WHITE FISH AND HERRING SUBSIDIES (UNITED KINGDOM) (No. 2) SCHEME 1975

HL Deb 21 October 1975 vol 364 cc1328-34

7.1 p.m.

Lord STRABOLGI rose to move, That the White Fish and Herring Subsidies (United Kingdom) (No. 2) Scheme 1975, laid before the House on 31st July, be approved. The noble Lord said: My Lords, I beg to move that the White Fish and Herring Subsidies (United Kingdom) (No. 2) Scheme 1975, which was laid before this House on 31st July, be approved. The purpose of this Order is to provide for payment of aid to the fishing fleet in respect of the third quarter of this calendar year. Details of the Government's proposals in this respect were announced in another place on 29th July and the requisite Order, before us today, was laid shortly before the Recess. Your Lordships will note that this is a No. 2 Order, indicating the existence of a predecessor. Perhaps it will help if I briefly describe the reasons leading up to it.

Earlier this year the Government became convinced, from the evidence available to it, that the United Kingdom's fishing fleet was suffering severe economic hardship, the result of rapidly mounting costs, principally of fuel and fuel derived products, unmatched by prices and overall returns obtainable for its catch. In short, fishing was unprofitable leading inevitably to retrenchment. Some prudent restructuring of the fleet was both inevitable and right but the pace of change was gathering an unhealthy momentum which, if not arrested, could have led to permanent structural damage. It was decided therefore to give temporary aid to the industry and details were announced on 27th February. Subsequently Parliament gave its approval by way of the White Fish and Herring Subsidies (UK) Scheme 1975, S.I., 1975, No. 970.

The Scheme was, as I have indicated, intended as a temporary measure only to allow the industry time to adjust to changed circumstances. However, as the period drew to a close the industry made strong representations, backed up by economic data, about the need for continued help. We found, from our close examination of this evidence, that while, during the period of respite provided by the aid, the industry had continued to rationalise its operations, particularly by the removal from service of a number of old, high-cost vessels of outmoded type, prices at port auctions which are the key to effective stability had not recovered significantly from the levels to which they had fallen 12 months previously. The industry continued to be squeezed therefore by factors largely outside its control.

The Government decided that circumstances were such as to justify the continuation of aid until the end of the year. But, as my right honourable friend said on 29th July, the actual rates of aid would be fixed in the first instance only for the quarter ended 30th September, the requirements of the final quarter being decided later in the light of circumstances then obtaining. We are today concerned with the instrument permitting payment of aid for the period July-September for which purpose the Government have set aside £2¼ million being additional to the sum of £6¼ million provided for the first half year.

The continuation Scheme follows very closely its predecessor except, of course, that it covers three not six months and the qualifying provisions are scaled down accordingly. The only change of substance is that the daily rate of aid payable to the two larger-vessel categories has been reduced by £10 per day, in line with the improved prospects for this type of vessel.

My Lords, as a result of the Recess we are past the closure date for the second Scheme. Claims for that period are being submitted and payments will commence as soon as Parliament has given its approval. I beg to move.

Moved, That the White Fish and Herring Subsidies (United Kingdom) (No. 2) Scheme 1975, laid before the House on 31st July, be approved.—(Lord Strabolgi.)

Earl FERRERS

My Lords, those of us who comprise the House will be grateful to the noble Lord, Lord Strabolgi, for having introduced and explained this Order. I think he said that early this year the fishing industry was facing an economic disaster. There is no doubt that 18 months ago the fishing industry was doing reasonably well and that suddenly there came a down turn, both of catch and of costs—if that is not a contradiction in terms—because the cost of oil sent the fishermen's costs roaring up; and this made a great inroad into the profitability of fishing. The Government were right to come to the aid of the fishing industry and to introduce a measure of support for it. The noble Lord, Lord Lovell-Davis, introduced a similar Order in June which allowed the Government to pay out to the industry, as I understand it, for six months up to the end of June. The Order which the noble Lord has introduced today allows the Government to pay a subsidy for the three months—not six months— up to the end of September. Of course, we are now in October.

My Lords, there are two major worries in this connection. One of them is that the first Order was for six months and the second for three months, from which it might be concluded that the Government were thinking of phasing out their support for the fishing industry. The other major worry—and I am sure there is a good reason for this although I cannot quite see it—is why it is necessary to do these things in retrospect. On the whole, if a subsidy is to be paid those involved in fishing operations would wish to know in advance whether it is to be paid. As I understand it, those people who are out fishing at the moment do not know, whether their operations are going to attract a subsidy. I hope that the noble Lord, Lord Strabolgi, will be able to explain why it is necessary to do things in this retrospective way and whether it is not possible to look forward.

Further, is he able to say whether another Order will be introduced allowing the Government to pay a subsidy for the current period? If so, will that Order be for three months or six months? Is the noble Lord also able to say what the level of payment will be? I think that the answer to my last question will be, "No!" But I would point out that the difficulty about this is that those engaged in fishing at the moment do not know whether a subsidy will be payable. I should like to ask the noble Lord whether the Government will pay some subsidy. Is there any element of doubt whether they will pay anything at all? If the noble Lord could answer that, it would be helpful.

I wonder why it is that the Government do not indicate whether they are prepared to pay a subsidy in advance, and I wonder whether it is because the Government are watching the returns for the fishing industry. If that is so, one might conclude that if the returns during the current period go up, the Government may feel that this is an inappropriate time at which to pay a subsidy. I would appreciate that argument if the noble Lord used it, but I do not believe it is fair on the fishing industry because those going out to fish now ought to know whether or not there is a subsidy. If they felt that if their prices went up that would exclude them from subsidy because the Government were watching the situation, this would not be fair. If the noble Lord, Lord Strabolgi, is able to throw any light on those few questions, I should be grateful.

7.11 p.m.

Lord STRABOLGI

My Lords, I am grateful to the noble Earl, Lord Ferrers, for welcoming this Order. I thought the points he raised were very fair, reasonable and important, and I will do my best to answer them. Before answering the point he made about why the Government are giving aid on this ad hoc basis, perhaps I could deal generally with the first point he made about the downturn of catch and costs due to oil and other factors. Of course, there were other reasons for the depressed fish prices.

In 1972 and 1973 the first hand prices of fish rose sharply along with the prices of other food commodities due to circumstances in world commodity markets which no one could have foreseen. In Western Europe food processors hastened to build up stocks of frozen fish, because they thought prices might rise further. The result was that heavy stocks were accumulated which overhung the market and depressed prices. I am glad to say now that the stock position is beginning to improve. Additionally, over the past two years the market in North America, which has traditionally taken substantial supplies of West European and Scandinavian cod, has been taking instead heavy supplies of Alaskan pollock. So the cod supplies which normally go to the United States of America and Canada have also been depressing prices of the West European market. The result has been that first-hand prices of fish have been static or even falling since the middle of 1974. But the American market, I am glad to say, is showing signs of return to traditional preference which should help a general recovery in prices.

With regard to the ad hoc basis, the original intention was to give aid for six months only. But recognising that difficulties remained, the Government undertook to continue aid until the end of the year. But, in view of the changeable situation, we felt it expedient to retain scope to adjust action as required by events. A lot of people would have liked us to ban imports as a means of helping the industry, but that proposition is not realistic. First, it would mean taking action against friendly nations like Norway and Iceland. Secondly, it would mean taking action against the housewife because we need those imports to help satisfy the demand from the consumer. The problem was much more one of price than of supply. After informal discussions at official level, the Norwegian Government unilaterally set up a minimum export price scheme which was aimed at avoiding disturbance of the market in the United Kingdom. This was a great help.

The Council of Ministers in Brussels had also recognised the serious nature of the problem affecting the market for fish, and at its meeting last April a package of measures was made up. The package was aimed at alleviating the depressing effects on the fish market of the heavy stocks of frozen fish. For us in the United Kingdom the most important measure was the introduction of reference prices for frozen fish. It is worth saying more about this point very briefly. First, it is a permanent system under the control of the Community itself and applicable to the whole Common Market. Secondly, if supplies of frozen fish enter from third countries below these reference prices, then the Community can restrict or even ban the imports.

These are wide powers but they are powers that will have to be used with an eye to balancing the needs of consumers and of producers. Then, of course, the level of the prices can be reviewed in the light of experience. Fourthly, the prices are broadly comparable with those in the Norwegian scheme. Some are a little higher, some are a little lower, but the general effect is the same. The important point, I suggest, is that the system is now on a permanent and Community-wide basis and under Community control.

Regarding the Government's long-term policy, what I can say at this stage is that this long term policy can be determined only in the light of the fishing opportunities open to us once the series of discussions on access to waters have reached a satisfactory conclusion. The noble Earl, Lord Ferrers, and other noble Lords will no doubt be aware that this coming Thursday there will be talks in London with the Icelandic Government. But, in general, our policy must be to secure for the nation, through the efforts of the United Kingdom's fishing fleet, as large a proportion of the fish resources open to it as is practicable and consistent with demand. This will require a viable industry of the right size and the Government will stand by an efficient industry capable of achieving this objective.

Earl FERRERS

My Lords, if I may have the indulgence of the House for one moment, may I ask the noble Lord whether he answered one of my questions? I think he did so, though not directly. I think he said that the subsidy was payable until the end of the year. Does one infer from that that the Government will be bringing forward another Order in three months' time to cover the current period?

Lord STRABOLGI

Yes, my Lords. The Government wished to ensure that the aid promised for the second half was geared to actual needs, and related of course to any changes which may occur. We shall certainly introduce another Order.

Lord STRABOLGI

My Lords, I beg to move that the House do now adjourn until 7.45 p.m.

The Sitting was suspended at 7.18 p.m. and resumed at 7.45 p.m.