§ Question proposed, That the Clause stand part of the Bill.
§ 12 noon.
§ Mr. Anthony Stodart (Edinburgh, West)A remark by my hon. Friend the Member for North Fylde (Mr. Clegg), on Second Reading, struck a sympathetic note with me. It was when he asked for a simple explanation of the Clause. It is by no means clear, until one looks up the 1962 Act, that one is told that Section 2 of that Act is to cease operating, which may lead one to think that, apart from Section 2, things are to go on very much as they were. Section 2 applied the Act only to vessels over 80 ft. and authorised the basic and special rates and set out percentage reductions in the basic rates, and so by a complicated chain of negatives and double negatives, which often seem to me to form the white and red corpuscles of Parliamentary draftsmen, we find all those features of the fishing subsidies brought to an end.
It would probably be realistic to say that there is a general welcome for the termination of the percentage cut in grant each year, and if that were all the Clause did it would be very different. But it removes the authority to pay basic and special grants although it still provides power to pay a subsidy and we must, therefore, satisfy ourselves about the quality of the subsidy which is to succeed those which are to go.
The right hon. Gentleman the Minister of Agriculture, Fisheries and Food has told us with great consistency that the new arrangements are to be based on a new principle, that of the most subsidy going to the most efficient. He could not have been more explicit when he said:
The purpose of the discussions with the industry will be to find the best way of distributing the total sum to individual vessels so as to encourage efficiency of production."—[OFFICIAL REPORT, 8th July, 1968; Vol. 767, c. 57.]783 On Second Reading, with what I thought was one of my most winning smiles, I remarked that I thought that it was a good thing to link Government aid to productivity. When I made that remark, the right hon. Gentleman nodded approval and, thus encouraged, I went on to say that I welcomed the principle of the proposal. All the thanks I got for that from the Under-Secretary of State for Scotland when he wound up the debate was a rebuke for the sullenness of my speech, and I was somewhat puzzled and dismayed to see that the right hon. Gentleman nodded at that remark, too.If efficiency is to be the basis, how is it to be assessed? The Government's thoughts are on the value-added formula. I do not know whether the details are yet concluded, but, even if they are, I would certainly not wish to examine them in detail now, because all this will come under the scheme which we shall want to think about hard, because it will probably be a complicated formula.
However, on the broad principle of value-added, one take the gross earnings, the value of the catch, and deducts some of the expenses, but one does not deduct either the crew's wages or the depreciation of the vessel. This, therefore, excludes one very substantial item, wages, which in all businesses has almost as big an influence on efficiency and in the assessment of efficiency as any other factor.
I can well see that, particularly with the disasters of earlier this year in mind, a dilemma faces all those who discuss this matter. By all means let us reduce manpower in most industries, but if by reducing manpower we start the under-manning of fishing vessels, one gets on the horns of a considerable dilemma.
The Under-Secretary may well say something this morning which will reduce my misgivings, but, from what we have been told hitherto of what is in the Government's mind, it seems that there cannot be as much incentive as there should be to install, say, gutting machines, or to mechanise generally, and, if there is not that incentive, this is not the way in which to encourage efficiency.
If gross earnings, the value of the catch, are taken and from that are 784 deducted expenses other than wages and depreciation and I do not say how likely this is, but it is within reasonable probability there could be a situation in which over a period of assessment two boats could get catches which were virtually identical in value, one boat being thoroughly modernised with all the latest labour-saving productivity-boosting equipment, and the other much more conventional.
Assuming that their gross earnings are the same, their net profits will be quite different, but the value-added formula does not deal with net profits and each of the boats would attract the same subsidy, because the only two items of expenditure in which they would differ would be excluded from the calculations. If this is to be the basis of the new system, I do not understand how the right hon. Gentleman can continue to claim that efficiency is to be the dominating factor.
Surely efficiency is assessed by such things as the time that a vessel spends at sea, the time it is actually fishing, the rate of catch over a given period, often calculated as per 100 hours, the rate of catch per man abroad and the catch of saleable fish brought in.
All these factors would probably be taken into account in trying to assess efficiency of one vessel against another. The only table in the White Fish Authority, of which I am aware, concerns the third suggestion that I made, namely, the rate of catch per 100 hours. In Appendix 3 of the 1968 Report there is a breakdown of the catch per 100 hours of trawling of the English trawlers fishing distant waters, the motor trawlers fishing near and middle waters in England and Wales, and the trawlers in Scotland. Looking at the pattern of those figures over the period given, 1960 to 1967, there is no question who has the biggest improvement in the rate of fishing per 100 hours. The Scottish fleet stands unchallenged on that formula.
We have no tables giving the other possible points for examination which I suggested. Therefore, I cannot do more than speculate. But, from the figures referred to by the hon. Member for Aberdeen, South (Mr. Dewar) on Second Reading, figures worked out and submitted to the hon. Gentleman by the Scottish Trawlers Federation, unless the 785 Government either have thought again or will think again, the Scottish fleet, while it will draw more subsidy than before, will lose 2 or 3 per cent. of the share that it had in the subsidy drawn by the United Kingdom fleet as a whole over the last few years.
I do not wish to provoke clash between my hon. Friends and myself or between the Minister and the Under-Secretary. I hope that justice will be done and that the hon. Gentleman will be able to tell us a bit more. If efficiency is to be the yardstick for measuring the new subsidy, from what we have heard so far about the plans, difficult though they are—and I accept that to work this out with meticulous accuracy would probably be asking the impossible—the instrument is that little bit blunt in the meantime. I hope, therefore, that the hon. Gentleman will be able to tell us that in the days that have followed since Second Reading the instrument has had a slightly more cutting edge placed upon it.
That is the main burden of my remarks on this Clause, but I should like to raise a point for clarification about sub-section (4). I do not think that I am infringing upon your tolerance, Mr. Irving. Although an Amendment was ruled out of order, I think it is proper for me to raise this matter on the Clause.
§ The ChairmanThis is entirely in order.
§ The Under-Secretary of State for Scotland (Mr. Norman Buchan)I wonder whether we should leave uncorrected the hon. Gentleman's predictions about the basis of the Scottish subsidy level. I wonder whether this is based, to an extent, on assumptions that past characteristics, including aspects such as special subsidies, will necessarily prevail in future—in other words, whether the assumptions will differ. However blunt the hon. Gentleman regards the instrument, it is nevertheless based on efficiency, however crudely.
The new concept would tend to assist the Scottish fishing industry if the hon. Gentleman's argument on efficiency based on his own reasoning is borne out. It would seem better, rather than say that this will necessarily be detrimental to the Scottish fishing industry, to say that, on the whole, it would appear possibly 786 to benefit it. At any rate, we ought to see how it works in practice. We cannot predict that the assumptions on which it has been based so far will be those on which it will be based in future.
§ Mr. StodartI accept that we are in the realms of speculation. The Scottish Trawlers Federation has said that if these figures had been applied over the last three years, and if things happen in the next three years as in the last three years, its calculations show that it will be down. It will be better off concerning total subsidy, but that will apply to all sectors. There is more global subsidy going to the whole fleet.
The point I make—and I am sure the hon. Gentleman has not lost sight of it—is that if the Scottish fleet can claim at least as good a record of efficiency—and I hope that I have demonstrated that on at least one score it can be argued that it has shown itself more brilliant than others—it will not be any worse off than hitherto.
12.15 p.m.
Turning to subsection (4), when the Minister replies I hope that he will explain, because I find it slightly confusing, where the Home Secretary fits in regarding fishing responsibilities in Northern Ireland. Why does he not feature here where we are dealing with an extension in applications for the grants, which we welcome? The hon. Gentleman will probably say that the Home Secretary does not feature in Clause 1 because he did not appear in the comparable section of the 1962 Act. But what puzzles me is that Section 20 of the 1951 Act specifically laid down that the powers and the duties of the White Fish Authority could be extended to cover Northern Ireland—they did not so cover it at that time—and, if they were so extended, the Secretary of State's responsibility for sea fishing there would be added to the list of Ministers. What has happened to him?
Northern Ireland has been brought in. There is now a separate Committee of the White Fish Authority for Scotland and Northern Ireland. I was tempted to put down an Amendment, which you, Mr. Irving, would clearly have ruled out of order, which would have removed the Northern Ireland interests from the Minister of Agriculture, Fisheries and Food and given them to the Secretary of State for Scotland. Considering that 787 Joint Committee, I think it would have been a much tidier way of administering it. But, as I am known to be saying that I think that the Secretary of State for Scotland has too much on his plate already, I thought that the hon. Gentleman would tax me with illogicality if I embarked upon that course.
The Home Secretary comes into the picture when restrictions on fishing, landings and licensing of boats are involved and when fishing limits arise. The right hon. Gentleman appears to be left out when grants and levies are discussed. This seems rather anomalous in view of the quite important part which I have known him play in agricultural price review negotiations.
Next—and this was the subject of the Amendment that was ruled out of order—what is the particular implication of the words
the Secretary of State concerned with the sea fishing industry in Scotland."?Surely there can be no other Secretary of State concerned than the Secretary of State for Scotland. I imagine that there would be the most fearful ructions in Hamilton, and possibly elsewhere, if any other Secretary of State were allowed to be concerned with fishing interests in Scotland. It would clarify the matter if it were made perfectly clear that the only Secretary of State concerned is the Secretary of State for Scotland. I should have thought that he was the only Secretary of State it could be. I should be very glad to have an explanation from the Parliamentary Secretary on this matter.
§ The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. James Hoy)I will not be the judge of what is sweet and what is sour. I find it is a little difficult in replying to the hon. Member for Edinburgh, West (Mr. Stodart), who said that he did not want to go into the Clause meticulously and then posed about 20 questions. There will be a difference of opinion about what is and what is not "meticulous". My job is to try to clear up some of the issues which the hon. Gentleman raised.
In replying to the Second Reading debate, my hon. Friend the Under-Secretary of State for Scotland said that 788 we would try to meet the desire of right hon. and hon. Members to know in some detail what will go into the new subsidy scheme for the deep sea fleet. The hon. Gentleman repeated the request this morning, and I thought that it might be for the convenience of the Committee if I were now to outline the way in which my right hon. Friends intend to exercise the powers available to them once the Clause becomes law.
Very properly, we did not feel able to make an announcement until we had given full consideration to the views of the British and Scottish Trawlers Federations and to those which the Transport and General Workers Union put to us very recently. My right hon. Friends the Minister of Agriculture and the Secretary of State for Scotland have now decided what provisions to make in the scheme which they will lay as soon as possible after the Bill has been given the Royal Assent. Hon. Members are aware that the scheme will then require an affirmative Resolution.
Apart from administrative details, there will be two provisions of substance. The first will give statutory effect to the formula which my right hon. Friend announced on 8th July for calculating the deep sea subsidy payable in a year. I need not repeat the details. I wished only to make it clear that the formula for adjusting the basic £2 million by reference to the operating profits of the industry will form part of the scheme.
The second matter concerns the way in which the total will be distributed. As my right hon. Friend explained in introducing the Bill, the main factor which we will take into account is the added value attributable to each vessel—that is, the net contribution which the combined efforts of owners and crew have made to the economy after meeting the cost of the goods and services which they have used in the process. If we were to measure relative efficiency in a different way—for example, by using profits alone as the yardstick—the subsidy would put pressure on owners to maximise profits by economising on labour costs as well as on other costs. We did not believe that that would be right, particularly at a time when, as the hon. Member for Edinburgh, West said, great concern is rightly being shown for trawler safety.
789 The scheme will, therefore, provide for added value to be calculated by taking the earnings from fishing and subtracting all operating costs except two—the cost of sea-going labour, to which I have referred, and the cost of training men employed on the vessels. We think that this training cost can be distinguished in principle from other non-labour costs. There is as yet no industry-wide scheme for making training the collective responsibility of employers in the industry. It could, therefore, be that a progressive employer spends money on training men but his competitor later reaps the commercial benefit.
We propose—and this is in line with what both trawler federations as well as the union have suggested—that an owner who incurs training costs should not have his added value reduced by the amount of these costs. In other words, labour costs and training costs will be treated in exactly the same way and neither will reduce an owner's added value.
That is how we propose to start. However, I agree that this is a new and untried method of distribution. It should encourage investment expenditure which shows promise of increasing added value while discouraging costs which reduce it. We shall watch what actually happens very closely, and my right hon. Friends undertake that after a year's experience we shall look, with the industry, at every item in the calculation, whether of earnings or costs, to see whether the scheme is having the effects for which we hope and which we anticipate. I hope that that takes the Committee a good step forward concerning the scheme.
§ Mr. Patrick Wall (Haltemprice)May I say how much we welcome the hon. Gentleman's announcement that training costs will be included in the scheme? May I also ask him—I am sorry; I have forgotten what I wished to ask. However, I welcome the scheme, because it is agreed by the industry.
§ Mr. HoyI am grateful to the hon. Gentleman. I liked the question which he did not put; it saves me a bit of trouble.
The purpose of the wording in Clause 1 is to make it clear which Secretary of State will discharge the functions of the office of Secretary of State. The 790 Secretary of State has functions under many Acts, and it is common form, in an Act with two separate functions of the office, to refer to the Secretaries of State concerned in this way. I am advised that the wording of the Amendment certainly would not have been apt for this purpose since there is a limited statutory application. For that reason, even if the hon. Member for Edinburgh, West had had the privilege of moving an Amendment, I should have had to advise the Committee to vote against it.
§ Mr. James Johnson (Kingston upon Hull, West)My hon. Friend I am sure knows as well as I do that for a long time there have been discussions about the possibility of setting up a training board. The White Fish Authority has concerned itself with this matter. If we find in future that the arrangements on the owners' side are not as adequate as we would wish, would my hon. Friend consider setting up a statutory board or doing something from the Government's point of view? This is a very important matter.
§ Mr. HoyYes, it is very important; I would not want to underestimate it. But I cannot give any pledge when discussing this Clause. We have gone a fair way in saying what will happen if expense of this kind is undertaken. The question of setting up a board, as in the agricultural industry and other industries, would have to be raised on another occasion.
§ Mr. Kevin McNamara (Kingston upon Hull, North)I welcome, and I am sure that all the people in Hull concerned welcome, the provisions made for training in the proposed scheme. This is perhaps one thing which has been most lacking in the industry, and to include a training provision as an exemption under the scheme is a tremendous step forward. I hope that as a result—and I am sure that I speak for the Transport and General Workers Union on this point—there will be increased emphasis placed on training facilities within the industry. Because of the unique system of promotion, and so on, only by having a properly skilled and trained fleet, can we improve the quality of the entrant and get the skill and ability needed for an efficient fleet using the most modern techniques. 791 A second proposal which I particularly like is that after a year's experience the situation will be reviewed. I congratulate my right hon. and hon. Friends, in their discussions with the employers and the unions, on saying that in a novel scheme like this it is essential that an opportunity is provided to try it out for a time, to see where we are going and to ascertain what progress is being made. Particularly is this so when, having got rid of the albatross that we had under the old scheme, under which definite arrangements were made every year for grants and the rest, we are able to take stock and see where the industry is going.
12.30 p.m.
I would like to know how this is to be done. Will it be in the form of a new draft Order every year? Will there be simply a general discussion in our annual fishing debate? How will the flexibility of the situation arise so that we can look at progress as it develops? In particular, because of the way in which the productivity and efficiency grant is to be worked, will Parliament have laid before it sufficient detail of what is happening to individual vessels and companies to see the operation of the grant? The amount of information that we are given in this way will obviously be of considerable importance when one considers how the scheme is working and how the companies are operating.
On Second Reading, I expressed fears that perhaps the scheme might encourage the retention of older vessels. Certainly, as a result of the yearly review, we will be able to see whether things work out as I feared might be the case.
In referring to what we said on Second Reading, I tend to disagree with what has been said from the benches opposite about wages being outside the formula. Because of the safety factor, that is extremely important. There are already within the industry too many pressures at work to take a risk. There is a great feeling that ships are, if anything, undermanned because of the hours the fishermen work when making the catch. We are to get the final report of the Holland-Martin Committee, and all this will have to be borne in mind when considering the way that the scheme works.
I sincerely welcome the details which have been given today. I hope that my 792 hon. Friend the Parliamentary Secretary will be able to indicate the method of future discussion after six years and the amount of information that Parliament will receive. I really welcome the provisions about training. As my hon. Friend the Member for Kingston upon Hull, West (Mr. James Johnson) said in his intervention, I hope that we can see this as a start towards getting the proper sort of training that we want in the industry, because it is becoming increasingly skilled and competitive and higher and higher standards are needed.
§ Mr. James JohnsonI cannot speak for the Transport and General Workers Union or for the Scottish vessel owners, about whom we have had an eloquent plea. I wish to refer to the quality of men coming to the fleet, because from conversations on the fish dock at Hull I know that the officials of the union are worried about the quality of some of the intake.
It is important to get the training scheme off the stocks and into action as quickly as possible. Unless we get men of good calibre coming into the fleet, any discussions about how much fish we catch and the quality of saleable fish will go by the board. I therefore emphasise again to my hon. Friend the Parliamentary Secretary the great importance of the calibre and content of the intake to the fleet, because without the requisite fishermen we will have no fish.
§ Mr. WallHaving recovered from my delight at the Minister's statement, I have also recovered my memory. I wanted to take up a point which has been mentioned by the hon. Member for Kingston upon Hull, North (Mr. McNamara) about our annual debate on the Order and on the Bill after it is in operation.
I understand that the Clause and the Bill will last for three years, including this year. We are told in the Explanatory Memorandum that the position will be reviewed in 1970, that the Bill will probably continue for another two years and the review will include the question of the added value formula which the Minister has this morning explained.
I understand that an Order will be laid fairly soon bringing the Bill into effect. Will it be necessary to have an Order each year? Under the old system, we 793 had to have a different subsidy scheme each year. This time, I understand, except for the inshore vessels, an annual Order will not be required. Therefore, the chances are that we will not have a debate covering the distant water vessels until 1970, when it is promised as part of the review. This matter was mentioned on Second Reading. Can the Minister clarify the position?
§ Mr. HoyThe question of training is very important. All I can say today is that it is not the responsibility of either the Ministry of Agriculture, Fisheries and Food or the Scottish Office, but is the responsibility of another Department. I have no doubt that what my hon. Friends have said today will be drawn to the attention of that Department, because that is the one which would have to be responsible if a training scheme were introduced.
As to whether we should have a new Order each year, hon. Members are asking me to anticipate how the first 12 months will work. This I simply cannot do. If at the end of the year it proved that changes had to be made, I would think that an amending Order would have to be introduced. That would give the House an opportunity of discussing the matter.
It would be difficult to disclose the profits of every vessel. When firms give their returns, they give them in confidence to the Department and it would be difficult to disclose the trading accounts of every firm and make them public property. However, I assure my hon. Friend the Member for Kingston upon Hull, North (Mr. McNamara) that we will give all the information that it is reasonably possible for us to provide.
I hope that with these assurances and explanations we might now have the Clause.
§ Question put and agreed to.
§ Clause ordered to stand part of the Bill.