Net Zero, Energy and Transport Committee

Meeting date: Tuesday, March 29, 2022

Official Report 653KB pdf

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P&O Ferries

Welcome back. We now turn our attention to P&O Ferries. This session was scheduled following P&O’s 17 March announcement on staffing and on the suspension of services. I refer members to the papers for this item of business, which were issued by the clerks and by SPICe on Friday.

I welcome Peter Hebblethwaite, chief executive officer of P&O Ferries. I thank him for accepting our invitation at short notice and for his reply to our letter, which we received at 8.56 am today.

We have allocated one hour for this session. I understand that Mr Hebblethwaite would like to make an opening statement.

Thank you for letting me make an opening statement to explain what has been a difficult and unquestionably controversial decision, but a necessary one. Before I make that statement, I reiterate, if I may, my apology to 800 seafarers and their families and, specifically for this committee, to the 39 affected seafarers and their families who live in Scotland.

The backdrop is that P&O has lost an unsustainable amount of money in the past few years and has not been viable or competitive for a number of years. Without a material change to the business, I would not be here answering questions about the loss of hundreds of jobs, as difficult as that is; I would be here talking about the loss of thousands of jobs, because if we had not made material changes to the business we would have had to close it.

The business has been funded to the tune of hundreds of millions of pounds by our shareholder, who has never—not once—taken a dividend from the business. It is not sustainable. It is not possible to expect a shareholder to unconditionally and indefinitely support a business that has no plans to change. Sadly, we had to bring about significant change. At the core of that was the very difficult decision to change our operating model.

I do not think that I have fully explained why that change to our operating model is so material. I would like to take time to do that. The vast majority of the impact of the decision is on the Dover to Calais route and is better explained with reference to that. We used to operate and pay for four full-time crews, which, in reality, was more like 4.8 crews when we accounted for sickness and training. We had to pay for four full-time crews who worked for 24 weeks a year.

The new model is a different way of doing business. We are outsourcing our crewing arrangements. By doing that, we will be paying for only two crews and paying only when they work. That gives us significant savings and an increased level of flexibility, so that we can compete. That model is radically different from where we were but is recognised and used in 80 per cent of shipping across the globe, and is one that the cruise industry moved to decades ago.

Having made that very difficult decision about our model, there were reasons why we implemented the decision in the way that we did. We assessed all the available options. Ultimately, we as a board and I as the chief executive concluded that implementing the model in any other way than by the route that we chose would lead to the closure of the business and the loss of thousands of jobs rather than, very sadly, hundreds. Because that critical decision was so radical, it was our conclusion that no trade union could possibly accept our proposal and therefore that any consultation would frankly have been a sham.

We are, of course, compensating people as we are required to, in full and up front, for the failure to consult. On top of that, we are overlaying a significant redundancy package, which we believe to be the largest such package issued in maritime history. There has been a lot of talk about how big that package is for staff at the top end, but I think that what is most important is that, although we did not cap the top, we capped the bottom. That means that, for the people who are less well-paid and who have been with us for a shorter period and who would normally have received a much smaller payment, we capped the minimum payment at £15,000. Where we sit today, 765 out of 786 seafarers have started the process to accept that, and we will support the remaining 20-ish seafarers if they need any support to make their decision about whether to accept our offer.

I have just one last thing to say. We now move to two priorities. The first is finding new jobs for those 800 seafarers. We have engaged a number of organisations to do that, and it is a clear objective of ours. The second is to restart our business. With reference to this committee, that means particularly the Larne to Cairnryan service, which I would like to bring back safely to a full schedule to deliver the trade requirements for the route between Scotland and Northern Ireland.

Thank you. We will move on to questions. Will you explain what is currently happening with the MV European Causeway, and what regulations you are not complying with?

We have said all the way through that we will not let any ships go back into service unless they are fully safe. That is not a process that we are prepared to rush or that is limited by money or anything like that. We have worked hand in glove with the regulator—in fact, I met the chief executive of the regulator yesterday. We had inspections of the Causeway and the Highlander. The Highlander was passed to do a single voyage. With the Causeway, we have some challenges. There were 20 of what are called defects, 12 of which were technical, four of which were administrative paperwork-type issues, and four of which were crew related. Absolutely correctly—this is how it should work—we have worked together with the regulator to work out whether the ship is ready to return to service, and we have both concluded that it is not yet ready.

You have acknowledged breaking the requirements of the Trade Union and Labour Relations (Consolidation) Act 1992 for business reasons. Are there any other laws that you would consider breaking if a similar situation arose? Can you understand why passengers would be very worried about travelling with a ferry company that is happy to break the law?

We failed to consult—I do not deny that—and we are compensating people in full for that failure to consult, as we are required to do. It was a unique situation. We are talking about saving a company and genuinely saving thousands of jobs that would otherwise have been irrecoverably lost. We therefore found ourselves in a unique situation, and in that unique situation, we took the path that we took because, as I said, all other routes lead to irrecoverably losing thousands of jobs. Of course, I understand that it is controversial, and I read the headlines as much as anybody else. However, I believe that consumers and the industry are better served by a P&O that exists rather than one that does not.

It is understood that the UK Government might bring in new laws as soon as this week. Will you commit to comply with any future UK legislation in the area?

Of course. I cannot really comment on what the Secretary of State for Transport might bring in but, as you know, there is talk about a national minimum wage. I want to be absolutely clear that, on the route that runs between Scotland and Northern Ireland, as a domestic route, we are required to pay the national minimum wage. We pay that, and we will continue to pay it. If that were extended elsewhere, we would completely comply with that.

The issue has not been about rates of pay; it has been about a fundamentally different model and having a level playing field for us to be able to compete. It is about transforming a company that was not viable to a company that can compete.

Do you have any remorse?

On many occasions, I have reiterated how sorry I am for the impact that the decision has had on 800 seafarers—39 of whom live in Scotland—their families and the 2,200 people who remain in the organisation and have had to answer a number of difficult questions. I am very, very, personally and deeply sorry for that. However, I categorically believe that, had we not taken that very difficult decision, we would be talking about the irrecoverable loss of thousands of jobs.

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Do you have any regret or shame?

I do not think that this is about me personally. It is about saving an organisation and thousands of jobs. I regret the impact that it has had on 800 seafarers and their families but, unfortunately, it was a very difficult but necessary decision.

Do you have any shame for yourself or your company?

I do not think that I should feature in this. I am not really worried about me; I am worried about saving an organisation and thousands of jobs. That is not hyperbole; I really feel that. It was a critical decision that had to be made, otherwise the business would have closed.

A company director who breaks the law—that is a serious responsibility for any individual.

I will move on to the area of finance. When its annual accounts were signed off on 10 December 2021, the board of P&O Ferries Holdings considered the business to be “a going concern”. Can you explain what changed in the past three months, that led from the business being “a going concern” to the summary sacking of 800 workers?

It was “a going concern” with the support of our shareholder. What has changed is that it is not appropriate for me or the P&O board to expect unconditional support for a business that is not viable without that financial support, unless there is a plan to change. We have received extraordinary levels of support—as has the British economy, with more than £2 billion of investment—but it is not appropriate for the P&O board to continue to expect unconditional support, without a plan for the business to become a viable business in its own right.

Good morning, Mr Hebblethwaite. P&O accepts that UK employment law was not merely broken but fundamentally offended. You are paying out £36 million in settlements to make that acceptable to the employees. I presume that the settlements needed to include—per employee—notice, holidays, a settlement sum, an aggravation uplift and a 90-day collective consultation award. There must also be an up-front cost per month for the agency supply workers. What is the cost of the agencies? How long do your projections show that it will be before P&O breaks even on the settlement sums, agency fees, legal fees and management time, so that the decision makes commercial sense?

You are absolutely right that it has been a very costly process. It is not about the short-term financials; it is about giving P&O a long-term future or closing it. Frankly, as we should be and as our shareholder would expect, we have been very generous in our settlements, as I think that you are indicating. Depending on which scenario works out, the payback time for that ranges from 18 months to two and a half years. The decision has an appropriate business case—which, of course, it should—but it is about making the business competitive and viable in the long term. Ultimately, it is about setting us up as part of a programme of change. That decision was the most difficult change, and future changes will be positive and growth orientated, but it is about the long term, not the profit and loss for the next few months.

On a point of clarification, I am not suggesting that you are being very generous.

It is interesting that a two-year payback period leads to the conclusion that you cannot carry out the consultation required by statute, but I will let others pick up that point.

I will move on to an issue that is interesting from the point of view of various parties. In 2019 and 2020, P&O registered losses of around £130 million, and the suggestion is that there will be a further £131 million loss in 2021, for which DP World has offered a facility of £100 million. That begs the question, how certain are you that P&O is good for the £36 million settlement and the agency fees? Have you given the agencies guarantees? They may feel that they are taking a financial risk by doing business with a company that you described earlier as “unviable” and that chooses to ignore the law of the land if a bit of money is thrown around.

It is a P&O board decision, supported by finance from our shareholder. I am absolutely confident about our ability to pay our bills. We have entered into a contract with a new crewing management company that both of us are confident is appropriate.

I will ask part of that question again. Did you give them guarantees?

Yes, there is a level of guarantee.

Finally, P&O accepts that UK employment law was broken such that hundreds of employees could potentially have prosecuted unfair dismissal claims. It is difficult to see how such claims could have been successfully defended. I have no doubt that in making your plans you were aware that the primary remedy for a successful unfair dismissal claim is reinstatement. What planning did you do for a situation in which a tribunal ordered the reinstatement of all those employees? Did you plan to comply with such an order or would that authority have been ignored as well? Had that situation come to pass, what loyalty would you have shown to the new agencies?

Our assessment was that we would not get to that situation. The reality is that the forced reinstatement of our previous model would have put us straight back into the position where the business would close.

Yes, but have you not just said that you would have ignored any such order from a tribunal?

No. Our assessment was that we would not find ourselves in that position. We failed to consult and we are compensating people in full for that. We are doing everything that we are required to do.

I have no further questions, convener.

Good morning, Mr Hebblethwaite. What bonus will you receive for driving through this new way of doing business and when will you receive it?

There are no bonus scheme objectives for me to deliver the changes. I cannot tell you how far that is from any of our thinking. We are talking about saving a business and avoiding the irrecoverable loss of thousands of jobs. My personal bonus schemes have nothing to do with it. We are not talking about me and how much money I get paid.

Could you just answer the question? Are you expecting to receive a bonus in this financial year or the next one?

No, I am not expecting to receive a bonus. I have no idea what my bonus scheme looks like.

Thank you.

You have now had two ships detained on safety grounds by the coastguard. Will there be any more?

I hope not. However, we are under a level of scrutiny and very thorough checks are going on. We are working very closely with the regulator, which is exactly how the process should work. No ships should or will go out that are anything less than absolutely safe. I will not rush it. We will work closely and give our fleet team full support. We have an open book arrangement with the regulator and we are in open dialogue with it. That is how it should work. Ships should be passed as fully safe, and never has there been a more thorough approach to that by us or the regulator—and we fully welcome that.

You do not sound very confident, Mr Hebblethwaite. Do you understand why many passengers are cancelling their trips and want to boycott P&O Ferries?

I am absolutely confident that no ships will go out that are not safe. No ships are going to sea that are not safe. If there was any ambiguity in my previous answer, please let me be 100 per cent clear about this: we have always said that we do not have a business unless we have a safe business, and no ships are going out to sail unless they are safe, as assessed by us and the regulator.

I have been looking back at your comments last week at the Transport Committee and Business, Energy and Industrial Strategy Committee of the House of Commons. We know that you fired 800 experienced workers who had, on average, 20 years’ service. You sent in security guards in balaclavas, with handcuffs. It was an extreme act of corporate terrorism. The select committees published their ruling yesterday, saying:

“Peter Hebblethwaite ... is not a fit and proper person to run a company that operates critical national infrastructure.”

When will you resign?

There was quite a lot in there. I want to be absolutely clear that there is a lot of press coverage that is, frankly, inaccurate. We employed a security firm of professionals to keep our ships safe—but much, much more important, to keep our people safe, at a very emotional time for them.

The facts of the day, rather than the headlines of the day, are that there were no balaclavas—none of those things that were reported—and there was not a single incident of anybody getting hurt or anything inappropriate happening. Those are the facts of what happened.

Sorry, the second part of your question—

I am trying to believe you, but you have confessed to being a lawbreaker, so it is hard to believe anything that comes out of your mouth—

Sorry. To be fair, I have accepted responsibility for failing to consult. We are compensating people in full for that, and I have apologised to 800 seafarers and their families and I continue to do that. However, I must reiterate that we are talking about saving thousands and thousands of jobs that would otherwise have been irrecoverably lost.

On your question about my resignation, I have no plans to resign. I need to see this through. I need to get this business back up on its feet. I need to make it competitive and viable and I need to give us an opportunity to grow in the future and service the needs of Northern Ireland and Scotland on a route that I believe is incredibly exciting.

Mr Hebblethwaite, you are leading the committee to believe that P&O Ferries is somehow unique, special and above the law. It sounds like you have convinced yourself that you are a saviour—saving workers rather than throwing them overboard. The truth is that you are a failure of a chief executive, and most likely right now—in a crowded field—the most hated man in Britain.

I have a final question. Under your leadership, P&O Ferries has executed one of the most widely condemned decisions taken by a UK company. Your ethics are lying at the bottom of the sea. How do you sleep at night?

Look, it was a very difficult decision. It was a decision that we implemented as, in effect, the only option that, in our opinion, we had. It was a decision that, I reiterate, was designed to save thousands of jobs.

I have heard enough, convener.

Good morning, Mr Hebblethwaite. We have heard that you will not resign. What will it take for you to resign? What needs to happen?

I do not know the answer to that. I think that I have had to make an incredibly difficult decision. I think that it was a better decision than closing the business. I think that we had to implement the decision in a very difficult way. I do not think of myself as some kind of saviour, as your colleague suggested. That is not how I mean to come across; I apologise if that is how I have come across. However, I think that it was a binary decision, albeit a very difficult one: give the company a future or do not restructure the company and close it.

11:15  

I am not entirely sure that your sacked employees will agree with that.

When my colleague Emma Harper was down at Cairnryan last week, she spoke to some of the folk who have been sacked. They raised serious concerns about how a new crew can be trained in health and safety to a competent standard so quickly. How long will that process take? Are you confident that they will be trained to a competent standard?

Yes, I am more than confident that they will be trained to the appropriate standard and that we will not let any ships go out to sail until they have been deemed absolutely safe by us and by the regulator. I am not going to rush this. We all want the Larne to Cairnryan route back open and trading as soon as possible, but not at the risk of compromising safety. I do not think that anybody would like that.

How long do you think the training will take?

I will not be drawn on that, not because I am being evasive, but because I do not want to apply a time pressure to something that cannot be compromised.

I want to move on to pay and terms and conditions. What is the difference between the sacked crew and the new crew in that regard? What are the new crew not getting that the old crew got?

Again, it is a fundamentally different model. In the public discussion, there has been a lot of focus on the national minimum wage. To be absolutely clear, on Larne to Cairnryan, we always had to pay the national minimum wage and we will continue to do so. From that point of view, there is no change from the old model to the new model.

The difference in the model is not about rates of pay; it is about the number of crews. On the Dover to Calais route in particular, we have to fund four full-time crews, whereas the new model means that we have to pay for only two crews when they work.

So you are saying that every new member of crew will be paid exactly the same as the previous crew members, and that the terms and conditions have not changed. In other words, the new crew will receive holiday pay, employer pension contributions and sick pay, for example.

No, I am not saying that. The terms and conditions will change slightly. There is no question about that. We are moving to a model that is consistent across all our routes.

My answer was about the national minimum wage, which we will continue to pay. The new operating model is such that it is not directly comparable with the old one; it is not an apples with apples comparison. In response to the question about whether we will pay the national minimum wage, the answer is yes. We will also make pension contributions and pay for crew members’ food, their travel and their accommodation.

Is the money for crew members’ food and travel included in their wages? Is that what is bringing down their terms and conditions?

No—we pay for that separately.

You have still not said what the difference is in the terms and conditions, or maybe it is just that I have not heard that. If there is no change to pay and very little change to terms and conditions, why did you feel the need to sack 800 people so that you could take on new people under new contracts?

The vast majority of the impact of the change is on the Dover to Calais route.

I say, with all due respect, that I do not think that it matters where it is happening; it is happening.

Okay—that is fair. Fundamentally, instead of having to employ four crews, we now need to employ only two crews when they are working. That is the major fundamental change. The issue is really not so much about rates of pay, as has been played out in public; it is about putting in place a fundamentally different operating model.

I still do not think that I am getting much of an answer, deputy convener. I think that I will just pass back to you.

Passengers are going to be worried about crews not getting paid for half the year, having to find other employment for the rest of the year and therefore, I suspect, being extremely weary and tired when they operate your ferries. Is that not a safety risk in and of itself?

The UK Government might well, as we expect, decide to put you and your competitors—for example, Irish Ferries, which you refer to in your letter—under the same requirement to pay the national minimum wage, but what, apart from risk to passengers, will be the benefit of having crew who are very tired and weary from having to supplement their income because you have halved their paid time at work?

I did not say that crews would be tired and weary. This model is absolutely safe; indeed, it is used in 80 per cent of shipping around the globe. We recognise the intensity of each of our routes and will put in place appropriate rosters to reflect that.

I reiterate that this is about our moving to a competitive model, not undercutting other arrangements. I assure you that the model is safe—no ships will be going out to sea that are not safe—and, as I have said, it is used in 80 per cent of shipping around the globe.

Good morning, Mr Hebblethwaite. Given that your company was facing imminent collapse, can you outline how the remuneration for senior staff and executives has been reduced alongside that of seafarers?

Board-level pay has been reduced by about 50 per cent in the past couple of years, and we will make further changes and reduce the size of the board very shortly.

In response to one of my colleagues, you stated that this is not about you. However, I understand that, as my colleagues have again picked up, your salary is over £300,000, before bonuses. Can you confirm whether you took a pay cut to protect the future of the business or did you ensure that your own interests were protected to the detriment of those 800 people who were unlawfully sacked?

I was promoted to this job and given pay that, I guess, is consistent with the market and this particular job. I recognise that there are different levels of pay in an organisation, but I assure you that we have reduced the costs of our senior management by as much as or more than we have in other parts of the business.

Can I confirm, then, that your answer is no?

Have I received a pay cut? I have not.

Okay. We understand that some employees are being paid £5.50 an hour, which is above the International Transport Workers Federation pay rates. Would you be happy to work for £5.50 an hour?

I just want to qualify the £5.50 issue, if I may. That was for the non-officer group, which we call ratings. If you include the officers, the average rate is much, much higher. I have to say that I do not think that seafaring is all about money. People love it, and that is one of the main reasons why I regret so much the very difficult decision that we had to make.

As for whether I would work for £5.50 an hour, I have chosen a particular career route, and it has led to my sitting here, answering totally appropriately positioned questions about a very difficult decision that I have had to make. I did not choose a path that led me to being a seafarer.

My question was more about whether you would be happy to work for £5.50 an hour. I appreciate that this is not all about money, but that is probably not music to the ears of those who have to feed themselves and their families.

As I say, it is important that it is an international standard of shipping. It is crewed by international crew and we pay above the standards that we are expected to, including national minimum wage and ITF rates.

Moving on, P&O Ferries seems to have been a largely profitable business until around 2019. Would you not say that recent losses are the result of Covid-19 rather than some fundamental challenges to the business?

Actually, I would not. P&O has not been competitive for a while. It has been in decline for a long time and it must become competitive and viable as a business.

Can you elaborate on why the company was facing the imminent collapse that caused the vast number of redundancies despite other operators being able to survive without such drastic action?

We work in an increasingly competitive environment, as lots of companies do, and the reality is that all of us need to move with the times to be able to compete. We, as an organisation, have struggled with the decision for a while. We have been aware that it was an option, but it became no longer an option to expect our shareholder to unconditionally and indefinitely carry on funding a business that was not viable or competitive.

Okay, thank you. I have no further questions.

Good morning, Mr Hebblethwaite. You say that the new regime has not changed the rate of pay, but what is important is how much is in someone’s take-home pay at the end of the month, which has significantly changed. I think that the people who have been affected would vehemently disagree with you.

The deputy convener made the point that, when the annual accounts were signed on 10 December 2021, you must have been a viable business, because it is, of course, illegal to trade insolvent. Three months later, you are asking us to accept that P&O got into such a financial crisis in that time that you had to let 800 staff go. Is that what you are asking us to accept?

P&O has been supported to the tune of hundreds and hundreds of millions of pounds by our shareholder, which has—this is an important point—never once received a dividend for all of that support. It is not appropriate any longer for me to run a business that requires shareholder support with no plans to change and become viable. Therefore, we concluded that we needed to bring about fundamental change in the business so that we could stand on our own two feet without the indefinite financial support of our shareholder.

In international businesses of the size of P&O Ferries, it is not unusual for finances to swing from positive to negative in the numbers that you suggest. I go back again to the point that you could not trade insolvent so, in December 2021, P&O was a viable business. Why has it collapsed so much in three months?

It was viable with our shareholder’s support. We are now having to change the business so that we can be a viable and competitive business going forward. I cannot comment on other shipping firms.

I have watched the story develop, Mr Hebblethwaite, and I would suggest that you and the board are not stupid people. In taking this decision, you must have thought through all the repercussions that there might be and you must have known that there would be significant pushback at the level that there is. You must have known that it would not be allowed to happen. Therefore, my question to myself and to you is what outcomes P&O is really driving at, because you know that you will not be allowed to deliver the change the way you have done.

11:30  

I do not think that we do know that. We will see what the secretary of state has to say and, of course, we will comply with all of that. We are very clear that we have not done anything illegal.

Yes, you have. You already admitted that you did something illegal. You broke employment law. You already admitted that.

That is not what I said. I said that we failed to consult.

Which is illegal.

For that failure to consult, we are compensating people in full. The headlines are not consistent with what I said. I said that we failed to consult and are compensating people for that. That is different from doing something illegal.

We are very confident that we have not done something illegal. If the laws change, we will, of course, comply with them. As I said, it is a fundamental change that moves us on to a level playing field with 80 per cent of global shipping.

I think that you will find that, when you break the law, that is illegal.

I am sorry, Mr Hebblethwaite, but I cannot accept that you did not consider all eventualities. You must have known that what you are about to do would have significant pushback. Time will tell what outcome you are driving for, but I do not believe that you thought that it would be acceptable.

It is important not to leave that unresponded to. We are genuinely trying to save the company. We are genuinely trying to make it competitive and give it a future. That is the outcome that we are driving for.

Morning, Mr Hebblethwaite. You mentioned the shareholder quite a bit. Was the shareholder putting pressure on you to do what you did?

No.

If the shareholder was not putting pressure on you to do it, why did you do it?

The P&O board, including me, believes that it is no longer appropriate and possible to expect our shareholder, who has supported us and the UK economy to quite extraordinary lengths, having never taken a dividend from P&O since owning it, to unconditionally and indefinitely carry on funding a business that had no plans to make itself viable.

If the shareholder was not putting pressure on you to do it, would it not have been sensible to ask it whether it was happy with what you planned and whether it was content with the current arrangements?

We had to go to the shareholder for funding so, of course, we went to the European board, explained our proposal and gained funding for it. However, ultimately, it was a P&O board decision.

Right. So it did not come from the shareholder.

You said earlier—these are your words—that it was a unique situation. There is nothing unique about companies getting into trouble, as you describe it, having to make changes and, potentially, making redundancies. There is absolutely nothing unique in that. The difference with this situation is that any other company would have gone through proper process, so why did you not?

We have always consulted in the past and we will consult in the future. It was a unique situation. Believe me, we considered all routes for how we might implement this very difficult decision. Our assessment was that no union could accept our proposal because of the dramatic nature of making a step from our old crew model to a new crew model and, therefore, consultation would have been a sham. In the event that we failed to consult, we are required to fully compensate people for that—which we have done and will do—to the tune of 13 weeks.

What was unique about the situation? You have not explained that.

It was a case of bringing about fundamental change or closing the business. In 2020, when we very sadly had to make some redundancies, we were not looking at something as dramatic as closing the business. This time, it was different. This is a business that needs fundamental change in order to be able to compete and survive. It needs major steps, of which this is one. It is by far the most difficult step and, as I say, we concluded that no other route was available to us, other than closure.

There is nothing unique about that. Many other companies have faced the same position and, to be frank, have taken a more honourable route than you have chosen.

Can I ask you about Grant Shapps? He has written to you, and the deputy convener mentioned earlier that Mr Shapps may be bringing in some law changes. If he does that, how will it affect your business?

I do not know. It is obviously difficult for me to comment on changes that we have no sight of, but we will of course comply with what we are required to do.

The changes could affect rates of pay. You said earlier that it is not about rates of pay, so presumably you will not be too concerned about that. Is that the case?

We pay the national minimum wage on routes where we are currently required to do that. On the Larne and Cairnryan route, which I imagine is of particular interest to the committee, we are required to pay the national minimum wage, and we do pay it.

I have a final question. Natalie Don asked you whether you would be prepared to accept £5.50 an hour. I do not think that you would be, because I have done a quick calculation based on your basic pay and not bonuses, and you are on a princely £156 an hour. That is pretty good going. How do you think the sacked workers think of you when they look at that rate of pay?

As I say, I have chosen a route through my career that has led to me sitting here in front of you today answering your totally reasonable questions. I did not choose to become a seafarer. I reiterate my heartfelt apology for this really difficult decision and how it has impacted on 800 seafarers, 39 of whom live in Scotland.

Will the new crew be unionised?

The crewing management company will have recognition with ITF. It is obviously a decision for the individuals involved. I do not have visibility of that.

Do you understand that it is not for an employer to decide what a union will think or how it will respond? It is for the union to decide that. Why did you not respect that fundamental, basic principle of employer and trade union relations?

We did not believe that any union could possibly have accepted our proposal, given the fundamental nature of the change that we were potentially going to have to propose.

I will move on to some further questions on your shareholder. You have set great store by the claim that you wanted to oblige the shareholder, even though you say that it did not instruct you to carry out the actions that you have taken. Your shareholder has fundamental interests globally, but it also has fundamental strategic interests, for example in the freeports that the UK Government is developing and the green ports that are being developed here in Scotland. Do you not think that you are jeopardising not only the reputation of your shareholder but its strategic aims, which might prove to be counterproductive for its interests?

I am not here to represent our shareholder, so I cannot speak for it. I reiterate that our shareholder is an organisation that has invested over £2 billion. It has invested more in the UK economy than in any other country that it operates in and out of, apart from the United Arab Emirates, and it has been very supportive. Clearly, it is a regret of mine that it has been drawn into this, but it has been very supportive of the business.

Monica Lennon has a supplementary question.

From his responses to your questions, convener, it is clear that Mr Hebblethwaite and P&O Ferries do not respect trade unions. They have just picked a big fight with more than half a million trade union members in Scotland alone, never mind in the rest of the UK.

Mr Hebblethwaite, last week you had a chat with the First Minister, and she might have talked to you about the importance of fair work and the fair work convention in Scotland. There are now calls for a boycott of P&O Ferries and for your company to be effectively blacklisted so that it does not benefit from any public project or public money in future. If you and DP World are not allowed to be part of a freeport in future, will that be a price worth paying for your new way of doing business?

It is important for me to go back to where you started your question. I absolutely respect unions and we will continue to work with the unions that we work with. This was a radical change that we had to bring about, and we did not believe that any union could possibly accept what we were proposing. It is not right to say that that means that we do not respect the unions.

One of the principles of fair work is giving workers an effective voice. You chose to silence your workers and their unions. How is that showing respect?

I have full respect for the unions, and we will continue to work with all the unions that represent our workers.

Mr Hebblethwaite, I understand that there are a number of land-based employees of P&O, many of whom are based at Cairnryan. Does P&O have any strategic plans, whether finalised or in draft, that would impact on those employees in some way? Obviously if they are to be restructured, transferred under the Transfer of Undertakings (Protection of Employment) Regulations, or dismissed, they will be legitimately concerned.

No, we do not. The Cairnryan port is very important to us. We have invested more than £40 million in it. The Larne to Cairnryan route and the Irish Sea are an exciting opportunity for us in the future, but the specific answer to your question is no, I do not have plans to make such changes.

I will just push you on that point, if you do not mind, Mr Hebblethwaite. Just for absolute clarity, you are telling the committee that there are no strategic plans, whether in draft or finalised, to do anything to the land-based staff at Cairnryan—is that correct?

What I think that you are referring to is a paper outlining options for us to look at how we run the Cairnryan port, none of which was taken up. There is a document to that effect, and it is from a number of months ago, but none of those options was taken forward.

That seems to be a slightly different answer from the first one that you gave me, with respect. Will that document be published and made publicly available? I would have thought that the land-based employees would need to know the details.

The land-based employees have seen that paper, as have the unions. It was a private document that covered a piece of work that we went through, as all businesses go through, to look at available options. We considered a number of those options, as all businesses do, and we chose not to take any of them forward. I have had that conversation with the union and with the shore-based team at Cairnryan.

I have one final thing to raise, convener, if I may. It is something that my friend Monica Lennon brought up earlier that really troubles me. Mr Hebblethwaite, you accept that you wilfully, consciously, and knowingly broke the law. You offended against UK employment law, a law that Parliament felt to be so important that it attached a protective award to it to mandate compliance. Does that not trouble you, as a company director, and make you question whether you are truly a fit and proper person and are discharging fiduciary duties to your company if you are content simply to break one of the strongest laws that Parliament has put in place?

To be clear, we failed to consult, and we are compensating people in full, as we should, and up front. My duty as a director is to make the business viable, and I was faced with the option of a programme of change or the closure of the business. As a company director, I took the only route that was available to me to preserve thousands and thousands of jobs.

11:45  

That is not your only duty, is it, Mr Hebblethwaite? As a company director, you have fiduciary and legal duties. What I asked was whether you consider yourself to be a fit and proper person who is discharging not merely the duty that you just mentioned but the full raft of fiduciary duties for your company, given that you wilfully and knowingly took a decision to offend against one of the strongest laws that Parliament has put in place.

I did consider that, and I believe that I have discharged those duties.

I will go back to the issue of Cairnryan seafarers. Cairnryan is used for domestic routes, so P&O needs to comply with UK employment law in relation to staff on those routes. Why were Cairnryan seafarers included in the sackings, especially given that new staff are being paid the same amount as the sacked ones were being paid, as you said earlier?

This is about implementing a consistent crewing model throughout our organisation—a crewing model that is consistent with 80 per cent of global shipping.

And?

Your question was about why the decision was made. It was made because we are implementing a fundamental change to our crewing model across the whole of our business. It is not an apples and apples thing; we are moving from a crewing model that was uncompetitive and made the business unviable to a totally different model that is consistent with 80 per cent of global shipping.

With all due respect, you said earlier that the new staff are being paid the same amount as the sacked staff were being paid, so why were the Cairnryan seafarers included in the sackings?

No, that is not what I said. I said that we were required to pay staff on the Cairnryan route the national minimum wage, and we were doing so. Under the new model, we are required to pay the national minimum wage, and we will, of course, do so.

You said earlier that the pay was the same and that the terms and conditions were changed slightly but not a lot. That is why I am asking why you needed to sack the Cairnryan seafarers.

To be clear, my reference to the rates of pay not changing was about the national minimum wage. We always paid that wage previously, and we will absolutely continue to pay it.

This is not about the Larne to Cairnryan route; it is about having a consistent and competitive crewing model across the entire organisation.

I am sure that the Cairnryan seafarers will be comforted to know that it is not about them.

I thank Mr Hebblethwaite for attending the session. In my 20-plus years as a member of the Scottish Parliament, I am not sure that I have come across an issue with an employer that has united members right across the chamber in such hostility. The people we represent—our constituents—even those who are not in the south of Scotland or in Cairnryan, are disgusted and dismayed that a company with your reputation, and a company that has shareholders with reputations, has treated people with such disrespect and such a lack of dignity at work.

However, I thank Mr Hebblethwaite for taking the time to attend the session. We will discuss the evidence that we have received later in the meeting.

I wish everyone a restful Easter break—unfortunately, that will not be the case for the many P&O workers who have suffered at the hands of this chief executive.

11:49 Meeting continued in private until 12:52.