Fishing Industry

Delegated Legislation – in the House of Commons at 11:25 pm on 20th November 2000.

Alert me about debates like this

Motion made, and Question proposed, That this House do now adjourn.— [Mr. Sutcliffe.]

Photo of Sylvia Heal Sylvia Heal Deputy Speaker

Order. Will hon. Members leaving the Chamber do so quickly and quietly?

Photo of Austin Mitchell Austin Mitchell Labour, Great Grimsby 11:42 pm, 20th November 2000

I am sure that hon. Members were expressing their excitement at the remarks that I am about to make, and expressing their support before they go home, safe in the knowledge that the British fishing industry is being well defended in the Chamber.

I have a simple theme: the rise in fuel prices has hit fishing harder than almost any other industry, and has resulted in the fact that sections of the industry are no longer viable because fuel is too expensive for fishermen to carry on fishing in the way that they have done; whereas other industries, such as freight, received help and concessions in the Budget announcements last week, and recognition of their problems, fishing has received neither help nor effective recognition of the scale of the problem. Certainly, nothing has been done about it.

The fishing industry put its case to Ministers in two or three meetings in September and since, but nothing has happened to help the industry or to save it from the consequences of the rise in fuel prices. That is unacceptable. At the same time as the fishing industry has been hit by rising fuel prices, it has been hit by another crisis as well.

There is clearly a conservation crisis, or a stocks crisis, affecting large sections of fishing. Quotas have been cut, yet in the case of some species—cod is the classic example—fishermen cannot catch the fish permitted by the quota. Catches are down, but prices have not risen enough to compensate. Indeed, they have fluctuated while the fuel crisis has put up costs.

Fishermen face three crises: higher fuel costs and a shortage of fish, as well as prices that do not compensate for that. For example, marine diesel has increased in price by 200 per cent. in just over two years, which shows the scale of the rise. Most of that increase has taken place since the spring, and it now sells to fishermen at about £230 a tonne. Indeed, I received word from Lowestoft today that it was trading at £238 a tonne; last week, others told me that they were paying 26p a litre for fuel.

Such heavy fuel charges are particularly crippling for a number of vessels—those at Grimsby, for example. Grimsby fishing vessels have further to steam to reach the grounds and catch the fish than those from other ports. Those charges are hitting vessels that have to stay longer at sea to catch their quotas and make a living. They are being squeezed both ways: the longer they stay at sea, the higher the fuel costs. However, staying at sea is the only way that fishermen can make a living.

Beamers in particular are being hit, as they need more power and use more fuel. The markets depend on the big vessels, which catch the bulk of the fish. Their throughput has to be sufficient to keep the market and the facilities in the fishing ports going and to sustain the industry, yet those vessels are being hit particularly hard. Fuel costs have risen from a fifth to about 50 per cent. of the earnings of a vessel, which means less money for the crews, who are coming home in debt.

Some vessels have tied up to sit out the situation; others cannot get crews, even in great ports such as Grimsby, because earnings are too unattractive. Crewing has always been difficult, but that difficulty is increasing because family connections and the tradition of going into fishing have been broken. For example, in June, Aberdeen's Press and Journal cited a skipper who said that his fuel costs were £75,000 a year and that that had cut the crew's annual earnings by about £3,500 a head.

Those huge cost increases are being taken out on the vessels and the crews, and they cannot be made up through prices because the fishing industry is a price taker, not a price maker. It does not have control over prices, which are set at auction and, ultimately, by the consumer. If the price of fish rises too much, consumers switch to white meat such as chicken. That imposes a limit on the level to which prices can rise to compensate fishermen for those increased costs. Consumers are not prepared to pay more for fish, so the all-round impact on the industry is disastrous.

If that impact is prolonged, some vessels will clearly drop out of the industry. Many will not be viable and will be unable to carry on fishing. The crews will be out of work and the whole industry will decline. The spiral of decline, which hit us in the 1970s, had been checked, but a resumption is imminent. My hon. Friend is a good Minister and I know that he takes the concerns of the industry seriously—indeed, he takes them to heart and keeps in touch with fishermen—but I want to impress on him the need for urgency. He must outline those concerns to a Department that can be callous and unfeeling to fishing, even when the case is argued as well as he argues it.

Fortunately, fishing has strong support throughout the country. However, some critics may point out that marine diesel is duty free. I admit that that is true throughout the European Union. Others—including the Government, I am afraid—argue that the increase is temporary and that prices will fall in the long term. However, there is no sign of that. Keynes said that, in the long term, we are all dead. At current fuel costs, in the long term, large sections of the fishing industry will be dead. Keynes' argument is therefore especially relevant. The level of prices is a nail in the coffin of some sections of the industry. If it dies, the Government will effectively have killed it by standing by, wringing their hands and saying, "We feel your pain." That is now the answer to most problems.

Feeling the pain of the lorry drivers and the freight industry produced some results. However, feeling the fishing industry's pain has produced nothing so far. Unless there is a response, we will return to the policy of the Tory years: restructuring fishing by rigor mortis. I do not want such a process to occur under a Labour Government. It is not right to allow that to happen, and to stand by without helping the industry. I do not believe that my hon. Friend the Parliamentary Secretary wants to take that position. Yet no help has been forthcoming.

Most of the European fishing nations, with which we compete for the catch in fairly intense competition, have produced some sort of support for the industry to see it through the crisis. Even the Greeks have come bearing gifts to fishermen. That has no impact on competition with us, but it shows that other Governments have been more responsive than ours.

Support has been given in some form other than for fuel prices, although Portugal provides fuel at a fixed price to the Portuguese fishing industry. The classic example of support is France, where fishermen, like lorry drivers, are prone to asserting their power, usually at the expense of British tourists who are trying to return home on the ferries. Such assertion of the industry's needs, to which French Governments listen, has produced both long-term structural support and a short-term package. We need such measures in this country if we are to maintain the competitive position of British fishing.

Pressure from French fishermen produced relief from social security charges. Dutch fishermen also receive roughly —3 million of such relief. Spanish fishermen have received —9 million in social security reductions. The support for Belgian fishermen is on a different basis; their social security contributions are deferred for one year. Those are all examples of support that has been provided to help the industry in its temporary difficulties through lower social security charges.

The French have also granted relief from port charges. It is not yet clear whether they will be written off or whether central Government or local authorities will pay them. However, fishermen have been relieved of the heavy burden of port charges. It is right that that should be done to compensate them for the fuel price increase.

In Ireland, support has been given for exploratory voyages. We used to grant such support in this country; it helps to keep the industry going. As far as I know, Denmark has not yet done anything. Perhaps my hon. Friend the Parliamentary Secretary will tell us otherwise when he responds. However, support in the other countries that I cited has been fairly substantial.

Spain has granted approximately £26 million in soft loans to fishing infrastructure. That is another form of compensation. The French have given support through a reduction in finance charges for those in debt, and Belgium has done the same. British fishermen have had nothing like that.

All our competitors are anxious to secure the survival of their domestic fishing industries and to see them through this crisis, so they support them. If their industries survive and ours does not, or if our industry is reduced in scale more drastically than theirs because of the crisis, they will inherit the better future which must lie ahead for fishing with proper conservation. Is that what our Government want? Do they want a fishing industry reduced in scale by the pressure of the fuel crisis and because it does not receive help from the Government, unlike fishing in other countries?

My hon. Friend the Minister told the fisherman early on: I am not going to see our industry disadvantaged by illegal action by other states. That is well and good. He wants to maintain a level playing field, but if other states are giving advantage to their fishing industries, we must do the same.

Such measures may not be demonstrably or provably illegal. In fact, I doubt whether social security reductions are illegal. They may be inconvenient for the Government or the Commission, but their legality is another issue

entirely. Even if they are illegal, it will take a long time to prove that and to get them removed. The crisis is now. It will take a long time for the argument within the European Union about whether this support can be given to this industry and whether it is legal or illegal to go through the official channels. How much of our industry will be left at the end? How many of the EU's industries will be left, given that they will have received aid through this long process of consideration?

If my hon. Friend intends to contest these supports as illegal because they distort competition. does he have any prospect of success? Frankly, I doubt it, so it is important to keep our industry viable and to maintain a level fishing ground, which I am always talking about—it is a nice concept. Maintaining a level fishing ground means doing something for the industry now, not waiting to prove the illegality of what others are doing. The crisis is now, the impact is now, and the lack of viability is now.

There has been a series of meetings with Ministers. My hon. Friend always listens patiently. He is the best informed Fishing Minister we have had for many years, and he keeps in close touch with the industry. I am repeating to him what the fishermen have said to him, but he knows it well.

Photo of Dr Norman Godman Dr Norman Godman Labour, Greenock and Inverclyde

My hon. Friend is absolutely right about the Minister. I think he is the best we have had since John Silkin. My hon. Friend makes an important point about the need to ensure that our fishermen get the same benefits as those in other member states of the European Union.

Photo of Austin Mitchell Austin Mitchell Labour, Great Grimsby

I am most grateful for that contribution, and I support absolutely what my hon. Friend has just said about the need for intervention and about my hon. Friend.

The first meeting was on 6 September, when the fishermen were told that officials would examine all options. At the next meeting on 15 September, they were told that this is a short-term crisis and that the United Kingdom had neither the funds nor the mechanism to provide a package of emergency aid to offset the price of fuel. My answer to that is: where there is a will there is a way, and the will and the way have existed in other countries, so why not here? What emerges from the account of that meeting given by the National Federation of Fishermen's Organisations is that there was no sense of urgency about helping the industry.

Ministers referred to light dues. We have been talking about light dues for 10 years, ever since they were introduced. They should never have been put on in the first place, but they have not been taken off. We have been talking about satellite monitoring costs for three years, and there is no sign of help for the British industry. There are the GMDSS—global maritime distress and safety system—costs, survey charges and all the other regulatory burdens. There is talk of looking at those, but how urgently will they be looked at? When will they be looked at? What will be done about them? It is an urgent crisis now. The discussions at the meeting seem to have exasperated the NFFO, because nothing was said about help in an immediate crisis, besides looking at ways to reduce fuel consumption, which the industry is doing anyway quite naturally.

The Government hope for a major restructuring package. They hope that it will be done on the European scale, with money coming from the European Union, rather than the British Government. There is a need for a restructuring package, but from what I understand from the fishing industry, even the European Commission is blowing hot and cold on that proposal. The latest wind is apparently colder than the previous wind.

Why does fishing always have to be the fall guy? I know that the finances of the Ministry of Agriculture, Fisheries and Food are in a mess. I know that it has difficulty fulfilling all its commitments. I know that there has been a huge expense for agriculture, but why is it always fishing that is cut? Why is it never fishing that is helped, in the way that agriculture has been helped? Why is help postponed, apparently till the Ides of Brussels? Why is it always so slow to emerge from MAFF?

Given the Treasury's usual tactic of blocking access to European funds, what hope do we have of getting help from Europe? The answer must be support for the British fishing industry that is comparable with that provided by European Governments—certainly some form of support is needed. It is not beyond the ingenuity of Government to find a way to support the fishing industry to see it through the immediate crisis.

There is a long-term restructuring package. That is true; the Government have talked about it. We need that, but not now. What we need now is immediate help to survive: support to keep fishing going in the light of escalating fuel costs. The only answer must be an emergency package now.

I therefore say to the Minister—who has had to listen patiently to an argument that he has heard many times; he always does listen—that he must do something. The British fishing industry needs help to keep going and to benefit from the major restructuring package that might be planned. However, to keep the industry going, something must be done. Please do something-do something now.

Photo of Elliot Morley Elliot Morley Parliamentary Secretary (Fisheries and the Countryside), Ministry of Agriculture, Fisheries and Food 12:02 am, 20th November 2000

I congratulate my hon. Friend the Member for Great Grimsby (Mr. Mitchell) on advancing a persuasive argument and a strong case. I am grateful to him for his comments, and to my hon. Friend the Member for Greenock and Inverclyde (Dr. Godman), who has a long experience of the fishing industry and long connections with it. I know that the concerns of my hon. Friend the Member for Great Grimsby are shared by my hon. Friend the Member for Waveney (Mr. Blizzard), who raised them in a question to the Prime Minister, and by my hon. Friend the Member for Brigg and Goole (Mr. Cawsey), who hails from Grimsby, and has long connections with the town and knows the industry well.

I concede that there is a problem in relation to fuel costs in the fishing industry. The difficulty is how we can address it, both in relation to the resources that I have available to me in the Ministry and within European law—the issue of state aids. It is true that the fishing industry does not pay tax on its fuel. Therefore, any measures to reduce taxation, which have been called for by the haulage sector, for example, will not work in the fishing industry. There is not much that we can do there.

It is fair to say that the impact of fuel charges has hit different sectors of the industry in different ways. Beamers have been very badly hit because of the high fuel consumption of those fishing boats. I accept that some of the other larger vessels, such as the freezer fleet, have been hit, too.

In relation to the Grimsby fleet, I should have thought that the anchor-seiners were among the lower fuel consumers. It is an environmentally friendly way of fishing; it is very selective and a large mesh is used. Ironically, in relation to costs, they are being rewarded for their fishing methods.

As my hon. Friend rightly said, I have met industry representatives on various occasions. They have made their case very well and powerfully, and I accept it. I have been examining the issue of costs facing the industry. As my hon. Friend the Member for Great Grimsby will understand, however, some of those costs fall to other Departments, such as the Department of the Environment, Transport and the Regions in relation to light dues and Marine Coastguard Agency inspection costs. I am in discussions with the DETR on whether anything can be done about that. As my hon. Friend said, however, it is an issue of budgets and the Department's commitments. Nevertheless, I understand the case that the industry has made and I have agreed to look into it.

At the last meeting, industry representatives made their case to my right hon. Friend the Minister of Agriculture, Fisheries and Food, who also said that, if there are issues that we can explore, we would be only too pleased to do so. There are, however, no obvious solutions. I realise that the situation is made worse by a shortage of fish and—in some cases, particularly in the export market—by the price of fish. Exports account for up to 90 per cent. of the market for much of the wet fish fleet. As the high pound affects the prices received by parts of the fleet, joining the euro would help, but I know that my hon. Friend has mixed views about that.

My hon. Friend made some points about the packages offered by other countries. I have examined those packages very carefully, and some of them are probably legal. The bulk of the Dutch package, for example, is a decommissioning scheme for the beam sector, and much of the remainder is to promote sustainable fishing. Its basic purpose, therefore, is to help beam trawlers to convert from beam trawling, which is perfectly legal under the structural funds. We ourselves have funds available to help fishermen who want to convert to other forms of fishing.

The Greek Government are offering to continue 100 per cent. refund of fuel tax. However, we are doing that; there is nothing new about it. They have also been talking to the oil companies about trying to keeping down the fuel price for the fishing fleet. We might like very much to explore a bit more what the oil companies can do for the United Kingdom fishing fleet, which is vulnerable in selling its fish through markets.

I am not so sure that the French package is legal. In the example that my hon. Friend gave, the important point is not so much what the French Government are doing, but the intention of what they are doing. There is no doubt that the French Government presented their package as a reduction per litre of fuel, or that presenting a package in such a manner constitutes a state aid. I am sure that the Commission will have something to say about it. It has already asked the French Government to provide details of their packages so that it can carefully examine them. Although the legality of the package is a matter for the Commission, I have no doubt whatever that, if the Commission decides that it is illegal, it will take action against the French and the state aids will have to be repaid, as has happened before.

Photo of Austin Mitchell Austin Mitchell Labour, Great Grimsby

But when will action be taken?

Photo of Elliot Morley Elliot Morley Parliamentary Secretary (Fisheries and the Countryside), Ministry of Agriculture, Fisheries and Food

We know how slowly the European Court can operate. I realise, therefore, that the possibility of such action is not a great short-term comfort to our industry.

Last week, at the Fishing Council, when 1 discussed the matter informally with a French Minister, I said that the French package was altering competition policy within the European Union fishing fleet. He replied that, as my hon. Friend said, fishing opportunities are not equal. He complained bitterly that French fishermen were complaining to him that United Kingdom fishermen have an advantage in business tax, capital gains tax, corporation tax and social taxes. The United Kingdom fishing industry pays the lowest class II stamp rate in Europe. We have some of the lowest on-going taxation costs, as the French Minister had been reminded by his own industry. We should take that into account.

It is also true that fuel costs are cyclical. My hon. Friend was right to say that, in the past 18 months, the fuel price has essentially trebled. Of course such an increase has an impact. It also demonstrates to fuel protesters, who claim that the issue is soley one of taxation, that even an industry that is paying no fuel tax whatever is still being hit. The bulk of the increase has come from the changes in world prices and the impact that that has had on the fishing industry, which I concede. It is likely that, as part of the cycle, fuel prices can go down as well as up. We are now in the winter period-a period of peak demand for heating oil, which affects the diesel oil market and the overall price of marine diesel.

I told the industry that MAFF would pay for a consultant who would look not only at fuel efficiency, but at how the market works in relation to fuel and whether the industry could collectively advance purchase. The Dutch buy their fuel on the advance market collectively through their producer organisations, and I was willing to pay for a consultant to advise the industry about that. The industry felt that that was not the answer because of the overall costs, and I understand that point of view.

We have available structural funds that can help the industry in several ways, although they are not designed to compensate in any way for movements in oil prices. My hon. Friend the Member for Great Grimsby is right that if we are to have major cod recovery programmes or a multi-annual guidance programme 5, we may need some substantial restructuring packages and the cost implications may be significant. I understand that and, depending on changes in fleet size and the MAGP, there

may be a need to look at the resources that we have available with the structural funds. If so, I am prepared to make the case for the industry on that basis.

I appreciate that that does not deal with the immediate problem of fuel charges. It is not an easy problem to deal with. Most countries are not really giving their fishing industries anything more than we are giving our industry, which still enjoys many lower payments and taxes than those other countries. I have given an undertaking—

The motion having been made after Ten o'clock, and the debate having continued for half an hour, MADAM DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at twelve minutes past Twelve midnight.