Whitehall officials tried to justify P&O Ferries’ sacking of 800 workers by telling ministers it would “ensure that they remain a key player in the UK market for years to come through restructuring”, a leaked memo shows.
The briefing document shows the Department for Transport failed to challenge the company’s decision to dismiss crew members with immediate effect, possibly in breach of employment law.
Written by a senior official, it was shared across the government, including with the prime minister’s private office, before P&O told staff in a video recording on Thursday that it was their final day at the company.
Cabinet ministers then condemned the redundancies as a public backlash ensued. Grant Shapps, the transport secretary, gave P&O’s chief executive, Peter Hebblethwaite, a public dressing-down.
This weekend Shapps ordered a review of all government contracts with P&O Ferries and its parent company, DP World. Unions want DP World’s London Gateway and Southampton ports to be blocked from having “freeport” status under a flagship government programme to create mini tax havens around the country.
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Fresh details of the mass sacking emerged this weekend.
Before the announcement of the redundancies, a recruitment firm was running job advertisements aimed at workers in eastern Europe and the Baltics. Another crewing agency, appointed by P&O, offered sacked staff a sweetener if they agreed to return to work through the agency. They would receive £19,666.67 after a year if they signed by March 24, and half that if they waited until March 31.
Employees said that they could lose their redundancy payouts if they talked to the media, but Phil Lees, 62, an engineering officer in Dover who had worked for the ferry operator for 34 years, said: “They repaid me by basically throwing all my service and everything straight in the dustbin.”
There were also warnings taxpayers could end up bailing out the firm’s pension fund. It has a £146 million deficit, much of it long-standing, which if not paid off will affect the benefits of retired staff from dozens of other companies that pool their pensions through the Merchant Navy Ratings Pensions Fund.
The taxpayer is exposed to the tune of £20 million because the Royal Fleet Auxiliary, which provides support to the navy and the marines, is a so-called sponsoring employer of the scheme, as are the British Antarctic Survey and the National Environment Research Council.
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Baroness Altmann, a former pensions minister, said: “Taxpayers are on the hook for their share of liabilities in the scheme.”
A P&O spokesman said: “We are going to honour all our commitments.”
On Saturday P&O restored its service from Liverpool to Dublin. It expects to restore its cross-Channel ferry service on Friday.
Shapps said vessels would not be allowed to sail with inexperienced crews and has ordered the Maritime and Coastguard Agency to inspect all vessels before they return to service.
Although ministers are now acting, the memo shows the government’s instinct was to defend the company’s decision. It states: “We understand that P&O Ferries have an intention to try and re-employ many staff on new terms and conditions or use agency staff to restart routes; they estimate disruption to services lasting 10 days.”
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The document adds: “Without these decisions an estimated 2,200 staff would likely lose their jobs. These changes will align them with other companies in the market who have undertaken a large reduction in staff.”
Shapps received a copy. Sources close to him say he was “blindsided” by the ferry company’s announcement and had no warning — even though officials in his department were told on Wednesday.
A Whitehall source said: “Officials appear to have initially bought the P&O Ferries line that this was essential to save the company from imminent collapse. But talk of agency staff and getting operations up and running in just ten days should have set alarm bells ringing that this was no ordinary redundancy announcement with a proper consultation process.
“Ministers were incandescent when they were made aware of what was taking place and intervened as quickly as possible.”
Louise Haigh, the shadow transport minister, is expected to try to force a vote on Monday on the fire-and-rehire practices being used by the company.
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The Department for Transport said: “This was an internal government memo which, as standard practice, outlined what officials had been told by P&O Ferries shortly before their announcement was made.
“This was sent before ministers were advised of the full details and as soon as they were informed, they made clear their outrage at the way in which P&O staff had been dismissed.
“It is clear from the memo that our immediate priority was to work with unions to ensure workers’ rights continue to be protected and the transport secretary has urged the company to sit down with workers and reconsider this action.”
