Rural Affairs, Islands and Natural Environment Committee

Meeting date: Wednesday, February 9, 2022

Official Report 736KB pdf

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Subordinate Legislation

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Aquaculture and Fisheries etc (Scheme for Financial Assistance) (Scotland) Regulations 2022 [Draft]

Our second item of business is consideration of an instrument that is subject to affirmative procedure. I refer members to pages 3 and 30 of their briefing packs.

I welcome back Mairi Gougeon, the Cabinet Secretary for Rural Affairs and Islands, for this agenda item. She is supported by Caroline Cowan, the interim deputy director for funding and strategy, and Iain Hepburn, the futures marine funding strategy delivery lead, Marine Scotland; and by Emma Phillips from the Scottish Government legal directorate. I invite the cabinet secretary to make an opening statement.

Thank you for inviting me to speak about the regulations today. The draft instrument establishes a scheme in accordance with the Fisheries Act 2020, whereby Scottish ministers can give financial assistance for a range of permitted purposes, including: promoting and developing our fishing and aquaculture industries; training and improving the health and safety of those who work in those industries; the economic development and the social improvement of our coastal communities that rely on those industries; developing recreational fishing; and conserving and restoring our marine environment.

The instrument is necessary as it will enable us to go beyond the scope of our existing funding powers and consider other areas that would benefit from support, particularly coastal communities and recreational fishing. The instrument will enable delivery of a funding scheme from 1 April, allowing financial assistance to be given for a broad range of purposes as set out in the 2020 act. We will publish guidance setting out the specific range of activities that can be funded, and the eligibility criteria, in due course.

Under the Bute house agreement, we have committed to an ambitious programme to protect our marine environment, and to support fishing and aquaculture businesses and the coastal communities who depend on them. The instrument will ensure that the marine fund Scotland continues to be key in the sustainable development of Scotland’s blue economy, through investing in our marine sectors, creating sustainable jobs and helping to protect the marine environment not only today but into the future.

We are not alone in recognising the value of our marine space and the need to protect, restore and use it sustainably. The European Union established its European maritime, fisheries and aquaculture fund last year, replacing the previous European maritime and fisheries fund from which Scotland benefited greatly. Its new fund includes support for the transition to sustainable low-carbon fishing, the protection of marine biodiversity and ecosystems, and innovation in the sustainable blue economy. We share those objectives, and the instrument will ensure that those objectives can be delivered. I am happy to take any questions that the members may have.

Thank you, cabinet secretary. We will now move to questions from members.

I understand that the legislation will allow the Government to subsidise fishers. It is important that the subsidies are pinned to delivering public and environmental outcomes. Examples of those outcomes are in the United Nations sustainable development goal 14, which states:

“By 2020, prohibit certain forms of fisheries subsidies which contribute to overcapacity and overfishing, eliminate subsidies that contribute to illegal, unreported and unregulated fishing and refrain from introducing new such subsidies”.

I feel that Scotland should be leading the way on that issue, but the proposed regulations do not seem to provide for any such conditionality. They provide wide-ranging powers and leave the awarding of subsidy to Scottish ministers’ discretion. In fact, recent rounds of funding have seen money given for new, more powerful engines and bigger nets, without any link back to what that might mean for sustainability. How will the Scottish Government ensure that subsidy that is created using the regulations does not contribute to overcapacity and overfishing, as set out in the UN sustainable development goal 14?

I want to emphasise that we are not setting out the creation of a fund through the regulations. The regulations simply set out the framework for funding and give us additional powers as to what we can look to fund—it expands the range of activities that we can look to fund.

We have had one round of the marine fund Scotland. We will look at the outcomes of that and at how the first year’s funding has gone. As we mentioned in the previous evidence session, a number of pieces of work are currently under way. We are working on our blue economy vision and action plan, and we already have our future fisheries management strategy. As we look to develop the criteria for future funding, we will make sure that that aligns with the visions that we will set out and with the different strategies that we will have in place at that point. We are not at the stage of establishing the criteria for that; the regulations simply allow us to fund a wider range of activities.

If those initial regulations—this framework—does not include conditionality, I am not sure how the Parliament and members can have faith that that will come later on. How will the Government use the regulations to incentivise a move towards sustainable forms of fishing? Is there any further detail?

We are still to set out our vision for the blue economy, but we are undertaking a number of on-going pieces of work on fisheries and aquaculture. We will make sure that the new funding, when we establish it, takes account of that. I reiterate that are not at that stage, because we have not yet decided on what any new fund might look like and what the criteria would be for that funding.

Will you confirm whether the Scottish Government agrees with the principle that subsidies should be linked to public and environmental contributions and improvement?

In my opening statement, I mentioned what we have signed up to through the Bute house agreement and our environmental ambition in that regard. I will not commit to what will be in the fund at this stage because we are yet to take decisions on that. The regulations set out the range of activities that we will fund. I again make the point that the work to establish a fund is yet to be undertaken.

Thank you. I have no further questions.

Have any of the companies that received hardship funding through the marine fund Scotland from the Scottish Government in the past two years also received fixed- penalty notices or been referred to the Crown Office and Procurator Fiscal Service for breaches of fisheries rules?

I am afraid that I do not have that information to hand.

Would the Scottish Government amend the regulations to prevent companies that have received fines or been prosecuted for illegal fishing from accessing funding for three years?

I am not looking to amend the regulations at this stage. As I have already outlined, they extend the range of activities that we can fund; we are not at the stage of establishing a new fund or what the criteria for that might look like.

It would be helpful if could follow up Ariane Burgess’s initial question and get back to the committee.

The instrument enables the Scottish ministers to specify the procedure for making an application for a grant or loan under the scheme. With the previous funding, you were unable to make decisions on assisting the fishing industry with aid directed at statutory costs of a business but you were able to support non-statutory investments. Does the instrument change the ability of the Scottish ministers to do that? I will give you two examples. Assistance may be given for

“improving the arrangements for the use of catch quotas or effort quotas”

and

“contributing to the expenses of persons involved in commercial fish or aquaculture activities”.

To my mind, those are defined as statutory costs. Would the instrument change your ability to make decisions on those aspects?

I do not believe that it would.

I will give an initial answer and maybe ask our lawyer Emma Phillips to intervene. On contributing to the costs of business, those do not necessarily have to be statutory costs; they can be any costs. On the use of catch quotas, I would have to remind myself of the detail of the regulations, but that can be used. Emma Phillips may want to add something.

10:15  

Those are purposes for which funding can be provided under the powers that have been used to establish the scheme. As to the precise definition of what the term expenses would cover, and in terms of the use of catch quotas or effort quotas, I will take that question away and respond the committee in writing to address those points, if members want further clarification.

In response to the question about conditionality, the regulations provide that any grant or loan funding offered under the scheme will be subject to any conditions that are determined by the Scottish ministers. There is provision for that to be subject to conditions, and any contractual conditions of grant or loan would be specified in the contractual offers of grant or loan issued to successful applicants. There is provision under the regulations to allow conditionality to be attached to the grant or loan funding under the scheme.

I want to follow up on that, because there is method behind my madness. In the past, the Scottish Government has considered grants and loans in terms of public investment and there is a relatively poor return on that public investment when funding, say, a fishing business’s operational statutory cost. I am very interested in Emma Phillips’s response to the committee on the specific issue about return on investment and how the instrument changes that.

Again, we would be happy to come back with answers on those points.

I want to touch on how the scheme differs from the European maritime and fisheries fund. The instrument broadens the scope of financial support that was previously available under the EMFF to include, for example, conservation, and the enhancement or restoration of the marine and aquatic environment. I understand that you have a current funding pot of about £14 million through the marine fund Scotland and that money is coming out of the UK seafood fund as well. The EMFF provided about €108 million. Do you have a funding figure in mind for the new scheme? How does that compare with the funding amount for EMFF? How would your proposed scheme operate within the UK internal market? To what extent will the United Kingdom Internal Market Act 2020 constrain your choices?

You mentioned the previous round of the EMFF. The regulations will mean that we can better align with the new European maritime, fisheries and aquaculture fund. The regulations broaden the scope of what we can fund compared with what we could fund previously. For example, we could now look to fund activities in marine biodiversity, ecosystems and coastal communities. There is a broader range of what we can look to fund through the regulations.

On the level of funding that we receive, we are allocated £14 million a year. That has been very frustrating and disappointing for us, because we believe that our allocation should be about £62 million, so there is a significant shortfall, but we know that our—

Can I stop you there for one wee second? If you are short of that amount of money but you are saying that you have greater scope to act, does that not mean that your ability to fund will be much more limited? You will be funding more areas but with a smaller pot. How will you make that work?

We will have to take careful consideration of that when we look to set the criteria for the new fund and the activities that we would like to fund. Ideally, we could do so much more, if we got the full allocation of £62 million, which we were right to expect and that we deserve.

What makes the situation worse is the fact that, in previous years, we had received an extra £5 million on top of our EMFF allocation in recognition of the significant marine resources that we have in Scotland. However, the UK Government has decided not to give us that uplift. Therefore, the funding that we have is significantly less than the funding that we had previously.

We continue to raise the issue with the UK Government. The matter continues to be a cause of significant frustration and disappointment. We could do so much more for our marine environment, our coastal communities and our fishing industry if we had the full allocation of £62 million.

What about the impact of the United Kingdom Internal Market Act 2020?

We see the impact of that through the UK seafood fund. I touched on some of those points when I had the discussion with the committee on the budget. That duplicates what we can fund in Scotland. There is a lack of clarity. I think that it will be confusing for those who are applying to the marine fund in Scotland—which we have had in place during the past year—because that is direct spend in a devolved area. We believe that that funding should be for the devolved Parliaments to allocate and distribute. Caroline wants to come in.

On Mr Fairlie’s first point, I will explain how we have got to where we are. Previously, we had directly applicable EU regulations, which allowed us to spend in the full range of the EMFF’s purposes. Last year, because of the very late settlement with the UK Government, we had to use the powers that we had available to spend the money.

Those powers, which are fairly narrow, are under the Aquaculture and Fisheries (Scotland) Act 2007. The regulations are a bit of a top-up, almost, to EMFF powers. That is partly why we need to introduce the regulations now. If, for example, we are to align with the new funds, we have only those narrow powers. The regulations allow us to have that broader range of purposes. Last year, we were very restricted in some ways compared with where we had been in the EU with the relevant regulations, if that makes sense.

Yes. In effect, you had very restricted powers with a bigger pot of money and now you have much more powers with a restricted pot of money.

Last year, we had the same fund, plus the £5 million that the cabinet secretary referred to. Under EMFF, we had £98 million over its funding period. The key point is that the EU has now negotiated a new fund and our assessment is that we would have been entitled to significantly more of that funding. The quantum from this financial year to next financial year is a little bit reduced but it is far below what we believe we would have received had we stayed in the EU.

Will the new fund support sustainable fisheries management through the provision of financial assistance for scientific data collection, or does that fall within the scope of the UK seafood fund?

The criteria for what we would look to set up in a new fund have not been established yet, but that is something that we would be able to fund through the regulations.

The Scottish statutory instrument states that grants and loans can be given in relation to Scotland or the Scottish zone. As the cabinet secretary knows, I have raised with her on several occasions concerns about the practice of non-UK gillnet fishing around Shetland. Does the SSI leave open the possibility that any boat operating in Scottish waters or the Scottish zone would be eligible for financial assistance?

We have not yet established any criteria for a new fund, but there would have to be alignment with the strategies and vision that we have set out, which is that we want what we do to be to the benefit of our coastal communities and our fishing industry in Scotland.

I want to be clear on that. Are you saying that the scheme would allow boats that are not registered in Scotland to receive financial assistance? You appeared to say that that would depend on the criteria, but surely the scheme would not allow boats that are not registered in Scotland to obtain grants and funding.

No.

It would not.

No—that could not happen through the regulations.

I would like to double check the act but, as far as I remember, we are restricted to funding Scottish vessels.

That is quite important.

I will confirm that in our written response, but I am reasonably confident that that is the case.

My understanding is that what we are deciding on today is the establishment of a scheme that allows you to make payments. The instrument does not set out anything further than that.

What stakeholder engagement will you carry out? How long will it take you to develop the guidance around the grant and loan schemes that you envisage will be introduced? We are looking for a timescale for the work that you say needs to be done to set out criteria.

The guidance would be a technical document. We would not look to consult on the technical guidance, but consultation will be undertaken on the strategies that I have talked about that are currently in development. That is the point at which that would be done.

On timescales, I will ask Caroline Cowan to talk about what happened when we established the marine fund Scotland and when we were able to have the guidance available for that.

One of the challenges is not knowing how much or if we were going to receive money until the UK spending review, which makes the timetable tight. Last year, if I remember rightly, we were able to have the scheme open in late May or early June, and to publish the guidance. We will try our best to do it sooner than that.

We have to bear in mind the links to the other strategies. We do not want to publish the technical guidance until we are sure that it is aligned with the wider strategy. Some of those strategies are in the public domain, such as the future fisheries management strategy.

On that basis, if you hope to open the scheme in May, when will you start the consultation process? How wide will the stakeholder group be?

It is not possible for me to set that out at the moment, because what we would look to fund is dependent on the committee approving the regulations today. Should that happen, we have a number of pieces of work under way that will help to inform what a future fund might look like, and we will look to develop that as soon as we can.

So, at the moment, there is no timescale planned for the consultation.

I cannot give a definitive timescale at the moment, but I would be happy to keep the committee updated as to when we intend to launch a round of funding.

That would be helpful—thank you.

Are there any further questions?

It is welcome that the Scottish ministers have the ability to set the criteria for what is a relatively new fund. What relationship does the fund that we are discussing have with the £100 million UK Government’s seafood fund? How will it complement that fund? That fund has tranches on innovation, infrastructure, training and skills. Is there a crossover here, or are you planning to fill the gaps through the stakeholder engagement to which Finlay Carson referred?

I assure the committee that we are in constant contact with our stakeholders anyway. I do not think that it is our role to plug the gaps in other funds. Ultimately, I come back to the point that the UK Government is spending directly in what is a devolved policy area. That funding should come to the Scottish Government for us to distribute according to our policy priorities. That is the problem with the UK seafood fund at the moment. It is causing duplication and confusion in relation to the activities that we are funding through the marine fund Scotland. That is not an ideal position and it is not where we want to be. It is a source of frustration to us that there is duplication when we should be able to spend according to our own priorities.

What are the duplications?

I will ask Caroline Cowan to outline the specific areas that are covered by the UK seafood fund, but there are a number of activities that we fund through the marine fund Scotland that are now also being covered by the £100 million.

That goes to the heart of my question. The UK seafood fund covers innovation, infrastructure, training and skills. I know that you have not yet established the detailed criteria for your fund, but will you seek to cover what the seafood fund does not cover in the activities that you have suggested that the SSI before us will cover?

I will look to establish a fund in accordance with our priorities. As I said, the pieces of work that are currently under way will help to shape the criteria for that fund, but it is not our job to simply plug the gaps in the funds of others. We must spend according to our own priorities. That is what we will seek to do with the creation of any new fund.

That concerns me, because if you want us to approve the SSI today, surely you should have done work on what the duplication is and should have that information to hand.

We have continued to raise that issue with the UK Government. Because we established the marine fund, there had been little engagement on the part of the UK Government in terms of—

What are the duplications?

That is what I asked Caroline Cowan to outline.

With the initial science funding, a lot of the funding went towards continuing an existing programme. On the innovation pillars and training skills, we do not really know what those are, as they have not been set out clearly. It is hard for us to assess duplication when we do not know what the UK Government’s criteria will be.

Does that mean that you are not ready to put forward the SSI?

That is not the case at all. The SSI will enable us to fund a broader range of activities. I do not think that we should wait for the UK Government before we look to do that or to fund the priorities that we see as being important in Scotland.

But, after all, it is public money.

Yes.

10:30  

Obviously, we would not duplicate. One project could not receive funding from both funds for the same work. We have agreement with our UK Government colleagues that we would assess for that kind of duplication.

Why have you not done that prior to this point?

Because the UK Government has not yet launched its fund—I think that it will launch it in the next financial year. I see your point now. It has not set out the criteria.

I have a quick question. What would be the implication, from the point of view of delays, if we did not approve the regulations today, given that we are giving the Scottish Government an opportunity to set up a framework to support loans and grants to fishermen?

It would mean that we would be restricted in what we could fund. We could still launch another round of the marine fund Scotland, but we would be able to fund only activity that falls within the existing scope of that. We would not be able to fund a wider range of activity.

Therefore, the regulations provide an opportunity for fishing communities to apply for a wider range of grants and loans to support their businesses and their sustainability.

Yes.

Emma Phillips would like to come in.

I want to add that we will respond in writing to the committee on the question about the funding of Scottish fishing vessels. The enabling powers are very clear that funding will be provided in relation to either “Scotland or the Scottish zone” or Scottish fishing vessels. Therefore, any funding relating to fishing vessels would be tied to Scottish fishing vessels. We can respond more fully to the committee’s question on that point in writing.

Thank you. That is most helpful.

As members have no more questions, we move to the formal consideration of the motion. I invite Mairi Gougeon to move motion S6M-02734.

Motion moved,

That the Rural Affairs, Islands and Natural Environment Committee recommends that the Aquaculture and Fisheries etc. (Scheme for Financial Assistance) (Scotland) Regulations 2022 [draft] be approved.—[Mairi Gougeon]

No member has indicated that they wish to debate the motion. The question is that motion S6M-02734 be agreed to. Are we agreed?

Members: No.

There will be a division. Please indicate your vote by raising your hand or by putting Y, N or A in the chat box.

For

Adam, Karen (Banffshire and Buchan Coast) (SNP)
Allan, Dr Alasdair (Na h-Eileanan an Iar) (SNP)
Burgess, Ariane (Highlands and Islands) (Green)
Carson, Finlay (Galloway and West Dumfries) (Con)
Fairlie, Jim (Perthshire South and Kinross-shire) (SNP)
Minto, Jenni (Argyll and Bute) (SNP)
Wishart, Beatrice (Shetland Islands) (LD)

Against

Hamilton, Rachael (Ettrick, Roxburgh and Berwickshire) (Con)

Abstentions

Villalba, Mercedes (North East Scotland) (Lab)

The result of the division is: For 7, Against 1, Abstentions 1.

Motion agreed to,

That the Rural Affairs, Islands and Natural Environment Committee recommends that the Aquaculture and Fisheries etc. (Scheme for Financial Assistance) (Scotland) Regulations 2022 [draft] be approved.

Thank you. That completes our consideration of the affirmative instrument. I thank the cabinet secretary and her officials for attending.

I suspend the meeting briefly to allow for a change of witnesses. We will reconvene at 10.40.

10:34 Meeting suspended.  

10:40 On resuming—