This is why you'll probably be eating American lobster soon

UK lobster: the world is no longer its oyster.

Those of you getting used to seeing cheap frozen lobsters in supermarket freezers and shaking your heads at the distinctly non-luxury pricetags, may be surprised to hear the UK is suffering a crustacean supply crisis.

According to Alistair Sinclair, chairman of the Scottish Creel Fishermen’s Federation (SCFF), the UK’s ongoing triple-dip winter has seen grim weather on the East coast of Scotland wreck fishing gear, leaving lobstermen stuck on shore, and depleting stockpiles to the point of exhaustion.

“The boys haven’t been out for five months” warns Sinclair, whose organisation represents a £39m per year industry, “and when they do get out, they’re finding that a lot of the gear is damaged, so they’re having to spend more time on shore to repair it.”

The last year’s Scottish lobster catch was 90 per cent down year-on year, he says, and the ponds and vats in which the Autumn catch was stockpiled for distribution over the Christmas period are now long empty.

What comes next is a massive hike in UK-caught lobster prices - according to the BBC, the Scottish market has already seen them shoot from £15 to £25 per kilo in the last three weeks. Restaurants are hauling lobster dishes off menus, or worse yet, in Sinclair’s view at least, switching over to using imported North American stock.

It is, by and large, exports from Northeastern US and Canadian fisheries that lie behind the rash of cheap lobster appearing in the UK over the last few years – an economic shift also rooted in sweeping environmental change.

With cod, a major predator of young lobsters, being long scarce in the waters off America’s Eastern Seaboard, and warmer temperatures increasing the density of food available to young animals, lobster fisheries have boomed, leading to an unprecedented crash in prices.

The summer of 2012 saw Maine lobster prices collapse from around $4 per pound to just $2 per pound, spurring Maine’s Lobster Advisory Council to throw $3m of marketing money into convincing Americans to eat more lobster, and spurring exporters to push even more frozen decapod into overseas markets.

“I’ve eaten one of those £6 lobsters” says Sinclair, “or rather I should say, I’ve eaten part of one. I can assure you they are not the same as Scottish stock.”

But it’s not just budget Euro supermarket chains offering the overseas stock – relatively upmarket chains like London’s Burger & Lobster, which sells lobster at a flat price of £20, get all their stock from Canada, and do not expect to see prices increase as a result of the problems in Scotland.

Yet while there is an issue of quality at stake here, the greater worry is economic and social: with the UK gorging itself on American lobster and domestic prices skyrocketing, Sinclair says that a great deal of his federation’s 500 members stand to lose their livelihood altogether.

“We have to do something to catch up. The American fisheries are 20-30 years ahead of us” he says.

In order to close the gap, the SCFF is seeking government support for the construction and maintenance of lobster hatcheries: a facility measuring just six feet by six feet, Sinclair says, is capable of putting out five million lobsters per year, and would ensure a greater density of catch for those fisherman able to get out in bleak weather.

But until something shifts on this front, it seems UK consumers with a taste for lobster should get used to the taste of Eastern Atlantic stock.

Delicious. Photograph: Getty Images

By day, Fred Crawley is editor of Credit Today and Insolvency Today. By night, he reviews graphic novels for the New Statesman.

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Q&A: What are tax credits and how do they work?

All you need to know about the government's plan to cut tax credits.

What are tax credits?

Tax credits are payments made regularly by the state into bank accounts to support families with children, or those who are in low-paid jobs. There are two types of tax credit: the working tax credit and the child tax credit.

What are they for?

To redistribute income to those less able to get by, or to provide for their children, on what they earn.

Are they similar to tax relief?

No. They don’t have much to do with tax. They’re more of a welfare thing. You don’t need to be a taxpayer to receive tax credits. It’s just that, unlike other benefits, they are based on the tax year and paid via the tax office.

Who is eligible?

Anyone aged over 16 (for child tax credits) and over 25 (for working tax credits) who normally lives in the UK can apply for them, depending on their income, the hours they work, whether they have a disability, and whether they pay for childcare.

What are their circumstances?

The more you earn, the less you are likely to receive. Single claimants must work at least 16 hours a week. Let’s take a full-time worker: if you work at least 30 hours a week, you are generally eligible for working tax credits if you earn less than £13,253 a year (if you’re single and don’t have children), or less than £18,023 (jointly as part of a couple without children but working at least 30 hours a week).

And for families?

A family with children and an income below about £32,200 can claim child tax credit. It used to be that the more children you have, the more you are eligible to receive – but George Osborne in his most recent Budget has limited child tax credit to two children.

How much money do you receive?

Again, this depends on your circumstances. The basic payment for a single claimant, or a joint claim by a couple, of working tax credits is £1,940 for the tax year. You can then receive extra, depending on your circumstances. For example, single parents can receive up to an additional £2,010, on top of the basic £1,940 payment; people who work more than 30 hours a week can receive up to an extra £810; and disabled workers up to £2,970. The average award of tax credit is £6,340 per year. Child tax credit claimants get £545 per year as a flat payment, plus £2,780 per child.

How many people claim tax credits?

About 4.5m people – the vast majority of these people (around 4m) have children.

How much does it cost the taxpayer?

The estimation is that they will cost the government £30bn in April 2015/16. That’s around 14 per cent of the £220bn welfare budget, which the Tories have pledged to cut by £12bn.

Who introduced this system?

New Labour. Gordon Brown, when he was Chancellor, developed tax credits in his first term. The system as we know it was established in April 2003.

Why did they do this?

To lift working people out of poverty, and to remove the disincentives to work believed to have been inculcated by welfare. The tax credit system made it more attractive for people depending on benefits to work, and gave those in low-paid jobs a helping hand.

Did it work?

Yes. Tax credits’ biggest achievement was lifting a record number of children out of poverty since the war. The proportion of children living below the poverty line fell from 35 per cent in 1998/9 to 19 per cent in 2012/13.

So what’s the problem?

Well, it’s a bit of a weird system in that it lets companies pay wages that are too low to live on without the state supplementing them. Many also criticise tax credits for allowing the minimum wage – also brought in by New Labour – to stagnate (ie. not keep up with the rate of inflation). David Cameron has called the system of taxing low earners and then handing them some money back via tax credits a “ridiculous merry-go-round”.

Then it’s a good thing to scrap them?

It would be fine if all those low earners and families struggling to get by would be given support in place of tax credits – a living wage, for example.

And that’s why the Tories are introducing a living wage...

That’s what they call it. But it’s not. The Chancellor announced in his most recent Budget a new minimum wage of £7.20 an hour for over-25s, rising to £9 by 2020. He called this the “national living wage” – it’s not, because the current living wage (which is calculated by the Living Wage Foundation, and currently non-compulsory) is already £9.15 in London and £7.85 in the rest of the country.

Will people be better off?

No. Quite the reverse. The IFS has said this slightly higher national minimum wage will not compensate working families who will be subjected to tax credit cuts; it is arithmetically impossible. The IFS director, Paul Johnson, commented: “Unequivocally, tax credit recipients in work will be made worse off by the measures in the Budget on average.” It has been calculated that 3.2m low-paid workers will have their pay packets cut by an average of £1,350 a year.

Could the government change its policy to avoid this?

The Prime Minister and his frontbenchers have been pretty stubborn about pushing on with the plan. In spite of criticism from all angles – the IFS, campaigners, Labour, The Sun – Cameron has ruled out a review of the policy in the Autumn Statement, which is on 25 November. But there is an alternative. The chair of parliament’s Work & Pensions Select Committee and Labour MP Frank Field has proposed what he calls a “cost neutral” tweak to the tax credit cuts.

How would this alternative work?

Currently, if your income is less than £6,420, you will receive the maximum amount of tax credits. That threshold is called the gross income threshold. Field wants to introduce a second gross income threshold of £13,100 (what you earn if you work 35 hours a week on minimum wage). Those earning a salary between those two thresholds would have their tax credits reduced at a slower rate on whatever they earn above £6,420 up to £13,100. The percentage of what you earn above the basic threshold that is deducted from your tax credits is called the taper rate, and it is currently at 41 per cent. In contrast to this plan, the Tories want to halve the income threshold to £3,850 a year and increase the taper rate to 48 per cent once you hit that threshold, which basically means you lose more tax credits, faster, the more you earn.

When will the tax credit cuts come in?

They will be imposed from April next year, barring a u-turn.

Anoosh Chakelian is deputy web editor at the New Statesman.