Fishing Rights and Structural Changes in the UK Fishing Industry, A. Hatcher and A. Read

Centre for the Economics and Management of Aquatic Resources (CEMARE)
University of Portsmouth, Portsmouth PO4 8JF, United Kingdom
<[email protected]>

1. INTRODUCTION

1.1 The UK fishing industry

The United Kingdom has a long history of fishing, reflecting its position as an island with a relatively long coastline and proximity to the productive fishing grounds of the European continental shelf (notably the North Sea, the English Channel and the West of Scotland).

The UK’s fisheries are heterogeneous and this is reflected in its complex fleet structure. The shape of the modern UK fleet is the product of technological and market changes together with political developments, in particular the loss of access to traditional distant-water grounds (particularly Iceland and Greenland) in the 1970s and the development of the Common Fisheries Policy (CFP) by the European Community (EC) (which the UK joined in 1972). Under the CFP (see below) there have been national quotas for most stocks since the early 1980s, coupled with a succession of fleet-reduction programmes (the so-called MAGPs) or multi-annual guidance programmes.

There are currently just over 8000 fishing vessels in the UK, although nearly three-quarters of these are inshore boats of less than 10m in length. Table 1 shows the trend in vessel numbers for the period 1994 to 1999 by vessel type (the sector shown corresponds to the classification used by the EC for measuring fleet size).

Table 1. Number and type of UK fishing-vessels 1994-99

Segment	1994	1995	1996	1997	1998	1999
Pelagic	68	67	58	49	50	46
Beam trawl	212	220	215	153	123	114
Demersal trawl	1644	1549	1451	1428	1318	1235
Lines/nets	300	267	224	214	187	172
Shellfish mobile	206	194	265	227	241	243
Shellfish fixed	305	283	339	352	311	301
Distant-water	13	12	15	13	14	12
Others	355	263	0	0	2	2
Inshore (£ 10m)	7195	6320	5606	5474	6027	5920
Total	10298	9175	8173	7910	8273	8045

Source: MAFF UK Sea Fisheries Statistics.

Employment in fishing has declined somewhat during the 1990s from around 21 000 to 18 000 jobs, but most of the decline has been in part-time employment. Full-time employment in fishing has been rather stable in recent years at around 15 000.

Table 2. Volume of landings by UK vessels (‘000 tonnes)

	1993	1994	1995	1996	1997	1998
Demersal	359.2	371.6	386.0	407.7	426.1	456.7
Pelagic	393.8	388.9	396.3	343.9	323.2	334.4
Shellfish	104.6	114.4	129.5	140.6	142.0	132.7
Total	857.6	874.9	911.8	892.3	891.3	923.8

Tables 2 and 3 show the total landings by weight and (nominal) value made by UK vessels during 1993-1999.

Cod, haddock and whiting are the main whitefish species caught by UK vessels and together they make up about 45% of the total demersal landings by weight and 36% by value. Other species landed in large quantities include ling, anglerfish, plaice, sand eels and blue whiting. Although classed as demersal the latter two species are fished by pelagic vessels and are the only species caught for reduction to meal. High-value demersal species caught in smaller quantities include sole, hake and megrim. Herring and mackerel account for roughly 80% of pelagic landings by weight and value. The most important shellfish species are scampi or Dublin Bay prawn (Nephrops) (which now rivals cod as the most valuable catch), crabs and scallops, which together account for nearly three-quarters of the value of shellfish landings.

Table 3. Value of landings by UK vessels (£ millions nominal)

	1993	1994	1995	1996	1997	1998
Demersal	356.4	364.8	369.4	383.5	368.5	372.2
Pelagic	56.4	58.4	64.3	90.0	88.4	113.8
Shellfish	113.6	138.2	156.4	163.0	165.0	175.4
Total	526.0	561.4	590.1	636.5	621.9	661.5

Source: MAFF UK Sea Fisheries Statistics

Scotland accounts for 70% by weight and 60% by value of UK landings. The majority of the Scottish fleet operates from the East coats ports of Fraserburgh, Peterhead and, to a lesser extent, Aberdeen; the Shetland Islands are an important base for the pelagic fleet. The major fishing activity of the Scottish fleet is demersal trawling for whitefish and Nephrops, and pelagic trawling for species such as herring and mackerel. Scallop dredging is locally important in south-west Scotland and the Isle of Man. Scottish vessels primarily operate in the Northern North Sea (ICES area IVa) and the West of Scotland grounds (ICES area VI). There has been considerable development of the Scottish fleet during the 1990s with significant investment in new vessels and technology. Major advances that have had an impact on the efficiency of the fleet are the development of twin-rig and pair trawling.

Atlantic Cod (Gadus morhua) - An endangered resource in the North Sea

The rest of the UK fleet is spread throughout England, Wales and Northern Ireland. The Northern Irish contribution is fairly small, and although locally important, there are only four ports with sizeable landings. The fishing fleet in Northern Ireland has contracted significantly since the early 1990s with a 27% decrease in vessel numbers. A similar contraction has been seen elsewhere in the UK. The traditionally important ports of the Humber region on the north-east coast of England have been in steady decline and, although still very important in terms of transhipment and processing, the catching sector is barely represented in the local ports. The south-west of England, particularly Cornwall, has also seen reduced numbers of vessels during recent years, although the value of landings remains high in the region.

The UK fleet is diverse and there are fishing methods that are particular to certain regions. The predominant fishing methods in the South-West are beam trawling in the English Channel for sole and plaice, gill netting and trawling for high-value demersal species such as hake and megrim, and scallop dredging. The main markets are those of Newlyn, Brixham and Plymouth. Small-scale demersal trawling, gill-netting and crab/lobster potting is predominant in the English Channel. The North Sea fisheries of the East Coast include beam trawling for plaice and sole, but the predominant method is demersal trawling for whitefish such as cod and haddock. Also of great importance is the North Sea Nephrops fishery, fished mainly by small-scale demersal trawlers of under-24m. The key markets are in Lowestoft (for beam trawlers), Grimsby, and to a lesser extent, Scarborough and Whitby.

1.2 International context and management responsibilities

The United Kingdom is a member of the European Community and its marine fisheries must therefore be managed within the framework of the EC’s Common Fisheries Policy (CFP)[7]. Since 1983 the CFP has provided for the setting of annual total allowable catches (TACs) for most commercially important stocks within the overall zone of extended fisheries jurisdiction created by the 200-mile limits of those Member States bordering the North-East Atlantic and adjacent seas. The TACs are divided into national catch quotas according to an established allocation mechanism which gives each Member State a fixed percentage share each year (although a number of intergovernmental quota swaps are regularly and routinely undertaken).

Fishing opportunities in the waters of third countries and in international waters (such as the NAFO area in the North West Atlantic) are negotiated by the European Commission on behalf of the Community and are allocated to Member States in a similar way.

While national fleets fishing in Community waters are subject to certain common controls under the CFP (in particular technical conservation measures such as minimum mesh sizes) each Member State is able to determine the means for allocating its quotas to the national fleet and for regulating quota uptake[8]. EC rules nevertheless require all vessels of 10m or more in length to keep a logbook of their activities, which must include details of the quantities of TAC species caught and retained on board, and the time and location of capture[9]. Inshore vessels less than 10m long are not obliged to carry logbooks but Member States are still required to monitor their landings to ensure that national quota-limits are respected.

2. USE RIGHTS AND THEIR TRANSFERABILITY

The historical development and detailed operation of the UK’s licensing and quota management systems are described in Hatcher and Read (2001). UK-registered commercial fishing vessels require a licence appropriate to the type of vessel and to the stocks targeted. As a general rule, quantitative restrictions on landings are imposed as licence conditions, but the majority of the offshore fleet belong to producers’ organisations (POs), which receive group-quota allocations from the Government (see below). For these vessels the licence conditions simply refer to the quota-management arrangements implemented by the PO to which they belong. The relatively small number of offshore vessels which operate independently have monthly landings-limits specified in their licences. Licences are issued annually by the Government Fisheries Departments[10] but licence-entitlements can be transferred between vessels, subject to certain conditions, and between ownerships.

There are four main categories of fishing-vessel licences: category “A” licences for offshore vessels over 10m authorise fishing for all the commercially important stocks subject to quotas under the European Community’s common fisheries policy; category “B” licences authorise fishing by vessels over 10m for a smaller number of quota stocks[11]; category “C” licences authorise fishing by vessels over 10m for non-quota species only (principally shellfish). All vessels of 10m or under in length are issued with a special class of Category A licence[12].

The licence system also controls vessel-capacity, measured in terms of GRT (in the process of conversion to the GT measure) and rated engine-power (in kW). Each licence carries an entitlement to employ a number of “vessel capacity units” (VCUs) which must match the number of units calculated for the vessel according to a standard formula[13]. If a licence is transferred to another vessel a VCU “penalty” is incurred (unless the recipient vessel is identical or has the same number of VCUs with a lower tonnage). The system also allows licences from a number of vessels to be aggregated onto a larger or more powerful vessel, again with an overall VCU penalty.

The capacity penalties and other licence-transfer rules have been altered a number of times since they were introduced ten years ago. The main rules are currently as follows:

i. in general, licences cannot be “upgraded” by transfer or aggregation, i.e. vessels under-10m to vessels over-10m, C to B, B to A, etc; also category A demersal species licences cannot be transferred onto pelagic vessels, and ordinary pelagic licences cannot be transferred to pelagic purse-seiners or freezer-trawlers[14]

ii. a 10% penalty is imposed for most licence-transfers (except in the case of vessels 10m-and-under, and pelagic purser/freezer licences)

iii. a 20% penalty is imposed for aggregating two licences and 30% for aggregating three or more licences (except in the case of pelagic purser and freezer licences, for which the penalty is 10%)

iv. no licence transfers or aggregations may result in any increase in either total tonnage or engine-power[15] and

v. there is an exemption from the penalties, subject to certain conditions, for distant-water vessels.

A system for regulating the uptake of national quotas is linked to the licensing scheme. This involves the allocation of percentage quota-shares each year mainly to groups of vessels, although some individual vessel allocations are made by Government in the case of pelagic and distant-water stocks. Until 1998 these allocations were based on the track-record vessels’ landings during the previous three years (the reference period for the majority of stocks), but in 1999 this was replaced by a system of fixed-quota allocations (FQAs). The allocations for 1999 and 1998 were based on track records over the period 1994-1996 which was the reference period for the 1997 allocations (in order to avoid any inflation of track record over a qualifying period)[16]. The 1994-1996 track records were converted into allocations of “quota units” with an initial value of 100kg to produce the 1999 allocations. Although a “one-off” reallocation of units between licences was allowed for the 1999 allocations to let the POs resolve outstanding quota deals (see below), the allocations for 2000 and thereafter, in theory at least, should be the same as the 1999 allocations on a percentage basis, i.e. adjusted only according to changes in the UK quota allocations[17].

In the case of the offshore (over-10m) fleet, each vessel, in effect, is given a set of notional individual quota allocations each year. By aggregating these individual notional quotas, group allocations are made by Government to Producers’ Organisations (POs)[18], which are then allowed to manage those allocations as they wish, for example, by means of monthly landings-limits from a common quota pool, or by allocating annual individual vessel - or company-quotas[19]. There are now 20 recognised POs in the UK representing roughly two-thirds of the fleet over 10m. The POs together account for some three-quarters of total landings by UK vessels and over 95% (by weight) of UK quota allocations in Community waters.

The quota-shares allocated to vessels that are not members of a PO (the so-called “non-sector”) are managed directly by the Government Fisheries Departments by monthly landings-limits. Uptake of the quota shares reserved for the inshore (10m and under) sector is not normally regulated unless the level of estimated landings dictates an early fishery closure, although increasing pressure on some inshore fisheries means that the use of monthly catch-limits is likely to become routine for this sector too.

Quota is allocated in 100kg units and attached to the vessel’s licence, but individual-quota allocations remain entirely notional except for members of POs operating an IQ system, where the PO usually allocates each vessel an individual-quota based on its FQA.

As licences are transferred and aggregated, so are the FQAs attached to them. Clearly, however, there is no incentive for vessels to acquire notional-quota unless they can realise an individual quota-entitlement. Acquiring quota through the licence market is therefore only valuable for vessels which belong to a PO that operates an internal IQ system, although a “quota pooling” PO may not accept a new member unless he carries an adequate number of units. It is also not possible for (notional) quota to be divisible in movements between individual vessels through the licence transfer/aggregation system: FQA is transferred in its entirety.

The feature of the management system that greatly facilitates quota-trading is the relative freedom the POs have to exchange quota between themselves. As the quota management-system developed, POs were allowed to swap quota but initially all swaps had to balance in terms of “cod equivalents” (by value). This was later relaxed to allow non-balancing swaps, and then to allow “gifts”, i.e. one-way movements of quota. Although all quota movements are subject to Government approval, in practice POs can now trade quota between themselves in any quantity, and the Government takes no interest in any financial transactions that may accompany quota-exchanges or gifts.

Since quota can be traded between POs, it can effectively be traded between a member of one PO and a member of another PO, either “permanently” (a straight quota sale) or on an annual lease basis. Under the FQA system as it is presently configured, however, a sale of one tonne of quota from a vessel in one PO to a vessel in another PO necessitates the transfer between the POs of one tonne of quota each year in perpetuity. This assumes that no annual adjustments of vessels’ FQAs are permitted to take account of quota movements either between, or indeed within, POs (where quota-trading is obviously much more straightforward), which is the Government’s current stated policy. At the time of writing the Fisheries Departments have indicated that annual adjustments will not be allowed, but industry pressure may result in a change of policy.

A further significant feature of the UK quota management-system is that it is essentially an informal arrangement between Government and industry. Legislation provides for the issuing of fishing licences and for the attachment of certain conditions to those licences, including quantitative restrictions on landings. There is no legal basis, however, for the notional individual quota-allocations which are used to calculate group-allocations, they are merely an administrative tool used by the Government Fisheries Departments in the exercise of the Government’s discretionary right to issue licences in order to regulate sea fishing. Fishermen have no legal right to receive a licence nor any legal title to a share of national quotas[20].

3. MEASUREMENT AND ADJUSTMENT OF FISHING CAPACITY

3.1 Objectives

UK policy on the measurement and adjustment of fishing-capacity is largely dictated by the fisheries structural policy of the EU[21]. This requires member states to adjust their fishing capacity in line with the EU’s so-called Multi-Annual Guidance Programmes (MAGPs) which impose target levels of fleet capacity measured in terms of gross tonnage (GT) and engine-power (in kW). Although the MAGPs date back to 1984, it was the third MAGP for 1993-1996 that first imposed significant cuts in (nominal) fishing capacity on the EU member states. This section concentrates on the UK’s attempts to meet the objectives of MAGP III through a combination of measures, including a series of annual decommissioning schemes and the licence “market”. Reference is also made to MAGP IV, which covers the period 1997-2001. It should be appreciated that the nominal capacity-reductions required under the MAGPs are dictated simply (and more or less pro rata) by biological estimates of excess fishing mortality for the various exploited stocks.

The MAGPs divide fishing fleets up by sector, with each segment by and large being defined according to fishing method, although in some cases sectors are distinguished by vessel size or target species. Targets must be achieved for each sector as well as overall. For the UK the third MAGP, approved by the European Commission in December 1992, required the UK Government to achieve an overall cut in the size of the registered fishing fleet from 214 733GRT and 1 228 922kW (the reported situation at 1 January 1992) to 173 455GRT and 995 627kW by 31 December 1996[22]. These figures represented overall reductions of 19.2% in GRT and 19.0% in engine-power (measured in kW)[23]. The UK’s targets were however amended in June 1995: the reductions required for the “Nephrops trawl” and “shellfish mobile” fleet-segments were relaxed in the light of information supplied by the Government to the Commission on the rates of by-catch of demersal species by these segments[24]. As a result, the overall reductions required for the UK fleet as a whole were reduced slightly to 17.6% in GRT and 17.4% in engine-power.

Table 4 summarises the original and revised objectives for each of the UK fleet-segments under MAGP III. It can be seen that the biggest cuts were required for the “beam trawl” and the “demersal trawl and seiners” segments. For other segments the cuts required were intended only to take account of the effects of technical progress. Under the terms of MAGP III, up to 45% of the overall reductions required could be achieved by reductions in activity (measured in terms of days at sea)[25].

Table 4. UK objectives by fleet-segment under MAGP III

Fleet segment		Situation at 1.1.92	Original objective for 31.12.96	Initial % reduction required	Amended objective for 31.12.96	Final % reduction required
Pelagic trawl	GRT	25178	22633	10.1%	22633	10.1%
	kW	80858	72060	10.9%	72060	10.9%
Beam trawl	GRT	23062	17621	23.6%	17621	23.6%
	kW	107542	81465	24.2%	81465	24.2%
Demersal trawl and seiners	GRT	71956	51746	28.1%	51746	28.1%
	kW	368194	262505	28.7%	262505	28.7%
Nephrops trawl	GRT	18140	13860	23.6%	16306	10.1%
	kW	100142	75859	24.2%	89246	10.9%
Netters liners and other static gears	GRT	12121	10896	10.1%	10896	10.1%
	kW	58503	52137	10.9%	52137	10.9%
Shellfish mobile	GRT	6007	4320	28.1%	5400	10.1%
	kW	34725	24757	28.7%	30947	10.9%
Shellfish fixed	GRT	2636	2370	10.1%	2370	10.1%
	kW	18397	16395	10.9%	16395	10.9%
Distant-water	GRT	10987	9876	10.1%	9876	10.1%
	kW	23829	21235	10.9%	21236	10.9%
Mixed (non-trawlers) <10m	GRT	24438	21968	10.1%	21968	10.1%
	kW	304630	271484	10.9%	271484	10.9%
Others >10m	GRT	20208	18165	10.1%	18165	10.1%
	kW	132102	117728	10.9%	117728	10.9%
Total	GRT	214733	173455	19.2%	176981	17.6%
	kW	1228922	995627	19.0%	1015204	17.4%

Note: The figures for the fleet situation at 1.1.92 do not include vessels registered in the Isle of Man or the Channel Islands (estimated to represent an additional 2 500 GRT and 33 000kW at the time); the objectives however do include this part of the UK fleet.

3.2 Implementation

3.2.1 Technical measures

In February 1992 the UK Minister of Agriculture, Fisheries and Food announced a package of measures designed to “reduce fishing effort over the period up to 1996, to meet a target which we shall need to quantify and agree with the Commission in line with our Community obligation under the 1992-1996 Multi-Annual Guidance Programme”[26].

These measures were to include the following:

i. the introduction of (tradeable) days-at-sea entitlements
ii. a series of annual decommissioning schemes
iii. increased capacity penalties for fishing-vessel licence-transfers and aggregations and
iv. the extension of restrictive licensing to vessels of 10m-or-under.

3.2.2 Days-at-sea limitation

At the end of 1992 new primary legislation was enacted to enable days-at-sea entitlements to be attached to fishing-vessel licences, and secondary legislation to establish the general rules for days allocations was put in place in May 1993[27]. The Government had originally planned to freeze effort at 1991-levels in 1993, and then to reduce it as necessary in the years 1994-1996, depending on the contribution of other measures to overall capacity-reduction[28]. Under the terms of MAGP III, a reduction of 8.6% in overall fleet activity could have been made to contribute a 45% achievement of the final objectives.

However, opposition from the fishing industry led first to a postponement of the scheme’s implementation until 1994, and then to an indefinite suspension following a legal challenge by the National Federation of Fishermen’s Organisations, which was referred by the British High Court to the European Court of Justice. In October 1995 the Court found in favour of the UK Government, but the Government decided against trying to reintroduce the scheme at this time (ostensibly because of the introduction in 1996 - in principle at least - of effort-limits for all Community vessels over-18m fishing in Western waters).

3.2.3 Decommissioning schemes

It was originally intended that a decommissioning scheme would run for two years with a total (gross) budget of £25m. In June 1994 the scheme was extended for a third year, and in January 1995 it was extended until the 1997-98 financial year with the total budget being increased to £53m[29].

The key operational features of the decommissioning schemes were as follows: (a) vessel owners were invited to submit tenders for compensation, which were ranked in terms of £ per vessel-capacity unit withdrawn[30]; (b) successful applicants had to surrender their licences and the vessels had to be scrapped after de-registration (despite the other options under EC rules of disposal outside the Community, or use for purposes other than fishing); and (c), eligible vessels had to be UK-registered (not registered in the Isle of Man or Channel Islands), seaworthy (with appropriate safety certificates if necessary) and over 10m in length. In order to be consistent with EC rules, grants were also limited to vessels that were at least ten years old. It was the responsibility of the vessel owner to supply proof of scrapping by the required date (and so, by implication, to bear all of the costs involved in scrapping the vessel).

The first scheme was announced in May 1993. In addition to the general rules outlined above, the following criteria were applied:

i. the vessel must have been fishing for at least 100 days in 1991 and in 1992 and

ii. the vessel’s licence had to be no less restrictive in terms of the stocks authorised than at 27.2.92 (the date of the first announcement of the decommissioning schemes).

i. the vessel must have been fishing in Community waters for at least 100 days in 1992 and in 1993 as a UK-registered vessel and

ii. the vessel’s licence had to be a “full pressure stock licence” (the old equivalent of a category A licence).

i. the vessel must have been fishing in Community waters (or Norwegian waters south of 62°N) for at least 100 days in 1993 and in 1994

ii. the vessel’s licence had to be a category A or category B licence (or category C with certain individual species entitlements) and

iii. the vessel should not have been predominantly involved in the Nephrops fishery in 1994.

i. the vessel must have been fishing for at least 75 days (the EC minimum) in 1994 and in 1995 and

ii. the vessel had to have a valid licence.

Although MAGP III finished at the end of 1996, the 1997-scheme was designed to make up any shortfall under MAGP III. The main changes in the eligibility criteria were that applications were once more restricted to vessels with category A licences, and that Nephrops trawlers were again excluded (the Government left open the option of excluding vessels from other segments which were found to have met their MAGP targets). Most significantly, the industry had by now agreed that landings track-records could be retained by owners who decommissioned their vessels.

3.2.4 Licensing

The UK Government clearly hoped that the fishing-vessel licensing-system would make a significant contribution to reducing fleet-capacity in line with the MAGP III targets, in particular through increased capacity penalties for licence transfers and aggregations, and through administrative changes designed to limit the expansion of certain fisheries.

The UK licensing-system was and remains complex, having evolved in largely a piece-meal manner since 1984 as new restrictions were introduced in order to control the growth of various fisheries (and, in some cases, to try and limit the size of the Spanish - and Dutch-owned sectors).

By 1992, restrictive licensing applied to all vessels over-10m but still did not apply to vessels of 10m-or under. Following a period in which there were rather complicated restrictions on transferability, most licences had since 1990 been transferable both between vessels and between owners, but capacity penalties (described in Section 2. above) were incurred whenever licences were transferred or aggregated. A number of licensing measures were introduced during this period as follows:

i. In 1992 the aggregation of pressure stock licences onto beam trawlers in ICES Area IV was dis-allowed, and the VCU penalty for all transfers and aggregations was increased to 20%.

ii. In 1993 restrictive-licensing was extended to the sector 10m-and-under. The VCU penalty was again reduced to 10% for aggregations where the increase in engine-power was no more than 15% and for all over-10m licence-transfers. There was to be no penalty applied to transfers of vessels 10m-and-under (no increase in VCUs was allowed) but no licence-transfers from vessels 10m-and-under to vessels over-10m, or aggregations combining both under-10m and over-10m licences were permitted. In addition, no more than two vessels in the 10-17m band could be involved in aggregations. From 1993 it was also no longer possible to retain indefinitely a licence entitlement that was not actually assigned to a vessel.

iii. In 1995 the overall structure of the licensing system was revised. All licences were now fully transferable independently of vessels, but still as a general rule only similar licences could be aggregated. An exception was made for purse-seiners and freezer-trawlers which could receive demersal licences for engine modifications up to +15% with a 10% VCU penalty. Also in 1995 the penalty for aggregating three or more licences was increased to 30% (except in the case of purse-seiners and freezer-trawlers), aggregations of more than two licences between 10-17m were now permitted, and Area IV beam trawl licences could now be aggregated if the resultant engine-power did not exceed 1500kW. Another significant change at this time was that vessels’ landings track-records (which were normally assessed over the previous three years) were now attached to the licence rather than the vessel.

iv. Early in 1996 it was announced that no further licence transfers or aggregations would be allowed which would increase either tonnage or engine-power, and that no aggregations of vessels 10m-and-under would be allowed to result in a VCU total of more than 100.

3.3 Results

The data in Table 5 are taken from the European Commission’s report on the progress of the MAGPs at the end of 1996[31]. They are based on the Community fleet register but take account of the UK Government’s reallocation of vessels from the “others” segment[32]. From the Table it appears that at the end of 1996 for the UK fleet there was still an overall reduction-backlog of some 5.0% in GRT and 2.9% in engine-power, but for certain fleet-segments the deficit was more significant, in particular for the segments: beam trawl, demersal trawl, and shellfish (fixed). Because of discrepancies between the UK register and the Community register, however, which affected the figures for 1992 as well as 1996, this situation was a provisional result.

Table 5. UK progress towards MAGP III targets

Fleet segment		Situation at 1.1.92	Situation at 31.12.96	Revised objective for 31.12.96	% reduction still required
Pelagic trawl	GRT	25178	27132	23541	13.2%
	kW	80858	73896	77955	--
Beam trawl	GRT	23062	20966	18393	12.3%
	kW	107542	109259	86467	20.9%
Demersal trawl and seiners	GRT	71956	64111	57559	10.2%
	kW	368194	323184	300176	7.1%
Nephrops trawl	GRT	18140	14350	18123	--
	kW	100142	83820	101018	--
Netters liners and other static gears	GRT	12121	14588	12712	12.9%
	kW	58503	54738	63910	--
Shellfish mobile	GRT	6007	8110	8125	--
	kW	34725	45558	48606	--
Shellfish fixed	GRT	2636	5839	5094	12.8%
	kW	18397	36539	34054	6.8%
Distant-water	GRT	10987	7107	9876	--
	kW	23829	18120	21236	--
Mixed (non-trawlers) <10m	GRT	24438	19577	21968	--
	kW	304630	264868	271482	--
Others >10m	GRT	20208	0	0
	kW	132102	0	0
Unclassified	GRT	--	2760	--
	kW	--	24518	--
Total	GRT	214733	184539	175391	5.0%
	kW	1228922	1034498	1004903	2.9%

Notes: 1992 figures from amended MAGP III for the UK (Commission Decision 95/243/EC); the 1996 figures are from the Community register and still do not include all vessels registered in the Isle of Man and the Channel Islands (see text).

Table 6. UK progress towards MAGP III targets (MAGP IV figures)

Fleet segment		Situation at 1.1.97	Revised objective for 31.12.96	Situation at 1.1.98	Objective for 31.12.01 under MAGP IV
Pelagic trawl and purse seines	GT	37453	34876	41220	34876
	kW	71876	82168	69757	82168
Beam trawl	GT	28240	26062	26323	26062
	kW	117616	103054	106143	103054
Demersal trawls seines and Nephrops trawls	GT	116581	120630	115468	120630
	kW	400127	422876	390150	422876
Netters liners and other static gears	GT	16431	15854	16282	14538
	kW	51977	67364	51550	61744
Shellfish mobile	GT	11766	11615	10197	11552
	kW	55648	51232	46872	50958
Shellfish fixed	GT	6413	6267	7305	6242
	kW	44463	35895	49512	35768
Distant-water	GT	15567	14883	15829	14883
	kW	25400	23741	25004	24281
Small-scale coastal (<10m)	GT	20120	21901	19991	21901
	kW	286367	286154	287554	286154
Total	GT	252571	252088	252615	250684
	kW	1054474	1072484	1026542	1066463

Notes: the 1997 GT figures include some estimations and are therefore subject to revision; the 1996 GRT objectives were converted to GT according to the relationship between GT and GRT for the fleet at 1.1.97.

The four decommissioning schemes operated during 1993-96 removed a total of 578 vessels over-10m from the UK fleet, representing 19% of the 1992 total of 3036 vessels over 10m. Table 7 shows the capacity withdrawn by segment, compared to the 1992 situation, and the 1996 objectives as specified in the 1995 amended MAGP for the UK. Because of the adjustments to the UK register during 1996-7, these are probably the most appropriate comparisons available.

It is apparent that while the decommissioning schemes removed around a half of the required tonnage, they removed only one third of the required engine-power. Certain fleet segments (Nephrops-trawlers, shellfish-mobile and shellfish-fixed) were clearly over-represented in the decommissioning process, while other segments were under-represented.

The total gross expenditure on the 1993-6 schemes was £36.24m. The 1997-scheme, which cost around £14.3m, removed a further 108 vessels and 4406 GRT[35]. At the time of writing details of the capacity removed under this last scheme are not currently available.

3.3.2 Fishing vessel licensing

The only data presently available on the effects of licence-transfers and aggregations over the period 1992-1996 come from a 1997 report on the decommissioning schemes undertaken for the UK Government[36]. No data are currently available on transactions concerning vessel-licences 10m-and-under in the inshore sector, or the results of licence-transfers and aggregations since 1996.

During the period a total of 397 transactions involving vessels over-10m (measured in terms of the number of recipient vessels) resulted in a reduction of 39 737kW (17%) from the donor licence total of 232 478kW. This represented some 19% of the overall reduction in engine-power required under MAGP III (based on the 1995 amended targets). The contribution of licence transfers and aggregations in terms of tonnage is not known because of changes from GRT to GT, and because the VCU system does not take account of vessel tonnage directly.

Table 7. Capacity withdrawn by decommissioning 1993-1996

Fleet segment		Situation at 1.1.92	Amended objective for 31.12.96	% reduction required	Nominal capacity with-drawn	% 1992 capacity with-drawn
Pelagic trawl	GRT	25178	22633	10.1%	437	1.7%
	kW	80858	72060	10.9%	850	1.1%
Beam trawl	GRT	23062	17621	23.6%	2138	9.3%
	kW	107542	81465	24.2%	9791	9.1%
Demersal trawl and seiners	GRT	71956	51746	28.1%	6916	9.6%
	kW	368194	262505	28.7%	25805	7.0%
Nephrops trawl	GRT	18140	16306	10.1%	5174	28.5%
	kW	100142	89246	10.9%	17134	17.1%
Netters liners and other static gears	GRT	12121	10896	10.1%	841	6.9%
	kW	58503	52137	10.9%	3849	6.6%
Shellfish mobile	GRT	6007	5400	10.1%	713	11.9%
	kW	34725	30947	10.9%	4539	13.1%
Shellfish fixed	GRT	2636	2370	10.1%	697	26.4%
	kW	18397	16395	10.9%	3735	20.3%
Distant-water	GRT	10987	9876	10.1%	228	2.1%
	kW	23829	21236	10.9%	1214	5.1%
Mixed (non-trawlers) <10m	GRT	24438	21968	10.1%	0	0.0%
	kW	304630	271484	10.9%	0	0.0%
Others >10m [non-active/unknown]	GRT	20208	18165	10.1%	500	2.5%
	kW	132102	117728	10.9%	3209	2.4%
Total	GRT	214733	176981	17.6%	17643	8.2%
	kW	1228922	1015204	17.4%	70126	5.7%

Notes: 1992 figures and 1996 targets as in 1995 amended MAGP; data on decommissioned vessels from MAFF published in Nautilus Consultants (1997).

4. CONSEQUENCES OF TRANSFERABLE USE RIGHTS

4.1 Licence and quota trading

Obtaining comprehensive and reliable data on licence-trading in the UK is extremely difficult, since the Government takes no interest in the financial transactions that accompany licence-transfers, and all trading takes place privately either directly or via licence brokers. The Government also does not routinely produce statistics on licence-transfers and aggregations. Nevertheless, there is no doubt that the volume of licence and quota-trading has increased greatly since 1995.

The report on the UK decommissioning schemes[37] investigated trends in licence/track-record prices during the period of MAGP III. Data was obtained from licence-brokers showing that in early 1997 track-record prices (as a component of total licence values) ranged from £350/t for herring, to £1200/t for cod, and up to £10 000/t for sole. The figures are reproduced in Table 8 below. The consultants also obtained data on licence prices over the period 1993-1996. These figures are summarised in Table 9 (with the pre-1995 licence-types expressed in terms of their current equivalents).

It is difficult to interpret the apparently chaotic price movements during 1993-1995, but the big jump in the prices for category A licences (which authorise fishing for all quota stocks) from 1995 to 1996 reflects the marked strengthening of demand for licences which started to occur around this time.

Table 8. Average track-record prices in 1997

Species	£ per tonne
cod	1200
plaice	1200
saithe	2500
hake	2000
monkfish (anglers)	3300
sole	6000 to 10000
herring	350
mackerel	700

Table 9. Average licence prices (per VCU) 1993-1997

Licence type category	£ per VCU
	1993	1994	1995	1996
A	179	269	184	776
A purser	na	395	na	2083
A beam trawl	700	391	276	1222
B	62	189	88	182
C	47	na	na	184

The report (1997) considered only that there was “some evidence” of quota-leasing arrangements between PO members. We find that in recent years quota-leasing and selling within and between POs has grown significantly in importance. A report for the Scottish Whitefish Producers Association[38], which represents the majority of catching power in the Scottish demersal fleet, found that almost a third of the Scottish fleet had bought quota in some form or other during the conversion of rolling track records to FQAs. Leasing, although becoming more widespread, was less prevalent at the time, with less than 10% of vessels leasing quota. This number, however, is still much greater than seen in previous years, when the only leasing that had taken place was between Dutch-owned vessels in the North Sea Fishermen’s Organisation and in the Fife Fish Producers Organisation, which had already had experience of this while operating under the Dutch ITQ system. The same report indicated that the ten or so quota-trading and leasing arrangements currently in operation would increase rapidly, as skippers coming up for retirement opt to keep their quota entitlements and lease them out.

The average quota-prices given in Table 10 were obtained from the records of a company representing a significant proportion of the quota-trading in the UK. This company remarked that the prices of a number of stocks were largely driven by purchases by foreign-owned vessels (so-called “quota-hoppers”), with Spanish interests buying quota for monkfish (angler) and hake, and Dutch-owned companies buying quota for North Sea sole and plaice.

4.2 Impact of trading on fleet structure

We estimated previously that from 1992-96 around 45% of the observed decrease in the capacity of the fleet over-10m (in terms of engine-power in kW) was attributable to decommissioning, while around 26% was achieved through the capacity-penalties applied to licence-transactions.

The figures for the UK fleet for the beginning of 1997 (from Table 6) and the latest figures available from the Ministry are shown in Table 11. There has been a 3% overall increase in registered tonnage and a 7% decrease in rated engine-power[39]. However, this result masks some significant changes in the capacity of certain fleet segments. For example, the tonnage of the pelagic sector increased by 27%, while the beam trawl sector decreased by 13% in GT and 22% in engine-power.

Table 10. Average quota-prices (per tonne) 1995-2000

Quota stock	£ per tonne
	1995	1996	1997	1998	01/1999	08/1999	01/2000
NS cod	250	400	1000	1000	1500	2000	2200
NS haddock				1000	1200	1800	3000
NS plaice		1800	2000	1800	1500	1500	1200
NS sole		10000	10000	8000	8000	8000	10000
NS anglers				2500	2400		2200
NS Nephrops				1500	2500		3500
WOS anglers				3500	5500		6000
WOS Nephrops				700	1800		2000
VIIa sole					7000		6000
VIIe sole					7000		9000
VIIfg sole					8000		9000
VIIa plaice					1000		1000
VIIde plaice					1200		1200
VI/VII hake				2500	3500		4500
VII anglers				2500	3500		5000
VII Nephrops				1000	1500		1700

NS = North Sea (ICES area IV); WOS = West of Scotland (ICES area VI); VII = ICES Area VII.

The increasing trade in licences certainly had an effect on the operation of the 1992-97 decommissioning schemes, as did the decommissioning schemes on the licence market, by reducing the overall supply of licences and injecting liquid capital into the industry. It became clear during the schemes, that the fleet segments with the highest average licence-plus-vessel values were the least represented among the vessels successfully decommissioned. Given the current level of licence-prices, a tender-based decommissioning scheme, even based on EC maximum rates[40] would now be likely to remove few vessels from the most profitable fleet segments.

Whether the recent growth in quota-trading will start to have a significant effect on fleet capacity remains to be seen. Nevertheless, there are indications at least that the ability of many within the industry to separate quota and licence may result in a rationalisation of capacity.

For example, licences are currently allowed to lie unused as entitlements for 3 years. A number of vessel-owners have sold vessels, and for 2 years at least are renting their quotas, while keeping their licences and deciding whether to replace the vessels or leave the industry all together. In addition, the few deals that have taken place in the pelagic sector within the last 3 years have seen quota divided, in several cases, between purchasers. This is certainly having at least a short-term effect on capacity, as the licences are currently unused while the quota is being caught by others.

Table 11. Changes in UK fleet capacity 1997-9

Fleet segment		Situation at 1.1.97	Situation at 31.12.99	% change
Pelagic trawl and purse seines	GT	37453	47661	27%
	Kw	71876	77209	7%
Beam trawl	GT	28240	24498	-13%
	kW	117616	91417	-22%
Demersal trawls, seines and Nephrops trawls	GT	116581	116752	0%
	kW	400127	357128	-11%
Netters, liners and other static gears	GT	16431	15046	-8%
	kW	51977	43968	-15%
Shellfish mobile	GT	11766	12317	5%
	kW	55648	52607	-5%
Shellfish fixed	GT	6413	6443	0%
	kW	44463	43353	-2%
Distant-water	GT	15567	16664	7%
	kW	25400	25015	-2%
Small-scale coastal (<10m)	GT	20120	20309	1%
	kW	286367	288239	1%
Total	GT	252571	259812	3%
	kW	1054474	979473	-7%

5. CONCLUDING REMARKS

The operation of a series of annual decommissioning schemes during the 1990s, and the changing nature of the possibilities for quota-trading under the UK’s quota-management system, makes it difficult to attribute any changes in the size and capacity of the fleet to the emergence of transferable quota rights. From the figures that are available, the licence market did, however, contribute to the reduction in fleet size that was observed during the course of the decommissioning schemes.

Nevertheless, as might be expected, there are signs that the huge growth in quota-trading in the last couple of years may be starting to lead to some rationalisation of fleet capacity, if yet on a relatively small scale. Whether there will be a significant rationalisation in the future depends on the direction taken by the Government policy on quota-rights, and hence on the subsequent characteristics of the quota-market as well as the efficiency of quota-enforcement.

6. LITERATURE CITED

Hatcher, A. and A. Read 2001. The Allocation of Fishing Rights in UK Fisheries. In: Shotton, R. (Ed.). Case Studies on the Allocation of Transferable Quota Rights in Fisheries. Fish. Tech. Pap. No. 411, FAO, Rome.