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Section III: Findings - specific issues
Role and functions of SFIA
Responses to consultation
59. Our consultation paper noted the statutory remit of SFIA and outlined its current activities under the five headings of industry development, market analysis and economics, marketing and PR, training and technology. It noted key changes in the structure of the sea food industry over the 25 years since SFIA was established, and in the institutional context within which SFIA operates. We invited views on whether there was still a role for SFIA, and on priorities for its work.
60. Overall, a substantial majority of our 50 respondents thought that there was a continuing role for the Authority, with only seven respondents arguing that it should be wound up. However, a good proportion of those broadly supporting its continuation also favoured a significant rethink or refinement of its role. Major concerns were to align the SFIA more closely with the industry rather than with Government, and to challenge the imposition of levy on imports.
61. Mixed feelings about the continuing case for SFIA were particularly marked among levy payers, of whom there were 14 among our respondents 4. Six of the 14 (two medium and four small levy payers) were opposed outright to the continuation of SFIA, stating in very strong terms their opposition to compulsory funding of a body from which they felt they derived no benefit. While not seeking the immediate abolition of SFIA, a further 5 levy payers argued for substantial change, in one case proposing abolition of the compulsory levy. This group included three of the largest levy payers, the tenor of whose responses can be judged from the extracts below:
"A welcome rare opportunity.. to raise some comments on a body we have so little to do with but pay so much into." (Icelandic UK Ltd)
"For a large levy payer I do not believe we get value for money". (Royal Greenland Ltd)
"There is no raison d'etre for the SFIA levy on ... imports other than an unfair and additional tax on our industry". (Lyons)
62. Three other levy payers expressly stated that they saw a continuing role for SFIA, including one large levy payer 5 who said that they "would be horrified to think that the SFIA should cease". SFIA's ability to bring together and represent views across the whole industry was of particular importance to these respondents.
63. Turning to the detail of what SFIA should be doing, there were a wide range of views expressed as to priorities, with few marked themes or patterns. The activities which arguably attracted the most support from a wide range of respondents were:
SFIA's work in providing a focal point for the industry and a link with government;
its role as a central source of market and industry information for the industry and others;
its work in monitoring and advising on new food legislation (but with the notable exception of the FDF who have reservations about its involvement with this work);
recent work on traceability and vessel accreditation.
64. SFIA's work in marketing and promoting fish consumption was a controversial area, with many respondents arguing that the Authority should focus on the supply rather than the demand side of the industry. Conversely, the concerns expressed about lack of pay back for levy paid on imports, as reported in paras 60 and 61 above, were sometimes associated with arguments for a greater focus on promoting seafood demand.
SFIA's role and functions - conclusions
65. We have no simple and conclusive view to offer on SFIA's future role. In section II we have pointed to tensions and contradictions at the heart of the Authority's current constitution and funding. More work needs to be done to resolve these issues by sponsor Departments and by SFIA management before final decisions can be taken on its future role and priorities. Tying in with views set out elsewhere in this report, we suggest that this work is undertaken in four stages as set out below.
Stage 1: determining SFIA's purpose and core constituency
66. Paragraphs 36 to 42 above describe the tensions between SFIA's role in meeting the needs of the UK-based fishing industry which has traditionally been at the heart of its business, and providing a valued resource to the wider seafood industry sourced largely by imported fish. As argued in those paragraphs, 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 now lie.
Stage 2: changing the scope of the levy requirement
67. Having reached a view on SFIA's purpose and core constituency, it will be the job of sponsor Departments to take whatever steps may be necessary to apply the levy requirement to all businesses in the sea fish industry as defined. This is discussed further in paras 73 and 74 below.
Stage 3: developing a plan of action to meet the needs of the constituency
68. As a next step we would like to see SFIA management to produce a broadly costed forward plan setting out how it proposes to meet the needs of the industry. In drawing up the plan, they should assess current activities and proposals against the two key levy principles set out in paras 51 and 52 above, namely:
(i) Any activity paid for by levy must be justifiable on the basis of its contribution to the profitability of the levy paying community, having regard to the interests of consumers. We would expect activities to support a wider public interest agenda normally to be financed by government grant, or pursued through other structures or arrangements.
(ii) Levy payers should expect to benefit from activities financed by the levy broadly in proportion to their contribution, taking one year with another. This does not mean that the Authority should seek crudely to give back resources to different sectors of the industry in proportion to what they pay in. It means rather that levy funded activities should benefit the industry as a whole.
69. In drawing up the forward plan, other considerations are as follows:
(i) SFIA should be free to engage in activities which are not justified in terms of market failure or the wider benefit of levy payers provided that these are not a call on levy funds, and provided also that the work complements SFIA's core activities, for example by developing their contacts with the industry. The Kingfisher service and aspects of its business consultancy may be cases in point. SFIA should give consideration, however, to 'privatising' these activities if they do not meet these tests.
(ii) Where SFIA is engaged in activities in which other public bodies have a leading role, it should ensure that the service it provides does not conflict or duplicate. SFIA management have a good understanding of this principle, and are already working to ensure that their service is complementary to that of other providers, notably in the context of training and regional development.
Stage 4: seeking the views of the industry and endorsement by Ministers
70. Having developed a costed forward plan for the services it intends to supply to its levy payers, SFIA should seek the views of the industry on the proposals. Ministers should take account of industry views in deciding whether or not to endorse the proposals. The mechanisms adopted for obtaining industry views and informing Ministers' decisions are part of the wider debate on improving accountability. The issues are explored in more detail in paragraphs 119-124 below.
Extending the remit to salmon, migratory trout and bottled and canned fish
Responses to consultation
71. Our consultation paper noted that salmon and migratory trout are excluded from the definition of sea fish in the 1981 Act, and hence from the scope of the levy. Canned and bottled fish are also excluded under the Sea Fish Industry Authority (Levy) Regulations 1995. We noted that the legislation dated from a period when fish farming was in its infancy, and invited views on whether the legislation should now be amended to bring salmon within SFIA's remit. SFIA's most recent Corporate Plan made a strong case for salmon being brought within the remit.
72. 22 consultation respondents dealt with this question, all but five arguing that salmon should be included in SFIA's remit. Significantly, however, Scottish Quality Salmon, the only respondent from the salmon farming sector, was opposed to a move in this direction. It was supported in this by the Food and Drink Federation. The main argument of those opposed to the extension of the levy to salmon farmers is that the industry has been successful in developing its own technical environmental and quality marketing standards without the intervention of SFIA, and that SFIA's input would be of limited value at this stage.
Extending the levy to salmon etc - conclusions
73. Notwithstanding the views of those engaged in the salmon industry, we can see no logic in the current situation. We support the views of the current levy payers that salmon should be added to the remit of the Authority. We set out in para 47 above our concern about the market distortions inherent in the current definitions of sea fish on which levy is payable. If it is agreed that SFIA's core purpose is to support the wider sea food industry, then we are clear that the statutory definition should be amended to include salmon and other fish farmed for consumption, and that it makes no sense to treat canned and bottled fish differently from other fish and fish product imports.
74. If the role of SFIA were redefined in legislation to focus solely on the UK fishing industry, then further consideration would need to be given to whether or not the definition of fishing should include fish farming. Farmed salmon should then be treated in the same way as other farmed fish.
Seafood Scotland and other national/regional structures
Responses to consultation
75. Our consultation paper noted the existence of regional/national bodies like Seafood Scotland and Seafood Cornwall, and invited views on how the industry saw the relationship and demarcation of responsibilities between them and SFIA.
76. The majority of those who responded on this issue were based in Scotland. The comments about the work of Seafood Scotland were generally positive but were accompanied in some cases by expressions of confusion on the respective duties and functions of SFIA and SFS. A couple of respondents called for a greater devolution of SFIA's responsibilities to regional bodies with an accompanying transfer of levy funding.
National and regional structures - conclusions
Seafood Scotland
77. We consider first the relationship between SFIA and Seafood Scotland ( SFS), as this was the issue which provoked the most interest among our consultation respondents. Key extracts from the publicity material of the two bodies, showing a considerable degree of overlap in how they describe their respective roles, is attached at Annex B.
78. Our discussions with the industry indicate that there are some differences in the way SFS and SFIA are perceived. SFIA, as a body to the board of which Ministers make appointments, is looked on more as a creature of central government, while SFS, as a (Scottish) trade organisation to which the industry makes board appointments (but does not directly fund), is recognised as more independent. SFIA clearly has a UK-wide remit while SFS operates solely on behalf of Scottish interests. SFS has a good reputation in Scotland, particularly for its staff's willingness to get out and about in local areas, on fishing boats and at markets, and generally to maintain a positive public profile. Views on SFIA are less uniformly positive.
79. But while there are some differences in the way the two bodies are perceived, there is nonetheless considerable uncertainty as to who does what, and to whom stakeholders should look for assistance. This lack of clarity is made more acute as SFS is housed within SFIA's Edinburgh Headquarters, and some of SFS' small staff are seconded in from SFIA.
80. Earlier this year (2005), SFS, SFIA, Scottish Enterprise, Highlands and Islands Enterprise, Scottish Development International and the Scottish Executive commissioned an exercise - the 'Scottish Seafood Sector Joint Planning Initiative' - designed
"…to replace the then existing consultative and informal working arrangements between these various sector support and funding organisations with a more formal strategic partnership approach, aimed at maximising resources, avoiding duplication and continuing to work closely to deliver [better] results."
81. Flowing from the exercise, there seems now to be a better understanding among the bodies themselves who should take the lead on a wide range of issues and projects. We therefore endorse the value of that exercise. Where in our view some work remains to be done is in explaining to actual and potential customers and stakeholders which of the bodies involved takes the lead on which subjects. We recommend, therefore, that the bodies concerned take forward the 2005 exercise to its logical next step either to provide simple clarification much more widely to external customers or to establish a one-stop shop address or access point for all seafood-related enquiries.
82. While there is considerable potential overlap in the activities of the two bodies, there is a key difference in their core purpose. SFIA's job is to promote the interests of the UK sea fish industry at large. SFS by contrast is concerned to promote the interests of the Scottish industry, even where they are in competition with other parts of the UK industry. This difference of purpose ultimately dictates the relationship between the two bodies, demanding that they maintain independence of each other. Seafood Scotland must be free to work wholeheartedly to promote the interests of the Scottish industry even where these conflict with the interests of other parts of the UK industry. Conversely, SFIA should be seen to be using levy funds only to support activities which are potentially of benefit across the UK industry.
83. Recognising that the two bodies should maintain their independence of each other, there may nonetheless be scope to reduce duplication of activities and, more certainly, to clarify the different roles and responsibilities of the two bodies where their programmes overlap. We recommend that the two bodies formalise their relationship in a published memorandum of understanding. In so far as SFIA seeks to pursue its levy-funded programme agenda through the offices of SFS, then there should also be a formal contract between the two bodies for the provision of services, perhaps in the form of a Service Level Agreement.
Other regions
84. There are currently three regional bodies in addition to SFS, comprising Yorks and Humber Seafood Group, Seafood Cornwall and the newly established Seafood North West. Yorks and Humber Seafood Group is the largest of these, with a turnover of c £600k, strongly supported by the regional development agency, Yorkshire Forward. In addition, Northern Ireland Seafood Ltd ( NIS), a trade association which looks after the interests of the processing sector in Northern Ireland, is sometimes classed with these regional bodies.
85. Few stakeholders commented to us on the role of these bodies, either in response to our consultation paper or in discussions. NIS were an exception, arguing in particular for SFIA to become more involved at the regional level, acting as a catalyst to promote and develop the industry in Northern Ireland.
86. Our comments on the relationship between SFIA and SFS apply also to other regional bodies. Where such bodies exist, SFIA should aim to work through them to deliver services in which they have a common interest. As with SFS, there should be a Memorandum of Understanding setting out the relationship between SFIA and each of these bodies, and any services delivered on behalf of SFIA should be governed by a Service Level Agreement. On the other hand, we do not think it would be practicable or even desirable for the SFIA to seek to promote the establishment of a regional body to cover every area in the UK. SFIA will need to deliver services direct in those areas which are not covered by regional bodies.
87. We support Northern Ireland Seafoods' suggestion that SFIA should be involved as a catalyst in bringing together different interest groups in the NI seafood industry. Cross-industry co-ordination is an important role for SFIA.
Relations with Government
Responses to consultation
88. Our terms of reference invited us review the rationale for and role and functions of the SFIA, paying special attention inter alia to "how best it can work with Fisheries Departments to deliver the strategic framework and priority tasks of the Departments' joint and individual fishing strategies". To follow this up, our consultation paper invited respondents to comment on how the Authority can best help to deliver the Government's strategies, and how far it should be seeking to do this.
89. There was perhaps more consensus in the response to this question than on any other issue. Most respondents argued strongly that SFIA is paid for by the industry and should therefore be accountable to the industry. Some argued that any work carried out by the SFIA for Government should be funded by Government. There were concerns that SFIA has in the past been too close to Government and as a result failed properly to represent the industry view. Generally, with the exception of two respondents from outside the industry, there was no enthusiasm for the idea that SFIA should be working closely with Government to pursue policies set out in the Government's fishing strategies.
Relations with Government - conclusions
90. We discuss in paras 55 to 58 above the dual accountability of the SFIA to the industry and to Government, and comment on the dangers inherent in that situation. Our view is that the SFIA exists to serve the interests of the industry, and its first line of accountability must be to the industry, with Government involved only as a backstop. Levy monies should be used primarily to benefit the levy paying community, rather than to pursue a wider public agenda 6.
91. Having said that, we 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 its own best interests. We would certainly see it as important part of the job of SFIA to keep up close links with those responsible for fisheries and food policies in Government, and to maintain a good understanding of Government policies. But SFIA management should look to the industry rather than Government in deciding its priorities and setting its agenda.
Case for a compulsory levy
Responses to consultation
92. The consultation paper invited views on whether a compulsory levy remained an appropriate way of financing SFIA.
93. Respondents' views on this broadly corresponded to their views on the future of SFIA. Opposition to the levy was the driver for the minority who argued for the abolition of SFIA. Those who saw a future for the organisation on the whole thought that it should be continue to be funded by levy so as to retain some independence from Government. There was no support for the idea of a voluntary levy; those who commented on this thought it would not work.
94. But while there was a considerable degree of support for the principle of a compulsory levy, many levy payers and their representative organisations expressed major reservations about the way the system currently works. Particular concerns were about the imposition of levy on imports, and the exclusion of salmon and other classes of fish from the scope of the levy. Many thought that the levy should be reduced, perhaps with Government or other sources contributing more.
Case for a compulsory levy - conclusions
95. The question of whether there should be a compulsory levy is at the heart of this review, and we express views that are relevant to it throughout this report. Compulsory levy is justified only where key principles are met. Drawing on principles established by the Australian Government (attached at Annex C) and on the report of the Agricultural Levy Bodies review, we would summarise these as:
(i) There must be market failures within the industry or sector which, without statutory intervention, would not be readily correctable.
(ii) Levy income should be used to support collective activities which promote the interests of the businesses who pay the levy. Businesses should benefit broadly in proportion to their contribution taking one year with another.
(iii) The majority of those who are required to pay the levy should consent to the levy, in the expectation that it will deliver industry-wide benefits which outweigh the costs and which would not otherwise be available.
96. We note that the majority of those from the sea fish industry who responded to our consultation paper saw a continuing role for SFIA in some form, the majority also supporting a compulsory levy of some kind. In these circumstances, we consider that a compulsory levy continues to be justified at least at present. We set out in elsewhere in this report the steps which we suggest now need to be taken to resolve the current tensions and ambiguities about the SFIA's role, and to secure greater accountability to the industry.
Rationalising levy collection
Current situation
97. Levy payments are based at present on the weight of fish landed with 26 different prescribed rates applying to different classes of fish and fish products. This range of rates creates bureaucratic complexity.
98. The enabling legislation 7 permits the levy to be based either on weight or on value of fish. It requires that levy rates are fixed through regulations made by the Authority, confirmed by an order of sponsor Ministers, and subject to negative resolution procedures in Parliament. The most recent regulations were made in 1998.
Consultation responses
99. Our consultation paper invited comment on the possibilities of moving to a 'by value' ( ad valorem) system of levy payments and of setting uniform rates of levy for all species. Relatively few respondents dealt with this issue (15) the majority of whom were against any change. The reasons given included the argument that the issue had been discussed and rejected before and would be again, the suggestion that variable rates could better reflect the ability of different industry sectors to pay, and that an ad valorem rate would be too difficult to administer.
Rationalising levy collection - conclusions
100. Notwithstanding the views of consultation respondents, we consider that a single ad valorem levy rate would be both fairer and significantly easier and cheaper to administer, and we recommend that the regulations are amended to provide for it. We were not convinced by the arguments offered against it. We assume that these negative views are driven either by a concern that particular industry sectors may end up paying more, or by the inflation-proofing upward ratchet that is built in to any system calculated by reference to prices.
101. We believe that these concerns can be addressed in different ways. Paras 115-124 below discuss a number of mechanisms which might be adopted to improve the Authority's accountability to the industry. We recommend that sponsor Departments explore the possibilities further with the industry, with a view to putting effective new arrangements in place as soon as possible. New arrangements should give the industry regular input into decisions about the overall size of the budget, as well as priorities for action. There should be no assumption that the overall SFIA budget would continue to increase in line with price inflation even though ad valorem levy rates build in a link to prices.
102. In considering its forward programme and budget, SFIA should estimate the ad valorem rate needed to generate the required level of income. The calculations should take account of both costs and income likely to be generated by any change in the remit of the Authority to cover salmon or other species or fish products. The table at Annex D gives an example of how these calculations might work out; applying levy at an ad valorem rate equivalent to the rate currently paid by the lowest paying sector (shell fish) would generate total income only 17% down on current levels.
Other sources of income
Consultation responses
103. The consultation paper invited comments on whether SFIA should seek to raise more through charging for its services, and on how far it should seek to maximise income from grants.
104. Only a minority of respondents dealt with either of these questions, and neither question provoked particularly strong views. Of those commenting, the majority were in favour of SFIA trying to raise more income from charging, and all but one favoured the Authority to some extent seeking to take advantage of grants.
Charges and grants - conclusions
105. SFIA will need to continue to make a judgement as to how far it should seek to impose charges on the industry for the services it provides. There will continue to be some services for which it would not be practicable to charge (the supply of industry information, the promotion of cross sector co-operation etc), and others where the imposition of a charge would be counter-productive by discouraging the use of a service designed to promote the wider industry interest (eg aspects of training). On the other hand, as set out in para 69 (i) above, if and where SFIA is involved in the provision of services which are or might be available on the open market, then it should aim fully to recover the costs of the service through charging. SFIA should be involved in such services only where they are complementary to its core activities.
106. The Authority should aim to take full advantage of government grants where these are available to support its programme. It should however be careful to avoid using levy income as match funding to attract grant where the activities to be financed are not central to levy payers' interests.
Board appointments and advisory committees
The consultation responses
107. Our consultation paper noted that the legislation currently provides for Ministers to appoint up to 12 Board members, four of whom - including the Chair and Deputy Chair - must be independent of the industry. It also noted that the Authority has established five industry advisory committees covering each of the main seafood species groups with the objective of maintaining close links with all sections of the industry. The paper invited views on the current arrangements for Board appointments, and on how stakeholders view the role and importance of the advisory committees.
108. The issue of Board appointments was relatively contentious among respondents, with many feeling that the industry should have more direct influence and/or arguing for greater transparency. There were a number of comments also that the traditional catching sector is over-represented. The issue of independent members was less contentious; more than three quarters of respondents were happy that the Board should continue to include at least some members who are independent of the industry.
109. Most of those who commented were in favour of the industry advisory committees, with respondents commenting that they offer a useful forum for debate and that they play an important part in maintaining links between SFIA and the industry, and in informing the development of SFIA policies and programmes. Concerns were that their make-up was too dominated by internal politics, that they were not sufficiently in touch with individual businesses and, in the case of a couple of respondents, that they were simply not very effective.
Appointments and advisory committees - conclusions
110. We see no easy solution to stakeholder concerns that the industry should have more direct influence over Board appointments. There are essentially three reasons for this. First, we consider it right in principle that Ministers should have the ultimate responsibility for appointing Board members; this is appropriate for a statutory body, and consistent with the 'back-stop' role which we have referred to in para 58. Second, given the number and range of sector and regional interest groups, it would not be possible to give each the right to be represented on the Board without creating a Board which was far too big to be capable of operating efficiently. And third, short of radically amending the legislation to give levy payers rights comparable to those of shareholders in voting for the Board membership of public companies, we do not see how in practical terms the industry could be given direct control over appointments.
111. The debate about the make-up of membership of the Authority is not new; it was raised in almost every speech on the second reading of the Fisheries Bill which set up the SFIA back in 1981. The then Minister of State at the Ministry of Agriculture, Fisheries and Food commented in his summing up that: "Unless we have an inordinately large authority …. it would be difficult …to have total representation of all parts of the industry and all geographic areas". He hoped that "the industry will be unselfish and will show responsibility and common purpose in working with representatives, even though individual sections and areas may not be represented". 8
112. Our conclusion is that there is no fully satisfactory way of meeting all concerns for representation, just as there was not in 1981. We recommend that the current statutory and administrative arrangements for Board appointments should continue unchanged, and that different mechanisms should be established to improve the influence which the industry has over the Authority's agenda. We return to this question in para 115 below.
113. But having said that the formal arrangements for appointments should remain unchanged, we have some sympathy with concerns about the balance of the current board. Of the eight 'industry' members, two have a background in the processing sector, one is involved in retailing, and the remaining five all have their base in the catching sector. If SFIA's role is to support the wider sea food industry supplied largely by imports, then this dominance of the Board by the catching sector seems undesirable.
114. The role of advisory committees also featured in the debate in 1981, when the Opposition spokesman queried whether the new Authority would be supported by an advisory body 9. The Minister responded that there would be no statutory arrangements to continue the large advisory councils which had supported the Herring Industry Board and White Fish Authority, but that it would be open to the Authority to set up its own consultative machinery 10. The SFIA's industry advisory committees thus fill a role which was recognised in 1981 and remains relevant today. They have the support of most stakeholders, and should continue broadly unchanged.
Improving accountability to the industry
115. Throughout this report we have noted a clear need to strengthen the arrangements through which the SFIA is accountable to levy payers and the wider seafood industry. Some effective arrangements for accountability to the industry are in our view essential to ensure that the Authority is focussed on the industry's needs, and provides value for levy payers' money. We discuss below a number of different mechanisms which might be developed to promote SFIA's responsiveness to the requirements of the industry, each of which has merits but also shortcomings. We recommend that sponsor Departments explore the options further with the industry, with a view to deciding what new arrangements should be put in place.
Levy payers' ballots
116. A 'sunset clause' is one option for increasing accountability, discussed in the Radcliffe report in a section entitled ' Taking account of the views of levy papers'11. Under this kind of arrangement, levy payers have an opportunity to vote at regular intervals in a ballot on whether or not a particular levy should continue. According to the Radcliffe report, five yearly ballots of this kind are in operation for mandatory levies in Australia. Such arrangements offer a clear mechanism for checking whether a levy remains acceptable to the majority of those who pay it, and for ensuring that those who manage levy-funded activities remain focussed on levy payers' requirements.
117. The Radcliffe report notes that regular ballots of this kind have disadvantages; they are time-consuming and costly, and "they can result in distortion of effort as those whose jobs may be affected seek to obtain a particular ballot result rather than concentrating on what they are supposed to be doing". Rosemary Radcliffe advocates a modified approach under which dissatisfied levy payers would have the right to demand a ballot, and steps would be taken to wind up the levy following an adverse vote result. She proposes conditions to avoid the mechanism being used frivolously, including a requirement that a minimum of 5% of levy payers must demand the ballot, and that the right should not be exercisable more than, say, every three years. The report concludes that such a power is an important one in the overall system of governance albeit one which, with proper arrangements in place for taking account of the views of the industry, should only need to be invoked occasionally, if at all.
118. While we see the attractions of this approach, we note that it also has disadvantages. A ballot of levy payers would take account only of the views of those who actually pay the levy which, important though they are, may not fully reflect views in other parts of the sea fish supply chain which contribute only indirectly to the levy. While a ballot could provide crude 'yes/no' answers on straightforward questions (such as whether a mandatory levy continues to justified), it would be a less suitable vehicle for exploring the balance of views in the industry on the size of the SFIA budget, or on its priorities for action. Ballots would lead to substantial uncertainty for SFIA staff, clients and suppliers. Finally, the process would be complex and time consuming for all concerned. While SFIA might manage the ballot, the four sponsor Departments would need to be closely involved in considering the results and if necessary acting on them.
Formal consultation on budget and forward programme
119. An approach put to us by SFIA and sponsor Departments is that SFIA should build on arrangements which it already has begun to improve industry involvement in its programme and budget setting. The proposal is that SFIA should develop a budget and costed forward work programme for a rolling period of perhaps 3 years ahead which it would then put out to formal consultation with levy payers and others in the supply chain. Consultees would be invited to offer views, giving their reasons for any aspects of the programme they would like to see changed. Their responses would be published, thus offering transparency. SFIA would adjust its proposals in the light of consultation responses, justifying any decisions not to accept particular views. As part of the normal corporate planning decision process, Ministers would then judge whether to accept the revised budget and programme in the light of the weight of comments.
120. We welcome the steps SFIA is taking to improve its relationships with the industry, and consider that formal industry consultation on SFIA's forward budget/programme would be an important step forward in increasing its responsiveness to the industry requirements. But it can be argued that the proposal is not enough to ensure that the SFIA would be ultimately responsive to what the industry wants, not least because it provides for no mechanism to capture an independent industry-wide overview on which Ministers might base judgements about the majority views in the industry.
Consultation combined with levy payers' ballot
121. Some combination of consultation by SFIA on its proposed budget and programme with a ballot of levy payers could be worth further consideration. For example, if at the end of the consultation process described in para 119 above SFIA's budget and programme as revised was put to levy payers for endorsement or otherwise in a ballot, then there would be very much more obvious accountability to the industry. While the vote would formally be on the budget and programme, a failure to endorse the programme would send a clear signal to Ministers to consider the implications for the body's future.
122. In any ballot of SFIA levy payers, we consider that it would be appropriate to weight levy payers votes broadly in line with the size of their contribution. This is necessary to take account of the very wide range of levy amounts currently paid by different businesses, from those who pay over £500k a year at one end of the scale to those who pay only a few pounds at the other. It would also be appropriate to invite views from industry representative bodies alongside any ballot of levy payers, so that the views of non-levy payers across the sea food supply chain could also be taken into account by Ministers in reaching decisions.
Improving accountability to the industry - conclusions
123. While we are concerned to see new mechanisms put into place to improve SFIA's accountability to the industry it serves, and hence its responsiveness to the requirements of the levy paying community, we accept that there is no easy answer on how best to do this. The various mechanisms discussed above are complex matters with few obvious precedents on which to draw, and we are conscious that we have not fully explored all the possibilities. In addition to wider consultations and the possibility of ballots, there are other options that the industry might like to see examined, such as re-visiting the opportunities for greater industry influence over board appointments, or considering the transferability of the governance ideas suggested in the Radcliffe report.
124. We recommend that sponsor Departments explore the options further in discussion with the industry, with a view to agreeing effective new arrangements for improved accountability. We would expect the Food and Drink Federation, the British Frozen Fish Federation and the Scottish Seafood Processors Federation to be among the industry representative bodies included in the discussions, and ballot options to be included on the agenda for discussion. We would like to see the work put in hand urgently, and new improved arrangements for accountability put into effect as soon as possible.
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