§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Robert G. Hughes.]
§ 10 pm
§ Sir Jim Spicer (Dorset, West)I open this short Adjournment debate by saying how delighted I am that the Minister—my hon. Friend the Member for Dumfries (Sir H. Monro)—is to reply to the debate. It is his first time on the Front Bench for a few years. There is no one better qualified to speak about forestry. As a Scot, he knows how important forestry is in Scotland—although it is equally important for all in the United Kingdom. I warmly welcome him to the Front Bench.
I apologise to my hon. Friend and to you, Madam Speaker, as the debate was billed as being on the subject of the Forestry Commission. I am not saying that that is a dull subject, but it is not what I intend to speak about tonight. If anyone from the Forestry Commission is in the Gallery listening to the debate, he will be sadly disappointed.
I want to talk about the crisis in forestry in this country, which could and should have been dealt with over the years. I hope that it will be a debate in shorthand because those with an interest in forestry know what the problem is only too well. I shall briefly set the scene. Between 1980 and 1988 there was a renaissance in the forestry industry in Britain which benefited all sectors of the industry. Sometimes people think about the subject only in terms of forestry, but there are three sectors—the nursery men, the growers and the processors. They are interdependent and equally important.
During that period, the level of planting of broadleaf and conifers in private woodlands rose from 8,302 hectares to 23,821 hectares. There was near certainty that the target —and I stress that it was the Government's target—of 33,000 hectares would have been achieved by the year 1990–91. I am not arguing against the tax changes in 1988 because there were things that were wrong and things that needed to be put right. However, nobody really anticipated what would happen after those tax changes. I have a particular constituency interest as the first thing that happened was that 10 million plant orders were cancelled and a large nursery man in my constituency stopped production. In 1988 to 1990, there was a drop in planting in the private sector alone, from 23,000-plus hectares to 12,767 hectares. I am quoting the exact figures so that there is no nonsense about the matter. That massive reduction was not expected.
In 1988 and 1989 people said, "Don't worry. We have changed the tax system, we are moving over to grants, and grants will solve the problem." That has not happened and the haemorrhage and the lack of new planting have continued. Even the Forestry Commission reported in 1990 that new plantings totalled only 4,081 hectares—lower than in 1988. I apologise for giving more figures, but total planting in 1990 was 16,874 hectares, which was the lowest figure for 20 years—at a time when demand worldwide and in this country in particular had risen rapidly.
In 1989–90, spurred on by those with a great interest in the forestry industry, I went to see the then Secretary of State for Scotland, my right hon. and learned Friend the Member for Edinburgh, Pentlands (Mr. Rifkind), who 468 gave an assurance that if the situation was as serious as we had indicated, he was only waiting for the planting figures for that year before taking action.
The scene is one of falling planting over four years, and with no take-up of the grant system that can ever compensate for taxation. Some people might ask why there is any need to worry. The reason is that 90 per cent. of this country's consumption of forestry products is imported, at a cost of £7.2 billion per year. Imported timber products account for our fourth largest trade deficit after vehicles, food, and fuel. My guess is that, given that our vehicle exports are doing so well, our third largest trade deficit is now accounted for by timber imports. Demand will double over the next 60 years, so if no action is taken that deficit will massively increase.
Another aspect relates more to industry and processing. Most people would not know what I was talking about if I were to mention the Shotton and Caledonian paper mills. They are state-of-the-art mills that are at the top of paper processing, and were established between 1980 and 1988, in the firm expectation that there would be a massive rise in forestry and wood products in this country. Sadly, they are to be disappointed. Some 55,000 people are employed in the private sector, to which one can add those working for the Forestry Commission and processors. Therefore, the livelihoods of a large number of people depend on an expansion in forestry.
Forestry is and always will be part of the agricultural and rural scene. At a time when we are facing cutbacks in agriculture, it is ludicrous that forestry, which could and should provide an alternative, is not being fully exploited and taking up more land. Twenty-five per cent. of the European Community's overall agricultural land is taken up by forestry and forestry work, whereas in this country the figure is only 10 per cent. We are not only at the bottom of the league table; we are right at the bottom of it. At the present rate of planting, we will stay there for many years to come.
Given that we face the certainty that our requirement for timber products will double over the next 60 years, it is unbelievable that we are prepared to import more timber without setting an environmental example by increasing our own planting capacity.
There is a crisis. That cannot be denied by any Minister, least of all those in the Treasury. It is summed up in a letter written to the Chancellor on 31 October by Mr. Christie-Miller, chairman of Timber Growers UK. He wrote:
The change in support for forestry from a tax based to a grant aided system is clearly not achieving the Government's aim, which is to sustain a healthy forestry industry whilst at the same time providing for a wide spectrum of public benefits including leisure, recreation, wildlife habitats and environmental enhancements.I cannot believe that a single hon. Member would not say, "Hear, hear" to that.What, then, are we to do about the crisis? The letter from which I have just quoted made some recommendations. First, it recommended that planting grants should be index-linked. Secondly, it recommended that land acquired for purposes of forestry should enjoy the same tax relief as agriculture on the interest on its purchasing loans. I quote the letter in shorthand, as it were; it exists, and can be quoted again—as I hope that it will be—in a further meeting with Treasury Ministers.
The third recommendation was the exclusion of forestry from inheritance tax. The fourth mentioned the 469 need to broaden the base of forestry investment and ownership—the "people's capitalism" argument. That could be achieved through a unitised corporate vehicle whereby investors in forestry would be treated in a similar fashion to the individual investor. I shall not go into the details, but if my hon. Friend the Minister wants more information, he can refer to the people who really know what they are talking about—the timber growers.
Let me sum up my argument. No one can deny that there is a problem; no one can deny that we need more home-grown timber; no one can deny that at present, instead of seeing an increase in planting in this country, we are seeing a massive decrease. Something must be done. All that I ask of my hon. Friend is that he makes the strongest possible representations—on behalf not only of those who live in rural areas, but of all who care about our environment in this country and that of the rest of the world—and tries to persuade the Treasury to see some sense.
§ The Parliamentary Under-Secretary of State for Scotland (Sir Hector Monro)I thank my hon. Friend the Member for Dorset, West (Sir J. Spicer) for the warm welcome that he gave me on my return to the Front Bench. No doubt he was almost as surprised as I was. The portfolio for which I am now responsible is a great asset in terms of the Scottish Office, and also in terms of the United Kingdom where forestry is concerned. The environment, the countryside, agriculture, fisheries and heritage have all been combined as a single responsibility, and I think that in the long run that will prove a tremendous advantage.
I am glad to speak on behalf of forestry. My constituency, along with that of my right hon. Friend the Member for Galloway and Upper Nithsdale (Mr. Lang), probably contains a larger acreage of planting than any other region in the United Kingdom in percentage terms. We are both particularly aware, therefore, of the importance of forestry to the rural economy—and, indeed, of the other aspects mentioned by my hon. Friend, such as recreation, tourism and, of course, employment.
My hon. Friend was right to raise the question of the industry as a whole, from the seedling to the ultimate manufacturing process. He must accept, however, that that is connected to a large extent with developments in the Forestry Commission and the private sector. Both are interdependent and extremely important.
The incentives that have been developed in the past year or two, and even in the last month or two, to increase planting are significant. The overall crop is also important. As my hon. Friend rightly said, the timber deficits, in terms of the balance of payments, are extremely important in United Kingdom terms. I shall cover as much ground as I can, but if I am unable to cover all of it by the end of the debate, I shall write to my hon. Friend as soon as possible.
The Government are fully committed to developing and supporting the forestry sector. During the past 12 years, our record of policy initiatives has been one of considerable progress and achievement. The Forestry Commission has played, and continues to play, a central role in the development of forestry throughout Great Britain. We have made it clear on a number of occasions that we have no intention of privatising the Forestry 470 Commission. That remains the position. Many Forestry Commission staff have asked me what policy the Government intend to pursue in the future. We have given a firm commitment not to privatise the Forestry Commission.
Only a month ago—this is important in terms of how forestry will develop—the Government commissioned a major reorganisation, designed to achieve a clear distinction between its regulatory and advisory roles as a Government department and the management of its forests. The commission has set up a policy and resources group at its Edinburgh headquarters. That group is responsible for supporting and advising Ministers on forestry policy. Moreover, the Forestry Authority, which provides advice and sets standards for the forestry industry as a whole, administers the grant schemes, carries out regulatory functions, such as felling control, and undertakes forest research. That will be particularly helpful as we move into the world of set-aside and encourage farmers to plant trees on land that is no longer required for agricultural purposes. Advice there is particularly required, though farmers do not always realise that advice is available from the commission.
Forest Enterprise will now be free to concentrate on managing the commission's forest estate of more than 1 million hectares on a multi-use basis—for recreation, wildlife, landscape and conservation, as well as for timber production. That shows that the commission is forward looking and that it is determined to develop woodland planting in this country.
Nearly 250,000 hectares of new forests have been created during the last decade, mainly by the initiative and enterprise of private owners. Wood production has more than doubled since 1970 and is set to double again—to reach 10 million cubic metres—over the next 20 years. British timber is of high quality and is in demand by our domestic wood processing industries. The longer-term confidence of the industry has been amply demonstrated by the investment of over £1 billion in new processing plant since 1980. Our wood processing industry can compete with the best in the world. The new mills and plants incorporate the latest in technical innovation in paper making, panel production and saw milling. That has enabled them to capture a significant share of our growing domestic requirement for wood products. All that has been made possible by the doubling of the area of woodland cover during the past 70 years.
§ Sir Jim SpicerThe fact that we are going to double our production is very impressive, but does my hon. Friend accept that unless we have new planting we shall be left with an awful chasm? That is what worries me. I am not worried about all the products that will appear as a result of the planting that took place between 1980 and 1988. That is marvellous. But what will happen when we hit that trough? That is what worries me, and it should concern us all.
§ Sir Hector MonroYes, indeed. I was just coming to the point about the downturn in private sector planting over the past two or three years. I am sure that my hon. Friend will be interested to know that new planting in England has increased. In 1987, the figure was 1,200 hectares, whereas in 1991—the latest year for which figures are available—it was 4,400 hectares. The picture should not 471 have been so depressing for nursery men and others in Dorset, but I know that conditions have been difficult for them.
In Scotland, the overall picture has been disappointing. The new grants offer an incentive to increase planting now and in the coming years. The woodland grant scheme, which we introduced in 1988, has made substantial progress. Grants range from £615 to £1,575 per hectare, depending on the size of wood and species of tree. I give these details because it is important to realise what is available to encourage people to plant more trees.
We recently introduced the better land supplement, which offers another £200 per hectare to £400 for conifers and £600 for broadleaf trees. That is another useful incentive. The woodland management grants are most important. As my hon. Friend will remember, possibly some of the fiercest criticism of the Chancellor's fiscal change was the fact that there would be no tax relief on maintenance in the later yars of the life of a plantation. Many foresters think that between 20 and 30 years is the crucial period for additional maintenance. The woodland management grant is of particular help in replacing what some foresters lost from the change in the fiscal system.
As late as last month we introduced a new community woodland supplement of £950 per hectare for establishing new woodlands open to the public and within easy reach of towns and cities. Its purpose is to encourage planting on the urban fringe to add to the amenity and to the overall amount of planting in this country. The native pine wood scheme encourages the management of existing pine woods in Scotland.
The most recent change or development has been our new farm woodland premium scheme, which provides grants to make planting more attractive to farmers. Its purpose is to offer a particular incentive to plant on good land. Farmers such as myself and many in my hon. Friend's constituency are reluctant, having looked after fields that require a lot of husbandary, to plant them into woodlands and know that their use as agricultural land has probably gone for ever. To encourage people to do so, bearing in mind our commitments in Europe to reduce overall production, there is a high grant for planting on good quality land and perhaps less grant for land of less importance, and certainly down to the less favoured areas.
We realise that there has been a drop in planting in the past two years. Only by raising the incentives as high as we can will the planting level be restored. My hon. Friend said —and this view is widely held among foresters in general —that we must think again about the change made to the fiscal system in 1988, but it is too early to be certain. I am sure that my right hon. Friend will want more time to assess the impact of our new grants on planting before any reconsideration of the tax incentives. Bearing in mind the fact that the overall grant to forestry probably equates to the amount of money that the Treasury had to pay in tax relief, I believe that that must almost have balanced the position.
However, we must accept that the forestry industry makes a substantial contribution to meeting our growing demand for wood. It supports and provides employment 472 for people living in rural communities. The forests and woodlands also provide opportunities for people to enjoy and to have access to the countryside. They are also an essential habitat for a rich variety of wildlife.
My hon. Friend might be interested to know that earlier today I was in Perthshire at the inauguration of the new Scottish Natural Heritage, which is a combination of the Countryside Commission for Scotland and the Nature Conservancy Council, which will now have overall responsibility for many aspects of the habitat and conservation in Scotland, not of course directly for the Forestry Commission although it will co-operate very closely with the commission and, of course, with private woodland owners for whom we have the highest regard and whom we must do all that we can to help in the future.
Our policies deliver environmental as well as economic benefits. The Forestry Commission has a responsibility to ensure that full account is taken of all interests and that those interests are carefully balanced. The commission consults the statutory bodies that represent the interests of nature conservation, amenity and local people to ensure that planting schemes are, as far as possible, acceptable to all involved. Investors now fully recognise the need for planting to be sensitive to the environment. They are taking time to plan their planting schemes and, to assist in that, the Government are encouraging local authorities to prepare indicative strategies to show preferred areas for planting and areas that are environmentally sensitive.
However, we must keep bureaucracy to a minimum and the new Forestry Authority will be able to focus clearly on the needs of the private sector. It will put additional resources into its role of providing sound advice to woodland owners and of promoting the grant schemes at a time when new opportunities are opening up. In terms of bureaucracy, the authority is determined to make quick and speedy decisions because that is the right way to proceed, to encourage the planting of new areas, and not to allow the head of steam among the landowners to fall away because of the time given to the authority to proceed with planting.
On the whole, I am certain that the commission and the Government are doing a great deal to give incentives for planting and, therefore, to ensure that the total hectarage increases rather than decreases, as it certainly did in 1990 and 1991. I believe that the confidence stemming from the general election and the lowering of interest rates in every way encourages the landowner and private forestry developer to proceed in the future, knowing that he has the full backing of the Government and that the Forestry Commission will give every possible assistance in the form of grants, advice and experience.
Although I welcome the fact that my hon. Friend has raised this issue and shown his concern which will, of course, be considered by the Forestry Commission and the Government, I believe that we are on the right track, and I am personally confident that we will achieve great success in the coming year.
Question put and agreed to.
Adjourned accordingly at twenty-nine minutes past Ten o'clock.