§ 1.30 p.m.
§ Earl Howe rose to move, That the scheme laid before the House on 15th June be approved [21st Report from the Joint Committee].
§ The noble Earl said: My Lords, the instrument which the House is considering sets out the rules for the 1994 decommissioning scheme. Much of it will be familiar because it is closely based on the successful 1993 scheme: in particular, it retains the tendering mechanism which enabled us to get the best possible value for public money. I am sure that most fishermen recognise the merits of this approach, and I trust noble Lords will agree that it should continue.
§ The main criteria for determining eligibility have not been changed. Vessels must be: UK registered and licensed, over 10 metres in overall length, over 10 years old, and seaworthy. We want to target active vessels so we have also retained the requirement that vessels must have spent at least 100 days at sea on fishing trips in each of the last two years—the years in question now being 1992 and 1993. We considered carefully whether the scheme should be more precisely targeted, for example, by confining it to trawlers or beam trawlers. We concluded that this would be too restrictive, but there is a new requirement that the vessels which apply should hold a full pressure stock licence, thus focusing on vessels fishing the most vulnerable stocks. Moreover, the 100 days at sea on fishing trips must have been spent in Community waters; the effect of this is to exclude vessels fishing primarily in distant waters where the pressure on the stocks is less intense.
§ Finally, we are excluding vessels which were successful in the 1993 tender but which were not actually scrapped; we included a warning to this effect 2126 in the 1993 explanatory leaflet to discourage withdrawals, and the current scheme implements that rule. The Government have already indicated that £8 9 million is available for this scheme. That includes an amount corresponding to the balance remaining from last year's scheme. Application forms are available in local fishery offices; fishermen who are known to be interested in this scheme have already received their forms. The closing date is 15th August and we look forward to a keen response with realistic bids.
§ It is of course difficult to predict the outcome because of the tendering element but I expect the 1994 scheme to make a useful contribution to conserving the stocks and achieving our multi-annual guidance programme targets. It is one element in a package of measures which also include the 1993 scheme; a further scheme in 1995; our system of licence penalties; and technical conservation. Of those, the 1993 scheme has already removed 135 vessels, about 4800 tonnes or 2.2 per cent. of capacity, at a cost of £7.8 million. The 1995 scheme will have £8.3 million available—that is to say, the original £25 million less last year's expenditure of £7.8 million and this year's expected expenditure of £8.9 million. Our system of licence penalties is such that capacity has to be given up when a new vessel takes over the licence of one or more existing vessels: we shall continue to operate this. And we shall continue to explore the scope for counting technical conservation towards our MAGP targets: the industry has put forward some useful suggestions which we are discussing with the Commission.
§ Your Lordships will recall that the first round of decommissioning was linked to our proposals on days at sea. In last year's debate on decommissioning I referred to the postponement of days at sea until 1st January 1994, and we subsequently announced that the policy had been suspended pending a ruling by the European Court of Justice. That remains the position and I believe there is no need to debate days at sea this morning.
§ However, the concept of effort control will not go away. The scientists are unanimous that total allowable catches and quotas are not sufficient on their own, and they have recommended effort reduction as an additional means to help the stocks. Community effort restrictions have operated since 1990 and the current MAGP requires fishing activity to be controlled. Effort control will also be vital in controlling an enlarged common fisheries policy which embraces Spain, Portugal and Norway. I would like to mention in this context that the European Commission has just put forward proposals on the integration of Spain and Portugal into the common fisheries policy. Its broad approach has been to allocate controls on effort in western waters using a system of "standard vessel days". That is needed if we are to see a continued control on Spanish fishing effort—but since they will be common measures they will need to apply to all member states. We shall want to study the proposals with our own industry to see whether they are on the right lines and how they can be made most effective and workable. There is no question of imposing inappropriate or unworkable controls. A first meeting of the industry with officials has already been fixed for next week.2127
§ There are also domestic reasons for keeping an eye on fishing effort because if fishing effort increases, the stocks will not benefit from our decommissioning expenditure, and because the MAGP rules now include a requirement that fishing effort should not increase. That is why we intend to monitor fishing effort. We shall not be heavy handed about this, but information from log books and landing declarations will enable us to assess the current level of fishing effort and its future evolution. The industry claims that the fleet is already fishing flat out and, if that is the case, effort should not increase. If it is wrong and effort does increase, we shall have to consider the way forward, taking account of the ECJ's ruling and of the position of other member states. We shall also consult the industry and listen carefully to what it has to say. However, I hope the industry will collectively exercise restraint and so make the use of such controls in the context of this scheme unnecessary. I invite noble Lords to join me in urging such restraint, and I invite them also to approve the scheme so that it can make its own significant contribution to conservation and to our Community targets. I beg to move.
§ Moved, That the scheme laid before the House on 15th June be approved [21st Report from the Joint Committee].—(Earl Howe.)
§ Lady Saltoun of Abernethy
My Lords, first, I want to say that the Scottish Fishermen's Federation welcomes the Government's commitment to decommissioning as a means of reducing current fishing fleet capacity without imposing as a pre-condition the days-at-sea restrictions which have been referred to the European Court of Justice. The Scottish fishermen hope that this order will pass rapidly through both Houses of Parliament.
Next, I have various comments to make and questions to ask about this year's scheme. The fishermen very much dislike the sealed bid system and consider that they are entitled to the same terms as those in other member states who will get the revised rates of decommissioning grant laid down in Council regulation 3699 of December 1993. Last year 46 Scottish vessels were decommissioned with an average grant of no more than £60,000 each. After deduction of the costs of scrapping, which have to be met by the owners themselves, and the consequential tax liabilities, very little was left in the hands of those withdrawing from the industry. In some cases the grant was insufficient to cover all the accumulated debts of the vessel, which can include large bank loans since the vessels can cost anything from £600,000 to £5 million to build. Application of the Community scheme would unarguably result in very much higher grants being paid.
Incredible as it sounds, I understand that decommissioning grants are not tax free. Needless to say, it would give far greater encouragement to fishermen to offer their vessels for decommissioning if they were. In many cases where decommissioning is under consideration preparatory negotiations will have to be undertaken with bankers and others with an interest in the vessel, and the matter of exactly when the grant can be expected to be 2128 paid may be of importance. In view of the fact that decisions on all applications will be made, I understand, by October, it is not acceptable that payment should not follow as soon as all the requirements of the scheme have been complied with but should often be held over until 1st April. The Treasury does not tolerate laggardness in payment of its tax demands. Why should it not do as it expects to be done by?
Why are the Government insisting that the required 100 days spent at sea fishing during 1992 and 1993 should have been spent entirely in Community waters? That will disqualify vessels which spent a significant part of the year fishing in the Norwegian sector of the North Sea, which is very much nearer to the ports of north-east Scotland than some Community waters.
The Scottish Office agriculture and fisheries department says that, according to its records few, if any, vessels would be disqualified by the provision, but I am not sure that that is right. Fishermen are unhappy about it and would prefer paragraph 3(1) (c) of the order to be amended to read, "days at sea on fishing trips" as in the 1993 scheme.
The noble Earl referred to the monitoring of the fishing effort. Apart from looking at logbooks, how is that to be done and who will do it? The fishermen fear that they will be saddled with still more bureaucracy and paperwork.
As with the 1993 scheme, the government announcement of the order made no reference to the need for socio-economic measures to assist crew members who will lose their jobs as a result of decommissioning and who will not benefit from the grant which the boat owner will receive. The Community has recently announced the PESCA initiative which is designed to help in that regard. Are the Government prepared to make a commitment to the fishing industry which will give us access to the PESCA budget, as every other member state's government will certainly do?
I turn to the more general subject of the serious shortcomings of the Government's policies on conservation, structures and decommissioning, with particular emphasis on the inadequacy of the latter to fulfil the requirements of the multi-annual guidance programme.
The present multi-annual guidance programme requires a reduction in the capacity or effort, or both, of our fleet by 19 per cent. by the end of 1996. Last year's section of the three-year £25 million scheme resulted in a reduction of 2.2 per cent. Assuming that this year's and next year's sections achieve the same result, by 1996 we shall have achieved a reduction of less than 7 per cent., leaving over 13 per cent. of our target outstanding. Industry-led capacity aggregation initiatives may result in a further small reduction in capacity. However, with effort limitation measures through days-at-sea restrictions in abeyance pending approval by the European Court of Justice —approval which, as one who knows the industry, I hope will not be forthcoming—there is no possibility of our meeting the target of 19 per cent. by 1996. What do the Government propose to do about that?
2129 The multi-annual guidance programmes of all member states are at present being reviewed. The report of the Commission to the Council of Ministers and the European Parliament on progress as at the end of 1993 has recently been produced. It shows the United Kingdom situation to be one of non-compliance.
As long as we are in breach of our multi-annual guidance programme—which the Government, not the fishermen—signed up for, our fishermen will not have access, as other Community countries have, to Community funds for building and modernisation grants. Our fleet is an ageing one and we are being left behind in the progress being made elsewhere in Europe.
Of the £25 million which this three-year scheme is to cost the Government, the Treasury will claw back some £15 million from the Community. But under the Fontainebleau agreement that will reduce the general rebate which the United Kingdom receives. So the Government will have less to spend elsewhere. By that piece of accounting—which is not creative accounting, but more like destructive accounting—our fishermen are being done down compared with their European counterparts.
Between 1987 and 1992 approximately £250 million was drawn from Community funds by various member states to finance decommissioning schemes, of which nothing came to us. If amounts paid to member states for construction and modernisation are taken into account, the amount rises to nearly £500 million, of which only £11 million came to us. No wonder our fishermen feel that they are not on a level playing field compared with their Community counterparts.
§ 1.45 p.m.
§ The Lord Bishop of Peterborough
My Lords, some 37 years ago I was appointed Rector of Lowestoft where the fishing fleet was at the time in decline in comparison with the wonderful years before 1959. The decline has continued. Those in the fishing industry well understand the problems that are faced by everyone and are very ready to play their part in the reductions which have come about. However, as the noble Lady said, they need reassurance that it is indeed a flat playing field. They want to know that there is equity in the handling of fishermen of other nations. I ask the noble Earl to reassure them that the Government will exercise total vigilance in ensuring that the same control and fairness exists throughout all fishing nations.
§ Lord Mackie of Benshie
My Lords, the Minister will be glad to hear that I can give a small welcome to the decommissioning scheme. However, it is a small welcome. It may take out 7 per cent. of existing capacity, but it does not tackle the main problem.
There is still some money left from previous schemes. It means that something is wrong with the scheme when fishermen are not even applying for the small amount that the Government are making available. We need to look at that aspect.
That is not the main problem. The scheme will help a little. However, the Government are up a gum tree together with all the governments of Europe. One may decommission but at the same time techniques are 2130 improving. Danish industrial fishing is immensely competent and sweeping up far more than is admitted. The monitoring of the catches of some nations entering our waters—for example, Spain—is woefully inadequate. One hears stories of there being half a dozen people stationed in Madrid who are supposed to cover the entire industry. That makes a nonsense of the efforts we are making in this country to control catches.
In relation to the total allowable catch, perhaps the Minister can say how accurate scientists have been in their calculations. Again, one hears stories from fishermen of adequate or even surplus catches of cod or haddock and so on when the scientists have forecast that stocks are well down.
The policy on discards needs to be looked at. Catches of cod and haddock need to be counted together. It is absolute nonsense that in order to keep their quota, fishermen have to throw away valuable fish. The number should be counted together so that the fish are not wasted, as they have been.
The problem is enormous. Are the Government exploring any new lines? It is true to say that we should not be improving the catching capacity. Perhaps we should return to older methods. My noble friend Lord Thurso has a bee in his bonnet, which I share, about line fishing. I well remember that in Arbroath—at one time a big fishing port —the line-caught fish, set on a long line, fetched a far better price than the net-caught fish because they were taken freely and were not simply caught in a net, squashed together, and suffocated. Not only did those fish taste better and fetch a better price, but the small fish which were put back into the water had a good chance of survival. I may be talking nonsense—it may not be possible—but an idea which the Government might explore is to give line fishermen a free run. That position would certainly be better than the total confusion we have at present.
I am sorry not to be kinder to a Government who are trying their best. The problem is enormous. We are not getting anywhere within Europe. Big efforts have been made. New methods with regard to nets, and so on, have been tried. Such efforts are absolutely necessary if we are to get anywhere. One factor is certain: at present we shall run down the stocks.
§ Lord Carter
My Lords, the Minister explained the scheme extremely clearly. I can be brief because almost all the points that I would have made have been covered. However, before we discuss the regulation, will the Minister confirm that certain proposals released by the European Commission only yesterday—I have not seen them—are likely to be discussed at the Fisheries Council in November? The Minister commented on them, but how do they relate to the regulations that we discussed today? I understand that they deal with the situation after decommissioning. Does the Spanish and Portuguese accession have any effect on the scheme that we are now discussing, or does the scheme have to run for two or three years? Do the proposals deal with the situation after that period?
Like the noble Lord, Lord Mackie, on these Benches we welcome the scheme on the understanding that it has been carried forward from last year. However, it is 2131 important to repeat the figures given by the noble Lady, Lady Saltoun. The first round took out 2.2 per cent. of fleet capacity; the present rate of about 7 per cent. will be taken out by 1996. I understand that that compares with the target reduction of 20 per cent. Is that correct? What happens about the 13 per cent. shortfall? What are the Government proposals to deal with that?
If the gross expenditure last year was £7.5 million, I understand that £5 million will come back through the Fontainebleau agreement. Tax is paid on the £7.5 million that is paid out. Therefore if one takes an average tax rate of 15 per cent. or even 20 per cent., what is the net cost of the scheme to the taxpayer? After the tax payments come back in, I envisage that the Government are spending little more than £1 million on the scheme. How much of the £8.3 million this year will come back through the Fontainebleau agreement, and how much through taxes paid by those who receive the grants? I believe that the net cost to the Treasury is in fact quite small.
Is it also correct that, of the £500 million that was made available for decommissioning, construction, and modernisation grants, only about £11 million has come back to the United Kingdom? Why is the figure so small if that amount of money is available? We all know the size of the problem.
The figure of £25 million has been allocated over three years. Could the allocation be speeded up? It has been suggested that if it were speeded up, to be spent perhaps within two years, the vessels could be decommissioned more quickly. Is there any specific reason that the allocation has to be spread over three years?
Will the Minister comment on the interesting suggestion raised when the regulations were debated in another place yesterday? It appears that a potential buyer from Sri Lanka has a firm and positive offer to buy decommissioned boats in the United Kingdom and to take them to Sri Lanka. The buyer is prepared to obtain assurances from the Sri Lankan Government that those boats will not find their way back into the European Union fleet. Obviously it is important that they do not. If they were to return, of course they would need licences. However, that seems a useful offer. What is the Government's reaction to it?
In conclusion, as I said, all the important points had already been made in the debate. We are all aware that it is a difficult area. I was on the Select Committee of this House which considered the fisheries policy. To put the matter at its politest, there is not unanimous enthusiasm throughout the European Union to secure enforcement of fisheries policy. Our fishermen feel that the system has not worked to their advantage. I am not sure that these regulations will help to reassure them.
§ 2 p.m.
My Lords, we have had a useful debate. I am grateful to all noble Lords who have spoken. I shall endeavour to cover as many points as I can in my reply, but I hope that noble Lords will forgive me if I do not 2132 cover them all. If questions remain to be answered at the end of the debate, I shall, of course, write to noble Lords.
I am pleased to say that noble Lords have welcomed the scheme, albeit in some cases in somewhat guarded terms. But the general view has been expressed that we should have been spending more if we are to achieve our MAGP target. It is true that we have a demanding target to meet. But we still have two and a half years to go. Decommissioning last year, this year and next year will make a useful contribution. As I mentioned earlier, we shall continue with licence penalties and we are actively exploring the scope for technical conservation at the instigation of the industry itself. It will not be easy to do that. I do not pretend that it will. But we shall pick our way forward in a sensible fashion, taking account of the position of other member states and of the Commission.
Perhaps I may turn to the detailed speech made by the noble Lady, Lady Saltoun. She mentioned, first, that fishermen disliked the sealed bid system. The use of the sealed bid system is a normal way of securing the best possible value for public money, just as fishermen use the auction procedure to achieve the best possible value for their fish. It can allow for the cost of scrapping and debt, and so forth, in individual circumstances. I agree that fixed rates, as in the EC regulation, would have resulted in higher rates of grant. But then it follows that fewer fishermen would have been successful in the tender.
The noble Lady also referred to taxation. The general rule on taxation is that fishermen who scrap their vessels and receive decommissioning grant are treated in the same way as fishermen who sell their vessels. In both cases they have been able to set their original investment against tax; so it does not seem unreasonable that receipts on disposal should also be taken into account. The tax position of those receiving grant will, of course, vary according to individual circumstances. Applicants will be advised to take any necessary financial guidance before submitting their bid.
The noble Lady also made a complaint about the lack of prompt payment of grant, as she saw it. The results of the tendering exercise will be announced in October. Payment will follow as soon as the requirements of the scheme have been met. In particular, the vessel must be scrapped and the licence surrendered. The 1st April is the last possible date for payment but it will certainly not be the norm. We would wish to pay the grant as soon as the conditions have been fulfilled.
The noble Lady also referred to the disqualification for vessels fishing in Norwegian waters. I am aware of her anxieties. However, as she acknowledged, the point is probably academic because vessels which fish in the Norwegian sector of the North Sea are likely to have clocked up 100 days in Community waters too. Therefore, we are not inclined to amend the 1994 scheme but we shall certainly reflect on her point when it comes to the 1995 scheme.
The noble Lady expressed anxiety about the way in which fishing effort might be monitored. Of course, we want to avoid any unnecessary red tape. The aim is to use the existing system of log books and landing declarations and to avoid adding to bureaucracy.
2133 She also referred to the PESCA initiative, which the Government welcome. The aim of the scheme is to help the fishing industry adapt to the restructuring of the fleet. The Commission's guidelines and the invitation to member states to participate in the PESCA initiative were issued on 1st July. That has been followed by five symposia organised by the Commission in the UK to explain the initiatives to interested organisations. We are awaiting details of the UK's indicative allocation under PESCA. We shall be drawing up programmes to indicate what will be eligible for assistance, and I can assure your Lordships that we shall carefully consider the views of the industry before final decisions are taken.
The noble Lady, Lady Saltoun, and the noble Lord, Lord Carter, referred to the Fontainebleau mechanism. I am afraid that the figures that they quoted were wide of the mark. The Community contributes up to 75 per cent. of the. cost of decommissioning when vessels are scrapped. However, in large part, this contribution from the Community budget is financed by the UK taxpayer. The UK contributes about 15 per cent. of total Community revenue. Moreover, the operation of the Fontainebleau abatement, although it is beneficial to the UK overall in view of our position as a net contributor, reduces the net benefit of any receipts. Taking those two factors into account, the UK taxpayer would bear about 71 per cent. of any receipts from the Community plus the Government's own contribution.
The noble Lady and the noble Lord, Lord Mackie, questioned the adequacy of the decommissioning scheme. As I said, we shall take stock as we go along. We have two rounds of decommissioning yet to come, plus the other measures to which I have referred. I do not believe that there is any cause for undue alarm any more than there is cause for complacency. The main point is that the Commission will want to see that we are taking our targets seriously and I believe that we are doing so.
The right reverend Prelate the Bishop of Peterborough referred to the position of UK fishermen as compared with that of fishermen in other member states. The Government fully agree that there must be a level playing field among member states. The new control regulation and the recent Commission proposals for controlling effort will help to ensure that. My honourable friend the Minister of State has emphasised to Commissioner Paleokrassas the need for rigorous enforcement if the common fisheries policy is to have any credibility.
The noble Lord, Lord Mackie, asked about the lack of full uptake in the 1993 scheme. Money was left over from the 1993 scheme because vessels that had been accepted were in some cases not scrapped. The underspend was therefore carried forward to this year. The demand for decommissioning grant was excellent. Four hundred and thirty-three applications were made, of which 142 were successful.
The noble Lord also asked about the accuracy of scientific assessment and about discards. Of course, he will know that the science of fisheries is not precise and, I dare say, it never can be. But general experience and anecdotal evidence supports the view that stocks are 2134 under pressure and I am sure that he will agree with that. I agree with him that discards are a cause for concern and for that reason we are working in particular on technical conservation measures.
The noble Lord, Lord Carter, asked what the link was between the recent EC proposals and decommissioning. There is no direct link between the two. I think it worth emphasising again that the decommissioning scheme that we are operating is freestanding. However, the noble Lord, Lord Carter, also asked whether it would be possible for vessels to be sold abroad, provided that an undertaking were given not to return the vessel to the UK fleet. It would be difficult to police such a system and we believe that scrapping represents the only practicable means of ensuring that decommissioned vessels do not find their way back not just into the UK fleet but into the EC fishing fleet too—
My Lords, the licensing system provides a check on the number of vessels in the scheme. However, it would be anomalous, would it not, if we found that a vessel for which the taxpayer had paid out money was back in the fleet a month or a few years later? That would bring the system into disrepute—
§ Lord Mackie of Benshie
My Lords, I thank the Minister for giving way. Would the Minister be indiscreet enough to say that he is not satisfied with some of the licensing on the Continent? In this country, it would be very difficult to license a boat which had received a decommissioning grant.
My Lords, it is not so much that I am satisfied or dissatisfied; it is that the UK. has no means of controlling the way in which other member states operate their systems. The point that I made about wanting to keep maximum possible integrity within our own scheme is valid in that context.
I am told that in my remarks covering the anxieties expressed by the noble Lady, Lady Saltoun, about vessels which fished in Norwegian waters, I referred to their disqualification from the scheme. I hope that the noble Lady realised that I meant to say that the time that those vessels spent in Norwegian waters would not count towards the 100-day requirement I compressed my remarks, and I am sorry.
I hope that with those explanations the House will approve the order so that the 1994 scheme can go ahead. I believe that it will make a valuable contribution to the conservation of fish stocks and to our Community targets.
§ Lady Saltoun of Abernethy
My Lords, before the Minister sits down, can he confirm that we shall still have access to PESCA funds, even if we are in breach of our multi-annual guidance programme targets?
My Lords, we are not in breach of those targets. As I have explained, the Government welcome the PESCA initiative. So far as we know, we shall be eligible for funding under that initiative, and we shall study the rules with all speed and consult with the industry as we do so. But if I am wrong, and there is 2135 some link between the MAGP target and the PESCA initiative, and that somehow our eligibility will be delayed —although I do not believe that that is the case —then I shall write to the noble Lady.
§ On Question, Motion agreed to.