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House of Commons Hansard
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Public Bill Committees
06 December 2018

Finance (No. 3) Bill (Seventh sitting)

The Committee consisted of the following Members:

Chairs: Ms Nadine Dorries, †Mr George Howarth

† Afolami, Bim (Hitchin and Harpenden) (Con)

† Badenoch, Mrs Kemi (Saffron Walden) (Con)

† Black, Mhairi (Paisley and Renfrewshire South) (SNP)

† Blackman, Kirsty (Aberdeen North) (SNP)

† Charalambous, Bambos (Enfield, Southgate) (Lab)

† Dodds, Anneliese (Oxford East) (Lab/Co-op)

Dowd, Peter (Bootle) (Lab)

Ford, Vicky (Chelmsford) (Con)

† Jenrick, Robert (Exchequer Secretary to the Treasury)

† Keegan, Gillian (Chichester) (Con)

† Lamont, John (Berwickshire, Roxburgh and Selkirk) (Con)

† Lewis, Clive (Norwich South) (Lab)

† Reynolds, Jonathan (Stalybridge and Hyde) (Lab/Co-op)

† Smith, Jeff (Manchester, Withington) (Lab)

† Sobel, Alex (Leeds North West) (Lab/Co-op)

† Stride, Mel (Financial Secretary to the Treasury)

† Syms, Sir Robert (Poole) (Con)

† Whately, Helen (Faversham and Mid Kent) (Con)

† Whittaker, Craig (Lord Commissioner of Her Majesty's Treasury)

Colin Lee, Gail Poulton, Joanna Dodd, Committee Clerks

† attended the Committee

Public Bill Committee

Thursday 6 December 2018

(Morning)

[Mr George Howarth in the Chair]

Finance (No. 3) Bill

(Except clauses 5, 6, 8, 9 and 10; clause 15 and schedule 3; clause 16 and schedule 4; clause 19; clause 20; clause 22 and schedule 7; clause 23 and schedule 8; clause 38 and schedule 15; clauses 39 and 40; clauses 41 and 42; clauses 46 and 47; clauses 61 and 62 and schedule 18; clauses 68 to 78; clause 83; clause 89; clause 90; any new clauses or new schedules relating to tax thresholds or reliefs, the subject matter of any of clauses 68 to 78, 89 and 90, gaming duty or remote gaming duty, or tax avoidance or evasion)

Clause 57

VED: rates for light passenger vehicles, light goods vehicles, motorcycles etc

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I beg to move amendment 108, in clause 57, page 40, line 12, at end insert—

“(10) The Chancellor of the Exchequer must review the revenue effects of the changes made to the Vehicle Excise and Registration Act 1994 by this section and lay a report of that review before the House of Commons within six months of the passing of this Act.”

This amendment would require the Chancellor of the Exchequer to review the revenue impact of Clause 57.

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With this it will be convenient to discuss the following:

Amendment 109, in clause 57, page 40, line 12, at end insert—

“(10) The Chancellor of the Exchequer must review the expected effects on levels of CO emissions and the UK’s ability to meet its fourth and fifth carbon budgets of the changes made to the Vehicle Excise and Registration Act 1994 by this section and lay a report of that review before the House of Commons within six months of the passing of this Act.”

This amendment would require the Chancellor of the Exchequer to review the impact of clause 57 on CO2 emissions and climate change targets.

Amendment 110, in clause 57, page 40, line 12, at end insert—

“(10) The Chancellor of the Exchequer must review the expected effects on the volume of traffic on the roads of the changes made to the Vehicle Excise and Registration Act 1994 by this section and lay a report of that review before the House of Commons within six months of the passing of this Act.”

This amendment would require the Chancellor of the Exchequer to review the impact of clause 57 on road congestion and traffic levels.

Amendment 111, in clause 57, page 40, line 12, at end insert—

“(10) The Chancellor of the Exchequer must review the expected effects on air quality standards of the changes made to the Vehicle Excise and Registration Act 1994 by this section and lay a report of that review before the House of Commons within six months of the passing of this Act.”

This amendment would require the Chancellor of the Exchequer to review the impact of Clause 57 on air quality standards.

Clause stand part.

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It is a pleasure to serve under your chairmanship, Mr Howarth. I am pleased to have the opportunity to speak to the clause and our amendments. As the Minister might outline shortly, the clause provides for changes to certain levels of vehicle excise duty, which I will refer to as VED, by amending the Vehicle Excise and Registration Act 1994, which will now be known as VERA—there are lots of acronyms in this.

Changes to the rates are due to take effect in relation to vehicle licences taken out on or after 1 April 2019. VED is chargeable on vehicles, dependent on various factors, such as vehicle type, engine size, date of first registration, carbon emissions data—indirectly—and other emissions’ impacts, such as air quality and public health. I will not go through all the changes to the various excise duty rates as they apply to the different types of vehicle covered by the clause. At this stage, I will simply note that they are relatively small.

The amendment would require the Chancellor to review the revenue impact of the clause and to publish the findings. That would allow the House, not to mention the drivers of those classes of vehicle and the public at large, to understand the impact on the public purse. Without such an assessment, neither the Government nor indeed Committee members would know how much additional money was available to redirect into measures to help drivers—in particular those on low incomes—to take up cleaner vehicles to the benefit of the natural environment and public health. Will the Minister tell us whether the Government have undertaken any such assessment? If so, will he commit to publish it? If they have not, will he undertake to do so?

The amendment would require the Chancellor to review the impact of the clause on carbon dioxide emissions and the UK’s climate change targets, and to publish that analysis. As the Minister might confirm, road transport accounts for 22% of total UK carbon dioxide emissions—a major contributor to climate change. The European Union has agreements with motor manufacturers that aim to reduce average CO2 emissions from new cars. Colour-coded labels, similar to those used on washing machines and fridges, are now displayed in car showrooms, showing how much CO2 new models emit per kilometre. However, as traffic levels are predicted to increase, road transport will continue to be a significant contributor to greenhouse gas emissions.

Given that light vehicles and other vehicles covered by the clause contribute substantially to carbon and greenhouse gas emissions, will the Minister explain why no such climate impact assessment has been carried out? How will the Government take a lead internationally in the fight to keep average atmospheric temperatures below 1.5° C in the absence of full monitoring and measurement of all greenhouse gas emissions from all sources? He will surely also need to apply “polluter pays” disincentives in the form of increased taxes, for example, including relevant changes to VED.

Finally, will the Minister give a commitment that any such planned or future increase in VED will be recycled into helping drivers to adopt low-emission fuel alternatives, such as electric vehicles or, in future, hydrogen-powered vehicles—that is particularly important to help drivers who must use their vehicles for work purposes as well as for leisure activities—or, where convenient, into helping public transport alternatives, which are rarely available in some parts of the country and many rural areas?

Amendment 110 would require the Chancellor to review the impact of the clause on road congestion and traffic levels and to publish the results. Vehicle use affects our whole quality of local life: traffic can be dangerous and intimidating, dividing communities and making street life unpleasant, while air pollution and traffic noise can make urban living uncomfortable. As the Institute for Fiscal Studies points out, taxing only fuel consumption and car ownership, no matter how the taxes are differentiated by emissions and engine size, cannot result in anything approaching an optimal tax, because neither is a good proxy for the impact of car use on congestion.

Many journeys occur on relatively empty roads. Those journeys are overtaxed because the congestion cost imposed on other road users is minimal. Rural road users are overtaxed relative to those who regularly drive in towns during busy periods. The result is too much driving in towns relative to the amount of driving in less congested areas, and the build-up of noxious fumes and climate-changing pollution. Those adverse impacts are in addition to the disruption for all drivers, who are less able to move freely and go about their business or other driving activities efficiently and without wasting so much time stuck in their vehicles. Not only is that personally frustrating and a contributor to so-called road rage, but the impact on economic and social productivity should be minimised. Will the Minister therefore explain why there has been no assessment of the impact of the clause on road congestion and traffic levels, or publish any that has been carried out?

Amendment 111 is similar, requiring the Government to assess the impact of the clause on air quality standards. As the Minister must be aware, air pollutants in transport include nitrogen oxide, particles, carbon monoxide and hydrocarbons, all of which have a damaging impact locally on the health of people, animals and vegetation. Air quality in the UK might be slowly improving, but many areas still fail to meet the health-based national air quality objectives and European limit values, particularly for particles and nitrogen dioxide.

In town centres and along busy roads, vehicles are responsible for most local pollution. Vehicles of all types tend to emit more pollution during the first few miles of a journey, when their engines are warming up. Although new technology and cleaner fuel formulations will continue to cut emissions of pollutants, these benefits are being eroded by the increasing number of vehicles on the road, including motorcycles, and the number of miles driven. Can the Minister please explain why he does not believe that any such assessment, as set out in our amendment, is necessary to understand the impact of the clause on such a critical aspect of road use?

Amendments 108 and 111 also allow us to address a particular aspect of the total revenue impact and the impact of the measure on air quality: the specific amount raised from VED in London and the extra amount that would be raised as a consequence of the clause, and the consequent impact on air quality.

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Are our amendments not particularly important in the light of fact that the Government have been taken to court three times by ClientEarth for failing European air quality standards and have lost three times?

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My hon. Friend makes a very valid point. The point has not been lost on many people, including in my own city of Norwich, where some people are part of a court case against the Government on this issue and on others relating to climate change. It is something that many people are concerned about, especially given the impact on very young children, who are often lower to the ground and closer to the fumes. I welcome the point my hon. Friend has raised.

This issue is directly relevant, because an element of VED revenue take, including the extra amount raised by the clause, is ring-fenced to provide a fund of about £500 million for air quality. Londoners are contributing to this, in common with the rest of the country. The Government have allocated about £255 million of that funding for clean air zone implementation and another £220 million for the clean air fund, including supporting measures to soften the impacts of clean air zones on the poorest and on small businesses. They also allocated an extra £20 million to £25 million in the Budget for city air quality measures.

London, however, is excluded from all that funding. The Government previously said that this is because London received a generous air quality settlement in 2015 under the then Mayor, who is now better known as the failed former Foreign Secretary. Frankly, that is an absurd claim, and I hope the Minister will not stretch his credibility by repeating it to the Committee today. In reality, the Government reduced the revenue grant by a far greater amount than any extra funding for air quality, reducing it from £700 million to nothing in this financial year. The Mayor’s office received no air quality funding from the Government as part of the last comprehensive spending review. Unlike other cities, London is not getting help to implement the ultra low emission zone, and nor can the Greater London Authority access the mitigation funding to help small businesses and low-income people in other cities to meet new vehicle emission standards. That is perverse.

In addition, that predates the changes to VED, which Londoners are contributing to, and ignores the fact that, quite frankly, the current London Mayor has far greater ambition on air quality than his predecessor did. London is introducing the first, biggest and most ambitious clean air zone—the ultra low emission zone—on 8 April 2019. This is an essential part of the national air quality plan to achieve compliance with our legal obligations.

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Is my hon. Friend aware that my city, Oxford, is due potentially to be the first city in Europe with a zero emissions zone? We need more support for such initiatives from the Government—more than has been forthcoming up to this point.

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Yes, I was aware of that. Labour local authorities in Oxford and across the country do fantastic work on the issue, but they often do so in isolation and with limited support from central Government. The Government should really be getting behind them, given the severe impact that poor air quality can have, not just on children, but on all of us—it is now believed to be connected to the onset of Alzheimer’s and other degenerative diseases.

The London Mayor has proposed a targeted scrappage scheme that uses camera data to ensure that only vehicles that are regularly in the ultra low emission zone receive scrappage funding. The proposal meets the criteria set out in the five-case model in the Treasury’s Green Book and has a positive business case ratio.

Will the Minister confirm that none of the general VED revenue will be spent in London, because the Treasury plans to give it to Highways England to maintain strategically important roads outside London? Strategically important roads in London are maintained by Transport for London without any Government support or a share of VED income. Frankly, I suspect that any assessment made under our amendments would reveal that money is available from the proceeds of VED, which of course will rise under the new rates proposed in clause 57. I am also confident that any assessment under amendment 111 would show that reducing harmful emissions in London is vital to our national effort on climate change and air quality, let alone the fact that it would address the suffering of ordinary people in our most congested city.

It is fair to say that there is a strong suspicion that the Government’s political refusal to support Londoners owes more to Londoners’ refusal to support them at the ballot box than to the best interests of the city or the country as a whole. If the Minister wants to dispel that impression, will he clarify what share of VED revenue comes from London now and what share he expects to come from London after the passage of the Bill?

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I am a London MP and my constituency borders the North Circular road. The Mayor has introduced a low emission zone for part of the road, but more is needed to reduce emissions. Does my hon. Friend agree that funding from this measure should go towards introducing low emission zones in other parts of London as well?

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Yes, I do. I do not think that there is a lack of ambition from the Mayor of London or from local authorities around the country; ultimately what holds them back is a lack of resources. Will the Minister commit to using the revenue to offer London the same air quality funding that is being made available to other parts of the country, to ensure that ultra low emission zones are a success?

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It is good to be back, Mr Howarth. As we have heard, clause 57 will make changes to vehicle excise duty rates for cars, vans and motorcycles with effect from 1 April 2019. As announced in the Budget, those rates will increase in line with the retail prices index from that date. As a result, they will have remained unchanged in real terms since 2010, with additional significant incentives for ultra low and zero emission cars. That comes on top of the Government’s decision to freeze fuel duty rates for the ninth successive year, which by April 2020 will have saved the average car driver £1,000 compared with the pre-2010 escalator.

Cars first registered on or after March 2001 pay VED based on their carbon dioxide emissions; 87% of those cars will pay no more than £5 extra in 2019-20. From April 2017, a reformed VED system was introduced that strengthens the environmental incentives when cars are first purchased, with all cars paying a standard rate in subsequent years. The standard rate will increase by £5 only. Expensive cars with a list price of more than £40,000 pay an additional supplement for five years of paying the standard rate. That will increase from £310 to £320, so it is only a modest increase, and it will affect about 7% of new car purchases. Finally, the flat rate for vans will increase by £10, and for motorcyclists there will be no more than a £3 increase in rates. We believe that those are modest, incremental changes, which protect the public finances but also pay careful attention to the cost of living for motorists.

Amendments 108 to 111, which the hon. Member for Norwich South has spoken about, would require the Government to review the impact of the clauses on various grounds: revenue, carbon dioxide emissions, carbon budgets, traffic volumes and air quality standards. I shall come on to his wider comment about the granularity of the available data in relation to understanding the impact on London, and his important points about air quality more generally—in all parts of the country, but particularly London. I hope to give him some reassurance on those points.

As I have said, the clause increases VED rates only by RPI. It maintains VED revenue in real terms for 2019-20, ensuring that motorists continue to pay a fair contribution to the public finances. As VED is increased only by RPI, the clause has no revenue impacts, as the Office for Budget Responsibility forecast assumes that rates will rise by RPI already. The impact is already in the public domain, and there is of course no revenue impact other than the increase by RPI. I am therefore not sure whether there would be any benefit from further information in that regard.

In relation to statistics and data in the public domain, the Driver and Vehicle Licensing Agency publishes VED revenues on an annual basis as part of its annual report and accounts. In 2017-18 VED raised about £6 billion, making an important contribution to the public finances. We announced previously, and reconfirmed at the Budget, that VED revenues will be hypothecated towards the roads fund, which will fund strategic road investment across the country. I shall come in a moment to the point made by the hon. Member for Norwich South about London; but it is important to note that from 2020 the roads fund will, at £25 billion, be the largest we have had. It will make a major contribution to the improvement of strategic roads across the country, and it will invest in tackling productivity, by reducing congestion and helping people get more quickly to work and elsewhere.

As VED is a tax on car ownership, it is unrelated to congestion or traffic volumes. The changes will not, therefore, have an impact on the volume of traffic on the roads, air quality or our ability to meet CO2 emissions targets, as, I think, the amendments suggest.

The hon. Gentleman raised a distinction between supporting drivers in rural areas, who may well drive longer distances, and supporting those in urban areas, who might drive shorter distances. That is why, in addition to keeping VED low, and in this case increasing it only by RPI, our primary intervention has been the freezing of fuel duty—for eight successive years. That particularly helps those on lower incomes who must drive considerable distances to work or to the other appointments and engagements of daily life, particularly in rural areas.

I am pleased to report that the Government’s most recent projections on climate change, for the fourth and fifth carbon budgets, suggest that we could deliver 97% and 95% respectively of our required performance against 1990 levels. Of course there is always more that we would like to do, as I am sure the hon. Gentleman would agree. However, the VED system continues to incentivise motorists to choose cars with low CO2 emissions to help in meeting our legally binding targets. On first registration, zero emission cars pay no VED, while the most polluting models pay more than £2,000, so we are taking action in that regard.

On improving air quality, as the hon. Gentleman mentioned, the Government announced in the Budget an additional £20 million to help more local authorities meet their air quality obligations. That is in addition to the £255 million implementation fund and the £220 million clean air fund announced last year. Those were introduced alongside the diesel supplement, which incentivises manufacturers to bring cleaner diesels to the market. Many are doing so, but we appreciate that important British manufacturers have not yet done so, and we are in regular consultation and engagement with them. They are clearly all working on this, and we want to support them to get to the point that they can bring such vehicles to the market and improve their position accordingly. Those measures are unaffected by the changes made by the clause.

The Department for Environment, Food and Rural Affairs will shortly publish the clean air strategy, which I hope will answer some of the hon. Gentleman’s perfectly legitimate questions about the long-term scale of our ambition to support communities. All of us who live part of the time in cities or bring up our children in cities want a significant improvement in air quality, and that strategy will be ambitious.

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I appreciate that the Minister is providing all this information in answer to issues raised by the amendments. Given that he has all the information, it would be great if he just put it into a review, as the amendments would require, so that we could see it written down in six months’ time.

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I take the hon. Lady’s point, but the information is mostly already in the public domain. It is not clear to me what information is not available. With respect to air quality, the Government will very shortly publish our ambitious clean air strategy. I encourage her and other hon. Members who, perfectly understandably, want to scrutinise our clean air commitments to pay attention to that document and scrutinise the Environment Secretary at that point. No doubt he will come to the House to make an announcement on the strategy.

The hon. Member for Norwich South also mentioned London. London already has a separate comprehensive funding settlement from the Department for Transport, which includes measures to deliver compliance with legal air quality limits. The Mayor has significant powers to take additional measures. Londoners also receive further funding for ultra low emission vehicles such as taxis. Indeed, measures in the Bill support the uptake of ultra low emission taxis. We took those measures a year early, as we will discuss later, and they have had a significant impact on the number of taxis on the streets of London. There are now between 500 and 600 electric or ultra low emission taxis that did not exist at the beginning of the year, incentivised by the measures taken by the Treasury. We are also supporting low emission buses and charging infrastructure. The Committee has already discussed the £200 million public investment in charging infrastructure, which we hope will spur at least a further £200 million of private investment. That will support charging infrastructure in all parts of the United Kingdom.

I hope hon. Members respect the fact that we consider the funding settlement for London’s roads as separate from that for the rest of the United Kingdom. That is a long-standing convention. We occasionally provide additional money. For instance, in the Budget the Chancellor provided more than £400 million for potholes. He included London in that, so London boroughs are able to take advantage of that money, but in general the funding settlement for London’s roads is separate from the negotiation with respect to Highways England.

I urge the Committee to reject the amendments, as I believe the reports they would require are unnecessary. The changes outlined in the clause will ensure that the Government continue to support motorists with the cost of living while ensuring that they continue to make a fair contribution to the public finances. As a result of our decision to hypothecate VED revenues, we will see a major increase in investment in our strategic roads, which I hope will benefit everyone in all parts of the United Kingdom. I therefore commend the clause to the Committee.

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I thank the Minister for trying to answer some of our questions, but I still find myself with questions. It seems that there is a basic issue of transparency here. If, as he is saying, the Department for Transport has given certain funding to London—I am sure that is true—it would do no harm to make transparent what other funding is going to other parts of the country, so that the figures can be compared and contrasted to ensure that London is getting its fair share. The Mayor of London clearly does not believe that it is getting its fair share. It is the capital city—it has a large population, many vehicles on the road and a high population density—and all that is being asked for here is transparency.

On the issue of there being no assessment of the impact of the clause on road congestion on traffic levels, the Minister said that VED has a limited impact on that, but that is quite an arbitrary statement. Taxes have two effects: they can raise revenue and they can change behaviour. It is normally one or the other, but there are variations and it is sometimes a bit of both. I do not think it is beyond the ken of the Government to assess the potential impact of the VED increases on congestion levels, given that we have all agreed that air quality in this country is in a pretty poor state. Tens of thousands of people are dying prematurely or are adversely affected every single year.

To echo the sentiment of the hon. Member for Aberdeen North, it would not be too much trouble to write a report along the lines that we have asked for and make it available to Parliament. So go on, please.

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The hon. Gentleman tempts me, but on this occasion I will resist his request. On the two issues he raises, the clause is not increasing VED; it is simply allowing it to rise with RPI, so the clause has no revenue impact; the public finances assume that VED and many other duties will rise with RPI, so its impact will be negligible. This is not a substantial or material increase in VED. I really do not think there would be any value in having a review.

On the wider question of roads funding, all this information is in the public domain. The settlement with respect to roads for London is in the public domain, as is the settlement for the roads fund. Which roads will then be funded through the roads investment strategy, which will be set out in the middle of next year, will be in the public domain. All these investments are highly transparent, as one would expect. That information is available to all hon. Members, should they wish to view it.

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My observation is that an awful lot of money is spent in London, compared with the regions of this country, whether the north-west or south-west. There may be a very good reason for that—London is a very important city for our nation—but I would not be inclined to vote even more money to London, bearing in mind that it has the biggest infrastructure project in Crossrail, to which the Government have already given £300 million extra. If there is any special pleading, it really ought to be for the shires and counties of this country, which probably need a bit more money for potholes, rather than clean air.

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My hon. Friend makes a very important point. It is certainly important to me, as a midlands and northern MP. The Government have made a significant effort both to increase the levels of public investment in infrastructure over the course of this Parliament to the highest levels in my lifetime—the highest level since the 1970s—and to redress the regional imbalance. Over the course of this Parliament, for example, investment in transport will be highest in the north-west of England, and London and the south-west will be among the lowest. There is a great deal more to do, not least because London has the ability to raise significant amounts of money from local government, which has co-funded projects such as Crossrail. My hon. Friend makes an extremely valid point.

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I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 57 ordered to stand part of the Bill.

Clause 58

VED: taxis capable of zero emissions

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I beg to move amendment 112, in clause 58, page 41, line 16, at end insert—

‘(6) The Chancellor of the Exchequer must review the revenue effects of the changes made to the Vehicle Excise and Registration Act 1994 by this section and lay a report of that review before the House of Commons within six months of the passing of this Act.’

This amendment would require the Chancellor of the Exchequer to review the revenue impact of Clause 58.

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With this it will be convenient to discuss the following:

Amendment 113, in clause 58, page 41, line 16, at end insert—

‘(6) The Chancellor of the Exchequer must review the effects on the taxi and private vehicle hire sectors of the changes made to the Vehicle Excise and Registration Act 1994 by this section and lay a report of that review before the House of Commons within six months of the passing of this Act.’

This amendment would require the Chancellor of the Exchequer to review the impact of Clause 58 on the taxi and private car rental industry.

Amendment 114, in clause 58, page 41, line 16, at end insert—

‘(6) The Chancellor of the Exchequer must review the effects on levels of CO emissions and the UK’s ability to meet its fourth and fifth carbon budgets of the changes made to the Vehicle Excise and Registration Act 1994 by this section and lay a report of that review before the House of Commons within six months of the passing of this Act.’

This amendment would require the Chancellor of the Exchequer to review the impact of this measure on CO2emissions and climate change targets.

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I am pleased to be speaking—again—to our amendments relating to clause 58, on vehicle excise duty and taxis capable of zero emissions. The clause seems to rectify an obvious mistake made by the Treasury during the 2017 Budget, which saw electric vehicles fall into the luxury vehicle segment of the new VED regime for cars costing over £40,000.

VED rates are based on carbon emissions, and zero-emissions vehicles below £40,000 have a zero standard rate and a first year rate. Standard rate on zero-emissions vehicles above £40,000 is currently £310 a year for the first five years. To include electric vehicles in that policy was clearly a major oversight by the Treasury in last year’s Budget. The correction, although somewhat late in the day, is none the less welcome and, indeed, essential if we are to seriously encourage the uptake of electric vehicles, specifically taxis.

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I am sure that my hon. Friend is aware that back then, Opposition Members warned about the potential unintended consequences of those measures, including for the private hire and taxi industries. Those warnings were not heeded at the time. It is rather frustrating that they have only now been dealt with.

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My hon. Friend makes a very good point; that is one lost year of support.

To include electric vehicles—ah, I have already said that. I will recap, though. [Laughter.] To include electric vehicles in that policy was clearly a major oversight by the Treasury in last year’s Budget. The correction, although somewhat late in the day, is none the less welcome and, indeed, essential if we are to seriously encourage the uptake of electric vehicles, specifically taxis.

That is particularly pertinent as local regulations are tightening around clean air and greenhouse gas emissions, as we have seen with the implementation of the ultra low emissions zone in London. Amendments 112 to 114 require the Government to undertake a review that we believe is essential to understand the consequences of the clause, which range over the impact that it is likely to have on the Exchequer, on the taxi and private car rental industry, and on CO2 emissions and climate change targets. Amendments 112 and 113 focus on the economic impact of the clause, both on the Exchequer and on taxi and private car rental companies. Can the Minister provide an assessment of the revenue implications of the measure?

Similarly, while we understand from the published documents relating to the clause that industry response to the Government consultation was supportive, will the Treasury do further analysis of the potential economic impact on taxi companies and the private car rental industry, should the change come into effect? The Minister may wish to resist the amendments, but regardless of any legal obligation, will he commit to conducting such an analysis and presenting it to the House in due course?

Amendment 114 refers to carbonisation and improving air quality. It would seem, in that respect, that taxis are low-hanging fruit. They are used frequently, often in urban areas with poor air quality. Similarly, according to the Mayor of London, drivers stand to benefit from lower fuel costs—by around £2,800 a year—and from avoiding present and future congestion and air quality charges. We believe, however, that the Government have failed to put in place necessary fiscal incentives to encourage the transition to the electric vehicles needed to ensure a reduction in CO2 emissions. Simply removing the excess tax for luxury vehicles, as the clause would do, does not go far enough to encourage the uptake of zero-emission vehicles.

The primary driving forces behind the reluctance to take up electric vehicles are cost and an anxiety about range. The costs of electric vehicles are explained by high manufacturing costs, specifically of their batteries. The anxiety about range affects taxi drivers far more than private vehicle owners or private car hire companies, as they do not have access to the range in the ultra-low emissions vehicle segment of the market for mid-range to luxury. That is due to licensing conditions, as they need to fulfil accessibility requirements. In London, for example, that means that many drivers are mandated to buy a London-style hackney taxi in many districts. Will the Minister agree to assess the impact of clause 58 on CO2 emissions and the UK’s climate change targets, and whether that policy goes far enough in encouraging the purchase of zero-emissions taxis?

I have a few questions on the clause. At present, a grant of £7,500 is available for new zero-emissions taxis. We believe that the Government should be looking to increase available grants and encourage the transition to electric vehicles, specifically taxis, in areas outside Greater London. There are currently only a few limited pots of funding, not all of which are available for taxis, and they are largely skewed towards Greater London.

Similarly, the Government have yet to invest a penny of the £400 million charging fund announced in the 2017 Budget, half of which should be public money, with the other half contributed by the private sector, as we have already heard. Will the Minister tell us whether the issue that the clause seeks to rectify will aid the Government in finally setting up the charging fund that they promised to deliver to encourage the use of zero-emissions vehicles? Will he give us a clear timetable of when that fund will be operational? Will he commit that he or another relevant Minister will come back to the House with more detail when it is due to launch?

Available charging infrastructure is a requirement of accelerating the transition. Outside London and a few select places, availability is poor. Drivers face a postcode lottery that is a barrier to electric vehicle growth. For example, there are more chargers available in the Orkney Islands than in Blackpool, Grimsby and Hull combined. Even if grants are available, drivers in some areas will be unable to perform their work using EVs, due to the unavailability of charging infrastructure. It could therefore be argued that even if the Government increased grants and ensured that availability, poverty of EV infrastructure would mean that a majority of taxis would not be in a position to benefit from the change suggested in clause 58. Will the Minister comment on that? What assessment has been undertaken of the availability and adequacy of the infrastructure, and what steps are being taken to ensure that it does not undermine the good intentions behind the clause? Although the current situation is a mistake, it should not have happened in the first place. The measure is important in seeking to undo the bias created by classing zero-emissions taxis as luxury vehicles, and in encouraging the uptake of zero-emissions vehicles.

We will support the clause—we ask only that the Government assure us that the right analysis will be done to assess the impact of the measure on the Exchequer, the companies that will be affected, and the environment. We urge the Government to take such matters into consideration. I hope the Minister can give us some assurance on those points.

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I thank the hon. Gentleman for those questions. I hope that I can answer them all and reassure him. Clause 58, as we have heard, makes changes to ensure that purpose-built taxis that are capable of zero emissions do not have to pay the VED supplement applicable to expensive vehicles, which are those with a list price of more than £40,000. Having listened to representations on the issue, the Government announced in March that the exemption for such taxis would be brought forward a year earlier than planned.

We do not believe that the purchases of many vehicles, if any, were adversely affected. For example, the London Electric Vehicle Company, which manufactures these vehicles, had sold almost no vehicles by the time of the announcement and has subsequently sold more than 500 vehicles—I do not have the exact figures but I am happy to supply them to the hon. Gentleman—so from the time of our announcement in early March to the present day, the incentives have clearly made a significant difference in stimulating the market. We do not believe that many purchases, if any—I will confirm that point—were disadvantaged as a result of this matter, which was an unintended consequence of the earlier policy.

An exemption will encourage the transition to ultra-low and zero-emissions taxis. The figures show that, certainly in London, there has already been a significant take-up in vehicles, although it is less in other parts of the United Kingdom. I believe that the manufacturers are now targeting other cities, including Manchester and Nottingham—my nearest city—to improve their air quality. We want to see that rolled out as soon as possible in all part of the United Kingdom.

It will make the system fairer. The Government recognise that a number of technical requirements exist for purpose-built taxis, including, as the hon. Gentleman said, access for disabled passengers and turning circles, meaning that only a limited number of options are available. Most other motorists have a range of vehicles available to them, many costing less than £40,000, and can therefore choose not to pay the supplement.

In passing, the hon. Gentleman mentioned other private hire vehicles. Our argument—a valid one, I think —has always been that there are a range of other options available to drivers of private hire vehicles. They do not have to purchase a vehicle costing over £40,000. That would be a choice because they want to enter a particular segment of the market. Those driving a registered London taxi do not have that discretion. Therefore, it would not be right for drivers buying a taxi capable of zero emissions to pay the VED supplement targeted at cars at the luxury end of the market. As the supplement is only due from the second licence onwards, this means that almost all taxi drivers who have purchased an eligible taxi from April 2018 will never have to pay the supplement. This will save those drivers up to £1,600 in total.

The changes made by the clause will provide the power to exempt purpose-built zero-emissions taxis from the supplement for expensive cars, through regulations. This will enable the Government to apply the exemption to further models as they become available in the future.

I will turn briefly to the amendments tabled by the hon. Member for Norwich South. Amendment 112 would require the Government to review the revenue effects of the changes made by the clause. The Government have already published a tax information impact note, in line with normal practice, which sets out that the revenue impact of the changes will be negligible. Amendments 113 and 114 would require the Government to review the effect of the clause on the taxi and private hire sectors, and the impact on carbon dioxide emissions and our carbon budgets. The measure applies to purpose-built taxis only, enabling a quicker switch to greener models by saving drivers that £1,600. It is not expected to have an impact on the number of taxis on the roads, but it is intended to increase the proportion of those that are capable of zero emissions. By strengthening the incentive to purchase such taxis over conventionally fuelled alternatives, the measure is expected to have a small positive impact on our ability to meet our fourth and fifth carbon budgets, although isolating its impact would be challenging and uncertain. I am not sure what value, if any, that analysis would provide. Again, these impacts were covered in the published tax information and impact note. I respectfully urge the Committee to reject the amendments, on the grounds that they are unnecessary.

The hon. Gentleman asked important questions about electric vehicle charge points. Clearly it is important for taxi drivers in London, and indeed in any other part of the United Kingdom, to know that the relevant charge points are available to them. Range anxiety is just as valid, if not more so, for a taxi driver as it is for a private citizen. Significant investment is underway in London, particularly for fast charge points, which are critical for taxi drivers, so they do not have to spend hours waiting to recharge or top-up their vehicle. The Mayor of London is leading that effort and making good progress.

With regard to the charge point infrastructure fund, which I spoke about in relation to the previous clause, we are close to appointing a fund manager and expect it to be launched in January or February. I am happy to write to him with more details and to inform him when it is launched, but I expect that to be at the very beginning of the new year.

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There is £200 million in public money and £200 million in private money. Will the Minister confirm whether the £200 million in private funding has actually arrived and is available for the Treasury to spend on EV infrastructure?

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The answer is that the fund has not actually been launched yet. We are committed to the £200 million, but we will not know until the fund is launched the amount of private capital we are able to crowd in as a result of that. I am happy to write to the hon. Gentleman with more detail about that. As I said, I expect in the first two months of the new year to be in a position to launch the fund and to inform hon. Members across the House of its detail, should they wish to direct businesses in their constituencies that are interested in this area to it. With that, I commend the clause to the Committee.

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I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment proposed: 114, in clause 58, page 41, line 16, at end insert—

“(6) The Chancellor of the Exchequer must review the effects on levels of CO2 emissions and the UK’s ability to meet its fourth and fifth carbon budgets of the changes made to the Vehicle Excise and Registration Act 1994 by this section and lay a report of that review before the House of Commons within six months of the passing of this Act.”—(Clive Lewis.)

This amendment would require the Chancellor of the Exchequer to review the impact of this measure on CO2 emissions and climate change targets.

Question put, That the amendment be made.

Division 27

6 December 2018

The Committee divided:

Ayes: 8
Noes: 9

Question accordingly negatived.

View Details

Clause 58 ordered to stand part of the Bill.

Clause 59

HGV road user levy

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I beg to move amendment 115, in clause 59, page 44, line 9, at end insert—

“(11) The Chancellor of the Exchequer must review the revenue effects of the changes made to the HGV Road User Levy Act 2013 by this section and lay a report of that review before the House of Commons within six months of the passing of this Act.”

This amendment would require the Chancellor of the Exchequer to review the revenue impact of Clause 59.

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With this it will be convenient to discuss the following:

Amendment 116, in clause 59, page 44, line 9, at end insert—

“(11) The Chancellor of the Exchequer must review the effects on levels of CO2 emissions and the UK’s ability to meet its fourth and fifth carbon budgets of the changes made to the HGV Road User Levy Act 2013 by this section and lay a report of that review before the House of Commons within six months of the passing of this Act.”

This amendment would require the Chancellor of the Exchequer to review the impact of Clause 59 on CO2 emissions and climate change targets.

Amendment 117, in clause 59, page 44, line 9, at end insert—

“(11) The Chancellor of the Exchequer must review the expected effects on the volume of traffic on the roads of the changes made to the HGV Road User Levy Act 2013 by this section and lay a report of that review before the House of Commons within six months of the passing of this Act.”

This amendment would require the Chancellor of the Exchequer to review the impact of Clause 59 on road congestion and traffic levels.

Amendment 118, in clause 59, page 44, line 9, at end insert—

“(11) The Chancellor of the Exchequer must review the expected effects on air quality standards of the changes made to the HGV Road User Levy Act 2013 by this section and lay a report of that review before the House of Commons within six months of the passing of this Act.”

This amendment would require the Chancellor of the Exchequer to review the impact of Clause 59 on air quality standards.

Clause stand part.

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I begin by welcoming the long overdue change to the heavy goods vehicle road user levy. As the Minister will no doubt lay out, the clause will differentiate the rates paid by efficiency, rewarding freight operators for using less polluting trucks on the UK’s roads.

Department for Transport statistics show that HGV traffic has grown on average by 2.3% per year since 2008, making it the second fastest growing type of traffic in that period. That has resulted in HGV traffic increasing, on motorways and rural A roads in particular, to an overall 17.1 billion vehicle miles. Inevitably, that has had an enormous impact on greenhouse gas emission and climate change targets, road congestion and traffic levels, road safety, and air quality—the key issues on which our amendments are based.

Amendment 115 would require the Chancellor to review the revenue impact of the clause. We believe that there is an urgent need for a financial assessment of the measure, as the freight sector has been left in the dark about the overall impact of these tax reforms. The Department has failed to publish any conclusions from its call for evidence, which closed in January. We therefore argue that it is the Treasury’s responsibility either to produce the evidence and conclusions or to undertake any new research that is needed.

We believe the analysis should focus on the costs and benefits of remaining on a time-based charging system rather than one based on distance. Will the Minister tell us what comparative analysis has been undertaken to date by Government, and agree either to publish it or to commission the relevant work and publish it in due course?

The analysis should also assess how well the HGV road user levy reflects the costs imposed by road freight on other road users, the road network itself and society at large. Metropolitan Transport Research Unit research, issued in April 2017 and sponsored by the DFT, suggests

“that a very significant amount of the real marginal costs imposed by the largest HGVs is not being met.”

That has led to poor economic efficiency and a misallocation of scarce resources. Will the Minister undertake a review of the real marginal costs imposed by the latest HGVs so that we may assess their relative economic efficiency?

Similarly, when considering the overall revenue effect of differing levels of road user levy for different categories of heavy goods vehicles, we believe it is important to factor in the huge disparity between the costs of wear and tear on road surfaces caused by HGVs and those caused by cars and lighter vehicles. The Campaign for Better Transport estimates that the standard 44-tonne HGV does 100,000 times more damage to road surfaces than a Ford Focus.

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One hundred thousand times!

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Yes. An update of the DFT’s mode shift benefit values technical report in 2015 doubled previous estimates of the cost per HGV mile to road infrastructure. Campaign for Better Transport research suggests that HGVs are paying for only 11% of their UK road infrastructure costs, predicting a shortfall of about £6 billion.

Will the Minister tell us whether the Government have made their own such estimate during the development or passage of the Bill, or does our amendment give them the opportunity to assess it for the first time? Will he produce a fresh assessment of the cost shortfall that the new HGV road user levy rates will leave for other road users and taxpayers in general to pick up? In any case, will he give us the Government’s view of whether the total revenue raised will reflect a fair share of the total tax take from road users, as compared with that of those who drive smaller vehicles? In the Chamber, many MPs complain about potholes and funding for them. The statistics give a clue as to where in part the responsibility lies for so many potholes on our roads.

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As the driver of a Ford Focus, I want to clarify something. Does my hon. Friend agree that yes, a greater proportion of the money ought to go towards repairing potholes, because that will leave more money available for schools and other resources?

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My hon. Friend makes an interesting point from his Ford Focus. The issue is that there is a massive externality that those HGVs are causing on our roads. No one wants to see HGV businesses go out of business, but everyone in Committee would agree that it is right for people to pay the appropriate level of tax for the damage that they cause to our road infrastructure. If they are to be subsidised, that subsidy ought to be transparent, so that we can appreciate and make a proper assessment of the value that HGV companies contribute to our economy, while taking into account the externalities that they create as well, because there are impacts on other tax areas where the Government would need to spend—he mentioned schools, and there are hospitals and so on and so forth.

Amendment 116 would require the Chancellor to review the impact of the clause on CO2 emissions and climate change targets. As I have described, the use of HGVs has increased hugely in recent years. Inevitably, that has had an adverse effect on the UK’s greenhouse gas emissions. Studies from the Government’s own 2017 freight carbon review proved that HGVs are also disproportionately responsible for pollution when compared with other road vehicles. In 2014, HGVs were estimated to account for about 17% of UK greenhouse gas emissions from road transport, and about 21% of road transport nitrogen oxide emissions, while making up only 5% of vehicle miles. Will the Minister confirm those figures?

Clearly, if we are to stay in line with EU emissions targets, which have themselves been agreed at the necessary level to ensure that we meet our Paris climate agreement targets, CO2 emissions from HGVs must drop by at least 15% by 2025, and be at least 30% lower by 2030. Will the Minister agree to conduct an analysis of just how far the changes in the clause go towards the country’s ability to meet our climate targets? Will he also consider addressing the generality of the need to meet those targets with either taxation of the sector, or other measures that the Government might put in place to meet our obligations and to safeguard our shared environment?

Amendment 117 would introduce a similar requirement to review the impact of clause 59 on the overall volume of traffic on roads, which is fairly self-evidently a major contributory factor to road traffic congestion. The Centre for Economics and Business Research estimates that congestion will cost the economy as much as £307 billion by 2030. Similarly, the latest INRIX figures show that the UK currently ranks as the fourth most congested developed country, and the third most congested in Europe.

Will the Minister tell us what assessment the Government have made of the economic—not to mention environmental —impact of traffic congestion? I hope he will agree that it is undeniable that the increase in HGV traffic is contributing to the problem. Is he willing to undertake a formal assessment of the impact of HGVs on overall road congestion and traffic, which in turn clearly has a significant impact on the economy? If he intends to resist the amendment, perhaps he will tell us what assessment the Government have made to date and how it informed their choice of the relative levels of taxation that the clause sets for more or less polluting vehicles.

The amendment also addresses the important issue of road safety. The volume of traffic is clearly relevant to road safety outcomes. The Campaign for Better Transport’s analysis of Department for Transport road safety statistics shows that HGVs are twice as likely to be involved in a fatal collision on minor roads as they were 10 years ago. In 2016, HGVs were almost seven times more likely than cars to be involved in fatal collisions on minor roads, despite making up just 5% of overall traffic miles. There has been little or no improvement in recent years in the rates of fatal collisions involving HGVs either on motorways or on A-roads. In 2014, HGVs were involved in almost half of all fatal collisions on motorways, although they accounted for only 11.6% of the miles driven on them. Will the Minister tell us whether, in the course of considering the relative levels of taxation for different types of HGV, the Government have made any assessment of the impact on road safety of HGVs on motorways and A-roads across the UK? In developing the clause, did they consider whether the tax system for vehicles might in any way be used to improve the safety record of HGVs?

Amendment 118 would make equivalent provision in relation to air quality standards. In launching its call for evidence about the HGV road user levy, the DFT conceded the importance of working

“with industry to update the Levy so that it rewards hauliers that plan their routes efficiently, to incentivise the efficient use of roads and improve air quality.”

As the results of the consultation are yet to be published, I ask the Minister whether the Treasury is able to review whether the changes proposed in clause 59 will succeed in encouraging an improvement in air quality standards.

If the Minister does not intend to accept the amendment, perhaps he will tell the Committee whether, and when, the Government intend to publish the evidence they have gathered, and their formal response to it, for scrutiny by the House and the public. Perhaps he will also confirm that the evidence that they have gathered to date shows that, nationally, 20% of lorries are now driving around completely empty and only 36% are full by volume. Not only is that a highly inefficient use of scarce road space, but it exacerbates the existing problem that more than 40 towns and cities in the UK have already exceeded air pollution limits set by the World Health Organisation. Can he confirm that air quality standards will be assessed when looking at the important impacts of the HGV road user levy? Can he give us any timetable or detail?

The Committee will note that our amendments have a similar theme. Perhaps I can ask the Minister to outline in general terms what assessment or review of the success of these measures the Government have planned, what impacts they will consider, how they will measure them and how they will publish their results. I also reiterate my point about the Government’s various calls for evidence that relate to the measure in clause 59. Will he commit to publishing the evidence received and giving a formal response from the Government? We often hear about evidence-based policy making, but as legislators we, too, need to hear that evidence if we are to agree to the legislation that implements that policy.

I look forward to the Minister’s response to our amendments, but I want to make one final argument about the clause itself. While it is to be expected that the reforms in clause 59 will lead to improvements in fuel efficiency and reductions in pollution from HGVs on Britain’s roads, we believe that those reforms are incomplete and unsatisfactory because the HGV levy will continue to be charged according to time spent on UK road networks. It is widely acknowledged that the existing time-based charging system is inefficient and not cost-effective. As it stands, the current daily charge bears no direct relationship to the amount of use of the network and therefore the system does not incentivise efficient use of the network. To improve economic efficiencies, there should be a direct relationship between taxes per mile travelled and the marginal cost that a distance-based charging system can provide.

The DFT’s recent review offered the opportunity to move to distance-based charging in the UK, which would be the single most effective change that would achieve all the Government’s stated objectives of improving efficiency, reducing exposure to collisions and reducing air pollution and CO2 emissions. Replacing time-based lorry charging with a distance-based system could relate charges paid to the real impact that HGVs have on other road users, the road network and society at large. Of course, it could also reward those HGV operators who have the least such impacts, as the clause intends to do in relation to emission standards.

The most troubling thing about all the measures of cost and harm—from the environment, to road safety and congestion, to the revenue impact on the Exchequer—is that the sector is showing little or no improvement across them. That is a clear illustration that the current framework of incentives, including the HGV road user levy, is not working. While we welcome these much-needed changes, we urge the Government to look at the bigger picture and assess the wider impacts of the HGV road user levy, as our amendments propose.

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Apart from paying the levy, the road haulage industry pays considerable sums of tax on fuel; it therefore pays quite a lot into the Exchequer for the provision of roads. I would make another important point: almost every good that we have in this country travels at some point on a road haulage vehicle. Almost all of what someone buys in a supermarket for Sunday lunch travels in such a vehicle. There is no such thing as a painless tax. If we raise the cost of vehicles delivering goods in this country, the costs are raised for supermarkets and businesses and that is passed on in the form of higher prices and inflation. There is a balance to be struck.

The other point is that the British economy has been growing since 2009-10. As it grows, there are more vehicles on the road, and that is a difficulty. The real way to deal with climate change is probably to crash the economy, so that unemployment shoots up and vehicles come off the roads. It is a problem that, if we have the economy growing, there are more vehicles on the road. On the whole, the solution is technological, both in the development of the levy—the hon. Member for Norwich South made one or two suggestions for that—and also in the engines and the information that people get this days. There has been a big improvement. The biggest incentive that there ought to be for the industry is to replace vehicles more regularly because, in the end, that will probably have more impact on climate change.

I do not think that the solution to this problem is to increase costs. There are technological solutions that I am sure will come to help with all of our concerns about climate change.

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If we are going to disincentivise people from using HGVs or charge them more for using HGVs, we need to make sure that we have a positive route with alternative methods of transport. There has been a massive increase in the number of light goods vehicles, which is negative if we end up with older diesel models.

We could develop the rail freight network. I understand that it is pretty difficult for those who are looking to increase rail freight to get time on the lines because of the number of passenger trains. Solutions to assist that would be very helpful in ensuring that freight is moved around the UK in the least carbon-emitting way possible.

Subsection (6)(b) relates to Euro 6. It describes the definition of Euro 6, saying that it is as in the EC directive. I am keen for the Government to lay out what would happen about the development of new standards after Brexit and any transition period. Is it their intention that we would have our own standards on vehicle emissions? If so, how much does the Minister believe it will cost to assess vehicles? What would be the cost of UK-EU regulatory divergence, which will result in issues for car manufacturers?

Alternatively, do the Government intend that we should not diverge from using the European Commission directive standards? Obviously technology is developing and there will be new standards to which we should peg our decisions on tax rates. If the UK Government plan not to have their own assessment centre, with regulatory divergence, do they plan to continue to follow EC directives? What preparation are the Government making in that case to scrutinise or comment on the directives, given that we will not be in the room after Brexit, and will therefore not be able to influence the standards, either to support our car manufacturers or secure the best standards for the British public and get improved air quality?

I understand that the Minister may not have the answer at his fingertips, but I hope he can say something.

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I shall try to respond to the many points that have been raised. My hon. Friend the Member for Poole in part answered the challenge from the hon. Member for Norwich South as to whether hauliers pay their fair share. It is worth remembering that they pay a range of taxes, as my hon. Friend pointed out. They pay the levy that we are discussing and vehicle excise duties. They also pay tax on fuel. Taken as a package, hauliers pay a considerable amount of tax. British hauliers as an industry are highly taxed, going by European and international comparisons. The reforms mean that some hauliers will pay more. The VED system is based on both weight and axles, so to some extent it reflects wear and tear on the roads, although I appreciate the point made by the hon. Member for Norwich South that HGVs make a significant impact on the roads. I did not realise it was 100,000 times that of a Ford Focus, but that puts things in perspective.

The hon. Gentleman asked whether the HGV levy was specifically hypothecated to tackle such issues as potholes and strategic roads. It is not. However, as I have described, the VED system will be, which will significantly increase the amount of investment that the country makes in roads at every level: £28.8 billion is the spending envelope for roads investment announced by the Chancellor in the Budget, and £25 billion of it will be spent on strategic roads in the road investment strategy that will be announced later next year. That will be about 170% of the first road investment strategy, so there is almost double the amount of investment going into roads to tackle congestion and improve strategic roads in all parts of the country.

The hon. Member for Aberdeen North made a valid point about the European standards. It is our intention to remain closely aligned to those. That seems sensible and it is our intention in a number of respects, such as climate change, emissions and carbon budgets, as is indeed set out elsewhere in the Bill. For example, we have not yet made a final decision on carbon trading, but we shall monitor it and review the matter. If I can give the hon. Lady any further information I will write to her to set out the position of the Department for Transport.

On the broader question of why we are not using the VED system for HGVs to encourage greater take-up of zero-emission or ultra-low emission HGVs, it comes back to the point made by the hon. Lady: currently there are very few commercially available ultra-low emission alternatives for HGV drivers, which prevents the broad uptake of new vehicles. Clearly, we would like to do all we can to stimulate the market and see rapid progress, but we have to be mindful of that. Through the Road to Zero strategy that was published earlier this year, the Government have committed to working with the industry to reduce HGV greenhouse gas emissions significantly by 2025. The strategy sets out the Government’s plans to use a variety of different tools to meet that commitment.

The hon. Member for Norwich South made a number of important points about HGVs and road safety. I will write to him on that and find out what information I can about DFT’s work, because it is important that we take note and see what can be done to improve road safety, particularly as the number of vehicles going down smaller roads and country lanes as a result of online shopping is becoming more important. Through the Road to Zero strategy and other initiatives, DFT is paying attention to how we can improve the last mile of delivery to tackle air quality and reduce the number of vehicles on our roads.

The clause introduces a lower rate of HGV levy for vehicles that meet the latest emission standard, and a higher rate for vehicles that do not. As we have discussed, the change will incentivise hauliers to move to cleaner, less-polluting vehicles. It is only right that everyone plays their part in protecting our natural environment so that we leave a cleaner, greener Britain for our children. HGVs currently account for approximately 20% of harmful nitrogen oxide emissions from road transport but only 5% of total miles travelled, so they will play an important part in tackling the problem.

The changes made by the clause will reduce HGV levy rates by 10% for vehicles that meet the latest emission standards, reflecting the fact that they generate 80% less NOx emissions than the older HGVs. The clause will also increase rates by 20% for HGVs that do not meet those standards. Many hauliers will pay less as more companies move to cleaner lorries—we have introduced it to improve air quality and not to raise revenue.

On amendments 115 to 118, to which the hon. Member for Norwich South spoke, the Government have published a tax information impact note outlining the impact assessment of these reforms, including the forecasted revenue effects, which have been certified by the Office for Budget Responsibility. I believe those amount to £25 million over the scorecard period. These reforms to the HGV levy are part of wider action by the Government to tackle challenges in the areas highlighted by the amendments. Isolating the impact of the HGV levy reforms would be extremely challenging and, I suspect, of limited use, as they cannot be separated from other actions the Government is taking in these areas.

The Government’s draft clean air strategy sets out an annual reporting process for the monitoring of air pollution, which is the appropriate mechanism for assessing the effectiveness of those changes and others over time, rather than introducing a new method to review it, as proposed by the amendments. I therefore urge the Committee to reject the amendments. The changes outlined in the measure will ensure that both foreign and domestic HGVs play their part in meeting the Government’s air quality targets.

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I thank the Minister for his contribution. I note that he was unaware of the 100,000 figure between the damage caused by an HGV compared with the damage caused by a Ford Focus. Have the Government made any assessment of whether HGVs currently cover the cost of the impact they have on UK road infrastructure? It sounds like they have not, but the Treasury should be able to amend VED or the taxation system that it will use in order to better reflect that.

To pick up on some of the comments made by the hon. Member for Poole, we are talking about externalities. Everyone wants to see everybody pay their fair share, and I am aware that haulier companies pay not just the excise for HGVs, but road tax and fuel tax. So do drivers of Ford Focuses: they also pay their fair share of tax, including income tax and other taxes as well. We all pay our fair share of tax, but if HGVs are damaging the roads to that extent and having such an impact in terms of road traffic accidents, that calls into question whether they are paying excise duty appropriately, and whether that excise duty is a genuine reflection of the cost that those HGVs are exacting on society and on our road systems.

The hon. Member for Poole also talked about technological fixes—so-called technological decoupling. Unfortunately, that has been around for some decades now, and there is no evidence that technological decoupling will work quickly enough or in a manner that will stop us from heading off a cliff edge on most of the nine planetary boundaries that scientists say we should be aware of. David Attenborough has said that the horizon for the end of civilisation is before us. It is no longer acceptable for political parties and Members of this place to decouple political rhetoric from political reality and the reality of climate change. That has to end.

HGVs are significant contributors to pollution and to greenhouse gas emissions, so I argue that the Treasury needs to accept the amendments. It needs to take on board the impact that HGVs have on our road networks, greenhouse gas emissions and noxious fumes, and the fact that the system in place is inefficient. Sixty-four per cent. of HGVs on the road are either empty or partially full, so the Opposition have suggested basing excise duty not on time on the road, but on distance travelled by HGVs. That would incentivise road hauliers to increase efficiencies and invest in vehicles to ensure that they are as efficient as possible. It would also ensure that logistical runs are as efficient as possible, which they clearly are not currently. I look forward to the Minister writing to me on those issues, but we will be pressing both amendments to a vote.

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In my earlier remarks, I did not respond to the hon. Gentleman’s questions on the calls for evidence. We did a call for evidence before we introduced the levy in 2014 and, at that point, the time-based levy was the preferred method among those who responded. That was the reason why we alighted on that methodology. The call for evidence on the reforms, which he also asked me about, will be published next month—further information that he may wish to scrutinise when it is published. As I said earlier in response to my hon. Friend the Member for Poole, we believe that HGV drivers pay their fair share through the levy, through VED and through fuel duty. However, we will of course keep the matter under review.

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If a road haulier sends a vehicle with a load to a city in the north, the profit it makes is on the load back. If that vehicle runs empty, the haulier has higher costs. Therefore, if that vehicle is empty, the road haulier’s manager is not doing his job properly—they have not been able to find a load—or the vehicle is going from one factory or depot to another to pick up a load. It is inevitable that there will be some empty vehicles, but that is not the fault of the road haulage industry. They would love their vehicles to be full.

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My hon. Friend makes an important point. Technology will improve that situation in time, as he said in his earlier remarks, but we will keep this matter under review. However, we respectfully ask that the amendments be rejected.

Question put, That the amendment be made.

Division 28

6 December 2018

The Committee divided:

Ayes: 8
Noes: 9

Question accordingly negatived.

View Details

Amendment proposed: 116, in clause 59, page 44, line 9, at end insert—

“(11) The Chancellor of the Exchequer must review the effects on levels of CO2 emissions and the UK’s ability to meet its fourth and fifth carbon budgets of the changes made to the HGV Road User Levy Act 2013 by this section and lay a report of that review before the House of Commons within six months of the passing of this Act.”—(Clive Lewis.)

This amendment would require the Chancellor of the Exchequer to review the impact of Clause 59 on CO2 emissions and climate change targets.

Question put, That the amendment be made.

Division 29

6 December 2018

The Committee divided:

Ayes: 8
Noes: 9

Question accordingly negatived.

View Details

Amendment proposed: 117, in clause 59, page 44, line 9, at end insert—

“(11) The Chancellor of the Exchequer must review the expected effects on the volume of traffic on the roads of the changes made to the HGV Road User Levy Act 2013 by this section and lay a report of that review before the House of Commons within six months of the passing of this Act.”—(Clive Lewis.)

This amendment would require the Chancellor of the Exchequer to review the impact of Clause 59 on road congestion and traffic levels.

Question put, That the amendment be made.

Division 30

6 December 2018

The Committee divided:

Ayes: 8
Noes: 9

Question accordingly negatived.

View Details

Amendment proposed: 118, in clause 59, page 44, line 9, at end insert—

“(11) The Chancellor of the Exchequer must review the expected effects on air quality standards of the changes made to the HGV Road User Levy Act 2013 by this section and lay a report of that review before the House of Commons within six months of the passing of this Act.”—(Clive Lewis.)

This amendment would require the Chancellor of the Exchequer to review the impact of Clause 59 on air quality standards.

Question put, That the amendment be made.

Division 31

6 December 2018

The Committee divided:

Ayes: 8
Noes: 9

Question accordingly negatived.

View Details

Clause 59 ordered to stand part of the Bill.

Ordered, That further consideration be now adjourned. —(Craig Whittaker.)

Adjourned till this day at Two o’clock.

Fisheries Bill (Third sitting)

The Committee consisted of the following Members:

Chairs: James Gray, David Hanson, † Mr Laurence Robertson, Sir David Crausby

† Aldous, Peter (Waveney) (Con)

† Brown, Alan (Kilmarnock and Loudoun) (SNP)

† Carmichael, Mr Alistair (Orkney and Shetland) (LD)

† Debbonaire, Thangam (Bristol West) (Lab)

† Duguid, David (Banff and Buchan) (Con)

† Eustice, George (Minister for Agriculture, Fisheries and Food)

† Grant, Bill (Ayr, Carrick and Cumnock) (Con)

† Hill, Mike (Hartlepool) (Lab)

† Hollinrake, Kevin (Thirsk and Malton) (Con)

† Jones, Mr Marcus (Nuneaton) (Con)

† Lefroy, Jeremy (Stafford) (Con)

† Morris, James (Halesowen and Rowley Regis) (Con)

† O'Hara, Brendan (Argyll and Bute) (SNP)

Pennycook, Matthew (Greenwich and Woolwich) (Lab)

† Pollard, Luke (Plymouth, Sutton and Devonport) (Lab/Co-op)

† Smith, Owen (Pontypridd) (Lab)

† Stewart, Iain (Milton Keynes South) (Con)

† Sweeney, Mr Paul (Glasgow North East) (Lab/Co-op)

† Tracey, Craig (North Warwickshire) (Con)

Gail Poulton, Lis Gerhold, Committee Clerks

† attended the Committee

Witnesses

Rebecca Newsom, Head of Politics, Greenpeace

Andrew Clayton, Project Director, Pew

Helen McLachlan, UK Programme Manager for Fisheries at WWF, Greener UK

Debbie Crockard, Senior Fisheries Policy Advocate, Marine Conservation Society

Andrew Brown, Director, Sustainability and Public Affairs, Macduff Shellfish

Andrew Pillar, Director, Interfish/Northbay Pelagic

Daniel Whittle, Managing Director, Whitby Seafoods Ltd

Mike Park OBE, Chief Executive, Scottish White Fish Producers Association Limited

Public Bill Committee

Thursday 6 December 2018

(Morning)

[Mr Laurence Robertson in the Chair]

Fisheries Bill

The Committee deliberated in private.

Examination of Witnesses

Rebecca Newsom, Andrew Clayton, Helen McLachlan and Debbie Crockard gave evidence.

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I welcome our witnesses. We have until 12.15 for this session. Will the witnesses very briefly introduce themselves, please?

Debbie Crockard: Good morning. My name is Debbie Crockard and I am the senior fisheries policy advocate for the Marine Conservation Society.

Helen McLachlan: Good morning. I am Helen McLachlan, fisheries programme manager for WWF UK.

Andrew Clayton: I am Andrew Clayton from the Pew Charitable Trusts.

Rebecca Newsom: I am Rebecca Newsom, heading up the politics team at Greenpeace. We have a history of working on marine issues.

Helen McLachlan: I should have said that I am also here as chair of the Greener UK coalition of non-governmental organisations, so representing the views of Greener UK.

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Thank you very much for coming. You are very welcome. I invite the Minister to ask the first question.

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Q147 Could each of you explain to us what you think the main flaws and weaknesses in the current common fisheries policy are, but also which of its elements and principles you would like to be retained in a domestic Bill?

Andrew Clayton: I think the biggest weakness in the current common fisheries policy, following the reforms in 2013, is that those reforms have been under-implemented. For example, the legally binding requirement to fish at sustainable levels that was written into the CFP was classic EU fudge. It was put in there with a deadline of 2015 where possible and by 2020 in any event, so we are only now coming to the crunch in terms of delivering that and making sure that fishing limits are sustainable when they are set each autumn. The Fisheries Minister will no doubt have a torrid time in Brussels in two weeks, trying to make sure that deadline is achieved. The fudges in agreeing those objectives have added further delay to making that policy sustainable, even though a lot of work has been done in the four years since the policy came into effect.

Debbie Crockard: One of the weaknesses of the CFP is its lack of flexibility and ability to react quickly when situations arise. That is something that can be quite difficult if there is a situation that requires reactivity. That is one of the biggest weaknesses, but one of the strengths—one of the strongest things that came out of the last reform of the common fisheries policy—was the legally binding requirement to fish at maximum sustainable yield, which is definitely something that we would like to see.

Rebecca Newsom: We would say that the strengthened version of article 17 of the CFP was an important step forward, but it has not been implemented in the way that we need in terms of environmental and social criteria. We welcome the transposition of article 17 into the Bill, but it urgently needs to be strengthened in order to deliver on environmental, social, and local economic objectives.

Helen McLachlan: I agree with my colleagues and just add that the commitment to take a more ecosystems-based approach towards our fisheries management was a welcome inclusion in the CFP, and we need to take that broader perspective—take fisheries out of a silo and look at the environmental impact, not just on target stocks but broader than that, on other marine species and habitats.

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Q Is it your view that if we move away from the multilateral kind of discussion that takes place at December Council, with qualified majority voting being the underlying principle for decision making, and instead we move to something that is more of a bilateral agreement between the UK and the EU, and given that we have set out clear environmental objectives that we have brought across from the EU in clause 1 of the Bill, then to answer Andrew Clayton’s point, it should be easier to deliver those objectives, because it will be a bilateral agreement rather than a qualified majority vote?

Andrew Clayton: I would agree that the deal making might be made a kind of cleaner process through that bilateral discussion, but the big concern for me is that the precautionary objective brought into the Bill is insufficient. It actually undercuts the CFP; it is a lower level of ambition than exists in the CFP at the moment. The UK is signalling with this text as it stands that it will aim lower, and that will certainly make it harder to get that kind of agreement.

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Q Would you expand on that? I know that you have raised this point with me, and I can make a direct comparison between what we have—clause 1(3)—and article 2.2 of the CFP. With the absence of targets that are now past, or they will be past by the time this Bill is commenced, the wording is identical.

Andrew Clayton: The fudge that was agreed in 2013, and the legally binding objective that at the time was welcomed as a big win for the UK in negotiating that legally binding requirement, was CFP article 2.2, which is written in two parts. The first part of the CFP objective is an objective to restore biomass, defined in terms of maximum sustainable yield. It was felt at the time that it was very difficult to make a biomass objective legally binding, because you would be holding Ministers to account for putting fish in the sea, so it was agreed at the time that there should be a second clause to that objective with the aspiration to restore biomass. The second clause, which is the more important and more binding, actually relates to exploitation rates—setting fishing limits. It is that more binding clause that brings in those legal deadlines, saying that by 2015 where possible and by 2020 in any event, fishing limits should be set in line with that scientific advice on maximum sustainable yield. It is that binding part that we can hold Ministers to account to and it is that binding part that is having an impact in the EU decision making. That is the kind of element that is in the forefront of Ministers’ minds when they are setting fishing limits in the December Council.

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Q But the use of the term “exploitation rate” was only in the context of describing the 2015 where possible and by 2020 on all quota stocks.

Andrew Clayton: Yes.

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Q So it is the date that is the only thing—

Andrew Clayton: Personally, I think the date is a moot point, because the UK is committed to achieving that date by 2020. I realise the timing of this Bill taking effect is uncertain, but either way the UK is committing to achieving that job.

The net effect of removing that second clause is that the future Fisheries Bill would therefore just have an aspirational objective to restore biomass at some point in the future, with no deadline. That still leaves Government and Ministers under short-term pressure every autumn to take that short-term view, to overfish in any given year, and there is always an excuse that can be made that overfishing for one more year might be justified in some way, with this longer term biomass objective in mind. The history of the CFP shows us this, but it is not even a historical point that I am making. We have just literally agreed and signed up to a deal this week to set limits for 2019 for mackerel higher than scientists advise, and the only kind of saving grace in that decision was that the Commission announced that they would not be able to do this again next year because of this 2020 deadline. This deadline is biting at the moment; we need to stick to that and not go backwards on the progress we have made.

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Q Finally on that, there is something else in the Bill that is not in EU law: the requirement for a joint fisheries statement. That is a statutory requirement to have a plan agreed by all parts of the UK that sets out how we will deliver those statutory objectives in clause 1. Is that not the right place to define and describe in more detail how to deliver that biomass objective?

Debbie Crockard: That may be a good place to define it, but the problem with the joint fisheries statement is that, under clause 6(2), if a national authority takes the decision to act other than in accordance with the JFS, it simply has to state the reason why. There is no binding duty to follow that JFS. If it goes against the JFS and sets fishing limits that are not legally bound, there is nothing to hold it to account in that situation.

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Q One of my concerns about the Bill is that it does not go far enough in addressing data deficiency. We have data for a number of stocks, but for an awful lot of stocks—some quota and some non-quota—we do not have a baseline stock assessment or an understanding of how much fish is in the water that we may be catching off-quota. What could be improved in the Bill to address that data deficiency?

Helen McLachlan: That is one of our concerns. It is not really addressed fully by the CFP either, which is why we think the Bill is a great opportunity for the UK to start to fill that gap. You are absolutely right: we do not have an effective means of documenting what we remove from the oceans. There are requirements to log what is taken. We have operated a landings-based system to date, but we should now move over to a catch-based system, with which we should be able to monitor what comes up in the net. We are not able to do that now; the systems are simply not in place. We would like to see the Bill address that with a verifiable, fully documented catch commitment, supported by the use of electronic monitoring in the first instance, for example.

As you say, it is not only the catch but what else comes up in the nets that we can start to gather data on, which can be fed into stock assessments, increasing confidence in those assessments. That, circularly, is good for best management practice. We advocate a verifiable, fully documented fishery approach with the support of electronic monitoring on the vessel. When under a piece of legislation that prohibits discarding, as we are now, that activity occurs at sea, so we need some means of monitoring effectively at sea to take account of that. Improving data collection would be absolutely fulfilled by that requirement.

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Q The Minister asked about MSY by 2020. The omission of the “by 2020” part, although problematic because it looks like the UK will not hit the 2020 date, means that there is no target date in the legislation, which is a de facto reduction in environmental standards compared with the CFP, which is something my party has concerns about. Recognising that we will probably miss the 2020 date, what level do you think would be appropriate for the UK to reach an MSY figure?

Andrew Clayton: I certainly agree that it is a de facto reduction as the Bill stands. I would not necessarily make the assumption that the UK will miss the 2020 deadline, because the power is with the UK to set fishing limits, or for the Council as part of the EU process. The only difference between an overfished stock and a sustainably fished stock are those decisions, and they are in the power of Ministers. I therefore think that we should certainly stick to that MSY commitment.

We have made a huge amount of progress, which is an important point. This is not about some far-off aspirational aim when it comes to setting fishing limits in line with the MSY objective. For 2018, about 44% of fishing limits were set higher than the scientific advice, but for stocks with MSY advice the percentage in line with that advice was about 75%. We have made good progress; we have taken a lot of pain on the way but the UK’s stocks are moving in the right direction, with fishing pressure being brought closer to scientific advice, biomass recovering as a result, and profits for the fleet on aggregate rising at an all-time high as a result of that progress. The important thing is not to go backwards.

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Q Can I ask about stock levels in relation to non-quota species such as cuttlefish? Cuttlefish live for only about two years, so there is a risk that if you overfish in one year, you can significantly affect stock levels with huge potential future impact. We do not have a lot of data on cuttlefish at the moment. For those types of species, is there anything that could be included in the Bill to require or encourage greater data collection?

Andrew Clayton: I would emphasise that the precautionary objective in the Bill refers to harvested species. The Bill aims to deal with all those stocks, whether they currently have a fishing limit or not. It is a note of concern that the CFP also does that—it talks about harvested species—and the CFP is going in the opposite direction and removing fishing limits. Six limits for deep sea species were removed just in November. It is a good opportunity for the UK to show more ambition in managing those species better and gathering the data that is needed as the starting point.

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Q One of the areas about redistributing quota, both new and potential if we get any drawdown from our EU friends, is allocating that on more economic, environmental and social grounds. Is that an area where, from your point of view, there could be benefits in terms of environmental protection and investment in coastal communities? Is that an area that you would support?

Rebecca Newsom: Absolutely. Greenpeace is working with the Greener UK coalition as well as the New Under Ten Fishermen’s Association, the Scottish Creel Fishermen’s Federation and Charles Clover’s Blue Marine Foundation, to push for a more robust approach to distributing quota—existing, new and future—on the basis of environmental and social criteria. It stands to benefit the entire fishing industry in terms of driving a race to the top for fleets of all sizes, which would have the opportunity to access fishing opportunities as long as they conformed to environmental standards and things such as giving local employment to communities. We see that as a huge opportunity.

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Q What importance do you feel the Government attach in this Bill to conservation, sustainability and protection of the ecosystem?

Andrew Clayton: Referring to the objectives again, I think the fanfare with which the Bill was published emphasised sustainability and put it at the heart of what the Government are trying to achieve. The language in the objectives is ambitious to the extent that it mirrors some of the existing commitments. I have already described the serious concerns I have about the shortfall in the sustainability and precautionary objective.

Learning the lessons from the CFP, the important thing under this Bill is that the Government pave the way for implementation—that is why it requires slightly more binding commitments in it—and through the joint statements, to ensure that is implemented in practice, with sufficient deadlines and some concrete detail. Fisheries is a policy area that suffers constantly from short-termism and highly politicised annual decisions. It is important that future Fisheries Ministers are not put under as much pressure to make short-term, short-sighted decisions as previous Fisheries Ministers have been.

Debbie Crockard: The ambition here is for world-leading sustainable fisheries management. At the moment we do not have a duty in this Fisheries Bill to meet the objectives in the Bill. Those objectives cover a lot of very good things—sustainability and a precautionary approach—but without the duty there is no clear obligation to deliver those objectives. Without that clear obligation you are in a situation where they might not be met and there is no obligation to meet.

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Q Do you think that the Bill as it stands improves or will adversely affect conservation, sustainability and the eco-environment?

Debbie Crockard: It has the potential to improve it if it becomes binding. A lot of these objectives are very good, but they have to be binding; they have to allow us to make those steps to world-leading sustainable fisheries. Without that binding obligation and without the obligation for MSY and without the improvements in CCTV and monitoring and information and data collection, we will struggle to prove that we are even making those changes to sustainability.

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Q How confident are you that, without that binding mechanism, this will work?

Debbie Crockard: I think you just have to look, as Andrew said earlier, at the common fisheries policy. We have the binding objectives there, but there is still a lack of political push in many aspects to actually meet those things. MSY was supposed to be put in place by 2015, but it has been pushed back and back to the very last point, which will be 2020. Without that binding obligation, there is a lack of motivation.

Helen McLachlan: That was demonstrated by the CFP. The last reform introduced that binding commitment for a deadline. Prior to that, we consistently set limits over and above that recommended by scientists. Since that binding commitment was brought in, we have started to see those trends going the right way: biomass increasing, fishing mortality decreasing, and trying to balance our fleet sizes appropriately to the resources available to them. This is good in terms of the commitment, but the application will be absolutely critical. To have that duty and also the mechanisms around it in terms of monitoring what is coming up in the net, what we are removing from the sea and how we are being accountable for what we are removing, will be key to the success and the ability to say that we are talking about world leading fisheries. At the minute, without that, we are falling behind.

Andrew Clayton: Also, it is not just about the application. The removal of the requirement to set fishing limits at sustainable levels is a clear signal that we will aim lower, so it is not just the application. As drafted, it sends a message that we will go lower than the EU.

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Q Sustainability is clearly important. Several of you have mentioned the remote electronic monitoring equipment, as have other witnesses. Is that technology sufficiently developed to do what we want it to do? Is there any evidence from where it is being used in other countries?

Helen McLachlan: Yes, very much so. Electronic monitoring systems have developed quite rapidly in the last decade and are now standard operational practice in certain fisheries around the world. In the US, for example, the national administration there has taken the decision that there is no need for further piloting; they just need to get on and do it. They currently have between 25% and 30% of their fleets covered by electronic monitoring. New Zealand has just taken the decision to roll it out across the whole of their fleet. That is in the process of happening.

Numerous other countries have started to adopt it, not just as a means of monitoring but in recognition the things that New Zealand cited, for example: reduction of waste, so it incentivises more selectivity; reduction of discards; and greater economic returns, because you are no longer taking out lots of smaller fish but allowing them to stay in the water longer. Your biomass and the health of your stock in terms of the make-up of age classes is better. Also, in terms of public confidence in the fisheries, the ability to say, “This comes from a highly sustainable fishery,” is a great thing. Coming back to your point on data provision, Mr Pollard, and the data coming out of the system, being able to build into the assessments gives greater confidence in that management. Quite often, if you have higher confidence levels in what you are talking about, your quotas start to increase because your confidence is greater.

There are benefits all around, and I think more and more Governments across the world are realising that. It is a cost-effective and robust means of doing that. Here in the UK we have several vessels currently operating with it and saying that they have benefited from it, because it has been able to demonstrate that sometimes what fishermen see in the water is not what they are being recommended by scientists, so they have said, “We can use this as a great tool to be able to say, ‘Actually, what we’re seeing is here.’” There is an ability to be very responsive in the management, turning it around very quickly—not quite in real time, but very close to it—and allowing adaptive management.

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Q From the New Zealand example that you cited, do you know how long it is taking New Zealand authorities to make this happen on their fleet?

Helen McLachlan: They introduced the intent last year and they are phasing it in.

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Q Over what period?

Helen McLachlan: I do not think they have a detailed end point. The commitment is for all vessels going to sea to have this technology. They are rolling it out currently. It is not something that will happen overnight. You cannot all of a sudden one day have a vessel that does not have the technology.

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Q That is the point I am making here. You are asking for it to be put into the legislation, and clearly in that case at some point vessels would need to be compliant, so I am trying to get a feel for what that really means, bearing in mind that there are some timescales that we are working to.

Helen McLachlan: I think a reasonable timescale is perhaps over a two-year period. You have to make the decision about what system you are going to go with, you have to get the technology on to vessels and set up on the port side. Two years to get the fleet operational is reasonable.

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Q Good morning, everybody. Mr Clayton, could you give us more examples of species where there has been fishing well above the MSY in recent years?

Andrew Clayton: It might be useful to talk about a choke species, because that generates a lot of debate when we talk about setting objectives for sustainability and the difficulties of dealing with stocks that have very low levels of biomass and therefore very low levels in their scientific advice. There is a good example that will be discussed in the December Council: cod to the west of Scotland is a stock that has been overfished for decades. Fishing pressure is way too high and because biomass is so low, scientists advise a zero TAC or a zero level of directed fishing.

That is proving very difficult because of where we are in implementation of the CFP. In 2019, both a landing obligation and this MSY requirement—the deadline to end overfishing—will be approaching. What we need to do with those species is to find a way to reduce their catch. We need to reduce bycatch and we need initiatives to ensure that they are not being fished at the high levels that they have been under pressure from for years and years.

To meet the deadline, what is happening in the EU system at the moment is that they are considering bycatch initiatives—small bycatch TACs that would be used to bring fishing pressure down. Member states have plans to reduce the bycatch to try to restore that stock, because where we have stock that has been overfished to that level over such a long time, we have a huge disparity between the catches in that mixed fishery. That stock will hold back all the other perfectly sustainable catches that could be made in that fishery. What we have done for way too long is overfish and then hide discarding over the horizon. Now is the time when we need to get to grips with the fishing mortality in that fishery and allow that stock to recover so that we can get the highest yield out of the fishery overall.

In this particular case it is not an example of MSY being used to set that limit; no fisheries scientist on the planet would advise catching that stock, because it is in such a dire state. The MSY level of catch for that would be about 500 tonnes, but zero catch is advised because it is in such a poor state. That is one example of overfishing. I mentioned mackerel earlier, which is the UK’s most valuable stock. It supports so many jobs in the UK and is a really important iconic species for us. It is also a stock that has been overfished in recent years. That is partly to do with the lack of agreement between the various coastal states that are fishing the stock. Not all coastal states are within the CFP; we have to negotiate with Iceland, Norway and the Faroes.

The advice for this year was for a huge cut of that stock, because our luck ran out. We have been overfishing it, and taking too much of a gamble with that stock. Finally, a huge cut was proposed to try to get things back on track. That is, of course, unpalatable. The main thing that we need to do is to move away from that boom-and-bust cycle, so that we do not keep fishing at the absolute maximum pressure, or even overfishing, and then find it surprising when scientists advise drastic cuts. We need to move away from drastic cuts and get some stability in our fisheries.

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Q You have obviously been very clear that you think that this is a less ambitious set of targets, and less binding on Ministers, than the CFP. How would you repair the Bill to make it more ambitious and more binding? Would you simply transpose into the Bill that second part of article 2.2 of the CFP, or would you do something else?

Andrew Clayton: I understand the head scratching about the 2015 deadline and the 2020 deadline. I understand that that might not be appropriate for the Bill at this stage, but Greener UK has submitted amendments that would correct this and ensure that a fishing limit is set in line with scientific advice.

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Q Finally, do you think that recreational fishing could play a part in improving sustainability? That is to say, certain stocks could be preserved for recreational fishing, as has happened in New Zealand and elsewhere.

Andrew Clayton: Yes, I think it is time that recreational fishers were at the table and involved in management decisions, because they bring a large amount of money into the economy and are involved in fishing mortality as well. They should be a player in the system.

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We have less than 15 minutes remaining, so brief questions and brief answers might be helpful.

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Q My apologies for arriving late. In my experience, fisheries management is currently incredibly adversarial. We in this place, parliamentarians, and non-governmental organisations very much promote a more collaborative approach, with the fishermen being the solution. Do you think that that will be achievable in practice, and how do we make it achievable? We talk about collaboration the whole time, but in the real world it can be very difficult.

Helen McLachlan: Again, it comes down to the processes, the implementation and how we are going to take it forward. There are some good models of collaboration and effective delivery. For example, the Scottish Administration have taken a very strong approach to that, really bringing the catching sector, the processors and the NGOs around the table to have very frank discussions about what needs to happen if we are to meet certain objectives. That is a good model, and one that could be replicated by the different Administrations. We will not deliver sustainable fisheries management by having conflict and not having the catching sector working alongside administrators and the NGOs, because we all represent important constituents.

Rebecca Newsom: Adopting a more fair, equitable and sustainable approach to the distribution of fishing opportunities in the future is of fundamental importance to securing the buy-in of fishers across our coastlines. We just have to look at the current unequal distribution, which can also contribute to unsustainable outcomes, to recognise that we need to see urgent change.

In practice, all we are saying is required to deliver on that is a couple of small tweaks to clause 20, which essentially removes historical catch levels as the prevailing criterion for determining the distribution of fishing opportunities in the future and requires that environmental, social and local economic criteria are prioritised instead. We need to think about the political buy-in that can be achieved by that and, in turn, how that helps us to deliver on the higher-scale MSY objectives that we have been talking about.

Debbie Crockard: The advisory councils are also an example of collaboration between the other interest groups—OIGs—rather than the NGOs, on the advisory councils, and the industry. While we do not always agree, and it can take a lot of time to come to any agreement, there is a lot of really useful discussion and collaboration in those groups.

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Q This is a bit of a repeat, but are you in favour of redistributing quotas more fairly to under-10s?

Rebecca Newsom: Yes we are, but we want to stress that the way to achieve that is through introducing transparent and objective environmental and social criteria that all fleets need to abide by. It is not necessarily a black-and-white dichotomy between small scale and large scale, although of course the new approach would stand to benefit the smaller-scale fleets significantly, given their current fishing practices where, for example, about 90% of the under-10s use passive gears.

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Q Do you think that would have a positive economic impact on localities such as Hartlepool, where we hardly have a fleet but where the fleet could grow given a fairer distribution of quotas?

Rebecca Newsom: Absolutely. I refer the Committee back to the evidence from Jerry Percy on Tuesday. To add to that, the social criteria that we would suggest were used would need to be developed through public consultation and advice from experts. They should include, but not be limited to, things such as local employment and port and processing opportunities. That is a way to bed in local economic benefits.

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Q I have one last question on climate change, which is hardly mentioned in the Bill. Are the provisions adequate to abide by international climate change obligations? What are the implications of climate change for fish stocks and marine ecosystems?

Andrew Clayton: I can say something about the level of precaution and the importance of building resilience. As managers of fish stocks, as I said earlier, we cannot put fish in the sea and we cannot control biomass directly. All we can do, when we are managing exploitation and managing the fishing fleet, is operate with a suitable level of precaution and make sure that stocks can be resilient if they face other pressures.

Fishing pressure obviously has a huge impact on fish stocks, but so do climate change, habitat degradation and acidification—there are all kinds of other threats that fish stocks face. It is about leaving them enough space to be resilient to those other pressures as well.

On the economics, I wanted to say that the concept of maximum sustainable yield is primarily an economic concept that gained ground after the second world war. It is about providing as much protein for hungry people’s plates as possible. It is not a green benchmark; it is not something that you would start from if you were looking only at the environment—you might want to be more cautious with some other measure.

It is a happy coincidence that we, as green organisations, find that we are advocating a high-yield, highly profitable, highly economically successful approach. That is what other countries around the world have seen when they have delivered MSY. It is win-win for the environment and for the bottom line of fishing businesses.

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Q I would like to ask about the legal implications of potentially redistributing quotas. What do you envisage the complexities of that might be? How can we address them as part of the process? What is your take on monopolistic activity in the fishing industry?

Rebecca Newsom: Greenpeace has taken independent legal advice on the issue. The conclusion was that, from a legal perspective, the Government and any other relevant national authorities can feel very confident in proceeding with this new approach to quota distribution. The prospects of a successful judicial review are very low, and the reasons for that are twofold. First, in the Brexit process, the proposed amendment is being put into a new Westminster Act of Parliament. As such, after we leave the EU, Parliament will be supreme and the law will have superiority to case law. Secondly, the 2012 legal case discussed on Tuesday concluded that while there may be some property rights attached to fixed quota allocations, those are not applicable if the quota has not been used. In any case, it is within the power of the Secretary of State to allocate as they see fit. Taken together, our conclusion is that such a measure would be clearly compatible with national and international law.

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Q Good morning, everybody. We have not discussed the fact that the Bill includes a proposal for a discard prevention scheme. Do you have a view as to whether the measures are transparent enough? What are the risks of doing that? Is it the right approach to avoiding discards?

Helen McLachlan: Discards are a major issue and we welcome the continued commitment to trying to minimise discards overall. Our view on the measures in the Bill is that it is not quite clear what consequences or unintended consequences might arise. We would like to see more effort being placed on being clear about what it is we are taking out of the water and how much we really do need to discard. Going back to electronic monitoring at sea, we need to get a clear case. What we are concerned about at the end of the day is what we are removing from our ocean systems and how we can account for that sustainably. I think we would like to see more focus on that, rather than penalties per se, particularly as we are not quite clear on the intended or unintended consequences at this point.

Debbie Crockard: Especially because the original intention of the landing obligation was to improve selectivity, to make fishing more sustainable and to reduce waste. If there are uncertainties and things that are not clear within the Bill, we need to ensure that the legislation is still trying to meet those initial intentions.

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Q Rebecca, if we go back to quotas and quota allocations, you are talking about wanting to see more transparency, environmental measures and social benefits. You spoke about public consultation developing that. What do you actually want to see on the face of the Bill? That is what we are looking at just now. How do we get those protections in the Bill?

Rebecca Newsom: In terms of the Bill, we are talking specifically about clause 20, which starts off as a transposition of article 17 of the CFP. We are suggesting that a few very small changes are made to that article essentially to remove historic catch levels as one of the determining factors for distributing quota and to prioritise environmental, social and local economic criteria instead. That would be the tangible, most important change on the face of the Bill. In terms of the follow-up process, the change in the Bill would set the principles and the legal framework for how quota should be distributed in the future, but it would then become the responsibility and powers of the relevant national authorities, including the devolved Administrations, to run their own public, transparent consultation process to determine exactly what those criteria are, how it works in practice and to implement it.

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We now have to conclude this session. I thank all the witnesses for attending; your evidence has been very helpful.

Examination of Witnesses

Andrew Brown, Andrew Pillar, Daniel Whittle and Mike Park gave evidence.

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I thank our new set of witnesses for joining us. Could you please introduce yourselves very briefly?

Andrew Pillar: My name is Andrew Pillar. I am representing Interfish and Northbay Pelagic, which are primary processing and exporting businesses in Plymouth and Peterhead, but I am also wearing a hat here on behalf of the Scottish Pelagic Processors Association.

Mike Park: My name is Mike Park and I am chief executive of the Scottish White Fish Producers Association, representing over 240 businesses.

Andrew Brown: My name is Andrew Brown and I am the director for sustainability and public affairs at Macduff Shellfish, which is the biggest shellfish processor in Europe.

Daniel Whittle: I am Daniel Whittle from Whitby Seafoods, which is the UK’s largest scampi manufacturer. We are somewhat unique, in that we are entirely supplied from the UK and supply into the UK. I would say we are also representing Northern Ireland, because we have a factory there and are very dependent on its supply.

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Q Obviously, some of our most important fisheries agreements are those with Norway and the Faroe Islands and the coastal states agreements on species such as mackerel, all of which are currently handled by the EU, where we do not have a direct seat at the table in the way the other coastal states do. Would you explain some of the consequences of that lack of representation by virtue of the fact that we are an EU member?

Andrew Pillar: I have attended many of those meetings with teams travelling from the UK, and it is an extremely frustrating position to witness that power being taken out of the hands of a team representing the UK and placed in the hands of the EU, making decisions that are not best aligned with the interests of the UK catching and processing sector. We have seen in recent years this becoming a very difficult issue in terms of negotiating away access to UK waters, in the coastal states agreements, for a period of time that has been inconsistent with the best interests of the UK.

Mike Park: You will be aware that the EU-Norway negotiations are going on in London as we speak. They failed to come to a conclusion last week. I have been going to these negotiations for over 25 years, I think, and one aspect of the negotiations that we look at with envy is the Norwegian Government always sitting with their sector. They normally have five or six fishermen bound roundabout them so that they can feed from one another in terms of what the appropriate output should be.

I also feel sorry for some of the member state officials, such as the officials from the Department for Environment, Food and Rural Affairs and Marine Scotland, who sit in these meetings, because very often they are kept out of the heads of delegation meetings, where the detail of the discussions and sometimes the conclusion agreements are set. For 25 years, we have sat there, looking at Norway with envy, thinking that at some point we would like to do that, and I think that, as we move forward, perhaps we will. For us, it has always been a negative that the fishermen of Europe are not talked to in any way other than a loose way, and we are certainly not bound into any of the negotiations to feed in in an appropriate manner.

Andrew Brown: I can say a little about this: I used to be involved in these negotiations for the Scottish Government. It was very difficult to try to continue the dialogue with the industry as the negotiations went on. One of the roles I had was to speak to Mike and his like as the negotiations continued. I think there is something in what Mike has suggested.

Daniel Whittle: I do not get to go to the negotiations, but in the previous session there was talk about TAC being set above the recommended scientific advice, and I know a good example of where that happens: area 7 in the Irish sea, for nephrops, where there is a large, 20,000-tonne fishery. Every year they set it above that because the French and the Spanish have quotas that are largely unused, so they set the TAC above what the recommended scientific advice is, to allow that to happen. There is nuance in when the TAC is set above what the scientific advice is.

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Q In conclusion on this point of the important fisheries in the North sea, is it your view that British interests get traded away by the EU in order to get advantages for other member states?

Andrew Pillar: The opportunity for us is not to be underestimated—to be at the table as a coastal state. That is the prize we in the industry see. Mike touched on that point about the industry working with Government to best achieve those objectives. There will be some trading and negotiations, but they need to be right for the UK and at this moment we are not in that position because we are not a coastal state, but this framework will enable that and delivery of a coastal state has to be the objective.

Mike Park: There is a typical example going on just now in the current negotiations, where the quota of North sea haddock next year will come down by approximately 30%. We would like to get some trade in from Norway to help us through next year, but that has now been balanced against north Norway cod, which the Spanish and French are lobbying heavily to get. That could mean that we do not get the haddock we want in the North sea. The answer to your question, Minister, is yes, it works against us at times.

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Q All of you export some of your products. In the event of a World Trade Organisation scenario with most favoured nation tariffs, how high is the tariff on the fresh fish that you sell, and are you more worried about tariffs or the possibility of border inspection posing some disruption to the supply chain? Which concerns you most when it comes to trade?

Andrew Brown: As a shellfish processor, we are highly reliant on exports, particularly to Europe, which is the destination for 95% of our scallops, for example. At the moment we enjoy free and frictionless trade, so the implementation of MFN tariffs would have significant effects. We have done some calculations for the shellfish industry as a whole. We are looking at perhaps £43 million in additional costs on shellfish exporters if we moved to that, plus, with third-country agreements with the likes of South Korea, probably another £5 million on top of that—that is per annum. Whether some of that can be absorbed by the customers and buyers in Europe is a difficult one to see. It is a competitive market; therefore, we have concerns that this will have an impact on our competitiveness and on how well we are able to sell our product.

The non-tariff barriers are equally, if not more, important. If we move to a stage where we need health checks and border checks at both sides of the border, that will cause a delay. For shellfish—a highly perishable, high-premium product—a 12-hour delay can reduce value by almost 50%. If you are delayed for 48 hours, you have more or less lost that consignment. The non-tariff aspects are really significant for the shellfish sector and for other sectors.

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Q On scallops, the MFN tariff is 8%. Arguably, that is a bit like VAT—it is a tax on the consumer, ultimately. I know some in the fish processing sector have said, “Yes, we would obviously rather have tariff-free trade, but don’t sell out the catching sector on our behalf.” I wondered whether an 8% tariff, at the end of the day, given the fluctuations in market price anyway, is hugely problematic.

Andrew Brown: Of course, we do not welcome such a tariff. We have to remember that the shellfish sector is not really gaining anything in additional quotas through Brexit. These are non-quota stocks, other than the langoustine, which we already have a very large share of, so there is no benefit to us—to the shellfish sector—from the Brexit process. We do not expect our catches to be able to go up much, and we require access to some European waters for scallops and crabs, so there are multiple threats to the shellfish sector. We need to ensure that the sector is not forgotten about in the larger discussion on fin fishing.

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In previous sessions, you might have heard me asking about a national landing obligation—a requirement to land fish caught under a UK quota in UK ports. Would that have an impact on the processing side of the businesses that you represent? In the interest of complete disclosure, I also declare an interest, because Mr Pillar and Interfish are based in the constituency that I represent. What impact would a landing obligation to land fish in UK ports have on your sector? Would it be beneficial?

Andrew Pillar: One of the key things in the port that we originate from, in Plymouth, is the market—the auction—and the opportunity for fishermen at all levels to access that and sell their catch. That is from the under-10 fleet right through to larger vessels. As it stands, that business has absolutely no security and no certainty that there will be a supply of fish coming into that marketplace if operators were to choose to put their fish into the back of a lorry and send it directly overseas, which can and does happen. In some ports around the country, that has evolved under the CFP to a situation where markets have failed and there has not been the opportunity to have a diverse marketplace for small, medium and larger vessels.

In the pelagic sector, the opportunities around employment export, upstream and downstream, are wide-ranging. To be competitive in many of those markets, it is essential to have a critical mass—a business must have that critical mass. In the UK, we operate with very different bases for business in terms of business rates, labour costs and harbour costs, which do not put processing on an even playing field with many of our competitors, but we must recognise that it is a competitive market. What we do have is some of the best, highest quality seafood that we will stake our case for being sustainably produced within British waters. That is a highly desirable product and not to be undervalued.

Mike Park: From a Scottish perspective, in terms of landing to the market, up in Scotland all our vessels operate locally. We do not fish north Norway, the Mediterranean or the Pacific or anything; we fish around our coasts.

The vast majority of the demersal fish comes in to ports such as Peterhead, which is the largest white fish port in Europe, and Fraserburgh, which is the largest nephrops port in Europe. You see the investment going on there: we have a new fish market there, and last week we landed 36,000 boxes of fish into that fish market, which is unprecedented elsewhere. You see a significant investment in new vessels—replacement vessels, not additional vessels. You see an enthusiasm up there, which is built on the fact that the stocks are on our shores, we take care of them and we land it back to our markets. There is a small amount that goes to northern Denmark for the Christmas market—we utilise their market for saithe over that period—but apart from that, everything largely comes back home to Scotland.

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One of our concerns about the Bill is the potential for standards to be different on British fishing boats versus foreign fishing boats fishing in British waters. From your point of view, for those who trade here, is there a concern that there could be a differential in terms of cost base, compliance and regulations, environmental protections and marine safety if there is not a level playing field between British fishing boats and foreign fishing boats in our waters?

Daniel Whittle: I have a suggestion on that front. There was discussion about remote monitoring. You could make that part of a requirement of fishing in UK waters, so that there would be a level playing field.

To give our perspective on the landing obligation, in Northern Ireland, it is challenging that there is a whiting bycatch. There has been a lot of work on selectivity to reduce it. I fear that the approach being taken, which is “Let’s have a deadline,” is not a practical approach. The approach should be that fisheries continue to try to remove unwanted catch from their nets, but it should not be deadline-driven; it should be a continuous improvement approach.

Andrew Brown: On the foreign vessel conditions, the Bill needs a little more explanation. Each fishing administration is able to establish its own licence and therefore its own licence conditions, and each fishing administration can in principle establish licences for foreign vessels as well. A problem could exist whereby a British or a foreign fishing vessel, fishing in different waters around the UK, might be subject to different licence conditions. It is not clear to me in the Bill how that will operate. That could indeed have an effect on UK fishermen who fish in more than one fishing administration’s waters and on what licence conditions will apply.

Mike Park: In Scottish waters, we do a lot to try and protect the stocks. We have closed areas for spawning females of cod. We have other areas for abundances, and of course we have a network of marine protected areas, like everyone else. One of the things that we ask for going forward—it is a positive, but a negative for our fishermen—is that we avoid the areas of high density. Chances are that that means we catch less fish in terms of economic viability. We could go to area A and catch loads of fish, but we do not; we avoid it. We go to area B where we catch less, but it allows stocks to recover. We do not feel there is equivalence across the EU because some of our EU colleagues enter these areas while we have them closed unilaterally. On issues like that, in the future we would have to ensure that whatever happens there is a degree of equivalence, so that when we make a rule in UK waters, that rule applies to everyone. I am sure it will.

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Q We heard in one of our evidence sessions on Tuesday that some fish are caught in UK waters, exported to China for processing and then brought back. I think an awful lot of people will have found that very disturbing. The issue of food miles has dropped from the political agenda, especially with the focus on trade deals with countries far away. How do consumers know whether they are buying fish that has been caught, landed and processed in the UK, or something that has travelled all the way round the world and back again to get to your plate?

Daniel Whittle: Can I ask a question? Where did your suit come from? [Laughter.] And where was it made?

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It’s from Marks and Spencer, like all the best suits.

Daniel Whittle: Are you bothered about where it has or has not been in the supply chain? You trust Marks and Spencer to act ethically, so why would you scrutinise a fishery?

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Q The difference is that there is a label so that I can see where it is made. As a consumer, if I rock up to a supermarket and buy some fish, how do I know where it has come from? Can we get clarity for British consumers who might be under the impression that, because we are an island nation, the fish we buy have simply been plucked out of the sea and brought in?

Daniel Whittle: Ethically, should you not be wearing a British wool suit?

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Perhaps we can do less on suits and more on fish.

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Order.

Mike Park: Perhaps I can answer the question that the hon. Member posed. In Scotland, I chair a group called the Scottish Fisheries Sustainable Accreditation Group. That group focuses on ensuring that we build stocks up to sustainable levels and that our fishermen harvest stocks appropriately in terms of selectivity and other things. Once we reach a certain standard, we put them through the gold standard of the Marine Stewardship Council certification. The consumer is more concerned about whether she is buying a sustainably caught fish—quality fish—than she is about where it is filleted. By attaching that mark we ensure we give comfort to the consumer. I think that where it is filleted or whatever is a bit of a red herring—excuse the pun. At the end of the day, the consumer is focused on whether the fish comes from a sustainable source and whether it is of good quality. That is what we as an industry group actually ensure.

Andrew Pillar: One of the things that we would like to see strengthened is the recognition around labelling and for labelling to be consistent with the chain of custody and provenance—where a fish has been through its life cycle. That really is driven by point of landing. If something is British, that point of landing is key because you start to derive the value upstream and downstream in the chain of jobs dependent on that fish being produced.

Andrew Brown: I agree with what Mike said about accreditation. Macduff is working hard on accreditation for nephrops stocks and scallop stocks. That is important to us, and, post Brexit, accreditation and certification will become that much more important to guarantee the sustainability of our stocks.

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Andrew, you commented that access to EU markets and the EU workforce is critical for business and industry. What will the ending of free movement mean for your industry? Have you seen any impact of Brexit already since the referendum? Also, what are your views on future immigration policy? The UK Government are talking about not allowing what they call “low-skilled workers”, and having a £30,000 threshold for qualification.

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Order. I am advised that free movement is beyond the scope of the Bill.

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Q I have a question for Mr Brown about the importance of the shellfish industry. As the Member of Parliament for Argyll and Bute, I understand the importance of shellfish to my west of Scotland constituency the. Do you think that the shellfish industry has been adequately heard in the debate, or do you feel that you have been slightly subsumed into the big fishing producers and big organisations? Are your concerns adequately covered in the Bill?

Andrew Brown: Obviously, fisheries have played a prominent role in Brexit and there has been a lot of publicity about the possibility of additional quotas. The fact that inshore fisheries and shellfish fisheries will not gain from that has probably been underplayed. There is certainly that aspect to it. We want to see tools in the Bill to allow Ministers to manage shellfish stock sustainably. If anything, shellfish stock management has probably lagged considerably behind demersal and pelagic management because of some inherent difficulties in the stocks, given their patchy distribution across UK waters.

However, it has always been the kind of fishery that new entrants have come into, because if you are a new entrant to a fishery you need three things: a licence, a vessel and a quota. Those are all expensive, but to get into the shellfish sector you do not need your quota, because they are non-quota stocks. The main way to get into the fishing industry is through the shellfish sector, and to try to build up a quota from there. That means that the entrance to shellfish fisheries is not very well controlled. Consequently, it is difficult to use management levers.

We would try to increase the significance, or the relative importance, that shellfish fisheries have in the Bill. Scallop shellfish fisheries are the most important fisheries in England, and the third most important fisheries in the whole of the UK, in terms of value. They have not been given the kind of management, attention and science that they need.

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Q You talked about the financial and time cost of any barriers being put up. It is essential that a lot of the live product gets to continental Europe as quickly as it can. Are you confident from what you have seen in the Bill, and from what you have heard from the debate surrounding the Bill, that those time costs in particular will not damage your industry?

Andrew Brown: I am not sure that much can be done on this on the face of the Bill, but obviously, on how ports are managed and facilities maintained, within the Bill there is certainly the power to award grants to support infrastructure to someplace where you might have looked into their storage and freezing facilities. But yes, you are right; any kind of delay becomes quite significant. A two-hour delay on a motorway heading towards a port can mean you miss the ferry, which can lead to a day’s delay. An awful lot needs to be done to ensure the smooth running of this. Local authorities are involved as well, because we need export health certificates from them. There is a lot of work to be done to ensure that delays are minimised to the smallest amount possible.

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Thank you very much. Thank you, Mr Robertson; I am sure my esteemed colleague has now reworded his question.

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We will come back to Mr Brown, but we have to move over to the other side.

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Q Earlier, you talked about how the likes of Norway, Iceland and others have been looked on with envy in negotiations, probably not just by us, but by other EU member states. In the future, as an independent coastal state, when we end up in those negotiations with that increased power, what role do you see Ministers and officials from devolved Assemblies playing, and how well is that covered in the Bill?

Mike Park: In the discussions that we have had with both the Scottish Government and with Ministers and officials at DEFRA, we have always tried to put across the point that now we have a blank sheet of paper, we should look at governance structures and good governance. It is essential that one of the lessons we learn from the CFP is that we should start to build policy from the bottom up. That is perhaps not how we should approach international negotiations, but it aligns with where the key areas should be.

It is essential that we build a suitable advisory structure, perhaps within the Administrations but certainly within the UK. I think, as we move forward into what will become trilaterals on setting tax and bilaterals on exchanges and balances, we should start to bind the sector in there. You referred to my previous comments about looking on in envy at our Norwegian colleagues, who are part of the Norwegian delegation. We would ask Ministers—or the people to whom we need to apply—to ensure that there are knowledgeable people sitting behind the officials and doing the negotiations.

Andrew Pillar: In my experience—I have been to several rounds of mackerel coastal states talks this year—the officials representing the Scottish Government and DEFRA are very competent, well informed and, quite honestly, raring to go in what I see as individuals lined up to be taking that seat negotiating on our behalf as a UK coastal state. We are very enthusiastic about that.

I echo the points you have already heard about making sure that the industry is close to that. I have seen first hand how that has happened, with the likes of the Faroese Government listening very carefully to their industry and acting on their instructions to deliver for them.

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Q Do you think the role of the devolved Administrations is adequately covered in the Bill?

Mike Park: Personally I would have liked to see some tighter wording around structures, governance and inclusion. The document talks about “interested persons” being asked to comment. I am not entirely sure how broad that goes. I would like to be classed as more than an “interested person”—not just me personally, but across the broader industry sector.

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Q There has been a focus on the pricing aspects of the impact of Brexit, but I am also interested in the workforce aspects, particularly in more remote communities, such as the Western Isles, where there is a big shellfish industry. If we look at the skills profile of the fishing industry in the UK, 67% of the workforce is in the process. What long-term impact do you think that will have on the skills profile and the age of the workforce, and will that present any challenges for you?

Andrew Brown: Yes, there will be challenges going forward. Obviously it comes back to an earlier point that Mr Brown made about EU migration policy. We have a lot of reliance on that—76% of our workforce are EU migrants. In the longer term, we hope to see commitment of investment from Government into vocational training for workers, both on land and at sea. In the short term, it is very difficult to see where we can get staff. Retention of staff is really important for us. We do what we can to make the job as attractive as possible and to look after our staff, but going forward it is an issue we have to plan for.

Daniel Whittle: In both Whitby and Kilkeel, in Northern Ireland, about 80% of the workforce are local. I personally believe that a high availability of low-skilled and low-paid people has perhaps made life relatively easy—not easy but easier—when businesses compete. I think the area of competition may lean more towards productivity—output per person and kilos per hour—and be much more focused on automation. Not everything can be automated, but if there is support to help with that process, and I think there is a mention of that in the Bill, then that could ease the situation.

Mike Park: May I mention the catching sector? It is perhaps not contained within the Bill. If you want me to stop I certainly will. This is in relation to our reliability on non-EEA crew in the fishing sector and the problems for communities in the west of Scotland, where we cannot bring in non-EEA workers because they come in on a transit visa and are not allowed to operate inside 12 miles. If you look at the west of Scotland, there are very few areas where they can work where they are not operating inside 12 miles, which means that they are struggling for crew.

Daniel Whittle: Just to follow up, that has a significant impact on the nephrops fishery, which has historically been one of the top three high-value species in UK fishing over the past 10 years. This year—as of last week—that quota was 51% caught. It has been fundamentally undermined by the lack of crew available to fish on the boats, and that goes across the west of Scotland and Northern Ireland. In the North sea, where most of the fisheries are outside the 12 miles, the landings have actually increased.

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Q Are you satisfied that the grant provisions in clause 28 are robust enough? Would you like to see further definition of what those opportunities might be, if you are looking at labour substitution with capital investment to offset the cost and scarcity of labour?

Daniel Whittle: It is currently very vague in the Bill, I would say.

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We have only 10 minutes to go and I have four questioners. Brief questions and brief answers would be appreciated.

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Q I ask this to everyone, with the exception of Whitby Seafoods, who I think source UK and sell UK catch for the other three panel members. I am sure the movement of fish products—catch—will be dictated by the consumers’ palate rather than by any Bill. I understand that there is a lot caught in UK waters and shipped abroad. There is almost a reversal; we like what somebody else catches and somebody else likes what we catch. Is there anything in the Bill that will impair that continued process, which is essential for the industry? Is there anything in the Bill that could improve that process for the future?

Andrew Brown: I do not think there is anything in the Bill. If you look at shellfish, for example, our only important market in the UK is for langoustine tails for scampi. Practically everything else goes abroad, mainly to the EU but to some other parts of the world as well. I think it is very difficult to change food culture. Traditionally, UK consumers have not eaten crab, scallops or dog whelks to any great extent. It would take a long time to change that, I think. Even if we could do that, we would still have more product than would be consumed by a UK market. It would not be just be a case of changing tastes. We would need to increase the general uptake of seafood in people’s diet as well. Even then, we would still have more product than could be sold.

Andrew Pillar: In our experience of working with British retailers and consumer markets, there is a real opportunity to engage people with what British-produced, good fresh fish looks like and what it tastes like. I was with the Minister in the last 12 months, eating gurnard in a local restaurant in Plymouth. There is that opportunity, but we need to get the retailers and other points of the supply chain on board to recognise exactly what we have within our waters, and to think differently. When we put that in front of consumers, in our experience quite often we can see that they can be well-priced, competitive, very good offerings. We have to try to market that and it is not straightforward. It takes effort.

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Q Going forward, do you see wider markets beyond the European Union? Do you see opportunities for the products caught off UK shores elsewhere in the world, other than the EU?

Andrew Pillar: In our experience, very much so. We have experience already with exports throughout Asia and elsewhere around the world. There is a very strong demand, particularly for the pelagic products coming from UK waters, based on the quality that we have available.

Andrew Brown: From our perspective, we have growing markets in Asia and north America, but they are not of the scale that would be able to replace what we currently export to Europe.

Daniel Whittle: We have seen evidence of something similar of late, with brown crabs. There has been a significant increase in the price of brown crabs as a consequence of exports of live brown crab to China, which is driving up the price.

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Q Generally, you have obviously set a lot of store by the prospect of us being at the top table, as it were, when we are a so-called independent coastal state. Are you worried that during transition we are going to be even further away from the top table than we are presently?

Mike Park: There is some concern that Europe could introduce some rules or plans that impact on us more than on other member states. There is that concern. How real those concerns are, I am not entirely sure. Pelagic is the area that should probably be most concerned, when they renew some of the plans. It is difficult to see how they could impact on us, other than to ignore us. For instance, the December Council is coming up. We are still a member state at that Council. Could they ignore us during that? We normally go with a shopping list. As the Minister will know, England has normally got its requirements and Scotland has its requirements. Whether we are in the IP or whatever—if the IP comes—and whether we are ignored during those events could impact on us. As yet that is an unknown, but yes, there is the possibility.

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Q On tariffs, the Minister was implying that an 8% increase in tariffs on shellfish might not necessarily be a problem. You talked about £43 million of increased costs for the industry. Would we see more or fewer jobs in the industry if we had an extra 8% tariffs on our shellfish?

Andrew Brown: It is difficult to predict. Obviously, it will affect our competitiveness and it is a competitive market, so it cannot be a good thing for the industry, but different products have different premiums and can absorb different levels of tariffs. It really depends what stock you are talking about and what market you are talking about. There is an average of an 8% to 9% tariff value across all our stocks, so clearly that is not going to help us in terms of profitably.

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Q Are you anticipating growth in your industry post Brexit?

Andrew Brown: Yes. I think we are, but it is reliant on a number of factors and the sustainability and management of the stocks. We are very dependent on, let us say, growth in China. Currently the situation is good, but that market can be subject to sudden and unexpected regulatory change, which can close off markets just as quickly as they open up. There are risks associated with that, and we have to build that into our business planning.

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Q There is a scenario at present in the southern North sea where a significant amount of fish is caught, in particular by Dutch vessels, using particularly unsustainable practices such as electric pulse fishing, and it is processed in the Netherlands and then imported back into the UK. That presents three challenges: allowing UK fishermen to catch more of the fish in our waters; promoting sustainable fishing so electric pulse fishing just cannot take place in the way it has; and promoting our own processing sector. Does the Bill help us achieve those three goals?

Andrew Pillar: We have expertise in the demersal sector but also in demersal processing. This is a stepping stone in that direction. There is clearly other work that will need to be done, but it is part of the enabling framework. It is clear from the work that was done in terms of the consultation and the White Paper behind the Bill, and from my engagement with the team who went out on the road and did the fact finding, that a tremendous amount of work went into producing the Bill. We recognise that, and we recognise that it is not all going to be there on day one. This is part of the framework. If we successfully implement the Bill and its spirit, we will set out a framework for sustainable production—for harvesting fish, for having access to markets and for domestic processing—and for enabling those people who are employed indirectly and have no direct association with fishing opportunities or quotas to find employment.

Mike Park: I guess the good thing is that the Bill does not do anything horribly wrong. That is the main thing for me.

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Q Should we have Bills that do not do anything horribly wrong or Bills that promote the best possible practices?

Mike Park: It allows fisheries to develop in a positive way. It does nothing to restrict that, and it does nothing overly to promote it. If you overly promote something and it is wrong, the chances are that is not a good thing. It does nothing horribly wrong. It should allow fisheries to progress into this highly sustainable and sought after product. As an industry we are very aware of the marketplace and of regulation. For us, that is essential, because as we leave Europe and the spotlight comes on us in terms of sustainability, we will have to do things better than anyone else if we want to increase our market share. That is where our awareness is currently focused, and the Bill does nothing to stop that.

Andrew Brown: I agree with that. It is a framework Bill. The proof will be in the pudding—in the policies that emerge from this framework. The principles of sustainability and scientific basis, which we support, should stand us in good stead.

Daniel Whittle: I echo that. There are a lot of excellent policies in the Bill. I particularly support the focus on the devolution of licensing and so on. The challenges in Scotland and England are different from those in Wales and Northern Ireland. Allowing devolved Governments to control effort is a big step forward.

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We have less than two minutes, but I call Marcus Jones.

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Q The standards of foreign and UK vessels have been mentioned. Mr Whittle, you mentioned electronic monitoring equipment. I did not quite catch—pardon the pun—what you said, so would you elaborate on that? In that context, Mr Brown, will you say a little about licensing if we have time?

Daniel Whittle: I said if you were serious about implementing the landing obligation and seeing it as a source of data, which I believe it is, you should have remote electronic monitoring of UK vessels and make that a necessary criterion for fishing in UK waters, which would mean that any foreign boat wishing to fish in UK waters would need it, too. We feel it particularly acutely because we buy the smaller end of our species, and there tends to be high grading within the Irish fleet, which frustrates us.

Andrew Pillar: Can I very quickly interject? We have experience of doing trial work for the REM equipment with DEFRA on the demersal fleet in the south-west, and—

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Order. I am terribly sorry, but my hands are tied; I have to end the session at 1 o’clock, which it now is. I apologise to Mr Brown that I was not able to bring him back in. Witnesses, thank you very much for joining us today. It has been very useful.

The Chair adjourned the Committee without Question put (Standing Order No. 88).

Adjourned till this day at Two o’clock.

Fisheries Bill (Fourth sitting)

The Committee consisted of the following Members:

Chairs: James Gray, † David Hanson, Mr Laurence Robertson, Sir David Crausby

† Aldous, Peter (Waveney) (Con)

† Brown, Alan (Kilmarnock and Loudoun) (SNP)

Carmichael, Mr Alistair (Orkney and Shetland) (LD)

† Debbonaire, Thangam (Bristol West) (Lab)

† Duguid, David (Banff and Buchan) (Con)

† Eustice, George (Minister for Agriculture, Fisheries and Food)

† Grant, Bill (Ayr, Carrick and Cumnock) (Con)

† Hill, Mike (Hartlepool) (Lab)

Hollinrake, Kevin (Thirsk and Malton) (Con)

† Jones, Mr Marcus (Nuneaton) (Con)

† Lefroy, Jeremy (Stafford) (Con)

† Morris, James (Halesowen and Rowley Regis) (Con)

† O'Hara, Brendan (Argyll and Bute) (SNP)

Pennycook, Matthew (Greenwich and Woolwich) (Lab)

† Pollard, Luke (Plymouth, Sutton and Devonport) (Lab/Co-op)

† Smith, Owen (Pontypridd) (Lab)

† Stewart, Iain (Milton Keynes South) (Con)

† Sweeney, Mr Paul (Glasgow North East) (Lab/Co-op)

† Tracey, Craig (North Warwickshire) (Con)

Gail Poulton, Lis Gerhold, Committee Clerks

† attended the Committee

Witnesses

Griffin Carpenter, Senior Researcher, New Economics Foundation

Dr Carl O’Brien CBE, DEFRA Chief Fisheries Science Adviser, Department for Environment, Food and Rural Affairs

Dr Amy Pryor, Programme Manager at the Thames Estuary Partnership and the Chair of the Coastal Partnerships Network, Coastal Communities Alliance

Elaine Whyte, Communities Inshore Fisheries Alliance

Public Bill Committee

Thursday 6 December 2018

(Afternoon)

[David Hanson in the Chair]

Fisheries Bill

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I beg to move,

That the order of the Committee of 4 December be varied, by leaving out “and 5.00pm” in paragraph (1)(c).

This amendment has been agreed by the Whips.

Question put and agreed to.

Examination of witness

Griffin Carpenter gave evidence.

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Q 194 I invite the witness to introduce himself and his organisation.

Griffin Carpenter: My name is Griffin Carpenter and I am a researcher at the New Economics Foundation. My work on fisheries policy takes a mixed-method approach; for example, last year I produced an economic impact assessment of Brexit scenarios across the UK fishing fleet—large and small quota holders and non-holders—and followed up the work this year by going to four case study ports and interviewing fishers about what future fisheries legislation could deliver for them.

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Q You will be aware that our White Paper on the Bill set out our intention to start to depart from fixed quota allocation units as the basis of quota allocation, to create the possibility of tendering quota to producer organisations based on their sustainability track record, what they give back to local communities and what they offer new entrants, and to use quota to help with the discard ban and possibly to put more into the under-10 pool. Do you broadly support that direction of travel?

Griffin Carpenter: Yes, I was pleased to see what was in the White Paper. We have been calling for some of those things for years. As the method of doing that we proposed something like a quota reserve, where the Government set aside some quota and some is allocated based on historical track record and some is set aside saying that we have multiple objectives for fisheries management—new entrants and the landing obligation, as you say—so this quota can be served for different purposes. I think of it a bit like agricultural subsidies where, over time, some continue to be based on production or land area, but some are set aside saying that we have many objectives in this sector. The Government need to retain some quota to do that.

The problem is that that is not followed up in the Bill, which just transposes article 17, which, as written, is not being implemented by member states. That is the problem with article 17. I was a bit disappointed to see the Bill not go through with what was in the White Paper. I think it could be more specific and say, “Rather than just transposing article 17, let’s put in actual criteria such as contribution to local economies or low environmental impact”, but that is not in there right now.

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Q A lot of this comes down to the difference between a White Paper, which explains the Government’s policy on something and what they intend to achieve with a Bill, and the Bill itself, which is simply the legal powers required to carry out the White Paper. There is a clause in the Bill that gives us the power to have a super-levy on over-quota fish or, indeed, to have a tender regime for different quota. Does that not give all the powers we need? What powers are missing?

Griffin Carpenter: The powers are there. I understand that the Fisheries Bill is enabling legislation and this Committee has had to struggle with asking questions about an enabling piece of legislation. I have a couple of comments. If we want to do something about existing quota—not just the idea of quota that is gained—we need to do something in the Fisheries Bill itself. For example, you have heard other witnesses say, “With extra quota we can solve all problems—any issues around new entrants, the small scale sector and so on—as long as the existing quota is protected.” Of course, that is their interest—they are the quota holders. But we have been working with people who do not hold the quota and they are interested in breaking the lock around existing FQAs.

In essence, fisheries have been accidentally privatised. Every year, quota is allocated to the same holders, and there is a legitimate expectation that that continues in future. The Department for Environment, Food and Rural Affairs and other organisations are too scared to break that hold on the quota and say, “This year we will allocate quota differently.” It has not been done; it is basically privatised now the claim is so strong. If there is ever a point to break that link, it is now.

We are redoing our fisheries legislation, so at the same time as allocating fishing opportunities, I would put something like a seven-year notice period. In seven years, all quota goes back to the Government and we can decide who gets to fish 100% of our quota, rather than just the idea that some quota will be gained. That is great if it happens, but we do not know for which species or whether that is the species required for the landing obligation or the small-scale fleet.

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Q Do you accept that a lot of business models have been based on buying vessels with the quota attached and, therefore, there is a legitimate expectation, having paid money to get the vessel with its entitlement to some kind of property right, even though it is not an indefinite one?

Griffin Carpenter: Exactly. When those purchases are made, it is not known how strong that property right is. There is an issue with banks not understanding if they can give a loan to a fishing vessel because they hold a quota: how long is that good for? If the stocks go up and down, what earnings will they have 10 years from now? The point of the notice period is to get around that. To give a couple of examples people can look into, the Faroe Islands recently renationalised all their fishing opportunities, and Denmark has a notice period and has extended it recently. It reallocated some quota from large to small and, as something of a compromise, extended the length of the notice period, to say, “Okay, we reallocated from large to small, but we won’t touch this again for 14 years—that’s your notice period.”

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Q Do you not think that might change from species to species? It might not be a straightforward seven-year period if you were to do things fairly.

Griffin Carpenter: Are you saying what will not be fair by species?

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Yes. A seven-year period might not be fair for everyone because some might have paid more for different types of entitlement.

Griffin Carpenter: No. If we are dealing with this as a public resource, the claim is the same no matter which fish species it is. The idea is that it is a public resource. We are happy for some members of society to have that right to fish, and not others, but we still reserve the right to change that in future. That is true whether it is mackerel, herring, cod or haddock.

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Q The NEF study of small fishers around the UK was interesting in highlighting the views of the under-10 fleets in particular. If there is an opportunity, as the Minister outlined, to reallocate future quota or, subject to amendments being accepted, reallocate existing quota, what do you think the opportunity is for small fishers in particular and coastal communities from any type of reallocation from our EU friends to those communities, or from big boats to small boats?

Griffin Carpenter: There are two different types of potential reallocation: one from European fishers to UK fishers, including the small scale, and the question whether we change those distributions in the UK share. The principle is the same: can the small scale benefit from having additional fishing opportunities, however those come? Our research has shown that there is a desire for fishers.

There is some confusion because small-scale boats often target shellfish. They are not fishing a lot of quota right now; they are catching crab, lobster, cuttlefish and anything they can get their hands on. Nephrops are subject to quota. People say, “They don’t have quota so they don’t need quota,” but if you speak to them, they say, “If we had it, we would love to use it,” because a lot of small-scale fisheries are mixed—they will do something for one season and then switch to quota species if they have it.

There is also a problem with new entrants, which overlaps a bit. You heard earlier that, traditionally, the route into fisheries for young people—fewer are entering at the moment—is through shellfish, because it is so hard to get your hands on quota. You might be able to buy a fishing licence, but buying a quota is too much. Having some quota set aside for small scale, and the overlap of small scale and new entrants—young fishers—is a huge opportunity.

There is a sustainability point, too. There is increasing pressure on shellfish stocks and we do not have good stock assessments on those. Some of the warning lights are coming up now: we are getting lower catch per unit effort, which means that where you do not have stock assessment, that is the warning light. If there is too much pressure on shellfish, what will these guys do? They need some quota to release the pressure on shellfish stocks such as crab or scallops, so they have another seasonable fishery.

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Q Having the Bill list fish as a public good has been mooted by some stakeholders as one way definitively to say that fish is a public good and should be allocated for the benefit of the country. From your research, is that something that would make a difference?

Griffin Carpenter: Absolutely. When I have spoken to stakeholders, even the quota holders, everyone starts from the same premise that fish is a public good, but from my perspective that has not been followed through in the way we treat the opportunity to fish that public good. It is only in a couple of hands. You and I cannot go fishing; we do not have fishing licences and we certainly do not have quota, so that opportunity is limited. How do we think about that, as the public? I think we do so through having conditions attached to those licences: “If you’re going to fish, then X, Y and Z.” I know that you are interested in the economic link as an issue, but allocating quotas and the distribution of that matters as well.

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Q You have the allocation of quota—who has the ability to fish—but the economic link is an important additional, complementary policy. I am especially concerned about those small communities around our coast for which fishing has historically been a very strong industry, but that strength has reduced over the course of our involvement in the CFP. Would requiring a national obligation to land at least 50% of your catch in any one quarter, but allocated on a species-by-species basis, make a difference? Where would the difference be most felt, in your opinion? Would it be in small communities or larger ones? How would it be distributed?

Griffin Carpenter: I guess the first point to make is that every trend or practice we see in the industry is there for a reason. I am sure you are aware of that, but we need to think, “Why are the landings not taking place in the UK right now?” The first reason is probably the price effect. If you can get a higher price elsewhere, you land it elsewhere. If we are going to change some of the incentives, or have a conditional policy such as the economic link, be aware that basically we are accepting a trade-off: fishers might not be as profitable in the catching sector because they are getting lower prices on first sale in the UK, but we may well make up for that later in the value chain. Just be aware that that is the trade-off you are accepting.

The idea of an economic link as a principle that the public resource should be landed in the UK is a valid economic one. I would go about designing the policy a bit differently. The economic link is very rigid; you are either above the line or below it, whether that is 50% of your landings or 60% or 70%. If you are already landing 90% of your catches in the UK, this policy does not really address you at all.

I would rather have a marginal incentive. For example, funding for fisheries management is not really talked about in the Fisheries Bill, although it is in the White Paper. That is fine, but let us think about it this way: if we are going to have a landings levy—in the same way that you might have a levy on stumpage fees in forestry—on aggregate extraction or on other resource industries, and if we are going to have the fishing sector pay for management, why not differentiate so that 1% of your landed value in the UK goes to resource management, but if you land abroad it is 3%? The idea is that there is a marginal incentive for every trip you make, rather than a threshold that, as far as I can see, would not affect most of the fishers who already land in the UK.

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Q Griffin, you have talked in quite a lot of detail about the reallocation of quota. From my perspective, representing a community that is a have-not, shall we say, that is music to my ears, but I am wary of the legal implications of that. I agree that fishing is a public right, but as we have heard in our evidence sessions, by ill fortune or bad management, it has acquired certain proprietorial rights. How far, legally, do you think we are able to go? The important thing is that this Fisheries Bill must be determined and made by this House, not by lawyers.

Griffin Carpenter: Absolutely. I am not a lawyer—I am an economist—but the legal advice I have heard is that the use of a notice period goes a long way. I mentioned the international examples. We have to make some claim on FQAs as a public resource. Where you might get buy-in for this across the whole sector, including the large-scale fleet, is on something such as flagged vessels. When you hear about Spanish vessels in UK waters, they are almost never Spanish vessels in the sense that they have a Spanish flag and are fishing the Spanish quota; they have purchased UK fishing vessels and are fishing with UK quota, and a lot of coastal communities do not like that. For example, in Wales, most of the quota is caught by those vessels and either landed in Ireland or taken straight to Spain.

The problem is that, if you want to address this issue of flagged vessels—those who are foreign nationals but have UK quota—you must do so by saying, “FQAs are a public resource and we are going to take that away from you and then revisit the issue of distribution.” In a political sense, you can get buy-in for that idea. In a legal sense, I get that the notice period goes a long way. We heard the point made this morning that, because this is new legislation, some of the case law around the previous FQA distribution under the common fisheries policy might not apply. I am actually not sure about that.

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Q Sticking to the quota theme, you have already touched on the debate between this being enabling legislation and how much detail needs to be in the Bill. Do you think there needs to be more on how the quota allocation will work in future? You also mentioned potential quota reserves for new entrants—small-scale recreational anglers have also been mentioned—so is it your view that there should be more in the Bill?

Griffin Carpenter: I think that is a political question. I understand the idea that it is enabling legislation and that for most fisheries legislation all the detail will come in secondary legislation, but if you have some priorities that you absolutely want to ensure are in future UK fisheries, here is an opportunity to introduce them. I understand that some of the ideas we are discussing might be incongruous with the tone, at least, of the rest of the Bill, but here is an opportunity where we can say, “Starting now, we are only in 2018 and we are already thinking about this issue. We are guaranteeing it is in the fisheries legislation, first and foremost.” From a political perspective, that is valid.

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On the redistribution of quota, obviously, if you are a larger owner of quota versus a smaller owner of quota, or an owner of no quota, you will certainly feel that you are going to be worse off in this situation. How do you cater for the fact that a lot of the smaller vessel owners perhaps previously owned quota that they sold, benefiting greatly financially, and then moved into smaller vessels for which they did not need quota? How would you avoid that kind of gaming happening again in the future?

Griffin Carpenter: That is a good question. The line that has always been used on quota allocation in the past was, “You’re robbing Peter to pay Paul, and we don’t want that in the industry.” Now we have the idea of a Brexit dividend of extra quota, we are robbing Pierre to pay Paul, so that is fine. We are fine as long as Peter is protected.

The idea of quota shares is actually a bit confusing because they are percentages rather than tonnage. Now that stocks are recovering, and the quota increases each year, you can have a situation, even if you are taking from Peter and giving to Paul, where everybody is better off. You can have this as a conditional reallocation. Let us say you get a certain share in the large-scale fleet—you have a large-scale vessel—and you are guaranteed 1,000 tonnes every year. If the quota is going up, some of the surplus quota of that year can be reallocated to the small-scale fleet in a pool or through whatever system you do that. There is a bit of a difference between tonnage, which is what actually affects your bottom line, and the percentage. I suggest that we can have these thresholds in place.

The other thing is that, with additional fishing opportunities potentially coming in, hopefully, we can do a reallocation all at once so, again, the large-scale fleet will not necessarily be worse off. They might have a smaller percentage of haddock, let us say, or some demersal stock that the small-scale fleet really wants, but they are getting all the extra herring and other species from the North sea from our EU colleagues. There is the potential for doing all this at once: revisiting the allocation system and making everyone better off.

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That was an interesting answer to the question I was going to ask. I was going to ask you to clarify the position that the only way to redistribute quota fairly, if I heard you right, is to break the hold of the larger fishers and bring fisheries back into public ownership. You suggested something like a seven-year notice on that, but what you were just talking was a potential incremental progression towards that through redistribution of surplus tonnage. Were you right in the first instance that fisheries have to be brought back into public ownership for fairer redistribution, but have you also realised that there can be incremental changes to benefit new starters or the under-10s as we proceed?

Griffin Carpenter: That is a good question. Unfortunately, it is an awkward one with Brexit timing, because we are not sure if or when the additional quota will come online. One of the issues about not dealing with the fixed quota allocations is that right now it really does not matter to a small-scale fisher if there is a theoretical extra quota that may or may not come. The more important point is that, given the timeline right now, it will probably need to be incremental, where first we will deal with the additional quota, then we deal with the existing FQAs. But that requires in the fisheries legislation at the first available opportunity to give notice, because every year you delay is another year that you cannot do the reallocation that we propose. The Fisheries Bill is the right place to do that.

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Q On the same theme, I have come across the theory of using days at sea. What are your thoughts on days at sea in relation to quotas? It is admirable that you suggest giving that time period of 14 years to reduce the larger quotas, to give a better share for the smaller vessels and under-10s. While the capacity for the last vessels is there, how do you see us increasing the capacity of the smaller vessels over that period of time, and attracting new people into the industry to absorb the redistribution of quotas?

Griffin Carpenter: There is lots going on there.

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You will have to be relatively quick because we are running short of time.

Griffin Carpenter: I will be as brief as possible. There is a number of reasons why young people are not getting into fishing. Let us just stick with one of the most obvious: it is expensive to get in and get that quota. The UK could have a system, through the quota reserve, where it is allocated for free on a loan. Denmark does that—it is called a fish fund—and you can get more detail there.

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Exceptionally quick. Thank you.

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Q Your report, “A Fair and Sustainable Fisheries Bill” made a number of recommendations. How much of that has been translated into what we have in front of us? Do you think that the Fisheries Bill represents radical change or preservation of the status quo? Is it a missed opportunity?

Griffin Carpenter: It has been discussed many times that it is an enabling piece of legislation. Many of our policy ideas are not in there, for the reasons just discussed. In my opinion it is a political choice whether you get overly detailed in one area. That is a trade-off, depending on what you want to prioritise now and your trust that it will come in secondary legislation.

We were calling for redistribution of quota. Something I think is missing from the Bill, which was discussed earlier, is commitments to maximum sustainable yield—not just the stock commitment but the flow, so how much you are taking out. Many of us were surprised that was not in the Bill. We would like more focus on inshore fisheries management; those are shellfish stocks that are left out of the discussion on quota.

Also, there is a lack of trust in the fishing industry. The way you build trust is through repeated social interaction. The only realistic way to do that is to have inshore bodies, where all the stakeholders meet together to discuss issues in the inshore waters within 12 miles. Those bodies should be empowered to have jurisdiction up to 12 miles and control the number of pots, and so on.

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Q The right hon. Member for Newbury (Richard Benyon), when he was Fisheries Minister, fought very hard in the 2015 review of the CFP, and the general consensus was that it was a good deal. One of the main things won was article 17, so you worry me by basically saying that no one takes any notice of it. In transposing article 17 to the Bill, what can we do to give it teeth, so that people take notice of it and it is implemented?

Griffin Carpenter: Exactly. This refers back to the first discussion we had. We as an organisation were one of the groups advocating for article 17 in the CFP. The CFP—people might disagree with this—actually gives quite a lot of power to member states, for better or worse. The EU did not want to say exactly how each member state should allocate its fishing opportunities. It just says, “Tell us how you are doing it. Be transparent and objective about how you are doing it. Is it based on historical catch records? Are you giving more to the small-scale fleet?” and so on. Every member state continued allocating quota as they were. The UK has done some things with unused quota, but never actually referred back to article 17. It was just that the small scale wanted more, so they gave some more.

The problem with transposing that is that it seems like we are missing an opportunity to be specific. Article 17 was vague so that each member state could use their own criteria. Now we are transposing that, but we are the member state—we are one entity—so we can say exactly, especially in the case of England, how we are going to do it, and we can say that right now. It seems strange to transpose something that was intentionally vague so each member state could be specific.

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Q As a Welshman, I am obviously worried about the prospect of robbing Dai to pay Pedro. On the issue of flagged vessels that you mentioned, is there anything in the Bill that would stop the Welsh from addressing that issue?

Griffin Carpenter: Nothing that stops the Welsh from addressing the issue, but nothing that addresses the issue per se. Again, devolution is extremely awkward in fisheries, where we have a Bill that empowers the fisheries Administrations and stops there. It would be up to the Welsh Government to do something, presumably in their licensing.

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We have just over three minutes, if there are any further questions.

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Q The Bill envisages a joint fisheries statement, but also something called a Secretary of State’s statement, which would include a whole plan for the English fleet about how it contributes to coastal communities and supports livelihoods. In what way does that fall short of what you are seeking? It is a clear commitment for a plan that will outline how we allocate fishing opportunities to help those objectives.

Griffin Carpenter: It is a commitment for a plan, but I am saying we should think about that plan right now and what should be in it, rather than leave it to each Government to decide. We have seen that, through article 17, it has always been in UK jurisdiction to decide how to allocate quotas. That is not a power that the EU had that we are taking back; it was always up to us and we have not taken that opportunity. Now is the right time to have that conversation, and the Bill is a piece of legislation that we can put that in.

It is roughly the same with the discussion about MSYs. Yes, in the fisheries statement, they can say how we are doing—how the stocks are doing in reference to those MSY values—but we should have that as a duty. Be specific in the Bill and say, “You cannot fish above MSY.” We are going be post 2020, so you might as well just say, “We will be fishing in line with MSY.” We are past the deadline.

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Q A few witnesses have commented that they do not think there is enough information or transparency regarding the discards prevention scheme that is in the Bill and how it will actually work in future. Do you have any views on that?

Griffin Carpenter: It is an interesting question. From my reading of it, it seems to take from the Norway model, which is that some discards are landed but there is a fee attached to that. Instead of the landing obligation, we will say, “The quota is set at this level. You cannot fish above that, otherwise you get choke problems.” It is more of an economic incentive, rather than a hard line.

That needs to be compensated for with lower quota, because we are saying that there is going to be some fishing above that line, but we will have an economic incentive so you do not land as much. I think the principle is a fair one—switching incentives—but that should be compensated for in our expectations about how much above that quota we are actually going to fish.

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Q We are into the last 45 seconds or so of the session. Is there is anything you wish to say that has not been said so far, Mr Carpenter?

Griffin Carpenter: One quick point, if I may. We have spoken a lot about quota, but non-quota species are very important. More work should be done on stock assessments. That is something that could be in the Bill to say, “We are not going to be fishing stocks anymore if we have no idea how much we can be fishing.”

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Thank you for your evidence to the Committee.

Examination of Witness

Dr Carl O’Brien gave evidence.

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Welcome, Dr O’Brien. Could you please introduce yourself and your role to the members of the Committee?

Dr Carl O'Brien: My name is Carl O’Brien. I am the chief fisheries science adviser for the Department for Environment, Food and Rural Affairs. I am also the UK delegate to the International Council for the Exploration of the Sea and I am now one of its life presidents. Also, I am from the Centre for Environment, Fisheries and Aquaculture Science, which is one of DEFRA’s Executive agencies. I attend Fisheries Council meetings with our Minister, and I have attended with previous Ministers, to negotiate quotas.

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Q Carl and I have worked together on many late nights at December Council.

The Committee is hearing a lot about MSY and the use of it as a guide to fisheries management, but I wondered whether you might be able to explain to everyone, first of all, the types of raw data that CEFAS collects through things such as a survey vessel, Endeavour, the work done on fishing vessels and on landings to gather the raw data, and, secondly, how that data is used—as close to layman’s terms as you can—to create the MSY position for a given stock.

Dr Carl O'Brien: Before the common fisheries policy was agreed, most fisheries management went through the North-East Atlantic Fisheries Commission. The data that was used by the NEAFC and that is used by the Commission comes from ICES. At the moment, ICES is made up of 19 member countries that are not just from Europe; it also includes Iceland, the Faroes, Greenland, Norway, America and Canada.

Each country records landings data, which is done for us through the Marine Management Organisation. It records effort data, which is the so-called fishery-dependent data. We also have fishery-independent data: in our case, we have the research vessel Endeavour, which goes to sea and surveys around our waters for distributions of individual species. We record the type of species and their size. We take the little earstones, otoliths, out of their ears and age them in a way that is similar to ageing trees—if you slice through the otoliths, you can count growth rings.

We have length measurements of fish, we have age readings, we have species composition, and we have species distribution. All that information is given to ICES. In the case of the UK, because we have devolved Administrations, Scotland, Northern Ireland and England—England does some of the sampling for Wales—combine their data together and it goes in as the UK data. Countries within Europe, such as Germany and France, do something very similar.

The landings data and the biological data are all put together and we carry out formal assessment models. These can be data-intensive and very complicated mathematical models, or they can be more simplistic models, using life history characteristics—things based on growth rates and size of individuals.

Essentially, the assessments are international. It is not the UK assessing our fish stocks in our waters; it is done internationally, there is international agreement and it is not just within the EU but outside the EU, as well.

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Q When we talk about data-limited stocks, what typically is lacking for a stock to be data-limited rather than one with a full dataset on which you can judge MSY?

Dr Carl O'Brien: Before I joined fisheries in the mid-90s, virtual population analysis was used, which is an age structure-based model. You actually use age data. As long as you can age fish, you can model the development of fish as they grow, the same as you would with human populations—one-year-olds become two-year-olds, who then become three-year-olds. You can take into account natural mortality through natural deaths and also exploitation rates—death through fishing.

The typical data-rich models are those that have the age-based data. The data-limited ones are those where, for various reasons, we either cannot age the fish or it is too expensive to age the fish, so we have simpler methods, such as the size of the fish or maturity ogives, which are simpler types of metrics. However, we can still come up with so-called proxies. Back in 2015, within ICES, I was developing methods with our Portuguese and French colleagues to come up with MSY proxies, which, as the Minister knows, the Commission will now accept as MSY values. They are not treated as second-class MSY values. They are appropriate for the data-limited stocks.

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Q Could you explain briefly the difference between the biomass MSY and fisheries MSY, and why FSMY is deemed the right measure to use for fisheries management?

Dr Carl O'Brien: Partly because it is a question of input and output. To a certain extent you can control fisheries exploitation—the harvest rate. You can control how many boats go to sea and, by implication, how many fish are taken out of the sea. The biomass is a consequence of your management being appropriate or right for the sea and for the species. If you get the balance between exploitation or harvest rate correct, your biomass should continue to grow. One is input; one is output.

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Q Would you explain where, from a scientific point of view, using MSY throws up practical problems—for instance, with mixed fisheries or where there are choke species—and what we might do to overcome some of those problems?

Dr Carl O'Brien: Do you want to know the history of MSY before I answer that, or can I take it that you know it?

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You gave us a bit of the history. My question is more about where it poses practical problems, on mixed fisheries and choke species.

Dr Carl O'Brien: The problem is that the stocks in European waters, Icelandic waters and Faroese waters, and in the Barents sea for Norway, are assessed on a single-species basis. The reference points that we have in terms of biological reference points and harvest rates are determined on a single-species basis. Unfortunately, when you put your fishing net in the water, you cannot catch just cod or haddock, or if you try to fish for plaice you cannot catch just plaice; you end up with sole and other species, so you have the so-called mixed fishery problem.

The reference points themselves would be fine in an ideal world where you could fish for just those species. The mixed fishery issue is that you cannot simultaneously achieve all those single-species FMSY values. The approach that scientists have come up with is basically to ask, “Can you find a range around MSY?” The UK was very instrumental in this, and the Minister took our paper to Council in, I think, 2013—the first time we tried it with the Commission.

The idea was to look at ranges. Can you find a range of fishing mortalities that are consistent with high long-term yield? The value that ICES took was 95% of the maximum. Some academics, such as Ray Hilborn, take 80%, which ICES thought was going too far—that could give you quite high Fs. ICES is being quite constrained in the way in which it is trying to manage the mixed fisheries and the choke issues. The reason for the range is that it allows you to try to deal with some of the mismatches between the availability of fish on the ground and the fact that the gear may not be as selective as it needs to be.

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Q Finally, Norway uses MSY, but also uses a number of other measures. It is sometimes argued that following MSY on its own gives you too much volatility and year-to-year change in stock management. Is there anything that we can learn from the Norwegians’ approach? Do they have a point in terms of having a slightly more holistic approach to sustainable fishing?

Dr Carl O'Brien: Norway, like Iceland, although it wants to follow the general principle of maximum sustainable yield, is not wedded to it to the exclusion of other principles. There may be reasons why one year you might choose to exploit at a slightly higher rate than MSY, rather than at or below MSY.

The Norwegians also have the idea of so-called “balanced harvesting”. Rather than trying to decide how much cod, haddock or whiting you want, you decide, based on the trophic level of where species live, how much you could take out of that part of the system for it to remain balanced. That includes not only the fish species that we look at, but seals, seabirds, whales and other parts of the ecosystem.

We can learn from Norway that if you focus just on fish themselves and the fisheries, you will lose a part of the ecosystem around seabirds, cetaceans and whales. That is something that we need to incorporate into our models. The Government’s 25-year environment plan mentions an ecosystem approach to fisheries management, which I interpret as, starting with the mixed fisheries models, asking how you expand those to take into account other aspects of the ecosystem.

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Q One of the concerns that many stakeholders have raised with us is about data deficiency, especially on non-quota species. How would you recommend that the UK Government and the devolved Administrations address that data deficiency, especially among species where there might be concerns but not a huge amount of evidence gathered to date?

Dr Carl O'Brien: I think you would be surprised how much evidence has been gathered for non-quota species. Seafish had a project called Project Inshore, which I think is now in its second phase, looking mainly at shellfish species. Quite a lot of data has been collected from around the ports by Project Inshore, with the support of the fishermen and the IFCAs. There is a lot of information from that project.

The Department for Environment, Food and Rural Affairs is committed to progressing its assessments of species like scallops, whelks and crabs. There is a commitment from the Minister’s Department to actually improve data collection and the assessment of those species. I think things are all going in the right direction. At CEFAS, we started this work back in 2010 with ICES, recognising that not having assessments of non-commercial species or data-limited stocks was a drawback to fisheries management.

The Minister answered a Parliamentary question in January, when we came back from December Council, which quoted 31 stocks out of 45 being exploited at MSY. We do not exploit just 45 stocks as a nation—we exploit in excess of 150. A lot of those are data-limited and they may be small tonnages, but they are very important species for local fishermen, certainly down in the south-west. I think we are improving the quality of the data we have available. It is not just for scientists; it is for the fishing industry and for the likes of Seafish.

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Q As another west country MP, I agree that we need more data to support the mixed fisheries that we have. What is the progress that needs to be made to get to fully documented fisheries? One of the difficulties that some of our stakeholders have been flagging up is that some of our fisheries cannot be classed as sustainable simply because there is not enough data to prove that they are or not. What do we need to do to get to fully documented fisheries?

Dr Carl O'Brien: I think it depends on the size of the vessel. Large offshore vessels already keep logbooks. A lot of the English fleet has cameras on board, so that is helping the documentation. I am aware of projects down in the south-west, such as Fishface, where they are trying to use cameras on under-10 metre vessels, with quite a lot of success. It is making the best use of the technology that is available. A few years ago, with DEFRA funding, CEFAS developed apps for mobile phones so skippers could go out on smaller vessels and their positions were known through the apps. They could also fill in electronic log sheets, certainly for shellfish species, and record how many pots were put in the water and what quantity of shellfish was being lifted from the sea.

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Q That is good. The UK has some of the best fishery science in the entire world, if not the best.

Dr Carl O'Brien: I agree.

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Q That brings me to an allied question that goes along with access to waters. If we are requiring British fishing boats to have this high level of reporting—entirely appropriately—do we have the same level of data coming from foreign boats accessing UK waters?

Dr Carl O'Brien: The answer is that it is variable, depending on the country. The Danes are quite well advanced and are similar to us, in that they have cameras on board their vessels. If your question is about vessels that might have access to our waters in the future, then I think whatever measures we use or apply to our own fishermen should be applied to other vessels coming into our waters. If we require cameras then that should be a requirement for a French or German vessel to come into UK waters. It has to be a level playing field. It is not necessarily just to focusing on making life fair. What you do not want to end up with is very accurate data from our fleet, and very bad data from everybody else, because you know what the consequence of that is. You end up penalising those that provide you with perfect information and those that do not provide you with information get off.

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Q Moving slightly off the Bill—I am sure the Chair will forgive me as it is connected to the environment—we see birds gathering to migrate across the globe, but we do not see the same movement of fish under the water. What sort of distance do the fish travel as they migrate from place to place? Environmentally, we have believe that the temperature of the water is going to increase, so could that increase in temperature alter where the shoals of fish go? Is that going to affect the fishery?

Dr Carl O'Brien: The answer to the first part is that it is very species dependent. Species like North sea cod will live in the North sea, the eastern channel and the Skagerrak. They mix quite happily. Species like mackerel, blue whiting and Atlanto-Scandian herring travel over very large distances. Species like eels essentially travel around the globe, starting in the Sargasso sea. We have a lot of data that has been funded by DEFRA, and the Ministry of Agriculture, Fisheries and Food in its previous role, from tagging things like bluefin tuna. We have a lot of data on migration, so we know roughly where fish are moving.

The issue of climate change has two aspects. One is that, as waters warm, you may see a movement of fish. We have seen northern hake move from the southern waters more northerly into the North sea, which is causing some of our fishermen a problem at the moment, with choke issues. The other aspect is that you may suddenly find species that you have never seen before. We are getting reports of cuttlefish, squid and even jellyfish down in the channel. We are aware, through questioning the public, that there is an Asian market for jellyfish, so perhaps some time in the future there will be a market for UK jellyfish. Who knows? We are looking at that as part of this process; we are not focused just on this year’s or next year’ fishing quotas. It is very much about where we might be in 50 or 100 years’ time.

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Q I have a question about the discard prevention scheme: we have heard over the last couple of days from representatives from the fishing fleet itself, who think the system will not work, and from environmental groups, which think there is not enough information on how it will operate. Could you tell us how the scheme will be implemented? Given that both the environmental lobby and the fishing fleet have concerns, do you think we should put something in the Bill to make it absolutely clear how it will work?

Dr Carl O'Brien: I am a scientist, not a politician or a Minister, so I do not know how it will work. The thinking behind it is that, as we move towards fully implementing the landing obligation next year, there will be some serious issues with choke species, as the Minister mentioned. My understanding of the discard prevention charging scheme is that you have two options: you either have such a scheme or you tie vessels up. As soon as you have fished your quota, you can no longer go to sea because you will not have the ability to discard, which means you will not have the ability to land quota.

The discard prevention scheme is a way of saying to fishermen, “If you have good ideas for selectivity measures or ways of mitigating large amounts of discard and you want to use those measures, if you catch a small amount of over-quota catch, through this scheme you can be charged and incentivised to carry on fishing.” Where the scheme moves from being an incentive to being a penalty is that if you habitually overfish, there must be a point at which it is a penalty to you and you have to stop doing it. Clearly, you would have to manage quota in such a way that the system can cope with that bit of overfishing. But in principle, it is a good idea.

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Q One final question, if I may, which follows on from what Mr Grant said. I was in Greenland recently. There are species that have been caught off the coast of Greenland that have never been recorded as having been there before. I presume that as species move north, species from the south move into UK waters. How fleet of foot is DEFRA in terms of whether our fishing fleet should begin to harvest stocks of fish that are not usually there?

Dr Carl O'Brien: The easiest answer to that is that, in 2003, MAFF created the fisheries science partnership, which is still funded by DEFRA. We asked fishermen for their ideas on specific projects. A lot of the ideas are selectivity measures, but we had a project a few years ago where there was an emerging cuttlefish fishery down in the south-west. The fisheries science partnership was used as a way for the fisherman to work with scientists to see the viability of a cuttlefish industry down there. The problem with cuttlefish is that they come and go. They had a couple of years of quite high catches, but then basically they died away.

There is a strong role for science and industry to work together, because you would not want the industry to gear up for a cuttlefish fishery that will last for only two years. The way we have worked in the past is the way I hope we would work in future. But you are right—if there are emerging new species, there should be a dialogue between the industry and scientists and also Government to see whether you should develop fisheries. In some cases, these will be species that we may not know very much about, a bit like the jellyfish. You would not want to gear up for a high extraction rate of jellyfish without understanding the implications for the ecosystem. There will be other species that feed off jellyfish. If we as humans are removing them from the system, those species will not have access to a food source.

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Three more Members have indicated they want to ask a question, and I want to try to get them in before 3 o’clock.

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Q Good science and evidence should underpin sustainable fishing, yet at the moment electric pulse fishing is going on in the southern North sea. How can we devise a new framework that stops such practices and ensures that we pursue a precautionary approach to sustainable fisheries management?

Dr Carl O'Brien: The short answer to that is that DEFRA is funding a project that my colleagues in CEFAS in Lowestoft are undertaking to collect more evidence on the detrimental effects of pulse trawling. It has to be evidence-based. The industry is polarised. There are those who hate it just because they hate it and there are those who have a slightly open mind. The scientific evidence is not conclusive that pulse trawling is bad. There are clearly environmental benefits from it. It certainly reduces fuel consumption and the impact on the seabed, but there are some side effects. Species such as cod and haddock can be damaged by the pulse trawlers.

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Q Before the Dutch built a whole new industry on the back of this, should the science not have come to a conclusion as to whether it was a good thing or not?

Dr Carl O'Brien: It came to a conclusion that there was not a conclusion. ICES held a number of working groups that reviewed the evidence. It was not conclusive that pulse trawling is detrimental because there are positive benefits from having a pulse trawl. There is anecdotal information from our own industry that at certain times of year, you find cod with broken backs. That is certainly so for the Thames estuary, and it could be the impact of pulse trawling. Talking to some of the food producers who deal with chickens, one of the reasons for not electrocuting chickens is that you break their backs when they go into spasms. That is exactly what would happen to a cod; it would also break its own back.

I think the answer to your question is that until you actually have the evidence and it is conclusive that you should ban a method, it is quite difficult to ban it. The Commission has gone out of its way to allow scientists to collect the evidence. The slightly surprising thing is that I was around when ICES gave its original advice, which was for 10 or 12 vessels as a scientific trial. It is now about 100 vessels, and that clearly is not a scientific trial. I think you have to be very clear about the parameters are when you give dispensations for gears.

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Q So the new UK fishing policy can be better than the CFP when it comes to sustainable fisheries management.

Dr Carl O'Brien: I think so. I have forgotten who asked me the question earlier, but if you are going to allow vessels to come into our exclusive economic zone, we can put conditions on their access rights. If we decide we do not like pulse trawling and we have our own evidence base to say that, I assume we can just say, although it would not necessarily ban it, that any vessel with pulse cannot come in.

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Q Dr O’Brien, given your long experience of going to Council, how do you envisage our country being treated during the transition period, when we will effectively have observer status?

Dr Carl O'Brien: I do not know, because I am under the impression that this is my last December Council, as it is for the Minister, unless I have been misinformed.

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Q Given your experience in the past, do you think it will be a problem that we are effectively attending and being consulted with, but are not having direct influence as we have had previously?

Dr Carl O'Brien: My worry and fear is for the other member states. I have been to a number of Council negotiations, to coastal states negotiations on mackerel, blue whiting, Atlanto-Scandian herring and to EU-Norway negotiations. The other member states look to the UK to provide a lot of the science and the technical arguments. Countries will wave their arms and say, “We do not like the Commission’s proposals”, but when it comes to facts, hard data and evidence, the UK leads the world. We provide the arguments and we sit with the Minister, the presidency and the Commission and we argue our case based on facts and science. Other countries do not do that.

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Q No wonder they are petitioning for us to stay in. Can I ask you about recreational fishing? We have heard people petitioning that the recreational fishing industry ought to have a more official stakeholder role in future. Is that a view that you have sympathy with? What is your view of the potential value of designating certain fisheries and species for recreational fishing only?

Dr Carl O'Brien: One of the problems with recreational fishing, which is a disaster waiting to happen, is that when we carry out our bass assessments, we include commercial catches from trawlers and larger vessels and recreational catches, but the only other assessment that I am aware of that ICES carries out with recreational catches is the western Baltic cod. In the case of the western Baltic cod, the recreational catch is far in excess of the commercial fleet.

In future, we need to have a better understanding of recreational fishing. We cannot ignore it, but we have to come up with a policy where you balance commercial and recreational anglers. I would not want to see them being recognised independently of the commercial fisheries, because in a sense, regardless of whether they are selling their catch, they are competing with a commercial fishery. As I say, for the western Baltic cod, the catches of the recreational anglers are far in excess of the commercial fleet. The CFP has tried to constrain the commercial fleet—

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Q On the science, one of the major frustrations—I was going to use the word “criticisms”, but that is too strong—I hear from fishermen is that the science tends to be at least two years old by the time it is actually applied, and they are seeing more fish in their nets or in the water than they are told to expect. Is there any way we can make the science more current, or is there anything we can do in the future to help with that situation?

Dr Carl O'Brien: Our Minister will know, because one of the first questions that every new Minister gets is, “Why are your scientists using data that is out of date?”. The reality is that, this year—2018—when we carried out our assessments, we had landings data only up to 2017. That is just a fact of life; we will not know the landings for this year until the end of the year. We have survey information, so when we predict next year’s quotas, we are doing that based on 2017 landings data and survey information that we have from this year, so that is where our two-year window comes from.

In terms of doing something that is more reactive, there are issues around juveniles. Certainly in Norwegian waters, they have real-time closures that are almost instantaneous—certainly within 24 hours. In the past, if fishermen found aggregations of very small fish, they would have fished them and dumped them, but now if they fish them they will have to land them, which will come off their quota. The sad thing is that by killing those fish, they are then not there to reproduce into the future to rebuild spawning stocks.

On the assessments, it is a fact of life that, essentially, they will be two years out of date in terms of the landings data, but we will have current information from research vessels and from fishermen. In terms of management, it would be a more adaptive and proactive management where you could keep an eye on what is going on in the sea and within our waters, in terms of whether you are seeing aggregations of juvenile fish or lots of older fish that are aggregating in certain areas and being targeted by vessels. You would want to have a more adaptive management framework—certainly more adaptive than we have with the common fisheries policy.

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Q Do you think the Bill creates an opportunity to do that?

Dr Carl O'Brien: I think it does, yes. As I say, it goes hand-in-hand with the 25-year environment plan that you have an ecosystem approach to fisheries management. We are in the process of defining what that actually means, but it is certainly not single species quotas; it is mixed fisheries and multi-species.

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We are in the last minute.

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Q I have a quick question. We have heard some representations that we should make the MSY commitment more rigid in the Bill. If the price of getting an agreement with Norway is showing some understanding for their other scientific metrics, is it better to show that flexibility or to walk away and let everyone unilaterally set their own quota?

Dr Carl O'Brien: No, I think it is better to be flexible. I came into fisheries in the mid-’90s when exploitation rates were horrendous—cod stocks were being fished to fishing mortalities of 0.8; we are now down to levels of 0.4 or 0.3. We should still have that flexibility when we deal with Norway. I also think that it has to be an international negotiation. The UK cannot go it alone.

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On behalf of the Committee, Dr O’Brien, I am grateful for your evidence today. We discharge you and invite our next witnesses to the table.

Examination of Witnesses

Dr Amy Pryor and Elaine Whyte gave evidence.

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I welcome our next witnesses and remind Members that we have to finish this session at 3.30 pm. Could the witnesses introduce themselves and their organisations?

Dr Amy Pryor: I am Amy Pryor. I am the programme manager at the Thames Estuary Partnership, chair of the national Coastal Partnerships Network, and a member of the Coastal Communities Alliance.

Elaine Whyte: I am Elaine Whyte. I am a member of the Community Inshore Fisheries Alliance, and also of the Clyde Fishermen’s Association.

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Q Obviously, a number of the areas that you cover will be highly influenced by the work of the IFCAs—the inshore fisheries and conservation authorities. What is your view of how that model works?

Dr Amy Pryor: From a wider stakeholder coastal communities perspective, we think IFCAs have grown from strength to strength since they were set up under the Marine and Coastal Access Act 2009. I lived through them being set up, and they have grown in terms of gaining the respect of the local fishermen and putting in place fisheries partnerships with those fishermen to get better data and better science. I attended an IFCA meeting just last week, and the representation on the IFCA boards is second to none—it is absolutely fantastic. The only thing I would say is that there is an opportunity to get even better locally managed inshore fisheries by formally empowering the IFCAs within the Bill, certainly within England, instead of focusing just on the national fisheries administrations.

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Q Obviously, IFCAs now have the power to make bylaws through their local authority sponsors. What additional powers would you be seeking through the Bill?

Dr Amy Pryor: First and foremost, I was referring to formal recognition in the wording of the Bill. However, if we could move to a more nimble, agile approach—as the scientist before us was saying—and have more locally based management of the fisheries based on local science, that ecosystem-based approach objective could be realised much more easily. There could maybe be more formal powers in terms of quota allocation based on the science of the local fishery.

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Q You would like almost a consultation role for the IFCAs in the way the quota allocation is done.

Dr Amy Pryor: I am not sure about a formal consultation role. Yes, that would probably work, but there could be a better link between the fisheries data and the local situation, because each coastal environment has a unique set of challenges. Take the Thames estuary, for example. It is an estuary; it is a highly dynamic mixed fishery. All of the fishing communities around the Thames estuary are non-nomadic: they cannot go much further than a few nautical miles offshore, so they are very restricted by their quota allocations, which results in a large amount of discards and a large amount of bycatch. They are the first ones who do not want to see that happen, so having additional powers within the IFCAs to work with the science on a more local, regional level would lead to more agile and much more relevant fisheries management in the local setting.

Elaine Whyte: It is slightly different for Scotland: we have the inshore fisheries groups, which are also fairly new in terms of taking on the same kind of role as the IFCAs. However, I agree that they have come on leaps and bounds in the past few years. Local management is absolutely key, as is the socio-economic link to local communities. For instance, we often talk about choke species; we hear a lot about whiting and cod on the west coast, but down in the south-west, it is spurdogs. Those are the regional issues that we can work through with bodies like IFGs or IFCAs.

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Q We have had some representations about the suitability of more of an effort-based quota, particularly for the inshore fleet, rather than a tonnage quota. As we set out in our White Paper, we certainly want to pilot and explore that for the inshore fleet. Do you think that would make more sense as a management tool for fishing effort?

Elaine Whyte: Again, it is regional, and it depends on the fishery, but trials should certainly happen. We often say that the Clyde is already operating a days at sea scheme; we go to sea only five days a week in the mobile fleet. There are various ways to look at it, but going regionally, looking at what works for each specific fishery, and ensuring that we have trials is the right way to go.

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Q Finally, some shellfish, particularly crabs and lobsters, tend at the moment to be managed predominantly by IFCAs through technical conservation. We also have the western waters regime, which is effectively a days at sea quota regime, which is not very satisfactory. A number of people have said that we should move either to a catch quota system for crabs and lobsters, or to restrictions on the number of pots that can be used, for instance, and try to do that nationally. Do you think that that is worth exploring, or should it just be left to the IFCAs?

Dr Amy Pryor: I really think it should be left to the IFCAs. I must admit that I am not very up on lobster and crab fisheries. We do not have them here in the Thames estuary, as much as we would like them. It comes back to my point that, if it is locally managed and the IFCAs are running those decisions, they will have all the information, along with the stakeholder engagement consultation from the wider coastal community, to input into those management decisions. I think regional and local would work best.

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Q Coastal communities have been among the hardest hit by austerity since 2010, but there is a real chance that fishing could be part of a coastal community renaissance, if it is delivered in the right way. What are the things that you are looking for in the Bill to deliver the renaissance that, whichever side of the House Members are on, we all want to see in our coastal communities?

Dr Amy Pryor: There is actually a very large correlation between small inshore fleets and coastal deprivation in some of our most deprived areas along the coast. There are two things. First, there is a lack of join-up between marine planning and land planning processes. Each goes to the relevant high or low water mark, but they have different types of indicators and they do not link in any meaningful way.

Coastal areas tend to fall down the cracks between two planning systems, and what goes hand in hand with that are the financial funding streams that go along with it. The coastal communities fund, for example, is fantastic for the coastal communities that can access it, but if you look at the local economic plans of each of the coastal community teams, very few of them even recognise fisheries as an industry that is relevant for the area. That is obviously a massive missed opportunity. They also do not really recognise the water—the role of the health of the marine environment—in driving the tourism that is central to their local economy.

In terms of the financial assistance elements of the Bill, it would be fantastic to see recognition of the need for a more holistic, integrated approach to our funding streams that recognises those multiple benefits so that we can really generate them. That would ultimately benefit the fishing industry, but in a way that better embeds it in the wider coastal community and opens up the routes to market and the innovations in marine businesses that we would all like to see on the coast. That could contribute to the local economy, instead of thinking that tourism alone will drive that. It would also recognise that fisheries are a major part of tourism. They shape the cultural identity of—

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Order. Apologies—with two witnesses, we have only half the time, so we have to keep the answers short.

Elaine Whyte: I see potential, because I see those communities that are quite sea-blind at the moment. Local authorities are saying that they have never had a fisheries policies, or that they do not know that they have active fishermen on their doorstep. That is a massive opportunity. We just have to look at how Norway has taken 60% of quota allocations and given them to the coastal communities to see them thrive. I would like to see that.

I am slightly worried about the concept of auctions, which is obviously more English-based. I do not know how that will be reflected in UK fisheries in general. However, I see potential here for all communities around the coast.

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Q In terms of supporting small fleets, which generally speaking are the ones that have the potential to have the biggest impact as quickly as possible in coastal communities, what measures do you feel we need to ensure are in the Bill to support the small fleet in particular?

Dr Amy Pryor: It depends on what you call the small fleet; I prefer to call it a coastal fleet. Again, I would say that you should look at what Norway has—their coastal fleet is 5 metres up to 30 metres. I think the definition can be quite wide. We have mobile guides and keel guides. We have to be just a bit more flexible about opportunities. It is about ensuring that we have the quota and licences available and that we are providing grants to get new starts into the market and giving them a leg up.

Dr Amy Pryor: I agree with all of that. I also second what NEF said about using transparent and objective criteria in quota allocation so that you really do start to recognise the sustainability credentials of the small-scale inshore fleet; it is common sense that they are much more sustainable by being local and non-nomadic and using smaller vessels. Seafarers UK is very concerned, though, that that can lead to a lack of safety at sea, where individual fishermen are piling as much gear as possible on to tiny vessels and souping up the engines, which is highly dangerous. It is about finding a balance between keeping fisherman safe and having a fairer distribution of quotas.

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Q You referred to the need for co-ordination between marine and land-based planning. Would you say that the same would apply for economic regeneration and a role for local enterprise partnerships?

Dr Amy Pryor: Gosh, absolutely. In the last year or two, some LEPs with coastal areas—in fact, most have them—are starting to look towards the coastal communities, but it certainly has not been that way since the beginning. It was a fight to get them to take notice of the coastal areas and the role that they play. I see a role for LEPs and for coastal partnerships, because they have a lot of trust from the local community and have been around for about 20 years; they pool all the different strengths together. I would like to see more formal recognition in the Bill—perhaps an extra marine planning objective that could actually set out these things. The Fisheries Bill cannot remedy everything, but it could take steps towards providing that integration, which would also achieve the objectives of the 25-year environment plan that the Government are committed to.

Elaine Whyte: To be fair, it is not just in marine planning, but in science. We always find that the science is lacking at local inshore levels. Again, we should be looking to Norway and look at our local fleets as reference fleets and get the fishermen working with the scientists to provide that reflexive data that is needed. A lot of planners and other people sitting around the table do not quite understand what is happening. There is a major problem there for stakeholders as well. What we do have around these timetables are a lot of stakeholders; we are very happy to have them, but sometimes they bring their own science and ideologies. What we really need is an honest broker—that is how we can do it through marine planning and through local authorities.

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Q This is more to Elaine. Clause 10 is about the power to grant licences. Scottish Ministers and Northern Ireland Departments can do it. The Scottish west coast fishing fleet is in close proximity to Northern Ireland; they fish in the same water for the same stocks. How concerned are you and your members about the possibility of different regulatory frameworks for Scotland and Northern Ireland, and what damage could that do to the west of Scotland fleet?

Elaine Whyte: With the greatest respect to Northern Irish colleagues, who we have fished with for a long time and whom we respect entirely, we are concerned about this, because it is the same stock from the same area. If there are different tariffs and different rules are applicable, that will of course impact on our trade and our entire ability to fish. It is a massive concern.

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Q Has there been any analysis of what damage that would do to places such as Tarbert or Oban?

Elaine Whyte: No, but there really should be. There is socio-economic work on the marine protected areas going on at the moment, but we really need to look at what we are landing from such areas. Nephrops are the second most valuable shellfish that we have in the whole country and we really have to look at where they are being landed—a lot of them coming from Scottish waters are going to Northern Ireland at the moment.

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Q How important to Community Inshore Fisheries Alliance members is keeping current access to EU markets, and is there any analysis of the damage that time delays would have on your ability to export?

Elaine Whyte: As an alliance we are constitutionally and politically neutral. We have always said that and we will work with the best outcomes possible, but we are very worried about market access, as we have said from the start. We are looking at the delays. A lot of people are saying that maybe there will be six months and that that will be a problem. Our fleets could not really handle six months. We are more aligned with the Federation of Small Businesses in the sense that a month or two would be enough to harm our fleets.

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Amy, do you have any comments on that?

Dr Amy Pryor: I am going to leave that to the Scottish and Irish experts.

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Q You started off by talking about the local fisheries management, which was very interesting. Harking back to what Dr O’Brien said about the data and how, by the time you have collected it all from the whole country, a lot of it will be out of date, do you think the local fisheries management approach would help that agility in making sure that the data is more up to date, particularly if the local fishermen are working with the scientists on a more real-time basis?

Dr Amy Pryor: I personally do, yes. There are great examples all around the country where it is already happening. The next step is for that to actively inform fisheries management. The IFCAs can create a byelaw using that data, but if there was a more proactive approach rather than a reactive approach, we would have very agile fisheries management.

Elaine Whyte: A lot of people talk about environmentalists and fishermen, and I think a good fisherman should be an environmentalist. We have been to Norway, looked at their system and studied real-time closures, and they can close a fjord based on the patterns that they see the fish recording. We could be far better at that, in terms of real-time closures, and that is something that we would support.

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Q I would like to get your take on the prospect of the redistribution of quotas. Obviously, on the west coast of Scotland there is a pattern of under-10s and smaller boats prevailing, and they tend to land, by volume, a much smaller share of the UK catch, given the quantity of the fleet. What opportunity do you think there could be to enhance the distribution of quotas among the smaller boats, particularly those on the west coast of Scotland?

Elaine Whyte: Again, a coastal fleet is not particularly just under-10s. Our median weight is probably about 14 metres, so I would consider them all in the same category. There is massive potential. We had some members who are quota holders, and we spoke to them at the beginning, thinking that they would want to protect their asset. They said to us, “We’ve had our money 10 times over. Let’s look at doing something fairer for the new guys who weren’t born when the system was brought in.” So yes, absolutely we see a fairer way to do this.

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Q That is great. It is encouraging. The Department for Work and Pensions defines fishing as an unskilled industry. What is your take on that view?

Dr Amy Pryor: That is nonsense. Our fishermen have survived all sorts of adversity throughout the years. They are a massively untapped skill resource. You can learn all sorts of skills through working in the fishing industry and not necessarily become a fisherman. You can also learn a lot of skills that are peripheral to the fisheries industry so that you are more agile as a fisherman. When you do not have a quota or you have run out of days, whatever system is in place, you can move into another sector like boat engineering or boat maintenance—all sorts of stuff. Just because they do not want to talk to you, and they might be secretive about what their skills are, does not mean they do not have a huge amount of skill.

Elaine Whyte: I would add that if you can do your accounts and write a scientific report in a gale force wind while at sea, you are a very skilled businessman. That is something we should think about. We have a gap at the moment in skills, and we possibly need to look at foreign workers. It is important, particularly for rural areas. I would look at things like the “become a fisherman” scheme in Denmark, and how they have managed to turn things around in their country and repopulate rural areas just by proactive marketing. We need to do that. They are very skilled.

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Q This question is for Elaine. You will notice from my accent that I am a west coaster. I am of an age where I have seen the demise of the fleets running from Stranraer way up through to Oban, and I would love to see that return. Do you think this Bill and other changes to the CFP, or the absence of the CFP, will give us an opportunity? Should we have better training to make that industry more skilled than people perceive it to be? Should we have courses to encourage young men and women to go to sea and secure the fish that we have in relative abundance?

Elaine Whyte: Yes, absolutely. There is a generational issue. We have missed a generation, but we can catch up. We should have young men coming out of places such as Glasgow, where there is a port 30 minutes away, and thinking, “Actually, I could go to sea.” That is something that we have to be proactive on with Government. But I think we need to look at what has gone wrong. We can look at somewhere such as Stornoway. Pre-1974, it was landing more than 85% of fin fish; it is now landing 1% of fin fish. That possibly has something to do with the EU; it possibly has something to do with domestic allocations as well, so we have to look at it in a holistic way and try to give men, and women, a reason to want to go into the job. Nobody wants to tail prawns on minimum wage forever; people want the opportunity to have their own boat and to progress.

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Q We should make the conditions and the financial rewards better and we could grow the industry in due course.

Elaine Whyte: Absolutely.

Dr Amy Pryor: I absolutely agree. The only thing I would add is that I think this is an opportunity to think about a more integrated approach to the way we do our training. I am talking about cross-sectoral training schemes and apprenticeships not only to spread the skills and highlight the fact that you can have multiple transferable skills, but to build relationships across sectors. We can build those better relationships between the different coastal sectors. To back that up, Sir John Armitt recommended this, as part of the Thames growth commission, as a way forward, because we are lacking skills in all our coastal and estuarine areas.

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Q We heard earlier from one of the big shellfish companies and we asked it about the impact of tariffs—potentially, 8% tariffs on shellfish. How would that impact on smaller producers?

Elaine Whyte: We are extremely worried about that and always have been. And apart from the tariffs, we are extremely concerned about disruption and action, possibly, by French and continental fishermen, who might not be too happy about us getting access. That could be just as big a problem as the tariffs, to be honest, so yes, we are very concerned.

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Q This is an enabling Bill, but what degree of certainty do you feel about what fishing is going to look like in Great Britain in the years to come as a result of the Bill? Are you confident?

Elaine Whyte: I heard a comment yesterday, I think, or the day before about how the market will take care of fishing. I do not think that is fair. I think that we have to try to support our industry, to get the best of national benefit for our fishermen. I am confident that we could have a better future, but it depends on a lot of things. We are not quite clear when we are coming out. We are not quite clear what this financial framework means, across all the sectors, for the UK. And what does that mean? Does it mean that every year that we are negotiating a deal with the EU we could barter fishing rights away for another sector? Those things are still a concern for us.

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Q I want to come back to something that Elaine Whyte said earlier about the concern that there might be different rules for different parts of the fleet, with Northern Ireland having access to west of Scotland waters, for instance. Could you explain a bit more what your concern is? Obviously, the Bill is trying to resolve quite a difficult tension, which is that fisheries is a devolved matter, yet it is also highly affected by international negotiations, which are reserved. The way it does that is by giving each Administration the ability, through clause 10, to have licence conditions, but then separate to that, in clause 31 and schedule 6, it gives the Administrations the ability to set their own technical conservation measures, so if they wanted to have a closure, for instance, that would apply to everyone, whether or not it was on the vessel licence. There are two means of doing it, and I think the Bill squares that rather difficult circle through that means.

Elaine Whyte: It potentially does, but it does not square the tariff issue, so that is something that we would still have a concern about. Some of our members have mentioned the issue of nomadic rights, and of course we understand that, but we always think that there should be some link to the coastal communities around about. They should not be disadvantaged by lack of access to their own stocks, in a sense, as well. That is important to us domestically as well as between different countries and the UK.

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Q Mr Grant said, and I think we would all agree, that we hope to see young men and women from throughout Scotland going into a revived indigenous fishing industry, but we need to have an industry there for them to go into. How do we bridge that gap? Who will crew the boats and the fish processing plants while we wait for that throughput? Given the geography of the west of Scotland in particular, the inshore fishing fleet is now at a critical point, is it not?

Elaine Whyte: Yes, it is. We have some boats that are about 60 years old, which is not right, so we have to look at how we can help our infrastructure. There are ways to do that. The Western Isles had a very good boat-building scheme, which was very low-risk and allowed people to come in. We need to start building up those facilities along the coast. I would say that we need that not just on the west coast but all around the coast.

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Q But, particularly on the west coast, how do we crew or keep that—

Elaine Whyte: We have a gap at the moment, and we have to make sure we are getting skilled workers in from wherever they come from. I would say that we are working towards a long-term domestic policy through marketing. I would use the example of Denmark again and say that, 10 years from now, that is what we should have. For now, we have to be realistic and make sure we have got people there to teach the new guys coming up.

Dr Amy Pryor: Can I add something to that? Certainly within the south-west and the south-east, fishermen have told us that there are plenty of skilled crewmen out there, but they move around a lot. They go where the opportunity is. Something as simple as a database that tells young fishermen where there is a fishing opportunity, and for how long, would go a long way towards filling those gaps and making it a bit more attractive to be a nomadic land-based fisherman going between different fishing communities to fill those holes.

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Q I would just like to ask for your view of the grant system offered in the Bill. Do you think it may support smaller fishermen, particularly when we are looking at fleet renewal and the potential industrial benefit to the UK? Do you think it is an opportunity? Do you think it needs better definition, or is it too vague?

Dr Amy Pryor: I personally think it is a bit too vague at the moment. The examples that we have had through the European fisheries fund and the European maritime fisheries fund have gone a long way to enabling fishing communities—especially the community-led local development mechanism and fisheries local action groups. Where they have worked well, they have worked extremely well. They have had a huge impact and have gone on to bring millions in investment into the local economy, benefiting the whole coastal community. As an enabling Bill that says, “We are committing to provide financial assistance,” it is great, but it could be a lot more prescriptive and detailed. It could break that down and really represent the different sectors of the wider coastal community, as well as the fisheries.

Elaine Whyte: I would add that it is important that we somehow define fisheries through this, because I know a lot of instances where fisheries funds have been used for something that fishermen on the ground have probably never had any benefit from. It is good that we consider who the stakeholders are, how we want this to be used and whether fishermen will ultimately get the benefit of it. It is particularly important at a time when there is a lot of money coming into the fisheries policy sector from environment non-governmental organisations and charities and whatnot—I counted about £4 million into Scotland in the last couple of months for people influencing fisheries policy. We need to be enabling our fishermen to do something positive.

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Q Do you think that the ending of the European funding is a risk? It is not clearly defined what will substitute for it in the future. If anything, there might be a cut in the overall level of state aid into the sector.

Dr Amy Pryor: Absolutely. There are no other funding streams that are specifically for fisheries. There are none—absolutely none. Fishermen cannot access any of the other regional development growth funds or even the other European funding streams. Having something to replace it is essential, but there is an opportunity here to do things in a bit more of a holistic way, while benefiting the fishing industry.

Elaine Whyte: A small investment can make a big difference. Some of the ports in the Western Isles, such as Ceallan, have been European funded, and that has been a massive benefit to the community. Particularly in rural communities, it is a lifeline.

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Q I think we have come to a natural conclusion, unless there are any final 10-second points that witnesses wish to put to the hon. Members.

Elaine Whyte: My colleague would never forgive me if I did not mention this. We would like to see communities having an opportunity to access things such as bluefin tuna, because it could make a difference to artisanal fisheries around the coast.

Dr Amy Pryor: We would like to see better recognition of our estuaries and the links with the land. Estuaries are the ovaries of the sea, and having them recognised formally as part of this, with potentially better and more sensitive management, would definitely be the way to go to safeguard our stocks for the future.

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I am grateful to both witnesses for their evidence, and I thank them for their attendance today.

Ordered, That further consideration be now adjourned. —(Iain Stewart).

Adjourned till Tuesday 11 December at twenty-five minutes past Nine o’clock.

Written evidence reported to the House

FISH04 Historic England

FISH05 ANIFPO/Sea Source

FISH06 Professor Richard Barnes, The School of Law and Politics, University of Hull

FISH07 Heritage Alliance

FISH08 Daniel Whittle, Whitby Seafoods Ltd

FISH09 Greener UK

Finance (No. 3) Bill (Eighth sitting)

The Committee consisted of the following Members:

Chairs: Ms Nadine Dorries, †Mr George Howarth

† Afolami, Bim (Hitchin and Harpenden) (Con)

Badenoch, Mrs Kemi (Saffron Walden) (Con)

† Black, Mhairi (Paisley and Renfrewshire South) (SNP)

† Blackman, Kirsty (Aberdeen North) (SNP)

† Charalambous, Bambos (Enfield, Southgate) (Lab)

† Dodds, Anneliese (Oxford East) (Lab/Co-op)

Dowd, Peter (Bootle) (Lab)

† Ford, Vicky (Chelmsford) (Con)

† Jenrick, Robert (Exchequer Secretary to the Treasury)

† Keegan, Gillian (Chichester) (Con)

† Lamont, John (Berwickshire, Roxburgh and Selkirk) (Con)

† Lewis, Clive (Norwich South) (Lab)

† Reynolds, Jonathan (Stalybridge and Hyde) (Lab/Co-op)

† Smith, Jeff (Manchester, Withington) (Lab)

† Sobel, Alex (Leeds North West) (Lab/Co-op)

† Stride, Mel (Financial Secretary to the Treasury)

† Syms, Sir Robert (Poole) (Con)

† Whately, Helen (Faversham and Mid Kent) (Con)

† Whittaker, Craig (Lord Commissioner of Her Majesty's Treasury)

Colin Lee, Gail Poulton, Joanna Dodd, Committee Clerks

† attended the Committee

Public Bill Committee

Thursday 6 December 2018

(Afternoon)

[Mr George Howarth in the Chair]

Finance (No. 3) Bill

(Except clauses 5, 6, 8, 9 and 10; clause 15 and schedule 3; clause 16 and schedule 4; clause 19; clause 20; clause 22 and schedule 7; clause 23 and schedule 8; clause 38 and schedule 15; clauses 39 and 40; clauses 41 and 42; clauses 46 and 47; clauses 61 and 62 and schedule 18; clauses 68 to 78; clause 83; clause 89; clause 90; any new clauses or new schedules relating to tax thresholds or reliefs, the subject matter of any of clauses 68 to 78, 89 and 90, gaming duty or remote gaming duty, or tax avoidance or evasion)

Clause 60

Rates of duty from 1 April 2020

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I beg to move amendment 104, in clause 60, page 44, line 17, at end insert—

“(3) The Chancellor of the Exchequer must review the effects of a reduction in air passenger duty rates from 1 April 2020 and lay a report of that review before the House of Commons within six months of the passing of this Act.

(4) A review under subsection (3) must in consider the effects of a reduction on—

(a) airlines,

(b) airport operators,

(c) other businesses, and

(d) passengers.”

This amendment would require the Chancellor of the Exchequer to review the effects of a reduction in air passenger duty.

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With this it will be convenient to discuss the following:

Amendment 120, in clause 60, page 44, line 17, at end insert—

“(3) The Chancellor of the Exchequer must review the effects of the changes made in subsection (1) and related matters specified in subsections (4) and (5) and lay a report of that review before the House of Commons within six months of the coming into force of the changes.

(4) The matter specified in this subsection is the revenue effects of the changes.

(5) The matter specified in this subsection is the effects of the changes on—

(a) CO2 emissions,

(b) the United Kingdom’s ability to comply with its third, fourth and fifth carbon budgets,

(c) air quality standards,

(d) air travel demand, and

(e) air traffic movements.”

This amendment would require the Chancellor of the Exchequer to review the revenue, environmental and certain other impacts of the changes made by Clause 60.

Amendment 121, in clause 60, page 44, line 17, at end insert—

“(3) The Chancellor of the Exchequer must review the effects of the changes made in subsection (1) together with the matter specified in subsection (4) and lay a report of that review before the House of Commons within six months of the coming into force of the changes.

(4) The matter specified in this subsection is to assess whether the rate for privately-owned and privately-chartered jets is reflective of environmental costs relative to the other rates and bands of air passenger duty.”

This amendment would require the Government to review the extent to which rates of air passenger duty for privately-chartered and privately-owned aircraft reflect environmental costs.

Clause stand part.

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I will not speak for a terribly long time, because I am sure the Committee is not keen on being detained for any longer than necessary.

The devolution of air passenger duty has not been properly completed, so the Scottish Government are unable to put in place air departure tax, which we committed to introducing, or to make our proposed changes first to halve that tax and then to remove it completely. We are keen to do that because we believe it is important that we can attract people to visit, live and work in our country, and those steps were in the manifesto we were voted in on in 2016.

Complete devolution has not happened due to an issue with our exemption for the highlands and islands. I understand that the UK Government and the Scottish Government are working on that. It would have been great if it had been dealt with before, because we hoped to have air departure tax in place in April. It has not been dealt with, but I get the impression that people are still around the table trying to solve the issue, which is good news.

In lieu of APD being properly devolved and our having the powers to make our planned changes in Scotland, we support a UK-wide reduction in APD. That is why we tabled amendment 104, which would require the Chancellor of the Exchequer to

“review the effects of a reduction in air passenger duty rates from 1 April 2020”—

we chose that date because the industry has asked us to ensure that any change in rates is not made immediately—

“and lay a report of that review before the House of Commons within six months”.

The review would have to

“consider the effects of a reduction on—

(a) airlines,

(b) airport operators,

(c) other businesses, and

(d) passengers.”

One of the key issues for us is that the comparatively high taxes in the UK sometimes cause difficulties for airlines and airport operators. If we take into account VAT, air passenger duty and other taxes, the UK is one of the more highly taxed places to visit as a tourist. We are keen to see changes so that we can secure the routes we have and run more routes.

Given the remoteness of some communities in Scotland, it is important that we have good access to flights. I live in Aberdeen, which is about two and a half or three hours’ drive from Glasgow and Edinburgh. There are international flights out of Aberdeen, but not as many as I would like—there are lots of places we cannot get to unless we drive to Glasgow, Edinburgh or even further afield. I have previously looked at flying from Newcastle to get a better range of flights.

I would appreciate it if the Minister, if he cannot accept the amendment, talked a bit about what he thinks would be the impact on airlines, airport operators, other businesses and passengers of reducing air passenger duty. If he does not want to talk about that because it is not the Government’s policy to reduce air passenger duty, it would be interesting to hear why it is not their policy given my concerns. We are calling for a review because the amendment of the law resolution does not allow us to change it in a serious way. I hope I have laid out the Scottish National party’s position clearly.

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With your leave, Mr Howarth, I will speak to amendments 120 and 121, and press them to a vote if necessary, before moving on to other significant questions that we feel need answering in relation to the clause. As numerous environmental non-governmental organisations, scientists and even the chair of the Committee on Climate Change have observed, the Government are failing to tackle the climate crisis that is already upon us, and we believe that that is reflected in their policy on air travel. There is an awkward mismatch between our world-leading climate change legislation and our policy and prevailing political attitudes towards aviation.

The purpose of amendment 120 is to force the Government to share with Parliament the impact, or the lack thereof, of their proposed changes to air passenger duty on a variety of environmental concerns. The Committee will be aware that the projected impact of climate change poses severe risks, not just to the natural environment but to the prosperity of the British nation and the welfare of the people we represent in the House.

Aviation has a significant and growing impact on climate change. Emissions from the sector rose by 1.2% in 2016. It currently represents about 7% of the UK’s total emissions yet, on current projections, that figure will reach 25% by 2050 as a result of increases in aviation demand and carbon reduction in other sectors. That is because aviation currently enjoys a uniquely generous target under our national framework for reducing emissions through to 2050—namely, it is not expected to make any contribution in our carbon budgets to those reductions, and is instead required to conform to a level of emissions in 2050 that are no higher than 2005 levels, which is 37.5 megatonnes of carbon dioxide. That is known as the Committee on Climate Change planning assumption for aviation. That generous target is in recognition of the difficulty of decarbonising air travel through technology and operational improvement, and of the utility and social value of air travel for those who are lucky enough to use it.

Department for Transport aviation forecasts show that UK aviation emissions are currently on course to exceed even that generous limit, thus potentially jeopardising our ability to meet our overall climate change targets in the form of the fourth and fifth carbon budgets. The Committee on Climate Change has repeatedly called on the Government to develop a robust domestic mitigation policy framework for international aviation emissions for flights taking off from UK airports. Most recently, its 2017 and 2018 progress reports in Parliament highlighted the need for a new strategy and new policies to ensure UK aviation emissions are at about 2005 levels in 2050. In its 2018 assessment of the Government’s clean growth strategy, it warned that they are falling far short of the necessary action. It noted that no progress has been made on this requirement.

The Committee on Climate Change is currently working to update its advice to the Government on mitigating aviation emissions. It is due to report on that in the spring—we await that with interest. One aspect of its guidance that is unlikely to change and is highly salient to the clause is the recognition that the UK’s participation in international mitigation programmes for aviation emissions, such as the International Civil Aviation Organisation’s CORSIA—carbon offsetting and reduction scheme for international aviation—agreement to offset growth from 2020 and the EU’s emissions trading scheme will simply not be sufficient to keep UK aviation emissions within safe limits, as defined by the Committee on Climate Change.

Likewise, even if some fairly heroic assumptions are made about technology, operational improvements and the uptake of genuinely sustainable biofuels, the projected growth in demand for air travel is expected to outstrip these efficiency gains, causing emissions to rise above the safe limit. In 2009, the Committee on Climate Change advised the Government that:

“Deliberate policies to limit demand below its unconstrained level are therefore essential if the target is to be met.”

That has remained its formal position ever since.

The statutory advice to Government by the committee—renowned, by the way, as among the best climate change advisers in the world—is therefore that the growth in demand for UK air travel must be limited if our climate change targets are to be met. That is clear. However, no Government, least of all this one, has yet proposed any such policies. On the contrary, this Government have acted to remove constraints to growth in UK air traffic, such as by approving a third runway at Heathrow Airport without any corresponding measures to meet climate change commitments.

That is why we seek through amendment 120 to compel the Government to review air passenger duty, its effect on the demand for air travel and the consequent effect on greenhouse gas emissions. That is not to say that APD is the only lever that the Government have, but it is incumbent on them to make it clear how they will achieve the climate objectives agreed by consensus of the House. Perhaps the Minister will answer some questions—I am sure the Committee on Climate Change will be interested in hearing the answers.

What impact APD rates have on demand today? How high would APD rates need to be, or what other measures would have to be in place, to constrain growth in emissions to within the safe limits advised by the Committee on Climate Change? Was that even a consideration of the Government when developing the Bill? Assuming that the Minister agrees it is indeed the Government’s goal, he might say that APD is not the best or most equitable route to achieve that goal, but we need to be clear that there is another route. The answers we hope to receive will help us all as legislators to decide whether APD and the suggested rate changes are indeed an effective mechanism to achieve the Government’s stated policy, or whether alternative measures would be more economically efficient and fiscally progressive.

We understand that limiting growth in demand for air travel is politically fraught, and that important social justice dimensions must be considered when designing any policies to achieve that aim. The issue, however, cannot be ducked forever. The Government have been, and continue to be, remiss in their duties by failing to make any assessment of the potential for different fiscal measures or other policy approaches to constrain UK aviation emissions in line with Committee on Climate Change guidance.

Modal shift from air to rail is an important feature of nearly all decarbonisation scenarios intended to deliver zero net emissions by the middle of the century, as per the UK commitment under the Paris agreement. At the moment, however, it is much cheaper to travel from London to Edinburgh by plane than by train. That is in part a product of the chronic failure of Britain’s ill-advised experiment with the privatisation of our railways, but there is an argument that it is also due to tax advantages enjoyed by aviation over other modes of transport, which brings us back to the clause.

Under international air service agreements, it is prohibited to tax aviation fuel—an anachronism from the earliest days of international aviation, when only a handful of passenger planes were in the sky and Governments sought to do all they could to nurture this exciting new economic sector. Seventy years later, more than 23,000 aircraft are in the global fleet, and yet this highly mature industry continues to enjoy tax-free fuel, a perk it has retained through a combination of lobbying and the structural difficulties of levying a tax on an activity that, by its nature, crosses national boundaries.

That anomaly is the subject of intense debate in France, where motorists are rightly pointing out the gross disparity between the high rates of duty in the form of a carbon tax levied on petrol and diesel at the pump, and the total absence of taxation on aviation fuel. Former French environment Minister, Nicolas Hulot, last week joined calls for kerosene to be taxed. Serving members of the French Government say that they are now speaking with the European Commission.

In addition to duty-free fuel, airline tickets, planes, parts, repairs and fuel are all zero-rated for VAT, alongside items such as baby clothes and wheelchairs. There is also the duty-free shopping in airports. Given that history, the price of air travel does not reflect the environmental damage caused by flight. Taxing air travel appropriately is clearly a difficult political problem to solve, and I want to make it clear that we do not advocate that such travel should become a privilege available only to the rich. However, it is important to understand the social justice dimensions of the challenge clearly.

APD has been criticised in the past as a blunt instrument. That may be true, but it is overall a fiscally progressive tax in the sense that it is mostly collected from households at the upper end of the income spectrum. Government survey data suggests that about half of British residents do not take any flights in a given year, while about a fifth say they never fly. Research suggests that 70% of all flights by UK residents are taken by 15% of the population—the so-called frequent fliers. That group probably includes many people in this room. Only 1% of the general population fly more than seven times a year, but the richest 5% of households fly 13 times a year. Growth in demand for air travel is likewise being driven by the UK’s wealthiest residents. Perhaps the Minister can share any official figures the Government hold.

In any event, to avoid catastrophic global warming, we must collectively limit carbon emissions from aviation. Ordinary people taking occasional family holidays or visiting relatives abroad should not be the priority for any policy designed to curb demand growth.

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The hon. Gentleman makes a strong case for the amendments. Given that more information is better, we are happy to support them. For the avoidance of doubt, I would love to stop flying every week. An independent Scotland would mean we could do that, and it would reduce our carbon footprint.

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The hon. Lady makes a good point—

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It is not that good a point.

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It is a very good point in the sense that the hon. Lady cannot not come down here—I understand that. It is not such a good point about breaking away from the United Kingdom, and independence. However, we understand that she has to make the journey for work purposes.

It is a small minority of people who have to work in the way that the hon. Lady does, but many people now talk about the use of new technologies, and there may come a time, in the near future, when a holographic image of her could be here to represent her constituents. That may soon be upon us—who knows? We have been talking about the impact of technology.

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Order. I should tell the hon. Gentleman that no hologram form will be recognised in this Committee.

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Thank you, Mr Howarth, for that clarification, which was clearly needed.

As I was saying, it would be neither socially fair nor environmentally effective if ordinary people taking occasional family holidays or visiting relatives abroad were made the priority for any policy designed to curb demand growth. Therefore, as amendments 120 and 121 would provide, the Government need to make an assessment of the distributional impact of increasing aviation tax rates on specific groups who could be disproportionately affected.

The Opposition fully accept that, ultimately, APD may not be the right instrument to bring aviation growth into line with the planning assumption of the Committee on Climate Change. However, without the reviews we are calling for in amendments 120 and 121, it will be all but impossible to know whether it can play a role, or whether there are better alternatives. There have, for instance, been proposals for a per-plane tax, which would more closely link taxation to carbon emissions, and be a better incentive for more efficient use of passenger capacity in planes. Alternatively, there could be a frequent flyer levy designed to protect access to a reasonable amount of flying for low-income households, while targeting the most frequent flyers with an incrementally rising tax, thus addressing the elasticity of demand for air travel in relation to low prices or high income—or the fact that the key determinant of the propensity to fly is income, not ticket price.

I take no view of those options today, because we simply need to understand more about how they would work; but that is precisely why we need the Government to undertake formal assessments that allow us to compare the impact of potential options on the factors set out in the amendment. Small changes in price have little impact on demand for flights, so increasing the cost of flights to a level that exerts significant downward pressure on demand is difficult to do fairly via the taxes that the clause deals with, and could mean pricing the poor out of the skies when the richest air travellers cause most of the environmental damage. In any event, without the Government carrying out the necessary assessments, which our amendments would require, we cannot know what APD rates are required to meet the planning assumption of the Committee on Climate Change, or the relative efficacy of APD and alternative fiscal approaches, such as a per-plane tax or a frequent flyer levy, for achieving this policy goal.

Let me end with a sobering fact. As the widely respected naturalist David Attenborough warns the world at COP 24 that the collapse of our civilisation is on the horizon, the two largest aircraft manufacturers in the world—Boeing and Airbus—have more than 13,000 new fossil fuel-powered planes on order. Given the long operational lifespan of passenger jets, most of those planes will still be in the air in 2050, as will many of the 23,000 already in use. Given what is at stake, can the Minister, hand on heart, genuinely say that the Government’s policies, future techno-fixes aside, are really up to the existential challenge that we all face?

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I will respond to as many comments as I can. I will come to the amendment tabled by the hon. Member for Aberdeen North, but we agreed and legislated to devolve air passenger duty to the Scottish Government. The delay in so doing is unfortunate—it is not what we wished to happen—but it is a result of the Scottish Government’s asking us to postpone the implementation of devolution. They did so for the perfectly understandable reason that they wished to pursue the measure with respect to the highlands and islands, but it was essentially their decision, which we respected in agreeing to postpone the turning on of devolution, if that is the right phrase, at their suggestion.

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Yes, but the UK Government were trying to hand APD over in such a way that the highlands and islands exemption would no longer exist, so it would have been completely deficient and would not have operated in the way we hoped or, presumably, the way it was intended to work when its devolution was first mooted.

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As I understand it, we handed it over in accordance with EU law. Negotiation has subsequently taken place between the Scottish Government and the EU, with the support of the UK Government, to try to find a satisfactory resolution. I assure the hon. Lady—I do not think she implied otherwise—that we are working as hard as we can to support the Scottish Government in that respect. In fact, my officials at the Treasury were in Edinburgh in the past couple of weeks to continue working with the Scottish Government in that regard. I hope she takes our assurance that we will continue to work productively together.

Because APD is essentially a devolved matter—although, as a result of the request, we have not yet turned it off—the Scottish Government could of course choose to carry out the review that the hon. Lady requests themselves. Alternatively, they could choose not to pursue the measure with respect to the highlands and islands and to continue with their plans for their own version of air passenger duty. I appreciate that they do not wish to do that. However, I hope that I can allay the hon. Lady’s concerns by saying we are going to work as closely as possible. I do not think a review by the United Kingdom Government is necessary when the Scottish Government could proceed with one if they wished.

The hon. Lady and the hon. Member for Norwich South asked what evidence and reports we had, and what studies we had done, on the impact of reducing air passenger duty on Treasury receipts or its wider benefits to the economy and society. We reviewed the 2016 PwC report, which the hon. Lady may be aware of. We did not agree with all its conclusions in terms of cutting or abolishing APD. Its principal claim was that that would pay for itself, and we did not agree with that. APD raises £3.4 billion a year, so it is a significant revenue raiser for the Exchequer. Cutting it would put pressure on other public finances, although I appreciate that it would have some benefits in different parts of the country. Recently, our limited study on devolving air passenger duty for long-haul flights in Northern Ireland acknowledged that there could be some benefits, but it also raised a number of further questions and concerns that require further study.

The Department for Transport will publish its aviation strategy shortly. That will, I hope, answer some of the broader questions that the hon. Member for Norwich South asked about our long-term strategy and plan for this country, whether it is in technology, aviation and airport capacity or the environmental concerns he expressed.

Air passenger duty was never designed to be an environmental tax. One might argue that it could be used as an environmental tax, but that was never its primary purpose; it was a tax designed to raise revenue for the Exchequer to pay for public services. It is already the highest tax of its kind in Europe, and one of the highest in the world, so it is not clear whether increasing it substantially would make any significant difference, and doing so would, of course, come at significant cost to our competitiveness as a country. Many would like us to reduce the tax substantially, rather than to increase it materially, as the hon. Gentleman seems to suggest. I will come on to his point about the international perspective and the Chicago convention, and what progress the Government are making.

To summarise the clause, it makes changes to ensure that long-haul rates of air passenger duty for the tax year 2020-21 increase in line with the retail prices index. The change will ensure that the aviation sector continues to play its part in contributing towards funding public services. APD, as I have described, raises £3.4 billion in revenue annually, so it is an important part of our public finances. Aviation plays a crucial role in keeping Britain open for business, and the UK Government are keen to support its ongoing success. Passenger numbers travelling via UK airports have grown by more than 15% over the past five years, and the UK has the highest direct connectivity score in Europe, according to an Airports Council International Europe report. Of course, we continue to measure our competitiveness, and we want the UK to continue to have hub airports and to be as well connected to emerging markets as it can be.

The clause increases the long-haul reduced rate—economy class—by just £2; and it increases the standard rate, which is for all classes above economy, by £4. The rounding of APD rates to the nearest £1 means that short-haul rates will remain frozen for the eighth year in a row, which benefits about 80% of all airline passengers, including many of those whom the hon. Gentleman mentioned, who are on lower incomes and trying to enjoy cheaper holidays and less expensive business travel. The changes made by clause 60 will increase the long-haul APD rates for the tax year 2020-21 by RPI.

On amendments 120 and 121, which were tabled by the hon. Member for Norwich South for the Labour party, the Government recognise the importance of understanding the impact of changes to tax policy on the aviation industry. I reassure the Committee that that is done as a matter of course by the Government as we consider carefully how to proceed at every Budget. Furthermore, isolating the impact of APD on the areas highlighted in the amendments is challenging. It is better to consider such issues in a more holistic way.

As I have said, the upcoming aviation strategy to be published by the Department for Transport will be the opportunity to consider the aviation industry’s impact on and role in addressing issues in such areas. I encourage the hon. Gentleman and others who take an interest in those matters to pay careful attention to that. They will have the opportunity to scrutinise the Secretary of State for Transport and other Ministers following that.

On the issue of those at the higher end of the distributional scale, in Government we have tackled that through the introduction of the additional rate for private jets. The Government are confident that those flying in that way will now pay a fairer share of tax. We were the first Government to introduce the private jet rate, and the rate for individuals flying by private jet is six times that of someone flying in economy on a commercial jet.

In terms of how we can use the tax system to tackle aviation emissions, APD is not designed to be an environmental tax. One could use it for that purpose, but it has already been set at a very high rate internationally. I am not clear that there is evidence that further material increases would make a difference. Because of international conventions—the Chicago convention and others, as I described earlier—we are unable to tax aviation fuel or any proxies for fuel. The Government remain committed to engaging actively on this agenda. I can see that the hon. Member for Oxford East is eager to intervene—she and I have discussed this previously.

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I am grateful to the Minister for being willing to give way. He will probably remember that I asked for the concrete ways in which Government are engaging with international partners around that convention. I have not received any concrete details aside from the general aspiration to change things. Can he provide some details now?

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The hon. Lady and I discussed this in a Westminster Hall debate earlier in the year. I believe I wrote to her afterwards to set this out, but perhaps she was not satisfied with the response. I am happy to revert to her with more information, but I made the point in that letter that the UK Government are committed to this, and we play a leading role internationally in discussing the future of the Chicago convention. As I also set out in the letter, several of the leading aviation nations—including the United States and Australia—have limited interest in changing the current regime, which makes it rather difficult to make the kind of progress that I suspect she would like us to make.

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The Minister is being generous in giving way. It might help the Committee to know what meetings the Government have called, which Governments they have contacted to discuss the matter and what public pronouncements they have made on the subject. I have been unable to find evidence of any.

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I will write to the hon. Lady again to set out some of the information. I discussed the matter with my officials in preparing for this Committee, and they listed some of the international meetings they have attended, where they represented the United Kingdom exactly as she would like us to have done.

I hope I have addressed amendment 104 in my earlier comments. This is a matter that the Scottish Government could take forward themselves, given that we have already legislated for the devolution of APD. The impacts of any future reductions in Scotland are a matter for the Scottish Government, and they will clearly become more so once we proceed to the long-term arrangement that the hon. Lady wishes for.

The changes being made by clause 60 ensure that the aviation sector continues to play its part in contributing towards the funding of our vital public services, raising £3.4 billion a year. I therefore commend the clause to the Committee.

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I want to raise a couple of things before we vote on amendments 120 and 121. The Committee on Climate Change has clearly stated that we are heading towards a substantial breach of the generous headroom that has been provided for aviation in the UK. The Government are going to overshoot that, to use a pun. There is a pressing climate emergency on this planet. As we speak, millions of people—many of them in the world’s poorest countries—are already being affected by climate change. My dad is from Grenada, and he has retired there. People there, and in the West Indies generally, cannot get insurance as a result of the hurricanes that destroy vast swathes of the islands year in, year out, because of climate change. I feel as though we are hearing once again from the Government about business as usual, even though a climate emergency is taking place.

I understand the APD. It is not designed as an environmental tax or a demand management tool; it is a revenue raiser. Given that we find ourselves heading towards a breach of the headroom that the Committee on Climate Change has provided, surely the Government should be looking at ways to control and push down demand for flights, so that we can begin to make a real impact on our commitments to tackling climate change. Will the Minister tell the Committee whether he plans to join our French counterparts in lobbying for tax reform on kerosene, as they will shortly talk about with the EU Commission? It seems to me that the aviation industry has enjoyed these 70-year-old tax perks and is now an established sector, but one that has yet to fully play its part in tackling climate change. This country can show leadership on that, starting with the Treasury.

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I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment proposed: 120, in clause 60, page 44, line 17, at end insert—

“(3) The Chancellor of the Exchequer must review the effects of the changes made in subsection (1) and related matters specified in subsections (4) and (5) and lay a report of that review before the House of Commons within six months of the coming into force of the changes.

(4) The matter specified in this subsection is the revenue effects of the changes.

(5) The matter specified in this subsection is the effects of the changes on—

(a) CO2 emissions,

(b) the United Kingdom’s ability to comply with its third, fourth and fifth carbon budgets,

(c) air quality standards,

(d) air travel demand, and

(e) air traffic movements.”.—(Clive Lewis.)

This amendment would require the Chancellor of the Exchequer to review the revenue, environmental and certain other impacts of the changes made by Clause 60.

Division 32

6 December 2018

The Committee divided:

Ayes: 8
Noes: 9

Question accordingly negatived.

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Amendment proposed: 121, in clause 60, page 44, line 17, at end insert—

“(3) The Chancellor of the Exchequer must review the effects of the changes made in subsection (1) together with the matter specified in subsection (4) and lay a report of that review before the House of Commons within six months of the coming into force of the changes.

(4) The matter specified in this subsection is to assess whether the rate for privately-owned and privately-chartered jets is reflective of environmental costs relative to the other rates and bands of air passenger duty.”.—(Clive Lewis.)

This amendment would require the Government to review the extent to which rates of air passenger duty for privately-chartered and privately-owned aircraft reflect environmental costs.

Division 33

6 December 2018

The Committee divided:

Ayes: 8
Noes: 9

Question accordingly negatived.

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Clause 60 ordered to stand part of the Bill.

Clause 63

Climate change levy: exemption for mineralogical and metallurgical processes

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I beg to move amendment 124, in clause 63, page 45, line 13, at end insert—

“(6) The Chancellor of the Exchequer must review the expected effect of the changes made by this section to paragraph 12A of Schedule 6 to the Finance Act 2000 on companies with up to 250 employees and lay a report of that review before the House of Commons within six months of the passing of this Act.”.

This amendment would require the Chancellor of the Exchequer to review the impact of Clause 63 on SMEs.

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With this it will be convenient to discuss the following:

Amendment 125, in clause 63, page 45, line 13, at end insert—

“(6) The Chancellor of the Exchequer must review the expected effect of the changes made by this section to paragraph 12A of Schedule 6 to the Finance Act 2000 in the event that—

(a) the UK leaves the European Union without a negotiated withdrawal agreement,

(b) the UK leaves the European Union following a negotiated withdrawal agreement.

(7) The Chancellor of the Exchequer must lay a report of the review under subsection (6) before the House of Commons within two months of the passing of this Act.”.

This amendment would review the impact of Clause 63 in the event the UK leaves the EU under (a) no deal or (b) a withdrawal agreement.

Amendment 126, in clause 63, page 45, line 13, at end insert—

“(6) The Chancellor of the Exchequer must review the expected effect of the changes made by this section to paragraph 12A of Schedule 6 to the Finance Act 2000 on divergence between the regime that applies to mineralogical and metallurgical processes in the United Kingdom after it has left the European Union and that which applies in the European Union.

(7) The Chancellor of the Exchequer must lay a report of the review under subsection (6) before the House of Commons within two months of the passing of this Act.”.

This amendment would require the Chancellor of the Exchequer to review the effect of Clause 63 on divergence between the UK’s regime for mineralogical and metallurgical processes and the EU’s, after the UK has left the EU.

Amendment 127, in clause 63, page 45, line 13, at end insert—

“(6) The Chancellor of the Exchequer must publish a statement annually listing the companies to which the exemption for mineralogical and metallurgical processes under paragraph 12A of Schedule 6 to the Finance Act 2000, as amended by this section, applies.”.

This amendment would require the Chancellor of the Exchequer to publish an annual statement listing the businesses to which the exemption for mineralogical and metallurgical processes applies.

Amendment 128, in clause 63, page 45, line 13, at end insert—

“(6) The Chancellor of the Exchequer must carry out an impact assessment of the exemption for mineralogical and metallurgical processes under paragraph 12A of Schedule 6 to the Finance Act 2000, as amended by this section, considering the impact on—

(a) tenanted businesses that carry out mineralogical and metallurgical processes,

(b) revenue effects,

(c) the UK’s ability to meet its third, fourth and fifth carbon budgets,

(d) the UK’s ability to meet its greenhouse gas emission targets.

(7) The Chancellor of the Exchequer must lay the impact assessment under subsection (6) before the House of Commons within two months of the passing of this Act.”.

This amendment would require the Chancellor of the Exchequer to carry out an impact assessment of the changes made by Clause 63 and their impact on tenants, HMRC revenues, the UK’s national carbon budgets, and carbon and other greenhouse gas emission reduction targets.

Clause stand part.

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I am particularly pleased to have the opportunity to speak to our amendments to clause 63, which relate to the climate change levy exemption for mineralogical and metallurgical processes. I hope that I do not have to say that too often—it is a bit of a tongue-twister—and that the Minister will answer some questions on the Government’s proposed measures.

The clause may seem technical, but the overall issue could scarcely be more important, as I hope I illustrated earlier. As the Minister no doubt will outline, business do not have to pay the climate change levy on the energy they use for some specified purposes, including mineralogical and metallurgical processes. The clause amends the definition of mineralogical processes so the exemption for energy used in those processes will remain operable following the UK’s departure from the EU. In addition, it clarifies that a landlord can claim the exemption for both mineralogical and metallurgical processes on behalf of a tenant.

Although it is estimated that the measure will have a minor impact on the Exchequer, we have a number of concerns. We appear to be lacking assessments of the market impact of the clause, its effect on our leaving the European Union and its consequences for the UK’s carbon budgets and other greenhouse gas emissions reduction targets, as well as for tenanted businesses covered by it.

Amendment 124 would require the Chancellor to review the impact of the clause on small and medium-sized enterprises. We are surprised by the Government’s lack of consideration of this matter, as SMEs, which lack the staff and financial resources of large companies, often struggle to cope with the impact of new financial regulation. As SMEs are important to maintaining existing jobs and creating new jobs and apprenticeships, will the Minister support our proposed review and help that critical part of our economy, which is already hard pressed?

Amendments 125 and 126 would require the Chancellor to review the impact of the clause in the event that the UK leaves the EU either in a no-deal scenario or under a withdrawal agreement, and its effect on divergence between the UK and EU regimes for these processes if the UK leaves the EU. Again, we are surprised that the Government have not seen fit to carry out such assessments. Does the Minister intend to do so? If not, why not?

Amendment 127 would require the Chancellor to publish annually a list of the businesses to which the exemption for mineralogical and metallurgical processes applies. As the Government are only too aware, there is nothing like keeping on top of matters to ensure that legislation has the desired outcome and markets respond appropriately to the necessary signals. Will the Minister support our amendment so we can all follow the unfolding impact of the climate change levy and its exemptions in this sub-sector?

Given the stark realities of the latest scientific findings submitted to the conference of the parties under the UN framework convention on climate change, which is meeting this week in Poland, the Minister surely agrees that nothing is more important than continuously monitoring, with an eagle eye, the greenhouse gas emissions of every sector in the UK. Monitoring leads to measurement, which leads to management. We must carry out official assessments if we are most effectively to support British industry and companies to reduce their carbon and other greenhouse gas emissions. That means embracing opportunities to modernise our industrial processes as we rapidly move along the path to a zero-carbon economy and help the world stay within the boundaries of the 1.5° warming target of the Intergovernmental Panel on Climate Change.

Amendment 128 would require the Chancellor to carry out an impact assessment of the effects of the changes made by the clause on tenants, the revenues of Her Majesty’s Revenue and Customs, the UK’s national carbon budgets, and carbon and other greenhouse gas emission targets. The guidance notes to the clause state that its impact on the Exchequer is negligible, but will the Minister please explain how, unless it investigates, HMRC will know how many heavy industry or fossil fuel use tenants will be affected? Without a confident quantification, that assertion is meaningless, as I am sure he agrees.

Moreover, by extending relief, the clause in effect encourages those tenants, alongside existing owners and plant operators, to continue emitting carbon and other greenhouse gases rather than switching to alternative generation methods with lower emissions. Will he please explain why the Government would want that, and what complementary measures they are taking to support businesses that want to convert to lower-emission modes of generation?

Given the imperative to reduce greenhouse gas emissions following the latest IPCC report and to contribute to stabilising the average annual temperature increase to no more than 1.5°C, the Government should take all possible measures to help industry to adapt and to retrain and re-skill workers so that they can secure well-paid jobs in the emergent low to zero-carbon economy—the so-called just transition. In that vein, it is also necessary to calculate a new greenhouse gas emissions budget for any policy change likely to encourage more intense fossil fuel use and therefore higher greenhouse gas emissions. Will the Minister tell us whether that calculation has been undertaken and inform the Committee of its results? If it has not been, will he agree to look into the matter and inform the House of any further findings?

This is a small but important change to the Government’s levy. Taken as it stands, it is, sadly, in tune with their refusal to use the levy in the way it was intended—to reduce greenhouse gas emissions. However, like the former Chancellor’s irresponsible and perverse decision to impose the