WEDNESDAY 9 MAY 2001 _________ Members present: Mr David Curry, in the Chair Mr Michael Jack Mr David Drew Mr Austin Mitchell Mr Lembit pik Mr Mark Todd _________ MEMORANDUM FROM THE MINISTRY OF AGRICULTURE, FISHERIES AND FOOD EXAMINATION OF WITNESS MR ELLIOT MORLEY MP (Minister for Fisheries and the Countryside, MAFF), examined. Chairman 24. Minister, thank you for appearing before what is the last meeting of this Select Committee of this Parliament. None of us knows what shape we will all be in when Parliament comes or what shape the Committees will be in, although I hope that they are re-constituted very rapidly because there is obviously a great deal of ongoing business, at least in the fields we are interested in, which will need to be discussed. You are here to deal with fishes. The loaves and the fishes are being dealt with in Committee room 14, I was told, where the Prime Minister is addressing the parliamentary party in about 20 minutes' time. When you look at the value of the catch landed and the amount of government money which supports the industry in the shape of research, you have just commissioned a new vessel, inspection, control, it must be about the most heavily subsidised industry in Britain, must it not? (Mr Morley) You can put that interpretation on it in terms of the overall expenditure of the budget because, as you quite rightly say, a lot of the budget is on regulation of the industry which does need to be regulated, not just our own vessels as you know, but vessels fishing in our waters. And indeed there is a considerable R&D function which has always been accepted as a responsibility of the state. I think perhaps it is more justified if you look at it in its broadest sense which is the link with the catching side, with the processing side, on-shore and the fact that it is interlinked with the marketing of fish, the processing of fish, where there are many more jobs of course in shore based industries. 25. When you discovered the amount of aid that the Scottish Executive was going to give to its industry, did you say to yourself, "Good luck"? Did you say, "We need to look at the Barnett formula pretty urgently"? Or did you say, "They must be out of their tiny minds"? (Mr Morley) Those are very provocative questions, Chairman. 26. The fact that you have not repudiated any of them is very interesting. (Mr Morley) The fact is of course that we are now in a devolved situation and the logic of devolution of course means that on occasions the devolved administrations will take different decisions from the United Kingdom Parliament's. I have always argued, and I think there is common ground amongst all of us as ministers from myself and in the devolved administrations, that it is better to go forward on a broadly United Kingdom basis so that whatever we provide in relation to our particular regions for the fishing industry it is broadly similar. It does not have to be exactly the same because, as you know, Chairman, there is enormous regional difference in the fisheries in this country. The fisheries in the North Sea are very different from those in the Western Approaches and the south west. There are those differences and so therefore recognising the differences within different fisheries there is of course going to be a different emphasis and different needs and therefore different policy approaches. I think that the decision in relation to the allocation of funds from the Scottish Executive is clearly one for them, but I have always said to the English based industry that I would not want to see them disadvantaged and therefore the opportunities available to the fishing industry on a United Kingdom basis should be broadly similar, and they are broadly similar. 27. The concordats which were signed with the Scottish Executive, do they not cover this sort of territory? Is thee nothing in there which might enable you to talk about the level playing field within the United Kingdom? (Mr Morley) I think the concordats do allow this level of regional discretion and the difference in terms of emphasis in the administration of what is the administration of FIFG funds which are regional funds. I think it is fair to say, Chairman, as you will know from the past, that there was always a regional difference in the administration of regional funds and the Highlands and Islands Development Board, for example, always had funds available to the Scottish fishing industry even pre-devolution, so there has always been a difference in the regional approach in different parts of the country. 28. Do you feel that there could come a time when the fishing industry in Britain in practice becomes almost entirely a Scottish industry? The bigger part is in Scotland now as we know, and probably the more modern part as well, partly because of its pelagic interests. Could that happen and would it make you feel uncomfortable if it did, or would it not matter? (Mr Morley) I suspect that would not happen. The bulk of the in-shore fleet for example is in England and that, in terms of the shellfish sector, has been a reasonably successful fleet. Of course there are other sectors of the fleet, the beam fleet, for example, which is very much English based. While of course different sections of it have their own strengths and weaknesses and they have their own problems at the present time, I really doubt that we would have a completely Scottish dominated fishing industry. I do not really think that would happen. It is true there is a lot of money in that industry and the pelagic industry, which is predominantly Scottish based, has been an extremely successful industry and a lot of investment has gone into some very modern boats in that sector. Mr pik 29. Those are interesting insights, Minister, into your expectations of where we are heading. What is the Government's proactive vision for fishing? (Mr Morley) What we want is a healthy and sustainable fishing industry with good returns to those people who are operating within it, generating enough money to provide their own investment and therefore as a stand-alone business, as indeed it should be, and also linking in with the on-shore side, the processing side. In some parts of the country like the south west there is a link between tourism and active, viable fishing ports. People like to see fishing ports operating and active and we should not forget that side of it. It is hard to quantify and it is on the peripheral side but it is still a consideration. I think we have a lot of work to do on the sustainability side because with the growth of technology, the efficiency of the fleet, there is no doubt that stocks on a European basis have taken a hammering. There are no two ways about that. That is what we are trying to address currently with the recovery programmes and they are quite difficult and painful for the industry but they have to be done and they recognise that in the same way that we do. 30. Do you have a geographical picture in your mind - you have touched on this already - for how the fishing industry in the future would be spread across the United Kingdom? (Mr Morley) I do not think it is for the Government to take an interventionist role in terms of saying, "You must have a certain section of the fleet in this part of the country", and "You can only have a certain section of the fleet in that part of the country". I think that is bad for the industry and if we want the industry to be viable there are always going to be some movements within the industry in relation to the way they think the best business opportunities are and where the best fishing opportunities are. It is very difficult for us to interfere with that and I think it would be dangerous for us to interfere with that. Obviously I want to see the geographical spread of the industry remain where it is today. I do not want to see fishing ports run down, wherever they are, and indeed we have been trying to take steps to try and support fishing ports around the country. However, I think it is fair to say that there are some fishing ports who are having a harder time than others. 31. Are you drawing up a strategy which would outline the kinds of things that you are describing now? (Mr Morley) Yes. From your previous report you did call upon the Government to produce a strategy for fishing. The Sea Fish Industry Authority did act as a convenor to bring together a strategy document and that was published a few months ago. That was a useful document but I think that that needs flesh putting on the bones. I think we need some more thought about a longer term strategy for the industry, particularly in relation to different methods of fishing. I know we have had these discussions before about low impact fishing, for example. It might be low impact in-shore based, but it might support quite a few jobs and I am not unsympathetic to giving those kinds of fisheries some particular thought. Whether or not we should have restrictions on the size of the industry in relation to the horse power, for example, or whether there should be unrestrained development and simply let the market dictate which way the industry goes, I am not sure. There are quite difficult issues because the issue that we have to consider is how interventionist we are as a government in what in the end is a range of private businesses. I think our principal role is to try and work with the industry and the support we should be providing is on the added value side, the marketing side, the processing side, to encourage the industry itself to have more control over its own business, its own management to a very large extent, the use of the producer organisations which can be very successful in terms of managing the business, and also pooling such things as quota and sharing quota out and well run POs are a very good model, but of course POs themselves do vary in relation to their professionalism. 32. Presumably that document you are describing will include the kinds of objectives that you agreed with on our Committee submission? (Mr Morley) Yes. 33. Do you have a timetable for when we can expect the finished document to be ready? (Mr Morley) No, because the Sea Fish Authority were producing that document. That is done; that has been produced and has been made public. If I can be frank with the Committee, one of the problems with it is that Sea Fish were acting as a convenor and a lot of it is wish lists which are quite familiar from various industry sectors, which are sometimes not compatible in terms of different sectors who have different wish lists in the long term future of the industry. What we have to do as a government is to try and pull that together and we do have to give that some thought. 34. The Government, as you rightly say, could pull that together by exercising leadership to achieve a result. Can I suggest that it would be helpful if you were to establish a timetable by which everybody who wants to contribute to this could contribute and by which time the public or this Committee could then focus on making plans for the major debate when we come to focus on the issue? (Mr Morley) That is not an unreasonable suggestion, Chairman. What we have done as a government is set up high level meetings with the fishing industry, which actually include the whole of the industry. It brings together all sectors and there are not many forums where you have everyone in from the processing side to the catching side. Obviously the election is an interruption in the process but there would have been a meeting scheduled for May. I think the next meeting of the high level meetings of the industry is one to address these points and to think about a timetable, discuss the sea fish document, which is a good basis for taking this forward, and to try and agree with the industry because you need involvement with the industry in terms of developing this strategy. 35. Would you consider postponing the election so that we can get that document ready? (Mr Morley) I do not think that is one for me to make. 36. The last serious question - that was not. Can you make any comment about where you envisage levels of financial intervention settling down in the long term? (Mr Morley) Yes, I did touch upon that, I think. Where it is legitimate for the state to provide financial intervention is obviously on the enforcement and restriction of development; that is perfectly legitimate, and also on the infra structure side, marketing side, processing side, adding value side, so that we could provide elements of grant aid to the industry itself. This would be on a matched funding basis. We are not talking about completely paying for these things. It is legitimate, as we always have done, through structural funds to give support for the infra structure development to increase profitability and to help the industry in relation to its returns. I think it is also legitimate as part of the R&D side to give some financial support to more selective gear, more environmentally friendly fishing methods. We have included those within our objectives under the new round of FIFG. Those are the areas where I think it is quite justified to have an element of public funds. Mr Todd 37. One of the key components of the compiling of the strategy for fishing has to be our approach to the common fisheries policy and its reform. You set out your priorities for that and consulted on those priorities. What feedback have you had as to whether the goals the government has set are the ones that the industry would share? (Mr Morley) This is on the Green Paper? 38. Yes? (Mr Morley) We were very pleased with the draft of the Green Paper because it has certainly picked up a lot of issues which we think are priorities in terms of CFP reform and the structure of the CFP. I think in all fairness the UK industry should be pleased because their arguments on such things as a regional approach have also been picked up. One of the things I should perhaps have said in relation to what Lembit was saying in terms of a long term strategy for the industry is I think the Green Paper is part of that long term strategy. I think that the discussion that we are going to have on the Green Paper is also a way of looking ahead for the longer term and the structure of the CFP and the future structure of the industry, of which important elements are that regional approach and the need for the CFP to be more flexible. Part of its problem is it is very monolithic, it is very slow to react and to adapt and it needs to be more flexible. It needs to take into account the regional differences in fishing. 39. Would you not agree that one of the great weaknesses of both the CFP and, to be honest, the perception of the UK Government policy is the divorce between the industry and its perception of its own interests and the regulatory authority and its perception of its role in conservation? It should be possible for those two functions to work in partnership for the long term health of the sector. We have not devised mechanisms to ensure that there is that common belief. (Mr Morley) I understand the point and it is a very fair one. I think we have made some progress on this. The fishing industry has had probably unprecedented involvement in the recent discussions on the cod recovery programme, the hake recovery programme, Irish Sea recovery programme, North Sea recovery programme. They have played a very important role in that and a very serious, thoughtful role. I think that bodes very well for the future. There is always going to be, well, there should not be, the point that you are making, but I think there is always going to be a little bit of tension between the enforcement role of the Government and the role of the fishing industry. They want to catch as much fish as possible. They want as few regulations and restraints as possible while, of course, in relation to the Government we have an obligation in terms of fisheries management that does involve enforcement, does involve restrictions at times and, of course, restrictions have economic consequences and that is why you sometimes get the conflict with the industry. 40. There must be some inevitable tension but if one makes the assumption that entrepreneurs have a wish to have a sector in which they can be active for some reasonable foreseeable future then there ought to be some basis of common agreement. (Mr Morley) Yes. 41. 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 42. Should not the leadership that Lembit pik 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. 43. 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 fisheries 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. 44. 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. 45. 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 --- 46. 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 pieces --- Chairman: Do not go into cod pieces. Mr Mitchell 47. 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? 48. 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. 49. 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. 50. 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. Chairman 51. 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 linked condition which has proved to be a deterrent. 52. 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. 53. 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 Departments 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. 54. 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. 55. 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. 56. 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. 57. 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. 58. 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 59. 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 German's 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 Fish 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 60. 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 5« million grant from the DETR for retraining and what is described as rejuvenation of fishing ports. (Mr Morley) Yes. 61. Could you just tell us what this rejuvenation is? (Mr Morley) Yes. It is a matter for DETR in discussion with the local councils. Very roughly, it would fulfil a very similar role to the old PESCA programme, if you remember the PESCA programme, where you could provide financial support for regeneration, elements of investment, some infrastructure works within the ports. I think it could be used in very similar ways to that. 62. Will that not represent a very small amount of money because 5« million to do two things - retraining and rejuvenate - over all the ports that are jumping up and down saying "Can we have a share of this money" seems a little thin on the ground? (Mr Morley) Well, not when you take into account that this is additional in terms of the overall budgets of the Regional Development Agencies, of which fishing ports can be included within that for general economic regeneration and general economic investment. This particular sum of money has been ring-fenced for fishing ports in recognition that many English fishing ports are suffering as a result of reduced landings and the impact that has on the whole knock-on consequences through the processing industry and all the allied industries that go with it. 63. Can it be used for a broad range of projects or does it have to be based on the fishing part of the port? (Mr Morley) I think there is a fair degree of flexibility within that but the intention is to benefit and to provide alternative employment within fishing dependent areas. 64. And improve the quality and value of fish caught is one of the uses of your 11 million? (Mr Morley) Yes. 65. Which I gather is going to be allocated over the next three years. (Mr Morley) That is right. 66. How will that quality aspect be implemented because I presume that is trying to improve the price and return to the fishermen? (Mr Morley) That is designed to invest in such things as new ice making facilities, which I know is an urgent need in Fleetwood, for example, and also to modernise fish holes for example, to improve their refrigerator capacity, because it is about, as you quite rightly say, improving the quality of the fish landed and maximising the price that the industry can get from it. There does seem to be a development of a two tier market with a lot of imported white fish which is going into the processing industry and a premium market for good quality fresh wet fish, such things as the restaurant trade, for example, the export market. We want the industry to have the maximum returns in relation to their catch. It is an area where some public investment is justified in that. 67. Right. Let us move to sustainability. Mr Portus, writing to the Committee on behalf of South Western Fish Producer Organisation Limited, made a bold statement and I would just be interested in your reaction to it. He said "The risk of any stock being exploited to extinction is infinitesimal. Once a stock reaches the point where commercial exploitation ceases to be viable the fleet leaves it alone and it recovers". This is conservation on auto pilot. How do you respond to that? (Mr Morley) I think that is a pretty irresponsible statement. To argue that we do not have to worry about fishing stocks because of commercial extinction because the industry will simply adjust to another stock, I think is a very, very dangerous argument. We have, of course, the Canadian example where the stock was fished so low it has not yet recovered. There are other factors in that such as temperature, for example, but nevertheless many scientists believe that if you fish a stock below its safe biological spawning biomass then there is a very great danger it may not recover. I do not think that any responsible fisheries manager could take that as a serious policy, to simply allow people to fish stocks out on the basis that once they have fished it out they will leave it alone. 68. Let us go to the other end of the spectrum where you and your Department have made some efforts to define how you will improve the balance between the fishing effort and marine fish stocks. In the MAFF Annual Report for 2001 on page 18, objective 7, PSA target, and I quote, it says "Improve the balance between fishing effort and marine fish stocks by reducing effort by 20 per cent in those sectors of the UK fleet with most over-capacity". Could you describe to the Committee how you decided that the effort reduction had to be 20 per cent and what measurable results will occur as a result of your achieving that target? (Mr Morley) I think that is based on scientific advice on a range of fish stocks. I think that is probably an average figure overall because the effort does vary from particular stocks. The effort reduction figures would vary on particular stocks. Effort reduction can be through a combination of measures. We have just been talking about decommissioning, that is one way of reducing effort, but of course bigger mesh sizes, the closed areas, they also have an effect on reducing effort. We are probably well on target overall in the North Sea for reducing effort along those figures. 69. You say, understandably, it is due to scientific advice but, when you decided this was going to be your target, as a Minister did you sit down with those providing this objective advice and look at a range of figures so that you could say: "Well, let us say if it had been, say, a 30 per cent reduction there would have been a proportionate increase, perhaps in a shorter space of time, of the stocks under the greatest pressure"? (Mr Morley) Yes. 70. In other words, is there a model that people can play tunes on to decide what the relationship is between your target and the rebuilding of the fish stocks which Mr Deas was telling us about earlier? (Mr Morley) That is right. There are models. I have not sat down quite as formally as you are suggesting in relation to deciding on a particular model but in terms of the discussions that we are currently having on phase 2 of the cod recovery programme, that is linked with mesh sizes and calculations on improving the survival rate of juvenile fish. What has been produced there by my own Department is a chart of different mesh sizes, different combinations, amount of fish lost, reduction in effort and also the economic loss to the industry as well. There are figures available on a range of options which give you a range of results so that you can go for a much bigger reduction in effort but, of course, a much bigger subsequent loss to the industry. There are different options you can choose. 71. Can you just give us a feel of the management strategy for sea bass to ensure long term sustainability of stocks because clearly your target forms part of that. Can you just try and put it into context for us. (Mr Morley) Yes. I think the key to it is to reduce juvenile mortality, if you want my opinion on this. There are all sorts of different objectives, issues, outcomes, but in the end I think that the principal problem with European fishing is the sheer killing power of the fleet and the fact that so few juveniles are surviving to maturity to breed. Therefore, the safe level of the breeding biomass has been falling for some time. We need to reverse that trend. I think that has to be the key objective and there are a number of ways that you can do that and, of course, there are a number of options and these are choices which have to be made. 72. You have followed a traditional line of reducing fishing effort by looking at power of vessels and mesh size. (Mr Morley) Yes. 73. One of the biggest contributory factors to the unequal battle between man and fish is modern fish finding technology. Have you thought about de-rating the effect of that equipment? (Mr Morley) That is a very interesting suggestion. You could make a very viable argument on that basis but you could only do that if it was done on a European basis. You could not do it unilaterally and, therefore, put our vessels at a disadvantage compared with other vessels. It does raise quite difficult issues in terms of should there be restraints on the technical improvements in relation to the fishing vessels. That is a very hard question to answer because you are back into the realms again of should you interfere with investment within the sector who, of course, are trying to improve their returns and putting money into that new technology or should you have some kind of artificial restraints to try as part of sustainable management? I think these are questions which do deserve some consideration but I would not say there are easy answers to them. 74. There are never easy answers in this particular area. (Mr Morley) Certainly not in fishing, no. 75. Can you give us a flavour of how you see the general level of support amongst the industry for the current stock recovery programme? (Mr Morley) I think there is support amongst the industry. There are differences of opinion which are inevitable. There are arguments about timing of the closures, which in some cases are not unreasonable. I think there was probably an argument for an earlier closure in the Southern North Sea, for example, and that is something that we need to give some thought to. These large scale closed areas are a new concept in relation to fisheries management and, of course, we do have to evaluate the benefits of them. I do believe they do offer a range of benefits. I think they are justified and we did get the majority support within the industry to implement these measures and I very much appreciate that. I think it does demonstrate that the industry are taking conservation management a lot more seriously these days than they have in the past. 76. Can I just take you on because Wyre Borough Council have written to the Committee and I ask this question because Wyre Borough happens to be in my own constituency. They say - and this is talking about the Fleetwood Fish Forum - "...The Forum agrees with the cod recovery programmes which are now in force in the Irish Sea, West of Scotland and the North Sea, but feels that it should be extended to include all species which are being fished outside of safe biological limits". They go on to say "The Forum also feels that the beam trawlers in the Irish Sea should be included in the cod recovery programmes, as they are in the North Sea. Evidence has proved that these vessels have a significant catch of cod and juvenile fish". Now, you mentioned a moment ago your own thoughts on reducing juvenile mortality and here we have the Fleetwood Fish Forum making a contribution to the debate. I would be very interested in your reaction to that? (Mr Morley) I very much value the views of the Fleetwood Fish Forum. I have met them on a number of occasions. We do take this seriously. What I would say, Chairman, is that the beam trawlers were not excluded from the Irish Sea cod recovery programme, they were actually barred from the Western side of the Irish Sea. We did put observers on the beam trawlers to actually look at the cod bi-catch level and it was very clear from our observer programme that the cod bi-catch level on the beamers was much higher on the Western side of the Irish Sea than on the Eastern side where it was actually minimal, frankly, so that was taken into account in the way that the closure was operated so beamers were not excluded from it. 77. Let me ask you how are you going to monitor the effectiveness of these various recovery plans? How are you going to judge whether they are going to be successful? What are the criteria by which you assess it? There is always a very fearsome debate about the level of fish stocks at any one moment in time. Usually about October or November each year a fearsome debate starts where a challenge is always put forward as to the viability of information. Yet the long term sustainability of the fishery, in judgment terms, now depends on you being able to make some very exacting measures for how successful all these programmes are going to be, not just from the perspective of next year but over a period of years if sustainability is to mean anything. (Mr Morley) The measurements are clear: the numbers of fish in the different year classes, so that we can measure the year classes to see whether or not there is an increase in a year class which will lead to an increase in the spawning biomass. The problem, of course, is that there are some natural fluctuations within fish stocks as well, so this is why you always get some arguments about whether or not programmes are successful and whether or not stocks are going through a natural down cycle or the impacts of fishing. Nevertheless, I think our scientific advisers have the experience to measure this and have the experience to interpret the actual figures. I do not think there is any doubt, even within the industry, that many stocks are in a dangerous situation and, therefore, these forms of actions need to be taken. 78. Let me just ask you one last question. One of the features of the Annual Fisheries Council at the end of the year is the vast amount of horse trading which goes on when either new policies or quotas are put forward. This sometimes seems to fly in the face of the kind of experienced, scientific evidence that you have just alluded to. It would be interesting to have just a word or two from you about how other Member States see all of this because you have given us some very good responses with entirely virtuous replies to the lines of inquiry that have been pursued. Do you think there is any stomach amongst Member States in general to stop horse trading, to look at the science and go with the flow of the guidance it gives, or is that just for the birds, we are going to see them back every year? (Mr Morley) I think there has been a shift within the Council of Ministers and you have experienced it yourself, as indeed has the Chairman. What you are saying is not wrong in relation to the way that the Council has traditionally operated. I think that more and more countries are coming to the conclusion that they just cannot go on in this way and that it is in nobody's interest to try to talk up quotas from the scientific advice. Certainly at the last Fish Council I cannot think of a stock where people were arguing to go beyond what the scientists were saying. Just about every country accepted the scientific advice even though for nearly all of us, especially the North Sea States, it meant quite drastic cuts in quotas, the biggest cuts in quotas probably that there have ever been. Really there was no serious attempt to argue against that. The attitude of the Commission has changed as well. In the past, even when I first became Minister in 1997, the Commission would put forward proposals that were clearly designed to be changed, so that you could say "we have persuaded the Commission to give us X amount of extra fish". As the years have gone on, and indeed last year, the Commission has put forward generally quite realistic proposals on the science and has been really very resistant to move from them, and has not moved from them, much to the anguish of some Member States who traditionally had expected to see that kind of movement. I think that is the right approach. I think it is much better to stick to the science and where there is some room for argument---- We did have some argument at the Commission because the Commission this year were recommending cuts in quotas that went beyond what the scientists were saying. I think when you recommend cuts going beyond what the scientists are saying it is not unreasonable to challenge on what basis the Commission is making those proposals. That was where the argument was this year. The argument was really centred on where the Commission was going beyond scientific advice. I think there has been a genuine shift in the Council of Ministers. Mr Mitchell 79. Can we move on to the issue of a level playing field, or a level fishing ground, because fishing is a much misunderstood industry, particularly by former Ministers of Fishing it seems to me. It does have a genuine grievance in the sense that it does not get the same degree of financial support from its Government, or indeed from Europe, that competing industries get, but it does get the continuous imposition of charges which competing industries do not have to bear. The NFFO this morning gave us a few instances, like inspection charges, the cost of satellite equipment. You could add dock and port charges to the list. Is it reasonable that these charges should go on increasing? Most of them are not imposed by MAFF but by other departments. Is it reasonable that these charges should go on increasing as a burden on an industry which is in such financial difficulty? (Mr Morley) There is always going to be an argument about such things as charges and there is always going to be an argument about how reasonable it is to apply charges on to the industry. That is a legitimate debate and we are obviously going to have that debate and I am always willing to listen to representations from the industry. We should not assume that all the costs in the UK industry are higher than competing European industries. We have already had a discussion about such things as social taxes, corporation taxes, business taxes, which are significantly lower in the UK for our industry ---- 80. That is not for all taxes. (Mr Morley) Just let me finish. It is significantly lower for the UK industry than it is for other European industries. 81. That is not part of the argument. (Mr Morley) It is, because when we have been discussing things like the support for fuel, where I cast severe doubts on the legality of the French package, the French response was "your taxation policies are a form of unfair competition because the operating costs for your industry are much lower than ours". 82. That is a debating point. (Mr Morley) That is the reality of the situation. 83. The other reality is that the competing industries get, for instance, much easier treatment when it comes to unemployment. Fishermen in the periods when they are not fishing are much more generously treated when it comes to unemployment benefit, and that was part of some of the packages of improvement in that situation. Ours have to face the rigours of Jobseeker's Allowance, which is really difficult for share fishermen. Let us not reply to the one debating point with another debating point. The point is that heavier charges are imposed on our industry but MAFF, which should be the protector of the industry in easing that kind of burden, is not able to do so because they are imposed by other departments and there is a genuine unfairness there. (Mr Morley) I repeat the point that I think there is always going to be an ongoing argument about different charges and it is a legitimate issue for the industry to raise. I think these are issues that we have to address on the basis of the particular charge and the strength of the particular case. 84. The recent update you have provided us with refers to an EU wide framework for the collection of data on the economics of the sea fishing industry, which was agreed by the Fisheries Council in June 2000, to enable a relative comparative assessment and a fair assessment of the costs and earnings of the fishing fleet in the competing industries. In your view, will this identify the real comparative costs of both regulations and the kinds of additional burdens that are pressed on our industry and allow us to have a fair basis of comparison with other Member States, which we should have had some time ago? (Mr Morley) In theory it should, Austin, and I support the concept of having this kind of data so that we can have a look at what other industries are doing. It does, of course, depend on the quality and the reliability of the data that is presented. Chairman 85. Minister, quotas and discards now, which are obviously one of the more emotive parts of the policy. You said you were going to look at recording permanent transfers through the annual reconciliation of fixed quota allocation units. You have already agreed that within the pelagic centre ITQs, although not called that, operate de facto. I also recall when you gave evidence to our original inquiry you said that there was a lot of argument in favour of trying to introduce a market mechanism but you needed to get the industry on board, which I think probably reflected on my own experience that the second coming, or perhaps the third coming, would come earlier. What progress has been made on the quota-trading area and how much further do you see it developing? (Mr Morley) We are currently out to consultation on the fixed quota allocation system. That is an opportunity for looking at the way that works and addressing some of the points that were raised in the last Committee. I personally think that the fixed quota allocation system has been successful. I think it has provided a range of benefits, not least this track record problem of ghost fishing and all the problems that went with that, and also the fixed quota allocation system does provide a better basis for a more logical management of fish quotas. You are quite right, Chairman, about the de facto ITQs within the pelagic sector, but some of the POs actually operate ITQs within the PO and, of course, they have the freedom to do that. 86. The report of the Working Group published in September last year, what is the progress on those recommendations? (Mr Morley) The Working Group on? 87. Published in September 2000. It is the Working Group on Quotas and the Permanent Transfers. (Mr Morley) That is right. The Working Group report, if I recall, is the one which is on the basis of the Working Group Committee. 88. Quota Management and Licensing. (Mr Morley) That is the one which is out for consultation at the present time. 89. Discards: it is difficult to see how you can manage a quota system without discards but, equally, it is difficult to see how you can manage the flak which comes from people seeing discards. You undertook to use the results of research into the economic aspects of discards in considering improvements nationally at the European Union level. That was in your latest Update. (Mr Morley) That is right. 90. What questions have emerged from this research which might give us a way of dealing with this issue? (Mr Morley) I do not think the conclusions of the research into quotas is finished yet, I have not seen the report on that. We have pressed the Commission on this, as we said, in the response to the Select Committee report. The Commission are bringing forward proposals about where multi- annual quotas can be applied on a wider range of species, which is something that we very strongly support. It is, of course, very difficult to do this when stocks are in poor shape. Mr Jack 91. Can you just update me on the latest data? One hears so many figures bandied about about levels of discards, can you just give us any kind of statistical feel as to how you see the present situation? (Mr Morley) It varies in different fisheries. The discard rate, for example, in the North North Sea mixed fishery, particularly in the haddock fishery, is probably around about 40 per cent I would say. 92. Forty per cent? (Mr Morley) Yes. 93. Is that the highest? (Mr Morley) I think it has always run at a level of between 30 and up to 50 per cent in that particular fishery. It has always been a very high discard fishery. 94. Just to go back to the system of quotas that you were describing a moment ago, is that a rolling programme where you would accept that you would land discards as part of a catch but then adjust the quota later on? (Mr Morley) The idea of the multi-annual quotas, and it touches upon an issue which often confuses some people when you talk about discards ---- The most indignation comes from marketable fish which has to be thrown over the side because the quota has been exhausted. Multi-annual quotas would remove that because you would have an element of adjustment in relation to year on year where you may be a bit over on one year and a bit less on the other, so you can even it out on a three to five year rolling programme, say. That deals with that problem but it does not deal with the problem of juvenile and unmarketable discards, which is by far the largest element of discards in our fishing grounds. The 40 per cent discards I was talking about in the North North Sea are predominantly juvenile fish, they are not a result of quota management, it is just the fact that they are not marketable. Chairman 95. The Green Paper talks about Integrated Coastal Zone Management and it may be that here we have the glimmerings of a policy over which there may be some "ownership" of value of fisheries depending on where the balance of power lies between decision making between the supervisory role of the Commission and decision making powers of local management. Do you support this move in principle? (Mr Morley) Yes, I do, Chairman, I think it is a sensible way forward. 96. Do the Sea Fisheries Committees have a role to play in it? (Mr Morley) I think so. I think that in relation to coastal management policies into our coastal fisheries, the Sea Fisheries Committees have a very important role to play. One of the areas where they may have an enhanced role, Chairman, is you will know that we are currently consulting on a shellfish licence which I, personally, strongly support, and I think the administration of that licence could be a role for the Sea Fisheries Committees. 97. Because there are, indeed, outstanding issues about the powers and resources of the Committees. When might we expect you to conclude your reflections upon this? (Mr Morley) On the consultation period? 98. In an uninterrupted world. (Mr Morley) I do not know offhand when the data will finish. It cannot be very far away, Chairman, because of the closure date for consultation. 99. The Association of Sea Fisheries Committees would like to see coastal waters of Member States extended to a limit of 12 nautical miles. (Mr Morley) Yes. 100. Not a surprising demand, I suppose. What is your view? (Mr Morley) If we could get agreement on that I would be delighted to do that. We do, of course, have jurisdiction out to 12 miles but there are historical rights of vessels, as you know, Chairman, between six and 12 for a limited number of countries and there are restrictions in relation to the size of vessels and things like that. I would strongly argue, and indeed have argued within the Council of Ministers, that giving Member States much more control out to 12 miles is a way of strengthening conservation management, particularly of our inshore sector which tends to be a low impact fishery. I think there is a very strong argument for strengthening the role out to 12 and, indeed, I am prepared to argue for that and see what support there is within the Council for that. Mr Todd 101. You touched on the issue of powers and resources of Sea Fisheries Committees. Logically, if they are going to be given a greater role in management then one has to look at both their constitution and how well they reflect the task they have in front of them and also the resources, the money, they have available to carry out their function. How far has that detailed work actually gone? (Mr Morley) The Sea Fisheries Committees do have proposals of their own and they have been pressing for a review of the legislation to modernise, legislation that gives them powers. There is a case for reviewing legislation. There is a case for addressing some of the areas where they feel their powers are inadequate, and I am sympathetic to that. It would require time, of course. 102. Has there been a bid? (Mr Morley) Yes, there is a bid in in relation to our future programme, in relation to certain aspects of it. There are different levels of changes which require different levels of complicated legislation. On the resource issue, which has been a long-standing issue, because they are resourced by local authorities, I understand the Sea Fisheries Committees' concerns about this, and there is no simple answer to this. 103. There is no ring-fencing of the resources. (Mr Morley) No, it very much depends on the local authorities, it is not ring-fenced. Mr Drew 104. You may have answered this, I want to look forward a few years, the expansion of the EU and what impact that might have on the some of policies that are you trying to implement. (Mr Morley) I think the expansion of the EU will have a fairly marginal impact on the Common Fisheries Policy. There are some candidate nations that do have significant fishing fleets, Poland is one, and some of the Baltic States, however they do not fish within current EU waters. The issue is that if we can maintain the principle of relative stability, and I think that we can maintain that, because I think there is a consensus agreement within the Council of Ministers, if we maintain that post 2002 as part of the Review then, of course, the candidate nations will not have a quota within EU waters and will not have access to EU waters. Mr Jack 105. You mentioned, it follows on from the area you have just been discussing, you thought some consensus was emerging from the Council around the Green Paper proposal, then you said in the Council the Spanish had disagreed from the position they had taken more privately within bilateral discussion. Can you give us a flavour of the areas of Spanish disagreement at the present time? (Mr Morley) The Spanish minister in the April discussions was basically - I hope I am not doing him a disservice - arguing for EU-wide ITQs. He was arguing that a quota should be tradable across international boundaries. He also did not give support to the coastal limits, and that was a little bit surprising because I know countries like Portugal are very strongly in support of coastal limits. 106. Can you refresh my memory, in terms of the 2002 situation, is there a consensus about not allowing Spain to fish in the North Sea? (Mr Morley) We are back to relative stability, that is where the consensus is, if relative stability is maintained, as Spain and Portugal do not have a quota within the North Sea, then, of course, they have no access. 107. What about access to waters for non quota species? (Mr Morley) Theoretically they will have access to waters with non quota species but I cannot think of any non-commercially important non quota species available in the North Sea. Over the last four years what new, non quota species have been put on quota, and I have to say, Chairman, the United Kingdom did very well out of that, getting 80 per cent of the --- Chairman 108. Minister, finally can I ask a question that I asked Mr Deas at the beginning, there only seems to be one route, it is more regulated, more complicated and fishermen are diverted on to one stock and it becomes under strain and before we know where we are there is a need to introduce licensing on that stock because that has been hit too hard. You yourself have introduced additional regulations, for example, the landing limitations, which everybody understands, can you conceive of a scenario where this goes into reverse? One is all the time multiplying regulation for what is, after all, a small catching industry. I accept your point about it being a dependent industry on the shore which does consume a very large amount of government money. Every time you go along to the Treasury to ask for more money you receive the same reception, that I have no doubt Mr Jack and I received, "You cannot be back again for more money for that industry!". (Mr Morley) "Do not darken our door" is a familiar refrain. 109. I expect there is a culture in the Treasury, for understandable reasons, I do not think that changes with government, can you envisage a scenario where we could unravel it a bit and free it up and it could still work as an industry? (Mr Morley) There is a case for trying to cut through some of the bureaucracy. It is part of the submission that we have made from the United Kingdom to the EU that we should look very carefully at the range of restrictions which are placed on the fishing industry and to examine whether or not they are justifiable. There is always going to have to be some restriction on the fishing industry, that is inevitable, although the development of new technology does allow, in principle, the possibility of reducing some of the restrictions, satellite monitoring and things like that. We do have one or two problems with the satellite monitoring going off on regular occasions which we need to resolve, but it does have the potential to reduce some of the bureaucracy. Chairman: Minister, we do not know whether we will be here after the election, you do not know whether you will be here and we have no idea whether MAFF will be there, although I have to say I rather take the view that all those people forecasting its demise ought to look at history and they will have been there before. I expect to see it survive rather more than most people expect to see it survive. You have done a very long stint as Fisheries Minister and without forecasting your fate or our fate I have no doubt you have scars to show, as we all have. One day we will form a club and invite Mr Mitchell to be an honourary member in order to continue the process of educating him. Thank you very much for coming to us today, and in whatever capacity we will look forward to meeting in the new Parliament, or not?