistently with an equivalence declaration or the operator has failed to comply with a request for a declaration. While I understand and share the anger against some of the bosses who, as my hon. Friend the Member for Dover mentioned, carry out such underhand employment practices, introducing such offences to the Bill would not improve its effectiveness. There is already a robust compliance mechanism that will provide a severe disincentive against operators that pay less than the national minimum wage equivalent.

Photo of Lia Nici Lia Nici Ceidwadwyr, Great Grimsby

This is the Seafarers’ Wages Bill, and I think we all agree, across the House, that further action and other Bills are needed. However, this Bill will be a disincentive to companies that think they can act improperly and take on cheap foreign labour rather than looking after staff on a proper minimum wage or more. That is exactly what the Bill is meant to do.

Photo of Richard Holden Richard Holden Parliamentary Under-Secretary (Department for Transport)

My hon. Friend makes a very sensible point. The Bill is a big step in the right direction in delivering for seafarers and countering some of the issues we have seen.

It will already be a criminal offence for operators to operate a service inconsistent with a declaration, and we do not think it is necessary for directors to be held personally liable for that offence. It would not be appropriate for directors to be guilty of an offence of failing to provide a declaration, as there is no obligation for them to do so. While the intention is that surcharges will be a sufficient disincentive against operators failing to pay at least the national minimum wage equivalent, it is open to operators not to provide an equivalence declaration, in which case surcharges will be imposed.

The existing compliance mechanism of surcharges for failure to provide a declaration and the criminal offences for operating inconsistently with a declaration will have considerable financial and reputational implications for operators. I do not think anybody here today can say that P&O Ferries has not experienced a reputational impact—not only that, but a legislative impact—from its behaviour over the last few years. Personal liability for directors is therefore not necessary.

I want to leave one thought in the minds of hon. Members on both sides of the Committee. The Insolvency Service is currently undertaking a civil investigation, which, among other things, will assess various individuals’ fitness to be directors.

Photo of Mike Kane Mike Kane Shadow Minister (Transport)

When will the Insolvency Service report? We keep asking, but we do not get an answer.

Photo of Richard Holden Richard Holden Parliamentary Under-Secretary (Department for Transport)

As the hon. Member knows all too well, he and I are very much on the same page and would like the Insolvency Service to report as soon as possible, but it is an independent organisation and we cannot comment on ongoing investigations. The entire basis of the new clause tabled by the hon. Member for Glasgow East, which Opposition Back Benchers have spoken about too—that they want something that could disqualify someone—is there in what is being looked at. It is maintained via the Insolvency Service. While I cannot comment on the individual case, I think it is clear that what everybody wants to achieve is already there. I understand why Members are trying to invent another offence, but it is not necessary, as what the hon. Member for Glasgow East seeks to achieve can already be done through current legislation.

Photo of David Linden David Linden Shadow SNP Spokesperson (Social Justice)

I am not sure that is the case, given that Peter Hebblethwaite can continue to act with impunity and had a promotion recently.

I will not seek to make this party political; I have been tempted to in the past, but I will not. I was interested in the point the hon. Member for Dover made in an exchange that was probably the hottest point of our proceedings today. I offer a hand of friendship; I will act as the Cilla Black of Parliament and bring us all together. If the hon. Lady says that she appreciates the sentiment behind new clause 9 but wants it to go further, I am happy to work with her.

On that basis, I will not press the new clause to a Division in Committee, but I ask the hon. Lady to join me for a cup of tea at some point to help me look at how to strengthen it. Then we can bring it back for a vote on the Floor of the House during remaining stages. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

Bill, as amended, to be reported.

Committee rose.

Written evidence to be reported to the House

SWB01 UK Chamber of Shipping

SWB02 Eurotunnel

SWB03 International Chamber of Shipping (ICS)