Review of the Amended Economic Link License Condition
A review of the impact of the Scottish Government's economic link licence condition following the introduction of amended arrangements in 2023.
Pelagic Price Differentials
Landings Abroad
Graphs 5 & 6 below show the real price per tonne (PPT) received by the Scottish fleet when landing mackerel (Graph 5) and herring (Graph 6) into Scotland and anywhere abroad[8]. Both sets of price points tend to follow similar price trends, rising and falling in line with one another.
Mackerel
Mackerel prices were roughly similar between Scotland and abroad between 2015 and 2022. During this period, mackerel typically commanded a slightly higher price abroad, although there were years when prices were higher in Scotland, or the price difference was negligible. Between 2015 and 2022, the average real price difference was £46. Since 2022, there has been a greater divergence between the two price points. Prices abroad were £111 higher than in Scotland in 2023; in 2024 this gap rose to £154. The real price of mackerel landed by Scottish vessels abroad plateaued in 2023, compared to 2022, before increasing 11%, to £1,557 per tonne, in 2024. In Scotland, real prices of mackerel decreased by 4% in 2023, compared to 2022, before growing by 9% in 2024, reaching a real PPT of £1,403. The total real value of mackerel landed by the Scottish fleet reached its highest real value since 2015[9], totalling £281m, of which £154m was landed into Scotland.
^ Provisional
* 2024 prices
Herring
Herring prices between Scotland and abroad were roughly similar, between 2015 and 2019, although herring typically commanded a slightly higher price abroad. During this period, the average real price gap between prices in Scotland, and abroad, was £37. There is a marked increase in the price differential between Scottish and abroad prices in 2020, when the real price difference increased to £78. This increase in price differential occurred prior to the introduction of the revised economic link licence conditions. The gap has stayed around this level since, with an average real price gap between 2020 and 2024 of £75. The average real price gap since the introduction of the amended economic link licence conditions has been £72. In 2024, the real price gap between Scotland and abroad was £70. Real herring prices were stagnant in 2021 and have been falling since 2022. Provisional management data suggest that the PPT for herring achieved in Scotland, in 2024, was £605, compared with £675 abroad. This is down from £731, and £805 per tonne, for Scotland and abroad, respectively, in 2022. However, falling prices have not impacted the total value landed from herring by the Scottish fleet, which totalled £51m in 2024, its highest figure since 2015, of which £33m was landed into Scotland. This was driven by an increase in the tonnage of herring landed, primarily due to an increase in the TAC for herring.
^ Provisional
* 2024 prices
2022 BRIA
In 2022, a Business and Regulatory Impact Assessment (BRIA) accompanying consultation on the economic link policy changes explored the impact that the proposed changes to the economic link licence conditions would have on businesses, and the economy. The analysis within the BRIA used a price difference per tonne of £35 for mackerel, and £31 for herring, based on published landings data between 2015 and 2019. The price difference was presented as expected 2023 prices at the time of publishing. Converted to 2024 prices, this price difference is £36 for mackerel, and £32 for herring. Sensitivity analysis was carried out exploring the impact to the Scottish economy, and businesses, if this price differential increased to £144 for mackerel, and £84 for herring. In 2024 prices, this is a price difference of £150, and £87, for mackerel and herring, respectively. The price differences modelled, and assumptions made, were not expected outcomes, but rather possible risks and were used to understand what might happen if circumstances were to change.
In 2024, as seen above, the price difference for herring between Scotland and abroad was £70. Although greater than the base price difference of £32[10] outlined in the BRIA, the 2024 herring price difference is within the boundaries outlined within the sensitivity analysis of the BRIA. However, the 2024 price differential for mackerel was £154 per tonne, £4 per tonne greater than the upper price differential of £150[11] per tonne used in the sensitivity analysis of the 2022 BRIA. In the BRIA, sensitivity analysis concluded that, even with the increased price differences of the worst-case scenario, the policy changes still resulted in a net benefit to the Scottish economy of £7.4m[12] in year three of the policy (2025)[13]. In light of the expected benefit despite an increase in price difference per tonne, the marginal difference between the current price difference per tonne and the one modelled in the BRIA, and the observed increase in landings of mackerel and herring into Scotland since the policy change, it is deemed that there is no need to take immediate action regarding the policy. It is, however, recommended that the price differential between Scotland and elsewhere (principally Norway) continues to feature as part of future reviews of the policy and this information features in any decision to amend the policy.