HC Deb 03 April 1980 vol 982 cc669-84

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Cope.]

11.18 am
Mr. Gavin Strang (Edinburgh, East)

I am grateful for the opportunity to raise this important issue today. There is continuing concern about the effects of the Government's public expenditure policies on the forestry industry in general and especially towards the future role and importance of the Forestry Commission.

It is common ground in the House—it has been for many years—that the Forestry Commission represents an important national asset. Since it was established following the Acland Committee in 1919, the commission has made a tremendous contribution to our national economy through the afforestation of many acres of our land, through its sponsorship of the private sector, and as the source of advice on forestry matters to successive Governments.

I wish to concentrate on the role of the commission as a State industry. It is necessary to say a few words to put the current attitudes towards the commission in a wider context. The case for growing more trees has become stronger rather than weaker in recent years. I am glad to see my hon. Friend the Member for Dagenham (Mr. Parker) in the House, because he has taken an interest in this subject over many more years than I have. He has argued this case for decades. I think that he would agree that all the evidence suggests that towards the end of this century and beyond the demand for timber will outstrip supply.

There are many sources of evidence to support that statement. I believe that the most authoritative statement is the Forestry Commission's own document "The Wood Production Outlook in Britain", which was published in 1977. Following that, there has been the World Forestry Congress in Jakarta, which expressed great concern about the trends in relation to demand and supply of timber throughout the world. There is also the report of the Centre for Agricultural Strategies, "A Strategy for the United Kingdom Forest Industry".

I hope that the Government are prepared to agree with that large body of evidence that it is apparently in the national interest to increase our investment in and commitment to the forestry industry.

As we know, this country produces only about 8 per cent. of its timber requirements. Forestry wood products and wood represent a substantial import burden of about £2,700 million a year.

Forestry is a long-term investment. That is probably why Governments of both parties have not attached to it the importance that the national interest demands. The timber that is now being harvested by the Forestry Commission was planted in the 1920s and 1930s. Thanks to the foresight of Governments then, a substantial amount of timber is available for harvesting today. If Governments in the days of depression could be far-sighted enough to make such an investment, surely, with all the benefits of North Sea oil, it is not too much to ask the Government to have a similar commitment to investment in forestry.

The investment that we make today will be harvestable when North Sea oil is exhausted. A small fraction of revenue from North Sea oil could be invested in this important renewable resource for the benefit of the generations that will come when North Sea oil has run out.

I am anxious in particular about the level of new planting. Both the private and State sectors have an important role. I acknowledge that there was a sharp and regrettable decline in the level of private investment in timber when the last Labour Government were in office.

Many people argue that that was a consequence of the capital transfer tax provisions. I did not and do not believe that that was the only consideration. More important was the market in wood and wood products. If the tax regime generally and capital transfer tax in particular were significant factors, it is reassuring that the substantial package on tax concessions and increased and new grants for the forestry sector, announced in March 1977, appears to be having some effect.

I read with pleasure the 1978–79 report from the Forestry Commission. Paragraph 86 states: we are pleased to report that the return of confidence to which we looked forward last year, following the improvements to the support arrangements for private forestry introduced in 1977, is now becoming evident. Planting in the private sector increased for the first time for some years. Although this is still well below the levels achieved in the peak years of the early 'seventies, the interest currently being shown in the Commission's grant-aid schemes, if maintained, would indicate that the upward trend in planting will continue over the next few years. It is fair to conclude that the private sector is reasonably buoyant.

My prime concern is the public sector. I am very worried about the medium-to long-term outlook for new planting by the commission. That worry is more than confirmed by the Government's White Paper on public expenditure, published on Budget day. The White Paper states, of forestry: Planned public expenditure from 1980–81 onwards has been cut by between £5 million and £6 million annually, The new public expenditure provision will allow for new planting by the Forestry Enterprise of some 11,000 hectares a year from 1980–81 onwards".

The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Jerry Wiggin)

In order to avoid too many statistics, perhaps I can inform the hon. Gentleman that the 1980–81 programme involves 12,900 hectares, of which 11,600 will be in Scotland.

Mr. Strang

I do not intend to quote many statistics. I was quoting the new planting figure in the Government's White Paper. Perhaps the Minister includes restocking in his figures.

I regret that there has been a significant decline in the level of planting by the Forestry Commission in recent years. However, there is a prospect of a reversal in the decline. The level of land acquisition is crucial. In the year 1979–80 the commission acquired about 8,500 hectares of land, at a cost of £3.3 million. That represents a significant increase on the previous year.

In 1980–81 the commission plans to spend only about £1 million on new land acquisitions. According to the White Paper, funds for land acquisition are to be reduced. That means that the commission will run out of new land for planting. If there is a new planting rate of 11,000 hectares—which is too low—and the commission acquires less than that per annum, it will begin to run out of land for new planting towards the end of the decade.

I accept that not only the Ministry of Agriculture is involved. The Treasury has a big part to play in the determination of decisions, particularly on the likely levels of planting and acquisition.

Manpower is an important element of public expenditure. I have an interest, in that I give advice to the Civil Service Union. The commission has already started to take some worrying decisions. If those decisions represent the beginning of what is to be become the Government's overall approach to this important national asset, there are grounds for considerable anxiety.

The Government's stated policy is to reduce the size of the Civil Service. That involved a cut of 3 per cent. in the commission's manpower, achieved by December 1979. There is to be another cut of 5 per cent. We are therefore talking of a cut of over 8 per cent. in commision manpower.

The commission is a source of advice to the Government. It manages grants to the private sector and it is a nationalised industry. It is being treated as if it were simply another Civil Service Department. No one suggests that the electricity, gas or coal industries should make manpower cuts.

About 8,250 people are employed by the commission. About 6,000 of them are industrial employees and can be regarded as wealth producers. Among the 2,500 non-industrial employees are about 1,000 State foresters—the middle management. These are productive people.

I do not want to push this analogy too far. The Minister understands what I am getting at. These people are more comparable, as it were, with miners and colliery overmen than with civil servants in the Departments of Trade and of Health and Social Security. It is very worrying that the commission should be treated in that way and that sufficient importance is not attached to its role as a State enterprise.

I mention in this context that a Rayner project is under way in the Forestry Commission. As has been done in the Ministry of Agriculture, Fisheries and Food—as the Parliamentary Secretary knows—it is looking at the numbers of commission employees involved in the administration of grants to the private sector. Given that that is going on, it is monstrous that these cuts in manpower are being attempted.

In recent years the commission has had almost total responsibility for the planting of shrubs—I use that word loosely—in the afforestation of the roadsides of new trunk and motorway schemes. I understand that the commission has taken on this work because the Ministry of Transport and other Departments involved found that it was the most efficient enterprise and the best placed to carry it out. But a decision has been taken that although the commission will continue to manage and oversee this work it will no longer be carried out by commission direct labour; it will be done by outside private contractors.

I challenge the Government on this matter. I have received undertakings from the Minister of State, Civil Service Department—as have other hon. Members and the union concerned—that work will not be hived off, as it were, solely on doctrinaire grounds but will have to be justified on grounds of efficiency or greater cost-effectiveness. There are grounds for believing that in that instance it is a doctrinaire decision, a privatisation—a horrible word that has crept into our jargon in the last few months—and that it will not be more efficient and cost-effective.

I do not expect the Parliamentary Secretary to talk at length on that matter today, but I hope that he will consider it and give an assurance that the undertakings repeatedly given by Ministers in this connection will be adhered to and that there will be no question of hiving off this work for the sake of it, in order to achieve cuts in manpower when no real savings are involved.

One of the consequences of the current approach being adopted to manpower in the Forestry Commission is that more and more of the work force is being deployed from planting and maintenance to harvesting. I welcome the levels of output being achieved on the harvesting side, but there is a source of genuine concern that the numbers involved in planting and in research will be significantly reduced in the years ahead.

I advised the hon. Gentleman's office that in this connection I would refer to the position at Fort William as it is important to Scotland. The hon. Gentle- man will be aware of the importance that the chemical pulp mill assumed in the Highlands economy and of the great concern when Wiggins Teape announced the closing down of the mill. Indeed, it has been closed now for some time.

I understand that a Canadian company—Consolidated Bathurst Incorporated—and Wiggins Teape are planning a major investment of £100 million in a newsprint mill at Fort William and that the decision may be taken by the early summer. The Forestry Commission has a part to play here in giving reasonable undertakings on the supply of timber, as have the private sector and the unions on working practice, but the Government also have an important part to play.

I hope that the Parliamentary Secretary will be able to give an undertaking not only to the people at Fort William but to the forestry industry in the Highlands and in Scotland generally that the Government attach the highest importance to making a success of this proposed investment and will be prepared to do what they can to give it the necessary support.

I congratulate the Forestry Commission on its tremendous achievement on the amenity and environmental side. On occasions I have derived great pleasure from picnicking in some of the commission's forests. The commission has set a European example with what it has achieved in many of the forests that it has developed. Hundreds of thousands of people in urban areas derive great benefit and enjoyment from the commission's investment in this area. The previous Labour Government and the Government before them had already taken a decision that this aspect should be encouraged in the national interest. Therefore, if my information is correct I find it disturbing that, as part of this cutback in the commission, new amenity, environmental and recreational projects have been almost if not completely halted.

I believe that there has been a bipartisan policy towards forestry during the last two decades. Conservative Members would say that the previous Labour Government, through their taxation regime, were too hard on the private sector. All right; I shall not argue about that. But, on the figures, the 1977 package was not only generous; it was appreciated by the industry and seems to have led to some extent to a resurgence in the level of planting activity. It would be sad and against the national interest if we were to see a sharp movement away from this bipartisan policy and there were to be a downgrading of the importance of the commission as an investor, producer and creator of our national wealth.

This is not a doctrinaire view. The British Paper and Board Industry Federation, in a statement issued last month, said: The Forestry Commission, with its sound commercial and harvesting resources, has greatly assisted in providing long-term stability, controlled development and continuity of supply, and its future is essential to complement the private sector in any future policy. On 1 November the Parliamentary Secretary gave me an assurance that the commission would not be sacrificed as part of the Government's public expenditure cuts. I have sought to argue that there is already cause for concern, first, in relation to the approach towards manpower and, secondly, in relation to the Government's White Paper on public expenditure. The Minister of State, in reply to the debate in the other place last week, said that the Government were undertaking a fundamental review and that a dialogue was taking place between the commission and the Government on the future of forestry policy.

I urge the Government not to go down the road of privatisation policy—an extreme policy—or to depart from the policy of successive Gevernments to support the commission. The case for investment by the commission in the forestry industry is getting stronger. I hope that the Government will acknowledge that.

11.39 am
Mr. John Parker (Dagenham)

I support what has been said by my hon. Friend the Member for Edinburgh, East (Mr. Strang). It is most important that some of the revenues from North Sea oil should be used to finance the forestry industry, not only because the trees will be there when the oil begins to run out but because trees are a replaceable asset, and more trees can be planted as they are used up.

The Reading report about the future of forestry has recently been published. It has made much of the point that in the next half century, whilst resources are likely to be dropping and prices rising, the various alternative sources of supply are likely to be much fewer. Therefore, it is all the more important that we should have our own source of supply.

I do not want to go into this point at great length, but I must point out that the Reading report suggests that we ought to have an all-party policy on an agreed programme of planting that would not be interrupted, as happened under both of the previous two Governments, who interrupted the general progress of the industry.

It is interesting to note that the pension funds, which have to invest with the best thoughts about the future, are now beginning to invest in forestry. It it indicative that the return will be coming to them at the time when they want to pay out their pensions, that is, in the early part of the next century.

We shall be seeing a world shortage of timber and an increase in price. That will mean an increased disadvantage, from our point of view, to our balance of payments. Therefore, we should be increasing supplies in Britain not only for that reason but because timber-using industries will be facing increased competition from foreign firms sending their finished products here—timber and paper, and so on—rather than our importing timber as a raw material to be turned into manufactures here. Therefore, it is in the interests of the timber-using industries as well that there should be increased planting here.

I hope that this will be a joint programme of public and private forestry. It is important that there should be a split between the two and co-operation between the two, and there should be backing for the policy of doubling the hectarage under forestry in the next 50 years. Once accepted, such a programme should go ahead irrespective of changes of Government.

I do not want to trespass too much on the time available for the Minister's reply. However, there is one other point in this connection. We give grants for hill sheep farming. Why should we not encourage hill farmers also to afforest strips of land? Should we not have special schemes, with the same kind of contributions, for creating shelter belts on steep bits of land that cannot otherwise be cultivated? Should we not encourage land owners and ensure that agricultural colleges instruct young farmers in forestry and advances in it? That is where there should be an increased effort and where Government policy could enter into the matter.

I hope that we shall soon have a report from the Government on what they intend to do about the Reading report. When that is produced, I hope that there will be discussions between the two Front Benches so that we have an agreed policy to go ahead for 50 years without interruptions when changes of Government occur.

11.44 am
The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Jerry Wiggin)

As is traditional, I start by congratulating the hon. Member for Edinburgh, East (Mr. Strang) on raising this subject. As the House knows, the other place had a lengthy debate on this matter last week. It is appropriate and timely that forestry should be debated in both Houses since I think that this is the first occasion on which the matter has been raised since the present Government took office.

The hon. Member for Dagenham (Mr. Parker), with his long-standing interest in forestry, mentioned the Reading report, as did the hon Member for Edinburgh, East. My view is much the same as that of the hon. Member for Edinburgh, East, which is that the Forestry Commission document "The Wood Production Outlook in Britain" is in many respects more authoritative and, I think, more deeply argued. However, there is little difference between the two in their general concepts and on the need for a continuing programme of forestry expansion in this country for the purposes of producing wood, providing jobs in rural areas and the wood processing industry, and reducing our large dependence on imported timber.

Nice as it would be to debate the general subject at length, time does not permit. Therefore, I think that I should deal with some of the more detailed and specific points that the hon. Gentleman raised in the context of such matters as constraints on public expenditure and on manpower.

I should like, however, to echo what my noble Friend the Minister of State, Scottish Office said in the debate on forestry in another place on 26 March. The Government are in favour of continuing expansion of forestry in this country and we welcome the contribution that further planting would make towards easing some of the problems identified by the two reports that I have just mentioned. But the further expansion of forestry raises a number of fundamental questions, the answers to which have long-term implications beyond the confines of forestry and cannot be reached hastily. Although we are pursuing our present review of forestry policy with vigour, it is something that we cannot skimp, as we want to be certain that the policy that emerges is positive and constructive and provides an acceptable balance, given the limited land and other resources available to us.

The balance of the future afforestation effort between the public and private sectors is clearly an important part of the equation and one that can, of course, be approached differently, depending upon one's political viewpoint. That balance has tipped one way and the other over the years, and it is now, as the latest planting figures show, tipping towards a more significant private sector investment in forestry. It is not the Government's intention, however, to dissolve the successful partnership between the Forestry Commission and private woodland interests.

In spite of what the hon. Gentleman said, the fact is that the commission is, to all intents and purposes, a Government Department. Like other Government Departments, it must take a share of the reductions in public expenditure and manpower to which the Government are fully committed. Indeed, from the tenor of the hon. Gentleman's remarks I would assume that he saw the commission, perhaps, more as a nationalised industry. Indeed, that is a point that is worth looking into. We would consider this as we would consider many other propositions, in looking at the very substantial public investment over the years and the very large assets now employed by the commission. I think that the hon. Gentleman's point is a reasonable one for debate and investigation.

These expenditure and manpower cuts have been tailored to meet the circumstances of each Department, and in the case of the Forestry Commission we fully recognise its revenue-producing role and the importance of maintaining its capacity to harvest the growing volume of timber now available as its post-war plantations mature.

The commission has had a good record of productivity over the past decade. At a time when its estate has continued to expand and its timber production has more than doubled, its industrial labour force has been reduced by nearly one-third and its supervisory and administrative staff by about 16 per cent.

Reductions of that order clearly cannot be sustained. Mechanisation of forestry has made an important contribution and has now achieved some of its effect. But, for an efficient organisation, as I believe the commission is, expenditure and manpower reductions of the order required recently should be capable of being absorbed without an unacceptable effect upon the discharge of its main responsibilities.

Nevertheless, it is fair to say that as the demand for staff to harvest timber in the forthcoming years grows, so I shall certainly be prepared to argue that it will be necessary, given the commercial constraints and the attitude that the Government naturally have to such matters, to see that in order to maintain its efficiency the commission has adequate staff to reap the harvest that it has sown. The commission has indicated that it expects to be able to make the current economies while maintaining its present estate in good order, as well as its harvesting, and thus its earning revenue capability.

About half the public expenditure reductions will fall on the commission's land acquisition budget, which has been cut this year from £3½ million to £1 million. I accept that the hon. Member for Edinburgh, East regards that as a retrograde step, but I fail to see how he can reconcile that attitude with the fact that the previous Labour Government lopped £1.6 million off the commission's acquisition budget in 1977–78 and restored it in full to the previous figure of £3 million only in the financial year just ended. The land market is notoriously volatile, and I remind the hon. Member that in the year when the Government of which he was a member were making their expenditure cuts—I wish that they had seen them through—the amount of plantable land on the market was such that the commission found it difficult to spend the reduced figure allocated to it for land acquisitions.

The current year's figure of £1 million, however, will be capable of variation, in so far as we have agreed that the commission may retain 50 per cent. of any revenues from the sale of surplus properties, over and above its survey figure of £1.4 million. Thus, the commission has every incentive to fulfil the Government's call to maximise its disposals effort. That arrangement will apply only to the current year, but in the next three years of the public expenditure survey period the commission's acquisition funds will be increased to an average of £2 million per annum. That might limit the expansion of our forests if the Commission were the sole bidder for forestry land, but that is not the case. Private interests have shown a growing readiness to invest in forestry over the past two years, and I am confident that little, if any, land offered in the market for forestry will be left unplanted as a result of the present retrenchment in the public sector.

As the hon. Member for Dagenham said, there is a growing awareness of the desirability of investment in forestry, and the nature of the reward and return is becoming apparent to many financial institutions, some of which have taken the trouble to inform me of their future interests.

Another main area of expenditure and manpower reductions will fall on the administration head, rising from £0.25 million to over £1 million by 1983–84. Apart from a marginal reduction in the commission's research activity, the main cut will fall on administrative staff at headquarters and in the regions. That may call for some difficult decisions. In common with other Departments, the commission is looking for ways of increasing efficiency. One example could be in the administration of private woodlands grants and felling licensing procedures, in respect of which the commission is shortly to complete a scrutiny under the guidance of Sir Derek Rayner.

The commission has also decided to call a halt, for the time being, to any new recreational projects, such as camp sites, forest trails and picnic sites, which will save upwards of £1 million per year. The remaining expenditure under this head will cover the maintenance of existing facilities. There will be no cutback in those facilities merely a stop on any additions. That must be right at a time of acute economic difficulties. The commission has an excellent record in this field, which has brought it much credit and has served as an example for others to follow, and it will continue to maintain its present high standards. There will also be significant expenditure savings—up to £750,000 by 1983–84—in fertilising and in the protection of plantations against predators, and so on. The commission has been careful, however, to ensure that the less intensive management involved in the short term will not have any harmful effects over the full period of the crop.

Expenditure—including staff—on new planting operations will be reduced. This year the savings will be £0.45 million, with the new planting programme falling by 1,000 hectares from last year's level, to 12,900 hectares. It is realistic to cut the commission's new planting programme to this lower figure because the depressed land market of recent years has resulted in its reserves of plantable land being eroded. In the following three years the new planting programme will fall by about 2,000 hectares, resulting in savings in 1983–84 of £0.9 million. The balance of plantable land on the market should, with the renewed confidence in the private sector, still go to forestry.

The hon. Gentleman will be pleased to learn, however, that that will still leave a substantial acreage of plantable reserves in the ownership of the commission. I am satisfied that this policy will not do any long-term damage. The maximum expansion will, of course, continue, with the commission retaining a significant share, although there will be a philosophical difference between Conservative and Labour Members as to whether that should be the proportion between the private and public sectors.

Previous planning programmes have proved over-optimistic. For example, in 1970.71 the total planting by the commission was 28,400 hectares. By 31 March 1979 the total had fallen to 15,400 hectares, in spite of the programme that was set in 1974 for 22,000 hectares a year. We should see that in the light of history and not be too critical if the programme is now being made more realistic.

There are other constraints, such as the availablity of land and the wish of the environmentalists to see that forestry does not harm the countryside. Those factors are increasingly infringing upon the acquisition programme of the commission, as they are of the private sector. This is a difficult area, on which the Government must concentrate. There are other minor savings in forest road improvement programmes, replacement of vehicles, and so on, which can be achieved without unduly impairing efficiency in the short term.

At this point I should like to mention the recent pay settlement that was agreed between the Forestry Commission and the unions for its forest workers. The settlement was concluded with a speed which does credit to both sides. The commission was able to pay the arrears from 21 January 1980 resulting from the settlement in the last financial year, rather than in 1980–81, as expected. That means that the 1980–81 cash limit for the Forestry Commission presented to Parliament on 26 March, in the sum of £40,133,000, which included provision for the arrears, will be reduced by £506,000 to take account of this, and a revised 1980–81 Estimate will be submitted to Parliament at the appropriate time.

Mr. Strang

Is the Minister aware that the latest pay settlement apparently means that for the first time—certainly in my recollection—the forestry workers will be paid a rate for the job that brings them below the legal minimum that applies as a result of the agricultural wages board determination in the private sector. I have not examined the amounts for pensions, but it has been suggested to me that, as a consequence of the cash limits, the settlement was bad from the point of view of the industrial workers in the commission. I hope that the Minister will look into the matter at a later date.

Mr. Wiggin

Obviously I am aware of the background, and I hope I have the facts right when I say that that is a deliberate policy by the commission to ensure that its workers are paid the same on either side of the border. The difficulty arises from the fact that wage council settlements in Scotland are at a different level from those in England. The hon. Gentleman is correct in saying that in order to maintain a salary structure some employees had to receive a little less and others a little more. That was the intention. I think that he will accept that there would be difficulties if two men doing the same job—one in Scotland and the other in England or Wales—were paid at substantially different rates.

Mr. Strang

They should be paid more.

Mr. Wiggin

It would be good if we could pay everyone double, ourselves included, but we cannot afford it. It is vitally important that the commercial aspects of operations are considered in forestry.

I am aware of the negotiations that my right hon. Friend the Secretary of State for Scotland—who has responsibility for the matter—is carrying out in regard to Fort William. The Forestry Commission can make a substantial contribution to the welfare of the whole nation, but particularly to employment in Scotland. If at the end of the day the matter becomes one of social benefit to Scotland, the commission should say so. The matter should be seen and identified for what it is. There is a contribution to be made in that regard. The Government have much good will towards it, and I hope that they will be able to help.

The commission is staffed by some very dedicated people, and I am sure that under its new chairman and its vigorous director-general it will continue successfully to fulfil its dual role as both forestry enterprise and forestry authority.