UK Fisheries -Transformational change by design

UK Fisheries – Transformational change by design

Rodney Anderson – Independent Consultant April 2021

This report has been commissioned by the Esmée Fairbairn Foundation to provide an independent view on the implications of the EU-UK Trade and Cooperation Agreement on UK fisheries. The information in the report reflects the situation in April 2021. There is a particular focus on the risks and opportunities in relation to the Foundation’s strategic objectives.

The views and opinions expressed in this report do not necessarily reflect the views or position of the Esmée Fairbairn Foundation.

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UK FISHERIES – TRANSFORMATIONAL CHANGE BY DESIGN Introduction The UK fishing industry is on the cusp of transformational change, but there is a question about how far this will be by design or by default. The fishing industry is well used to change, but Covid19 and Brexit have already brought changes that in many respects were unplanned and unforeseen. Bigger changes lay ahead which will affect every fishing community and every business. They will reflect and bring about further social and economic change and will have a bearing on how well we do in protecting and enhancing our marine environment.

This report summarises the fisheries aspects of the EU-UK Trade and Cooperation Agreement and discusses: a) The cumulative effects of the Agreement, the changes arising from the UK becoming a ‘third country’ when exporting to the EU, and the impacts on the UK fishing industry of Covid-19. b) How this evolving picture relates to the aims, goals and priorities of the Foundation in broad terms and the opportunities and risks it represents to the Foundation’s strategy c) Possible interventions that would further the Foundation’s objectives in relation to fisheries, the marine environment more generally, a fairer society and stronger communities.

This report has been commissioned by the Esmée Fairbairn Foundation to provide an independent view on the above. The Esmée Fairbairn Foundation aim to improve our natural world, secure a fairer future and strengthen the bonds in communities in the UK. The Foundation is supporting work across a number of impact areas. In relation to its priority of “fishing in tandem with nature”, it is seeking to contribute to the following long-term outcomes: • • • • •

UK is seen as a global leader in the management of marine resources Marine biodiversity is restored at scale and enjoyed by more people Seafood consumed in the UK comes from well-managed stocks Existing traditional coastal communities are sustained and the economy of small fishing communities is revived The status of marine wildlife populations is understood, effectively monitored and safeguards are in place to allow recovery

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Executive Summary The EU-UK Trade and Co-operation Agreement (T&CA) has sent shockwaves through the entire UK fishing industry. This has arrived on top of the many difficulties caused by Covid19.

Together these events have caused major upheaval and will lead to unprecedented and, in many respects, unplanned change within the industry. Some impacts are immediately obvious, but others will be longer term and will set of the context of the ongoing transformation of the industry.

The T&CA provides for: (i)

Tariff free trade between the UK and the EU, though there can be circumstances where tariffs will apply where fish is imported and then exported.

(ii)

In common with other areas of trade and services, there is to be a joint UK-EU specialised committee that will be able to consider and agree fisheries management issues, data sharing, etc. The committee will be co-chaired by the UK and EU with a joint secretariate.

(iii)

The UK has reclaimed considerably more policy and regulatory autonomy but this is not unfettered. It has to act in accordance with the objectives and principles in the T&CA, the measures have to be proportionate and non-discriminatory and the UK has to follow a prescribed process.

(iv)

The T&CA includes provisions that will help protect the marine environment and help develop sustainable fisheries. The EU and the UK have agreed, as key objectives, that commercial fish stocks should be maintained and restored to maximum sustainable yield and that fishing activities should be environmentally sustainable. There are safeguards built into the T&CA should agreement not be reached on the Total Allowable Catch (TAC) for individual stocks, to avoid overexploitation. The UK can now decide on its own authority to introduce fisheries management measures to protect offshore MPAs.

(v)

The UK will have larger amounts of the TAC of some of the fish stocks it shares with the EU, though this is not uniformly spread across the different stocks and the value to the UK is unlikely to be at the level attributed by the UK government.

The increases will be phased in over five years from 2021.

(vi)

The uplift in quota falls considerably short of the UK government’s ambition to move to zonal attachment, which is quota based upon the geographical spread of fish stocks.

(vii)

The T&CA contains detailed arrangements for setting annually the TAC of each of the shared fish stocks subject to quota. In many respects the process is similar to when the UK was within the Common Fisheries Policy, except the UK will be negotiating with the EU as a third country. There are differences when it comes to reaching agreement and it remains to be seen how this part of the process evolves.

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(viii)

Until June 2026 (the ‘adjustment period’), the EU and UK will have reciprocal rights of access to catch the allowable quotas, after which there will be annual negotiations on access. Considerably more EU vessels will have access to UK water than vice versa.

(ix)

EU vessels that have a historic track record will be able to continue to fish in the 6nm to 12nm zone of large parts of the UK’s territorial waters.

(x)

UK and EU vessels are able to fish for non-quota stocks in each other’s waters at a level that equates to the average tonnage fished during the period 2012-2016.

(xi)

If the UK deviates from the access or quota available to EU vessels under the terms of Agreement, during or at the end of the adjustment period, in the event of dispute, the EU can require the UK to pay compensation and can introduce tariffs not just on fish products but also potentially on other goods and services. The EC has made it clear that it will seek to protect EU fishing communities.

The UK has acquired third country status, which affects exports to the EU and later this year will affect imports. There have been serious problems for the fishing industry. Some of these have begun to be resolved as systems settle down and people become used to the new arrangements. Other elements will have permanent effect and will lead to consolidation and restructuring within the industry as it adapts.

Covid19 has hit much of the fishing industry hard and left large parts in a weakened state.

Domestic and foreign markets, especially for high value species, closed or shrank overnight. and prices remained low for long periods. As lock downs ease here in the UK and elsewhere prices have begun to recover but remain fragile. The full effects can only be speculated upon at this stage. But, it is evident that some businesses are unlikely to survive and the pandemic will lead to permanent changes in the structure of the industry and the way that it operates.

The immediate negative impacts of the UK’s departure from the EU, the T&CA and Covid19 affect all parts of the industry, but in general terms probably most acutely among the small businesses in the catching and processing sectors - especially those reliant directly or indirectly upon an efficient and profitable export trade. Governments seem to be focussed on fire fighting. The Scottish Government is alone in having a fisheries strategy to provide context and long term goals.

The Foundation’s Strategic Plan is highly pertinent to the range of issues arising from the changes being brought about by the T&CA and Covid19. There is an opportunity and need for strategic interventions. These should take into account the interdependency of the different elements, draw on local knowledge and experience, introduce a multidisciplinary approach, and focus on deliverable actions. There is an urgency about this. For many the situation is desperate. Recovery in a form that will enable small fishing communities to revive calls for energetic and purposeful intercessions that recognise the forces at play and the complexity of the challenge.

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The EU-UK Trade and Co-operation Agreement The UK-EU Trade and Cooperation Agreement (T&CA) is a long and complex document.

Although it contains a considerable volume of detail there are many areas where, at this stage, there is uncertainty about interpretation and what this means when it comes to practical implementation.

Under the terms of the Agreement, there will be no tariffs or quotas on trade in goods provided rules of origin are met, which in general terms means goods of UK or EU origin.

There are detailed rules specifying what is meant by UK or EU origin and how this applies in practice. The Agreement is overseen by a UK-EU Partnership Council, below which sit trade and various other specialised committees. There are mechanisms for settling disputes, which ultimately can involve an independent arbitration tribunal. These administrative mechanisms cannot be put in place until the European Parliament has ratified the T&CA. The UK has reclaimed considerably more policy and regulatory autonomy, though this is not unfettered The UK has secured considerably more policy and regulatory autonomy than it held within the CFP. The Government will be able to introduce policies more suited to the unique nature of UK fisheries, to determine its own priorities and to introduce much greater transparency into fisheries management. For many fishers this could turn out to be the main gain from Brexit, but that will depend entirely upon how the four UK fisheries administrations respond.

The UK does not have a completely free hand. All management measures introduced by the UK and EU have to be in accordance with the fisheries objectives and principles set out in the T&CA. However, these broadly accord with the objectives in the Fisheries Act. The T&CA also specifies that the management measures must be proportionate and non-discriminatory. The UK and the EU cannot apply measures to the vessels of the other Party in its waters unless it also applies the same measures to its own vessels. It is possible to envisage that there could be wrangles in the future about what constitutes proportionate and non-discriminatory.

There has to be prior notification of new measures and sufficient time has to be allowed for comment or clarification.

It is possible that through the annual negotiations on Total Allowable Catches (TACs) and, in due course on access and quota, the EU will seek to test the UK’s autonomy and perhaps try to negotiate trade-offs. The EC has drawn a link between the TAC negotiations and its other policies relating to bilateral fisheries relations with third countries, external relations, employment, environment, trade, development, research and innovation.

The Agreement includes provisions that will help protect the marine environment and help develop sustainable fisheries Both Parties have signed up to maximum sustain yield and fishing activities being environmentally sustainable, as objectives. These are underpinned by nine principles, to which the UK and the EU must have regard. Seven of these refer specifically to the

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precautionary principle, conservation measures or environmental sustainability. Fisheries management measures must be based on the best available scientific advice.

If agreement cannot be reached between the UK and the EU on a TAC for a specific stock there are safeguards in the T&CA to prevent either Party from acting unilaterally, which could generate a race for the fish and risk jeopardising the long term health of the stock. A provisional TAC will be set in accordance with scientific advice and the shares of the TAC will be in accordance with the quotas determined in the T&CA. This is an important safeguard that benefits the marine environment and the industry.

When the UK was in the CFP, introducing management measures in offshore marine protected areas proved difficult. It required collective agreement which was challenging to achieve. The UK can now decide on its own authority take appropriate action, provided the measures are proportionate and non-discriminatory. The UK government has already exercised its independence in this respect. Electronic pulse fishing by English and EU vessels has been banned - in advance of the EU-wide ban - and steps are being taken to introduce fisheries management measures, affecting both UK and EU vessels, to protect four offshore MPAs. The UK Government has indicated that this is just the start. It intends to introduce management measures in 40 offshore MPAs in English waters over the next three years.

The UK has secured an increase in fishing opportunities, but the extent to which this will bring commercial benefit to fishing communities remains unclear The UK will have a larger share of the Total Allowable Catch (TAC) for the stocks it shares with the EU. The increases will be phased in over five years from 2021. The government has calculated that the total additional value to the UK at the end of this period will be £146m.

This figure is said to represent an increase of 25% of the value of the EU catch in UK waters.

It is often misinterpreted (including in Government press releases and Ministerial statements) as a 25% volume increase of the UK share of the EU’s catch in UK waters, or as a 25% increase in UK quota. It is neither.

The government has not revealed the basis of the calculation, but it appears to relate to first sale value and to be a notional figure. The real life value to the UK seems likely to be considerably less than £146m. TACs are upper limits and quotas are frequently not fully taken up. The pool of quotas managed by the Marine Management Organisation (MMO) is commonly substantially under-utilised. In some cases, such as North Sea sole and plaice, the annual TACs and quotas have been much higher than catch levels for some years. The uplift in those quotas holds little prospect of any realisable gain to the UK. To state the obvious, additional quota is only of value if the fish are there to be caught and it is economically viable to fish for them. There are also other technical reasons why the net benefit may turn out to be lower than stated. These include a mechanism called the Hague Preference, which is no longer applicable but previously increased the UK’s entitlement to quota at the expense of other member states, and changes in the way quota swaps with other coastal states operate.

The total UK-wide increase also varies considerably between the different stocks. For example, the largest increases in volume are the pelagic species, Atlantic mackerel, North Sea herring and Norway pout, which together account for over a third of the estimated value of the UK’s

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additional quota shares (using the Government’s own figures). It is a highly mixed picture with other stocks. For some there will be appreciable increases in quota, but others have either not increased at all or only marginally. There are quota increases for 57 out of the 90 stocks. Looking across all quotas, there does not appear to be a constant correlation between identified needs in the UK and the quota adjustments secured.

One of the UK Government’s stated aims was to move towards UK fishing opportunities being determined according to zonal attachment (the geographical distribution of fish stocks) and away from ‘relative stability’, the mechanism employed in the EU and which is based on long gone historical fishing patterns. Most of the quotas available to the UK remain a long way from the tonnages that zonal attachment would deliver. It is a moot point as to whether the UK has departed from relative stability, since all the adjustments in the Agreement are expressed as recalibrated percentages for individual stocks within the relative stability formula. There is the presumption written into the Agreement that the 2025 quotas will roll forward into 2026 and beyond.

Although government statements have focussed on quota apportionment and access between the UK and EU, Norway and the Faroe Islands have also had vessels catching fish in UK waters and UK vessels catching fish in Norwegian and Faroes waters. There has been a considerable imbalance in the respective values of these catches, for example, with Norwegian vessels catching about £250m and UK vessels catching about £32m in 2019. The bilateral negotiations this year with the Faroes concluded with no agreement being reached.

As of the end of April 2021, it seems that the UK and Norway negotiations for 2021 have also concluded without a deal being reached. This will be a considerable blow to some in the UK industry though others could stand to gain. There might be wider implications for quota swaps which are difficult to chart, complicated because swaps can involve several linked transactions.

For stocks shared with the EU the total allowable catch will be negotiated annually The Agreement contains detailed arrangements for setting annually the total allowable catch (TAC) of each of the shared fish stocks subject to quota controls. In many respects the cycle and processes are similar to when the UK was within the Common Fisheries Policy, except the UK will be negotiating with the EU as a third country.

If agreement cannot be reached, the UK and the EU will set provisional TACs corresponding to the level advised by the International Council for Exploration of the Seas (ICES), with each Party’s share of the TAC being as set out in the Agreement, until agreement can be reached.

This is the current situation, with both the UK and the EU having set provisional TACs for their shared stocks.

Until June 2026 (the ‘adjustment period’), the EU and UK will have reciprocal rights of access to each other’s waters based on historical track record, after which there will be annual negotiations on access.

There are two elements to this: access within the respective Exclusive Economic Zones (EEZs), and access within the 6-12nm zone of each Party’s territorial waters. Access is to be

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‘reasonably commensurate’ with the respective shares of fishing opportunities. The most controversial element of this is the UK conceding that EU vessels can have continued access within UK territorial waters. It was seen as a red line by the industry and assurances were given by Ministers that it would not be crossed. In the event, it was one of the compromises made in order to secure a deal.

Provided EU vessels can demonstrate historic track record they will be able to continue to fish in the 6nm to 12nm zone in ICES divisions 4c and 7d-g (predominately English waters, stretching from the Humber, down the east coast, along the south coast, around the south west peninsula and up to Pembrokeshire). There is a reciprocal arrangement for UK registered vessels being able to fish in EU waters in the same ICES divisions.

Monitoring and controlling where fish are caught in shared access areas presents practical difficulties. Existing monitoring systems do not monitor where fish are caught in relation to the UK’s EEZ and territorial waters. Boats can cross these lines during a single fishing trip or even a single haul.

UK and EU vessels are able to fish for non-quota stocks in each other’s waters at a level that equates to the average tonnage fished during the period 2012-2016.

Some of these stocks, such as scallops, cuttlefish and bass are very commercially important to the UK. It will be a challenge for the UK authorities to establish previous catch levels by EU vessels in UK waters and to monitor and control compliance. The UK Fisheries Minister has acknowledged that the MMO does not hold comprehensive historical records of activities of EU vessels and is currently reliant upon data published by the EC. The exploitation of nonquota fish stocks in UK waters by foreign owned vessels is likely to be of continuing concern within the UK fishing industry.

The joint UK-EU specialised fisheries committee will be a forum for the EU and UK to work together on fisheries management In common with other areas of trade and services covered in the Agreement, there is to be a joint UK-EU Specialised Committee that will be able to consider and agree, inter alia, fisheries management and conservation measures, data collection and sharing, and joint control, monitoring and surveillance programmes. The Committee will be co-chaired by the UK and EU with a joint secretariate.

How the Committee will operate and its relationship with the ambitions of the Fisheries Act 2020 is not yet clear; for example, the extent to which the Joint Fisheries Statement and Fisheries Management Plans, provided for in the Act, will be independent of consideration and agreement by the Specialised Committee on Fisheries. There has already been discussion in Parliament about future transparency and the degree to which stakeholders will have the opportunity to be consulted and involved in matters going before the Specialised Committees.

The membership and how the Committees will operate are matters still to be agreed with the EU. Arrangements will not be in place until the T&CA has been ratified by the European Parliament.

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What happens after the adjustment period ending June 2026?

After the end of the adjustment period in June 2026, there will be annual negotiations between the UK and the EU on access and possibly quotas. The T&CA includes the presumption that the 2025 quotas will continue into 2026 and beyond, and that access to each other’s waters will be conducted with both parties acting in good faith to achieve a mutually satisfactory balance of interests. The expectation written into the T&CA is that access should continue on the same basis as previous years.

The UK or the EU have the right to withdraw any particular fishing rights in their waters after the end of the adjustment period, but the other party is then entitled to take ‘compensatory measures’ to make up for the social and economic losses sustained from the loss of access.

This may involve a reciprocal loss of access or new tariffs on fish products or, if this is deemed insufficient, tariffs on other goods and services or suspension of other parts of the T&CA. The UK government has been bullish about the prospect of the UK gaining additional fishing opportunities in its own waters after the end of the adjustment period, but there is considerable scepticism in the fishing industry about this. The EC has made it clear that it will seek to protect the interests of EU fishing communities in any future negotiations. So far, dialogue between the two sides on some fisheries related issues have struck more of a belligerent than conciliatory tone (for example, on the export of bivalve molluscs).

The above discusses only the fisheries section of the Agreement. As implementation of the T&CA in its entirety begins to take effect the provisions in the fisheries section may be affected by other provisions in the Agreement concerning trade, subsidies and regulatory autonomy.

The UK now has third country status and this affects exports to the EU .

More than two thirds of UK fisheries production is exported to the EU, while most domestically consumed fish in the UK arrive from non-EU countries such as Iceland, Norway, Indonesia, India and Ghana, or from other parts of the world via processing plants in the EU. The UK has acquired third country status and is no longer part of the customs union and single market. Exports to the EU will remain tariff free, but, in common with all other countries in the same position, there are rules and controls that the UK has to observe when exporting to the EU (and when moving products to Northern Ireland). There are new non-tariff barriers such as catch certificates, export health certificates, customs declarations, movement certificates, transport documents, etc as well as the need for goods to go through Border Control Posts.

Bringing these into effect has caused substantial problems for industry and government bodies. There has been criticism that the government was insufficiently prepared and did not do enough to produce timely guidance for industry. Because fresh fish is highly perishable and exports are time critical problems became immediately evident and have run ahead of finding solutions. The Some of the problems experienced can be attributed to initial difficulties (though nevertheless causing acute disruption for industry) as systems settle down and people become familiar with the new requirements, but others are systemic and will have long term implications. The additional paperwork and border checks, with their associated

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complexity and delays, are a permanent feature of exporting fish products to the EU. Over time, there will be adaption within government systems and structural change among businesses, which will have long term consequences.

Covid19 has hit much of the fishing industry hard and left large parts in a weakened state The Trade and Cooperation Agreement and the new rules governing exports to the EU have as a backdrop Covid19. There is a cumulative effect. For many in the fishing industry – the catching sector and shoreside – the pandemic has been a period of sustained financial stress and emotional turmoil leaving them ill-equipped to deal with further economic shocks.

The pandemic arrived in the wake of a bad winter when a lot of boats could not get out of harbour for long periods because of the poor weather conditions. Winter is always the low season, but 2019/20 was a tough time for the catching sector. Financially, the lockdowns in the UK, in the rest of Europe and elsewhere in the world could not have arrived at a worse time for much of the UK fishing industry. The restaurant and hospitality markets disappeared.

Supermarkets in the UK closed their fresh fish counters. Nations important to the UK seafood industry imposed trading restrictions and key export markets were closed. The whole supply chain was disrupted. Seafish have reported that close to three-quarters of processing businesses closed completely or reduced production at some point during the first lockdown.

Some auction houses closed whilst others adapted and managed to keep going but with lower sales and prices. Many boats in the UK were tied up whilst others had to reduce their trips and saw their earnings drop sharply.

The MMO has released provisional data. Compared to 2019, the value of landings by UK vessels during 2020 fell by 20%. This was not evenly spread. There was a sharp fall in the value of shellfish landings (e.g. crabs were down 42%), the values of all of the main demersal species were down but, despite a drop in prices, the overall value of the UK pelagic landings increased by 11% because of higher volume landings compared to the previous year.

Some merchants and processors – predominately the smaller ones – adapted their business model. They moved from wholesale trade to selling direct to the public. Numbers of fishers, with government encouragement, also started selling direct from their boat, the fish quay or via home deliveries. The move to direct sales was a hectic and acutely demanding experience for many, though for some it proved satisfyingly rewarding. During the summer when the traditional markets started to recover, some businesses switched back to their customary trade but others stuck with direct sales as part of their business portfolio. But, with autumn and winter came further national lockdowns and trade restrictions leading to further business realignment and adjustment. Fish prices fell back and remained volatile for several months.

First sale prices have begun to strengthen, but the balance between supply and demand remains brittle with continuing uncertainties about the impacts of Covid19 and the fallout from the T&CA. The pandemic has exposed the interdependence and fragility of the supply chain in the UK, and the importance of transport and logistics. For several months there was the paradox of strong demand for fresh and frozen fish from domestic customers, boats struggling to find

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outlets for their catch, fish prices falling and independent retailers closing their shops because of problems sourcing supply. Among other changes, online shopping has grown substantially and it is reported that consumers have shown a growing preference for frozen and prepackaged fish products, though demand on-line for fresh fish has also grown.

The small scale fishers and shoreside businesses face increased pressure and additional uncertainty Many small scale fishers and onshore fishing businesses are caught in a perfect storm of financial vulnerability because of Covid19, limited fishing opportunities for small vessels, further threats to traditional fishing grounds from competing uses, a growth in domestic regulatory burdens, fixed costs rising and the prospect of being squeezed out of the EU export market because of the scale of their operations. These factors, when combined, represent an unrelenting and possibly inexorable push towards rationalisation and consolidation.

Across the UK nearly all quota is allocated to Fish Producer Organisations (POs) in the form of Fixed Quota Allocations; the POs in turn manage the quota allocations among their members.

The remainder is managed by the fisheries administrations and allocated as catch limits to eligible small scale fishers. Both the UK Government and the Scottish Government consulted last year on the future distribution of the additional quota that would result from the UK becoming an independent coastal state. At the time, the amount of quota and the stocks included in any uplift were unknown. Because of the uncertainty, the Scottish Government confined their paper to the distribution of quota in 2021, but the UK Government consultation looked beyond this noting that change could take several years.

Both governments outlined various options for allocating the additional quota in ways that were aimed at furthering specific objectives, such as enabling vessels to diversify, increasing fishing opportunities for small scale fishers, incentivising compliance with the landing obligation, community quota schemes and so on. The quantity and make-up of the additional quota actually gained by the UK is likely to require a rethink by Defra about how it is employed in England. There has already been jostling among different interest groups and, in the first instance, difficult decisions have had to be taken about how the additional quota will be apportioned among the four UK fisheries administrations. The UK government has opted for apportionment between the administrations in 2021, based upon 90% historic uptake and 10% zonal attachment with an adjustment for Wales to deliver a minimum uplift for priority stocks.

Each administration will then distribute their share of additional quota as they see fit. The Scottish Government has decided to allocate most of its additional quota to active vessels, based on historic track record, with a further portion being allocated to the mainly smaller vessels (non-sector). Quota distribution across the UK will be given fresh consideration later this year for 2022 and beyond.

At this stage it is difficult to judge the extent to which the additional quota will assist the small scale fishers and the over 10m vessel owners that are having to rent substantial quantities of quota. The capacity for change to the system is limited – at least for the next few years – which will constrain the ability of the fisheries managers to deploy quota as a means of using the resource to secure environmental and social goals. The only guarantee right now is continuing uncertainty about future fishing opportunities, moderated to an extent for 11

producer organisations and their members by Ministerial assurances that the existing fixed quota allocation system will remain in place.

Allowing EU vessels to access the 6-12nm zone around parts of the UK was a bitter blow to many in the catching sector and it impacts disproportionately on the small scale fishers in those areas. They do not have the same flexibility as larger vessels and tend to concentrate their activities on their local fisheries. Space in the inshore area is becoming increasingly constrained due to, for example: marine protected areas, windfarm developments, mineral extraction, capital dredging, disposals at sea, cable laying, etc This leads to increasing concentrations of effort, which is acerbated by competition for space and potential gear conflicts from foreign vessels particularly in the southern North Sea, the Channel and the south west England fisheries.

Although there is demand in the EU for high quality day caught fish from the UK the extra bureaucracy, cost and financial risk faced by exporters is looking a tough barrier to overcome.

Assembling export packages from multiple small vessels is now very time consuming and increases the risk of error which could lead to the load being turned back or rejected by the buyer because of delays. Where a lorry is loaded with several different consignments (known as groupage) from different suppliers an error in the paperwork for one consignment means that the whole load could be turned back or destroyed when it reaches the Border Control Point in the EU or when they do get through the consignments rejected by the buyers because of delays.

There are substantial additional costs involved. There is an inevitable increase in fixed costs across the board, affecting all fishers and others in the supply chain, which are unlikely to be offset by increased sale prices. There is the cost of the extra staff time. Vets and local authorities charge for export health certificates and exporters have to appoint and pay for customs agents. Proportionately, these costs will bear more heavily upon the smaller operators. The Secretary of State for Environment, Food and Rural Affairs has indicated that small scale exports to individual buyers are likely to be no longer viable and instead larger consolidated consignments will need to be sent to intermediary distributors in the EU. However, this model is not without its own problems and eats into profit margins for small suppliers.

Once the current settling in period has passed, the rigour with which goods are checked when they reach the EU is unlikely to diminish and, in some respects, might increase. The EC and member states are entitled to conduct thorough checks of imports from third countries and have every reasonable motive to do so. They can also choose to introduce fresh controls and to ban the import of certain products. The problem with exports from the UK of bivalve molluscs illustrates how, overnight, a difference in interpretation can seriously threaten a profitable and sustainable sector, leaving the UK government and the industry scrambling to pick up the pieces.

Hauliers will only provide transport services where it remains profitable to do so. The larger processors and exporters have their own transport or dedicated arrangements, but smaller companies often rely upon group haulage. They are exposed to greater risk that their supply routes could be interrupted and possibly discontinued. It seems likely that transport costs will

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rise to compensate for the additional work and risk. The pandemic has exposed how disruption to haulage and logistics can have a dramatic effect on the businesses that rely upon these systems.

New delivery patterns may emerge and it might not be possible in every case to revert to next day delivery. Even with next day delivery, because of the time taken in preparing the documentation, sellers and exporters could face a choice between supplying fish with a shorter shelf life at reduced value or exporting smaller quantities of fish at a higher unit cost.

This will affect small scale fishers and exports more than larger operators.

Wholesale fish prices were already low because of the pandemic and fell further in January and February. Although they have more recently shown signs of recovery there is uncertainty about how well they will hold up over the reminder of the year. It is possible that over time two tier pricing could emerge: the higher tier for the species and quantities that continue to attract both foreign and domestic buyers, and the lower tier for domestic supply only. For parts of the shellfish sector the immediate future looks bleak. The difference of interpretation between the UK Government and the EC over the rules about importing into the EU bivalve molluscs has left that part of the industry in serious trouble. Business remodelling and restructuring seems inevitable, with some businesses falling away completely.

An area of growing difficulty is likely to be managing non-quota stocks to which EU vessels will have access. As mentioned above, it will be a challenge to establish track record and to monitor compliance. Some of these stocks are commercially important and, without effective management and controls, fishing activities could add to the pressure on the marine environment and the sustainability of these and other fisheries. It seems likely that new control measures will be introduced. The allocation of bass fishing limits, prior to Brexit, has already caused controversy and there could be a re-run. There are competing commercial interests in all the non-quota stocks and it remains to be seen whether satisfactory resolutions can be found. The introduction of additional catch limits and/or quotas could result in some rough justice, with winners and losers.

Jobs are at risk on land as well as at sea, unless mitigating measures are taken For every job at sea there are resultant multiple jobs on land. The ratio varies according to location, species of fish being landed and the extent to which there are associated shoreside processing and other activities. This multiplier effect sustains coastal communities, small and large. It only works to the benefit of UK coastal communities if boats land in the UK. Some Scottish vessels found in the early days following the end of the Transition Period that they could obtain better prices and reduce bureaucracy and costs by landing directly into Denmark.

The new export requirements, processes and rules of origin have strengthened the incentives for UK vessels and EU vessels to land directly into the EU. Direct landings into other coastal states are not new but, as a means of reducing costs and delay, avoiding tariffs (under the rules of origin in the case of EU vessels) and achieving higher sale prices, they could become increasingly attractive as an option. On the other hand, the UK government has been making strenuous efforts to reduce the impact of non-tariff barriers and smooth the passage of fish exports to the EU. The government is also proposing to strengthen the economic link licence condition and require all English registered vessels to land more of their fish in the UK. Taken 13

together, these actions might be sufficient to moderate the benefits of landing directly into the EU. Some of the small scale exporters have not yet resumed exporting to the EU, whilst they wait to see how the new arrangements work in practice and whether exporting will remain financially viable for them. If the costs and risks outweigh their operating margin they could decide to close that part of the business. Much of the trade with the EU is based on selling a high quality product at a premium but nevertheless competitive price. Interrupted supplies, inconvenience and higher costs to importers put this at risk. A concern among all exporters has been that they could lose their customer base that they have built up over many years and which would be very difficult to win back There will be structural changes within industry in response to the UK’s new relationship with the EU. Businesses will need to remodel to cope with the new requirements and risks. This will have knock on effects through the supply chain and will affect the number and types of jobs and where they are carried out.

Controls on imports from the EU will have an impact on the UK seafood and fishing industries, but at this stage the impacts are difficult to assess Import controls are being introduced by the UK on a phased basis and will affect domestic seafood businesses. The majority of the fish consumed in the UK is imported and a substantial proportion is imported from the EU. As with exports into the EU, tariffs might apply in some cases, if the fish originated outside the EU before being imported into the UK. Other requirements such as export health certificates and catch certificates will also apply. A great deal will depend upon interpretation and how the rules are implemented by the UK authorities. This could have a bearing on the domestic market for fish caught by UK vessels and landed into the UK and will introduce another set of dynamics. Currently, it is a known unknown.

Will government policies and plans help?

The UK fishing industry is highly regulated. Its current shape and form is the product of government rules and interventions, as well as the economics of global and domestic markets.

There is often tension between the regulatory system and market dynamics, which can lead to unintended and unwanted consequences. Business requires clarity about government intentions and early signalling of policy shifts and regulatory changes. A common refrain from industry is that they need to see the detail. High level objectives and aspirations do not cut it when it comes to assessing what will happen on the ground.

The Fisheries Act 2020 provides a wide range of enabling powers. It empowers the UK to put in place more agile and responsive fisheries management systems than the CFP could accommodate. There is a difference of approach between Scotland and England in how this is going to be taken forward. Scotland published in December 2020 a ten year fisheries management strategy articulating how its powers would be employed. In England, it seems that Defra is proposing to wait upon the statutory Fisheries Statements and the Fisheries

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Management Plans as the means of providing an overview and strategic direction. There will be a difference of timing as a result and the English industry will probably experience a more ad hoc release of policy and regulatory proposals in the interim.

The Scottish Fisheries Management Strategy explains its relationship with the Scottish government’s national performance framework, the government’s Environment Strategy and Scotland’s National Marine Plan. It will form part of the Scottish government’s Blue Economy Action Plan. Central to the government’s approach to fisheries management is stated to be protecting the marine environment and securing natural assets for future generations. The Strategy seeks to foster greater cooperation within the industry, with government and with other marine sectors. It recognises that fishing management should have regard for communities, onshore processing, local markets, healthy eating and sustainable food supplies, and opportunities for training and employment.

With all strategies, it implementation that makes the difference between aspiration and delivery. This is acknowledged in the Scottish Fisheries Management Strategy. There is a commitment to report ‘on progress in a regular, open and transparent way’ and to develop a firm plan of direct actions that will deliver the Strategy. It is proposed to strengthen the governance arrangements and build upon existing partnerships with greater focus on comanagement.

The Welsh Government and the Northern Ireland Executive appear to be in a similar position to the UK Government in terms of putting into place strategies for fisheries (though the Welsh Government did publish a Strategic Action Plan in 2013), in as much as these remain work in progress.

Relationship with the Esmée Fairbairn Foundation’s Strategic Plan, impact goals, the priorities accorded to those goals, and the long term outcomes.

The Foundation’s strategy includes Fishing in Tandem with Nature as one of the priorities within the aim of protecting, restoring and improving Our Natural World and the 2030 impact goal, sustainable ethical food. The strategy recognises that the UK’s departure from the CFP creates opportunities. There are five long term outcomes sought: • • • • •

UK is seen as a global leader in the management of marine resources.

Marine biodiversity is restored at scale and enjoyed by more people.

Seafood consumed in the UK comes from well-managed stocks.

Existing traditional coastal communities are sustained and the economy of small fishing communities is revived.

The status of marine wildlife populations is understood, effectively monitored and safeguards are in place to allow recovery.

All are directly relevant to the issues arising from the T&CA, the UK’s status as a third country and the fallout from Covid19. The autonomy that the UK has gained affords greater opportunity for the UK to raise its game on the management of marine resources and protecting the marine environment. It is now better placed to take decisions when needed

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and to be responsive and adaptable as circumstances demand. Covid19 and leaving the EU are cause for reviewing how seafood consumed in the UK is sourced. The T&CA, the new and additional requirements relating to exports to the EU, and the pandemic all present threats to the economy of small fishing communities, which will require mitigating actions if the Foundation’s desired outcomes are to be achieved.

Also relevant are other impact goals, priorities and long term outcomes, in particular: •

Restoration of marine habitats, reconnecting coastal areas with their natural heritage (as part of space for nature)

•

The outcomes relating to communities working together for change: o Local communities are fairer and more equal. o More people have a say in decisions that matter to them. o Communities are better able to pursue an aspirational vision of what they want their local area to be. o The corporate, cultural, public, and voluntary sectors work better together to deliver collective change with communities.

•

The outcomes relating to local economies work better for the people who live there: o Communities are central to rebuilding local economies in recovering from COVID-19 and in the future. o There is an increase in models of community ownership and regeneration (of land, assets, housing, and services) across the UK. o Increased models of economic development rooted in social and environmental justice and a green recovery. o Local economies address inequality. o Locally rooted institutions use their purchasing power and assets to achieve greater social and economic justice in their communities. o Sustainable enterprise and natural solutions are the building blocks of regeneration.

The T&CA has left many fishing communities feeling a strong sense of injustice and has reinforced a prevailing view amongst fishers that they are disenfranchised from decisions affecting their livelihoods. The majority of the catching sector is not represented by any formal trade organisation. References by central government to meetings with industry can be somewhat misleading as the meetings can be with groups and individuals that represent a relatively narrow range of interests. The UK fishing industry is very diverse and fragmented, so meaningful engagement represents a challenge, particularly in England with its large under 10m inshore fleet.

There is huge inequality in the way in which quota is held. A study report by Greenpeace revealed in 2018 that two-thirds of the UK’s fishing quota is controlled by just 25 businesses, the five largest quota-holders control more than a third of UK fishing quota and

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around half of England’s quota is ultimately owned by Dutch, Icelandic, or Spanish interests.1 Although the UK Fisheries Administrations have indicated that they propose to change the way in which additional quota (i.e. quota above that to which the UK was entitled within the CFP) is allocated they have chosen to retain the existing fixed quota system for the organisations already holding the quota. The UK government’s stated aim is ‘to ensure that UK communities derive maximum benefit from UK quota’.

Both Defra and the Scottish Government have signalled that they are keen to work with coastal communities and to develop co-management. Up to now engagement has tended to be patchy and restricted mostly to individual programmes or initiatives. There is considerable room to assist purposeful community development, to empower fishing communities and to influence worthwhile outcomes. Brexit, with all its challenges and discomforts, could nevertheless be the catalyst for positive change, directed at helping to restore local confidence and rebuild local economies.

Although there is further work to be done and plenty of room for progress, fisheries management measures are having a positive effect. The health of many fish stocks in UK waters has improved considerably over the past 15 years or so. The extensive coverage of marine protected areas in UK waters will help contribute to the further recovery of fish stocks, though the extent to which this will occur is unknown. Last year, the UK government commissioned a review of the effectiveness of the protection measures in MPAs and is currently considering whether increased protections for these areas are required.

There can be conflict between restoration of marine habitats and biodiversity, on the one hand, and sustaining traditional coastal communities and reviving the economy of small fishing communities, on the other. For example, marine protected areas are not generally designated for fisheries management purposes and often commercial fishers are negatively affected. Up to now, the negative impacts have tended to be experienced most frequently by small scale fishers. In the longer term there may be benefits to the fishing industry, as the MPAs contribute to growth of fish stocks with possible spill-over effects. However, if these benefits do materialise it does not follow that those who were displaced will automatically benefit. They might not still be in business. Also, the marine environment is shared space.

Local fishers do not have exclusive access. Vessels from elsewhere in the UK are entitled to fish in the same waters, subject to licence conditions and quota holdings, and over 1600 nonUK vessels have been licenced to fish in UK waters. This considerably outnumbers the entire UK over 10m fleet.

To tackle this will require a holistic and joined up approach which recognises competing interests. Fishers and their communities should be fully engaged in finding solutions and the impacts should be properly understood and acknowledged. In many cases it should be possible to reconcile these conflicts, with sufficient honesty and the willingness to accept mitigating measures which might be outside established orthodoxy.

1

https://unearthed.greenpeace.org/2018/10/11/fishing-quota-uk-defra-michael-gove/

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Interventions by the Foundation have a better chance of success where they encompass the full range interlinked of issues We all have a role in sustainable fisheries: central government to set the policies, regulators to manage the fisheries, local authorities to set local plans, scientists to provide sound and objective advice, local communities to provide the social and economic fabric, fishers to fish in ways that derive the best possible economic and social benefits for the least environmental cost (including safeguarding stocks for the future), processors and merchants to act sustainably, retailers and food services to inform and sell sustainably, and consumers to make choices that support sustainability. With these roles are responsibilities. Each of us needs to play our part and we are dependent upon on each other. Only by everyone working in concert will the Foundation be able deliver its goals, priorities and outcomes for commercial fishing.

Bringing marine conservation and sustaining coastal communities into the mix along with economically sustainable fisheries requires an approach that encompasses all three elements.

It could be coined the ‘whole body’ approach. The weakness of focussing on particular aspects, to the exclusion of other parts, is that there can be unintended and untoward consequences. Or the work runs into the sand because it has hit an unexpected obstacle from an unforeseen direction. By examining the full range of underlying issues, fully understanding them and seeking common ground it is possible to develop a cohesive and productive plan of action. A whole body approach might initially seem daunting as it will need to bring into play different fields of expertise, different perspectives (some of which are likely to be testing), different organisations, different policies, different regulations and different goals. It requires a multi-disciplinary approach that is able to draw on first-hand knowledge and genuine expertise. It can be phased and should always begin with a scoping exercise to identify the full range of issues, ascertain where there may be conflicting priorities and views, and identify all the relevant players.

It is reasonable to expect divergent voices. There is competition for space at sea between a growing number of other industrial users, between different groups of fishers and between traditional fishing grounds and conservation measures. Shared use is not always possible; there will be losers as well as winners. Although it can be uncomfortable, honestly about this and the consequences for the businesses affected is the only way forward. It is helpful to recognise that consensus might not be achievable and that a range of views can be a legitimate product of engagement.

Interventions should guard against transference, exporting problems from one area to another or drawing resources from one community to another. This happens a lot when new regulatory measures are introduced in the UK’s crowded seas. Displacement from customary fishing grounds has a cumulative effect. Unless mitigating measures are taken the result is concentration of effort, gear conflicts, competition for diminishing space, safety issues, and quite possibly adverse environmental impacts. The disruptive effects are not just felt at sea.

Disrupting the supply chain, without sufficient planning and consideration, can have negative ripple effects that extend more widely.

It is essential that on-shore facilities, activities and services are considered in parallel with what happens at sea. There is a strong interdependence, but this is often insufficiently 18

recognised. Ports, harbours and landing places are hubs. They are where boats are maintained, equipment is stored, fish are landed and they are the pivot between catching the fish and getting them to market. A fishing port is distinct from other ports because fish are highly perishable, quickly losing value, and because a fishing port operates to irregular and unpredictable hours. Although popularly portrayed as scenic they are nevertheless industrial sites where speed of operation is of the essence. Infrastructure costs can be high and if profits drop it becomes harder to find ways in which to secure the necessary investment. As at sea, fishers are often in competition for space with other users and can lose out. The whole body approach would seek to find innovative means of addressing this and ideally finding ways in which there can be complementary and mutually supportive solutions that bring benefits to the local community.

The Scottish Government’s fisheries management strategy observes that MPAs are not routinely a fisheries management tool, but may help protect fish stocks and enable them to grow. The Benyon report2 to the UK Government on Highly Protected Marine Areas came to the same conclusion. Both reports acknowledge that environmental restrictions can have negative socio-economic effects on fishers and fishing communities and that there is a need to mitigate these as far as possible. There can be medium and long term offsetting benefits, but, unless there is a plan in place, where these benefits fall will be determined by happenstance.

More could be done to usefully explore ways in which UK fishers can secure the benefits of conservation measures in shared waters – particularly where these waters are shared by foreign fleets. There could be value in linking this to the Foundation’s outcomes of communities working together for change and reconnecting coastal areas with their natural heritage. These policy connections have largely escaped consideration by the UK government.

The 2018 Fisheries White Paper did not touch on the subject except in very generalised terms.

Defra’s report in 2018 to Parliament on the progress made in establishing a marine protected area network omitted any reference.

Fishing is community based, part of the local heritage and most of the businesses are family owned and family run. The family unit needs to be fully recognised. Family members are part of the picture and should be given the opportunity to be fully involved. This may require a change of approach when designing and running a programme; one that accommodates the unpredictable and demanding working hours of small and weather dependent businesses and one that takes on board family and childcare commitments. It can be difficult for fishers to attend and prepare for meetings on days and at times that suit officials. Allowance should be made for the pressures on those in business and those with family commitments. Fishing is highly regulated. The amount of official material published and form filling required is voluminous. Official speak can be intimidating and require translation.

Both Defra and Marine Scotland have promoted the idea of co-management. It is not a new concept. There are lessons to be learnt from other sectors. Moving towards co-management on fisheries will require training, learning and adjustment on all sides. A common frustration for fishers is a sense that consultation and engagement are a formality rather than having 2

Benyon Review into Highly Protected Marine Areas: Final Report, 2020

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meaningful purpose. There is a place here for independent facilitators and for professional representation of fishers’ interests at a local or regional level. At present a minority have any form of formal representation, particularly in England. Communication with officials can be sporadic and not always satisfactory for either side.

The fishing industry and local communities only have a sustainable future if young people are able and want to work and live locally. Fishing can provide a good living and year round jobs (unlikely the seasonality of many other jobs reliant upon tourism in coastal villages and towns).

However, there are major barriers to entry and the industry suffers from greater uncertainties than many other industry and business sectors. Nationally, the average age of a boat skipper or owner is now 54 and the average age of crew is 38. Many skippers of larger vessels report problems in attracting crew and many small boats do not make enough profit to pay for more than the skipper. There are training programmes for new entrants and the possibility of apprenticeships is being explored, but there have to be worthwhile and attractive prospects at the end of that if young people are to remain in the industry. Again, a rounded approach to finding ways in which to enable new entrants to build a future is required if there is to be any realistic prospect of creating an appealing career framework.

Covid19 has led to changes in the way in which we work and shop. Many of these changes are likely to be permanent. The pandemic has accelerated the pace of technological change and its place in the fishing industry and fisheries management. This has created new opportunities and challenges. Future interventions ought to embrace the opportunities and be alive to the challenges.

Among other importance considerations are: o Change in the fishing industry usually involves an upfront cost and financial risk for fishers and their families Adopting different fishing techniques or targeting different species, for example, may involve purchasing expensive new gear or even a different boat, with no guarantee of a viable return. o Notwithstanding this, the industry is responsive and adaptive. It is a highly skilled and technical field of work. o There are no certainties. The fishing varies from year to year, season to season and day to day. Climate change and increasing competition for space from other users, such as wind farm developments, is affecting the fishing opportunities available. Any package of measures will need to be fluid and responsive to change. o The job is dangerous. Safety needs to be centre-stage and firmly embedded into any programme or initiative affecting the industry. Currently, it is not consistently so.

Safety is often siloed in central government structure and policy. o The supporting infrastructure in ports and harbours, is costly to construct and maintain. In most cases, the operating margins of the industry – particularly the under 10m fleet - are insufficient to accommodate these costs unaided.

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o Most fishers are supportive of marine conservation measures and are conscious that their future livelihoods are dependent upon healthy fish stocks. Fishing is the only marine industry that is wholly dependent upon this. o UK waters are shared. A fishing licence held by a UK registered vessel entitles the holder to fish in any part of the UK. A large number of foreign vessels have access to UK waters – more than the entire UK fleet of over 10m vessels. o The supply chain is complex, in which transport and logistics play a big part, and it usually extends well beyond local fishing communities where fish are landed. The variability and uncertainty of supply is a barrier to localised catch and supply except on a modest scale. Consideration should be given to assisting small-scale fishers to adapt and operate within the national trend among buyers to increasingly purchase frozen fish and ready prepared meals, and to build stronger links between local supply and local authority and crown procurement purchasing.

Conclusion Fisheries management is complex and does not lend itself to simple solutions, no matter how beguiling they may seem. Its history is peppered with unintended consequences. The interplay and interdependence of each link through the entire supply chain cannot be overstated; the importance of this has been vividly illustrated during Covid19 and following 1st January 2021. The industry’s future is tied up with protecting and improving the health of the marine environment – more so than almost any other industry. The businesses are predominately community and family based, though that is under threat as consolidation gathers pace.

Interventions aimed at delivering the matrix of outcomes set out in the Foundation’s strategy are likely to have lasting value only if all these elements can be brought together. Change is afoot, largely through a combination of externally driven events. There is an opportunity to assist the industry and coastal communities adjust in ways that would help them forge a sustainable future and that would help reduce the pressure on the marine environment. It is an ambitious goal that merits an ambitious and thoroughly prepared portfolio of actions.

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