Scottish Government

Covering Letter

Marine Directorate
Fisheries Grants and State Aids Team
T: 0131-244-6243
F: 0131-244-6313
E: EFF.ScottishGovernment@scotland.gsi.gov.uk
Web: http://www.scotland.gov.uk/Topics/Fisheries/grants-subsidies

2 May 2008

Dear Sir/Madam

Consultation (second phase) on the European Fisheries Fund UK Operational Programme

I am writing to invite you to participate in the second phase of consultation on the European Fisheries Fund ( EFF) UK Operational Programme ( OP), regarding funding priorities in Scotland.

This follows the first phase of consultation which was issued in early March 2008 to other public, funding and trade bodies. A summary of the responses to the first phase consultation and how these have been incorporated into the OP can now be found using the link: http://www.defra.gov.uk/corporate/consult/eufishfund/summary-responses.pdf.

I attach the OP for the UK along with a list of consultees. Both documents can also be found on the Scottish Government website at http://www.scotland.gov.uk/Topics/Fisheries/grants-subsidies

Background

The EFF¹ is the new fund for EU fisheries grants operating until December 2013, replacing the Financial Instrument for Fisheries Guidance ( FIFG) grants. The EFF can support projects in the catching, aquaculture and fish processing sectors along with fisheries communities. It is intended to promote a fisheries sector that is sustainable and profitable and which supports strong local communities, and is managed effectively as an integral part of coherent policies for the marine environment. The UK has about £97m of EU funding for the period covered by the programme. Details of the apportionment of this amount between Convergence and non-Convergence areas are set out in chapter 1 of the OP.

Scotland's fisheries industry has a vital contribution to Scotland's future success and the European Fisheries Fund will be one of a range of policy tools and mechanisms which will be used to help Scotland achieve increasing sustainable economic growth.

The EFF targets five priority areas (axes):

1. Adaptation of the Community fishing fleet;
2. Aquaculture, inland fishing, processing and marketing of fisheries and aquaculture products;
3. Measures of collective benefit;
4. Sustainable development of fisheries areas; and
5. Technical assistance to facilitate the delivery of assistance.

The UK National Strategic Plan, which outlines high level objectives for the fisheries industry in the UK, has been finalised and formally submitted to the Commission. A copy can be found at: http://www.defra.gov.uk/marine/pdf/fisheries/20080104uknspf.pdf. The Operational Programme, detailing specific funding priorities and implementation for the EFF grant scheme, has been formally submitted to the Commission for approval. It is now the subject of negotiation with the Commission which will be informed by your response to this second phase consultation.

Expressions of interest in support from the EFF

The Scottish Government is keen to roll out delivery of the EFF in Scotland as soon as reasonably practicable after the Commission has given its approval to the UKOP- expected later this summer. To assist potential applicants for support and the Scottish Government plan for delivery, potential project sponsors considering applying for EFF are invited to send an outline of their project together with indicative project costs and an indication of any other potential public sources of funding for which support may be available to EFF.ScottishGovernment@scotland.gsi.gov.uk or by post to;

EFF Expression of Interest

We anticipate that the first awards for key strategic projects will be made very shortly after Commission approval of the UKOP is confirmed with the first full round of applications being arranged as early in the Autumn as practicable while giving all potential applicants an equal opportunity to apply.

All awards will be publicised including by updates to the Scottish Government's website at http://www.scotland.gov.uk/Topics/Fisheries/grants-subsidies.

Further advice and information on applying for EFF along with application forms and guidance will be provided in the course of the following few months. If you, or any potential project sponsors you know of, have any queries regarding the delivery of the EFF please contact the Grants Team on EFF.ScottishGovernment@scotland.gsi.gov.uk or 0131 244 6243.

Specific issues for Second Phase Consultation

In this second phase of consultation, we would be grateful for any comments you may wish to make on:

1. the proposed measures which will receive EFF support in Scotland;
2. the proposed financial allocation of funds across the five EFF Priority Axes for Scotland.

Explanations about the second phase consultaion, proposed priority targeting and available financial resources are contained in the attached Question and Answer sheet at Annex A.

How to respond

If you wish to obtain a hard copy of this consultation, please contact Paul Jarron at the address below.

We would prefer to receive responses by email to EFF.ScottishGovernment@scotland.gsi.gov.uk, but are also happy to receive comments by post to:

Paul Jarron

Marine Directorate
Food and Fish Division

Deadline for responses: Friday 27 ^th June 2008

This consultation and all other Scottish Government consultation exercises can be viewed on line on the consultation web pages of the Scottish Government website at http://www.scotland.gov.uk/consultations.

The Scottish Government now has an e-mail alert system for consultation (SEconsult: http://www.scotland.gov.uk/consultations/seconsult.asprx). The system allows individuals and organisations to register and receive a weekly e-mail containing details of all new consultations (including web links). SG consult complements, but in no way replaces, SG distribution lists and is designed to allow stakeholders to keep up-to-date with all SG consultation activity, and therefore be alerted at the earliest opportunity to those of most interest. We would encourage you to register.

Handling your response

We need to know how you wish your response to be handled and, in particular, whether you are happy for your response to be made public. Please complete and return the attached Responder Information Form at Annex B, as this will ensure that we treat your response appropriately. If you ask for your response not to be published we will regard it as confidential and we will treat it accordingly.

All respondents should be aware that the Scottish Government is subject to provisions of the Freedom of Information (Scotland) Act 2002 and would therefore have to consider any requests made to it under that Act for information relating to responses made to this consultation exercise.

Where respondents have given permission for their responses to be made public (see the attached Respondent Information Form), these will be made available to the public in the Scottish Government library. We will check all responses where agreement to publish has been given for any potentially defamatory material before logging them in the library or placing them on the website. You can make arrangements to view responses by contacting the SG library on 0131 244 4565. Responses can be copied and sent to you, but a charge may be made for the service.

What happens next

Following the closing date all responses will be analysed and considered along with any other available information to help enable a decision to be reached on the issues on which consultation is taking place. We aim to issue a report on the consultation process as soon as possible after the consultation period is complete. We will also use your responses to this consultation to help inform the ongoing work with the other UK fisheries administrations in finalising the UKOP and in taking account of the outcome of the negotiations with the European Commission.

Comments and complaints

If you have any comments about how this consultation exercise has been conducted, please send them to the address above.

Yours faithfully,

PAUL JARRON
Marine Directorate

Annex A

Q. What is Second Phase Consultation

A. This stage of consultation will last for eight weeks. The first phase of the consultation sought views on the analysis and objectives of the OP, but not on the specific measures that we propose to fund which are set out in Chapter 5. In this second phase of consultation, we welcome your views on these measures and the results indicators. The OP identifies certain baseline figures and proposes certain targets. These have been primarily developed as an extrapolation of historical trends using currently available data and do not necessarily indicate any proposed Scottish Government or UK Government intention to reach those targets. Consultees are invited to comment on the selected indicators used in the OP and any proposals they may have for developing more relevant or Scottish specific indicators to further the Scottish Government's aspirations for the fisheries industry. Further views on the remainder of the document are also welcome.

Because the OP is applicable to the UK as a whole, in considering the content of Chapter 5 you will need to take account of the proposals of the different Administrations in the UK. This consultation letter provides further detail on the proposals for Scotland. The other Devolved Administrations and Defra are conducting their own separate consultations. It would be helpful if when responding, you would distinguish between comments on the UKOP and comments on Scotland's priorities as set out below.

Q. What are the funding priorities in Scotland

A. The Purpose of the Scottish Government is to create a more successful country with opportunities for all of Scotland to flourish through increasing sustainable economic growth. Within the Purpose the Scottish Government is aligned to deliver on 5 Strategic Objectives: Wealthier and Fairer; Smarter; Healthier; Safer and Stronger; and Greener. Scotland's fisheries industry has a vital contribution to Scotland's future success and the European Fisheries Fund will be one of a range of policy tools and mechanisms which will be used to help Scotland achieve increasing sustainable economic growth.

Priorities for funding projects in Scotland using the EFF will be informed by:

• The emerging strategic vision for Scotland's sea fisheries and Scotland's fishing communities being taken forward by the Scottish Government in partnership with the Scottish Fisheries Council chaired by the Cabinet Secretary for Rural Affairs and the Environment, Richard Lochhead. The Council brings together representatives of all sectors within the fishing industry and communities, conservation groups and the scientific community.
• The Strategic Framework for Scottish Aquaculture which is being renewed in consultation with the industry and all stakeholders led by the Scottish Ministerial Working Group on Aquaculture led by the Minister for the Environment, Michael Russell.
• The development of the first national food policy for Scotland, which will be cross cutting and take into account the 5 Strategic Objectives, will provide a long term direction and vision for the industry, realising the full potential of Scotland's food for the benefit of all.

In Scotland there will be an initial focus on projects that offer the greatest potential to deliver:

• Innovation for example in the reduction of discards and improve selectivity in the catching sector or support diversification into new farmed or cultivated species or improvements in containment;
• Fuel and other efficiencies to contribute to a sustainable future for Scotland's catching, farmed and fish processing sectors; and
• Added value throughout the fisheries industry with a particular focus on fish processing.

Chapter 5 of the attached OP details all the measures which will be supported using EFF funds by one or other of the Administrations. In Scotland, we propose to support all measures set out in Chapter 5 with the exception of, projects for public aid for permanent and temporary cessation of fisheries activities and small-scale coastal fishing. In our view, following previous decommissioning rounds, the Scottish fleet is close to a balance with available resources. No further substantive decommissioning rounds are expected ². Nor do we intend to use the option in the EFF to offer higher grant rates to vessels of less than 12 metres in length that do not use towed gear.

In order to make best use of the limited funds available under the EFF, we propose to target spending in Scotland towards interventions that appear to provide best value for money in meeting the Scottish Government's Purpose as it relates to the fisheries industry and communities. There will be an element of competitiveness in applying for funds, and as such each project will be judged on its merits in relation to a set of agreed criteria which will help achieve the Purpose and Strategic Objectives. These criteria may include issues such as additionality and wider public benefits eg:

1. Public versus private benefits

Projects which result in a benefit to the wider public are more likely to offer value for money than those which simply benefit the individual. For example, a change in fishing gear to reduce discards would be ranked above a project which improved crew facilities. There is one important exception to this general rule, namely safety training and equipment which generally results in a benefit to those trained. We will be prepared to fund non-mandatory safety training and the purchase of appropriate equipment to help improve the safety record of the catching sector.

2. Externalities

Projects which result in costs to the wider public (a negative externality) would be afforded a lower ranking than projects which result in wider public benefits. For example, we would give greater priority to projects that reduce excess capacity such as group re-engining for fishing vessels, or that promote diversification from unsustainable to sustainable fishing through vessel modernisation or improvements to processing, as these can help reduce the wider costs associated with overfishing. Similarly improvements in containment in the farmed sector will bring wider benefits for the marine environment and will be likely to attract a higher priority.

3. Information deficiencies

Information deficiencies are one of the main obstacles to an efficient and effective market mechanism for fish. They can result in a lack of co-operation within the industry, or between scientists and government, and may also result in a lack of consumer awareness about particular goods and services. We will rank highly those projects which reduce information deficiencies, for example by the improved marketing of fisheries products to boost consumer awareness, or pilot studies which improve understanding of fishing resources and the benefits of the marine environment.

4. Displacement and Additionality

We will consider the likelihood that a project would remove business from other areas. For example, funding a port development may have the potential to move activity away from neighbouring ports, therefore resulting in little additional benefit. We will also consider the likelihood of a project going ahead without grant funding so that grant moneys are used to the best effect.

Q. What is Scotland's share of the UK's EFF allocations

A. UK Fisheries Ministers have agreed a split of the UKEFF budget which results in Scotland receiving approximately £39m of the total allocation. Although we are not prioritising projects within the EFF axes themselves, as part of the OP we must allocate a proportion of the funds to each of the Priority Axes. The following tables set out how we propose to do this. (All figures are approximate, use the exchange rate on 16/04/08 of £1=€0.8078, and are in £m's).

During the course of the EFF Programme, there will be opportunity to re-align the funds should we not receive sufficient applications under a particular Priority Axis to take up the available funding. We will actively encourage applications for projects that help meet our strategic objectives for the Scottish fisheries industry and fishing communities. We will aim to do this using advice from existing expert groups such as the Scottish Fisheries Council and the Ministerial Working Group on Aquaculture along with input from Scottish Government policy expertise and the in-house grants team working with potential applicants and industry groups.

In addition we intend to establish a Scottish EFF stakeholders group to advise on the management and monitoring of performance under the EFF, feed into the discussions of the UK Programme Monitoring Committee established under the EFF Regulation and generally assist the Scottish Government's Marine Directorate with its efforts to maximise the value of the EFF Programme to Scotland.

Convergence (Highlands & Islands)

Non-Convergence (the rest of Scotland)

* These figures total more than £39m because the tables reflect the latest exchange rate. The figures will vary throughout the duration of the Programme.

Annex B

RESPONDER INFORMATION FORM