In July 2000 the Department for Business, Enterprise and Regulatory Reform (then the Department of Trade and Industry) announced a scheme to compensate former trawlermen who had lost their jobs when the distant water fishing industry collapsed in the 1970s. The collapse had been due, in part, to the loss of access by UK boats to Icelandic waters following agreements between the UK and Icelandic governments at the end of the 'Cod Wars'. Most trawlermen did not receive compensation at the time they lost their jobs, and the scheme followed a long campaign by former trawlermen and their representatives for better compensation. The scheme was targeted at former UK-based trawlermen who had worked in Icelandic waters.

The scheme was open to claims between October 2000 and October 2002, and the Department received claims from or on behalf of some 7,000 former trawlermen. Over £42 million has been paid to 4,400 former trawlermen or their dependents, around 63% of claims received.

The scheme presented the Department with major challenges. The Department required evidence to verify the eligibility of claims, but the events involved had occurred more than 20 years before. It faced difficulties distinguishing between trawlermen affected by the fishing agreements with Iceland following the 'Cod Wars', who were specifically targeted by the scheme, and those who had lost their jobs as part of the wider decline in the industry. When designing the scheme rules, the Department did not fully understand working practices in the industry in the 1970s, adding to the inherent difficulties in implementing the scheme and producing errors and delays to payments.

In February 2007 the Parliamentary and Health Service Ombudsman reported the results of her investigation into the administration of the scheme following complaints from a number of claimants.[1] Her report made three findings of maladministration: that the scheme was devised and launched before it was appropriate to do so; that there was a mismatch between what the scheme was intended to deliver and what it was capable of delivering through the scheme's rules; and that the problems identified during the operation of the scheme should have led to a comprehensive review of the scheme, which did not happen.

On the basis of a report by the Comptroller and Auditor General,[2] which was conducted in parallel with the Ombudsman's inquiry, the Committee took evidence from the Department for Business, Enterprise and Regulatory Reform on its administration of the scheme.