HL Deb 21 February 1980 vol 405 cc904-8

3.40 p.m.

Earl FERRERS rose to move, That the draft order laid before the House on 28th January 1980 be approved. The noble Earl said: This order is one of two instruments which are needed to enable the White Fish Authority to raise the rate of its general levy, from which it obtains most of its income. The levy is at present at the ceiling authorised by the parent Act, the Sea Fish Industry Act 1970, and this ceiling must therefore be raised. This is the purpose of the present draft order which requires the affirmative resolution of both Houses of Parliament. The second stage is then to set the new rate of levy to be charged. This new rate will be authorised by a second instrument which will be laid before the House.

The White Fish Authority is seeking to raise the rate of its levy to 1.6p per stone of fish, from the present rate of 0.8p. Without the increased income that this would produce the authority would have to cut back considerably on the extent of its services to the industry. These services include research and development, advisory work, training of fishermen and administration of the Government's grant and loan scheme for fishing vessels.

The cause of the authority's financial difficulties is that its costs have been rising with the general price level, but its income has not. The levy is fixed in terms of pence per stone of fish and the income from it has not therefore risen with prices. The present level of the levy was set in 1974, and I am sure your Lordships will agree that the authority has done well to live within its means for so long. Now however there is a considerable gap between expected income and expenditure. The scale of the imbalance is such that it is impractical to expect what one might call ordinary housekeeping savings to balance the accounts. Nor can the financial reserves of the authority be drawn on much further; a certain level of working capital is needed to enable the authority to continue to function. The options open to the Government were, therefore, either to approve the increase in the levy or, in effect, to impose precipitate cuts in the authority's functions.

We felt that it would be wrong to impose substantial cuts in the authority's services without a clearer statement from the industry that that was their preferred course. The Government have recently announced that the authority and the Herring Industry Board should be replaced by a single new authority for the Sea Fishing Industry. This will require new legislation; and we intend very shortly to begin full consultations with the industry on the functions that they wish to see a new authority retain.

In the nature of things however this procedure must take some time and we consider that the authority's present financial situation is so urgent that it would be wrong to delay the raising of additional finance until the consultations were concluded. To give an example of the scale of the proposed increase in the levy, it would add another three-quarters of one penny to the cost of a stone of fish worth £3 at the quayside.

The Government accept, of course, without hesitation the need to keep any additional cost to the fishing industry at this time to the absolute minimum. We have undertaken to look again at the possibility of raising the levy by some smaller amount than that which was originally intended by the authority, and if a smaller increase is feasible we will certainly wish to adopt it. The White Fish Authority is no less aware of the need to restrain its costs. It is already seeking ways to save £200,000 and will now be considering the scope for further cuts.

I should re-emphasise that whatever level of increase the Government finally decide is unavoidable must be confirmed by a separate instrument to be laid before Parliament at a later date. The order before us today clears the way for the increase in the levy by raising the ceiling in the parent legislation. Since the present levy is very close to that limit, this order will be needed regardless of the precise level to which the levy is eventually raised.

I therefore commend this draft order to the House. I beg to move.

Moved, that the draft order laid before the House on 28th January 1980, be approved.—(Earl Ferrers.)

3.46 p.m.

Lord STRABOLGI

My Lords, we on this side of the House are grateful to the noble Earl for moving this order and for explaining its purposes. I understand that it passed through another place yesterday and we certainly do not intend to oppose it. I accept the reasons for it. I should like to raise one or two points arising out of it. Is it a fact that for the year ended 31st March 1979 the authority's accounts were still in surplus to the extent of £100,000. while the accumulated surplus of income and expenditure account at that date was over £1 million, and the authority now except a deficit of something like £3 million in the current year? The surplus will become insufficient to finance fixed assets and stock to provide working capital. If that is so, it is a reflection on the times in which we live.

I understand that there have been further difficulties since there is a substantial rent revision contemplated for the Edinburgh offices. Is it possible for that to go to appeal or do the authority have to pay what they are asked by the landlords? Perhaps the noble Earl could enlighten us. I believe that one of the authority's largest and most valuable overseas contracts came to an end at the beginning of this year, a contract which they have no prospect of being able to replace; and that legal opinion has recently confirmed that they are no longer empowered to receive levy on transshipped fish such as mackerel. I wonder whether the noble Earl is able to tell me—and I will not press him if the matter is sub judice—what the legal opinion is and whether such opinion is going to appeal.

Earl FERRERS

My Lords, I am grateful to the noble Lord, Lord Strabolgi, for those comments. He asked about the cash position of the White Fish Authority. In general, he is correct. In March 1979 there was a total surplus of £600,000. There was a deficit during the year 1979–80 of £300,000 which left therefore a surplus, a balance of £300,000. During 1980–81 there is likely to be a further deficit of £700,000 which will in fact create an overall deficit. That is the reason why, if we do not take action during the year beginning March 1980, there will be an overall deficit at the end of the year.

The noble Lord also referred to the rent on the premises. He is quite right, there is a rent review there. It is proposed that the rent will be increased, and I understand from the authority that the rent on their headquarters is to rise from £20,000 to £60,000 next year, with an increase in rates also expected. The noble Lord asked what the position was with regard to the transhipment of fish. I think I can best explain this to the noble Lord by saying that, as he will realise, when fish are landed at the quayside there is a levy upon them. It was expected that when fish were transhipped at sea, instead of being landed at the quayside, a levy would be paid, just as if they had been landed at the quayside. For the last few years the White Fish Authority have raised that levy and had understood that they had the powers to do so.

The interpretation of the powers provided by the Act was queried by the industry early in 1979, and since then the levy on transhipped fish has not been collected. Whether the White Fish Authority have powers to refund any levy which they collected in good faith is apparently uncertain. I understand that a claim for recovery may shortly lead to litigation. New primary legislation is now needed if the power to levy on transhipped fish is to be obtained. My Lords, I think I have answered the points raised by the noble Lord and I am grateful to him for his observations.

On Question, Motion agreed to.