My Lords, this fourth and final group of amendments is concerned broadly with incentives, enforcement and compliance. There is a wide range of amendments herein. It has been helpful to have this discussion today.
I will start with Amendment 4, with which the noble Lord, Lord Hendy, seeks to make requesting a national minimum wage equivalent declaration a duty rather than a power that can be used with some discretion. The payment of national minimum wage equivalent would be a condition of port entry and so should be a matter for the harbour authority to decide. Furthermore, by making this a “may” rather than a “must”, we are allowing for flexibility in circumstances where there might be overlapping harbour authorities, for example where a vessel transits through one harbour authority’s area of jurisdiction to call at a port within another harbour authority area of jurisdiction. There may be other circumstances that noble Lords can think of where it is not necessary that this declaration is shared every single time. It should be noted that the Bill provides the Secretary of State with the power to direct harbour authorities to request a declaration, so there are necessary safeguards against harbour authorities not discharging this function properly.
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I am grateful to the noble Lord, Lord Hendy, for Amendment 11, which would require operators to inform the Maritime and Coastguard Agency—the MCA—if a service is operating inconsistently with the NMWE declaration. The MCA’s role is to investigate inconsistencies between the declaration and the actual rates of pay. We had considered that, given the operator’s relationship with the harbour authority, the information of a change in circumstance would be better passing through it. However, I take note of this amendment, and we will consider with the MCA what information would be useful to it in fulfilling the enforcement role it would have.
Amendment 12 in the name of the noble Lord, Lord Tunnicliffe, seeks to specify a minimum fine of £1 million. There are two issues worth drawing out on this. The first is that there is limited legal precedent for specifying a minimum fine in legislation and it would not be consistent with the sentencing guidelines for criminal fines. I also note that the breaches could be of a variety of types, including relatively minor matters for which a very significant fine would be disproportionate.
The Government’s position is that it is far better to allow a court to determine the appropriate fine according to the standard scale applicable in each jurisdiction, if
indeed the matter came to that point. Fundamentally, incentives to pay an equivalent to the national minimum wage are based on surcharges and, ultimately, the possibility of suspension of service rather than court proceedings. Any suspension of service, for example, would have far-reaching consequences for an operator and should therefore act as a significant deterrent. It is worth noting that there are different sentencing guidelines in Scotland and Northern Ireland so introducing a minimum fine in England and Wales would be inconsistent with other parts of the UK.
I understand a bit better than I did previously the thinking behind Amendment 17 in the name of the noble Lord, Lord Tunnicliffe. We will take it away and consider it. I understand the need for transparency so I undertake to set out a little further in writing the MCA’s plans both to carry out its enforcement role and to make sure that officers are properly recruited and trained and have the resources. Of course, the MCA carries out inspection functions all the time, but I will get greater clarity as to how it proposes to do that and also ensure that we have the right level of transparency such that people can see that the MCA has had to take action—indeed, that is what happens.
Amendments 18 to 22 and 31, from the noble Baroness, Lady Scott, relate to the role of the ports in the compliance process, specifically the proposed surcharge for non-compliance. I think noble Lords will understand where the Government are coming from on this. I appreciate the contribution from the noble Baroness, Lady Randerson, about the terminology “surcharge” and what that may mean. We envisage that a schedule of rates for the surcharge—we will call it that—will be set by the harbour authority but with reference, as noble Lords have noted, to the difference in what they should have been paying had they been paying the national minimum wage equivalent in the first place.
However, it will not be an exact calculation. We will of course set out in regulation what the calculation, or indeed the bandings, might look like. To my mind, there is probably still a bit of flexibility around how we ensure that this does not lead to a loss of competitive advantage by any particular harbour authority. I understand that we do not want a race to the bottom in terms of calculating a surcharge—that would be nuts. It would go against what we are trying to achieve in the Bill. We will take that away and potentially give further reassurance about how we envisage the calculations will be set out in regulations. We need to maintain the correct balance, such that operators have the correct and appropriate surcharge levied against them versus putting everything in the laps of the harbour authorities so that they basically end up looking like the bad guys, which is not at all our intention. We will probably come back to that in writing.
Now I come to the big one: the clause stand part notices and Amendments 30, 35 and 39. Obviously many noble Lords have an interest in this group. These amendments would fundamentally change the entire compliance mechanism of the Bill. The Government’s proposed mechanism has been carefully designed; we believe that it is a proportionate and appropriate balance of roles between the ports, which will fulfil an essentially administrative role of ensuring that access
to ports is conditional on payment of the equivalent to national minimum wage, and the MCA, which will be the body responsible for enforcement and prosecutions. The whole mechanism of the Bill relies on the national minimum wage declarations being a condition of access to ports.
It is for harbour authorities to set surcharges—subject to the regulations—and deny access in order to establish the condition of access connection. If the surcharge and refusal of access provisions were to be replaced with inspections and detentions only, the connection to the port would be lost. This is important, because vessels visiting a port are not in innocent passage. This means that associated restrictions on the exercise of jurisdiction, as set out in UNCLOS, do not apply. The Bill requirements will therefore apply only where the UK has jurisdiction over visiting ships and where the right of innocent passage does not apply. This would not be the case if the connection to the port is lost, as these amendments propose.
This role is not beyond the realms of harbour authorities’ capabilities, as they administer charges across many other issues. Beyond this, harbour authorities will not have to play a very significant enforcement role at all. The MCA will be the government agency responsible for detailed inspections, investigations and prosecutions, on behalf of the Secretary of State—in Scotland, that power would lie with the Lord Advocate. The harbour authorities will not be responsible for checking whether national minimum wage equivalent is actually being paid. As noted, harbour authorities can be directed by the Secretary of State to exercise their powers, or indeed not to exercise their powers, accordingly. The Bill simply would not work if we were to alter the compliance process in the way suggested. It has been designed to respect our international obligations, while assigning appropriate roles to ports and the MCA.
I turn to Amendment 24 on the detention of vessels. The Government’s view is that the detention of vessels would be a disproportionate and inappropriate mechanism in these circumstances. Detention provisions are provided for in legislation implementing international conventions dealing largely with matters relating to health and safety and pollution. It would therefore be inconsistent to use detention provisions in this case. Indeed, we are satisfied that we have the right compliance process of surcharges and refusal of access by ports, which means that any detention provisions would not be necessary.
On Amendment 28, regarding conflicts of interest and guidance, the Government are confident that there are no conflicts of interest. I would be very grateful if noble Lords want to send further information drilling down into how those conflicts of interests would manifest. Harbour authorities’ primary role under this Bill is to receive declarations—to receive a piece of paper. They will not be involved in checking the validity of those declarations. The form and nature of the declarations will be set out in secondary legislation, so they will not be defined by the harbour authority. This will, of course, all be following consultation. It is not envisaged that these declarations will include commercially sensitive information. The Secretary of State will have the power to direct the harbour authority in the exercise of its powers under the Bill. That also
will safeguard against any potential conflict. It is not new to have a duty that is perceived to be in conflict with a harbour authority’s commercial position. Harbour authorities are well versed in fulfilling their wide and varied existing statutory functions and duties independently of their commercial interests, or those of associated companies.
Finally, Amendments 29 and 32 to 34 relate to the powers of direction that would be available to the Secretary of State. We have touched on these before. We are seeking back-up powers for the Secretary of State to issue directions to exercise their powers, or not, in line with the wider policy intention. A particular area in which it is expected that the direction-making power may be needed is in respect of the surcharges under Clause 7. For example, if a harbour authority declines to charge a surcharge, the Secretary of State may need to step in.
In addition to the powers to require a harbour authority to exercise its powers, the Secretary of State also has the power to direct that the harbour authority does not exercise its powers. I think I have already said that, so forgive me for repeating it. I do not think that adds anything further to the debate.
That being said, now that we have the DPRRC report we need to go back through the concerns it raised to ensure that we are content with what we are proposing, and indeed whether alternatives might keep the DPRRC happy—and of course, more importantly, to keep your Lordships happy. We will look at that again and we will write back to the DPRRC ahead of Report. We will have further discussions on that.
There have been a number of further mentions of different international considerations—the OECD common principles, for example. I will address those in writing. Obviously, as your Lordships know, the Government’s intention is not to share their legal advice, but we will be able to set out our position on how we feel this Bill works with other international obligations that we have.