Fishing vessels - economic link: business and regulatory impact assessment

7. Benefits

Following the approach set out above (and in more detail in Appendix 2), this section sets out the monetised and non-monetised benefits associated with the attached proposal. The monetised benefits primarily accrue from additional value captured by seafood processors in Scotland as well as the economic activity associated with increased levels of quota gifts. While non-monetised benefits follow this through additional jobs in processing as well as expected benefits to processors from a more regular and secure supply of inputs.

7.1 Monetised benefits

Table 5 shows the expected monetised benefits relative to the “do nothing” option of the attached proposals. Figures are presented as a GVA change to the economy of Scotland.

Under the Central (most likely) Scenario (2), Scotland would benefit from an estimated £82.0 million in additional GVA over the first 10 years following the introduction of the new economic link licence condition, relative to the Do Nothing Scenario. These monetised benefits relate to the upstream and downstream effects of landing and processing in Scotland, with the benefits split roughly equally between upstream and downstream. The benefits of Scenario 3 are slightly less than 26% of those seen in Scenario 1, due to 26% of the landing gap stocks given as quota gift instead, with most of that quota gift then assumed to be landed in Scotland.

Table 6 shows the expected additional full time equivalent jobs that would be created by the additional processing in Scotland, relative to the “do nothing” option of the attached proposals.

Scenario 1 has the highest number of expected additional jobs as this scenario expects the most fish to be landed and processed in Scotland; this scenario has also the lowest probability of occurring. In the Central Scenario (2), most of the jobs created are realised in the third year after the transitional arrangement for the pelagic fleet has ended. The cumulative total shows the maximum jobs expected to be produced by each scenario, with the GVA gain monetised in table 5.

7.2 Non-monetised benefits

There are several benefits that have not been monetised, often due to their relatively small expected effect and/or the complexity in doing so. In terms of the latter, there are some that could have a material impact upon the catching fleet and Scottish economy as a whole. One such benefit is that a more stable supply of inputs could help to safeguard existing jobs in addition to creating new jobs. Alternatively, a more stable supply of inputs could also incentivise investment in plant machinery achieving productivity gains.

Quota gifted stocks could see additional benefits beyond those already monetised depending on the final manner of distribution. Gifted quota will be distributed for the benefit of potentially vulnerable rural coastal communities, where fishing is an important part of the local economy. In addition, gifted quota distributed to the non-sector fleet could also lead to improving the prospects for new fishers.

This proposal would be expected to fulfil a number of the aims as set out in the Scottish Government’s Economic Strategy. For instance, through fostering inclusive growth, by supporting coastal communities, maximising the economic returns from Scotland’s resources and promoting a more sustainable labour market. This will contribute to supporting the sustainability and resilience of these communities.

The food and drink industry is the largest export sector in Scotland, and Scottish seafood processors play a key role in this. While some of the benefits to processors are monetised, there may be other non-monetised benefits if a greater and more stable supply allows Scottish processors to grow into new markets and expand their presence in traditional ones. In turn, this could lead to increased investment by up- and down-stream sectors, which could lead to a higher skilled labour force, better quality infrastructure and more efficient process. The realisation of these benefits depends on whether processing businesses can overcome other barriers to growth, such as the ability to break into high value product markets and increase domestic demand, that are not linked to volume or regularity of supplies.

Finally, the policy change could result in environmental and financial benefits if steaming distance is reduced, where non-Scottish ports are further away than Scottish ports. Although, any such benefits could be lost through increased haulage depending on onward travel.