Will Brexit spell the end of fishing quotas?

Griffin Carpenter

The Leave campaign promised that Brexit would help fishers ‘take back control’ of Britain’s fishing waters and stocks. But how quotas are allocated has always been a national decision.

Last year’s EU referendum put the national media spotlight on UK fisheries for the first time in decades.

The Leave campaign promised that Brexit would help fishers ‘take back control’ of Britain’s fishing waters and fish stocks. With Theresa May’s finger now on the Article 50 trigger, debate is likely to continue around how European fish stocks are shared and what tariffs are imposed on British fish products in the EU.

But on fisheries, Brexit was sold with false promises. One of the most important issues in fisheries management – how limits on fishing (quotas) are allocated to the fishing fleet – is already up to national governments to decide; the UK government always had the power to change our fisheries for the better.

So, what should be done?

Myths and misconceptions

It is important to clear up some myths and misconceptions on UK fisheries that have plagued many proposals for reform.

First, there are two distinct issues in managing fisheries: what is the total limit on fishing that would keep fish stocks sustainable (the size of the pie), and who gets access to these rights (how it is divided). Second, fishing rights are allocated by national governments, not the EU. Third, under quota management in the EU, overfishing has significantly decreased and many fish stocks are now increasing in size. And fourth, the socio-economic state of the UK fishing fleet is one of substantial and increasing profits for the large-scale fleet and low profits for the small-scale fleet, while fishing jobs are in decline in the UK, the EU, and across the developed world.

Fishing quotas to serve the public interest

There are many different ways to manage fishing quota. My new report looks at 12 EU countries, the systems these use, and how these systems perform across 12 objectives. These objectives are based around ensuring that the system of fishing rights is good for fishers, good for society and has a good process. Using a series of qualitative indicators, quantitative indicators and expert interviews to measure each objective, the quota systems of the UK and other counties are assessed against these objectives, producing a ranking from low to high.

 The results reveal that the UK system has low performance on many of the objectives. In general, the UK quota system preserves a status quo in fisheries by guaranteeing quota rights to those with large, historical track records. This system benefits those who have acquired the track records, but it does not benefit small-scale fishers who were not required to record their catches during the reference period, young fishers trying to enter the industry, or the public purse. Neither does this fixed allocation incentivise fishing that protects the ecosystem and fishing communities.

There are several reforms that could improve this situation proposed in the report:

Fishing quotas should be publicly owned.

As fish stocks are public resource, fishing quotas should ultimately be owned by the government but granted to individuals as time-limited use rights.

Fishing quotas should be reallocated.

As the small-scale sector was disadvantaged in the initial allocations and continues to struggle financially, reallocation is needed for fairness and to protect small-scale fishing communities. Fishing quota should also be set aside for young fishers to enter the industry.

Fishing quotas should incentivise better fishing practices.

Using sustainability and socio-economic criteria in quota allocation, not dissimilar from emerging practice in farm subsidies, can encourage the development of an industry that delivers wider benefits while also ensuring security in planning and investment.

Fishing quotas should give greater control to fishers.

New industry institutions, particularly for the small-scale sector, can manage some quota functions for its members and an online peer-to-peer quota swapping platform would allow fishers to control their quota allocations by exchanging the species they have with the species they need.

Fishing quotas should help pay for management.

The costs of managing fisheries is high, and the fishing industry should share in this cost through a tax on the value of landings.

What of the other proposals that have been put forward?

Fishing quotas for market?

The Institute for Economic Affairs (IEA) has proposed that fishing quotas become fully tradable commodities, like in Iceland, where quotas can be bought and sold on an open market. The Adam Smith Institute has a similar proposal, coupled with a nautical border around British waters that is policed by air and naval patrols (the IEA calls this “protectionist policy” that would lower fishing efficiency).

The insistence from the Institute for Economic Affairs and the Adam Smith Institute on private property rights misunderstands the nature of fishing rights as fish cannot be identified and delineated as property, so many of the positive incentives of property rights do not apply. The market-based approach of the proposal misdiagnoses the problem of fleet performance in the UK, as it is the low-capital, small-scale fleet that is currently suffering.

As can already been seen through high quota leasing prices in the UK, a quota market, at least as proposed, would only increase the market power of the large actors and result in small-scale fishers leaving the industry in large numbers (as has been the case with individual transferable quotas used elsewhere). This effect may be the implicit objective of a quota market, but critically it would harm fishing communities and work against the stated objectives of the UK government. In fact, in the last election every political party manifesto promised to do more to help ensure that coastal fishers, and the communities that rely on them, are supported.

From fishing quotas to days-at-sea?

The proposal from Fishing for Leave and several fishing associations to end quota management in favour of limits on days-at-sea is significant for what is not said, as much as what is said. Management through days-at-sea is an attempt to solve the problem of ‘choke species’ in quota management (where fishers catching a mix of species will exhaust their quota for one species and need to stop fishing, even if quotas for other species are still held).

While a limit on days-at-sea would mean that a whole mix of species could continue to be caught, this has not ‘solved’ the choke species problem in the way that avoiding catches of this species would, it just means that fishing continues despite overfishing the vulnerable species. Given that the UK government has stated it will continue with the objective to end overfishing for all commercial species, then a limit on days-at-sea would be critically low and worsen economic performance. This is simply a choke by another name.

In addition to not solving the choke species problem, a transition to days-at-sea would generate new problems for fisheries management. As already demonstrated, getting the right balance between the number of days-at-sea that protects fish stocks while allowing for financial viability is a very difficult calculation. This is only further complicated by the practice of ‘technological creep’ as the catching efficiency of fishing vessels, and thus the pressure on fish stocks, continues to improve. Fishers seeking to maximise their catches per day would have the perverse incentives to fish harder, closer to crowded inshore waters, and more dangerously.

There is also the issue of how to convert current fishing rights into effort limits, especially for small-scale vessels (under 10 metre) that do not possess rights but fish out of a pool. The Fishing for Leave proposal addresses part of this issue by proposing to remove the small-scale vessels (under 10 metre) from effort restrictions entirely. This would be a huge error, as taken all together, small-scale vessels can have a large impact on fish stocks and restrictions must remain for all fishing vessels if we are to ensure long-term sustainability.

For these reasons and many others, the trend in fisheries management around the globe is in the reverse direction: from effort management to quota management. Many countries have started with management on effort such as days-at-sea but as management techniques have improved, most developed fisheries have transitioned to quota management. While Fishing For Leave point to the Faroe Islands as a model to replicate in the UK, their fish stocks are overexploited, financial performance is poor, and there are calls to do away with the system in 2018.

British fishing quotas for British people?

Fishing for Leave and some fishing organisations have also proposed that fishing quotas (or effort limits) should only be held by British citizens to ensure that the economic benefit of fishing activity stays in the UK. This is the issue of Dutch and Spanish fishers ‘taking’ British fishing quotas by purchasing UK fishing licences from UK fishers. A requirement for UK citizenship was introduced by Margaret Thatcher in 1988 under the Merchant Shipping Act, but was later overruled by the European Court of Justice as discriminatory under European Community law.

While the IEA opposes such a plan as it restricts fishing rights from moving to the highest bidder, it is true that national fishing quotas should have a wider public benefit. Accomplishing this objective by discriminating on the grounds of citizenship is a blunt and unsavoury instrument, but there are better alternatives. The landings tax proposed in our report could deduct port dues and other national levies that are paid, meaning that there is a financial incentive to use British ports. This proposal would generate economic activity in UK fishing communities (the intended target) rather than simply benefitting quota owners that are British citizens.

What next?

Regardless of how Brexit negotiations pan out, the UK government should reform its allocation policies so that fishing rights are publicly owned, reallocated to ensure viability, incentivise better fishing practices, controlled by fishers, and help pay for management. Without reforming how fishing quotas are allocated, changes to UK fisheries from Brexit will only reinforce a broken system./OD