A Fair Fishing policy - EU must act responsibly

The operation of Liquidated Damages is one of the first lessons anyone learns in Construction Contracts 101. The contract provision cannot operate in any way as a 'penalty clause' if it is to be enforceable; LADs must be a genuine pre-estimate of valuable loss and damage arising from the contractor's failure to complete by the due date. And this, I think, is a valuable lesson for the way in which we can use our EEZ after the end of the year.

One of the reasons why we are so determined not to give away any binding commitments to EU nations, and to stick to the granting of annual licences (which we can expect to slip to an offer of biannual in the final round of negotiations - which the EU may not want to take-up) is that the extent of any licence is wholly at the discretion of the UK. They're our waters.

However, we face challenges. One is illegal fishing and over-fishing by vessels from EU nations, or the use of vessels and methods of fishing which will be banned in UK waters. Drone surveillance and marine intelligence may inform us of offending, but enforcement action is costly. Not only the costs of patrol vessels with Royal Marines boarding parties, the costs of taking into custody offending boats and skippers, and of mounting prosecutions. It costs big money.

Then there is the failure by those same EU coastal states to control illegal migration from their nations to the UK - a failure amply demonstrated by Nigel Farage in recent weeks. Every migrant that France assists across the Channel comes with a lifetime cost - few of them will become net contributors. The TPA has estimated that net lifetime costs could be in the region £0.3m - £1m for each migrant. This, too, is a breach of our Exclusive Economic Zone - migration is an economic matter.

EU nations make big money from British fish. The FT reports that EU boats land more than 700,000 tonnes of fish from UK waters each year. Even if that figure reduces by half after licensing, it is still a very substantial sum.

And so we must consider a defaults system. A process for notifying breaches and defaults to the offending EU coastal state should be put in place - failures both by EU national governments to secure the EU border and breaches of fishing regulations by EU flagged vessels - with a mechanism for response and appeal to a UK tribunal. Any defaults accumulated during the course of a year would result in an appropriate reduction in licence quota for the following year - or two years, with biannual licences. The extent of reduction, like LADs, would be directly related to the estimated NPV of the cost of the breach, whether costs of maintaining migrants or the long-term depredations to fish stocks as an economic resource by illegal fishing, or the estimated costs of physical enforcement. A rubber boat full of illegal migrants may be valued at £10m, an illegal-mesh net £5m.

This is why the EU wants so much to secure a permanent legal right to fish in our waters. It would prevent us from implementing such a fair and reasonable licence condition. A properly formulated defaults system would stand up to challenges in both UK courts and international tribunals. Like LADs, such licence adjustments must be genuine pre-estimates of loss and damage.

The defaults scheme would also have beneficial consequences - EU fishing fleets would be motivated to take action themselves to prevent illegal migration in small boats; every raft let though by the French coastguard would cost them money. And EU national authorities would properly police their borders, as a failure to do so would result in lost votes and angry protests from a volatile fishing industry. It's win-win as far as I can see. And marine ecology and sustainable fishing would also be immeasurably improved - so even the Gretas could support it.