§ 8.19 p.m.
§ Lord STRABOLGI rose to move, That the Draft Fishing Vessels (Acquisition and Improvement) (Grants) (Amendment) Scheme 1975, laid before the House on 11th February, be approved. The noble Lord said : My Lords, the purpose of this Order is to extend for the calendar year 1975 the Government's power to pay grant for the construction of new fishing vessels or the improvement of old ones. For many years successive Governments, with the full support of the House, have thought it right to provide an incentive for this kind of investment in an industry which, by its very nature, is likely to suffer sharp fluctuations in cash returns. The level of the grant has fluctuated from time to time depending on both the level of incentive the Government thought appropriate at the time, and on the view they have to take as to considerations of public expenditure. It is important that investment in the industry should continue, given that technical advances are continuously being made and that in the course of time we may have to look increasingly to the multi- 254 purpose vessel as an important element in the constitution of the fleet.
§ The principal difference which we have made in the Order now before the House is that the rates of grant for vessels below 80 feet have been unified with those for vessels of 80 feet and over at 25 per cent. It has been held in the fishing industry for some time that the differential of 5 per cent. between grants for inshore vessels and others has been a source of structural distortion. The number of vessels constructed at 79 feet or 79.9 feet over the last five years—they were actually 28 in number—certainly bears out this view. A further consideration is that the future for fisheries may be one where we shall wish to preserve the maximum flexibility in vessel construction. We do not know what will be the outcome of the United Nations Law of the Sea Conference to be held later this month, but 200 mile fisheries limits may well be agreed. Whether we are in or out of the European Economic Community, such an outcome will mean that we may well come to depend more on the multi-purpose type of vessel and, perhaps, on new kinds of distant water vessel. This being so, we should ensure that operational considerations alone govern the design and construction of vessels. The unification of grant rates will remove an obstacle to this end.
§ Of course the statutory authorities and the industry would have preferred unification of grants to be at the higher rate of 30 per cent. But here consideration of public expenditure intervenes. In the autumn of 1973 it was seen that approvals issued by the statutory authorities would lead to expenditure out-running provision. In December 1973 it was decided to impose a moratorium on approvals which was not lifted until June 1974. We did not wish to contemplate the possibility of imposing a further moratorium so disturb-ing vessel construction programmes once more. It therefore seemed prudent both in the interests of construction programmes and of the need to contain the levels of public expenditure to unify the rates of grant at the lower, rather than the higher, level. The cost of these grants which the House will appreciate is quite separate from the special aid announced on 27th February, is estimated to be of the order of £6 million in the current financial year. This would represent an 255 investment of some £24 million in new and improved vessels. Clearly, the grant incentive is an important element in keeping investment in the industry going at a healthy rate and the Government have no hesitation therefore in asking the House to approve the Order. My Lords, I beg to move.
§ Moved, That the Draft Fishing Vessels (Acquisition and Improvement) (Grants) (Amendment) Scheme 1975, laid before the House on 1lth February, be approved. —(Lord Strabolgi.)
§ 8.26 p.m.
§ Lord SANDYS
My Lords, from this side we very much agree with the Government's policy of supporting our fishing industry in what will clearly be a very difficult period. I should like to start by saying that Government support in fiscal terms has been increasing over a period of years. One simply cannot take two years together, but from the previous record it is very interesting to note that in 1970–71 Government support in fiscal terms was £2.7 million, rising to £3.5 million in 1971–72, and to £6 million in 1972–73. The question which I should like to address to Her Majesty's Government is this. Has this support been eroded by inflation, or can it be expressed as in-creased support in real terms? The year 1973–74 started with commitments and, as the noble Lord will recall, up to 13th December 1973, when a moratorium was imposed, there was a further £5.8 million of new commitments. Can we know from Her Majesty's Government what has happened to the moratorium?
It is only just over 12 months since my noble friend Lord Ferrers laid a some-what similar Order which was approved in your Lordships' House. Since then the difficulties of the fishing industry have been very marked in one particular field; that is in regard to oil fuel. Here the oil fuel situation has been exceptionally difficult in so far as smaller vessels are concerned, and I should like to draw the attention of the noble Lord, Lord Strabolgi, to the fact that the inshore vessels, the small vessels in the industry, are under some considerable difficulty in this regard. With the rising cost of oil it is no longer possible to say that the small inshore vessels will be well provided for, 256 because boats over 100 feet—those of middle water—get a grant of £90; boats of 40 to 50 feet get a grant of £5 per day; and the small ones, to which I referred only a few minutes ago, get nothing. This is of great significance when considering the importance of the inshore fishing industry.
My Lords, the noble Lord has made a reference to the Law of the Sea Conference. It would be idle to speculate at present on the position of the inshore fishing industry. Nevertheless, the noble Lord has alluded to the middle water vessels and has drawn our attention to the fact that the medium-sized vessels will benefit particularly from the present scale of grants. I should like to ask whether the oil subsidy will apply to that range at the present rate of £5 a day, or will be varied. Secondly, in regard to oil, it seems that there is a somewhat curious situation in the same Ministry, although in a different industry—that is, the horticultural industry—in that the glasshouse oil subsidy has only recently stopped. It was a subsidy of great importance to that industry, and it has been curtailed. Yet it is intended to proceed with the subsidy in the fishing industry. I wonder whether the noble Lord is in a position to relate the situation regarding oil for glasshouses to the fishing boat subsidy? It would also be very helpful, in regard to the position of the industry as a whole, if the noble Lord would tell us how the Government see the position on catches, because the two relate very closely. Is there evidence in the hands of Her Majesty's Government in regard to the prosperity of the middle water and inshore fishing industry, which is sufficient to justify the Government's present intention of both grants and subsidies on oil?
§ 8.29 p.m.
§ Lord LLOYD of KILGERRAN
My Lords, I thank the noble Lord for his lucid explanation of the Scheme, and I wish to say that we formally support the Order which he is proposing to make. Incentives of the kind evisaged are very important to encourage investment of the nature explained and described by the noble Lord. These incentives are particularly important in view of the great technological improvements which are being made, and which to many of us are known to be envisaged, particularly in 257 regard to multi-purpose fishing vessels. I should also like to ask a question in relation to the oil fuel situation as it affects inshore vessels. I should like to ask the noble Lord whether the Government have it in mind to make any supplement to grants for inshore vessels in view of the increase in the price of oil.
§ Lord STRABOLGI
My Lords, I am grateful to the noble Lord, Lord Sandys, and the noble Lord, Lord Lloyd of Kilgerran, for the general welcome they have given to this Order. I shall do my best to answer the various questions that they have asked. First, the questions asked by Lord Sandys on the moratorium. These schemes have existed since 1953. Approvals and payments of grant under successive schemes have been delegated by Statute to the White Fish Authority and the Herring Industry Board. The present rates of grants which are 30 per cent. of approved cost for vessels of less than 80 feet in length and 25 per cent. for larger vessels, have obtained since 27th October 1970, when they were reduced from 40 per cent. and 35 per cent. respectively.
The present Order provides for one rate of grant for all vessels; namely, 25 per cent. In the autumn of 1973, during the last period of the Conservative Government, it was noticed that grants and loans were being approved by the statutory bodies at a rate which was causing money to be committed in excess of provision. The then Conservative Government were obliged to impose a moratorium on 13th December 1973. At that time the industry was apparently re-investing some 18 per cent. of its earnings. The moratorium was lifted on 27th June 1974.
The noble Lord also talked about the different aids to the industry and he quoted figures. I do not think he quoted up to 1973. In 1973–74 the figure had gone up to £76 million; and since the schemes began the sums involved have totalled £47 million. The noble Lord also asked about other aids to the industry. As announced by my right honourable friend on 27th February, we are now giving a general grant to fishing vessels. The grant is to the value of £6¼ million and is payable as a gradu-ated daily rate according to vessel size for days at sea related to voyages under- 258 taken during the period 1st January to 30th June 1975, for the purpose of catches of white fish and herring; but shell fish are not included. These will be subject to a further Order which will be submitted to your Lordships later, when we shall be able to go into it in more detail. I can say now that the aid is intended as a temporary prop to assist the industry to maintain roughly the pre-sent level of activity during a period when costs have risen far ahead of market returns. Without such help which will assist certain sectors to adjust more rationally to future situations of marketing and higher fuel costs and, in particular, as the noble Lord, Lord Sandys mentioned, of oil, there is a risk of a rapid run-down leading to permanent structural damage.
My Lords, the noble Lord asked about the different vessels which will benefit from this grant. He directed our attention to the fact that this is a decreasing rate and is payable at £5 for 40 feet to 50 feet and there is a cut-off there. He asked why the special aid excludes vessels of less than 40 feet. I thought that this was a very fair point. This is quite separate from the main matter under discussion tonight. We shall discuss this later when the Order comes before the House. I can say now that the Government fully recognise that all sectors of the fleet are experiencing higher costs which, under present conditions are not always recoverable from market returns. These unavoidable operating costs include fuel, gear and repairs; but they undoubtedly bear most heavily upon the larger types of vessel which necessarily travel further for their catches. The cost pressures that face the operators of these vessels are such that, without some aid now, an unacceptably large number of vessels may shortly be taken out of fishing, with associated problems—not only of making up catch deficiencies, but the valuable sea-going and shore-based expertise will be dispersed and lost to the industry. The Government do not consider, despite the acknowledged cost increases borne by that sector, that com-parable structural problems will arise in respect of vessels of less than 40 feet; and believe that the best use of the limited resources that can be made avail-able now will be achieved by applying them in the manner announced. 259 Basically, small boats do not have costs of the same order as the larger vessels.
My Lords, the noble Lord, Lord Sandys, and the noble Lord, Lord Lloyd of Kilgerran, tried to compare these to the other subsidies on the horticultural industry. But this aid is not a general subsidy; it is a particular form of aid to help the fishing industry over its present operational difficulties, and I submit that it cannot be compared with the general subsidies to the agricultural industry which have been the policy of the last Government and continue to be the policy of this one. I hope I have answered all the points raised.