The Committee deliberated.

Draft Report [Sea Fishing], proposed by the Chairman, brought up and read.

Ordered, That the draft Report be read a second time, paragraph by paragraph.

Paragraphs 1 to 74 read and agreed to.

Paragraph 75 read as follows:

"The economists referred to earlier also argued "that a profitable fishing industry should be capable of funding its own reinvestments - as is expected of many other industries - and that the priority should be to implement a management system that will ensure a profitable industry". We agree that when an industry is efficient and profitable there is no case to be made for public subsidies and when it is not, public subsidies are equally hard to justify unless clearly identified substantial social goods are achieved. The amount of investment in some sectors of the fishing industry at the moment as we have seen on our visits and as the Minister observed at the Fisheries Exhibition implies that there is sufficient profit in those segments to obviate the need for grants for new build or modernisation on a general basis. Indeed, Mr Wentworth of MAFF suggested that the industry was already operating its own version of a scrap and build scheme. We are disappointed that the industry is quite so alarmist on this issue. For example, the SFF claimed that the failure to have access to EU funding made "this whole area ... perhaps the most depressing aspect of current fisheries policy" and asserted that "If it continues unchanged in a single continental market for fish and fish products, profitability levels will decay inexorably and the lethal combination of poor commercial returns and ageing tonnage will lead to increases in accidents with loss of life and vessels." We are more inclined to agree with the Government that "the first priority for EU funding remains the reduction of excess capacity and that sustainable fishing means that fleets ought to be capable of generating sufficient returns from catch proceeds to justify investment in modernisation or renewal without the need for publicly funded subsidies." We are also disappointed by the attitude of the industry in demanding subsidies without offering a properly worked-out proposal for a scheme. It is impossible that any Government would ever concede a demand for grants without knowing the extent or shape of what is requested. On the arguments put forward for funding for new build, we have sympathy with the complaints of the industry about the money received by their counterparts in other EU states. We support the Government in its attempts to tighten up the rules for such assistance. Nevertheless, we do not recommend that the Government adopt an industry-wide scheme to aid the construction of new fishing vessels, whether or not under a scrap and build approach.".

Amendment proposed, in line 16, to leave out from the word "vessels" to end of the paragraph and insert:

"The Government took the view that "the first priority for EU funding remains the reduction of excess capacity and that sustainable fishing means that fleets ought to be capable of generating sufficient returns from catch proceeds to justify investment in modernisation or renewal without the need for publicly funded subsidies." We agree but must emphasise that in a situation where several national fleets are competing to survive it cannot be realistic to expect the British industry alone to be left without a modernisation programme of the scrap and build type, particularly when it is subject to higher charges of all kinds than its competitors. We are also disappointed by the attitude of the industry in demanding subsidies without offering a properly worked-out proposal for a scheme. It is impossible that any Government would ever concede a demand for grants without knowing the extent or shape of what is requested. On the arguments put forward for funding for new build, we have sympathy with the complaints of the industry about the money received by their counterparts in other EU states. We support the Government in its attempts to tighten up the rules for such assistance but in the present situation if we are to maintain a competitive fleet Britain must either end such assistance everywhere in the EU or match it, for the nature of competition in the EU is that an unsubsidised 'market-led' system of restructuring in one country alone must damage the competitive position of that industry.".— (Mr Austin Mitchell.)

Question put, That the Amendment be made.

The Committee divided.

Paragraph agreed to.

Paragraph 76 read as follows:

"We recognise, however, that a case may be made for assistance for other purposes. The Minister stressed that he was not saying that "we should not use public funds for the fishing industry", specifying a preference for "some element of modernisation, in terms of crew accommodation, ice facilities, things like that". These issues are important as they affect the ability of the industry to attract new entrants. We were told by vessel owners that young men were deterred from becoming fishermen by the poor living conditions onboard vessels. We are acutely aware that some segments of the industry are not profitable and that they could be helped to become so through the judicious use of public funds. The criteria for such assistance must include the continual reduction of fishing capacity in line with the available fish stocks, safety and the sustainability of the fishing method. We recommend that the Government, in consultation with the SFIA and the industry, prepare proposals for a grant scheme narrowly targeted on assistance for modernisation and safety improvements for vessels working within sustainable fisheries.".

Amendment proposed, in line 9, to leave out from the word "capacity" to end of the paragraph and insert "in line with the available fish stocks, safety, the sustainability of the fishing method, and that short-term targeted assistance would be effective. We recommend that any such grant scheme for vessels working within low-impact fisheries be based on these criteria.".— (Mr Mark Todd.)

Question put, That the Amendment be made.

The Committee divided.

Paragraph, as amended, agreed to.

Paragraphs 77 to 94 read and agreed to.

Paragraph 95 read as follows:

"When our predecessor Committee last examined the question, it recommended the introduction of ITQs into the UK fishing industry. Since then, the market in the UK has developed rapidly and there is also more experience to draw on from countries throughout the world which have experimented with ITQs. We believe that the system has much to offer the industry in the change of attitude it engenders to one of responsibility for the future of the stocks. It is far better for the industry to rationalise itself by adapting to the available resources than for the Government to attempt a half-hearted decommissioning programme as in the past. ITQs could also contribute to reducing regulation and removing restrictions on effort, leaving fishermen to manage their own businesses. We do not believe that any system currently in operation elsewhere in the world, however successful in that country, should be or could be transplanted wholesale into the UK and we are certainly convinced that any ITQ system should be agreed in collaboration with the industry although the Government must not use the perennial disagreements within the industry as an excuse for not introducing management measures which it, after consultation, regards as necessary. However, like the industry, we recognise that the UK is moving inexorably towards an ITQ system and it is surely better for this to be an orderly development than a chaotic scramble for fish at ever-increasing prices.".

Amendment proposed, in line 4, to leave out from the word "that" to the end of the paragraph and insert:

"tradeable quotas have something to offer the industry but that quotas are best given to the POs and handled within each one on an individual basis. Some POs such as Grimsby already do this sharing out unused quota and quota purchased by the PO itself on the basis of need and track record and though the situation is complicated by, for example, individually purchased quotas, we consider it comparatively straightforward to devise a system which combines the best of both worlds; the management and disciplines of the community PO and the incentives and benefits of transferable individual quotas within it. In this way the industry can combine flexibility with communal organisation, hand regulation down from the centre and give the POs a functional basis to build on as well as check any loss of quota likely to undermine the local fishing industry.".— (Mr Austin Mitchell.)

Question put, That the Amendment be made.

The Committee divided.

Paragraph agreed to.

Paragraphs 96 to 110 read and agreed to.

Paragraph 111 read as follows:

"These arrangements are only provisional: the final version of "the general framework for the conduct of business in the devolved areas" (the so-called 'concordat') covering fishing is "well advanced", but we are concerned at the time it is taking to reach agreement and to publish the document. The recent furore over the drawing of the eastern sea boundary between England and Scotland illustrates the potential for conflict and misunderstanding and we wish to see this minimised by having the responsibilities of the various parties and the framework within which they are to operate clearly set out. We recommend that the Government attend to the publication of the concordat on fisheries management as a matter of urgency. The nature of devolution also means that there is potential for differing treatment of fishermen in the various parts of the UK. Indeed, the SFF openly hoped that fishing would get more attention from a Scottish Parliament than it had from Westminster, given its proportionally greater contribution to the Scottish economy. While this expectation is quite reasonable, more advantageous treatment for Scottish fishermen would only add to the divide which already exists within the UK fishing industry and lead to even louder accusations of lack of parity. We ask the Minister for reassurance that MAFF will monitor with care measures applied by Scottish Ministers to the Scottish industry so that English fishermen are not disadvantaged by concessions awarded to their Scottish counterparts.".

Amendment proposed, in line 14, to leave out from the word "parity" to end of the paragraph.— (Mr Mark Todd.)

Question put, That the Amendment be made.

The Committee divided.

Paragraph, as amended, agreed to.

Paragraphs 112 to 126 read and agreed to.

Paragraph 127 read as follows:

"The dispute over satellite monitoring is not going to disappear. The EC believed that, although the UK "has fortunately moved from an unfavourable position to a much stronger one", it was still behind countries such as Portugal, Germany, Denmark and Spain in the setting up of the required control and information management centre and in the number of vessels equipped with the systems. Arrangements are supposed to be already in place for all vessels over 24 metres operating on the high seas or engaged in industrial fishing. The UK Fisheries Departments as of 4 June had one vessel reporting its position, with 26 in the process of linking up, and were receiving position reports from Danish industrial fishing vessels in UK waters. The difficulty is that far more vessels are involved in the next stage and we have heard anecdotal reports that there may be significant non-compliance. These problems will be compounded if, as is likely, the requirements are extended to vessels under 24 metres, a sector which is not making the kind of earnings described by the Minister. We take the Minister's point that fishing "is not the only industry that does have to accept costs, in relation to management". However, this is clearly a Treasury-driven decision and one which has the unwelcome effect of confirming the prejudices of some in the industry against the entire management system. We recommend that if the satellite monitoring requirements are extended to vessels under 24 metres in length the Government take up any EU funding available to subsidise the installation of the necessary equipment by the industry.".

Amendment proposed, in line 17, to leave out from the word "Government" to end of the paragraph and insert "either take up any EU funding available to subsidise the installation of the necessary equipment by the industry or produce reductions in the regulatory burden on fishermen to balance the cost.".— (Mr Mark Todd.)

Question put, That the Amendment be made.

The Committee divided.

Paragraph, as amended, agreed to.

Paragraphs 128 to 194 agreed to.

Annexes 1 and 2 agreed to.

Resolved, That the Report, as amended, be the Eighth Report of the Committee to the House.

Ordered, That the Chairman do make the Report to the House.

Ordered, That the provisions of Standing Order No. 134 (Select committees (reports)) be applied to the Report.

Several Papers were ordered to be appended to the Minutes of Evidence.

Ordered, That the Appendices to the Minutes of Evidence taken before the Committee be reported to the House. -(The Chairman.)

[Adjourned till Tuesday 19 October 1999 at Four o'clock.