Examination of Witness (Questions 28-39)
MR ALEX
WEST AND
MR HAMISH
MORRISON
16 NOVEMBER 2004
Q28 Chairman: Welcome, gentlemen. You
are Alex West, President of the Scottish Fishermen's Federation
and Hamish Morrison, Chief Executive of the Scottish Fishermen's
Federation. We welcome you both because you, in a sense, embody
the major part of the industry. So let me begin by asking you,
as we asked Barrie Deas, about your objections to the removal
of 13% of whitefish fleet. Why do you think that recommendation
is flawed, or the evidence on which it is based is flawed?
Mr Morrison: Very similar to Barrie's
reply but with a couple of local qualifications. Over the last
two years we lost 170 vessels, which were destroyed, some of them
less of five years old, which in anyone's language is quite shameful
that assets of that age should have been destroyed. What was more
galling about it was that the basic calculation on which these
outtakes were determined was flawed. This arises because the demersal
trawl fleet in Scotland and indeed in England is heavily skewed
by the number of vessels who earn more than 70% of their income
in the nephrops fishery, which has almost no effect on cod at
all. I think the whole nephrops fishery, by way of a by-catch,
takes less than 3% of the cod quota. Yet, for statistical reasons,
they are lumped together. So instead of, for example in the Scottish
case, a shade under 300 whitefish vessels but 700 were actually
brought into the equation. I did correspond with the leader of
the Strategy Unit and he conceded the point eventually that we
were indeed correct about this. But, like Barrie, I would rather
park that issue, which is going to be driven by other events in
the coming months and years, rather than try to be definitive
about it in the meantime. Like the NFFO we are, involved in trying
to build a better model for the industry to try and determine
its unit profitability once and for all.
Q29 Chairman: I would like to push it
a little further because you say the benefits of the reduction
are theoretical and any reduction would have unintended consequences.
What in your view would be the consequences of a 13% decommissioning?
Mr Morrison: I think there would
be a very real risk. We have to believe in stock recovery or we
are all wasting our time. There is a very real risk, even now,
on the level of trawling capacity we have now, that if we were
able to achieve the 30% year-on-year target that is set in the
cod recovery plan, in five years' time we would not have enough
vessels to take it. In fact, this year we have undershot the cod
quota—the cod quota, mind you—Here we are with six
weeks left of the year and we have only caught 65% of the quota;
much of the rest we have had to trade away to Denmark to buy more
haddock. That is already the position through effort reduction
and the loss of vessels to decommissioning. I have some sympathy
with officials because it is very difficult to get these calculations
right, but I think everyone who goes into them must be aware of
the fact that the unintended consequence rule is with you all
the time.
Q30 Chairman: You also think that the
tie-up scheme is unworkable; why is that?
Mr Morrison: It is a joke.
Q31 Chairman: Apart from that!
Mr Morrison: You say to someone,
"You will just go out of business for nine months and that
will be fine"; how do you pay the bills? It is not serious.
Q32 Chairman: If you are saying that
you do not want the decommissioning at that level and the tie-up
scheme is unworkable, what alternatives do you have?
Mr Morrison: The point I am making,
Chairman, is that the fleet is actually capable of surviving in
its present state; it is profitable.
Q33 Diana Organ: I want to go on to Individual
Transferable Rights. What do you perceive as the main disadvantages
of the proposed ITQ system?
Mr Morrison: The Strategy Unit
report is internally inconsistent, if I can be kind about it,
because you cannot have, on the one hand, Community Quotas and
on the other ITQs—the one is the obverse of the other. If
you tie quota to an area how can you then trade it? I do not understand
that. I think—and rather like Barrie Deas was telling you—that
in a kind of bumbling British way the FQA system is about right
because you do not have title to the fish but that, interestingly,
keeps speculators out because they are too nervous—"You
could not use investors money if you did not in the end have something
you could liquidate and enforce at law". Therefore the only
people who do trade tend to be fishermen and fishing companies,
and that is entirely healthy. The trading is necessary because
fishing patterns change, and if you happen to be someone who staked
your all on cod 10 years ago you will have needed to buy other
quota in the meantime, to stay in business. I do not mean to sound
complacent but I do think the FQA system is about right.
Q34 Diana Organ: You did though say in
your written evidence to us that the FQA system could and should
be refined, and not so much in the bumbling British way. In what
way would you like to see that refined?
Mr Morrison: I would like to see
the trades that happen reconciled on an annual basis, so that
it is entirely transparent as to who at the end of the year owns
what quota. I do not know if I would go as far as Iceland does
and actually have it on a public website so that I could find
out how much quota you had because there might be difficulties
in keeping that up to date. But I do think that the Government
should reconcile the position every year so that everybody knows
where we start at the beginning of the year.
Q35 Diana Organ: And a greater degree
of transferability?
Mr Morrison: I think the market
probably handles it to the extent that it is necessary at the
moment. At the moment, for example, you could not really give
cod quota away—the market does work.
Q36 Mr Lazarowicz: A brief question,
if I may, about the idea of the Community Quota Schemes, of which
I think you are in favour. Do you have any ideas as to what would
be the most appropriate way of establishing that type of scheme
in a way which is compatible with EU regulations, given the experience
of Shetland and Orkney Islands?
Mr Morrison: I think the Shetland
and Orkney experience is highly relevant because they were inquired
into and it was found to be acceptable. They still have the scheme;
it still works. I think the next group in Scotland to try it is
likely to be the Highland Council who, I understand, are examining
the feasibility of buying quite a lot of prawn quota. I think
it is more difficult than it looks because once you say, "That
is Mallaig quota" you immediately halve its value because
you cannot trade over the whole of the area in the way you can
now—you can only sell it to another boat from Mallaig. I
would suspect that one or two fishermen themselves might have
a problem with this, but if you just had the Highland Council
owning quota and leasing it on a preferential basis that might
be alright, but I just wonder if they might not fall foul of discrimination
under some kind of European law for doing that. I do not think
it is as easy as it looks, that is what I am saying. The way it
is done in Orkney and Shetland is very straightforward—a
trust fund controlled by the Council at arm's length, owns the
quota and leases it to their own boats, and that is all that happens.
I think if you were trying the kind of scheme that was in any
way bigger than that, and universal, it might be more difficult.
Q37 Mr Lazarowicz: If it were to take
off at a number of locations, but surely the state aid issue,
which is obviously an issue in Orkney and Shetland, is going to
be a much bigger issue if it were to be operating throughout large
parts of Scotland, for example? It is not going to be a way forward
which is going to have wide opportunities, is it?
Mr Morrison: Without the geographical
tie it is something that the Federation is deeply involved in
anyway, and perhaps Alex West could tell you a bit more about
it. Because after the decommissioning, some boats' quota went
to the banks to cover outstanding debts and the banks still "own"
that quota and are leasing it back, at really quite sharp rates.
But perhaps if you would not mind, Alex, saying something about
that?
Mr West: I think you have to be
careful in this area because generally speaking a lot of people
do not know the difference between FQAs, ITQs and all of these
things. What the Chairman spoke about earlier is the real danger
of this. If we had internationally traded ITQs then relative stability
goes right out of the window because the quota would then go to
the man with the biggest pots and the deepest pockets. So relative
stability is away. So it is a dangerous course. My view is that
what we have—especially in the pelagic sector—is just
about right. You have no legal title, but because there is not
legal title you do not have third companies coming in and buying
something if they are not sure about it, it is a bit dubious.
But fishermen that need the quota; the people who should have
it will buy it because they need to use it to keep their businesses
viable. So in that way it is just about right. You see, people
do not understand in general terms, but then you have three different
fishing fleets in the UK: you have the pelagic fleet fishing single
species, you have the whitefish fleet fishing mixed species, and
then you have the huge and very important prawn fleet. Personally,
I am a businessman, I have been to sea for 40 years, I have 16
whitefish boats and four pelagic ones and I have been very successful
in this business. But the thing that is the biggest danger to
us now is people interfering with the whole thing, politicians
making decisions sometimes, to be honest, scientists making decisions
as well. We have seen it in many areas. Monkfish, for example,
is a prime example. We have to be careful. A lot of people come
to ask you questions but they do not really know what FQAs are;
they do not really know what ITQs are, and of course the thing
that worries us to death above all else is the European dimension,
which is one we have to deal with right now.
Q38 Ms Atherton: I want to move on to
traceability, and I was very pleased that you support Strategy
Unit proposals, but then you put the caveats in, and there seem
to be a lot of them. You alarmingly talk about a threat to civil
liberties; you are opposed to the costs; you are worried about
how the enforcement will operate. Are you really on board for
this?
Mr Morrison: I think that with
traceability you have to be clear why you are doing it. There
is a public health issue, where I do not think there is any dispute
with anyone; you have to know where all food came from in case
there is an epidemic or an outbreak, or whatever. Then there is
the situation where the same legislation is extended to the quota
system and other refinements are made to it. I think it is that
area that we tend to worry about. Traceability is something that
happens now, and every day that goes by it becomes more widespread.
Apart from anything else it does not matter what the Government
does. If you are selling fish to Marks & Spencer they will
put far more controls on you than the EU or the British Government
could ever dream of. So there is no point in railing against that,
that is real. It is where you find that there is an attempt—and
we see it in one or two places with the introduction of electronic
logbooks and the rest—to actually screw down the flexibility
that there is, and the flexibility which fishermen need in order
to make a living.
Q39 Ms Atherton: I suppose the debate
comes to where does flexibility become abuse of the system, and
that is always the problem, is it not?
Mr Morrison: Absolutely, but it
is very well defined, as I am sure you will be aware, in percentage
terms right now.
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