P&O Ferries: New legislation could lead to company shut down with loss of 2,000 jobs

‘We will be taking steps to protect all mariners who are working in UK waters and ensure that they are paid the living wage,’ says Boris Johnson

In port: The P&O Ferries ship European Causeway vessel in dock in Larne, Co Antrim, where it has been detained by authorities for being "unfit to sail" (PA)

New legislation to be brought in by the government this week could lead to the shutdown of P&O Ferries and affect international links operated by other firms.

P&O made 800 seafarers redundant on 17 March, intending to replace them with cheaper agency staff. The company has repeatedly said the decision – which contravened rules on consultation about job cuts – was the only alternative to closure.

The transport secretary, Grant Shapps, is expected today to tell P&O Ferries’ chief executive, Peter Hebblethwaite, to re-hire the sacked staff.

Last week Mr Shapps said: “We are going to make sure P&O have to U-turn on this.”

But the ferry firm boss has repeatedly said that the firm has lost £100m in a year – a rate of £3 per second – and that it will close unless it can reduce its cost base.

Mr Hebblethwaite told MPs last week: “We weren’t viable before, and I know that if we hadn’t made radical changes, the business would have closed.

“That would not have been 800 redundancies with substantial severance packages, that would have been 3,000 people losing their jobs.”

He said that the average wage of agency staff is £5.50 per hour. The rate is 42 per cent less than the national minimum hourly wage of £9.50, which takes effect on 1 April.

Currently P&O Ferries, whose parent company is DP World of Dubai, is losing £1m per day. No ships are sailing on the key routes between Dover and Calais and between Cairnryan and Larne. On the latter link, one of two P&O ships has been detained in the port of Larne due to safety concerns.

P&O Ferries is expected to resume sailings between the Scottish and Northern Irish ports imminently, as well as on the Hull-Rotterdam link. It is already operating between Liverpool and Dublin – a route crewed by lower-cost agency staff.

Any closure would lead to more than 2,000 additional job losses and a sharp cut in capacity for passengers and freight ahead of Easter.

Ministers will bring in legislation this week to make ferry firms serving UK ports pay at least the national minimum wage to seafarers.

This would force Irish Ferries – whose crew are employed on agency contracts – to increase its pay on ships connecting Dover with Calais – as well as two links to Ireland, Holyhead-Dublin and Pembroke with Rosslare.

Low-cost competition from Irish Ferries was raised as a concern with Mr Shapps by the chief executive of DP World at a meeting in Dubai last November.

Many other shipping firms, including cruise lines, will be compelled to pay crew at least £9.50 per hour while they are in British waters and ports.

On 23 March the Prime Minister told Parliament: “We will be taking steps to protect all mariners who are working in UK waters and ensure that they are paid the living wage.”

This will particularly affect firms such as Southampton-based P&O Cruises, which is unconnected with the ferry company.

The standard business model in the cruise industry is to employ agency staff at below minimum wage rates in many countries.

The Independent has asked the Department for Transport what arrangements the government would make to help the 2,000-plus existing staff of P&O Ferries if the firm were to close, as well as for passengers and freight on the affected routes.