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ANNEX A - REGULATORY IMPACT ASSESSMENT
Title of Proposal
CONSULTATION DOCUMENT ON FISHERIES: QUOTA MANAGEMENT AND LICENSING
Purpose and Intended Effect
Fishing is a priority in Scotland, delivering benefits to Scottish fishing communities, and the wider Scottish economy. Our proposals set out in this consultation document are designed to help the fishing industry contribute to the delivery of sustainable economic growth, and help support strong prosperous rural communities.
We intend to establish Scottish quota management and licensing arrangements that:
- retain fishing rights in Scottish fishing communities for current and future generations; ensuring fishing rights remain a Scottish national asset
- promote a shared approach to the management of Scottish quota
- encourage quota to be held by those with the means to fish it, and prevent quota becoming a speculative asset
- provide a stable regulatory environment for the Scottish fishing fleet, those investing in its future, and for fishing communities
- facilitate business growth, encourage fleet regeneration, and minimise quota costs.
Rationale for Government Intervention
Failure to introduce proposals to improve quota management and licensing arrangements in Scotland will mean that the Government aims will not be met. This is detrimental to the future prosperity of the Scottish fishing industry, associated communities, and wider economy.
The main goal of fisheries management in Scotland is the long-term sustainable exploitation of fish stocks in support of sustainable economic growth. In some fisheries around the world, fishing fleets are larger than is required to catch the available stock. Consequently, over-fishing occurs, mainly because it is in the short-term interests of individuals to catch as much as they can. In many fisheries in the past there has been open access for all, leading to what is called the "tragedy of the commons" 1 where the sum of individuals' interest is contrary to the common good and the resource becomes exhausted. If fishing effort were not limited in some way this would inevitably lead to stock collapse.
Fisheries managers try to achieve an appropriate balance between biological, environmental, social, and economic objectives. The balance achieved depends on management priorities. There are a range of available management measures (input and output controls as well as technical measures) to try and match fishing effort with stocks. The introduction of property rights in fisheries management is an attempt to move away from the incentive to "race for fish". However, the application of the concept of property rights to fishing is by no means universal or straightforward. Fish stocks are more usually thought to be a common property resource ( i.e. owned by the country or community concerned). What is actually allocated, whether limited in time or granted in perpetuity, is the right of access to a fishery and or the right to harvest part of the fishery's yield.
Within the European Union, fish stocks are managed under the Common Fisheries Policy ( CFP). Most stocks of interest to the Scottish fleet are shared with other countries. Many are mixed fisheries requiring complex management arrangements. A key building block of the CFP is the limits on catches of individual stocks shared out amongst Member States, under Relative Stability arrangements. Fixed on an annual basis by the European Council of Ministers, Total Allowable Catches ( TACs) provide fishing opportunities for the Scottish fleet. A complex management mix of TACs/quotas, input controls and technical measures makes it difficult to deliver management objectives. However, it is vital for the sustainability of stocks, as well as those social and economic benefits that flow to Scottish fishing communities and the wider economy, that fisheries managers get this mix right.
SAFEGUARDING OUR RIGHTS
Background
Under the current management arrangements, there is no "ownership" of quota. This position remains unchanged since October 2001, when UK Fisheries Administrations issued the following statement:
" UK fishing quotas are allocated annually at the discretion of Fisheries Ministers, who make the allocation on the basis of the FQA units associated with the individual fishing vessel licences. Once allocated, quota is a permission to catch quota stocks which is conferred at the level of the PO or non-sector. In total FQA units represent catches made in the defined reference period and are solely for allocation purposes. Fishermen do not, therefore, have property rights over FQA units or quota. Nonetheless they are afforded a substantial degree of protection and certainty through the development and operation of the UK's quota management rules and the Ministers' assurance that significant changes will not be made to existing arrangements without full and proper consultation."
The Scottish Government recognises that the lack of clarity and certainty associated with access to FQAs and, hence, quota, taken together with the evolution of the current management arrangements, has created ambiguity and a lack of transparency in an area critical to the future of the industry. Greater certainty is required for quota holders to help fishing businesses plan for the future.
Property Rights in Fishing
Whenever a fishery is managed by restricting who can have access to the fishery, how much catch can be taken, or how much fishing activity is allowed, those with such entitlements are said to hold "use rights". A fisherman holding "use rights" has the right to access the fishery, but importantly does not own the fish (until they are actually caught). Thus "use rights" do not imply ownership of the resource in the sea.
In international schemes the existence, duration or longevity of "use rights" varies. In Norway, for example, no property rights-based system exists. In certain other countries, such as in New Zealand, the "use right" is explicitly in perpetuity. In other systems ( e.g. Namibia) the right is formally only for one year at a time but is generally automatically renewed (effectively the same as the current UK system). In other systems ( e.g. Chile) the duration is for a specified number of years without a clear statement as to how renewal will occur. Often (as in Iceland and Australia) the duration of the "use right" is simply left unspecified.
The Scottish Government's proposals, the current position with regards to "ownership" of quota, along with a brief description of property rights in fishing is provided in Chapter 2.
Options
Option 1: Do nothing
Provide no new definition of "use rights" but continue to base it around the previous statement made by Ministers in October 2001.
Option 2: Define rights - establish "stewardship rights"
These rights confirm that FQA units provide access to a share of the annual allocated quota, subject to management measures set by the Scottish Government. These rights will not be granted in perpetuity, and are intended to give more certainty with regards to quota holding than is currently the case. A rolling five year review period will be established, to ensure that management objectives are being met and the system is working as intended. If there is evidence of system failure a period of notice ( e.g. maximum five years) would be given, setting out the issue to be addressed.
Costs and Benefits
Option 1 - Do nothing
Costs
If no change is made, then over time, the expectations of strengthened property rights and legal title over quota may increase, and quota holders may by implication, maintain that they own the FQAs and associated quota held. Such an outcome may encourage concentration of quota holding, increase barriers to new entrants, fishing rights being held outside the active industry, and the loss of rights from traditional fishing communities.
No change may discourage long-term investment and planning. In practice it is not clear to what extent certainty of "use rights" play in influencing investment decisions, with a combination of historic annual fluctuations in quotas and other management measures undoubtedly discouraging industry investment.
Benefits
It has been argued that the uncertainty that exists regarding property rights on quota discourages speculation in quota holding in the short term, with the result that only those that really need to invest in quota (the fishermen) are willing to take the investment risk. In many respects the question of legal title has acted as protection to fishing rights in recent years, but has also created uncertainty and risk for the industry.
Option 2 - Stewardship Rights
Costs
Because defining rights will create further certainty about the status of fishing rights, this may encourage speculation and holding of FQA units by non-fishing interests (other management proposals are, however, designed to tackle this risk).
Benefits
Greater clarity regarding quota holding may act as an incentive for fishing vessel owners to make longer term investments, though there are many other factors that will also influence their decisions ( e.g. stock health, cost of fuel, price of fish, and access to capital).
Greater clarity of fishing rights has the potential to increase the use of fish stocks on the basis that industry would wish to protect long-term investments. It may also provide quota holders with such rights with a greater incentive to police the fishery themselves.
Small Firms Impact Test
The majority of businesses involved in the fishing industry are small family businesses, typically individual vessel owners and small fishing companies. This proposal will apply to small and larger firms in the same way, and will not have an adverse impact on small active fishing businesses involved in legitimate fishing activity.
- ESTABLISH A REGISTER OF SCOTTISH QUOTA HOLDERS
Introduction
The current register of vessel licences maintained by Fisheries Administrations records FQA unit holdings associated with vessel licences, but does not the identity beneficial holders or details of holdings associated with dummy licences. Establishing a register is a logical development with the establishment of a distinct Scottish quota management and licensing system, and will be carried out following the designation of Scottish quota prior to the start of a new system.
Options
Option 1 - Do nothing
Option 2 - Establish a register of Scottish quota holders
A register, showing details of quota holdings associated with individual licences, would be publicly available (possibly internet-based), and would be linked to an electronic platform for transfer of FQA units and in-year quota.
Costs and Benefits
Option 1 - Do nothing
Costs
Will not provide the Scottish Government with a complete and accurate register of holders of Scottish FQA units and quota, and could potentially undermine other management proposals. Will not improve transparency of quota holdings, particularly for those engaged in quota/ FQA transactions or improve management information.
Benefits
Will maintain the opaqueness of quota/ FQA holdings which some in the industry would welcome. There will be no information system development or running costs.
Option 2 - Establish a register of Scottish quota holders
Costs
Information system start up and running costs. Some industry resistance is likely from those content to maintain the status quo and current opaqueness of quota holdings and possible reluctance to embrace the establishment of a publicly available register of Scottish quota holders.
Benefits
It will improve transparency (particularly for those wishing to engage in quota/ FQA transactions), and quality of management information on an asset of national importance.
Small Firms Impact Test
This option will apply to small and larger firms in the same way, and will not have an adverse impact on small businesses actively involved in legitimate fishing activity.
FISHERMEN AT THE HEART OF QUOTA MANAGEMENT
Background
The Scottish Government is committed to fishing rights remaining in Scottish fishing communities; encouraging quota to be held by those with the means to fish it; and providing stability and circumstances for business growth.
The UK share of the Total Allowable Catch ( TAC) is obtained each year following agreement at the EU Council of Ministers in December. This quota is then shared across the fishing industry. The allocation of quota in Scotland is a well established and understood process. Until 1999, annual quotas were allocated to groups on the basis of the track record over the previous 3 years (the reference period) of licensed vessels in membership of sectoral management groups at 1 January of the quota year. From 1 January 1999, a system of Fixed Quota Allocations ( FQAs) was introduced. This system involves each group - Producer Organisations ( POs), other groups with sectoral management responsibilities, the non-sector and the under 10 metre fleet - receiving a fixed percentage share of the quota allocated to the UK each year.
Under the initial FQA arrangements, it was only possible to transfer FQA units with a vessel licence ( i.e. the licence and associated FQA units could not be separated). When the present FQA system was introduced, it did not include provision for the transfer in FQA units, except in the context of licence transfer. However, in the light of requests from fishermen for a means of adjusting their FQA holdings in line with business requirements, limited scope to transfer FQA units was introduced in Sept 2002 whereby, in certain circumstances (mainly where a licence transaction took place) FQA units could be transferred separately from licences and onto either licences already on fishing vessels (known as an "active" licence), other licence entitlements, or group "Dummy" licences. 2FQA units cannot, however, currently be transferred from an active licence and in practice, FQA unit holders with an active licence undertake quota (tonnage) transfers from/between their licences by means of contractual agreements drawn up between the parties concerned. Fisheries Administrations have periodically recognised these through a process known as "reconciliation" (aligning records of FQA units holdings against vessel licences). These provisions have not precluded fishermen and producer organisations from continuing to undertake annual transfers of quota as provided for in the current quota management rules. The current system has, to some extent, evolved to meet the changing needs of industry.
FQA units are presently associated with an active vessel licence, PO dummy licence, or licence entitlement. This has allowed fishermen and companies to hold FQA units that broadly match their fishing patterns. This holding can be made up of original allocations and/or units they have subsequently acquired. Some fishermen originally allocated FQA units have retired or reduced the level of their fishing activity. In some cases they have retained their FQA units with a view to leasing out the quota deriving from their unit holdings each year as a source of income, despite having no active ongoing fishing business interests.
These developments, along with the increased use of PO "dummy" licences in holding FQA units, and the ability of fishermen whose vessels were decommissioned in 2001 and 2003 to transfer the units associated with their vessel's licence prior to the surrendering of the licence has allowed beneficial flexibility to deal with ongoing changes in fishing patterns. On the other hand, it has weakened the link between FQA units and active fishermen. Hence, only around 70% 3 of FQA units are currently held on the licences of active vessels.
Many POs have acquired FQA units to act as a pool of quota to augment the holdings of individual members. Broadly speaking, and recognising that there will be variations between quota stocks and sea areas, around 3% of all FQA units are held by POs. Other interests have acquired FQA units in order to obtain access to quota, e.g. quota traders, vessel agents and Community Quota Schemes. This accounts for around 6% of all FQA units for key stocks.
Since 2001, decommissioning has removed 165 vessels from the Scottish fleet. 4 The owners decommissioning these vessels were allowed to retain and transfer the FQA units associated with their licences for a defined period of time, with the Government taking a flexible approach as quota management policy developed. Over the last few years, evidence (through recent annual exercises undertaken by Fisheries Administrations on FQA holdings on PO Dummy licences) suggests that many ex-vessel owners and financial institutions have sold their FQAs, to vessel agents/fish salesmen, and fishermen. Therefore, transactions involving FQA units and in-year quota are an increasingly important aspect of the quota management activity of POs and fishermen.
- MAINTAIN LINK BETWEEN FQAs AND VESSEL LICENCES
Introduction
Since 1999, FQAs (and track record prior to then) have been linked to vessel licences. The calculation of quota allocations are based on the FQAs associated with vessel licences as at 1 January of the quota year. This is a well-established and understood methodology. The Scottish Government has considered the merits of disassociating FQAs from vessel licences but has concluded that little would be gained by so doing.
Options
Option 1 - Do nothing - maintain link between FQAs and vessel licences in allocating quota
Option 2 - Remove link between FQAs and vessel licences in allocating quota
Costs and Benefits
Option 1 - Do nothing
Costs
Would limit flexibility of quota traders to transact FQA units.
Benefits
Administrative convenience. Current system of allocating quotas based on FQAs associated with licences well established and understood. Also maintains the link between the active fishing industry and FQAs/licences, from which quota derives. Thus, encourages quota to be held as close to the active fleet as possible.
Option 2 - Remove link between FQAs and vessel licences in allocating quota
Costs
New administrative and IT system likely to be required to "track" movement of units and calculate annual quota allocations. Start up and running costs. Would break link between active fleet and quota holding. Removing the link between FQA units and fishing licences will encourage the holding of FQA units away from active fishermen, potentially resulting in a range of interests (non-fishing) holding FQA units, concentration of holding, and migration of quota. FQA units associated with fishing licences are the cornerstone of the annual quota allocation calculations and additional problems could occur in the process of assigning quota units for allocation purposes if FQA units not associated with a fishing licence.
Benefits
Mainly to quota traders and speculators who would have increased flexibility to move FQA units.
Small Firms Impact Test
This option will apply to small and larger firms in the same way, and will not have an adverse impact on small businesses actively involved in legitimate fishing activity.
- RETAIN A HOLDING MECHANISM (DUMMY LICENCE) FOR SCOTTISH POs TO HOLD FQA UNITS
Introduction
While a Scottish system is intended to encourage quota to be held as close to the producer as possible, we recognise that there is also merit in retaining PO "Dummy" licences as a holding mechanism for FQA units in certain circumstances.
Options
Option 1 - Do nothing
Option 2 - Limit the use of PO Dummy licences
Limit the use of "dummy" licences whereby only quota units acquired for Community Quota Schemes, by the PO itself or, possibly, by vessel agents may be held on them. The holding of FQA units by those not active in the fishing industry would not be permitted.
Costs and Benefits
Option 1 - Do nothing
Costs
Would not improve the poor transparency that currently exists or lack of adequacy of management information the Government holds in respect of this asset of national importance. Would do nothing to address the, hitherto, unrestricted number of PO dummy licences which have been created and the use to which have been put in recent years, a use for which they were not intended when first introduced in the mid-1990s. The opaque nature of quota holdings on dummy licences would continue (as might the proliferation of Dummy licences generally) and the Scottish Government would not be in a position to establish clearly at any given time the provenance of Scottish FQA units on dummy licences.
Benefits
Current arrangements are well established and understood by industry groups engaged in using such a facility. Provides a degree of flexibility for Producer Organisations, and those on whose behalf they currently hold FQA units.
Option 2 - Limit numbers and use of PO Dummy licences
Costs
Under proposed arrangements, POs would be given a period of time (6 months) to divest their dummy licence of FQA units which did not meet the criteria for continued holding and, where appropriate, to make arrangements to reduce the number of dummy licences in their name to one.
There is likely to be increased administrative costs in the short-term for both Government and POs.
Benefits
Such an arrangement should further encourage quota units to be held on active licences while at the same time maintaining "Dummy" licences as an aid to transfer arrangements. Limiting the use of PO "Dummy" licences would also provide more transparency in terms of the provenance of units held on a Dummy licence.
Small Firms Impact Test
This option will apply to small and larger firms in the same way, and will not have an adverse impact on small businesses actively involved in legitimate fishing activity.
Introduction
One of the aims of a Scottish system is to encourage quota to be held as close to the producer as possible. FQAs will not be permitted to be held outwith the active fishing industry. For example, some owners who decommissioned their vessels under the 2001 and 2003 Decommissioning Schemes retained the quota ( FQA units) associated with their licences prior to their surrender and to transfer these units to another licence. A number of owners chose to come to an agreement with a PO to place units onto a PO Dummy licence and, thereafter, to lease the quota deriving from these units.
Options
Option 1 - Do nothing
Option 2 - Only active fishing interests will be permitted to hold FQAs.
Costs and Benefits
Option 1 - Do nothing
Costs
Continue to place a financial burden on the part of the active fleet in seeking to secure additional fishing opportunities. Improve long term viability of the fleet and help ensure that quota holdings better match fishing patterns.
Benefits
Holders of such units - non-active ex-fishermen - would continue to be able to generate an income from their ability to lease out quota.
Option 2 - Only active fishing interests will be permitted to hold FQAs.
Costs
Holders of such units would no longer be able to generate an income from their quota holdings.
Although the number of FQA units involved is likely to be relatively small, an influx of such units on the quota system may have the effect of reducing marginally the value of FQA units. However, a 6-month period (from the establishment of a Scottish system) within which to dispose of such units may mitigate against this prospect.
There is likely to be increased administrative costs in the short-term for Government in processing the transfer of such units to another licence, and financial costs to quota holders both in terms of selling and acquiring these quota units.
Benefits
Such an arrangement should further encourage quota units to be held on active licences and reduce the ongoing costs to the active fleet in securing additional quota for their needs.
Improve transparency in the quota management system, and viability of the fleet.
Small Firms Impact Test
This option will apply to small and larger firms in the same way, and should have a beneficial impact on small businesses actively involved in legitimate fishing activity.
- MAINTAINING THE LINK WITH THE ACTIVE INDUSTRY - SCOTTISH QUOTA/LICENCE HOLDERS TO DEMONSTRATE OVER A 3-YEAR PERIOD THAT AT LEAST 70% OF THEIR BUSINESS INCOME IS DERIVED FROM ACTIVELY CATCHING AND MARKETING FISHING
Options
Option 1 - Do nothing
Option 2 - Maintain the link with the active industry - at least 70% of a Scottish Quota/Licence holders business income is, over a 3-year period, derived from actively catching and marketing fish.
Costs and Benefits
Option 1 - Do nothing
Costs
Quota holding by non-active industry, and continued associated costs to active fishing businesses. Current arrangements are insufficient to meet Scottish Government goals.
Benefits
Administrative cost. Could argue that other management measures ( e.g. restricting the use of the PO holding licence) are sufficient to meet management objectives.
Option 2 - At least 70% of a Scottish Quota/Licence holders business income is, over a 3-year period, derived from actively catching and marketing fish
Costs
Additional resources will be required to administer this management measure.
Benefits
Encourage quota to be held close to the producers, discourage speculation in quota holding, and reduce ongoing transfer costs to the active fishing industry.
Small Firms Impact Test
This option will apply to small and larger firms in the same way, and will not have an adverse impact on small businesses actively involved in legitimate fishing activity.
- IMPROVE ACCESS TO REDUCE QUOTA COSTS - QUOTA INCENTIVE SCHEME
This measure is intended to encourage quota to rest with the active fleet. Under these arrangements, a certain level of (end-year) quota uptake would need to be achieved (at group level) in comparison to the average uptake of Scottish POs collectively over a rolling 3-year period (from 1 January 2009). A tolerance level of 10% is also proposed. So, for example, if the average uptake of all Scottish POs over a 3-year period for a key stock is 90%, and a PO's average uptake is 81%, then there would be no need to adjust that PO's initial allocation in the fourth year by virtue of the fact that its average uptake during that period fell within 10% of the Scottish average for the same period. If, however, that PO's uptake was say, 70%, then 10% ( i.e. the difference between 70% and 80% (average Scottish uptake less 10% tolerance)) of the PO's initial quota (tonnage, not FQA units) allocation would be deducted from its initial (provisional) allocation and re-distributed to those Scottish PO which met the requisite quota uptake. However, prior to such action being taken, Scottish POs would be consulted to allow due consideration to be given to force majeure ( e.g. vessel breakdown/vessel replacement) over the assessment period. The criteria for such arrangements would be set out clearly in the Scottish quota management rules to be agreed annually with Scottish stakeholders.
If, despite being subject to these arrangements, it is evident that a PO is still consistently under fishing quotas which are already subject to quota incentives ( i.e. in-year deductions), then that PO may be put on an extended period of notice (up to 5 years) to address this issue. If, after, say 3 years, the PO has demonstrated that it has corrected the issue and uptake is broadly in line with other Scottish groups, then the notice will be withdrawn. If, however, this issue is not addressed after the period of notice has lapsed, then, following consultation, FQA units relatively to the scale of the average under fishing may be removed from the PO (either at a group level or, for example, pro-rata to individual members' FQA share of the group total) and redistributed to other groups as appropriate.
Options
Option 1 - Do nothing
Option 2 - Introduce quota incentives scheme
Costs and Benefits
Option 1 - Do nothing
Costs
Less incentive for some groups to optimise uptake of quota or transfer quota in-year to those most in need of additional opportunities. Would not help address the costs of acquiring (leasing) in-year quota.
Benefits
Current management arrangements are well established, and provide a degree of security with regards to allocation for all Producer Organisations.
Option 2 - Introduce quota incentives scheme
Costs
May result in PO vessels focussing on the quantity (rather than quality) of fish landed to ensure that landings are sufficiently high to avoid their group being subject to the deductions envisaged under these arrangements. This may, in turn, adversely affect market prices.
We recognise that such a measure may encourage the practice of "ghost" fishing or mis-reporting ( e.g. amounts and/or area of capture) of landings.
Benefits
Would encourage quota to be held by those with the means to fish it. Would improve vessels viability, and benefits that flow to fishing communities. Would reduce the incentive to speculate on in-year quota, and encourage fishing businesses to hold the quota which match their fishing patterns.
Small Firms Impact Test
This option will apply to small and larger firms in the same way, and should not have an adverse impact on small businesses actively involved in legitimate fishing activity.
- MORE FLEXIBILITY TO MATCH QUOTA TO FISHING PATTERNS - REMOVE CURRENT RESTRICTION ON TRANSFER OF FQAs FROM AN "ACTIVE" LICENCE
Introduction
The present restriction on the transfer of FQA units can result in units being transferred through a system based on private contracts between fishermen.
Options
Option 1 - Do nothing
Option 2 - Remove current restriction on transfer of FQA units from an "active" licence
Costs and Benefits
Option 1 - Do nothing
Costs
The current restrictions have limited practical effect on the transfer of FQA units. However, if retained, industry will continue to incur legal and administrative costs in reaching agreements to transfer the beneficial holding of FQA units. This would lead to a lack of transparency, and do little to reduce the legal costs presently incurred by the industry.
Benefits
The current system is well understood by the industry, and the project restrictions provide a mangement safeguard.
Option 2 - Remove current restriction on transfer of FQA units from an "active" licence
Costs
Without other interventions ( e.g. economic link arrangements), there is a risk of speculation and quota moving away from Scottish fishing communities.
Benefits
This proposal would be welcomed generally by the fishing industry. It would allow the transfer of units in real-time to match fishing patterns; avoid the need to re-base FQA reference period; remove the need for periodic retrospective reconciliation; and the need for fishermen to maintain ongoing legal agreements and their associated costs.
Small Firms Impact Test
This option will apply to small and larger firms in the same way. This proposal should reduce the costs to small businesses actively involved in legitimate fishing activity.
- IMPLEMENT A NEW internet-BASED SYSTEM FOR FQA and Quota TRANSFERS
Introduction
This is a development of the current (paper-based) arrangements for FQA transfers, and of the current electronic in-year quota swap system. The primary aim is to facilitate the processing of such transfers and provide industry with greater transparency in terms of FQA/quota holding and transfers. As now, any in-year swaps/transfers will require to be formally approved by the Scottish Government/ MFA as appropriate.
It is envisaged that this system would be an internet-based system, with secure access (log-ins and password protected to ensure no unauthorised access to FQA details either at a PO or individual level). All units associated with Scottish fishing licences and Scottish recognised POs would be listed, and clearly designated and identified (through a set of serial numbers unique to each unit) as "Scottish" to ensure the Scottish Government has the ability to track them. Those units associated with "Scottish" licences would be established and serialised. Such units would retain their Scottish identity irrespective of where in the UK they are subsequently transferred.
All FQA transfers would, as now, be given a unique identifying number, and submitted for authorisation on behalf of licence holders, but only by the PO in whose membership the associated licence is at the time of transfer (this is to ensure that a PO has a clear idea of what units are "leaving" or "joining" the group at any time during the year). All transfers would, as now, require the approval of the Scottish Government. A history of FQA and quota transfers to/from POs and individual licences would be available to authorised users. Potential transfers of FQAs and quota could also be advertised on the system. We intend that the proposed system would interact with management arrangements elsewhere in the UK.
Options
Option 1 - Do nothing
Option 2 - Establish an internet-based system for transfer of FQA units and in-year quota
Costs and Benefits
Option 1 - Do nothing
Costs
Would continue with the current (administratively burdensome both to industry and Government) arrangements for FQA and in-year quota transfers, and not improve transparency. If current restrictions on transfer of FQA units (from active licences) are lifted, we are likely to experience an increase in FQA transfers, thus increasing the administrative burden. The current paper-based system struggles to cope with the increasing number of new quota stocks added to the FQA 2 (transfer) forms, and the increase in quota swap activity which tends to occur in the latter part of the year.
Benefits
Current arrangements are well established and understood by industry groups engaged in such activity. Some may prefer to continue with the familiar paper-based system.
Option 2 - Establish an internet-based system for permanent transfer of FQA units and in-year quota swaps/transfers
Costs
System development and running costs.
Benefits
Would facilitate and speed up the processing of such transfers and provide greater transparency both for industry and the Scottish Government. Electronic audit trail of FQA transactions would be established, further contributing to transparency and ease of data retrieval and administration. A history of FQA and quota transfers to/from POs and individual licences would be available to authorised users.
A development of the current e-swap system aims to provide a real-time picture of swap activity to quota managers rather than weekly as per current arrangements. This measure will enable the current in-year transfer arrangements to continue.
Small Firms Impact Test
This option will apply to small and larger firms in the same way, and should not have an adverse impact on small businesses actively involved in legitimate fishing activity.
Introduction
Currently, in-year quota transactions/leasing, FQA and licence transfers take place within the UK. By and large, we propose to continue with these arrangements.
Options
Option 1 - Do nothing
Option 2 - Place restrictions on the Scottish industry in respect of in-year quota transactions/leasing, FQA and licence transfers under a Scottish system
Costs and Benefits
Option 1 - Do nothing
Costs
There are risks of the loss of quota from Scotland other management measures ( e.g. economic link conditions), would help ensure that if there was a loss of quota from Scotland, that quota would continue to provide direct economic benefits to Scotland.
Benefits
The Scottish Government recognises that while it needs to safeguard the ongoing position of Scottish fishing communities by securing arrangements governing fishing rights appropriate to Scottish requirements, it is sensible that a devolved Scottish system should interact with the rest of the UK. In-year quota transactions provide benefits for fishermen in Scotland and elsewhere in the UK in acquiring quota from a larger pool.
Option 2 - Place restrictions on the Scottish industry in respect of in-year quota transactions/leasing, FQA and licence transfers under a Scottish system
Costs
The ability of Scottish fishermen to acquire quota to match their fishing patterns could also be curtailed, thus potentially affecting the viability of Scottish fishing businesses.
Would not facilitate mutually beneficial working relationships between the Scottish industry and elsewhere and the benefits that flow from having access to a larger UK quota pool would be diminished.
Benefits
Would help ensure that Scottish FQA and in-year quota provides benefits to the Scottish fleet and fishing communities.
Small Firms Impact Test
This proposal will apply to small and larger firms in the same way and, depending on the option chosen, may or may not have an adverse impact on small businesses actively involved in legitimate fishing activity.
- INTERNATIONAL QUOTA SWAPS ( IQS)
Introduction
Under a Scottish quota management and licensing system, we propose that where an IQS is "brokered" by a Scottish PO (whether as a "package" or not), only Scottish POs will be invited to bid. In addition, in-year increases in UK quota would, initially, be divided into a "Scottish" and " RUK" quota on the basis of the "Scottish" FQA share of the stock in question. Thereafter, the "Scottish" quota would normally be distributed to POs on the basis of their FQA share of the "Scottish" quota the Scottish Government reserves the right, after consultation, to distribute the quota on another basis.
Options
Option 1 - Do nothing ( i.e. continue to deal with all IQS arrangements at a UK level)
Option 2 - Establish Scottish arrangements for dealing with certain aspects of IQS
Costs and Benefits
Option 1 - Do nothing
Costs
Maintaining current arrangements for inviting bids for IQS will do little to recognise Scottish arrangements. Inconsistent with broader management proposals. No benefit to Scottish industry to permit bids from RUK where a Scottish PO has "brokered" an IQS.
Benefits
All PO groups in the UK could benefit from the continuation of the current arrangements, by having access to IQS proposals on a UK basis.
Option 2 - Establish Scottish arrangements for dealing with certain aspects of IQS
Costs
Little perceived costs to Scottish industry in terms of treatment of IQS "brokered" by Scottish PO. Possible costs to POs if in-year increases in UK quota not distributed to all Scottish groups on the basis of FQAs (revised concordat and MOU to deal with interaction issues, to ensure a fair and equitable share of quota for all quota holders throughout the UK).
Benefits
A logical development under a Scottish system. Only Scottish POs would benefit from IQS deals which they broker. Dividing in-year increases of UK quota into "Scottish" and " RUK" shares would provide the Scottish Government with flexibility to distribute the "Scottish" share. For example, where bids for IQS are over-subscribed, we would have the flexibility to determine the basis upon which incoming quota would be distributed. This would have the potential advantage of ensuring that incoming quota was fished and not simply traded.
Small Firms Impact Test
This option will apply to small and larger firms in the same way, and should not have an adverse impact on small businesses actively involved in legitimate fishing activity.
OTHER MANAGEMENT OPTIONS CONSIDERED
- MAINTAIN THE BASIS FOR ALLOCATING FQA UNITS
Option 1 - Do nothing
Retain the system of distributing quota on the basis of the number of FQA units associated with licences in group membership as at 1 January of the quota year.
Option 2 - Change the basis for the allocation of FQA units
The current distribution of FQA units could be adjusted by reallocating the units on a different basis ( e.g. rebasing the reference period to a more recent period based on recorded catch). This could be done on the basis of some measure of either landings or effort, and either for all the FQA units or a proportion of them.
Costs and Benefits
Option 1 - Do nothing
Costs
Some industry interests claim the allocation of FQA units in 1999 did not accurately reflect fishing effort at that time and was not therefore fair and equitable. It is also argued that FQA holdings may not reflect current fishing practices and therefore impose an ongoing cost on some fishing businesses through leasing in-year quota.
Benefits
Would help encourage stability by maintaining the present allocation system, and reduce uncertainty.
Option 2 - Change the basis for the allocation of FQA units
Costs
A reallocation of FQA units would create another set of winners and losers. May undermine the basis for the quota management system and lead to future uncertainty. This uncertainty may restrict the transfer of FQA units by removing the year-on-year stability which FQAs bring. May lead to incentives for fishermen to adjust their behaviour in anticipation of similar changes in the future, and encourage "paper" or "ghost" fishing ( i.e. recording catches which were not actually made). Would not respect investments made by some fishing businesses.
Benefits
A potential benefit of changing the basis for allocating quota is that long term fishing opportunity could be moved to fishing vessels that have been legitimately fishing by leasing in-year quota but who, for whatever reason ( e.g. such as poor access to capital), are not able to acquire the FQA units. Such an approach would allocate FQA units to "active" fishermen, thereby reducing administrative costs of leasing in-year quota, acquiring FQA units and, thus, improve vessel viability.
Small Firms Impact Test
This option will apply to small and larger firms in the same way. Changing the basis of allocation will create winners and losers, but would likely have a positive impact on those small businesses actively involved in legitimate fishing activity.
Introduction
This measure would limit the number of FQAs which could be held by an individual licence holder (whether it be on a single licence or multiple licences) or organisation with the aim of preventing concentration of FQA holdings, and protecting regional fishing interests.
Options
Option 1 - Do nothing
Option 2 - FQA holding limit
Costs and Benefits
Option 1 - Do nothing
Costs
Increases the risk of concentration of quota holding and loss of national asset. Would not protect regional fishing interests.
Benefits
Would provide flexibility for quota holders to increase quota ( FQA) holdings with minimum restrictions. Would facilitate economic efficiency.
Option 2 - FQA holding limit
Costs
Such a measure may distort the market in FQA transactions and restrict economic efficiency and the natural development of businesses.
Benefits
Would protect local fishing interests and help prevent concentration of FQA holdings. Offer additional protection to fragile fishing communities and access to fishing rights.
Small Firms Impact Test
This option will apply to small and larger firms in the same way, and would not have an adverse impact on small businesses actively involved in legitimate fishing activity.
Introduction
Place a restriction on the amount of in-year quota that FQA holders are allowed to transact within the year rather than fish, as a proportion of their FQA holdings. Any in-year quota in excess of the limit and not used for fishing could be retained, as would the FQA units, but the holder would gain no value from it.
Options
Option 1 - Do nothing
Option 2 - FQA Transfer limit
Place a limit whereby no more than, for example, 25% of FQA units could be removed ( i.e. permanently) from a licence (associated with a vessel or a PO Dummy) in a given year.
Costs and Benefits
Option 1 - Do nothing
Costs
Could encourage quota to be held by those who do not fish it, and to push up costs to active fishing businesses.
Benefits
Would permit quota holders to transfer FQAs/quota as now, with minimum restrictions.
Option 2 - FQA Transfer limit
Costs
May restrict some active Scottish fishing businesses and reduce business flexibility. Could restrict economic efficiency and business development. Additional administration costs.
Benefits
Encourage quota holding to more closely reflect a licence holder's current fishing activity. This is likely to reduce in-year quota transfer costs, and encourage quota to be held by those with the means to fish it.
Small Firms Impact Test
This option will apply to small and larger firms in the same way, and will not have an adverse impact on small businesses actively involved in legitimate fishing activity.
- IN-YEAR REALLOCATION OF QUOTA FOR KEY STOCKS
Introduction
Current arrangements for in-year reallocation of quota allow for quota (following consultation) to be reallocated from those groups unlikely to catch their allocation in full to those groups which could most likely make use of additional quota.
Options
Option 1 - Do nothing - maintain in-year reallocation of quota
Option 2 - No in-year reallocation arrangements under a Scottish quota management and licensing system
Costs and Benefits
Option 1 - Do nothing
Costs
Current arrangements can cause uncertainty for POs and quota holders due to the timing of reallocation, stocks involved, amounts involved, donors and beneficiaries.
Benefits
Maintains the Scottish Government's ability to regulate the market and to contribute to the Scottish Government's aim of ensuring that quota is available to be fished by the active fleet. Help to optimise uptake of quotas by providing incentives for those who hold quota. Under a Scottish system, arrangements would be clarified to provide more certainty to quota holders.
Option 2 - No in-year reallocation arrangements under a Scottish quota management and licensing system
Costs
Would not help contribute to our aim of ensuring that quota is in the hands of the active industry. Could result in continued under fishing of some quota stocks of interest to the Scottish fleet and associated costs of acquiring quota.
Benefits
Some argue that in-year reallocation can discourage POs from actively participating in the quota system due to an expectation that quota will be reallocated later in the year. Would also remove current uncertainties about timing of reallocation, stocks involved and amounts involved.
Small Firms Impact Test
This option will apply to small and larger firms in the same way. Reallocation will create winners and losers, but is unlikely to have an adverse impact on small businesses actively involved in legitimate fishing activity.
SUPPORTING OUR COMMUNITIES
In-year Quota Management and Role of POs
POs are governed by their Articles of Association made in most cases under either the Companies Act 1985 (as amended) or the Industrial & Provident Societies Act 1965 (as amended). POs are required to produce plans detailing their forward marketing arrangements on an annual basis. Their quota management responsibilities are governed by a set of administrative rules flowing from the fisheries regulatory framework. This includes monitoring landings, implementing catch restrictions and imposing penalties on those individual members in breach of restrictions.
Once quota allocations are made, POs, in accordance with arrangements set out in their Articles of Association, may adopt management methods which best suit their members. The current quota management systems employed by POs range from pool-plus 5 to individual quotas ( IQs). Fisheries Administrations monitor uptake and close PO fisheries when POs' allocations have been taken. Such closures are enforced through licence variations, prohibiting vessels from catching and landing the stock.
A review of UK Producer Organisations in 2006, explored how effectively POs exercise their marketing responsibilities, their role in quota management and their role in quota transactions. The full report can be found at http://www.scotland.gov.uk/Topics/Fisheries/sea-fisheries. One conclusion of the report was:
"Since the introduction of FQAs, there has been a very clear shift in the way POs manage their members' fishing activities - with much increased use of ring-fencing of quota, and more vessel owners opting for IQ-only systems. But the main change in management style is probably at the level of the vessel owner/skipper. Here, faced with a falling tonnage equivalent and thus a falling monetary value of many FQAs, owners have sought to increase their entitlements through acquisition of the entitlements from decommissioned vessels and the aggregation of licences better to match vessel capacity and entitlement".6
The Scottish Government is clear that the underlying ethos of all POs should be to support their local fishing industry and its associated economy. In considering how effective POs are, we have assessed how well POs are serving their members by creating added value for these members, and how well POs have served Fisheries Administrations in assisting the UK to meet its CFP obligations. We recognise the important role of POs in providing flexible quota management arrangements for members, and the role the main POs play in maximising returns through marketing of member's products, helping join up the supply chain, as well as their contribution to local fishing communities. In Scotland, we place great emphasise on POs link to the community, through PO recognition status. We believe that much of the strategic development of Scotland's fishing sector could be enhanced, and we recognise that POs could play a major role in this area.
Currently Ernst and Young are conducting a 2 year evaluation of the Common Market Organisation ( CMO) for fish and fisheries products on behalf of the European Commission. This evaluation will include an in depth assessment of Council regulation 104/2000 (the regulation establishing the CMO). It will pay particular attention to the role of Producer Organisations, pricing and intervention mechanisms, marketing standards, consumer information and trade with third countries. It is expected that the full evaluation will assist the Commission in coming forward with proposals for reform of the CMO. The Scottish Government has been consulted as part of this study and further developments in respect of POs can be anticipated.
Producer Organisations ( POs) were originally established through an EU remit for marketing, effectively providing them with derogation from some aspects of competition law. In 1999 when the FQA system was set up, POs were granted permission to manage quota on behalf of vessels. These quota management responsibilities include; monitoring landings; enforcing catch restrictions; and imposing penalties on members who are in breach of restrictions.
In considering how effective POs are, we have assessed how well POs are serving their members by creating added value for these members, and how well POs have served Fisheries Administrations in assisting the UK meet CFP obligations. We recognise the important role of POs in providing flexible quota management arrangements for members, and the role they play in maximising returns through marketing of member's products, helping join up the supply chain, and in supporting local fishing communities.
Having carefully considered a number of options to widen out management responsibilities to organisations other than POs and/or individuals, we consider that managing sectoral quota in Scotland should continue to be the responsibility of Producer Organisations. We believe sufficient competition already exists in the provision of quota management services. Widening quota management responsibility to organisations other than POs or individuals is likely to have an undesirable impact on POs, with possible wider implications for the important role some play in the supply chain and in supporting fishing communities.
In consulting industry, we recognise that there is a need to review and improve the rules and requirements of sectoral management and reform the Producer Organisations.
In summary, these are:
- POs retain sectoral management responsibilities.
- Ensure that Business Plans and strategies properly reflect PO members' requirements.
- Revisit arrangements for PO Board membership. Improving governance is essential to successful delivery of both a group's strategy and to oversee the effective implementation of its Quota Management regulatory role.
- Improve transparency of quota management.
- Ensure that POs have the tools to carry through their responsibilities, and revising the disciplinary process.
- Formalise the submission of Operation Plan and Accountability reviews as part of the accredittion process.
- Entitle only Scottish PO groups to hold and manage quota deriving from the FQAs associated with Scottish licences.
Options
Option 1 - Do nothing
Option 2 - Improve sectoral management as summarised above
Costs and Benefits
Option 1 - Do nothing
Costs
The current costs and inefficiencies with regards to the accountability, governance and transparency of POs will remain. There would be little incentive to improve their role in marketing and quota management.
Some argue that POs currently do not provide added value to their members.
Benefits
POs are a tried and tested vehicle for the management of quotas. Overall, POs appear to do a good job of facilitating fishing opportunities for their members and some in maximising returns through marketing of members' products and in supporting local fishing communities. There would be no implementation costs.
Option 2 - Improve sectoral management - PO accountability, governance and transparency
Costs
Costs of implememtation and administration for the Scottish Government and POs.
Benefits
Recognises and enhances the important role of POs in providing flexible quota management arrangements for members, the role some already play in maximising returns through marketing members' products, helping to join up the supply chain and supporting local communities. Will help ensure POs provide proper accountability to their members and the Scottish Government through improved governance, transparency in monitoring quota uptake, along with a requirement to revise and standardise (across Scottish POs) the disciplinary process.
Small Firms Impact Test
This option will apply to small and larger firms in the same way, and is unlikely to have an adverse impact on small businesses actively involved in legitimate fishing activity.
- ONLY SCOTTISH POs WILL HOLD AND MANAGE QUOTA DERIVING FROM THE FQAs ASSOCIATED WITH SCOTTISH LICENCES
Introduction
Once "Scottish quota" is established, it will be necessary, in the first instance, for that quota to be overseen by the Scottish Government and managed by a Scottish group. There would seem little logic for Scottish quota to be managed by a group outwith the administration of the quota's "home" administration.
Options
Option 1 - Do nothing
Option 2 - Only Scottish POs will hold and manage quota deriving from the FQAs associated with Scottish licences
Costs and Benefits
Option 1 - Do nothing
Costs
Would undermine the aims of the Scottish quota management and licensing system and call into question a shared approach between the Scottish Government and quota holders in managing Scottish FQAs/quota.
Benefits
Flexibility under current arrangements whereby there are no restrictions as to who can hold FQAs and quota within UK.
Option 2 - Only Scottish POs will hold and manage quota deriving from the FQAs associated with Scottish licences
Costs
Would restrict current holdings of FQAs and quota. Additional costs to POs, quota holders and Government in the lead up to establishing a Scottish system.
Benefits
Assist Scottish Government to meet management aims of delivering sustainable economic growth and supporting vibrant rural communities. Help maintain benefits that flow to Scotland from access to fishing rights. Aims will be undermined if Scottish quota is not managed within a Scottish management framework.
Small Firms Impact Test
This option will apply to small and larger firms in the same way, and is unlikely to have an adverse impact on small businesses actively involved in legitimate fishing activity.
10 METRE AND UNDER (10MU) AND NON-SECTOR MANAGEMENT
With the introduction of catch limits in 2000 (initially for langoustine), all Scottish 10mu vessel owners have had to submit landing declarations of langoustine and other shellfish with the result that the introduction of Registration of Buyers and Sellers ( RBS) arrangements for langoustine in January 2006 has had little effect on recorded landings.
The quotas for the 10mu and the non-sector (over 10m) group (whose licences do have associated FQA units) are placed in quota "pools" and managed separately by Fisheries Administrations within the UK, in consultation with industry interests; with catch limits (quarterly/monthly) for all quota stocks being applied across all vessels in the fleet. Both the 10mu and non-sector groups in Scotland are not able to undertake swaps or quota transfers individually - this is undertaken on their behalf by Fisheries Administrations in the UK.
The tonnages of quota in the non-sector and 10mu fleet "pool" are low compared with the sectoral fleet. However, a long-established system of underpinning 7 has been in place for some important stocks to try and ensure that the viability of these groups is maintained irrespective of changing Total Allowable Catches ( TACs). This quota is supplemented by additional in-year quota being transferred as a result of the "economic link" condition (see Chapter 5), and quota swaps with POs.
The current pool system of quota management results in all 10mu and non-sector vessels being managed in a broadly similar way, even though they may have different requirements ( e.g. fishing patterns, level of activity, and dependence on quota stocks).
A detailed report on the structure and activities of the Scottish non-sector and 10mu fleet can be found on the Scottish Government website at http://www.scotland.gov.uk/Topics/Fisheries/Sea-Fisheries.
Options
Seven options have been considered as part of a package of management measures to improve management of under 10 metre and non-sector vessels in Scotland.
Option 1: Maintain current pool arrangements
Option 2: Allocate FQAs to under 10m vessels
Option 3: One-off adjustment to North Sea Langoustine quota from the sector to the 10mu and non-sector
Option 4: Exit Strategy - in-year quota (temporary)
Option 5: Exit Strategy - FQAs (permanent)
Option 6: Quota leasing for under 10 metre and non-sector vessels
Option 7: Introduce Langoustine Permits
Costs and Benefits
- Option 1 - Maintain current pool arrangements
Costs
There has been some criticism that the present centrally managed arrangements do not reflect local needs, and a more flexible approach is required. The risks associated with underutilised capacity are not addressed.
Benefits
The present pool system is well established, simple, and understood by the fishing industry. The pool helps maintain a relatively easy entry point into the fishing industry.
A centrally managed pool can help fisheries managers balance economic and social and community objectives. This system can also prevent concentration of quota holding, ensure quota is retained for use by the inshore fleet, and thereby help protect some fishing communities.
- Option 2 - Allocate FQAs to under 10m vessels
Costs
It is likely that quota would migrate to larger more profitable vessel operators, with concentration of holding, a reduction in the number of small vessels, and permanent loss of quota from some fishing communities. The cost of entry to the industry would increase.
A fair allocation of quota would be difficult achieve. This could be based on a recent track record of landings, vessel power, or length, for example. However due to the diverse nature of the inshore fleet, significant latent capacity (larger number of part-time/hobby fishermen), and accuracy of landings data pre RBS, allocation may be problematic.
Benefits
Will give some efficient vessel owners working against the pool greater opportunities to develop and grow their business. Will also remove an historic administrative barrier.
- Option 3 - Review the Scottish North Sea Langoustine annual allocation to the 10mu and non-sector
Management of the non-sector and 10mu North Sea Langoustine "pool" fisheries has been problematic in recent years, due largely to an insufficient level of quota. Against a backdrop of under fishing of langoustine more generally, one option is to increase the initial "pool" allocations of North Sea langoustine to groups who are genuinely pool dependant.
Between 2005 and 2007 the average initial combined UK quota allocation for the 10mu and non-sector was 1,216 tonnes. The average end year UK quota for these groups was 1,858 tonnes (following in-year swaps, economic link quota, and gifts from POs), and average recorded UK landings of 1,823 tonnes. This means that Fisheries Administrations have had to source on average 600 tonnes of North Sea langoustine each year since 2005 to try and maintain a viable inshore North Sea langoustine fleet. In 2006 and 2007 the sector under fished its quota allocation by almost 3,500 tonnes (15% of the sector allocation) per annum.
We estimate that around an additional 400 tonnes of in-year quota (2.5% of Scottish POs' collective initial 2007 allocation) could be transferred in 2009 from Scottish POs to maintain a viable Scottish inshore North Sea Langoustine fleet. This transfer would be reviewed annually. How such quota would, in practice, be secured from Scottish POs and formalised under a Scottish system is a matter on which the Scottish Government would consult POs and other stakeholders if such an arrangement were adopted.
Costs
Increasing the amount of quota available in the under 10 metre and non-sector pool, may increase the attractiveness of fishing against the pool, and possibly encourage more effort on inshore stocks.
The quota needs to be sourced from somewhere - the sector. Adjusting the annual allocation of North Sea langoustine may create some uncertainty for vessels fishing in the sector. At current TAC levels that economic impact of sector vessels will be minimal. If the North Sea langoustine TAC is reduced, for example, then the management arrangements can be reviewed.
Benefits
The proposal will improve the viability of the North Sea under 10 metre and non-sector langoustine fleet, and help ensure quota goes to those that have demonstrated they can fish the quota. It may also help reduce discards, improve overall quota uptake, improve supplies to processors, and not potentially undermine international TAC/quota negotiations.
- Option 4 - Exit Strategy - in-year quota (temporary)
Costs
In-year quota will be transferred from the pool to a PO, for those vessels taking part in this scheme. Such arrangements will reduce the size of the pool. Introducing such a scheme, it can be argued discriminates against those under 10 metre vessels that have recently left the under 10 metre pool with no FQA/quota and joined a PO.
It may be difficult to determine a fair proportion of quota that vessel owners transfer to POs. Conditions on a scheme, such as limiting future transfer of quota, may be difficult/costly to police.
Benefits
This proposal will make it easier for some vessels to expand their business, and improve vessel viability. It will also help Improve flexibility for non-sector and under 10 metre vessels in forward planning.
This proposal will help reduce the artificial barriers that exist between the sector and non-sector/under 10 metre fleet. It may also help maintain supplies, reduce discarding, and increase income for POs, without undermining the integrity of current pool arrangements.
- Option 5 - Exit Strategy - FQAs (permanent)
The option is similar to option 4 (above), except that instead of vessels transferring in-year quota from the pool to a PO, this scheme would allow owners to leave the pool to take FQA units with them - a permanent exit from the pool. Similar to above, the number of units could be based on a recent track record of landings. For example, if a vessel landed 3% of total landings by under 10m North Sea langoustine, then they could take 3% FQA equivalent of the pool allocation. An option that vessels joining this scheme may receive a proportion of their track record ( e.g. 50% - 80% of the 3%). Conditions on the transfer of these units may also need to be considered, for example, to help ensure quota holding and subsequent benefits remain in local communities.
Costs
As with option 4 (may reduce size of the pool, discriminates against vessels that have already joined POs, difficult to determine what FQAs they take, and manage conditions on future sale). There is considerable risk that such a scheme would encourage concentration of holding, and permanent loss of quota from some fishing communities.
Benefits
As with option 4 (greater opportunity for more efficient vessel owners to develop their business, improve flexibility in planning fishing year, help maintain supplies, and increase income for POs). This proposal will also help reduce the artificial barriers that exist between sector and non-sector/under 10 metre fleet.
- Option 6 - Quota leasing for under 10 metre and non-sector vessels in addition to access to "pool" quota
The initial allocation of North Sea Langoustine is insufficient to maintain the fishery for the full quota year on a reasonable set of catch limits for Scottish inshore vessels targeting this fishery. While successful efforts have been made in recent years to acquire additional in-year quota, it is possible that a small number of vessels may be restricted by catch limits which are applied to the "pool".
Costs
Under 10 metre/non-sector owners (with relatively poor access to capital) would need to compete in the market place with larger/more efficient sector vessels.
May increase effort and make it more attractive to fish against the pool. By enabling vessels to top-up their pool allocation this may encourage so-called "super under 10s" to remain fishing against the pool. Any potential increase in effort, means this is not a long term sustainable solution.
Can argue that this discriminates against under 10 metre/non-sector vessels that have recently joined POs. May encourage some that have left the under 10 metre pool and joined a PO to return and fish against the under 10 metre pool (supplemented by leasing).
Benefits
This proposal will help improve flexibility for non-sector and under 10 metre vessels in planning their fishing year, improve vessel viability, and make it easier for some vessels to expand in the knowledge that they could lease-in quota but still have the comfort of being able to fish in the "pool" at no cost (of acquiring quota).
Option 7 - Introduce Langoustine permits
To try to prevent a growth in effort and limit access to the North Sea and West of Scotland langoustine fisheries, we propose to consider introducing permits for non-sector and 10mu vessels.
Costs
May discourage new entrants and new blood into the industry. May create winners and losers. Potential administrative burden.
Benefits
Would help address the risk posed by the latent capacity that exists in the Scottish 10mu and non-sector (inshore) langoustine sector, by restricting effort and entry to the fishery, thereby contributing to maintain a viable quota "pool".
Small Firms Impact Test
The above proposals will apply to small and larger firms in the same way, and are unlikely to have an adverse impact on those small businesses actively involved in legitimate fishing activity.
THE LICENSING SYSTEM
Fishing activity remains an important component of many Scottish coastal communities. In ensuring that we deliver and maintain a strong and prosperous industry through shared governance arrangements, our policy objectives, in some circumstances, require us to establish licensing arrangements tailored to our needs. Licensing is an important management tool with which we can manage entry and effort in a fishery. Proposals for a Scottish licensing system are set out in Chapter 5.
Options
Option 1 - Continue with the status quo and apply existing arrangements
Option 2 - Introduce a separate Scottish fishing vessel licensing system
Costs and Benefits
All Scottish registered and administered vessels will be affected, as well as Producer Organisations ( PO) that are recognised as Scottish.
Option 1 - Continue with the status quo and apply existing arrangements
Costs
This option would place no additional financial burden on the industry. However without the proposed changes the industry will remain constrained in its ability to operate in a more simplified and flexible manner which would continue to stifle investment. Both fishing communities and fleets would suffer in the longer term as a direct result of this with no clear incentives or opportunities being provided for businesses in forward planning requirements.
Benefits
This option would place no additional administrative burdens on the catching sector of the fishing industry, including POs. It would provide stability in the sense of familiarity of systems and rules in place and may alleviate concerns over potential impact on the current arrangements governing quota exchanges and transfers.
Option 2 - Introduce a separate Scottish fishing vessel licensing system
Costs
Business implications, owners and partnerships will require time to consider their position and the implications for the operation of their vessel's business activity with the introduction of revised arrangements for the administration and licensing of Scottish vessels. For example, where the existing PLN of the vessel is of a port outwith Scotland but where the vessel is currently licensed from a Scottish fishery office, based on residency or place of business of the owner(s), would the owners wish to change the vessel's registration so that it then fully meets the criteria to be determined as a Scottish licensed fishing vessel. A cost implication - presently £37 - would apply in making such a change. The actual cost of physically removing the PLN from a vessel and replacing it with another one can be conservatively estimated at around £100. There are some 221 vessels administered in Scotland that have a non Scottish PLN. The estimated cost to the industry based on a total cost of £137 per vessel would be in the region of £30,277.
Conversely, where the current registration and licensing of the vessel meets the proposed definition but where the criteria for membership of a Scottish recognised PO is not met, would owners be prepared to make necessary changes in PO membership so that the vessel will fully meet all criteria to be determined as a Scottish licensed fishing vessel.
There would be little or a negligible financial burden to pay when administering a Scottish licensing system. The infrastructure and framework is currently in place for the administration and distribution of licences both in the Scottish Government, and its agency the Scottish Fisheries Protection Agency. However any necessary changes or future improvements to current IT systems will attract a cost.
Benefits
The introduction and management of a Scottish quota system is intrinsically linked to the introduction of a Scottish licensing system. A separate licensing system should allow quota managers more flexibility to make decisions regarding macro management of local quota to the long-term benefit of the Scottish fleet.
The introduction of a Scottish licensing system would by default create the recognition of a Scottish fleet as a separate entity from the remaining UK fleet. Part of the criteria would be the creation of an economic link to Scotland. While the fleet would remain on the UK register, the Scottish Government would benefit from the economic link arrangements. Flagships would be required to pay a penalty in quota to the Scottish Government for distribution to the rest of the fleet.
The introduction of a separate Scottish licensing system would allow for a more rapid transition from implementing decisions/recommendations into policy. The recommendations made by the LRWG for example, which allows for more flexibility in the licensing system, conversely would introduce more investment and stability from the industry would be introduced under a Scottish licensing system. These long-term benefits to the Scottish fishing fleet and the associated communities outweigh any short-term financial loss in introducing the system.
The Scottish licensing system will not restrict the fishing activities of other UK, EU and third country fleets in the Scottish zone. They will continue to work under current arrangements.
Small/Micro Firms Impact Test
The majority of businesses affected are those that own fishing vessels with an economic link to Scotland. In some cases these businesses may be required to re-register their vessel with a Scottish PLN. The cost to the business would be £37 with an additional cost of around £100 to physically change the PLN.
MAINTAINING OUR SKILLS
Introduction
A key Scottish Government commitment is to help attract crews and skippers of the future, and to consult on introducing a new entrant's scheme. Further work is required in discussion with the industry in Scotland on how best to establish a national quota reserve to encourage young skippers/owners into the industry by reducing current barriers to entry ( i.e. quota). We envisage that this will be coordinated nationally, with possibly a role for Producer Organisations.
Options
- Option 1 - Do nothing
- Option 2 - Consider new entrants scheme/national quota reserve
Costs and Benefits
Option 1 - Do nothing
Costs
Fishing industry must compete with other industries for access to skilled labour. Failure to address the problems in attracting crews and skippers of the future may have economic and social consequences for Scotland's fishing communities and wider economy.
Benefits
Some argue that the market is best placed to deal with this issue, and no such "interference" is required.
Option 2 - Consider new entrants scheme/national quota reserve
Costs
A new entrants scheme would have associated administrative costs. Start-up quota would have to be found from within the Scottish share of quota allocated to the UK, and a mechanism and basis established for acquiring such quota, distributing what would likely be a finite amount of quota, and setting conditions on the use of such quota.
Benefits
Potentially significant in terms of attracting crews and skippers of the future by helping to ease the major problem of initial access to quota. Wider social and economic benefits for fishing communities.
Small Firms Impact Test
This proposal is aimed at encouraging new entrants into the fishing industry. Although the scheme will apply to small and larger firms in the same way, it is likely to be more appealing to smaller firms. This proposal will not have an adverse impact on small businesses actively involved in legitimate fishing activity.
WORKING WITH OTHERS
Introduction
We recognise that whilst we need to act to safeguard the ongoing position of Scottish fishing communities by securing arrangements governing fishing rights appropriate to Scottish requirements, it is also in the interests of the industry in Scotland and elsewhere in the UK to facilitate interaction.
Options
- Option 1 - Minimal quota and licensing interaction between a Scottish system and the rest of the UK
- Option 2 - Interaction - quota swaps/leases, FQA transfer, and licence transactions broadly similar to current arrangements
Costs and Benefits
Option 1 - Minimal quota and licensing interaction between a Scottish system and the rest of the UK
Costs
Reduce access to quota for fishing businesses and for those businesses to match quota holding to fishing activity and business flexibility.
Benefits
Reduce administration costs. Encourages quota to remain in traditional fishing communities.
Option 2 - Interaction - quota swaps/leases, FQA transfer, and licence transactions broadly similar to current arrangements
Costs
Increase risk of fishing rights not providing direct benefits to Scottish fishing communities. May undermine long term access to quota and licences.
Benefits
Business flexibility. Improve access to quota for fishing businesses working from larger pool.
Small Firms Impact Test
This proposal will apply to small and larger firms in the same way, and will not have an adverse impact on small businesses actively involved in legitimate fishing activity.
LEGAL AID IMPACT TEST
The current quota management and licensing system is well established, and the proposed changes are an evolution of the current management arrangements, taking into account the devolved nature of fisheries management.
"TEST RUN" OF BUSINESS FORMS
Still to be implemented.
COMPETITIVE ASSESSMENT
The above proposals will impact on businesses that hold and manage FQAs and in-year quota, licence holders, as well as the wider fish catching sector.
ENFORCEMENT, SANCTIONS AND MONITORING
The monitoring and enforcement of fisheries legislation will remain with the Marine Directorate and Scottish Fisheries Protection Agency ( SFPA).
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