HC Deb 07 July 1981 vol 8 cc381-6

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

11.57 pm
Mr. David Myles (Banff)

I am particularly pleased that my hon. Friend the Minister of State has seen fit to come at this midnight hour to reply to the debate. I believe that there was some doubt about who had the responsibility. I hope that it will be clear from my speech that the Department of Energy is responsible.

My request for the debate stemmed from a letter that I wrote to the Department of Energy on 4 February of this year, to which I received a reply on 12 June. Needless to say, I was rather annoyed at the delay in replying to my letter. I was more than slightly disappointed with what was in the letter. as I had hoped for a better defence of our energy pricing policy than appeared there.

The fishermen in my constituency fish in waters in which there is a great deal of oil development. The oil industry shows no sign of having to economise or limit its spending. The fishermen have had to suffer damage to their gear from debris, although I admit that the situation has greatly improved. I shall not go on at length about that. I still hear of insensitive actions such as testing anchors just off the Moray coast, which plough up the seabed in a damaging furrow and can have dire results for fishermen.

Let us examine fuel costs. In 1979, 89 vessels costed by the Scottish Fishermen's Federation showed that fuel costs amounted to 44 per cent. of expenses. In 1980 the figure was 51 per cent. Fishermen pay for fuel with the fish that they catch. The following facts demonstrate the seriousness of the situation. I shall give figures for the three main species of white fish landed in Buckie in my constituency and the number of six-stone boxes required to buy 1,000 gallons of marine oil. The figures are dramatic. I have not cooked the books. The figures are from a reliable source and can be checked.

Taking an average price over the year, 16.5 boxes of haddock were required to buy 1,000 gallons of marine oil in 1973. In 1974 it took 24.78 boxes. In 1975 it went up to 31 boxes and in 1976 it took 35.12 boxes. In 1977 the position improved a little to 31.55 boxes. In 1978 the situation improved even more, and it took 25.68 boxes. But then the figure climbed again. In 1979 it took 29.51 boxes and in 1980 it required 46.93 boxes. No quota existed in 1973, but a quota now operates, so fishermen cannot catch unlimited amounts of fish. At the price of haddock on Monday of this week at Buckie, 81 boxes would be required to buy 1,000 gallons of marine oil.

In 1973, 22.27 boxes of whiting were required to buy 1,000 gallons of marine oil. In 1980, 70.76 boxes were required. This week 120 boxes would be required.

There is no quota on cod catches. In 1973, 12.34 boxes of cod were needed to buy that amount of oil. In 1980 32.14 boxes were required. This week's figure is also dramatic.

What adds fuel to the fire of the fishermen's ire is the comparative costs in other countries which do not have oil. A number of companies and sales offices give instructions to their skippers to refuel if possible in Denmark or Norway, where the cost of oil is about 30 per cent. lower. If they are fishing off Cornwall, they are told to go to St. Malo in France.

The group which studied allegations of unfair trading in fish found that United Kingdom fuel prices have tended to be higher than those paid by fishermen in other Member States and in other important fishing countries such as the United States of America and Canada when prices in those markets are converted into sterling…Price differences would appear to reflect general policies of Governments on energy pricing and the commercial decisions of the supplying companies. It goes on to quote—and no doubt the Minister may quote—the findings of that group and the relative prices in £ sterling per tonne in the various countries. What disturbs me is that the United Kingdom price in December 1980 is quoted as £133 to £195 per tonne—a fairly wide disparity—and in March 1981 as £130 to £208 per tonne. Why cannot we give a price in the United Kingdom in the same way as other countries do?

The National Economic Development Council task force report on energy pricing quoted prices at various ports. In January 1981, in Aberdeen it was £172 per tonne, in Lowestoft £153 per tonne, in Fleetwood £147 per tonne and at the Humber ports £131 per tonne. Again there is quite a discrepancy, and the Scottish fishermen do not understand why. Sadly, the price in Buckle is not given, but it is even worse.

The French, of course, subsidise the fuel for their fishing industry. M. Louis le Pensec, the French Minister for the Sea, when he was interviewed by the newspaper Le Monde, said that immediate measures will be taken meanwhile to safeguard our fishing fleet. The doubling of the fuel subsidy programmed in the July budget is one of those measures. That means that instead of 10 centimes per litre the subsidy will be 21 centimes per litre.

In conclusion, I plead with the Government to take careful note of the situation and ensure that their energy pricing policy does not do irreparable damage to our fishing industry, which was here long before oil was discovered and will be needed long after the oil is used up.

12.7 am

The Minister of State, Department of Energy (Mr. Hamish Gray)

I well know that the fishing industry is among the most energy-intensive industries in the country. The cost of fuel can be well over 40 per cent. of running costs. It is therefore a subject of great concern to the fishing industry, meriting close examination and debate. I am grateful to my hon. Friend the Member for Banff (Mr. Myles) for giving the House the opportunity to discuss this matter tonight. It is typical of his enthusiasm and dedication that he should ask me to come to the House after midnight to reply to a debate that he has justly raised on behalf of the fishermen whom he so well represents.

I know that my hon. Friend will make allowances for the fact that my responsibilities lie in the energy rather than the fishing sphere. I know that the problems of the fishing industry range far beyond the cost of fuel oil, but any detailed response on such points must be for my ministerial colleagues responsible for fisheries. I shall therefore confine my comments to the subject of this Adjournment debate on energy prices as they affect the fishing industry.

I offer my hon. Friend the Department of Energy's apology for the delay that he experienced in receiving a reply to his letter. My hon. Friend the Minister, who was responsible for the division that dealt with the inquiry, was extremely angry when he discovered that such a delay had occurred. At the time that my hon. Friend wrote, the Department was under heavy pressure on this front, and inadvertently the letter was misdirected. That was the cause of the delay. I give my hon. Friend an apology that I hope he will accept.

My hon. Friend expresses the effect of the rising fuel costs to the fishing industry most graphically. But rising fuel costs are not confined to the fishing industry or to the United Kingdom. Since the end of 1978—this is important and has a direct bearing on the subject in hand—world crude oil prices have more than doubled. Since 1973 they have risen nearly twentyfold. These massive price increases in turn affect oil product prices and industry must adjust to survive.

This year there have been several rounds of wholesale price increases. The first, in January, mainly reflected the crude oil increases announced at Bali in December. Since then, crude oil prices have been broadly constant in dollar terms, but the sterling price of crude oil to United Kingdom refiners has increased by over 20 per cent. because of the weakening of the pound against the dollar. It was for that reason that the oil companies increased their wholesale prices in March, May and again in June. Despite those increases, most United Kingdom oil companies have been making substantial losses from their refining and marketing operations, which the reduction in North Sea crude prices will mitigate but not eliminate.

There has already been one announcement of a planned refinery closure. However, my hon. Friend is concerned about prices in the United Kingdom compared with the Continent, as well as about absolute price increases within the United Kingdom. My hon. Friend will no doubt have seen the NEDC task force report. Indeed, he referred to one or two of the points that it raised. That report included evidence on prices paid by United Kingdom fishing interests, provided by the industry's representatives.

At the beginning of the year it appeared that prices for bunkering fuel were cheaper at other European ports. However, the most recent figures provided by the EEC Commission in March show a marked increase in fuel prices in other member States, so that the range of prices expressed in sterling has narrowed considerably since December, with the relative price movement being in the United Kingdom's favour. Indeed, some United Kingdom consumers are paying substantially less than other EEC consumers.

The figure of 30 per cent. was mentioned, and I believe that my hon. Friend referred to Denmark. The difficulty about comparisons is to try to compare like with like. It may well be that at the port from which my hon. Friend obtained the information spot cargoes were available, on this occasion, at a very low price. However, that cannot be taken as the general price throughout the country in which it was obtained. Therefore, I take my hon. Friend's point seriously. It is on the record. I give him an assurance that we shall investigate the matter to see whether any light can be thrown on it. Even within our country a wide range of prices is available.

The NEDC task force report pointed to the fact that United Kingdom prices were less influenced by spot prices than prices on mainland Europe. The oil companies would argue that over a period of time differences between the United Kingdom and the Continent roughly even out. I know that a joint team from the fishing industry and the fisheries Departments carefully studied the allegations that fishermen in other countries benefit from lower fuel prices than those applying in the United Kingdom as part of its study into allegations of unfair or illegal imports of fish in the spring. Its conclusions acknowledged the difficulty of making comparisons because of movements in exchange rates which masked the real underlying relativities in pricing and also pointed to the European Community data showing a narrowing in disparities.

The NEDC report is to be updated in the autumn, and we shall look closely at the findings on oil product price movements compared with the Continent.

Mr. Barry Henderson (Fife, East)

Does my hon. Friend acknowledge that within the variations in price to which he referred a correlation could be made between the distance of the ports in this country which might have a lower price and how close they are to a possible Continental alternative? Has he observed such a correlation?

Mr. Gray

I have. I thank my hon. Friend for raising that matter. I shall deal with that in a moment. We have made it clear to the oil companies that we expect United Kingdom prices to be fully competitive over a period by international standards.

My hon. Friend mentioned the disparities in fuel prices between various United Kingdom fishing ports. It seems that, especially in fishing ports distant from centres of oil distribution, prices can be substantially higher. But the fishing industry can act against these market forces. Two means that have been shown to produce better prices are, first, the co-operative purchasing of bulk supplies, which gives greater bargaining strength against the oil suppliers, and, secondly, although this is clearly not open to fishermen in all ports—and this relates to the point raised by my hon. Friend the Member for Fife, East (Mr. Henderson)—the use of invoices as evidence of cheaper supplies bought elsewhere on the Continent may be used to force down prices from United Kingdom suppliers.

To some extent that relates to the example that my hon. Friend the Member for Banff gave, that some of his fleet have loaded with substantial supplies of fuel elsewhere, where it could be bought cheaper. If the invoices are retained, that is a means of negotiating with suppliers at home. That could be helpful.

My hon. Friend also mentioned subsidies given by other member States. The joint industry/official team to which I have referred also looked at this. It concluded that there were aids in France and Belgium but noted that neither of these countries provided United Kingdom fishermen with serious competition in the United Kingdom market: both are under review by the European Commission. We are also aware that Italy is providing some fuel subsidies, but those have no direct impact on our industry.

The industry/official team also recognised that the Government have provided very substantial aid to assist our fishermen through a difficult period. Among the factors that the Government took into account in deciding the level of special aid last year was the effect of the costs of fuel on fishermen's net earnings. I am not aware of any criticism by the industry of the total sums that we have provided to vessel owners—over £14 million last year and £25 million this year. I know that there are different opinions on how the money should be allocated, but the totals have not been criticised.

Mr. Albert McQuarrie (Aberdeenshire, East)

My hon. Friend said that he was not a fisheries Minister and is not speaking as one. However, he will accept that the fishing industry is fuel-intensive. Despite the aid granted by the Government, one of the industry's biggest problems is that the prices enjoyed at the quay on landing do not relate to the cost of fuel. Vessels leave port loaded with expensive fuel and return with a catch that does not cover the cost of the journey. That was a point made by the fishing industry when it asked the Government to consider a horse power rating rather than a length of boat rating, which may help.

Mr. Gray

That is a good point. It was a view held by certain people in the industry.

I add that the fishing industry has a valuable concession. Excise duty on its fuel is fully rebated, which is an advantage that I know only too well industry in general would like to enjoy. However, I emphasise that, like the rest of industry, fishing cannot be isolated from the real cost of fuel. Therefore, any endeavours that the industry can make to help the situation will ultimately bring it benefit.

The Government and the White Fish Authority can help the fleet to adjust. They do so, first, with White Fish Authority and Highlands and Islands Board grants to modernise and re-engine vessels for maximum fuel efficiency. The second way is through WFA development of more efficient methods of fishing, which can reduce weight and drag and thus increase fuel economy. Thirdly, help is given through training offered to fishermen to maintain engines and equipment to get the best performance from their vessels. With the greatest respect to hon. Members who represent fishing areas, we should bear in mind that the Government have done a reasonable amount to help, although not as much as the industry would wish, but few industries receive as much help as they would wish.

I am told that there are opportunities in other areas to improve net income—better handling of fish to maximise quality and better marketing—which will enable the industry to get the maximum return on the rising cost of fuel. I urge the fishing industry to take maximum advantage of the opportunities.

I again thank my hon. Friends the Members for Banff, for Aberdeenshire, East (Mr. McQuarrie) and for Fife, East, who have all taken part in the debate, for their part in looking after the fishing industry that operates around our coast and is based in the North-East of Scotland.

It has been a useful debate. We have noted the points raised. I assure my hon. Friend the Member for Banff that we shall do our utmost to investigate the matters that he mentioned. On this occasion, he will not have to wait too long for a reply.

Question put and agreed to.

Adjourned accordingly at twenty-four minutes past Twelve o'clock.