§ 2.48 p.m.
§ LORD HILTON OF UPTON
My Lords, I beg to move that this Bill be read a second time. On July 8 my noble friend Lord Beswick, who will reply to points made in this debate, repeated a Statement about the deep sea fishing industry which had been made by my right honourable friend in another place. This Bill implements the assurances of continued support for the deep sea fishing fleet contained in the Statement and goes on to make a number of valuable provisions on matters such as the conservation and policing of fisheries.
First in importance is the new basis of subsidy to be introduced for the deep sea fleet. This will not be set out in the Bill, but without the repeals effected by Clause 1 we should be unable to change the basis of subsidy at this time. As soon as this Bill becomes law, the Fishery Ministers intend to make a new subsidy scheme, which will require an Affirmative Resolution. The scheme will take account both of fluctuations in the industry's profitability and of the need to encourage efficiency. There will be a total sum available for distribution. Its amount each year will be £2 million, adjusted upwards or downwards by reference to the operating profits of the industry in a previous period. The details of this upward or downward adjustment were in last July's announce 10 ment, and perhaps I need not repeat the somewhat complicated arithmetic. The details of the distribution will go into the scheme which, as I have said, will be coming before your Lordships. As the Minister said at the time, the new arrangements will reward those with the greatest efficiency.
What I have been saying so far refers to the deep sea fleet. So far as concerns the white fish subsidy for inshore vessels and the herring subsidy, we shall continue the arrangements for annual review of the level of expenditure. The automatic reduction in subsidy which Clause 1 repeals has been a feature of the deep sea arrangements only, but Clause 1 will incidentally ensure that the powers to assist the inshore industry continue for the same minimum period of five years to which the new assurance to the deep sea fleet relate. Clause 2 makes minor changes to ensure that our subsidy schemes will not be out of order if they treat fish products in the same way as fish, or transshipment in the same way as landing. This latter provision will particularly help inshore vessels who can sometimes sell to a foreign buyer without having to land the catch on the quay in this country at all.
I ought to remind the House that since the July announcement the Government have reimposed the 10 per cent. tariff on frozen fish fillets from EFTA countries. This is the ordinary rate of duty which we took off in stages when EFTA was formed. This, however, was a conditional concession, and we have followed the agreed procedure in reimposing the duty. We shall, of course, continue to watch the import position carefully. There will be renewed talks with exporting countries in 1969.
Most of the rest of the Bill is designed to allow us to play our part in international fisheries conventions, to which we belong. First, it will enable us to ratify and implement the Convention on the Conduct of Fishing Operations in the North Atlantic—more commonly referred to as the Policing Convention. The Convention reflects closely the North Sea Convention of 1882, embodied in the Sea Fisheries Act of 1883. The 1883 Act is repealed and the relevant provisions are re-enacted in the present Bill with suitable modifications to meet to-day's 11 conditions. I am aware that from time to time concern is expressed about the activities of foreign fishermen within our fishing limits. As the 1883 Act formed, with the Fisheries Limits Act 1964, the basis of the régime within our limits, the Bill sets out in up-to-date terms the rules for foreign vessels within our waters. At the same time it strengthens them in a number of ways. I have no doubt that noble Lords will agree that these steps in international co-operation and the measures proposed to give adequate protection to our fishermen within our limits are important and timely. They are certainly welcome to our industry, who recognise the importance of international rules for conservation and for conduct on the fishing grounds. I hope, too, that noble Lords will welcome the measures in the earlier clauses of the Bill as assuring continued support to this important British industry. I beg to move.
§ Moved, That the Bill be now read 2ª.—(Lord Hilton of Upton.)
§ 2.53 p.m.
§ LORD NUGENT OF GUILDFORD
My Lords, I thank the noble Lord, Lord Hilton of Upton, for describing to us this Bill, to which I wish to say a qualified word of welcome, because the fact is that although the measures are good, so far as they go, I fear they will not be sufficient to meet the needs of this very hard-pressed industry. This seems to me to be an interim measure. The new subsidy scheme which the noble Lord has described and which will be introduced under the Bill was described to us in outline in the summer, and this, plus the imposition of the 10 per cent. import duty, will undoubtedly keep the industry alive for the time being. But I do not think that this can be regarded as a longterm solution to, in particular, the problems of the distant water fleets.
The distant water fleets, or the deep sea fishermen, as they are sometimes called, catch by far the greater part of our fish supply, and it is because the industry is, to my mind, in a pretty disturbing condition that I should like to say a word or two about why I feel this measure cannot be regarded as more than an interim measure and why the Government should be giving thought to how they can go further in order to put the industry on a more secure basis.
12 The gravity of the financial position of the distant water fleets is such that last year, 1967, over the fleet as a whole the average loss was over £18 per day per vessel. No port or section of the fleet made a profit, after allowing for depreciation. Landings of fish were up, but gross returns were down, with greatly increased quantities of fish surplus to human consumption requirements and, therefore, being sold at very low prices for conversion to fishmeal in the fishmeal factories. This year, 1968, prices have been running even lower, and I feel that the results may be correspondingly worse.
The distant water fleet is a fleet which ten years ago was making a good profit and required no help from anybody. It is, therefore, a picture of this fishing fleet, which, as I have said, provides the large part of the fish supply of this country, running rapidly downhill over the last ten years. The fleet itself is shrinking in numbers. Over the last two years it has shrunk by some 26 vessels, from a total of 189 down to 163. if I may just fill in the background, it is reckoned that if we had to become entirely dependent on imported fish for our fish supplies it would cost us as a nation an additional £40 million per annum. So it is a substantial item in the national economy.
I believe that this is a most disturbing picture. As I say, it has not come about overnight. It is nobody's fault in particular. It is due to a combination of circumstances which has adversely affected the fleet as a whole, and this fleet in particular, more especially in recent years. I can remember that in 1953, when it was my privilege to conduct through the other place the 1953 Sea Fisheries Act, the distant water fleets were robustly independent, making a good profit, fully able to build new vessels and to look after themselves. All we had to do then was to provide for the near middle water fleets and inshore fleets, which were both in trouble.
In the last fifteen years, and particularly in the last ten years, two factors have progressively undermined the economy of the distant water vessels. The first is the increasing and excessive subsidies which have been granted by foreign Governments to their fleets in order to 13 assist imports of fish into this country; and the second, the progressive exclusion of our distant water fleets from their traditional fishing grounds. This, I am sure your Lordships will remember, was started by Iceland with the establishment of a 12-mile barrier of territorial waters round their coast, and it has now been extended and has become generally the rule of the sea. The effect of this has been that the traditional fishing grounds which our fishermen have developed over the last generation or two have progressively been closed to these distant water vessels. As a result, they now have to go further and they tend to catch less, having, of course, more unproductive time when they are steaming to and from their fishing grounds. Nothing can be done about the territorial waters now—this has now become international law and we just have to accept it—but the other factor, the subsidising of imports, is, I submit, something which the Government can do something about; indeed, they are doing something about it in the imposition of a 10 per cent. import duty. This is very welcome so far as it goes, but I am going to suggest that they will have to go further.
A further progression of difficulties has also come upon the industry, first in the rapid development of the fish freezing plants. This, although it is of great advantage in many ways in conveying fish in better condition on to our table, has the disadvantage that surpluses tend to become cumulative and therefore further depress the market, not only in this country but of course in all the other fishing countries. Secondly, there is the progressive closure of the European markets to imported fish. I think I am right in saying that our market in this country is the last open market in Europe to imported fish. This of course inevitably greatly increases the pressure upon it. Thirdly—something to which I have already referred—there is the startling increase in subsidies given by foreign Governments to assist their fishing industries.
I should like to mention just two examples to give your Lordships a picture of the measure of the subsidies. Iceland is one of the principal fishing nations which export fish in this market. When this country devalued by 14 per cent. last year, in order to preserve her com 14 petitive position in our market Iceland proceeded to devalue by 25 per cent. Now, not content with that, in order further to improve her competitive position here she has devalued again, by 35 per cent. more. Norway is another example. Norway is a very great fishing nation. Government assistance to the fishing industry in Norway has increased from £6 million per annum last year to £14 million per annum this year, and the subsidy we are giving to our fleet is an average of £2 million a year with a maximum of £4 million. I mention these examples to indicate the measure of the subsidy which foreign countries are giving in order to push their imports into this market. In a way, of course, it is of benefit to the housewife in enabling her to gel cheap fish, but on the other hand it is completely ruining our own fishing industry. I think these facts put in perspective the measures which the Government are now putting before us.
In my view, the Government's very welcome measure of a 10 per cent. import tariff is going to have only a very limited effect. It will have some effect, certainly, but only a very limited effect, in the face of these massive subsidies which these important fishery nations are putting behind their industries in order to make sure that their exports continue to get into this market. These are my reasons for saying that I believe that this measure, valuable though it is, can be regarded as only an interim measure.
I should like, if I may, to suggest the kind of long-term solution which I feel we shall be driven to adopt for the fishing industry if we want it to continue to serve the nation's interests. This means protecting the home market for our own fishery industry. I believe, regrettable though this is, that this is really the only way in which we can secure an economic, profitable fishing industry here. This is indeed what all the other European countries have already done. I would say, on the other hand, that I feel it is most regrettable that we should have found ourselves step by step pushed into the position—and this has been done by all Governments—of subsidising first one section of the fishing industry and then another. Here is an industry which, above all, is an industry of enterprise and courage, where men must take great risks and exert great skill in order to 15 bring their catch safely home. The last thing we should wish to do is to make them in any way dependent on Government subsidies, with the inevitable tendency that they come back again to ask for more when they are in difficulties. This is bound to undermine the very spirit on which this really splendid industry has traditionally worked.
In the light of these considerations, I should like to ask the noble Lord, Lord Beswick, who I understand is to reply, three questions which I think are germane to the issue I am putting. What steps are the Government taking to work out a long-term policy for the industry? Are the Government considering setting up another Commission similar to the Fleck Commission to take an overall look at the industry and decide what to do now? It will be nearly ten years since the Fleck Commission was originally set up. Is there to be another Commission to decide what should be done to put the industry in a strong and healthy position? Secondly, will the Government consider an import control system which will effectively limit imports—unless there is a serious shortage here, when of course imports should be allowed? Have they considered a variable import levy, for instance, starting at 10 per cent. and, if necessary, being raised if it does not seem to be sufficient to obtain the right balance?
The point I make to noble Lords on the Government Bench is this. If the other countries in Western Europe are all able to protect their markets effectively, cannot we follow suit? We shall see later this week the Customs (Import Duties) Bill which the Government are bringing before Parliament, by which the Government intend to limit imports in another field. Is it not possible to find some flexibility within the system which would enable us to do what other countries seem to do so succesfully for their own markets? Thirdly, have the Government considered following the policy of the E.E.C. for their fishing industries, which I understand is now in course of development? Are they considering this as a possible solution to give stability to the fishing industry here?
There is one further general point on the Government's general policy which the noble Lord, Lord Hilton of Upton, 16 did not mention. It is generally known, I think, that the Industrial Reorganisation Corporation has been brought in to discuss a merger between three of the biggest fishery companies. As the Monopolies Commission prohibited an amalgamation between two of the big companies two years ago, there must be some initial doubt about any move of this kind by the I.R.C. If it was considered to be against the interests of the economy to amalgamate two companies, it would seem, prima facie, to be even more against the general interest to amalgamate three. However, my Lords, I do not oppose this matter on principle. Indeed. I welcome an investigation into the pros and cons of such a merger. It might be financially and industrially advantageous to the fishing industry. But I would suggest that what would be objectionable would be if the Government encouraged the I.R.C. to use public money which they have available to sugar the pill of the merger; that is to say, if what was achieved was an indirect form of subsidy to the industry on a discriminatory basis, because it would help only the three firms concerned while those firms which remained outside the amalgamation would not of course have the benefit.
It is, of course, common knowledge that the industry is short of finance for rebuilding the existing fleet and that what is needed is fewer vessels of modern design. I know that there is criticism in some quarters that the industry is old-fashioned and inefficient. But I am sure that the noble Lord, Lord Beswick, in replying, will agree with me that it would not be justified to make this general criticism against the industry, either on the catching side or on the marketing side. In both sections some highly efficient work is being done. But I am not going to say that there are not some old-fashioned fisheries still operating on the catching side; nor are all sides of the fishery business entirely up to date in their marketing, in matching the needs of the day to put their product on the market in the most attractive form for the housewife.
What is the Government's view on fleet replacement? Do they want to see some new conventional trawlers built? Do they want to see some modern stern fishers with deep freezing? Do they want to see some modern factory ships with deep 17 freezing? All these are, of course, very expensive items, all with high standards of amenity and safety in order to make them attractive and safe for the crews who are operating. Do the Government really think that these measures will provide the money needed by the fishery industry to rebuild and modernise itself on this sort of scale? I suppose each factory ship costs between £1 million and £2 million, and stern fishers certainly cost about £500,000 each. I earnestly hope that the Government will give further thought to finding some means of securing the home market for our own fishing industry so that the industry then gets a fair return, both for the owners and for the fishermen, and makes enough money for rebuilding and modernisation on the lines we want. I hope the noble Lord, Lord Beswick, will have something helpful to say in his reply.
As I have said, the Bill itself is unexceptionable. It is primarily an enabling Bill for the main subsidy measures, as the noble Lord, Lord Hilton of Upton, has told us, and we shall not have before us the details of the scheme until the Government lay the Order and the scheme is before the House, With regard to the design of the subsidy, to which the noble Lord, Lord Hilton of Upton, briefly referred, this is related to the added value of the operation of each vessel. That seems to be a sound basis, because it puts the right incentive on efficiency and success in operation. Where there is success in fishing there will be an additional subsidy, and if it is necessary to have a subsidy that is the best form in which to have it. I understand that the details of the scheme are now being worked out with the industry. I hope the noble Lord will be able to tell us that the industry is in agreement with those details and also broadly in agreement with the Scheme.
May I refer briefly to Clause 4? This would enable the White Fish Authority to impose a higher levy. The White Fish Authority raise a levy from the industry in order to finance their operation, and the Authority do much good work, but my impression is that the industry is so hard pressed at the moment that an increased levy now would go very badly indeed. I trust the Government and the Authority will have second thoughts about the imposition of a higher levy at the present time. The remaining clauses, 18 Nos. 5 to 14, deal with conservation and policing and are unexceptionable. They give me the opportunity of congratulating Her Majesty's Government on taking the lead in drawing up the new Convention on the conduct of fishing operations in the North Atlantic and getting the agreement, by signature, of all the 18 countries which fish the North Atlantic. I hope this will be on the record, for the benefit of all those who have worked so hard to bring this about. I have asked the Government to go much further because I believe the industry is in a dangerously weak position. However, I commend the Bill as a useful, although interim, measure, and I hope the noble Lord, Lord Beswick, will have something reassuring to say about the intentions of the Government for what I regard as the long-term solution for this hard-pressed industry.
§ 3.15 p.m.
§ LORD AIREDALE
My Lords, I have only one point to make, but I am sorry to say that I am making it for the fourth time. There has been a mass of legislation about sea fishing subsidies and the law is in state of chaos. This can be exemplified by my reminding your Lordships of the Scheme laid before the House on the day before we rose for the Recess—the White Fish and Herring Subsidies Scheme, said to be madein exercise of the powers conferred…by section 5 of the White Fish and Herring Industries Act 1953 (as amended by section 2 of the White Fish and Herring Industries Act 1957 and by section 37 of, and paragraph 18 of Schedule 2 to, the Sea Fish Industry Act 1962), section 3 of the White Fish and Herring Industries Act 1957 (as amended by section 37 of, and paragraph 22 of Schedule 2 to, the Sea Fish Industry Act 1962), and sections 1 and 2 of the Sea Fish Industry Act 1962,…Each time I make this point the Government hold out a very promising carrot. On the last occasion I was told that a consolidating measure had actually been drafted by the Law Commission and would be introduced in this Session. I did not find it in the Queen's Speech, but I dare say consolidating measures do not find their way into the Queen's Speech. All I ask is whether this consolidating measure is really going to be introduced now, and will it help the Government to find out how to introduce it if I threaten that if it is not done I shall be making this speech for the fifth time?
§ LORD STRATHCLYDE
My Lords, I wonder whether, in his reply, the noble Lord could say something about the distribution of fish. My noble friend Lord Nugent of Guildford has indicated that one cause among many why this industry requires help is that a proportion of the catch has to be sent to be made into fish manure, for which the industry gets a very low price. I find it strange that this should happen when, at least in my part of the country, there is a constant cry from the housewives that they cannot get fish. Yet there seems to be a surplus which is used for making fish manure. It would appear that there is something at fault in this regard.
§ 3.18 p.m.
§ LORD BESWICK
My Lords, perhaps I might first try to answer the question put by the noble Lord, Lord Airedale. I am not quite certain whether he meant his promised (or threatened) fifth speech to be a carrot or a stick; but he has a point in regard to consolidation. There is a need for consolidation, and as soon as this Bill is passed I hope that we can make progress with the promised Consolidation Bill. It would have been introduced before this, but the decision of policy incorporated in the present Bill was taken in the course of last Session, and obviously it seems best to amend first and then consolidate afterwards. I am afraid this means that the interests of the fishing industry have come before those of your Lordships' House, or the laudable quest for tidiness on the part of the noble Lord, Lord Airedale, but I trust that I shall have his sympathy. I hope that he will be patient just this once, and I promise him that there will be a Consolidation Bill.
I should explain that not only was it necessary to bring in the numerous minor amendments to be found in Schedule 1 and the repeals in Schedule 2 to the present Bill that make consolidation more simple, and therefore I hope more effective, but I ought also to say that at Committee stage I shall bring before your Lordships a number of Amendments to this Bill. They will be only of a minor or of a drafting nature, and should not detain us, but they should make the process of consolidation easier once we have passed this Bill.
20 Turning to the remarks made by the noble Lord, Lord Nugent, I thank him—as I find I usually do—both for the welcome he has given to this Bill and for the constructive comments he has made. I am not certain that I shall be able to answer all his questions. Some of the points I should like to look at again, but I appreciate that he has put his comments in a most constructive way. I do not quite agree with him when he over-uses, as I think, this word "interim". Certainly this is part of what we hope will be a constructive development of the industry; it is a part, it is a step, but I hope he will think that the tend to which he has fairly called our attention might now be reversed.
First, there is this incentive to efficiency which is built into the proposed scheme. As he said, although a fall in the profitability of the fleet as a whole will tend to increase the total available for distribution that total will then be shared out on the basis of a formula which will favour the most efficient units in the fleet. I agree with him that there are efficient units now, and there are some which are possibly less efficient, but so far the less efficient and the more efficient have been rewarded equally. From now on there will be an incentive for the efficient unit.
I accept what he says about the capital involved, but, as he knows, the White Fish Authority is put in funds by the Government to make grants. This does help the building of new vessels and the modernisation of existing vessels. I ought also to refer again, I think, to the calculations which will be involved in the distribution of the total. Briefly, they involve taking the earnings from fishing and subtracting all operating costs, except for labour and one other item, which I think is relevant to what he has been saying. In other words, we shall find out for each vessel its profits plus wages. The subsidy will be an instrument for encouraging investment expenditure likely to increase the added value whilst discouraging uneconomic costs. The reason for excluding labour from operating costs is obviously because we do not wish to give an incentive to lower safety standards. The other item to which I referred and which should be treated in the same way as labour costs is the cost of 21 training. We intend to provide that a progressive owner who spends money on training sea-going labour should not find that these costs reduce his added value and thus his share of the total subsidy.
Another reason why I think we can say that we hope that the trend to which the noble Lord called our attention, quite fairly, may be reversed is this possibility of a basic reorganisation of the fleet. I think that not only in the Press but in the July Statement which I repeated in this House reference was made to the study of the structure of the industry which is being made by the I.R.C. Some of the possibilities have been ventilated in the Press, but the I.R.C. have not yet completed their discussions or submitted any firm proposals, and it would be quite inappropriate, as I ant sure the noble Lord would agree, if I were to say more, except to emphasise that the Government wish to see an improvement in the structure of the industry.
I was asked about the relationship of any possible recommendations made by the I.R.C. and the attitude of the Monopolies Commission. Again, until the I.R.C. have finalised their proposals and put them before the Government it is clearly difficult for me to say what our attitude will be. The proposals will need to be considered by, among others, an inter-departmental mergers panel in the light of Government policy generally; and having regard to objections made by the Monopolies Commission in 1966 to the proposed merger of the Ross Group and Associated Fisheries I hope the noble Lord will think that this is a reasonable attitude to adopt. Let us look to see what they put forward, hearing in mind the philosophy of the Monopolies Commission and also our need and desire to see a much more efficient structure for this important industry.
The noble Lord also asked me about import control. I make no complaint at all that the noble Lord underlined the contribution which a liberal import policy has made to the problems of this industry. It was right for him—indeed I go so far as to be indiscreet and say it was probably useful of the noble Lord—to publicise that the United Kingdom is unique in this respect, certainly in Europe, in the way in which our ports 22 are open at all times to the landing of fish, whether directly from catching vessels, irrespective of nationality, or as commercial imports. The fact that we have a 10 per cent. duty now on wet fish and once again on frozen fillet; from all non-Commonwealth supplier:, certainly does not make us an illiberal country in this respect.
I am sorry that I cannot add much more to what my noble friend Lord Hilton of Upton has already said in his opening Second Reading speech. There will be talks. They are part of the outcome of the recent EFTA Ministerial meeting in Vienna, when it was agreed that the representatives of countries directly concerned with imports of frozen fish fillets should meet again in February or March, 1969to renew their efforts to find a mutually acceptable solution to the problem".I add this, however. When the EFTA Convention was negotiated in 1959, a 10-year period was set for the arrangements on frozen fish fillets. That is the arrangement under which the duty was first taken off and has now been reimposed. The negotiators left the régime after the first ten years to their successors, so obviously we are going to have this very much in mind when we have these talks in February or March. The House, I think, will not expect me to say anything about what I consider will be the outcome of these future talks.
I simply add this to the noble Lord and his colleagues who sit on the opposite Bench. I am not quite sure what room for negotiation they think we have. They will recall that we are negotiating within the Treaty of EFTA, and they wore in power when EFTA was set up. Therefore we must, of course, have the Convention in mind. I add again that in these discussions in 1969 we shall have to try to make the most satisfactory arrangements possible, and what the noble Lord has said will certainly be borne in mind. I was also asked about distribution of fish. It does not strictly come within the limits of this Bill, but I will see if I can, either at Committee stage or by letter, say anything useful to the noble Lord.
§ On Question, Bill read 2ª, and committed to a Committee of the Whole House.