§ 10.19 p.m.
§ The Minister of Agriculture, Fisheries and Food (Mr. James Prior)
I beg to move,That the White Fish Subsidy (Deep Sea Vessels) (United Kingdom) Scheme 1971, a copy of which was laid before this House on 3rd November, be approved.On 3rd August last I informed the House that the Secretary of State for Scotland and the Secretary of State for Wales and I had decided to improve the formula which governs the operating subsidy to the deep sea fishing industry and that in due course Parliament would be asked to approve the proposals. Because of the Summer Recess it was not possible to lay the necessary scheme until Parliament had reassembled. It was laid on 3rd November this year, and I am glad to have this opportunity of recommending it to the House.
I should like to make it clear that the scheme deals only with the deep sea fleet; that is to say vessels of 80 ft. and over in England and Wales and Scotland. There are no such vessels operating from ports in Northern Ireland. The Scheme does not concern the inshore industry, whose subsidy arrangements for the year ending 31st July, 1972, have already been approved by the House.
The scheme extends for a further two years to 31st July, 1973, the arrangements which have been operating for the deep sea fleet since August, 1968. As hon. Members will recall, those arrangements, made by the previous Government, introduced a new concept of financial support. First, they related the total subsidy to the industry's overall profits and, secondly, they distributed the subsidy in relation to individual vessel efficiency. It may help the House if I try briefly to explain what I find, and what I think all will agree, is a good scheme but a complicated one to understand.
In 1968 the normal level of operating profit for the whole deep sea industry, before depreciation, was calculated to be £4 million a year. If in any year the total operating profit works out at exactly that figure, a basic subsidy of £2 million is payable. If the industry's profits fall 780 short of £2 million, the subsidy is increased by one-half of the amount of the shortfall. For example, on a profit of £3 million a £2½ subsidy may be paid. In the same way, if the operating profit is greater than the £4 million norm, the subsidy goes down by one-half of the amount of the excess.
This form of support was one that commended itself to both sides of the House when right hon. Gentlemen opposite, after consulting the industry, introduced it in 1968. I thought it right to say that, and to recall the details, when I am asking the House to approve the continuation of the arrangements, although with some updating of the figuring, to which I shall come in a moment.
In general, these new arrangements have worked well, and to the industry's satisfaction. Some vessels have received less subsidy than others: some ports have fared less well than others. I cannot very well give local figures because if I did so I would be disclosing information about individual owners which are given to the fisheries departments on assurances that they will respect commercial confidence. But the Scheme has certainly, and in my view properly, proved far more selective than did the system of payments per day at sea which it replaced: and the retirement of obsolete vessels, as has happened at a number of ports, is the logical outcome.
I should like to give some figures for the industry as a whole which show how improved returns from the market have successively lowered the subsidy. These figures are all in respect of 12-month periods ending in September, which suits the accounting arrangements of most of the industry. In 1967–68 the amount was £2.7 million; in 1968–69 £2.3 million, and in 1969–70 £1.5 million. For the 12 months to September 1971 owners are still preparing their audited returns, but our estimate is that the total subsidy in respect of 12 months' operation will be well under £1 million, and as nearly £700,000 towards that was paid out last July for a six-month period under the old scheme, I must tell the House frankly that the first payment under this scheme—if it is approved tonight—which will be made early in the new year, may be 781 very small. It may, in fact, be only what is due to finalise the provisional amounts paid out last July.
That is a reflection, and a most welcome reflection, of the fact that the six months' period to September 1971 was even better for the industry than was the six-month period to March 1971. This improvement, however, is relative, and I would not wish to over paint the picture. The higher total return has only partly offset the industry's inability to cover its depreciation and provide for new investment. To illustrate what I mean by that, in the last two or three years the cost of building a new trawler has at least doubled and in some cases more than doubled. The profits norm of £4 million in the 1968 formula is, as I emphasised a moment ago, before depreciation. So the adequacy for capital renewal of a £4 million operating profit plus a £2 million subsidy has been put very much in question.
In addition, as I explained in my statement last August, the industry has to bear the extra expenditure which results from implementing the Holland Martin Report. That report dealt, among other things, with stability test costs and the need for stability tests in the whole fleet; and there the Government have agreed to meet in full the cost of any such tests to carry out the recommendations. The other recommendations of the report, on manning, rest periods, construction rules, and so on, are the responsibility of the Department of Trade and Industry, and I understand that that Department is pressing ahead with consultations with the industry about the regulations which will be needed under the recent Merchant Shipping Act and the Fishing Vessels (Safety Precautions) Act. In so far as we have met the stability costs, the costs of new construction will come out of the grant that has been paid. The other costs will be covered as operating costs by the operating subsidy, up to 50 per cent.; we felt that the industry should bear its share of the costs. The industry is also bearing the general rise in operating costs, from which no industry is exempt.
It was against this background, a general rise in operating costs and the Holland Martin costs, that the Government decided to improve the subsidy formula 782 by adding £800,000 to the present operating profit norm of £4 million; in other words, to increase it by 20 per cent. from the level fixed three years earlier. This does not automatically mean more subsidy; indeed, as I have just explained, less subsidy may be paid because profits are greater. But it means that if operating profits were, during the currency of the new scheme, once again to be no higher than they were before the recent rise, the industry would find that the safety net had been raised. In other words, the formula, as adjusted, assures the industry of a meaningful guarantee of profits plus subsidy.
When I announced the change in subsidy arrangements on 3rd August last I said:We trust that these measures will be regarded as evidence of the Government's determination to support the industry, and that they will encourage it to continue to modernise and re-equip the deep-sea fleet."—[OFFICIAL REPORT, 3rd August, 1971; Vol. 822, c. 261–2.]There is welcome evidence that the in adequate rate of capital renewal has been reversed. New completions for the deep-sea fleet in the first nine months of 1971 totalled seven vessels, compared with five in 1969 and only one in 1970. In the 15 months from this October to the end of 1972 the forecast of new vessels is 22. Older vessels are going out of service in even greater numbers; measured by the total number of vessels, the fleet is still shrinking.
§ Mr. Kevin McNamara (Kingston upon Hull, North)
The right hon. Gentleman speaks of the forecast number of vessels. Are these orders positively placed, have applications for grant and subsidy already been made, and are they, therefore, vessels which will be built?
§ Mr. Prior
I am assured that they are orders that have been placed. It is a rather higher figure than I expected, and I am delighted to see it. If the fleet is shrinking, it is becoming a more efficient and better equipped fleet. That is essential, in view of the many uncertainties of the next few years.
Obviously, Mr. Deputy Speaker, you would not allow me to do more than touch on some of these uncertainties, but as they are very much bound up with the way that we operate the subsidies I think I should be allowed, with your 783 permission, to mention briefly one or two of them.
There might be misunderstanding here and elsewhere if, when we are discussing the fortunes of the deep-sea sector of the industry, I were to make no reference to the proposal by Iceland to extend her fishery limits. This proposal must be taken into consideration. I am saying nothing new—but it should be repeated on all occasions—when I emphasise our determination to defend our rights under international law and our 1961 Agreement with Iceland, which was made by the previous Conservative Government, by all available means. It is as an alternative, and without prejudice to our position, that we are discussing the possibility of conservation arrangements to meet Iceland's apprehensions about the threat of overfishing. But we have left the Icelandic Government in no doubt whatsoever that we cannot recognise their claim to jurisdiction over fisheries beyond 12 miles.
I turn now to another part of the international background, our entry to the European Economic Community. The main concerns of the deep sea industry, which I fully share, are to see a satisfactory outcome of the negotiations, with a fair and balanced régime on access and a workable market organisation.
I will briefly refer to the question of the implications for our financial arrangements when we become a member of an enlarged E.E.C. The Community regulation dealing with fisheries structure makes provision for State aids for the rational development and modernisation of fishing industries, and there is further provision for the use of Community funds. So far no rules have been made under these general provisions, but this is only a question of time. Should the Community wish to introduce such rules between now and our eventual entry, our interests will be safeguarded by the consultation procedure described in paragraph 76 of the White Paper "The United Kingdom and the European Communities". This will give us an effective voice in ensuring that the detailed rules about State aids are suitable for the enlarged Community, particularly in securing fair competition between all its members.
784 It is appropriate for me to recall here what I said on 21st October in the debate on the Common Market:The method of paying the operating subsidy to the fishing industry is in any case due to be reviewed before the end of the five-year term"—that is, 1973—envisaged by the previous Government. In considering what should be done in the following period, we shall take into account not only the need to promote continued stability and prosperity in the industry but also the developing structural and marketing provisions of Community policy, including the possibilities they offer of obtaining funds from Community sources."—[OFFICIAL REPORT, 21st October, 1971; Vol. 823, c. 1035.]I now return to the immediate future, for which it is necessary to continue our arrangements for an operating subsidy for the deep sea fishing fleet. For this purpose, I now seek the approval of the House to a broadly unchanged scheme.
Perhaps before concluding I should add that, apart from the figures which provide for the revised formula which I have mentioned and which are set out in paragraph 9 of the scheme, the only changes from the previous scheme are minor matters of drafting.
Hon. Members constantly ask why we should have to have so many small debates on white fish or associated matters. All I can say is that, although I do not think that they come round all that often, inasmuch as the House has always recognised not only the importance of our fishing industry but the interests of the people who work in it, whether as fishermen, as skippers or as workers in the markets and so on, I am always delighted that so many hon. Members on both sides attend to take an interest in and express their concern for this great industry of ours. With that final word, I ask the House to approve the scheme.
§ 10.40 p.m.
§ Mr. Cledwyn Hughes (Anglesey)
We are grateful to the Minister for his explanation of the scheme and for his fairly wide-ranging observations on one or two matters of considerable importance to the industry which are presently engaging the attention of hon. Members.
As the right hon. Gentleman said, the instrument now before us continues the scheme which I announced on 8th July, 1968. We are all glad that he has decided to proceed with it. I say that 785 advisedly, because the Minister has abolished so many things that one never knows what may survive his indiscriminate axe. Both the industry and the House must be grateful that the scheme is to continue and that additional help is envisaged. In fairness to the Minister, one should recall that he himself warmly welcomed the scheme when we first brought it into operation.
I have a question to put about the Holland Martin recommendations, to which the right hon. Gentleman referred. The understanding has been that the costs of putting these recommendations into effect were to be shared between the Government and the industry. Will the Minister confirm that this revised scheme is intended strictly to conform to that understanding?
I understand the position at present to be that the actual level of extra subsidy depends upon the profitability of the trawling fleets as a whole, but, more important in the context of any contribution which may be made by the Government and by the industry, the amount of additional help will vary for individual vessels according to their profitability. The contribution will not be uniformly equal because different vessels will receive different amounts of subsidy. I accept at once that that is basic to the scheme which we introduced. But it seems to me that the cost of carrying out the Holland Martin recommendations will fall equally on all vessels. Is that so?
As the Minister said, there are other ways in which the Government assist the adoption of the safety recommendations, and there are improvement grants for any necessary physical alterations to vessels. But extra running costs, for example, arising from the new manning scales will, it seems, come out of the increase under this scheme. So the industry may not be receiving quite as much as appears on the surface. If that is so, it is right that the Minister should explain it.
Has the Minister made any calculation of what this may amount to in money terms? I imagine that it would be substantial, although I am not able to make any sort of calculation myself. This is a question closely relevant to the scheme, and my hon. Friends and I are deeply concerned that the safety regulations should be rapidly and effectively imple- 786 mented. I hope that we shall have further assurances on that point.
We are, as the right hon. Gentleman said, debating the scheme against a background of some uncertainty in the industry as a whole. The terms offered in the E.E.C. negotiations are one cause of anxiety. We noted with approval the Minister's assurance at Question Time on Tuesday:… that we must and would expect to receive comparable treatment with Norway and the other candidate countries."—[OFFICIAL REPORT, 16 Nov. 1971; Vol. 826, c. 199.]If I heard the right hon. Gentleman aright in his opening speech, he said that he would expect a fair and balanced régime on access. What precisely does that mean? Does it equate with what he said on Tuesday? If it does, I think that all hon. Members would be prepared to accept it as a reasonable basis for negotiation.
The right hon. Gentleman dealt with the future of the scheme in his speech, but it would be helpful if he could say whether the scheme or a scheme of this kind could continue during and after the transitional period. We regard it as the best which the industry has ever seen in this country, and we would wish it to be continued if and when we enter the Common Market. We know there are difficulties over many of the subsidies which are payable to the agricultural industry. Into which category does ad, scheme fall?
Very properly, the Minister referred to the other cause of immediate anxiety—the Icelandic Government's proposal to extend their limits to 50 miles. We all appreciate the Minister's firm statement this evening. It would be nothing short of catastrophe to the British fishing industry if Iceland succeeded in extending its limits to 50 miles. I agree with the Minister over conservation. No country in the world has a greater concern for conservation and a better record in conservation than the United Kingdom. It is important that Iceland should realise that in this country it has good allies over conservation, and it would be unfortunate if it pressed forward with its scheme.
We realise the importance of the fishing industry to the Icelandic economy, but in many parts of this country and in 787 many of our great ports the fishing industry is essential to the economy. Iceland must, therefore, have regard to our feelings in this matter.
Is the Minister satisfied about imports? This subject was very much to the fore when we had our debate in March 1969, and we took action then. I was in considerable difficulty and under attack on the importation of frozen fish fillets. But we took specific action on the 10 per cent., as the Minister will recall, and perhaps he could now report to us. I remember being cross-examined on this issue, and I was able to reassure the House. It would be helpful if the Minister could tell us the position today.
We on this side wish the fishing industry well. Those who man our trawlers have earned our gratitude and admiration. We sought to help them when we were in Government, and we shall support them in Opposition.
§ 10.50 p.m.
§ Mr. Ian Sproat (Aberdeen, South)
I am glad of the chance to take part in this debate. I am pretty certain that my constituents wil not look with unqualified approval on what my right hon. Friend has said tonight. Out of consideration for other hon. Members who want to speak, I will make two points briefly, but my brevity is no indication of the strength of feeling of my constituents on the matter.
My first point concerns protection. My constituents and I feel that the Scottish trawler industry should receive parity of treatment with agriculture. We do not approve of the protection of industries for fair competition, but the trawling fleet is not facing fair competition, because the industry with which it is in competition is agriculture, which is heavily subsidised. My hon. Friend who is to wind up the debate will have received a complex and comprehensive submission comparing the two industries, but it is extremely difficult to make direct comparisons. Allowances must be made. I am convinced that when all those allowances have been made the general case is absolutely positive that the Scottish trawling industry receives less protection than agriculture, with which it is certainly in direct competition. That is not just my view and the view of the Scottish trawler 788 owners. It is also the view of the C.B.I., both in Scotland and nationally.
I do not ask my hon. Friend this evening to make a direct refutation of all the details of the comparison, but I ask him at least to write after the debate to the Chairman of the Scottish Trawler Owners Federation and say why he rejects the case, if he does, so that the federation knows where the Government stand on the matter.
We understand that it is Government policy to remove aid to agriculture. But that removal will be tapered over a period of five years. Why should the trawling industry have to wait five years to have a fair deal, on the same level with agriculture?
My second point is that subsidies on the one hand and grants and loans on the other are complementary. One is not capable of its full use without the other under the present circumstances. For six years the Scottish trawling industry has not been able to get the finance it needs on realistic terms for the building of vessels suitable in type and size for Scotland. The White Fish Authority is restricted in these matters to vessels under 80 feet in length, and the shipbuilding industry scheme facilities are of little or no use to the trawling industry in Aberdeen. Apart from the past year or so, in which conditions have much improved, particularly in the past six months, for the past 10 years return on capital has been extremely low, while costs have been getting steadily higher and higher, with the result that there has been virtually no replacement. We have an ageing fleet about 50 per cent. of it is now over 12 years old. I do not think that I need emphasise to my hon. Friend the great gravity of the situation.
The federation feels, as I feel, that what is needed first is a proper global subsidy for the industry on a par with agriculture. That has been temporarily rejected, but I hope that the Government will consider it again. Second, my right hon. Friend could give an adequate system of grants and loans. We do not have this, but we must have it.
I suggest that the rate of grant for building should be raised from 25 to 40 per cent. and that the White Fish Authority should be enabled to provide loans of 35 per cent. over 15 years at a reasonable rate of interest. I under- 789 stand that aid on this scale is available in Common Market countries which we are about to join and in others which will be joining at the same time—Denmark and Norway. Do we want this country to join the E.E.C. with an obsolete fleet? That is the danger. There is a serious danger of decline in the industry which would have catastrophic results for the City of Aberdeen, for one in four of the working population is closely connected with the industry.
I urge the Minister to look again at this question, which is vital for my constituency.
§ 10.56 p.m.
§ Mr. James Johnson (Kingston upon Hull, West)
My only comment on the speech of the hon. Member for Aberdeen, South (Mr. Sproat) is that the horse which he has mounted is a very old steed. It has often been at the starting post, but I do not think it has ever finished the course. However, that is for the Minister to answer, not me.
We are not in the mood that we were in when we last debated the scheme in 1969. We were then in a much sadder mood. We had had a bad year in 1968. There had been the tragic loss of our 53 trawlers from Hull. The distant water vessels were losing money. My right hon. Friend the Member for Anglesey (Mr. Cledwyn Hughes) proposed the scheme which we are now discussing at a time of unsold catches which eventually finished at the fish meal factory. The scheme had the blessing, and I believe the unstinted blessing, of all those in the industry—the vessel owners and the unions.
No one likes subsidies—even the farmers, I am told—but they are unavoidable. We have intense competition. We are likely to lose—if not all—certainly much access to the Continental Shelf off Iceland. We face subsidised competitors like the Norwegians which today have higher vessel costs. This subsidy scheme is the most efficient and balanced scheme we have seen in the industry. It has stood the test of time. The hon. Member for Edinburgh, West (Mr. Anthony Stodart) spoke in an esoteric fashion about the added-value formula; he talked about rewarding efficiency by an increased subsidy and tying the subsidy to efficiency.
790 Paragraph 10(b) of the scheme specifies the costs which are taken into account when working out the grants payable for each vessel. There is universal approval for paragraph 10(b)(i) because of its significance for the state of our vessels and for manning. It is very important to all of us representing fishing ports that the fishermen should go to sea in safe ships. The cost of training officers and crews comes into this matter. We are concerned to ensure that no longer shall we have under-manned vessels, as we had during the lifetime of many men still in the industry.
The Minister said that he would pay particular attention to the matter of the safety regulations. I hope that we shall keep him to that following the Holland Martin Report.
The scheme which we began in 1968 has now finished its three-year term. The Minister referred to the sum of £660,000, or something like that, for the subsidy paid out for six months. The industry is doing well; there is no doubt about that. If we take a median of £4.8 million for aggregate operating profits, we add to it half a certain amount below that figure to the extent they are doing badly and deduct half of a certain amount over £4.8 million if they are doing well. I have attempted to work this sum out while on my feet, and I find that £600,000 taken away from £2 million leaves £1,400,000. If we double that and add it to £4.8 million we find that the industry is making approximately £7,600,000, which was the ceiling my right hon. Friend the Member for Anglesey fixed in the original scheme. So the industry is doing well at this time.
However, I would point out to the Minister that the industry, although is doing well now, we have 561 fishermen unemployed in Hull alone, as my hon. Friend the Member for Kingston upon Hull, North (Mr. McNamara) also knows, and we must bear this in mind when talking about expansion in the E.E.C. or about the fears and danger that the Icelanders will push out to a 50-mile limit with the unemployment consequent upon that.
Today in Hull we are catching far less fish but making more money, and the men in the industry, both the deck hands and the "bobbers"—that is, the fish 791 dockers who have to get up at 1.30 in the morning to unload vessels for the fish auctions at 7.30—are suffering unemployment. This needs careful examining.
The obligations imposed by the Holland Martin Committee fall on all vessels. Some vessels are losing money, and hence the day will come when those, like the old oil burners, will have to be replaced. I wonder whether this scheme is the best way of pumping money into the owners' pockets to get those new vessels.
I understand that the difficulty in getting the new vessels lies in getting credit. The big companies can go to the Shipbuilding Industry Board, but I understand that they get only three years' credit. This explains why certain owners in Hull have had two vessels built at Gdynia in Poland, where they get longer-term credit. The Minister knows this; I can tell by his face. We should turn our minds towards the building of new vessels. He stated that we are building new vessels and doing well; but how long will it last?
We had bad years in the early 1960s, and the last three or four years have been good ones. Scientists have told us that the next two will not be good, but that there will be a comeback in the late 1970s. We have good and bad cycles in the industry.
If men like Tom Boyd and his family firm have to pay £1.6 million for a new vessel and get only 25 per cent. out of the Government, they have a large amount of additional money to find, and need credit terms for the future planning of their fleet.
Again with the threat of the 50-mile Icelandic limit, 40 per cent. of the catch on the Humber and 60 per cent. of the catch at Fleetwood are at stake.
On the question of the E.E.C., I hope the Minister will look in the Library at Agence-France Presse of two days ago, at the account of the Strasbourg negotiations. I hope he can deny that report. He will find that it states that, while Westminster is saying that there will be a six-mile absolute limit, and the 12-mile limit in certain conditions, and although 792 he says he will stand firm on this and ensure that we get no less or no worse terms than other applicant nations, it is said in Brussels that our negotiations are at the moment based on a transitional period of 10 years. I hope we can stamp this one out. If we go into the Common Market—and many people fear that we shall because if we do not it will be a terrific smack to the nation after all the past negotiations—we want to make sure that we shall be under these present conditions of fisheries limits not for 10 years but for 20, 30 or 40.
§ 11.5 p.m.
§ Mr. Patrick Wall (Haltemprice)
The fishing industry is fortunate in that its problems are rarely subject to party political controversy, as has been shown by the way in which both sides have welcomed the scheme. The Opposition have every right to pat themselves on the back for introducing this measure in 1968. It has been a good measure which has lasted for three years, and it is now being extended for a further two years. The Government are entitled to credit for having increased the annual profit norm of the industry from £4 million to £4.8 million, an increase of about 20 per cent. We are pleased that the industry is now showing better profitability, and I am sure that the Chancellor of the Exchequer is equally pleased at having to fork out far less in subsidies.
Only two years are left for the scheme. What then? To follow up the words of my hon. Friend the Member for Aberdeen, South (Mr. Sproat), the Scottish Trawler Owners Federation has worked out that if in its section of the industry the Scottish deep-sea fisheries were given a subsidy similar to the agricultural subsidy they would receive Eli million instead of £¼ million, which is five times as much.
I hope the Minister will bear in mind the cost of implementing the Holland Martin Report, and the arrears of W.F.A. loans still owed, particularly in Scotland, on the ageing fleet. This problem of replacement does not apply so much, as the hon. Member for Kingston upon Hull, West (Mr. James Johnson) has said, to the Humber ports. I understand that 90 Aberdeen trawlers were built between 1957 and 1961 and only 13 have been built since. So Aberdeen 793 will soon be confronted with the replacement problem that confronted the Humber seven or eight years ago. I understand that there are still 50 oil-fired steam conventional trawlers at Aberdeen. Unless something is done about replacement there could be a loss of up to ⅛th of the total Scottish catch, which will mean serious unemployment. There must therefore be more help for the Scottish fishing industry.
So far as the B.T.F. is concerned, further south the catch this year has declined by 13 to 22 per cent. compared with 1970 but the price of fish has remained high, so the returns have been good. But this scheme is for two more years. What happens then? Presumably, there will be new legislation when we go into the E.E.C. which we will want to hear about in due course. I will not weary the Minister by talking about limits. He has given clear pledges to the House, and so has his right hon. and learned Friend the Chancellor of the Duchy. I am certain that we shall not accept less than any other applicants. If there is a transitional scheme, during the period of transition the enlarged Community will discuss the future with no commitments for the future. In other words, this does not mean that we will accept what I know the Commission wants, which is a phasing out of existing limits after the transitional period—
§ Mr. James Johnson
If the hon. Gentleman would care to check the source of my information he will find that this is the understanding of those who are in vessels at the moment. I hope it can be confirmed that it is not a 10-year transitional period.
§ Mr. Wall
This is the view of the Commission—that is, the civil servants in Brussels. I am sure it is not the view of Her Majesty's Government, and I doubt whether it will be the view of the Norwegians, the Irish or anybody else. I do not think that the civil servants will prevail over the Ministers of the enlarged Community, and I am certain that we shall stand firm on this.
When we go into the E.E.C., if new agreed limits are made they will need policing. I have said to the Minister before, and I say again, that I do not believe our fishery protection is sufficient. I should have thought that this country, 794 which led the world in light coastal vessels before the last war, could now lay down some fast patrol boats, which would be of great use to the Royal Navy in a state of tension, could be used in time of peace for fishery protection and would provide excellent training for the Royal Naval Reserve.
I hope the Minister will get together with his hon. Friend the Under-Secretary of State for Defence for the Royal Navy and press the Treasury on the matter. I think that both the Admiralty and the fishing industry would gain immensely if we had, allied to air-sea rescue helicopters, fast patrol boats which unlike some of our present vessels, had the speed to catch foreign trawlers. That is what we need.
Finally, I must refer to the Icelandic problem. I remind the House that in 1948 Iceland claimed the Continental Shelf, and she has been working to that end ever since. In 1952 she put out her limit to four miles from the base lines. In 1958 that went out to 12 miles, and that led to the cod war. As a result of the cod war, Iceland got nearly 10,000 square miles of sea for herself. But she agreed to go to the International Court in the event of any further dispute. I understand that she is now saying that she is going to increase her limit to the Continental Shelf, which is an additional 40,000 square miles of sea, on 1st September next year without fulfilling her legal and moral obligation of going to the International Court. I hope that wiser counsel will prevail. I believe that the Opposition in Iceland are very much in favour of maintaining their treaty obligations. I hope that the Icelandic Government will come round to that point of view. We in the Humber ports have always had close friendship with the Icelandic people. I do not believe that they would wish to betray their legal and moral obligations in this way. I was glad to hear my right hon. Friend say that we could not tolerate such action.
It would not destroy the British fishing industry, but if Iceland got away with this the Faroes, Denmark and Norway would follow. Then in 1973–74, when we have the Law of the Sea Conference, the Continental Shelf would become the minimum demand with Chile 795 and other South American countries asking for 200 miles. This situation would not only be utterly fatal to the British industry but would create chaos throughout the distant water fishing fleets of the world. There is, therefore, an important international principle at stake. I am pleased that my right hon. Friend made such strong remarks on the this subject.
I hope that the debate will convey clearly to the Icelandic Government that we want to be friends. We have been partners in E.F.T.A. and we hope to be closely associated in future. Our fishing industries have always been great friends. But we hope that the Icelandic Government will keep their word and go to the International Court at the Hague if they want to take any further action. I am sure that we shall support them in every way on conservation, but we must fight unilateral extension of existing agreed limits.
§ 11.13 p.m.
§ Mr. Kevin McNamara (Kingston upon Hull, North)
If I speak quickly it is because I gave an undertaking to speak for only two minutes. I have only a few small points to raise.
My right hon. Friend the Member for Anglesey (Mr. Cledwyn Hughes) has shown how excellent was the scheme introduced by the Labour Government. I suggest to the hon. Member for Aberdeen, South (Mr. Sproat) that if he had put his vote where his mouth was he would have voted against his Government when they cut the subsidy on fishing vessels soon after they came to power.
People seem to think that we are talking only about the fishing industry when we talk about the importance of the Icelandic limit. It is not only the fishing industry in areas like Humberside which is at stake; it is all the ancillary industries associated with it. It is not only shipbuilding and light engineering of various kinds which come to mind, but the modern processes of food production. Large firms on Humberside have already indicated that if the Icelandic Government get their 50-mile limit they will cut down their activities on Humberside and move their factories and business to where the vegetables are more easily grown and more plentiful. This will mean a great shrinkage in the economy of an area where fishing is regarded as a small sec- 796 tion of a widening and increasingly important large source of employment.
I turn to the E.E.C. negotiations. We want the Minister to spell out in clear and concise terms that this subsidy type of arrangement can exist if we go into the E.E.C. and what terms our deep sea fleet can expect. What exactly are we going to get? For example, are we going to get subsidies which will be equivalent to what the Norwegian fleet gets in subsidies from its Government?
Will there be guarantees that the catching potential of the fleet will be maintained? Shall we be able to ensure that our fleet is able to expand? On the question of the E.E.C., under the agreement being negotiated, former E.F.T.A. countries will have free trade in industrial products with the countries of the E.E.C. One of the major industrial products in that category is frozen fillets, and if the 50-mile limit is implemented Iceland will be the only source for these. The Minister says that we shall not tolerate this, but will he spell out what "we shall not tolerate this" means?
What are we going to do to ensure that international legal obligations are observed until they are changed according to the procedures laid down? Are we going to ensure that these industrial fish fillets do not come to this country in this way?
§ 11.16 p.m.
§ Mr. Patrick Wolrige-Gordon (Aberdeenshire, East)
Listening to the debate, the impression is coming to me that there is a definite divergence of impact and effect of the Scheme as between the Humber and the Scottish trawler fleet. There is obvious and real concern among the men responsible for the Scottish trawler fleet. There does not seem to be a similar concern mirrored in what we have heard from the Humber area this evening.
Scotsmen feel that because of what they regard as inequitable treatment in the past vis-à-vis other food processing industries, they are not able to make provision to secure the future of the Scottish fleet. Building costs have increased out of all proportion. Since 1968, particularly, total profits and subsidy taken together for that fleet have greatly decreased. Since 1969, the profit on the capital investment for a trawler in Scotland seems to have been running at about half the rate—or perhaps less than that— 797 necessary to provide the finance for its replacement. As a result, since 1966 Aberdeen has built only one new vessel. Finance has not been forthcoming from other private sources for the building of new vessels, and in this debate we are brought up sharply against what is going to happen in the future.
Are Aberdeen and Grantown going to have trawler fleets? If for no other reason than for the sake of the men who sail in them, I hope that they will continue to do so, but clearly the finance involved will have to be considered with care and real determination if the future of that industry is to be soundly based.
The Aberdeen fleet has made a good and detailed case to prove that if it had received assistance commensurate with that supplied to agriculture it would not be in its present position. Comparisons are never very appealing arguments, but I think the facts of the case deserve from the Government an answer which they have not so far given as to what the future holds. We are sailing into uncharted seas, but it is fairly clear that very soon the fishing effort will be measured on an oceanic scale and, I hope, graded accordingly, because until humanity begins to learn to replenish what it takes, conservation will be the minimum of necessary precautions that we can take to make sure that we do not despoil the sea for the rest of time.
How that conservation is applied, and how the legitimate interests of historic industries and those who work in them are safeguarded, we do not yet know, but, as we go into the E.E.C., are we in Scotland to have a modern fleet, or are we going to go in with an imperfect and outmoded one? This is a crucial question for Scotland, and I hope that the Government will give us some answers tonight.
§ 11.20 p.m.
§ Mr. Robert Hughes (Aberdeen, North)
Many of my constituents, like those of the hon. Member for Aberdeen, South (Mr. Sproat), are employed in the fishing industry and in fish processing and marketing. Perhaps from this side of the House I can be more free in my criticism of the Minister than he can. The Minister gave us a glowing picture of the industry's profitability and future pros- 798 pects. He said that the scheme carried forward the scheme of the last Government, with an increase in the operating profitability optimum from £4 million to £4.8 million.
I wondered whether he was speaking of the same scheme as was described in the memorandum which I and others have had from the Scottish Trawler Owners Federation. Although there has been a great deal of self-congratulation tonight about how the scheme has worked, we should recognise how things have changed. We should not regard the scheme as a global one, covering the whole country. Different fishing ports are suffering different problems. The question of profitability is not as clear in the Scottish ports as it appears to be in the ports of England and Wales I hope that the Minister will begin to give us some answers to the problems raised by people in the industry.
I was gravely concerned to be told that the scheme does not match up to the problems facing the industry, some of the results of which are difficult to quantify. If the Icelandic limits were extended to 50 miles, it would be a total tragedy for the fishing fleet, and we are glad of the Minister's assurance that he will stand firmly by the rights of the British fishermen.
Because of the apprehensions of the fishing industry, particularly in Scotland, insufficient investment is going into the industry. This must be of serious concern. I am concerned not only, or even primarily, with the case of the Scottish Trawler Owners Federation, which represents the owners, but with the future of those who go to sea in ships and must get their living from it. I want to see money going into the industry so that those working in it get a decent reward and decent conditions in the kind of job they have to do.
To this end we must have money going into new ships. One thing which we have recognised over the last decade and probably longer is that ships will have to go further out into the sea to get their catch and will have to remain at sea longer. As has been said, while the proceeds from the catch are increasing rapidly, the total catch is not increasing at all. This must be of serious concern to us.
799 Money for the industry can come from only two sources—either from the market, which means the consumer, or from the Government, in subsidy. In agriculture, the normal practice has been for the money to come from the Treasury—a cheap food policy. Many people say that they do not like subsidies. Perhaps the farmers do not like them, but they certainly accept them. It may be that, in principle, the Scottish Trawler Owners Federation people do not like subsidies, but they certainly welcome them when they get them. It is nonsense to say that people do not like subsidies. They do if they are necessary for the good of the people working in the industry.
§ Mr. Sproat
Of course the federation would be happy not to have a subsidy—if agriculture did not have a subsidy either. It is the unfairness of giving to one and not to the other to which it objects, and not to subsidies in principle.
§ Mr. Hughes
I am afraid that I do not accept that argument. The case of the Federation is that it is unfairly treated by comparison with agriculture. Frankly, I would regard that as a peg on which to hang the argument. But if the subsidy argument is to stand, then it must stand on its own feet. What the hon. Gentleman says does not diminish my case about liking or disliking subsidies.
Safety is among the items for which we in the fishing industry need money, and by safety I refer not only to ancillary aids but the vessels in which men go to sea. It has been pointed out that about 50 per cent. of the Scottish trawling fleet over 80 feet in length is at least 12 years old. If so much money is being made by the fishing industry, where is it going?
We are advised that as at April, 1971, of the 25 vessels over 80 feet in length, there was average arrears of payments of about £14,000 per vessel, adding up, in arrears in principal and capital, to £356,886. That figure would have been much worse but for the fact that in the past two years 10 vessels were reclaimed by the White Fish Authority because the companies concerned were unable to pay their way. I understand that in the last 10 years 21 vessels have been repossessed. If money is going to the industry, it does not seem to be going towards the replacement of the fleet.
800 I am old enough to remember what the Aberdeen trawling fleet was like 15 or so years ago. It was a disgrace to the trawling community and I do not know how, in the post-war years up to the early and middle 'fifties, the industry got men to go to sea in those vessels. The fleet has been and is being replaced, but not fast enough.
The Government must make up their mind where they stand on this issue. Either we have a modern fleet and an up-to-date industry or we do not, and if we do not, there will be a tremendous loss of jobs, of income and of goodwill. If we accept that we must have an up-to-date industry, then we must have modern boats. Somebody must be prepared to foot the bill—either the consumer or the Government—and my first choice is the Government.
It is wrong that the Minister should have met representatives of the Scottish Trawlers Federation and rejected their case for parity with agriculture without giving the reason for his rejection. If that has not happened, and is only a rumour, he should refute it. On the other hand, if it is correct that, after meeting those people with an interest, financial and otherwise, in the industry, he rejected their case, then there is a clear duty on him to explain his reasons and point out the defects in their case.
§ 11.28 p.m.
§ The Under-Secretary of State for Home Affairs and Agriculture, Scottish Office (Mr. Alick Buchanan-Smith)
This has been an extremely useful debate and, as is common in our fishing debates, we have witnessed a great deal of community of interest on both sides of the House in relation to the well-being of the industry, and long may this remain the case.
All hon. Members who have participated in this discussion have spoken from the heart, for they have a deep and intimate knowledge of the industry, most of them from a constituency point of view. While, naturally, hon. Members in different parts of the House have different views about the means, we are all anxious to help the industry.
There can be no doubt that anybody reading the OFFICIAL REPORT Of this debate will accept that it is the welfare of the fishing industry about which we are concerned. Whether we come from north 801 of the Border or from England or Wales, this industry is very important to us all.
I will do my best to deal with the points that have been raised, and particularly with those affecting Scotland, including the case put by the Scottish Trawler Owners Federation. This aspect was mentioned by my hon. Friend the Member for Aberdeen, South (Mr. Sproat), my hon. Friend the Member for Aberdeenshire, East (Mr. Wolrige-Gordon), and the hon. Member for Aberdeen, North (Mr. Robert Hughes). I wish to make it absolutely clear at the outset that the consideration of the case of the Scottish Trawler Owners Federation in relation to its plea for parity with agriculture has been very fully considered.
In the last few months of the summer I personally had two meetings with representatives of the federation, and on a third occasion they met my right hon. Friend and myself. In addition, there have been a number of very full and exhaustive discussions with my officials. I therefore hope that the federation will accept that its case has been very fully considered, and that any rejection of it by no means indicates that it has been rejected cursorily and out of hand. We have given to the case the deep consideration that it deserves.
To my hon. Friend the Member for Aberdeen, South, I can only repeat what I said to the representatives of the federation, when I made my position and that of the Government perfectly clear. We believe that their argument that the fishing industry should have assistance comparable to that given to agriculture cannot possibly be accepted by us. The case for a subsidy for any industry—and, with respect, I agree here with the hon. Member for Aberdeen, North—must be based on a consideration of the circumstances of that industry, and not necessarily on comparisons with any other industry. In that respect I know that our attitude now is identical with that adopted by the Labour Party when in power.
But there is an even more telling point, and this is probably where the hon. Member for Aberdeen, North and I part company. It is the present Government's policy to transfer support for agriculture from Exchequer support to support by the market, and thereby reduce the burden on the taxpayer. Therefore, even if 802 we did accept the federation's argument based on comparisons with agriculture, it would, in purely current terms, more than ever be inappropriate in present circumstances.
The federation representatives have said that they understand that there is this phasing out of agricultural support but would like nonetheless to have the disparity phased out over the transitional period. With respect, to change the whole basis for that short period would be an utterly unrealistic action on the part of the Government. I ask my hon. Friend to tell his constituents that we have very carefully reviewed what has been said to us but that that is our decision, as was made perfectly plain to them when they put their case to us.
My hon. Friend the Member for Aberdeenshire, East (Mr. Wolrige-Gordon) and the Federation have expressed concern about the balance between the Humber ports and Aberdeen. Whilst it is true that the federation has been asking for a very large increase—to which my hon. Friend the Member for Haltemprice (Mr. Wall) referred—in the global subsidy, it has not asked for a change in the subsidy distribution arrangements brought in by the previous Government. So, from the point of view of distribution, whatever may be said about the inadequacy of the global sum it is not fair to say that there is an imbalance between the Humber ports and Aberdeen.
§ Mr. Wolrige-Gordon
On the subject of replacement vessels, which is the important issue in Aberdeen, one major problem is the short time allowed for the duration of a loan. Three years is the maximum period, and this makes it very difficult.
§ Mr. Buchanan-Smith
I am grateful to my hon. Friend for raising that point. I was about to turn to some of the problems facing the industry in Aberdeen. The problem of the ageing fleet is naturally worrying to the Scottish Trawler Owners Federation. It is equally of concern for the Government and myself as Minister at the Scottish Office responsible for fishing.
Before I deal with that specific point, we should bear in mind that although the Scottish industry, and the industry south of the Border, would naturally like to 803 see more money put into it, as my right hon. Friend said, it is equally true that for the industry as a whole there is no doubt that the last 12 months have seen a very welcome upturn in the industry's earnings. It is worth remembering that the industry's earnings in the period October, 1969, to September. 1970, were £7.6 million, and in the period October, 1970, to September this year they were £10 million. This shows a very welcome increase. We have not the final figure for operating profits because the various information and calculations are not fully available. But even taking into account the undoubted increase in costs that has faced the Scottish fleet, and the fleet south of the Border, we anticipate that there should be a greatly improved position on operating profits.
Therefore, whilst there is still concern for the future in the industry in Aberdeen, at the same time the Scottish industry and the English industry have enjoyed a very much better financial position with their earnings over the last 12 months.
§ Mr. Robert Hughes
In view of these very welcome figures for earnings and, one assumes, an increase in profitability, can the Under-Secretary say what proportion of the new vessels have been ordered for Scotland? If it is a very small number, is the hon. Gentleman saving that the industry is taking money out without putting it back? If that is the case, what will he do to encourage the industry to build new vessels?
§ Mr. Buchanan-Smith
That was another point raised by my hon. Friend the Member for Aberdeenshire, East, and I now turn to it. I am very concerned about the ageing nature of the Aberdeen fleet. This point was put to me by the Scottish Trawler Owners Federation. What I have to say in general is in relation to the review of the arrangements, not only about the structure of loans and grants but also about the fact that the present scheme runs for only two years. Obviously in this period we shall have to make an assessment of the industry and its future shape. In general terms I assure the House and, through the House, the Scottish Trawler Owners Federation, as I have already, that we shall look at this problem—and it is one that concerns 804 us—with the reassessment of the arrangements before the present arrangements come to an end.
§ Mr. Robert Maclennan (Caithness and Sutherland)
Is the hon. Gentleman saying that he is not in a position to give the figures for Scotland indicated by the right hon. Gentleman in his speech? I am sure that they could be provided, but the hon. Gentleman talks of "a general assessment" of the industry being made. Surely the House can be given these facts tonight.
§ Mr. Buchanan-Smith
That was my next point. With only a limited time in which to speak, with respect to the hon. Member, I hope that I shall be given a chance to deal with these points because I am naturally anxious to deal with them properly.
I turn to the boats that are being built. I confirm what was said earlier in the debate by my right hon. Friend about the number of boats to be built over the next 15 months. This point was raised by the hon. Member for Kingston upon Hull, North (Mr. McNamara). The figure of 22 boats is based on orders placed, and on which W.F.A. grant has been approved. Any uncertainty about these can only be uncertainty about completion dates. So far as our knowledge goes, these are firm figures.
Moving to the particularly Scottish question, it is difficult in statistical terms to draw conclusions. I will state the figures and leave the House to draw its own conclusions. Out of the figure my right hon. Friend mentioned, the number in Scotland is two, compared with one boat in the year to 30th September. 1971, and no boats in either of the two previous years. In percentage terms this would be a dramatic increase, but it would be difficult to justify the argument that this shows a dramatic increase in investment terms.
A question which must be considered in relation to the future structure of the industry in Scotland, as I have put to the Scottish Trawler Owners Federation, is whether the fleet needs to diversify with different types of vessel or different types of fishing. A significant factor in the last few years has been the great increase in the number of boats under 80 ft. 805 built for the Aberdeen fleet, which indicates an element of diversification amongst Aberdeen companies.
§ Mr. James Johnson
Will the Under-Secretary say a few words about England in all this panegyric about Scotland?
§ Mr. Buchanan-Smith
Before I rose I carefully checked on how long I had in which to speak. I had not intended to speak for so long on the purely Scottish aspects. However, knowing the concern of the Scottish Trawler Owners Federation and of my hon. Friends and other hon. Members from north of the Border, and welcoming the brevity of the earlier speeches, I took the opportunity to put the record straight about the position of the fleet north of the Border. I have mentioned most of the Scottish points and I turn now to points affecting south of the Border and also points affecting the industry generally.
The safety question concerns us all. I confirm that an undertaking was given to consult the industry to see how the costs of implementing the Holland Martin recommendations could be borne. We have consulted the industry. I confirm that the results of the consultation are that the payment for the stability tests has been given in full. On the other hand, where safety costs involve capital improvement there is the element of capital grant available. It will be a consequence of the subsidy formula that the subsidy will meet one-half of the extra running costs not met by increased market returns. We believe that this is a fair proviso.
Further, because the added-value calculations exclude labour costs, any extra incurred such as manning scales does not reduce the added value of the vessel and thus its share of the global subsidy.
In relation to matters still to be discussed with the Department of Trade and Industry, my right hon. Friend said that that Department is pressing ahead with its consultations on the calculations which have to be made. Until the details of the regulations are known, it would not be right for me to speculate about the costs of their implementation. I am certain that the industry will make these points in its consultations with the Department of Trade and Industry.
§ Mr. McNamara
The hon. Gentleman knows of the concern on the trade union side, particularly in my own union, at the delay which is taking place. Aside from the question of cost, may we have an indication when we shall see the new regulations before the House in the form of a Statutory Instrument?
§ Mr. Buchanan-Smith
I cannot give any definite news on that tonight. I shall take it up with the Department of Trade and Industry and, if I can give the hon. Gentleman some indication later—if we can predict a timetable—I shall gladly do so.
§ Dame Irene Ward (Tynemouth)
The improvement of fishery protection is of enormous importance to the industry, and it would help with employment, too.
§ Mr. Buchanan-Smith
With respect to my hon. Friend, that is another point to which I hope soon to come. I hope that I have now dealt with the various specfic points which have been raised. I apologise to any hon. Member whose question I may have missed; I know that these are important constituency matters.
I come to the wider points which have been raised, and I take, first, the question of policing. I agree that, whatever happens in the future, and particularly in relation to the Common Market, the business of policing our fishery limits remains of vital importance if our fishermen are to be assured of the protection from the Government which they deserve. As hon. Members from north of the Border know, we have our own fishery protection arrangements in Scotland, for which I have certain responsibilities. I was able to watch them in operation at first hand this summer. I know and pay tribute to the valuable work done both by the Royal Navy and by our own fishery protection service in Scotland in looking after the interests of our fishermen.
I give the undertaking that, in consultation with my colleagues in the Government, once we know what is finally to happen as regards the E.E.C., we shall certainly have this question very much in the forefront of our minds.
I do not propose to deal with the question of Iceland. My right hon. Friend 807 gave a categorical assurance when opening the debate, and I know that the House welcomed it.
Now, the question of frozen fillets, which the right hon. Member for Anglesey raised (Mr. Cledwyn Hughes). This has been an important matter in the negotiations, and it still is. As the right hon. Gentleman knows, an understanding was negotiated with Denmark, Iceland, Norway and Sweden in 1969 whereby those countries ensured that their frozen fillets sent to the United Kingdom were priced above agreed minima. This understanding has been up-dated twice since 1969. At the moment, with a strong market, prices are generally above the minima, but the assurance given by the minima is still there, if needed.
We accept—this has loomed large in our negotiations with the Community on marketing arrangements—that the arrangements in an enlarged Community must be carefully considered, and I give the assurance that this question has not been overlooked. It is being covered in our current negotiations on marketing arrangements. I cannot say more than that tonight. Our fishing negotiations are not yet concluded, but this is a matter in relation to marketing which looms very important in that context.
On the wider issues concerning the Common Market, my right hon. Friend repeated many of the assurances which had been given earlier. I wish to do no more than underline them. I feel particularly concerned because I have been personally involved in the negotiations, with my right hon. and learned Friend the Chancellor of the Duchy since July this year. I give my personal assurance to the House, having been present at the negotiations, that we certainly mean to carry out all the assurances which have been given to the House.
I would like to clear up in particular the point raised by the hon. Member for Kingston upon Hull, West what is meant by "transitional period". I can do no better than repeat what my right hon. and learned Friend, the Chancellor of the Duchy of Lancaster said on 11th November. I hope I will lay low any uncertainty. He said:I made it clear that it"—and by "it" he means the move that the Six have so far made— 808was inadequate both as regards time and access. On time I said that however long the initial period there must be arrangements on a continuing basis subject to review.—[OFFICIAL REPORT, 11th November, 1971 Vol. 825, c. 1239.]It would be wrong to go into these negotiations and into what we may arrange without a commitment regarding the importance of a review. Circumstances change. There is the whole question of pushing limits out to 50 miles and to have such a review would be important so that this could be taken into account.
If the issues on which we are negotiating are important now—and I know that I speak particularly for the industry in Scotland, as elsewhere—they will be equally important in the future. That is why we have made it crystal clear to the Community that while we accept the principle of a review, we do not accept a review which automatically reverts to a pre-judged situation at the end of the review period. That is an important point which I cannot reiterate too strongly tonight.
Time is running out, and I think that I have answered all the points. I could not finish on a better note. What I have said demonstrates to the House, to the industry and to the Common Market countries with whom we are negotiating that on this vital matter, which affects the interests of a very large and important industry in our country, and which affects the interests of many of our constituents, the Government stand absolutely by the assurance they have given. I hope by what I have said I have managed to dispel any doubts which may be in hon. Members' minds.
§ Mr. McNamara
Will the Minister answer one point? Shall we have signed the fishery agreement before we sign the document for accession?
§ Mr. Buchanan-Smith
I can only refer the hon. Member to what was said by the Chancellor of the Duchy of Lancaster a week ago. It is certainly our hope that we shall be able to get agreement at the negotiations which take place on 29th November this year. I have made quite clear the will of the British Government. I believe that those with whom we are negotiating are equally anxious to see the matter satisfactorily resolved to our mutual advantage because 809 mutual advantage is what the Common Market is all about.
§ Question put and agreed to.
That the White Fish Subsidy (Deep Sea Vessels) (United Kingdom) Scheme 1971, a copy of which was laid before this House on 3rd November, be approved.