Aquaculture regulatory process: review

Summary

The Scottish Government from what I have read and can gather considers aquaculture to be an important industry to Scotland particularly for rural coastal and island communities, where it provides a range of economic benefits. While the economic benefits are evident there are other impacts that any industry would have to consider in order to operate so achieving the balance between both is where all countries strive to reach.

I was asked by Mairi Gougeon MSP Cabinet Secretary for Rural Affairs and Islands to

• review the existing evidence base and engage with key stakeholders in order to identify the issues impacting on the efficient and effective operation of the regulatory framework for aquaculture from the perspective of industry, users of the shared marine environment (tourism, wild fisheries), communities and regulators; and
• make recommendations for further work in relation to improved efficiency and more fundamental institutional reform.

Throughout the evidence gathering stage of this review a lot of what I have heard and seen resonates with other reviews of this type I have carried out. Many of the issues and challenges around regulation that involve multiple public bodies, regulators, and developing or changing industries and sectors have similarities and overlaps. However in all the reviews I have conducted over the years, there are two characteristics that I have never come across before namely

• All the people and organisations that I have met with or had input from think that the current regulatory system for aquaculture is not fit for purpose and in one form or another needs change; and
• The degree of mistrust, dislike, and vitriol at both an institutional and personal level between the industry (mainly finfish), certain regulators, parts of the Scottish Government and other stakeholders is at a level that I have never seen before which makes the current working relationships within the sector challenging.

The above primarily addresses the issues within the finfish industry. The shellfish and seaweed industry exhibit some of those issues but to a lesser degree. The level of mistrust in the finfish sector is such that there are those in the industry who believe officials within some Regulators and Government bodies have on occasion been actively briefing and supplying information against the industry to those that would seek to close it down completely. The converse to this are the accusations from some environmental groups that the Scottish Government and regulators are "green washing" or "in bed" with the industry. I make no judgement on whether either is true but these beliefs have driven relationships and mistrust to a level that is not just unusual but unhelpful as well.

In my view it is Government that set the policy around an industry and no one else, and its officials, associated bodies, and regulators implement and manage the rules and guidelines that policy sets out. Government policy should cover everything with regard to the presence of that industry; whether the country wishes to have an industry like this in the first place, its size, impact, and how all that will be controlled.

The above is especially true where an industry is developing dynamically. I believe the aquaculture sector in Scotland, especially finfish needs a policy framework within which development, change and growth can happen over a period of time in a manner that Government agrees with across the issues that may cause it concern. That policy and framework should therefore not be solely about what the industry looks like today but how it can develop over time, for example, 5-10 years. It is the future that should be at the heart of the vision for the sector and form the parameters of the framework.

That flow of policy is set out in Figure 1 below and all else in this report is set within that context and structure.

As knowledge, experience, and science have grown from all parts of the sector, ways of operating have changed and will continue to do so over the coming years both to reflect learning but also because its customers have, themselves, also become more discerning on what they need in terms of product and the environment they want that product to be produced in.

My second task was to make recommendations to Scottish Government on further work required and also what institutional change might be necessary to do that. These recommendations do both, I believe, but maybe slant more to the institutional and other change necessary than they would have done had not the evidence and desire for change been so strong. I believe my recommendations will give the aquaculture sector an opportunity to develop in a way that allows commercial certainty within a controlled environment while taking into account the different status of each sector.

The Scottish Government will shortly produce its own Vision for Aquaculture in Scotland, which all else for the sector should develop from. I believe though some of the recommendations I make can be implemented prior to the production of the Vision as they should happen no matter what that is as they make the processes involved more effective and efficient.

Indeed it would be useful to pilot the new proposed single consent document and to start to pull together what would be in the frameworks for each sector. I believe that Shetland would be the ideal candidate to carry out the pilot. A pilot would allow improvements to the new regulatory system to be designed within a supportive environment, aiding in a transition to the full roll out of the new process.

Government will create, from the Vision, and own its frameworks for the aquaculture industry. It will assess industry size, development and innovation within strict environmental parameters. Evidence based policy will drive the framework agenda. This will allow for change over time as the individual sectors develop. I am firmly of the view that once the framework is in place only the Cabinet Secretary should have the power to sanction change. Different bodies within National and Local Government, regulators, and other associated bodies will be responsible for implementing the framework to ensure they are delivered. They do so as implementers only.

While the Vision for the sector is being produced I propose that a Project Board be established to start to take forward the initial work on a framework. It is likely that its work will fall into a number of phases with the initial one deciding what should go into the framework perhaps being the most critical. Further work can be progressed on each part of the framework once that is done with individual timescales being put in place at that time. While that is being done it seems sensible perhaps to consider the timing of other consultations and other things that are to be implemented in aquaculture so that duplication, confusion, or divergence is avoided.

Below are the main recommendations I am making (including any associated recommendations) set out in the order they appear in the report and not for any other reason:

• There should be different regulatory solutions for finfish, shellfish, and seaweed with each based on a framework specifically designed for that part of the sector and in which the consenting and all other regulatory processes will sit and be driven by;
• There should be a single website and body where anyone with any questions around starting up an aquaculture business or who have questions on more general issues or aquaculture regulation can go to find out all that they need to know;
• A new single consenting document for aquaculture should be created, that mandates what all parties (the applicant, regulators, the community, and other statutory consultees) involved in an application are subject to derived from a pre-application consultation prior to submission;
• The new consenting document contains a 'social contract' that recognises the community and its needs;
• The science and other evidence that is currently being used by all parties involved in the sector is reviewed independently to ensure it is the best and most up to date available;
• The Scottish Government work with all parties through a Project Board to produce, within 12 months, a 10 year framework for each part of the aquaculture sector (finfish, shellfish, and seaweed) within which all must operate;
• Once that framework is in place all existing sites should be examined to ensure that they can operate within the framework;
• All sites where it is unlikely, after evaluation against the new framework and remedial action that further finfish production will occur, give up all licences held on that site by the current owner;
• The creation of a central science and evidence base should be put in place jointly run and managed by industry and the Scottish Government which gathers, collates and examines scientific and other evidence relating to this sector so decisions within the framework can be made in the most effective way;
• A new single licencing payment is introduced based on tonnage output of each site, which covers the costs of all bodies involved in the process and addresses community benefit as well. A separate charge on established sites that are to continue post review to be examined;
• A review of the length of validity for all the licences involved so all consents share the same timescale;
• The time of the licence/consent validity is long enough for the licence holder to gain value from the site and ideally allows it to be capitalised as an asset on their balance sheet;
• The full payment will only apply to new tonnage and not any transfer of existing tonnage to a new site, if that has come from consolidation of others e.g. if a company creates a new 5000 tonne site by closing three 1000 tonne sites, then the payment would only be calculated on the additional 2000 tonnes;
• That a separate tonnage payment be agreed for existing sites once consolidation is complete;
• Who makes the collection and distribution of the payment to be agreed by all regulators including Crown Estate Scotland, the latter which should be an integral part of the process;
• There is an allowance in the licence charge for local community benefit for the area where the site is situated. It's my belief that a significant amount of what is collected (similar to Norway) goes back to the communities in whatever form so that they can also benefit from the economic prosperity that the farms will bring. Decisions will have to be made on whether this part of the payment should be collected by Government for redistribution or whether the operator should be legally obliged to disburse that payment themselves directly to the community;
• Part of the licence cost is used to fund further scientific and other research in areas which is mutually agreed through the new composite scientific body;
• The payment be designated for accounting purposes in a way that allows it to be treated in a way that it can be taken out of annual EBITDA calculations;
• It should cover the costs of the new licencing and consents unit as well as the costs and fees of other bodies involved in the process;
• The process should encourage innovation and development across all three sectors with special consents or licences aligned to innovation including the length of validity and costs;
• A short term project board is established which oversees, drives, and guides all the varying parts, so that all the above can be put in place, where possible, within a 12 month period.

I could not have done this review without the honest, open, and full input of the many people and organisations that I have spoken to, visited, or have submitted written views to me. Their honesty has helped me better understand the issues and look at solutions that will not only work, but allow the sector to come back together in all its parts rather than the fractured state it currently appears. I save special thanks for those who have been my support and sense check throughout including Scottish Government officials who have fulfilled the role of secretariat for the process and Jane Malloch of South of Scotland Enterprise who has arranged all the meetings – virtual and physical – that have taken place and kept that part efficient and sane.

I would also like to take this opportunity to thank all those who contributed face to face and in writing.