Commission Green Paper on the Future of the Common Fisheries Policy

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Mr. Hoban: I want to make a few comments about the economics of the fishing industry. Although my constituency includes coastline, Fareham has no fishing industry. There is, however, a small fishing fleet based in Portsmouth. Fareham employs its coastline for leisure users.

The ironic aspect of the debate on fisheries is that in most industries in which the supply of goods is limited by law, those who exploit them tend to make profits, which is why they need to be regulated. It seems odd that fishermen do not make profits and the industry is relatively unprofitable.

The snappily titled Council document, ''7378/01'' of 23 March sets out a table showing the ratio of net profits over invested capital in 1999. It shows 28 categories of return, and it is interesting to note that eight categories make returns of less than 0 per cent. In other words, they are loss making. Thirteen categories make returns of between 0 per cent. and 10 per cent. and the seven remaining categories make returns of more than 10 per cent. There is profitability in the sector, but the several categories in which losses are made or in which there are very low rates of return because of investment made in fishing boats, indicate, as the Minister said, that there is overcapacity in the sector. The Green Paper explicitly highlights that, and refers to itself as ''a critique'' of the current state of the common fisheries policy. It suggests ways in which we can move forward, but those suggestions are its weakness. Issues must be principally tackled among member states, and between them and the Commission.

Overcapacity in the fishing sector reflects two issues. First, the Government have been reluctant to take fishing boats out of commission; the Minister referred to the decommissioning round that happened here, and there must be greater pressure on member states to decommission boats. The second is the issue of investment subsidy—the subsidy of construction for new boats. Such construction causes continuing overcapacity in the industry. People look for methods to get out to sea and they want to make a return on the money that they have borrowed, so they over-fish and begin fishing illegally. One can observe the chain of events from construction subsidies to the enforcement issues with which we must grapple at individual country level.

There are other subsidies such as tax-free fuel. As costs are reduced and competition is encouraged between boats, boats that are not subsidised will seek subsidies from their national Governments, which creates disequilibrium in the relationship between subsidies, and the cycle is repeated. That is dangerous for business because it requires more taxpayer's money to keep the business afloat—an unintended pun. I referred to the 1.1 billion euros of taxpayers' money that is used to subsidise a fishing

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industry that generates a net income of about 9 billion euros. The Green Paper makes progress in identifying why that problem should be tackled, but, given the regional importance of the fishing industry, the question of how is more difficult. I got exceptionally wet one day last summer when I visited the two towns in the constituency of the hon. Member for Scarborough and Whitby (Lawrie Quinn). There one can see the dependence on the fishing industry and the seasonal tourist trade, particularly on a wet August afternoon.

Lawrie Quinn: Very rare.

Mr. Hoban: As a native of the north-east, who has been on many summer holidays to Whitby and Scarborough, I would not use the words very rare to describe the climactic conditions of either seaside resort.

We must identify a way in which we can reduce dependence on the fishing sector. There is a conflict within European Union rules because, although we have a common fisheries policy—the Green Paper makes that clear—the economic and industrial strategy that relates to the fishing sector is dealt with at the level of nation states. That conflict runs through many aspects discussed today such as enforcement, to which the hon. Member for St. Ives referred. A suggestion in the Green Paper is that we should move to more Community-enforceable sanctions, but I disagree because nation states should decide on appropriate sanctions for illegal fishing. Furthermore, there is the conflict of economics.

My hon. Friend the Member for Congleton referred to the legal position of the common fisheries policy and the fact that it applies to national Governments. I am not sure that a Community-wide strategy is best. A regional system, such as that to which the hon. Member for St. Ives referred, could work with bilateral or multi-lateral arrangements between Governments. It is important to recognise that the regional bodies referred to in the Green Paper would be purely advisory and would not have the power to bind. If we are to make the process of setting fishing quotas more transparent, we must move decision-making closer to local level so that the fishermen off the north-east coast, Cornwall and so on can have a genuine say in what is happening and sit alongside the scientists so that they understand the environmental issues that must be taken into account when determining the level of quota. If decision-making is moved closer to those directly affected by the decisions many more people—crucially, those whose livelihoods are most affected—would better understand the reason for the quotas.

I did not intend to say much when I came into the Room and I hope that I have not trespassed too much on the Committee's time. We cannot allow the common fisheries policy with its current impact at member state level to continue unchanged. I hope that the Government will use the Green Paper as a vehicle to push through radical changes to the policy in the interests of a viable fishing industry in the United Kingdom.

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6.26 pm

Mr. Morley: This has been an interesting debate and some interesting and thoughtful comments have been made. We are considering the documents before us and much of the Committee's attention has, understandably and rightly, focused on the common fisheries policy and the forthcoming review. It is not often that we have a chance to address what we all agree are failings in the system. The Commission pulled no punches in the Green Paper and stated those failings. The challenge is to try to obtain agreement with other member states on the changes that we want post 2002. We want to retain much of the present policy because it is in our national interest. Relative stability and coastal limits are important. As I said to the hon. Member for Congleton, relative stability is an accepted and recognised part of the policy. Quota shares are also an established part of the policy and, as I said when answering questions on enlargement, they protect members of the European Union.

There is an argument that we have not done as well in some aspects of our national quota as in others. We have done well with haddock with about 80 per cent. of the EU quota and with cod, but we have not done as well with Channel cod for which we have a small quota. However, overall, it is not in our national interest to disturb relative stability, nor is it in any other country's national interest. That is one of the issues that we shall discuss.

There is much agreement among member states about important aspects of the common fisheries policy. If there is no agreement, matters such as relative stability will automatically roll over post 2002. The only issue on which there must be a decision is coastal limits, but that decision is made by a qualified majority voting and need not be unanimous. I am confident that a qualified majority will vote for us to retain our coastal limits, ideally for good. We shall argue that the United Kingdom's coastal limits should not be a derogation for the future but should be permanently classified as national coastal limits and there is support for that.

The hon. Member for Congleton referred to producer organisations and their responsibilities. They are responsible for managing quotas legally and properly. They know that, and my Department is in touch with them directly and through our sea fish inspectorate. If members of producer organisations break the rules, they face prosecution. We shall prosecute if they break the rules and they know that. It is important to give the industry an opportunity to manage its own affairs in a responsible way, and we expect it do that. However, it is not exempt from the law. We expect the producer organisations to operate in a proper manner: we check their returns and landing figures, and there is also an external check.

The hon. Lady made a point about EU law. With regard to that subject, disagreements are often about differences of interpretation, and, on this matter, her interpretation is different from mine. I acknowledge that there are people in the fishing community who hold sincere views about the interpretation of EU law, and they are entitled to do so. I am not criticising them. However, with regard, for example, to the Corfu

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permit system, as the hon. Lady rightly stated, the permit system is in operation in western waters, and that is not controversial within the fishing industry, as people understand the reasons for it.

Moreover, a permit system can only be extended if the member states agree to that. It is not within the Commission's power to simply impose policies such as EU fishing permits on member states. That provides a safeguard for individual member states. We believe that national licensing is the best way forward—that it is right to devolve the management of such matters. I am not aware that the Commission is challenging that.

I have heard many doom and gloom stories from people who have a different interpretation of EU law, about what will happen post 2002. However, although I do not claim to be infallible, my interpretation—which I have frequently defended—is shared by my officials, the Commission and its legal services, and member states. Therefore, on balance, I am on the safer side, with regard to interpretation of EU law.

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