Over 10 metre Scottish fishing vessel licensees and entitlement holders
Scottish Fishermen's Federation
Fish Producer Organisations
Members of the Fisheries Management and Conservation Group
UK Fisheries Administrations
Other interested parties
Over 10 Metre Scottish Sea Fisheries Licences
Scottish Government Proposal to Amend "Economic Link" Licence Condition
Purpose of letter
1. The purpose of this letter is to consult with sea fisheries licensees and other interested parties about Scottish Government proposals to amend the "economic link" licence condition that is included in sea fisheries licences for vessels over 10 metres.
This letter invites you to consider the Government proposals and to offer any views or comments, no later than 31 October 2017. Please submit your response using the Scottish Government's consultation platform, Citizen Space. You can view and respond to this consultation online at https://consult.scotland.gov.uk/marine-scotland/amendment-of-the-economic-link-licence-condition/.
2. Sea fisheries licences include a condition that requires vessels over 10 metres landing more than 2 tonnes of quota species annually to demonstrate a real economic link to the United Kingdom. The text of the condition included in licences now is shown at Annex A . The purpose of this licence condition is to seek to ensure that the parts of the United Kingdom that are economically dependent on sea fisheries and its connected industries do in fact benefit from the harvesting of fish quotas available to the United Kingdom.
3. The condition provides licensees with a number of ways in which a real economic link to the United Kingdom may be established, including by:
- making 50% of quota landings into the UK;
- having 50% of crew normally resident into the UK; or,
- by incurring 50% of operating expenditure in the UK.
4. Vessels not establishing an economic link licence condition also have the option of coming to an agreement with their licensing Administration to make quota gifts in lieu of meeting the other criteria for establishing a real economic link.
5. Compliance with the economic link condition is managed and assessed annually by the Scottish Government in relation to Scottish vessels.
Proposals for change
6. The Scottish Government proposes to amend the economic link licence condition and that the new condition described in this letter (and, in particular, the wording shown in Annex B ) come into effect from 1 January 2018.
Economic Link Licence Condition to relate to Scotland
7. The Scottish Government proposes to amend the economic link licence condition for Scottish fishing vessels so that it relates to establishment of an economic link to Scotland. The Scottish Government considers that this amendment is appropriate in view of the devolution of sea fisheries and in light in general of the responsibility of the Scottish Government to the economy of Scotland and to the parts of Scotland dependent on sea fisheries.
Establishment of economic link through landings in Scotland
8. The Scottish Government wishes to strengthen the economic link licence condition so that it delivers more benefits to Scotland and its fisheries dependent areas. It is proposed therefore to amend the licence condition so that landings into Scotland form the main basis of the condition. Landings into Scotland, as opposed to crewing and vessels' operating expenditure, are considered to offer a stronger economic link as in general they will result in increased economic activity. They will create opportunities in sales and auctions, economic activity in harbours, primary and secondary processing, transport, retail and restaurants, as well as national and global trade in seafood from Scotland. This is important, particularly, for the pelagic sector, given that its relatively low levels of labour intensity limits the scope to spread economic benefits through crewing.
9. In Scotland, the seafood processing and catching sectors are highly localised and concentrated in areas such as the North East and Shetland. In particular, the North East is important to both the fish catching and processing sectors. Peterhead is the largest landing point for white fish landings in Europe and one of the most important centres for seafood processing in the UK with a high concentration of primary and secondary processors. Employment in seafood processing in the North East (Grampian)  is estimated to be 68% of the Scottish total and 22% of the UK total with 3,199 FTE jobs in the area. In 2016, there were 1394 people employed in catching seafish in Aberdeenshire and the City of Aberdeen  .
Consultation question 1: Do you agree that landings into Scotland provide the best economic link to Scotland, and that they should form the main basis of the economic link licence condition, and that therefore the present options to demonstrate a link through crewing and / or operating expenditure should be removed?
Establishing a landings target
10. The Scottish Government proposes to amend the percentage of landings that can establish an economic link. It is proposed for the present to set this at 55 per cent.
11. The vast majority of Scottish fishing vessels already make the considerable majority of their landings into Scotland, and meeting this new landing target will not require any change at all to their day to day operations. In 2016, 416 vessels over 10 metres landed more than 2 tonnes of quota species. Of these 359 made more than 75 per cent of their landings into Scotland, and in total 381 made more than 50 per cent of their landings into Scotland.
12. While numbers inevitably vary from year to year, there are normally 3 groups of Scottish vessels that do not routinely make more than half of their landings into Scotland:
- A small number of vessels owned by non-Scottish companies targeting demersal fisheries that prefer to make landings into Spain or to other parts of Europe;
- A small number of generally Scottish owned demersal vessels that sometimes split their landings between Scottish ports and ports in Northern Ireland and / or England; and,
- Pelagic vessels that land a high proportion of their catch abroad.
13. Together these groups each year total about 25-35 vessels, or less than 10 per cent of the 400 or so Scottish vessels whose landings of quota species each year normally exceed 2 tonnes.
14. The Government assumes that vessels owned by non-Scottish companies that often land into other EU countries will likely wish to continue to make use of arrangements for "quota gifting", which it is proposed will continue to be available. The Government further considers that the small number of generally Scottish owned demersal vessels that sometimes split their landings between Scottish ports and ports in Northern Ireland and England will readily be able to find appropriate alternative landing opportunities in Scotland, if that is the method by which they choose to comply with the licence condition.
15. Pelagic vessels that land a high proportion of their catch abroad will also be affected.
16. Pelagic processing factories in Scotland are of course experienced and adept at adjusting to very significant fluctuations in supply, in part because quotas for pelagic fisheries often move up and down sharply, sometimes over just one year. For example, between 2013 and 2014, there was an 39.6% year on year increase in the amount of pelagic fish landed into Scotland by all vessels. 
17. Notwithstanding evidence that pelagic processing factories in Scotland would be able to cope with increases in supply from some Scottish vessels, the Government has considered whether, in the circumstances of these fisheries, with the large scale of landings involved, it would be appropriate to allow for transitional arrangements.
18. Further to this consideration, the Government proposes that there should be such transitional arrangements. The Government proposes that, for pelagic fish, the landings target included in the licence will be:
- From 1 January 2018, 30 per cent of total landings of quota species into Scotland;
- From 1 January 2019, 40 per cent; and,
- From 1 January 2020, 55 per cent.
19. The Government considers that this staged approach will allow time for appropriate adjustments to be made in the particular circumstances of this fishery.
Consultation question 2: Do you agree that the landings target included in the economic link licence condition should in general be 55 per cent?
Consultation question 3: Do you agree that there should be transitional arrangements in relation to landings of pelagic fish?
Arrangements for quota gifting an as alternative to meeting the landing target
20. The Government proposes to maintain the present arrangements whereby vessels that do not conform to the economic link licence condition by means of meeting the relevant landings target will instead be able to come to an arrangement to gift quota to the Scottish Government. The Government has reviewed the operation of present arrangements for the calculation of quota gifts and proposes to make certain adjustments. These are explained in Annex C .
Consultation question 4: Do you agree that there should continue to be arrangements whereby fishing vessels that do not meet the landings target should instead be able to meet the economic link licence condition by making quota gifts to the Scottish Government?
21. The Scottish Government welcomes views on the proposals in this letter from all fishing vessel licensees and all other persons with an interest. As noted above, the Government would be grateful to receive views and comments no later than 31 October 2017. Annex D contains details of how to respond to this consultation.
22. The Scottish Government notes that mackerel quota retained centrally further to the Cabinet Secretary's letter of 27 January 2017 will now be allocated according to the standard FQA method.
23. The Scottish Government further notes that it remains content to consider proposals for industry led action that has the result of increasing landings of fish, and particularly pelagic fish, into Scotland, so as to achieve benefits broadly equivalent to those envisaged in paragraph 8 and 9. The Government would be content for any such proposals to be made having regard to the aggregate landings of vessels in Producer Organisations. The Government invites those with an interest that wish to offer such alternative proposals to do so no later than 31 October 2017. The Government will consider any proposals offered, and leaves open the option of not proceeding with amendment to the licence condition if it considers that alternative proposals are likely to achieve broadly equivalent benefits.
Head of Access to Sea Fisheries
Sea Fisheries Policy Division
Email: Ross Parker, email@example.com
Phone: 0300 244 4000 – Central Enquiry Unit
The Scottish Government
St Andrew's House