Select Committee on Agriculture Minutes of Evidence

Examination of witness (Questions 40-59)



  40. That they too are as interested in conservation as anyone else because otherwise they will not be in the industry for very long. That implies the need for the industry to become its own regulator to some greater extent and I think the zonal proposals certainly push them into that role in which they then have a greater degree of ownership of decisions that are made and also have, therefore, to bring their own membership—if it is a member based solution—into line and recognise the unpleasantness of some of the decisions that have to be made.
  (Mr Morley) I absolutely agree with you. The more we can involve the industry in ownership of the industry then the better it is. We have moved down that road with such things as fixed quota allocations which the industry can invest in, they can trade in and, of course, it is in their interests to make sure that quota is managed and, of course, it is not in their interests to see people who have not made that investment creaming it off illegally, which does happen. I think the problem is that there is common agreement between fisheries managers and the fishing industry that there is a need for conservation management, the disagreement is what exactly that conservation management should be.

Mr Mitchell

  41. Should not the leadership that Lembit Öpik talked about, you can see it is now being done through the fora, actually have been exercised much earlier because what fishing needs is a definition of its future, how the Government sees it and how the industry can feed into that future? We provided, I thought, an excellent report in 1999 which did give the way ahead and predict a future, as we saw it.
  (Mr Morley) Yes.

  42. That was based on the compilation of wish lists that you mentioned coming in to Sea Fish. So instead of repeating a wish list exercise through Sea Fish, which you have done, the Government should have exercised the leadership at that point. It did not and in my submission—and I will get your reaction to it, which I do not suppose will be sympathetic—it did not because the Government's approach has still been living from hand to mouth towards fishing. It cannot get the money from Treasury and any new deal for fishing has got to be a combination of financial support and regulation and involvement for the future of fishing. It was subject to constantly changing pressures from Europe, therefore it did not go ahead with what it should have done, developing a national plan for fishing.
  (Mr Morley) I think that we have given a strong lead to the industry, although that has mainly been a lead focusing on some of the difficulties that the industry have been reluctant to face up to in the past, particularly on the conservation issue, particularly on some enforcement issues, where difficult decisions had to be made and a strong lead had to come from Government. I think those decisions and those leads have come from Government. They have not been altogether popular with the fishing industry, and I understand that, but nevertheless it is not an industry where you can allow things to just happen, there have to be some decisions. There have to be leads given in relation to how to help them deal with that. Also in terms of a strategy, what we wanted to do was to actually give the industry involvement in that which was why Sea Fish were the facilitators for a strategy document that was drawn up from the industry. It is why I was a bit disappointed that a lot of it were fairly familiar wish lists which were quite costly as you know. I would not pretend that there is not an interest of the Treasury in all these things. I would not pretend that I do not have the same restraints as any other spending departments in relation to the Treasury rules. I would say very clearly to the Committee that one of your five principles that you set down in 1999 was that the industry should not become a subsidised industry and that if resources are used they should be used in a way which is cost effective. Now we have been working to those principles and it means that, frankly, some calls from the industry have just been to subsidise them and it is not a route we want to go down, and I do not think it is good for the industry either.

  43. That is not the evidence the NFFO have given, and all the documents submitted to us have given, which is that the industry has got to be helped from A, which is the present situation where many of them are facing insolvency and a lot of them are below the level of viability, to B, which is the regenerated stocks which come from a proper management system.
  (Mr Morley) Yes.

  44. To get the industry between those two points there is the need for finance. Other industries are getting it, as you have shown us in the memorandum about the amount of support which is coming from other governments; our industry is not.
  (Mr Morley) Yes. On that memorandum, Chairman, you might like an update on that in that it did say that the French aid package had been suspended in February, following investigation by the Commission. I understand now that Belgium, France, Spain, Italy and the Netherlands are all currently under investigation by the Commission in relation to the support packages that they have provided. So I am not at all sure—

  45. That presumably has not stopped a lot of money being paid out already?
  (Mr Morley) It has with the French scheme which, as I say, was stopped in February. So I am not so sure whether some of these schemes are going to actually materialise. It comes back to the point what is legitimate Government expenditure in relation to the fishing industry? It is back to an argument that we have had before within the Committee, when I have been before it, which is is it sustainable to provide public subsidy for investment, say, in fishing vessels if the industry itself cannot provide the income from the fishing because are you then just propping up artificially an industry or sectors of the industry which are not sustainable which is not good for the industry in itself? I think you have to think very carefully about where you are putting that money, where it is going and what the end results are. What I firmly believe you must not do is use public funds to prop up unsustainable sectors of the fishing industry.

  Mr Mitchell: What I am suggesting and what the NFFO have been suggesting is that we look at the World Wildlife Fund proposals in respect, for instance, of the Channel fishery where the return is currently minimal but with investment, and Treasury never has a concept of investment, it seems to be obsessed with candle ends or cod ends—

  Chairman: Do not go into cod pieces.

Mr Mitchell

  46. Not cod pieces, no. There has never been the investment which would, as the study shows, yield a substantially higher return over the long term.
  (Mr Morley) What the Treasury are never going to do is put money into what they think should be market-led investment from the industry sector concerned. It is true that the fishing industry are under pressure because of a fall in fish stocks and the priority is to regenerate those stocks and that is being done at the present time. What you are talking about, to be blunt, is paying to tie up fishermen and pay them for not fishing. That is a very unattractive proposal because it does not really address some of the structural problems that the industry has because theoretically you could tie them up and, yes, it takes temporary pressure off the fish stocks but if they simply go back and you cannot tie them and pay them forever and hit them as hard as they have been hitting them in the past then you have just wasted a lot of money. Resources are limited so, therefore, you have to think about where you put those resources to get the best results for the fishing industry in terms of the best cost benefit analysis. The other point, which is a philosophical one but it is worth saying, is if we want the industry to take ownership, particularly of conservation, and I think that is right, and we are developing that more and more, I am not sure it sends a very good signal if we accept that the cause of the problem is over fishing but the reward for over fishing is automatic subsidy in relation to tying up. It does not really send the right signals to the industry, does it?

  47. That is a caricature of what I am saying or the industry is saying. You are saying pay them not to fish. There is support for farmers on set aside not to farm but that is just a debating point. What I am saying is that there are substantial costs imposed by re-equipment, by more selective gear, by new gear, by different mesh sizes, by square mesh panels, all these kinds of selective operations, which are not financed by Government and which would help the industry to be more selective and to survive.
  (Mr Morley) But the Treasury response, Austin, would be that all this investment is for the benefit of the industry who will reap the benefits of that so, therefore, where is the argument for the state to put money into that? I know that is a simplistic argument, and I understand what you are saying about the comparisons with the agricultural sector, but the agricultural sector through the CAP is not sustainable in itself and that is going to change.

  48. It is being sustained. It goes on year after year.
  (Mr Morley) No, it is going to change. I think that there is a growing mood within Europe for that kind of change. I do not think we should be saying we should have a similar unsustainable support regime for the fishing industry that we have for the agricultural industry. We need to get away from that kind of support for the agricultural sector.

  49. If the fishing industry is not helped in some way—you are doing a brilliant job, an excessively generous job, if I may say so, of defending the Treasury's position—if it is not supported in some way and other industries are—and despite what you said about France, Spain is being supported—we will get the same situation we got in the early 1990s when the Government refusal to support the industry led to licences being sold, a lot of it closing down, sold on to quota hoppers who then took the British quota and legally could do so. You will have that again. Industries which are subsidised to survive will tie up quotas and assets in this country because the Government is not supporting them to re-equip, keep going, to sustain the future.
  (Mr Morley) I should say I am not defending the Treasury position, I am explaining it, Austin, really.


  50. You referred to it as simplistic a short while ago.
  (Mr Morley) We have to live in the real world in these things and that is the attitude, of course, which is a long standing attitude—there is nothing new about this—which applies to a whole range of different sectors. Yes, there is a case for financial support and I recognise that in my discussions with the industry and I have tried to respond to that with the support package which we announced very recently which is about £22.5 million with a combination of support. That is a reflection of our accepting the case that the industry have made. There are limits to this and I would not take such a gloomy view of the industry as you presented because while I do not doubt the current problems and financial pressures within the industry, which are very real and very genuine, investment is going on. New boats are being built, the industry is putting that money in. Those who have a vision, and those who are good business people and innovative, are thinking ahead and finding the funds to make sure their business does have that investment. I do not think the risk of quota hoppers buying up licences is as real these days as it was in the past because there is no doubt that there are a range of factors which actually discourage that kind of quota hopping these days, not least the economic links condition which has proved to be a deterrent.

Mr Mitchell

  51. Let us move on to the aid package announced. You always had a package in view and indicated to fishing MPs something would be forced. In essence, was it not forced from you by the decision of the Scottish Executive to support the Scottish industry more generously?
  (Mr Morley) No, it was absolutely not forced from us because it was always the intention to put together a case for the industry and to find them a package of support measures, some of which have been funded from within the Department's funds, some of which have come from DETR funds, but that was done. It would certainly be true to say that if there was a scheme for the Scottish industry and not one for the English industry, that would be very unfair to the English industry and very hard to defend and I would frankly concede that.

  52. The Scottish Executive submission to us indicates this is new money in Scotland. You say, and you have just said it now, that the money ". . . has been secured from savings redeployed from elsewhere in the fisheries budget . . .", six million. How can that be described as new money?
  (Mr Morley) It is new money because it is money which is from the Department and it need not necessarily have gone into the fishing industry, it could have gone into a number of spending headings. It was a decision to put that money into a package of measures for the industry to reflect the particular problems that they are facing at the present time. I would also say in relation to the Scottish budget, Austin, a very large part of that £27 million that was announced was from the FIFG budget, it was not new money in that sense either. They did add some money on top of that but what they have done is rolled their FIFG budget into a decommissioning scheme.

  53. What you said was "secured from savings redeployed from elsewhere in the fisheries budget".
  (Mr Morley) Yes. There is no guarantee, Austin, within the Department rules that necessarily has to go into the fishing industry.

  54. There is a disparity there, is there not, because the Scottish Executive says up to £25 million for decommissioning? You say six million.
  (Mr Morley) Yes.

  55. That is totally unrelated to the relative scale of the two industries.
  (Mr Morley) That is not the case. It is actually roughly pro rata to the two industries. If you take into account the average number of fishing days which are calculated, if you include the demersal sector, nephrops sector, then approximately in relation to the size of the active fleets it is roughly pro rata. Now I do not particularly want to argue that it was done in a clinical pro rata calculation, because it was done basically as part of the package that we put together to address our own industry's needs and it was a combination of factors but, if you look at it, Austin, it is roughly pro rata in relation to the fleets.

  56. I look at it like Oliver Twist. Number of fishermen 39 per cent in England; number of fishing vessels 50 per cent in England, value of landings 31 per cent in England. That bears no relationship to six million versus 25 million. However, let me move on. I would like to ask you about the effect of that on the balance between the two industries. First, is it correct that several English fishing vessels are in fact registered in Scotland and will, therefore, be eligible for decommissioning financed by the Scottish Executive?
  (Mr Morley) This is a new situation because of the fact that this is the first decommissioning scheme that has been introduced under the new devolved arrangements. Generally speaking the country of origin of fishing vessels is taken as their port of registry. If they are registered in a Scottish port then they are Scottish vessels. I am not a legal expert on this, I have to say, Chairman, I must put that caveat in right away.

  57. What is the relative effect going to be? Will we have more decommissioning in Scotland, more bankruptcies in England?
  (Mr Morley) I do not necessarily accept that argument that there will be more bankruptcies in England. It is a voluntary scheme, of course. It depends who wishes to put their vessels in to the scheme. I think it is very hard to predict that. Of course, the whole intention of a decommissioning scheme—and it is a one-off one year scheme in both countries—is to remove some of the capacity and, therefore, to allow more quota to be shared out amongst the remaining vessels and, therefore, make them more viable. On the points you were saying of pro rata, I have found the figures now. If you basically assume the scheme would apply to the demersal, seines, nephrops, lines and nets segments of the fleet, include active vessels with a minimum of 75 days at sea per year, the capacity ratio of Scottish to English vessels is 3.8 to one which is very similar to the ratio of £25 million to £6 million. Now, I do not want to make a big thing about this but it is very roughly pro rata.

Mr Drew

  58. If I can just take you back to the Common Fisheries Policy. We have used the analogy with the CAP and it would seem what is beginning to make the possibility of change a reality rather than a dream is the change in the Germans' approach. What nationality or what factor would force that change that most people want to see with CFP?
  (Mr Morley) I think the most important thing is if there is a consensus amongst the North Sea states in relation to the way that the CFP should change. At the last Fisheries Council there was a round table discussion on the Green Paper to get a feel of what people thought about it. It was very clear from that round table discussion that there was a consensus, I think, emerging around the Green Paper proposals. The only note of dissent was from Spain. I was a little bit surprised because in discussions with the Spanish Minister I thought that there was a fair degree of agreement about the way that the CFP should go. Clearly part of these are negotiating issues. I think that there is a consensus emerging around the central themes of the Green Paper and that is absolutely right and I think that is quite good news in relation to what we want to see from the UK.

Mr Jack

  59. I wonder if I could just ask a couple of small questions about the package before we move on to talk about sustainability. I see that part of it was a £5Ö million grant from the DETR for retraining and what is described as rejuvenation of fishing ports.
  (Mr Morley) Yes.

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