House of Commons Hansard Debates for 12 Jul 1993

Mr. Steen : What the hon. Gentleman says is precisely what I feared- -the Minister will say that he cannot give way on wine because other people will start saying that the same should be done for whisky. There may indeed be a case for that. We are anxious to be fair to those who produce our wine. At the moment wine producers operate with both hands tied behind their backs--we seem to be shooting them not only in the foot but in the brain. We are not allowing them to encourage tourists to visit their vineyards and leave with bottles of wine, because we are tripling the amount that they have to pay for it.

Many other Members wish to catch your eye, Mr. Deputy Speaker, so I will conclude. If the Minister gets this one right, he will perform a great service to the nation--and solve a lot of problems.

Mr. Kenneth Carlisle (Lincoln) : I begin by declaring an interest. On my farm in Suffolk we have a vineyard, which we planted five years ago. We planted seven acres with 12,000 vines, and we are proud to be part of a new and, we hope, growing industry in the United Kingdom. I was appalled to hear the hon. Member for Oxford, East (Mr. Smith) talking about cheap booze. That just shows how little he knows about the quality of wines that can be produced in England. The closer a producer is to the geographical extremity of where a fruit can grow, the better that fruit can be. Even though the process is more risky, the longer maturing period enables production of a better quality fruit.

We in the countryside have all been encouraged to diversify, and this is a diversification--not to mention a large investment, which I and many others who have tried to make a living in the countryside have made. The industry needs encouragement : not help, but fair competition.

The industry also creates employment. By the time we have looked after our vines and made and marketed the wine, our little venture employs six people, part or full time. It thus makes a contribution to local prosperity --another point for the Minister to bear in mind. What we produce is drunk and enjoyed in this country. It substitutes for imports, another laudable achievement. We do not want help ; we just want fair competition. My hon. Friend the Member for Hastings and Rye (Mrs. Lait) made a good point about that. At present, vineyards near France suffer greatly from unfair competition owing to the new regulations.

Mr. Steen : Am I right in thinking that my hon. Friend's very small vineyard has been extremely successful of late ?

Mr. Carlisle : That remains to be seen. We have entered a competition and I look forward to hearing the result. I am hopeful that we have produced good quality wine.

I hope that the Minister will listen to the arguments. The wine industry is not a big one, but it is developing. It is a serious industry, which is becoming more professional and capable of producing good wine. Given a level playing field, we are confident that we will not only create employment in rural areas but help to cut imports.

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Mr. Graham : I did not intend to speak in this debate, but I have a lot of sympathy with what hon. Members have said, for example, about employment, which is very important.

I understand the rules that apply in other parts of Europe, and I agree that we should have a level playing field. I would like to extend it to the social chapter and other areas, but that is not the point.

7.30 pm

For years one tremendous growth industry in Scotland has been the tourist trail to distillers. As many hon. Members are aware, people from all over the world visit the distilleries to take a wee dram and encourage them to buy whisky when they get back home. I understand the point about possible visitors to the new wineries in England, or whatever they are called, and how that could be a new growth industry in tourism.

Last night I was reading a book about the history of Great Britain, starting with the Roman times. There was a paragraph about the wine that was produced in those days. Some of the finest wine in the Roman world was produced in Britain. Apparently, the climate then was slightly better than it is today. I came here from Scotland today, and I know how different the weather is in Scotland. I think that, given the heat down here, not only grapes but bananas can be grown. On a less frivolous note, I think that what hon. Members have said tonight is very serious. I believe in a level playing field and if wine can be boughtthat we can produce wine as good as that produced by any other country. I would encourage the folk in England, who are lucky enough to have the right weather, to produce the wine. The Government could take a wee lesson and give strong support to the new flourishing art--or rather ancient flourishing art--of wine making in Great Britain.

Like every other hon. Member, I like a wee glass of wine. I do not know a good wine from a bad one. I would follow the advice of the hon. Member for South Hams (Mr. Steen), who seems to have visited all the vineyards. Next time perhaps he would like to take me and my family with him.

Mr. Tim Renton (Mid-Sussex) : I am grateful for the support of the hon. Member for Renfrew, West and Inverclyde (Mr. Graham) for the new clauses to which I have put my name. Perhaps we could have a useful twinning association and organise exchange visits to the vineyards in Sussex, Kent or Suffolk and the distilleries that are near the hon. Gentleman's constituency.

I congratulate my hon. Friend the Member for Lincoln (Mr. Carlisle)--and this is an unsolicited comment : I have drunk his wine and it is excellent. I hope that soon the Chairman of the Catering Select Committee will ensure that it is available in the Members' and Strangers' Dining Rooms.

I am happy to support the new clause tabled by my hon. Friend the Member for South Hams (Mr. Steen). I spoke in support of him a number of years ago in the debate to which he referred. In my part of the world, in the county of Sussex, as my hon. Friend the Member for Hastings and

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Rye (Mrs. Lait) has already said, vineyards are a growing business. That is a bad pun, but the fact is that tourism has always been immensely important to Sussex.

In recent years, coastal towns such as Hastings, Eastbourne and Brighton have not found it easy to develop their tourist industry. One of the good recent developments is the vineyards, which are increasingly flourishing. Those on the downs in my constituency, inland from the coast, provide a pleasant stopping place during the day for tourists who have been to Brighton, Eastbourne or Hastings. In the afternoon, tourists and their families can go to somewhere like Drusilla's vineyard, where there is a wine shop that sells farm produce as well as English wine.

As my hon. Friend the Member for South Hams has rightly pointed out, there is an anomaly. We want to sell more English farm produce and English wine from our local shops, but the duty on English wine sold at the farm gate is £1.16 a bottle as compared with 2p a bottle in a comparable establishment in France, or nothing at all in other comparable continental establishments. I am sure that my right hon. and good Friend the Paymaster General will say something encouraging about that when he winds up the debate.

Many people in Sussex now take their cars on the ferry over to France from Newhaven, which is next door to Hastings and my constituency. They fill their car boots with dozens and dozens of bottles of wine at the hyper in Dieppe or Pas de Calais. I am a great supporter of the single market, but it is wrong that there should be such a tax differential against our English wine.

Mr. Graham : Is the right hon. Member for Mid-Sussex (Mr. Renton) aware that coach loads of people come down from Scotland every week, or every day, and go over to France to buy wine? They could possibly stop in his area, load up there with wine and save the cost of the petrol necessary to go to France. That would increase the amount of money that would go to the Exchequer.

Mr. Renton : I am delighted that Scotland is so prosperous under a Conservative Government that so many of the hon. Gentleman's constituents are able to take a bus down to fill up with wine in France. I hope that they will also stop at our wine shops in Sussex on the way back.

The tax differential poses a serious problem in Sussex. It is not a frivolous matter. Wine growing is an important young industry and we wish to be able to compete against our continental neighbours on a level vineyard, to use the memorable phrase of my hon. Friend the Member for South Hams.

Sussex has often prided itself on the slogan "Come to Sussex, Sussex by the sea". We would like to add a word in the middle of that. We would like people, when they come, to drink Sussex "Sauvignon" by the sea.

Sir Roger Moate (Faversham) : I should like to endorse everything that my right hon. Friend the Member for Mid-Sussex (Mr. Renton) has said, which applies equally to the vineyards of Kent.

I do not think that it is up to the Chairman of the Catering Select Committee to decide which wines are supplied in our Dining Rooms. All I know is that the excellent Syndale valley wine from my constituency--it is produced close to my home--got on to the wine list. I was

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privileged to be a member of the Select Committee when it tasted the wines. It was done without any knowledge of the origin of the wines, but that local wine still got on to the wine list. That is a tribute to my local vineyard and explains why I wish to add my voice to the powerful voices that have been heard today in support of the new clause.

Mr. Steen : I am a member of the Catering Select Committee, and I can inform the House that there are moves afoot to remove English wine from the list. Does my hon. Friend agree that we should resist that with all the enthusiasm that we can muster?

Sir Roger Moate : It would certainly be sad if that happened. The important thing is that consumers should be allowed to make their choice.

There is tremendous international competition to supply the wine drinkers of this country. The English vineyards do not produce volumes of wine and cannot compete easily with the flood of high quality wines that now come into this country. What is of tremendous importance is that they can compete by offering tourists and others the opportunity to visit vineyards that are found in some of the loveliest parts of the countryside.

I urge my right hon. Friend the Paymaster General and his colleagues, when considering the new clause or other proposals, to remember that the fact that people can go into the countryside, visit the vineyards and buy wines there is a tremendous and fast developing asset. That is the key point. It is even more important because of the international competition.

If it is true, as we are informed, that virtually no excise duty is charged at the farm gate in France, and that in most other European countries no tax is imposed, what is the justification for imposing it here? It cannot be because of the revenue raised because the amount collected must be very small. But if we can encourage tourism, diversification, conservation and the improvement of the countryside, I should have thought that my right hon. Friend would accept our overwhelming argument.

The Paymaster General (Sir John Cope) : I, too, like English wines. Indeed, I have a constituency interest in the form of a small vineyard at Thornbury castle. I understand what my hon. Friends are trying to achieve in tabling the new clauses, which are designed, as their title suggests, to assist English wines. However, they do not do that. They demonstrate my difficulty in distinguishing between English and other wines under the tax system.

The basic principle of international trade was laid down many years ago, after the war, in article III of the general agreement on tariffs and trade, which says :

"the products of the territory of any Contracting Party should not be subject, directly or indirectly, to internal taxes or other internal charges of any kind in excess of those applied, directly or indirectly, to like domestic products."

Since 1947, there has been a lot of case law on that and it covers the matters that we are discussing. Under GATT we are not permitted to distinguish in favour of English as opposed to imported wines. The principle behind it is that no country's tax system should discriminate against imports. My right hon. Friend the Prime Minister was doing his best the other day to achieve improvements in GATT and to lower all sorts of trade barriers.

It is also against article 95 of the treaty of Rome and European law to distinguish between products in that way.

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Dr. Godman : Is the Paymaster General confident that his decision to reject the new clauses is compatible with European Community law and hence not challengeable in the European Court of Justice?

Sir John Cope : Yes. I have just quoted the GATT article and mentioned the treaty of Rome and subsequent bits of European law. In trying to get around the problem of not contravening GATT or the treaty of Rome, my hon. Friends have hit on two ideas, which are incorporated in the new clauses : first, so-called "farm gate sales" ; and, secondly, the 10 hectare suggestion.

Mr. Andrew Smith : The Paymaster General has given the answer that I expected about European and international law, but how would he reply to the argument that in other European countries, with the exception of France, those farm gate sales are not charged duty?

Sir John Cope : I should not have given way to the hon. Gentleman and I apologise to the House for having done so because I was just coming to that point.

New clause 11 deals with farm gate sales, or rather vineyard gate sales. There is no difference in any European country between duty at the gate of a vineyard, or within a vineyard, and duty at a supermarket or anywhere else, nor can we introduce a difference under European law. The overall duties on wine imposed by France are less than that imposed by this country, and other European countries impose no duty at all. But that is true across the board ; it is no advantage to sell wine at a vineyard, nor can we introduce such an advantage.

It is a question of the difference in excise duties between this country and the other countries named by my hon. Friend the Member for South Hams (Mr. Steen). Our neighbours in other directions, such as Ireland, impose a duty similar to or higher than that imposed by this country. We have often discussed the difference between our excise duties and that of other countries. My hon. Friend discussed a direct function of a much wider argument about excise duties, particularly in the light of the single market.

Mr. Steen : Will my right hon. Friend give way?

Sir John Cope : I should first like to discuss new clause 12, which deals with the 10 hectare limit.

Sir Roger Moate : Before my right hon. Friend leaves that point, may I say that the English Vineyards Association informed most hon. Members that all those other European countries pay no excise duty at the vineyard? Is my right hon. Friend saying that that is simply because they pay no excise duty at all on all wine sales, or is our information wrong?

7.45 pm

Sir John Cope : I am saying exactly what my hon. Friend suggests. No excise duty--in some cases, VAT is charged--is payable on wine in the countries named, apart from France which imposes a small amount of excise duty. The rate of excise duty and VAT is exactly the same for sales at vineyards and in supermarkets or anywhere else in France and other European countries.

New clause 12 suggests that we should discriminate on the basis of size, but 10 hectares is far too large for discrimination to be of value. The vast majority of

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vineyards throughout the continent are under 10 hectares. I am told that most premier cru Burgundy comes from vineyards of under 3 hectares. Those small vineyards have a small production because they believe in being exclusive to maintain their markets. There are approximately 1.9 million vineyards on the continent, of which only 90,000 measure more than 10 hectares. Therefore, the difference of 10 hectares would be of little use and the same would be true if we changed that figure to 5 hectares or fewer.

Because of the international agreements that I mentioned earlier, we would be unable to distinguish between European and English wines in that way. If we said that the produce of small vineyards under 10 hectares or some other size should carry a lower rate of duty, we would have to apply that rule to continental vineyards of the same size, which is the vast majority of them. It is another way of saying that we would reduce the rate of excise duty on wine from almost anywhere in the world. Under GATT, an Australian vineyard of over 100 hectares or a large Californian vineyard would have to be treated in the same way as we treat our most favoured vineyards. We would have to offer the 10 hectare rate even to the most enormous vineyards imaginable, provided that they were overseas. It would discriminate only against large United Kingdom vineyards, not against large vineyards elseshere.

For all those reasons, I do not think that either of the solutions offered by my hon. Friends provides a way forward for us. I believe in free international trade ; I also believe in the single market. I recognise the problems caused by the difference in duty rates, which is not confined to wine, but is a wider issue. In the circumstances, it is not possible to use a duty device to benefit English wine. I hope that the trade flourishes. The best way to ensure that is by improving marketing techniques and by extending the ways in which grapes are grown and wine is produced and marketed. We cannot ensure that the trade flourishes by trying to seek duty advantages, which would cause immense difficulties.

Mr. Steen : Is my right hon. Friend aware that the English Vineyards Association is planning to set up stalls in French ports to sell English wine to English travellers returning from France so that they can buy English wine at £1.16 a bottle less than in England? It is crazy for English people to go to France to buy English wine to bring back to this country because it is cheaper in France. If the new clauses are incorrectly drafted, can my right hon. Friend help us to table some helpful new clauses?

Sir John Cope : I do not believe that there is a method of distinguishing, through the duty, in favour of English wine. Perhaps somebody else can find a way, but I have not found a method consistent with GATT or European Community agreements that benefits English wine through the use of duty.

My hon. Friend the Member for South Hams has mentioned a marketing method. I was commending innovative marketing methods, and my hon. Friend has drawn attention to just such a scheme. I recognise the difficulties of which he has spoken, but it is true that English wine or any other wine bought in France for personal consumption and either brought back to this country or drunk in France bears French duty. The important factor is the country in which the wine is

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bought ; it is not the specific farm gate or place where the wine is bought or where it is produced. I cannot accept the new clauses. Question put and negatived.

New clause 23

Taxation of fishing vessel decommissioning grant

(1) Any grant received under the Fishing Vessels (Decommissioning) Scheme 1993, shall be taxed in accordance with subsections (2) to (4) below.

(2) For the purposes of capital gains tax, a sum payable to an individual by virtue of the scheme referred to in subsection (1) above shall not be treated as part of the consideration obtained by him for, or otherwise as accruing to him on, the disposal of any asset.

(3) Where a vessel is scrapped in compliance with grant conditions under a scheme referred to in subsection (1) above, then for all the purposes of capital allowances legislation, and in particular Part II, Chapter II of the Capital Allowances Act 1990, the disposal proceeds to be brought into calculation of the balances adjustment for the purposes of section 24 of the said Act and the value attributable under section 26 of the said Act or otherwise shall be deemed to be nil.

(4) No part of a sum payable by virtue of a scheme referred to in subsection (1) above shall be treated as a trading receipt in the Schedule D Case/computation of profits of the applicant.'.-- [Mr. Wallace.]

Brought up, and read the First time.

Mr. James Wallace (Orkney and Shetland) : I beg to move, That the clause be read a Second time.

I hope that the hon. Member for Hastings and Rye (Mrs. Lait) will remain in the Chamber as she said in last Wednesday's debate on decommissioning that she was very much on the side of the fishermen, and I think that today's debate will give her the opportunity to reaffirm that. Last Wednesday the House approved the decommissioning scheme for 1993-94, which is expected to be the first of three annual decommissioning schemes amounting to £8.4 million per annum.

Mr. Robert Hughes (Aberdeen, North) : I am not sure that the order says £8.4 million per annum, but it says £25 million over three years.

Mr. Wallace : I think that the hon. Gentleman is right. I do not think that the order specifies the amount, but the Ministry of Agriculture, Fisheries and Food stated what the amount was likely to be over three years. In the present year the figure is expected to be £8.4 million, and the same in each of the two succeeding years. An official explanatory leaflet sent to people in the industry stated that, in order to qualify for a decommissioning grant--for which hon. Members on both sides of the House have called for many years--three specific conditions must be met. First, the vessel must be scrapped--permanently broken up or disabled so that it is incapable of going to sea. Secondly, registration in the register of fishing vessels must be cancelled. Thirdly, all valid fishing licences must be surrendered.

The leaflet comments on the tax treatment and states :

"Decommissioning grants are taxable in the same way as other grants to the agriculture and fishing industries".

That is an unilluminating statement which begs the question of what prompted the new clause. I hope that the Treasury team will be prepared to accept what I believe to

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be the most favourable taxation treatment of decommissioning grants. If that is not acceptable, it would be helpful to those in the industry if the Treasury team could state how decommissioning grants are to be taxed.

The hon. Members for Aberdeen, North (Mr. Hughes), for St. Ives (Mr. Harris) and for Greenock and Port Glasgow (Dr. Godman) have all taken part, over many years, in debates on decommissioning. I think that they, like me, will recall that when we have tried to do the sums, the Fontainebleau agreement has often been introduced into the debate so that it becomes unclear how much the scheme will cost the Treasury. We have always asked what sum will be taken back from the fishermen in tax. I do not recall fisheries Ministers ever giving a clear answer to that question. There is an opportunity this evening for Ministers to clarify the position.

We are asking businessmen to submit tenders and make serious business decisions to scrap their vessels when a key element in the calculation is unclear. I very much hope that tonight we can do something to clarify the position, not least because it was announced last Wednesday that fishermen have until the end of this month to make their submissions for decommissioning grants. Any further information that can be given this evening will be most welcome.

Dr. Godman : Is the hon. Gentleman confident that the scheme will not be hogged by Humberside trawlers in the same way that the previous scheme was so manipulated?

Mr. Wallace : The previous scheme was much criticised, not least by the Public Accounts Committee, and we shall want to watch how the new scheme operates. We do not want money to go only to one port. I shall be ruled out of order if I become too embroiled in a debate on the merits or otherwise of the decommissioning scheme. Many of us would argue that money is not enough, but this evening we are concerned with the tax consequences.

It appears that there are four ways in which the sums can be taxed. First, the receipts could be taxable as trading income. Although nothing in the scheme requires the applicant to cease trading, it would, for the most part, seem reasonably self-evident that if a person scraps his boat, he is unlikely to carry on trading. Such a method will probably not commend itself to the Treasury, particularly, as has been said, if the licences have been returned. Secondly, the receipt could be considered to relate solely to the scrapping of the vessel and accordingly to be taken into account when calculating capital allowances. I suspect that the Treasury may wish to pursue that policy.

Thirdly, the receipt or part of it could be treated as a capital gain. In addition to receiving compensation for the vessel, it could be argued that the value received also includes an element for the surrender of a precious stock licence and the forfeiture of the right to fish with that vessel. I believe that there is case law to support the argument that payments for those items--which amount to goodwill attached to the vessel--could be regarded as capital receipts. When a grant is allocated, no indication is given as to the amount awarded in respect of the vessel and the amount awarded in respect of the licence. The Ministry of Agriculture, Fisheries and Food and the Scottish Office Agriculture and Fisheries Department may consider that no value is attributable the licence on the basis that nothing was paid for it. I understand that in the north-east

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of Scotland the Inland Revenue routinely pursue a policy of attributing value to a licence as a capital asset when a vessel is sold. It is possible that a grant in excess of the vessel's current market value could be treated by the Revenue as capital.

Fourthly, it could be accepted that no tax is to be paid on the grant--a proposal that I commend to the House. I believe that that may have been the case in some previous decommissioning grant schemes, although the status of some of those grants has not been made clear from the commissioners' decisions. Perhaps the Ministers will tell us about the operation of decommissioning grants under previous schemes.

8 pm

The new clause has no implications for capital gains or income tax and it has some precedent. I refer the House to the tax treatment of grants under section 27 of the Agriculture Act 1967. That Government grant was to encourage people to reinquish the occupation of uncommercial agricultural units. The parallel between relinquishing such units and the decommissioning of fishing vessels is immediately obvious. Section 249 of the Taxation of Chargeable Gains Act 1992 states :

"For the purposes of capital gains tax, a sum payable to an individual by virtue of a scheme under section 27 of the Agriculture Act 1967 (grants for relinquishing occupation of uncommercial agricultural units) shall not be treated as part of the consideration obtained by him for, or otherwise as accruing to him on, the disposal of any asset."

The leaflet from which I quoted said that the method of taxation would be similar to that which applies to other agriculture and fishing grants.

I have given an example of an agricultural grant that is not included for the purposes of capital gains tax. I am sure that the Financial Secretary is aware of other agricultural grants such as those payable under sections 9 and 12 of the Agriculture (Miscellaneous Provisions) Act 1968. Section 9 deals with grants for reorganisation compensation. When dealing with it the then Minister of Agriculture, Fred Peart, said :

"This is a difficult matter, and right hon. and hon. Gentlemen opposite are right to ask whether the new payments will be liable to Capital Gains Tax, Income Tax or betterment levy.

Tenants will not be liable for Capital Gains Tax, Income Tax or betterment levy on sums received under Clauses 9 and 12. These sums do not constitute a capital gain or, in the Land Commission's view a realisation of development value, nor do they constitute part of the tenant's taxable income."--[ Official Report, 21 February 1968 ; Vol. 759, c. 473.]

That is another example of agricultural grants not being taken into account for tax purposes.

The new clause seeks to have the grant accepted as non-taxable and to permit the balancing allowance to be granted on the vessel. I do not purport to be an expert in understanding how balancing allowances and balancing charges work. However, they may be of little practical use to taxpayers who have applied for a grant and who have accumulated trading losses in recent years. It would preserve a measure of equity between those who have claimed allowances to augment losses and produce relief against other income and taxpayers who have sought to preserve the tax value of their vessel to set against future taxable balancing charges on a sale.

The share fishermen system operates in Scotland and there are differences throughout Scotland. Unlike parts of the north-east of Scotland, the practice in my constituency for a new person joining a partnership is for continuation

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elections to be signed when there are partnership changes. The effect of that is that the new partner takes on a share of the tax written down value of the vessel which reflects previously granted allowances. Subsequent allowances do not reflect the price that he pays for his share. There is always the possibility of that person having to pay tax on a balancing charge in excess of the allowances to which he may have been entitled. That means that there may well be a disincentive to Shetland fishermen applying for grants or at least to gross bids up more than would otherwise be the case.

That brings us to the purpose of the grants. The primary obligation is to reduce capacity to meet multi-annual guidance programme targets. Value for money can be measured in how much capacity can be taken out of the fleet. Many of us would have liked to see more money for decommissioning, but surely the effect of the small amount that has been made available should be maximised. An applicant must include the tax impact of accepting a grant in his calculation. If the effectiveness of the scheme is to be judged on catching capacity taken out, the clear efficiency argument says that if no tax is levied on the receipt there will be lower tenders and, therefore, more bids accepted and more capacity removed from the fleet. There will be greater value for money. I accept that that may not mean so much revenue for the Treasury, but it would be pleasant for once to see the Treasury trying to support the policy of another Department rather than trying to frustrate it.

Dr. Godman : Does the hon. Gentleman agree that one of the developments that we wish to see with a sensible decommissioning scheme in some of our ports is the pulling out of the older vessels so that the fleet can remain fairly modern? Does the new clause encourage that development?

Mr. Wallace : I suspect that it would certainly help. If I recall correctly, it was said in the debate on Wednesday that vessels had to be at least 10 years old.

If a person applying for a tender has to gross up to take account of the tax that he must subsequently pay, fewer vessels will be taken out of the fleet and the relatively small amount of money will not go so far in reducing capacity. Making the grant tax free would be the best contribution towards achieving the object of the exercise. Those who are engaged in the exercise should know where they stand on taxation before making important business decisions.

Mr. Salmond : I should like to be associated with the arguments advanced by the hon. Member for Orkney and Shetland (Mr. Wallace). He has presented the detail of the technical argument and I shall concentrate on why the industry needs some additional tax incentive as part of the decommissioning package. It is highly appropriate that this matter should be debated during consideration of the Finance (No. 2) Bill because many of the decisions, not just for the fishing industry but for all resource-based industries, have been Treasury and Revenue led. That is true for oil, gas and whisky and it is certainly true for fishing.

The Ministry of Agriculture, Fisheries and Food has argued for some time that its original two-year decommissioning scheme was extended to three years with no more money because of pressure from the Treasury, perhaps from the Financial Secretary himself. In a debate on fishing on Wednesday, I quoted an example given to me

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by Mr. Hugh Allen, the secretary designate to the Mallaig and North West Fishermens Association, on the precise detail of the proposal by the hon. Member for Orkney and Shetland.

I do not propose to quote the example again because it is available in Hansard . Mr. Allen reasonably set out a case study whereby a fisherman putting in a decommissioning bid of £150,000 on a 15-year-old capital asset that might be worth that amount would be left, after the operation of taxation and other obligations on thIf that is the current taxation system, it will severely inhibit a successful decommissioning scheme and will lead to one that is designed merely for the convenience of the Treasury. In the past few years, virtually every other fishing fleet in Europe has had access to substantial structural funds of hundreds of millions of ecu. Only the United Kingdom fishing fleet--the fishing fleets of Scotland, Northern Ireland, England and Wales--has not had access to that sort of structural funding. I hope, and it would be a triumph of hope over experience, that when the Financial Secretary replies he will go beyond the narrow Treasury accounting view of what is absolutely convenient and look to the possible success of the decommissioning scheme.

It has not escaped those of us from fishing constituencies that when Ministers argue about the costs of a decommissioning scheme, they always take the costs net of the deduction resulting from the Fontainebleu agreement--for example, even a scheme that is financed 75 per cent. from the European Community would have an impact greater than that on Treasury revenues because of the deduction from the United Kingdom rebate under the Fontainebleu agreement. Yet those same Ministers have always refused to look at the scheme net of taxation and net of the effect on the Treasury of taxation. That argument has been used to produce a very modest decommissioning package for the fishing industry.

Surely, tonight, the Financial Secretary should show that he appreciates that, without some tax concession, the decommissioning scheme could flounder and not have the effect that we all want, which is to bring capacity in the fishing industry into line with catching potential.

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