HC Deb 02 March 1998 vol 307 cc709-25

  1. '.—(1) The provision of funding for the exercise by the Forestry Commissioners of their functions in relation to Wales shall be the responsibility of the Assembly.
  2. (2) What subsection (1) requires of the Assembly is that it shall provide such funding as the Assembly considers appropriate for the exercise by the Forestry Commissioners of their functions in relation to Wales.
  3. (3) In deciding what funding it considers appropriate to provide for the exercise by the Forestry Commissioners of their functions in relation to Wales, the Assembly shall have regard in particular to what it considers those Commissioners need to spend in order effectively to discharge their functions in relation to Wales.
  4. (4) The Assembly shall before the beginning of each financial year of the Assembly consult the Forestry Commissioners about the funding it is to provide for them in that financial year; and in determining the amount of that funding the Assembly shall take account of the Forestry Commissioners' estimates of—
    1. (a) what they will need to spend in that financial year in order effectively to discharge their functions in relation to Wales, and
    2. (b) the income which they will receive in that financial year and be entitled to apply towards meeting their expenditure on the exercise of their functions in relation to Wales.
  5. (5) Schedule (Forestry Commissioners) (which makes provision consequential on this section) has effect.'.—[Mr. Ron Davies.]

Brought up, and read the First time.

3.34 pm
The Secretary of State for Wales (Mr. Ron Davies)

I beg to move, That the clause be read a Second time.

The First Deputy Chairman of Ways and Means (Mr. Michael J. Martin)

With this, it will be convenient to discuss the following: Government new schedule 1—Forestry Commisioners.

Government amendments Nos. 542 to 544.

Mr. Davies

I made it clear on Second Reading that I would table amendments about forestry in Wales, to combine the advantages that come from the Forestry Commission retaining an overall strategic role for forestry in Great Britain, with our aim that the Forestry Commission should be answerable for its operations in Wales to the National Assembly for Wales.

Forestry is important to the economy and environment of Wales. At 31 March 1997, the forest area stood at 247,000 hectares, or 12 per cent. of the total area of Wales, of which the Forestry Commission owned 120,000 hectares. Current production levels represent 15 per cent. of the British total. The latest figures suggest that 4,750 people employed in Wales are dependent on forestry, including 1,270 employed by the Forestry Commission, and more than 1,700 employed in wood processing industries, in which Wales has benefited from substantial investment.

Forestry can also provide farmers with an opportunity to diversify farm business through woodland planting as an alternative to agricultural production. Well-designed forests can provide high-grade landscape and wildlife habitats, and can be used to advantage in the reclamation of derelict sites, and provide excellent recreational opportunities.

The Government are not proposing the establishment of a separate Forestry Commission for Wales.

The Government amendments will ensure that, in future, the assembly will have responsibility both for setting policy in respect of forestry in Wales and for funding the activities of the Forestry Commission in relation to Wales.

Mr. Rhodri Morgan (Cardiff, West)

Is my understanding correct that responsibility for the Forestry Commission—a UK-wide body—in relation to Wales will transfer from the Secretary of State for Scotland to the Welsh assembly? For the past 10 or 20 years, the Forestry Commission has been anomalous, in that it is the only body with a remit outside Scotland for which the Secretary of State for Scotland has ultimate departmental responsibility. Will my right hon. Friend go into detail about the relationship between the Scottish Parliament and the Welsh assembly in respect of forestry?

Mr. Davies

As my hon. Friend will know, with my right hon. Friends the Secretary of State for Scotland and the Minister of Agriculture, Fisheries and Food, I currently have responsibility for all forestry matters. My hon. Friend is correct in his understanding that, post-devolution, the responsibility that I currently exercise will devolve to the Welsh assembly, and the responsibility currently exercised by my right hon. Friend the Secretary of State for Scotland will devolve to the Scottish Parliament.

On matters that operate GB-wide, it will be necessary for the Ministry of Agriculture, Fisheries and Food, the representative of the Welsh assembly, and the appropriate Minister in the Scottish Parliament to agree. It will be open to the Scottish Parliament, because it will have jurisdiction in this matter, to legislate by means of primary legislation. It will be open to the Scottish Parliament to decide to introduce further changes. My hon. Friend is correct in his understanding. If he will bear with me, I shall deal with this point in a moment.

Mr. Tam Dalyell (Linlithgow)

A number of my constituents work at the Forestry Commission's headquarters in Edinburgh, and there is real concern and a lack of clear understanding about their future. I am trying to be constructive about this, but can some document be placed in the Library fairly soon, outlining in detail precisely what the thinking is, because there are quite a number of worried people? They are worried about whether they will have to move their homes yet again, having recently moved north to Edinburgh. They are asking, "Do we have to move south, or somewhere else?" Families' futures are very much at stake here.

Mr. Davies

My hon. Friend raised that matter on Second Reading, when he asked me particular questions about the likely employment consequences for people in his constituency. Later in my remarks, I want to answer fairly specifically some of the questions that my hon. Friend asked. However, I take this early opportunity to assure him that there is nothing in the Bill that will in any way prejudice the livelihood, or the opportunity for continued employment within the present work force, of my hon. Friend's constituents. As I said in reply to the intervention of my hon. Friend the Member for Cardiff, West (Mr. Morgan), the Scottish Parliament will have jurisdiction in this matter. No one can foretell what it might want to do in future.

New clause 40 deals with the devolution of responsibility for funding. The Forestry Commission's funding is currently provided from a single vote approved by the House of Commons. Discussions are in progress on the appropriate transfer of resources into the Welsh block as a result of a significant shift of responsibility. At present, the commissioners' functions relate to Great Britain as a whole.

Paragraph 1 of the new schedule accordingly contains an order-making power for me to provide for the separate exercise, in relation to Wales, of the commissioners' functions, and for their functions to be exercised differently in respect of Wales. If an order under paragraph 1 amends Acts of Parliament, it will be subject to the affirmative resolution procedure. That is the purpose of amendments Nos. 542 to 544, to clause 144.

I currently have wide-ranging powers in respect of the commissioners enabling me to direct the exercise of their functions in relation to Wales. As I explained to my hon. Friend the Member for Cardiff, West, I exercise these powers jointly with my right hon. Friends the Secretary of State for Scotland and the Minister of Agriculture. These powers will be transferred to the assembly and made separately exercisable with respect to Wales in the transfer order under clause 22.

The forestry commissioners have powers to regulate activities in their forests. They may also make regulations to prevent the introduction into Great Britain of, for example, forestry pests and diseases.

Paragraph 2 of the new schedule provides for such subordinate legislation, where it contains only provisions relating to Wales, to be subject to procedures in the assembly instead of in Parliament. The overall effect is that the assembly will approve the commissioners' subordinate legislation.

Paragraph 3 of the new schedule provides that the status of the commissioners as a Government Department and the status of their staff—the point raised by my hon. Friend the Member for Linlithgow (Mr. Dalyell)—are not affected by these changes. I take this opportunity to tell the Committee that, in my view, these amendments in themselves are most unlikely to reduce the number of staff employed by the Forestry Commission. It will remain a Great Britain body, and any changes to this arrangement would require primary legislation.

My hon. Friend the Member for Linlithgow raised that point on Second Reading. Obviously, as I have said, we cannot predict how the assembly will choose to exercise its functions, including that of funding the commissioners, but the drafting of new clause 40 ensures that, if the assembly wishes to exercise its functions in a certain way, it must have a proper dialogue with the commissioners.

The arrangements for Scotland are broadly similar, although the details will be a matter for my right hon. Friend the Secretary of State for Scotland. They will differ from those for Wales, because of the different structure of the Scotland Bill, and in particular because it is proposed that the Scottish Parliament should have legislative competence over forestry.

If the Scottish Parliament were to legislate to create a separate forestry commission for Scotland, the Government would need to reconsider the issue, and in particular to decide whether to retain the commission on a Wales and England basis or whether to create separate bodies. As I have said, such changes would require primary legislation.

Sir Sydney Chapman (Chipping Barnet)

I wish this matter to be clarified: if and when the Bill is enacted, and any Member of this place wishes to ask a question or seek information about the Forestry Commission working in Wales, for example, would he or she table a question to the right hon. Gentleman, to the Secretary of State for Scotland or to the Minister of Agriculture, or would he or she not be able to table a question?

Mr. Davies

I say to the hon. Gentleman, in the gentlest possible way, that it is a question not of whether the Bill goes through, but of when. Last weekend, the leader of the Conservative party made the position absolutely clear. My understanding is that his party is now in favour of devolution. I assume that the right hon. Member for Devizes (Mr. Ancram) will lead his troops into the Lobby in support of Government policy.

It would be inappropriate for me to comment on which questions Madam Speaker would deem to be in or out of order, because I would be trespassing on matters for which I am not responsible. My current responsibilities will transfer to the assembly, and where those powers need to be exercised jointly, they will be so exercised by my right hon. Friend the Minister of Agriculture, the Scottish Parliament and the Welsh assembly.

The Table Office or Madam Speaker could advise the hon. Gentleman on tabling a parliamentary question to a Minister in this House who would answer on those broad policy matters. To influence the implementation of detailed policy in Wales, the hon. Gentleman would have to join the happy and growing band of Welsh Conservatives who will seek election to the assembly. Now that he has expressed an interest, he must look for what passes as a safe seat in Wales, although finding one may be difficult.

Mr. Michael Ancram (Devizes)

I am interested to hear the Secretary of State singing the praises of the Welsh assembly and inviting my colleagues to stand for election. Will he stand for election to the Welsh assembly?

Mr. Davies

In fact, I suggested to the hon. Member for Chipping Barnet (Sir S. Chapman)—

Mr. Nigel Evans (Ribble Valley)

Answer the question.

Mr. Davies

I shall certainly answer now. I said that the hon. Gentleman should try to find a safe seat; if I were to stand for the Welsh assembly, I would not have as much difficulty finding one as he would.

Paragraph 4 of new schedule 1 deals with the forestry commissioners' receipts. [Interruption.] The right hon. Member for Devizes has spent the past month or so berating me for arrogance; now he chunters from a sedentary position and accuses me of being coy. The transition from brutishness—I am supposed to have cast aside public and political opinion in Wales—to coyness is remarkable.

Mr. Cynog Dafis (Ceredigion)

Will the Secretary of State give way?

Mr. Davies

Of course. I am sure that the hon. Gentleman's question will bring me back to the matter of the Forestry Commission.

Mr. Dafis

We are speculating about Conservative intentions, and the Secretary of State will be as intrigued as I am by the proposal of the leader of the Conservative party for a more equal pattern of devolution within the United Kingdom. Does that not imply that there should be a Parliament in Wales with powers equal to those of the Scottish Parliament, and, further, that such a Parliament should have the power to establish a forestry commission for Wales? Would that not be an excellent idea, because forestry is an important industry in Wales and has many distinctive qualities that should be addressed at an all-Wales strategic level?

3.45 pm
Mr. Davies

The idea might be excellent, but it is outwith Government policy, which, as the hon. Gentleman knows, is to transfer to the assembly the powers that I currently exercise. He will not be surprised if I describe devolution as a process. It is for those who come after, in the assembly and in the House of Commons, to decide whether to modify the powers of the Welsh assembly. I am not proposing that; I am proposing sensible and practical arrangements for the transfer to the assembly of my current forestry responsibilities.

I was referring to paragraph 4 of new schedule 1, which deals with the Forestry Commission's receipts. The measure has been drafted to allow the assembly to choose whether to fund the commission's activities in Wales on a net or gross basis—that is, to decide whether the commission should retain its operating income to help it to meet its own expenditure.

We must also recognise that the commission's forestry assets in Wales have been built up using United Kingdom taxpayers' money.

Mr. Dafydd Wigley (Caernarfon)

We have paid for them.

Mr. Davies

Paragraph 4 provides an overriding power for the Treasury to direct that certain receipts, such as those arising from major asset sales, should be returned to the Consolidated Fund.

The right hon. Member for Caernarfon (Mr. Wigley) was right to say that we had paid for the assets. That is why I say that a balance must be struck. I assume that, if the Forestry Commission disposed of certain assets to assist its annual operations, the asset sales would be retained by the commission. In the event of a major act of privatisation, however, the Treasury would understandably want to retain the right to ensure that the contribution of United Kingdom taxpayers as a whole was properly safeguarded.

Paragraphs 5 to 9 deal with the accounts and audit arrangements. The Forestry Commission will produce separate accounts for Wales, which will be audited by the Auditor General for Wales. He or she will also be able to carry out value-for-money studies, and the Comptroller and Auditor General will retain access rights. Paragraph 10 provides for the forestry commissioners to produce an annual report about their activities in Wales, and for it to be laid before and published by the assembly.

The Government amendments devolve to the assembly responsibility for funding the forestry commissioners' activities in Wales, and make the commissioners properly accountable to the assembly.

Mr. Evans

The new clause, new schedule and amendments deal with an aspect of rural Wales that needs to be protected. They deal with our natural environment—trees, plants and wildlife, conservation and preservation, jobs and tourism, recreation and nature, and our ancient woodlands and forests.

The rural community feels threatened. Yesterday, 284,000 people marched here in London, crying out in frustration and fear that their voice was not being heard. Many demonstrators travelled from Wales to be here, and I hope that the Secretary of State—who was not on the march—was at least able to hear what they said. They were good-natured, but they were extremely frustrated. Large numbers turned out from all parts of Wales to join yesterday's demonstration, because they care for the countryside. I assume that that is what new clause 40 purports to do as well, and I shall ask a number of questions about it towards the end of my speech.

The Forestry Commission has a profound effect on our land. It was established in 1919 as an answer to first world war deforestation. In fact, deforestation had been going on for some time. At the turn of the century, only 5 per cent. of our land was forested; today, thanks to the commission's work, that percentage has more than doubled.

Forests are vital, not only for their value as timber but for their natural beauty and their part in conservation and recreation. The nation's forests need protection from, for instance, disease. The commission's research division is very important in that regard, and I shall want to know how it will be ensured that that research function will be properly protected in Wales under the new arrangements.

We need to prevent the reduction of crops by pests. We also need research into ways of increasing the productivity of forests, and the establishment of forests on difficult sites, if areas throughout Wales are to benefit. The conservation of rare and endangered species is important, as is the protection of our ancient and semi-natural woodlands.

The Forestry Commission's research is mainly done in house, but it also commissions outside work. We shall need to know how that will be done under the new arrangements, and what impact the assembly will have in directing key commissioning in certain areas. As the Secretary of State said, the commission has a large staff, and we shall need to know more about how staff will function after the changes. The commission also has an international impact. Will the assembly have a say in some of the international commitments in which we are involved on behalf of the commission?

Forests and woodlands support much of the rural economy, and they are environmentally and socially important. The White Paper entitled "A Working Countryside for Wales" spoke of the economic role of forestry and of the Government's aim to increase Welsh woodland by about 50 per cent. by 2050. Are the commitment and the target still operative, and how will they be affected by the proposed changes?

In January 1996, the Government's panel on sustainable development, which was chaired by Sir Crispin Tickell, spoke of the need to draw up a national forestry strategy that was supported by regional strategies containing targets that were related to the main economic, environmental and social benefits that forestry could provide. The incentives needed to meet those targets were identified. Will the relationship with regional strategies remain the same? What will be the impact on the Forestry Commission's national picture?

Mr. Ron Davies

I am grateful to the hon. Gentleman for the way in which he raises these matters. I do not want to be too brutal with him, but I have to say that many of the issues he raises are policy matters, on which the assembly and the Scottish Parliament will decide. We are debating structures—the way in which my current powers will pass to the assembly. It is not for me to decide how the assembly will formulate and implement its policies—unless I seek election to it. Those are matters for the assembly.

Mr. Evans

We can tell that the Secretary of State is seriously considering whether to move from this place to the assembly in 1999. I do not want to be brutal with him, but I hope that he decides to go to the assembly, because not many Labour Members have shown themselves keen to move there from Westminster. Perhaps he can lead the rush of his Back Benchers. [Interruption.] I shall not seek election to the assembly. I suspect that the people of Ribble Valley would not wish to have representation there.

Mr. Davies

How on earth can the hon. Gentleman square that stupefying statement with the comment over the weekend by his party leader that the Conservative party wants to make the assembly work? How on earth will it work without the hon. Gentleman?

Mr. Evans

I, too, find that a difficult question.

The First Deputy Chairman

Order. Perhaps we could get back to new clause 40.

Mr. Evans

We shall have to leave the question unanswered, and return to the debate on the new clause.

I hear what the Secretary of State says. It is important to look not only at the policy functions that are to be devolved to the assembly but at the national strategy, and how it will weigh with what the assembly wishes to do. I shall shortly come to the funding arrangements. I assume that the Forestry Commission will wish to continue its important consultations with local communities on such matters as planting and felling. It is important for it to carry on with its policy of ensuring that, where necessary, there are prosecutions for illegal felling, and warnings in less serious cases. It should enforce the restocking of illegally felled areas.

I have spoken about only some of the Forestry Commission's work, because it has an important and diverse role. The commission and the timber trade could do much for Wales. We import £7.5 billion-worth of wood materials and manufactures, and export £2.3 billion-worth. That leaves a gap of more than £5 billion. That shows the potential, and if Wales can exploit that, it will be an important boost to the Welsh economy.

My fears about changes to the Forestry Commission centre on the factionalism that may break out if the Welsh assembly pursues one route when a national strategy dictates that the Forestry Commission will pursue another route. We must ensure that both bodies work together absolutely, with one policy and with the same priorities.

The Forestry Commission's funding arrangements will be vital. The Secretary of State for Wales said that Ministers are currently talking about how much money will be provided in the block grant, part of which the assembly will provide to the Forestry Commission. However, we have been given no assurances on how much money will be earmarked for the Forestry Commission. Moreover, the money that is provided to the assembly for the commission will be only notional, and it will not be ring-fenced. The Welsh assembly will decide what priority to place on the Forestry Commission's work.

4 pm

The Welsh assembly may not necessarily say, "The Forestry Commission is an easy target; we'll cut its money." The assembly—perhaps because of the Committee's debate on sustainable development, on 25 February—may take the opposite view, and decide that the Forestry Commission's work is vital. It may therefore decide to spend more money on the commission than the Treasury had originally notionally allocated.

We must get the Forestry Commission's funding right, especially as so many competing demands will be placed on the assembly. As hon. Members have said during the Bill's passage, the assembly will have to determine how to order its priorities. Last Wednesday, for example, in the Committee debate on the assembly's role in promoting business in Wales, "business" was interpreted very widely. The right hon. Member for Llanelli (Mr. Davies) also mentioned the tin can that will be rattling outside the Welsh assembly, and the inevitable calls that the assembly will face for all sorts of money for all sorts of worthy projects. The Forestry Commission will be only one of those worthy projects.

There is enormous ignorance of the Forestry Commission's good work, of the depth of its remit and of the vital nature of its role. In future debates on whether money should go to education, to social services or to the Forestry Commission, my fear is that the commission will be an easy target for Members of the Assembly, and that it will suffer cuts. Such cuts cannot be made currently, because the national budget allocates the commission's funds. After devolution, because of competing interests, the assembly could decide to downgrade the Forestry Commission's role.

I assume that the Secretary of State is involved in negotiations on the funding arrangements. We know that there will be—although the Bill does not mention it—a type of Barnett formula in Wales, which the Secretary of State has assured us will apply after devolution. Will such a Barnett-type formula be devised to fund the work in Wales of the Forestry Commission, so that the definite needs of Wales are emphasised, and the funds allocated to the Forestry Commission are not simply divided into three?

Mr. Ron Davies

The hon. Gentleman's earlier interpretation is broadly correct: the assembly will have responsibility for deciding whether to increase or decrease the resources going to forestry. There is nothing exceptional in that responsibility, as that is the importance of devolution. Furthermore, the assembly will occasionally want to reassess its priorities in, for example, education, the environment and the health service. Any Secretary of State currently has that discretion, and it is one that the assembly will enjoy. He was therefore correct in that assertion.

On the hon. Gentleman's latter, specific question, I am currently in the process of discussions with my colleagues in the Government to determine how the Forestry Commission's budget can be disaggregated. I will want to ensure that the Welsh assembly gets its fair share of the disaggregated Forestry Commission budget once the new financial arrangements apply. It will then be a matter for the Forestry Commission to decide whether, by using additional money from the block grant, to supplement the resources that will provided to it by disaggregation of the existing Forestry Commission budget.

Mr. Evans

I am grateful to the Secretary of State. He will appreciate that we in Wales are interested in ensuring that we get our fair share. I was wondering whether special needs, tasks or projects within Wales would be able to get more. Will there be some form of Barnett formula after devolution?

Mr. Davies

I am sorry to interrupt the hon. Gentleman yet again, but his two points are inconsistent. He cannot suggest that there should be a Barnett formula and then ask for special consideration. The two positions are mutually exclusive. However, I can assure him that, during the discussions about the disaggregation of the budget, I shall press as hard as I can to ensure that the particular interests of Wales are reflected in the financial settlement.

I share the hon. Gentleman's great admiration and respect for the Forestry Commission, and attach the same importance as he does to its work. It has done a superb job over the years. I am glad that it is now following better policies than it did several decades ago, although not necessarily in the past decade.

Mr. Evans

Under several Governments, I presume. It is important that the Forestry Commission gets it right, but it needs resources.

The hon. Member for Linlithgow (Mr. Dalyell) mentioned his concern about his constituents who are employed by the Forestry Commission. The Secretary of State said that there would not necessarily be any reduction in staff because of the changes. I wonder whether additional staff will be required, because of the way the budgets will be allocated and because there will be more of a regional bent to the way in which the Forestry Commission will work in future. If extra staff are required and the resources are not increased, its task will not be as well fulfilled. I would be interested to know whether, as a result of the changes, the Forestry Commission is likely to need extra staff.

I spoke earlier about the goal of 50 per cent. more woodland by the year 2050. Is it the Secretary of State's understanding that the same targets will exist? Will the Welsh assembly be able to alter that target to a greater or lesser extent?

Mr. Davies

indicated assent.

Mr. Evans

We are dealing with a vital chunk of devolution, and a major change. We want to ensure, therefore, that the assembly is given not only the resources, but the knowledge of how important it is that the money is not channelled off to meet other priorities. The assembly must understand the importance of using the money it will receive for the particular task at hand.

The Secretary of State also mentioned sales—whether some of the proceeds could be given back to the Forestry Commission to use in pursuit of its targets within Wales, whether the assembly could take any of that money, and how much could be retained by the Treasury. Will he clarify exactly how the system will work? It all sounds very vague, and as if the Treasury will be able to step in.

We know that the demands on the Treasury are constantly rigorous, and that it is always keen to ensure that it gets its fair share of the money. How will it be worked out? Will it be through a concordat or a general understanding, or will there be a more specific definition of what is a major sale and what is a minor one? Obviously, the Forestry Commission is constantly buying and selling, so we are talking about rather large sums of money. Of course, privatisation would involve an enormous sum of money.

Will the Secretary of State say a bit more about the various roles and where the money will end up? Could the proceeds of sales be siphoned off from the Forestry Commission to the assembly? If so, given the priorities that the assembly will set itself, it may wish to use some of the money for other projects, so it would not be reinvested into the Forestry Commission's tasks and targets.

Mr. Davies

It is probably best to deal with these issues as we go along, rather than trying to deal with them all at the end—if that is all right with you, Mr. Martin.

The hon. Gentleman seems to be arguing that we should ring-fence the Forestry Commission budget. It would then be both a ceiling and a floor. That would merely fix in time the spending pattern for the Forestry Commission, making it difficult for the assembly to embark on new policies or change its priorities. If the forestry budget should be ring-fenced, why not those for health, the Welsh Development Agency or education? The purpose of devolution is to allow the assembly to change its priorities from time to time, reflecting local circumstances and its political will.

I had an exchange about funding earlier with several hon. Members. If the Forestry Commission wanted to dispose of assets and recycle the money as part of its annual operations, it would be able to do so as at present. If, on the other hand, there was a major privatisation, it would be open to the Treasury to recover part of the money because it reflected previous Great Britain investment. I cannot give the hon. Gentleman a precise definition of what would be a major privatisation and what would be considered annual operations. We shall have to make such judgments as we go along.

Mr. Evans

I am grateful for that response. The Secretary of State will understand why we are asking such questions. As my hon. Friend the Member for Chipping Barnet (Sir S. Chapman) said earlier—the response to his point reinforced it—after devolution we shall have limited powers to question the Secretary of State for Wales on matters relating to the Forestry Commission in Wales. I suspect that we shall usually be ruled out of order because our questions will be considered not the responsibility of the Secretary of State. It is right that we should ask questions now, because the opportunity to do so will be curtailed.

There is a fear that, after devolution, if the assembly gets part of any money raised from sales, it may spend it elsewhere, particularly when budgets are tight. The assembly will not have direct tax-raising powers, but here we have the possibility of an indirect tax. The assembly may be keen to award itself other indirect tax-raising powers.

Mr. Ron Davies

The hon. Gentleman is misconstruing what I said. I made it clear that, if the forestry estate was rationalised or certain sales were made to fund other forestry projects in Wales, the matter would remain within the assembly's discretion. The hon. Gentleman is suggesting that there will be privatisation, with the proceeds used to fund other services. I do not expect that. The hon. Gentleman should not raise the spectre of the Welsh assembly selling off the forestry estate in Wales wholesale to fund its other priorities. That is not what I said.

Mr. Evans

The Secretary of State likes to look at the devolution proposals through his rose-tinted spectacles, believing that everything will be fine and there will be sunshine. Expectations about what the assembly will do must already be high in Wales. It is right to consider worst case scenarios in Committee, to ensure that devices are in place to prevent them from coming about. That is all we are asking of the Secretary of State. We want him to clarify his interpretation of the Bill to ensure that it is carried out when devolution takes place.

The Forestry Commission is doing a good job. I have no problems with the way in which it is performing its functions in Wales, Scotland and England. It is fulfilling its targets with its limited budgets. The Secretary of State's passion for devolution is evident, although he is being rather coy—as my right hon. Friend the Member for Devizes (Mr. Ancram) said—about whether he will run for the assembly. Such a description does not normally sit easily with him. We need to be certain why, if the Forestry Commission is not broken, we trying to repair it.

4.15 pm
Mr. Denzil Davies (Llanelli)

I did not intend to speak, but I was intrigued by my right hon. Friend the Secretary of State's mention of disaggregating the Forestry Commission's budget. I think that that is what he said; he certainly used the word "disaggregating".

I am totally ignorant about the Forestry Commission's finances, but I was surprised that it is necessary to disaggregate its budget. I should have thought that the Welsh Office would already know how much the Forestry Commission spends in respect of Wales—perhaps I am wrong. If the Welsh Office does not know, the Secretary of State will have to conduct the disaggregation exercise every year in order to arrive at a hypothetical disaggregated figure, which will be added to the rest of the block grant and handed to the assembly. If I am right—I could be completely wrong—the assembly would not, in this rather convoluted procedure, hand back the hypothetical disaggregated sum to the Forestry Commission. I do not know. The assembly might or might not hand back the equivalent of the disaggregated hypothetical sum. Is that the position?

Mr. Ron Davies

indicated assent.

Mr. Denzil Davies

My right hon. Friend is indicating that I may quite correctly have reached such a convoluted end. I find it strange that, at the moment, the Welsh Office does not know how much the Forestry Commission spends or what its budget is for Wales. Who—I ask, perhaps rhetorically—decides the Forestry Commission's budget? Presumably, it is decided by the Treasury at the moment. Is it decided in negotiation between the Treasury and the Ministry of Agriculture, Fisheries and Food? My right hon. Friend said that he was responsible for the Forestry Commission in Wales.

Mr. Ron Davies

The essence of my right hon. Friend's case is absolutely correct. Forestry Commission operations in Wales are not funded at the moment out of the block grant. They are subject to a separate vote, which is negotiated with the Treasury by the respective forestry Ministers. His argument is correct that, post devolution, the forestry budget will be disaggregated. The block will increase, and that will form the basis of any future decisions that the assembly might want to take in funding forestry.

Mr. Denzil Davies

Perhaps one is playing with words. The budget must already be disaggregated if the Secretary of State for Wales is one of the three Ministers who negotiate with the Treasury on the total Forestry Commission budget. The Welsh Office must know what part of that relates to Wales, otherwise there would be nothing to negotiate. There is no need to disaggregate the budget because it is already disaggregated.

Mr. Ron Davies

Certain elements of the Forestry Commission's operation may or may not relate directly to Wales. That matter will have to be discussed. Indeed, it is the basis of current discussions. I cannot give my right hon. Friend a precise figure, because we have not yet arrived at the appropriate adjustments that need to be made.

I shall try to help the Committee by making it clear that, during the current financial year, the Forestry Commission expects to spend £27 million in Wales and generate income of £29 million. In addition, there is the appropriate Welsh share of Great Britain expenditure and income, which has to be calculated. The Welsh share of net GB expenditure is nearly £30 million.

Mr. Denzil Davies

In effect, the budget is £27 million-plus. That is the figure about which—possibly—there is some doubt, although the Welsh figure is fairly clear. Will the "plus" figure also go to the Welsh assembly, which will decide whether to hand it back to the Forestry Commission? In effect, the Welsh assembly could pocket the GB figure. Is that what my right hon. Friend is saying?

Mr. Ron Davies

That is the effect of it, yes. My right hon. Friend says that the Welsh assembly could pocket the money, but it could not do so and simply walk away. As he knows, the money will be in addition to the block, and the assembly will then have to decide its spending priorities. It will be for the assembly to decide whether forestry is a higher or lower priority and whether the programmes will vary from year to year.

Mr. Denzil Davies

I do not want to pursue the point, but I find it rather bizarre that the £3 million, being a "GB" or British figure, will be handed over to the Welsh assembly. No doubt the assembly will do its job properly and not abuse its position, but this point highlights some of the difficulties in dealing with a Great Britain body that is based in Scotland and which will be answerable, in part to the Scottish Parliament, in part to a Minister in England and in part to the assembly in Wales. One can only hope that matters will work out all right.

Mr. Oliver Letwin (West Dorset)

After that fascinating exchange about the financial side, I wish to raise what I suspect the Secretary of State will describe as a legalistic point, but one that is of considerable interest to Opposition Members, as it is part of a general pattern. Incidentally, I am still waiting for the Secretary of State to write to me about the errors that he made during our previous Committee sitting.

Will the Secretary of State, either now or when he winds up the debate, tell us whether the order-making power given in paragraph 1(1) of the new schedule is one that could, at least in theory, be transferred to the Welsh assembly through a transfer of functions order or a subsequent version thereof? If so, is it true that if that were to happen—even if it is not the current Government's policy—the Welsh assembly would itself have the ability to make orders in respect of the Forestry Commission? If so, how would that relate to the powers of the Scottish Parliament in respect of the Forestry Commission and to the activities of the UK Parliament?

Mr. Rhodri Morgan

I welcome the new clause, the new schedule and the Government amendments, because it seems to me that one could not fail to devolve forestry to the Welsh assembly. It would have been a great mistake had forestry and the funding responsibility for it not been devolved.

Mr. Evans

indicated dissent.

Mr. Morgan

I see the hon. Gentleman shaking his head—I take it that he does not believe that forestry should be devolved in the way proposed in the new clause. Because of forestry's intimate relationship with agriculture and rural life generally and because of its impact on the sustainability of rural life, responsibility for dealing with agriculture, forestry, tourism and other aspects of rural life should be devolved to the assembly, so that those matters can be dealt with according to the way in which the assembly sets democratic priorities.

My first point relates to the one raised by my right hon. Friend the Member for Llanelli (Mr. Davies). It would be useful to know when the disaggregation exercise will be completed. I do not know whether it will be done before the Bill goes to another place, or whether it will be carried out in connection with proceedings in another place, but, like my right hon. Friend, I should like to see the figures. The Committee should know what the present funding position is in respect of the Forestry Commission's various responsibilities, both those that are clearly a Wales responsibility and those that are the Wales share of the wider United Kingdom or Great Britain responsibility.

That is because of the switch taking place in the Forestry Commission's work and within forestry generally—from the giant monocultural plantations that formed the basis of the commission's work for 60 or 70 years, to the microforestry work that it increasingly emphasises nowadays. That change of emphasis is designed to achieve greater sustainability and to assist farmers to diversify from, for example, sheep farming in the uplands to being able to harvest a proportion of each year's growth in hardwood forests.

The switch from big monocultural plantations to the harvesting of natural growth in small coppices—a switch, therefore, from softwoods to hardwoods—is important, and requires a totally different approach not only to funding, but from Forestry Commission officers, in terms of the intimacy and local control that they need in working with farmers, landowners, local conservation groups and community forestry groups, for example.

We should also consider the job consequences of that switch and the number of jobs that can be created by harvesting only the natural growth of local hardwoods. If those woods are fed—through local sawmills or even, as I have seen in hardwood forests in south Wales, mobile sawmills—into furniture and similar industries, a massive number of jobs could be created in rural areas, to replace some of the jobs that are threatened in upland farming and other rural occupations.

Will my right hon. Friend the Secretary of State say what the implications of the switch from soft to hardwoods—and from the big to the small scale—will be for the funding questions to which he referred and the disaggregation exercise? We all hope that that exercise will be finalised as soon as possible, so that, as has been said so many times in this interesting micro-debate, we have the information that we need.

Mr. Ron Davies

I am grateful for the comments of my hon. Friend the Member for Cardiff, West (Mr. Morgan) because, as the hon. Member for Ribble Valley (Mr. Evans) said, what happens to forestry is an important part of devolution. My right hon. Friend the Member for Llanelli (Mr. Davies) properly drew to the Committee's attention the difficulties that could arise. The Forestry Commission is a unique body that is, by and large, answerable for policy to the House of Commons through the Secretary of State for Scotland, as it is based in Scotland. By establishing a Scottish Parliament and a Welsh assembly, we shall create an asymmetrical structure, so we need to ensure that there are appropriate arrangements in Wales, just as our colleagues in Scotland will have to make appropriate arrangements there.

I believe that the new clause, the new schedule and the amendments will enable us to have the best of all worlds. We shall retain the overall advantage of the Forestry Commission's status as a Great Britain body, but there will be an opportunity for greater flexibility to reflect the priorities in Scotland and Wales.

In response to the question asked by my hon. Friend the Member for Cardiff, West, it is likely that the new financial arrangements will apply from 1 April 2000, so we have some way to go before they are finalised.

Mr. Dalyell

I think that there is a real difficulty. Some of us have had discussions of a fairly confidential nature—no one wants to be embarrassed, and I am honestly not out to make trouble—and we know that there are real difficulties from the Edinburgh perspective about how the arrangements will work. Will the Forestry Commission put a candid paper into the Library to make public, before Report, its view on these difficult technical questions about investment and other aspects of its work?

Mr. Davies

My hon. Friend will have to take up that question, if he feels it appropriate, with my right hon. Friend the Secretary of State for Scotland, who is the lead Minister on these matters. We need not make too much of this, as the functions of the Forestry Commission will not change, and the powers that I currently have to influence those functions will be transferred to the assembly. After devolution, the Scottish Parliament may want to exercise its powers of primary legislation to bring about more fundamental changes, but we cannot properly address that in our consideration of the Wales Bill. My hon. Friend should pursue his concerns elsewhere, not in this forum—although he should not for a moment take that to mean that I am encouraging him to pursue my right hon. Friend the Secretary of State for Scotland on the matter.

My hon. Friend the Member for Cardiff, West rightly referred to the changing emphasis of the Forestry Commission, with its shift from a monoculture of softwoods to more varied hardwood production and the introduction of more small-scale enterprises. I strongly endorse those policies. It would be for the assembly to discuss with the commission the policies that should be pursued. The assembly could influence those policies by direct discussion with the commission and, in extremis, by exercising jointly the powers of direction that I currently hold. By its ability to fund the commission, it could ensure that its priorities were properly adopted.

4.30 pm
Mr. Richard Shepherd (Aldridge-Brownhills)

Will the Secretary of State give way?

Mr. Davies

I shall happily give way to the hon. Gentleman, if he will first let me deal with the points that have already been made. I was trying to wind up the debate, not the hon. Gentleman.

Mr. Shepherd

The Secretary of State is not winding me up.

Mr. Davies

I am glad to hear that.

The hon. Member for Ribble Valley spoke about the functions of the Forestry Commission. The new clause and our other changes will not affect those functions. As I have explained, an order under schedule 1(1) will provide for the commission's functions to be exercised separately, and differently, in Wales, but the functions themselves will remain. The policies that the commission follows in Wales will have to be discussed with the assembly. The funding that the assembly provides will reflect its priorities.

Mr. Shepherd

Am I correct in understanding that the assembly can, if it deems it appropriate, reduce the block grant from £27 million or £30 million to £20 million, for instance, so that the Forestry Commission's objectives, which were the basis of the original grant, could be frustrated by a cut decided on by the assembly?

Mr. Davies

I would have given the hon. Gentleman a far more robust response if he had asked whether the assembly could choose to reorder its priorities and increase the amount available to the Forestry Commission. He would have been entirely correct in that suggestion. That is the essence of devolution. In pursuance of policies to support and rebuild the countryside—we are dealing as best we can with a terrible crisis created by the legacy of 18 years of neglect—it may well be that the assembly will want to devote more money to forestry. If that is what the hon. Gentleman is asking, the answer is yes. The assembly will be able to vary the amount going to forestry.

Mr. Evans

The Secretary of State said that the Government wanted to do as much for the countryside as they possibly could. Was he on the march yesterday?

Mr. Davies

My Sunday arrangements are a matter for me. I do not propose to tell the Committee, because it may be that I was doing far more interesting things than coming to London to demonstrate on behalf of the countryside. The hon. Gentleman will know that I am a country man: I was born and have lived all my life in the countryside. I venture to suggest that, if the Government of the day had listened to the warnings that I and others gave them as far back as 1989 about bovine spongiform encephalopathy, for example, they would not have got into such a dreadful mess and wasted £3.5 billion of public money.

I have a good understanding of the countryside dimension. I believe that it is important that we follow a holistic approach, and I have no doubt whatever that the Welsh assembly will pull together the strands that are necessary to ensure that we have a vigorous policy to address the problems of the countryside.

The hon. Member for West Dorset (Mr. Letwin) raised a specific point. I was unaware of the fact that he had raised matters earlier to which I have not yet responded, but I assure him that I shall make inquiries and, if my officials have been negligent, I shall certainly not be negligent myself. The hon. Gentleman will understand that. If my officials have been negligent in giving him a precise answer, I shall remonstrate with them whole-heartedly. I have no doubt that as I speak scribes are looking back at each and every intervention by the hon. Gentleman in the debate and ensuring that he receives a reply. Of course, he is correct that if I fail to provide him with satisfaction, that is my responsibility, not my civil servants'. However, they will know what fate will befall them if they put me in that unfortunate predicament.

The order-making power in new schedule 1 could not be transferred to the assembly because, under clause 23(3), only functions in part VI of the Bill can be transferred. As the power would, in all likelihood, be used only once to set up the arrangements that I have described for forestry in Wales, there would be no need for such a transfer.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

Forward to