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Executive Summary
Introduction
1. Starting in May 2005, we were invited to undertake a review of the Sea Fish Industry Authority ( SFIA), looking at its roles, responsibilities and funding. We issued a consultation paper inviting stakeholders' views in July. This is our report of the outcome of the review.
2. We draw attention in this report to some substantial tensions and contradictions at the heart of SFIA's constitution and funding, which we believe need to be exposed and resolved if SFIA is to move forward on a sound footing. We go on to discuss the main issues raised during our consultation.
Findings: the need for fundamental reappraisal
Fishing industry v. the seafood industry
3. We argue that SFIA is now caught uncomfortably between meeting the needs of the UK-based fishing industry which has traditionally been at the heart of its business, and providing a valued service to the wider seafood industry sourced largely by imported fish. To deal with these tensions and ambiguities about its role, SFIA and sponsor Departments need to develop an agreed statement of how they now interpret the scope of the term 'sea fish industry', and where they consider that its common interests lie. We are not suggesting that a focus on the wider sea food industry implies the necessary exclusion of all activities which support the fishing industry, but it should influence the basis for their selection. The Authority must know what its core remit is if it is to have a sound basis for deciding its programme and priorities.
Levy funding and market distortions
4. We argue that the sea fish levy regime as currently operated is responsible for a number of market distortions, and that these have the potential to reinforce inefficient practices at the expense of efficient ones within the sea food industry, and to undermine the competitiveness of levy payers as against other parts of the food industry. Sponsor Departments should seek to apply the levy requirement to all who benefit from SFIA's activities, taking whatever legislative steps may be needed. SFIA should review its work programme to ensure its activities conform with key levy principles.
Divided accountabilities
5. As a statutory levy-funded body, SFIA is something of a cross between a standard non-Departmental public body and a voluntary co-operative or trade association. It is accountable to Ministers and to Parliaments in the various parts of the UK, but paid for by the industry.
6. We see dangers in this dual accountability. Ministers have no direct financial interest in ensuring that the SFIA budget is kept to the minimum consistent with delivering its functions effectively; nor do they have any benchmark against which to judge whether it is prioritising its programme effectively in terms of the best interests of the industry. Members of the industry are in not in a position to give collective expression to, let alone enforce, their views. The result is that SFIA's programme and expenditure levels are relatively free from rigorous scrutiny.
7. We would like to see arrangements put in place to ensure that the Authority is much more responsive to its levy payers while reserving the ultimate authority of Ministers as a back-stop. Some options are discussed in the final section below.
Findings: specific issues
The role of SFIA
8. While a substantial majority of our consultation respondents thought there was a continuing role for SFIA, many also favoured a significant rethink or refinement. Major concerns were to align the Authority more closely with the industry rather than Government, and to challenge the levy on imports. Mixed feelings about the continuing case for SFIA were particularly marked among levy payers, of whom there were 14 among our respondents. Six were opposed outright to the continuation of SFIA, while a further five argued for substantial change.
9. We have ourselves no simple and conclusive view to offer on SFIA's future role and priorities. We suggest further work in four stages: (i) SFIA and sponsor Departments to determine the purpose and core constituency; (ii) sponsor Departments to take necessary steps to ensure that the levy applies equitably to all businesses in the 'sea fish industry' as defined; (iii) SFIA to develop a costed forward plan, consistent with key levy principles, setting out how its proposes to meet the needs the industry as defined; and (iv) SFIA to seek industry views on the plan prior to its submission to Ministers.
Extending the remit to salmon, migratory trout and bottled and canned fish
10. Consultation respondents were generally in favour of extending SFIA's remit to salmon, although the salmon industry itself was not. Our view is that the current arrangements are inequitable and introduce market distortions. If it is agreed that SFIA's core purpose is to support the sea food industry, then the legislation should be amended to bring salmon within the scope of the levy, together with canned and bottled fish. If SFIA's role is redefined in legislation to focus on the fishing industry, then salmon should be treated in the same way as other farmed fish.
Seafood Scotland and other national/regional structures
11. Consultation respondents were generally positive about Seafood Scotland ( SFS), but many were also confused about the respective functions of SFIA and SFS. Other regional bodies attracted relatively very few comments.
12. We note that SFS, SFIA and other Scottish bodies have taken steps recently to clarify their respective roles, and suggest that more is now done to convey that clarification to external customers.
13. SFIA has a key difference of purpose from SFS, which exists to promote the Scottish industry. By contrast, SFIA's role is to support the UK industry at large. We recommend that the two bodies formalise their relationship in a published Memorandum of Understanding, and that services supplied by SFS to SFIA should be governed by a Service Level Agreement. Similar arrangements should govern the developing relationships between SFIA and other regional cross industry promotional bodies.
Relations with Government
14. Our terms of reference invited us in particular to consider how best SFIA can work with Fisheries Departments to deliver their joint and individual fishing strategies. We found very little enthusiasm among consultation respondents for the idea that the Authority should take on this role. Our view is that the Authority's first line of responsibility is to the industry, and that it is their agenda rather than the Government's which should be the focus of SFIA concern. But we also accept the view put to us by sponsor Departments that there will often be no difference between what Government is proposing for the industry and what is in it best interests.
The case for a compulsory levy
15. Respondents' views on this broadly corresponded to their views on the future of the Authority, with a majority supporting the continuation of a compulsory levy in some form. Within this, there were however some strong expressions of concern, particularly about the imposition of levy on imports.
16. Compulsory levy is in our view justified only if three key principles are met including, importantly, the principle that the majority of those required to pay the levy consent to it. Given current levels of support in the industry, we consider that a compulsory sea fish levy continues to be justified at least for the present. We set out elsewhere in the report the steps which we believe should be taken to ensure that other levy principles are met.
Rationalising levy collection
17. Notwithstanding the contrary views of many consultation respondents, we consider that a single ad valorem rate of levy should replace the current 26 weight-based rates. This would be both fairer and significantly easier and cheaper to administer. Improved mechanisms for accountability to levy payers should help to reduce opposition to this change in the industry.
Charges and grants
18. SFIA should continue to make judgements about how far it should seek to impose charges for the services it provides, and should take full advantage of government grants where they support its objectives. It should seek fully to cover the costs of any services that it provides which do not support the collective interests of levy payers, or discontinue or privatise them. Levy funds should not be used as match funding to attract grant for services which are not central to levy payers' interests.
Board appointments and advisory committees
19. Many consultation respondents argued for greater industry influence over Board appointments and/or greater transparency. We see no workable alternative to the current arrangements for Ministerial appointments to the Board, and argue that improved accountability to the industry should be secured through different mechanisms. We have some sympathy, however, with concerns that the catching sector is over-represented on the current Board, and suggest that the balance is reconsidered in the next round of appointments.
20. The industry advisory committees perform a valuable function and should be continued in broadly their current form.
Improving accountability to the industry
21. We are concerned to see new mechanisms put into place to improve SFIA's accountability to the industry it serves. Possible mechanisms include levy payer ballots and formal industry consultation on a costed forward programme. We recommend that sponsor Departments explore the options further with the industry, with a view to putting effective new arrangements in place as soon as possible.
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