EEC FORESTRY

HL Deb 06 February 1975 vol 356 cc1009-57

4.35 p.m.

Lord INGLEWOOD rose to move, That this House takes note of the Sixth Report of the European Communities Committee (Session 1974) on the proposed Council Directive on Forestry Measures (R/599/74). The noble Lord said: My Lords, I do not intend to expand on the duties of this Committee, the procedure and the evidence they have heard, because the noble Lord, Lord Walston, spoke earlier this week at some length about this when he was introducing a somewhat similar Motion in the field of agriculture. I would just say that where the Committee feel that any proposal for EEC secondary legislation—and we all know there is a mass of such proposals—raises special issues, they should draw the attention of the House to them and this is one such case. As your Lordships will see from the last sentence in the Report: The Committee consider that the proposal raises important matters of policy to which the special attention of the House should be drawn So we drew the attention of the House to this matter and time for debate has now been found. We cannot decide these questions here by vote, nor can we amend them. But we can hope to make our views crystal clear to responsible Ministers, in the hope that that will strengthen their hands when they meet ministerial colleagues from other EEC countries, and in doing so we shall be, I hope, performing a useful and a proper function of Parliament.

My Lords, before coming on to the merits of the proposal, I should like to draw attention to several dates because they are important—including a misprint, for which I would apologise, at the head of the Report, which is dated 23rd July 1973. There has been a time lag, but not as long as that, and it should of course read, "23rd July 1974". That was a long time ago, I must admit. Printing was then delayed by a strike until shortly before Christmas, and in the interval there have been several statements made by Ministers about forestry policy and fiscal arrangements in this country, and we must now accept that forestry in this country is in a state of great uncertainty. It is against the current forestry policy in this country, and such ministerial statements as I have mentioned, that the likely effects of the EEC proposal must be judged.

I now turn to the Select Committee's Report. I believe it is clear, and I do not intend to go through it paragraph by paragraph, but I would, with the permission of the House, like to underline several points. The general objects and effects of this EEC proposal are set out in the first large paragraph on page 2 of the Committee's Report, and it will be noticed that at the head of it there is the phrase that the principal object of the measure is "improving agrarian structure …". Other intentions and objectives are set out later, but noble Lords should notice that "improving agrarian structure" comes first. That explains a great deal of the nature and thinking behind this document. The general objects and intentions have been given a limited welcome by interested bodies, and I have heard it put like this: that they are all right so far as they go, but they do not go very far in any direction, and in the main not in the best direction for us. The most remarkable thing about the statement of objectives is that there is little emphasis on timber production. I should have thought that that should have come first and that the purpose of improving agrarian structure might have come later; but the EEC proposal is framed the other way round. Then it may seem odd that this proposal is not an integral part of the EEC long-term forestry policy—which is never mentioned in this document; and for the good reason because as yet they have not published any such policy. It is doubtful whether they can do so with any ease because forestry is not mentioned in the Treaty of Rome. Nor is timber an agricultural product covered by the provisions of the Treaty. This proposal is something on its own. It is aimed to solve a very special problem which is a consequence, one might say, of the Mansholt Plan where the aim was a reduction of the number of farms, mostly small farms, on the poorer land. I am advised that this problem of doing something with the land so evacuated is most acute in France.

There is another point which I should like to mention, which again is included in the last paragraph in page 3 and that is the vires of the draft Directive. Does it, in fact, fall within the Treaty of Rome? Doubts have been cast on this; they have been echoed within the Council of Ministers and are now under further consideration by the Commission.

So much for the general background of this proposal which, one must admit, is not entirely precise nor entirely fitted to our thinking nor to our forestry policy in this country. None the less, it has merits.

With regard to finance and the possible costs of operating this scheme, the sums are unlikely to be very large. It is extremely difficult to assess what they might be, broken down between a number of countries. The net cost to us, I am advised, could be £15 million or £16 million if the scheme were adopted on a wide scale; against which we might recover £3, £4 or £5 million, from the central funds. Although we must not be hostile to every proposal where we are likely to put more into the central funds than we get out, it is right for the Committee to draw the attention of the House to this fact. If such a view were always taken the EEC would collapse, and very shortly. In this case the central paragraph on the last page of the report sets out the financial position in greater detail. I do not think there is any need for me to read it.

The House should also take note of the Continental thinking on this problem of small woods. In the main, woods on the Continent, private as well as public, are on a much larger scale. As set out in the proposal, the thinking is very selective. We are much less selective in our thinking on small wood schemes and have always put greater emphasis on timber production.

It is worth noticing that if the central funds are to pay part of the costs of improvement work and planting carried out under this proposal, member-States none the less are given a wide discretion as to how they might contribute to the various systems of aid towards the balance incurred by the individual up to a certain figure. One of the ways whereby member-States may contribute is by fiscal incentives. If put into operation, this scheme, so far as the British Isles is concerned would be mostly of value to Scotland. Your Lordships' Committee thought this; and we thought that, to a lesser extent, it would be valuable to Wales; but the noble Lord, Lord Lloyd of Kilgerran, who gave me notice that he would like to speak but could not be here, asked me to say that in his view he thought that it would be of little help to Wales. In our view, taken from the view of the United Kingdom, it is unnecessarily narrow ; since it is based on planting one time agricultural land, mostly small areas, taken out of agriculture or shortly to be taken out of agriculture.

My Lords, I did not at the beginning declare my interest. I thought that most noble Lords would know that I have an interest in forestry; but I do so now. I have had a lifelong interest and I learned much of what I know in Germany as a student. I am the owner of some woodlands in Cumberland, small by Continental standards but, I suppose, medium by United Kingdom standards. Like most others, and like some in your Lordships' House this afternoon, even after many years I have seen only a small financial return for my endeavours and for the resources employed. I have had some reward in having made a contribution to amenity and conservation issues; and I have some pride in having once won the Royal Forestry Society Gold Medal in the annual plantation competition. I would not say that except for the fact that there is another noble Lord here, the noble Earl, Lord Lonsdale, who has won it twice. There are probably others in the Chamber who have won it too.

More than some, perhaps, I therefore have reason to appreciate the necessity for the continuity of policy; and this applies in every country. I would therefore make a plea to the Minister when in Brussels not to make changes in our established long-term policy or to compromise on essentials just to meet some provision of these proposals which are really of only a short-term nature. Much harm could flow from that and quickly. I call in aid a paragraph in the Report of the Economic and Social Committee of the EEC when they scrutinised this draft proposal. They say: In view of the long period before there is an appreciable return from forests, the Committee would stress the importance "— not our Committee; but the Committee of the EEC— of continuity in forestry, especially in tax policy with regard to forest holdings and forest production. To ensure this continuity official measures by the European Community and the member-States must have an appropriate long-term orientation. I stress the words, the importance of continuity … especially in tax policy ", and the words: To ensure this continuity official measures by the European Community and memberStates must have an appropriate long-term orientation. The essence of the whole industry could not be put more clearly than in that paragraph.

Your Lordships may think that this continuity, which is vital in all countries, is even more vital in this country which has such a small part of its surface area carrying a healthy crop of trees. Eire and Holland are the only countries in Europe which compare with us. Percentage-wise, if I may use this jargon, France and Germany must be three or four times as high as we are. I would submit that we in this country cannot afford to lose any of these healthy wood-lands no matter for what reason. In my final sentence, when the right honourable gentleman goes to Brussels and talks with his colleagues at home, I would ask him to remember—and I hope that the noble Lord who is to reply will underline this —the memorable phrases in a speech made by Tom Williams when the present Minister was his devoted Parliamentary Private Secretary. Mr. Tom Williams said in another place "that the Government considered taking into account all available information on present and prospective world supplies of timber, and that well-planned afforestation represented a sound national investment." That is no less true today than it was 25 to 30 years ago when Mr. Tom Williams said that in another place. He concludes his speech with these words, and I shall conclude my speech with the same words. He said: … no forestry workers, no timber; no timber, no security for this country."—[Official Report (Commons), 30/11/1945; col. 1784.] My Lords, I beg to move.

Moved, That this House takes note of the Sixth Report of the European Communities Committee (Session 1974) on the proposed Council Directive on Forestry Measures (R/599/74).—(Lord Inglewood.)

4.50 p.m.

Earl FERRERS

My Lords, we are grateful to my noble friend Lord Inglewood for drawing our attention to this draft E.E.C. Directive on Forestry Measures and, in his speech, touching on all the salient features, the parts which affect everyone, and yet doing so in a correct and non-controversial manner. This Directive has one unique distinction in Community Directives—that is, its brevity. We should also be grateful to the Select Committee who went into this subject for their excellent Report, which makes it clear that if this becomes an E.E.C. Directive it will affect Britain and British forestry in a very material way— and not necessarily in a beneficial one. I think I should explain or declare such interests as I have. I am not a forester, although I own some land on which timber grows and I am involved in other capacities with woodland. To my eternal shame and discredit, a quarter of a century of being connected with agriculture has seen me responsible for planting enough trees to cover no more than a total of a couple of acres or so.

The draft Directive is, in my judgment, a very unsatisfactory document. Its objectives, if put into action, would run right across the policy of State-aiding private forestry which, for a great many years, we have had in this country. This is because the whole philosophy behind the document starts from a totally different standpoint from that on which our policy has always been based. The purpose of grant-aiding forestry under this Directive is not because woods are themselves desirable, or that the economy of the E.E.C. requires timber, or that the amenity of member States within the Community would be enhanced by timber, but because it would form part of a policy—as the Select Committee point out—of "improving agrarian structure". This is, as my noble friend mentioned, a legacy from the days of the Mansholt plan when it was considered by some that the answer to the "butter mountain" within the Community was to plant up farms with trees.

This document—as the Select Committee rightly point out—is directly aimed at the afforestation of agricultural land and at altering farm structure, for which E.E.C. grants would be made available. I do not believe that if we want to alter farm structure the right way to do it is to plant forests. Nor do I believe that we should encourage this method of restructuring by providing, or accepting, grants. I can see that in certain countries within the Community, where there are farms which are both small in size and on marginal land, this scheme has certain attractions. Very few of our farmers or foresters would take up, or be in a position to take up, the benefits of the scheme, and yet we should be obliged to pay into the E.E.C.'s funds for the grants which would be payable under the scheme to other countries. My information is—and I am glad that my noble friend's remarks confirm this—that we should have to contribute £4 or £5 to the Community for every £1 which the United Kingdom would receive from E.E.C. grants. That is a very expensive way of encouraging private forestry.

This document is specifically related to State assistance to private forestry. I find it curious and anomalous and even possible fortuitous that we should be discussing a document which, although I think the United Kingdom would be better without it, is nevertheless one by which the Community wish to encourage and aid private forestry, for it comes at a time— and I make no apology for mentioning this—when private forestry in the United Kingdom is still reeling from the realisation of the effects which the considered proposals of Her Majesty's Government are going to have, not just on private foresters as individuals, not just on private forestry as an industry, but on the whole structure and appearance of woodlands, the countryside, the amenity and the environment. I refer to the capital transfer tax proposals as they are contained in the Finance Bill.

Under these proposals, capital transfer tax will be levied on a woodland every time it changes ownership. In the case of hardwood, which may take between 150 and 200 years to grow to maturity, this may result in tax being paid five or six times by those who have not only not received any cash reward from their ownership but who will have actually incurred expense, with the full possibility —as in the case of Dutch Elm disease —that the crop may die before maturity and become not just valueless but a liability on which further expense is incurred in felling. Even if the crop goes to full maturity, frequently the aggregate of tax paid over the years will exceed the value of the crop when felled—and let us remember that the tax paid has to come, all through the years, from resources other than the woodlands on which the tax is based. It may surprise your Lordships to know that the compound interest charges alone on the tax paid over a period of 150 years on a ten-acre hardwood plantation could amount to over £500,000. That is on the assumption that changes of ownership take place at death. If they take place during the life of an owner, the situation is infinitely worse, as they are subject to the "grossing up" procedure.

I am not concerned here with those who pay the taxes, or with any arguments about the philosophy of the redistribution of wealth, or with the merits (of which there are plenty) of the capital transfer tax. I am merely concerned with the effects and the results which this tax is going to have. The first is that people will stop planting. Already it is estimated that 20 per cent. of the production of young trees in nurseries has not been taken up this year and some 30 million seedlings will have to be burned. This can only have, and is having, a serious threat on the employment of people in areas where forestry is the main occupation, and on nurseries.

The second effect is that it will not be worth while to maintain existing woodlands. Both their standard and their appearance in the countryside will deteriorate. The third effect is that trees will be felled both before the owner's death and when the trees are immature, because no one wishes, if it can be avoided, to pass on a tax liability to someone else. The effect, therefore, which the tax, if it goes unamended, is going to have on the amenity and the countryside is quite horrifying, and I beg the Government—from a national point of view—to think again.

It is over the past ten years that the public have been made, and quite rightly so, conscious of and aware of our need as a generation to protect the environment which we, as a generation, have inherited, which we, as a generation, are destroying, and which we, as a generation, will have in turn to pass on to others. The public have been invited —and rightly encouraged—to appreciate the environment and to participate in the amenities which the natural environment around us provides. It was for this reason that the Forestry Commission employed Dame Sylvia Crowe to help landscape some of their forests, because large blocks of conifers were considered to be aesthetically unacceptable. It is for this reason, presumably—and I am glad to see the noble Lord, Lord Taylor of Gryfe, is in his place, because he will put me right if I am wrong—that the Forestry Commission has just announced the expenditure of £27 million on log cabins so that the public can enjoy their forests (though with that level of expenditure I am bound to say I cannot think where they are going to fit the trees in). The point is they have the amenity at heart. It is for this reason that the Countryside Commission was set up. It is financed by the Department of the Environment and offers grants—it gave £300,000 last year—towards encouraging people to plant shelter belts and trees for the improvement of their locality. It is for this reason that many local authorities are themselves prepared to give grants for amenity planting.

This public awareness of the desecration which the age of the machine and the concrete mixer is imposing upon our national heritage has resulted in the widespread use by local authorities and others of landscape architects, planners and environmentalists, as an antidote to the march of technological progress, which may benefit the statistician and the cost accountant but which offends against the natural and the aesthetic, and which eventually but inevitably numbs the senses. Purely untutored humanity interferes comparatively little with the arrangements of Nature; the destructive agency of man becomes more and more energetic as he advances in civilisation ". That sobering thought, I regret to say, was expressed not by me but by G. P. Marsh in 1864. One wonders what he would think now, in 1975.

It was because of the sudden awareness of the privilege of the surroundings which we have inherited that the last Conservative Government agreed with— and their successors accepted—the need to encourage the planting of broad-leafed hardwood trees, which can never be an economic proposition. This is why the Government pay not just a normal planting grant but give a substantial supplementary grant of a further £50 per acre for those who plant broad-leafed trees. This is done because 86 per cent. of all hardwood planting is done by private foresters. My noble friend Lord Brookeborough was hoping to be with us today but he has had to return to Northern Ireland because of the British Airways strike, which has meant his getting another flight by another airline. He would have told your Lordships that 100 per cent. of all hardwood planting is done by private forestry, and in that Province— which is far less tree-covered than the rest of the United Kingdom and yet has such a great tourist attraction and a great tourist industry—it is vital that the environment should be carefully protected and that forestry should be encouraged.

It is not without significance, nor is it surprising, that the Department of the Environment was so concerned with the protection of the environment that they set up and financed the organisation which had as its slogan, "Plant a tree in '73". One result of this campaign was the setting up of the Tree Council, whose chairman is Dame Sylvia Crowe; and the Council is having a National Tree Week next month. This is a body with a grant from the Department of the Environment whose main purpose is to urge people to plant the right thing in the right place. So here we have these bodies—financed by Government—set up to encourage people to plant trees for the benefit of the nation, and yet we have the Chancellor's proposals, the result of which must be the despoilation of the countryside.

The council planning officers, who hold so much sway not only over town planning but also over country planning, are very concerned about the whole question of what they call the "rebuilding" of the agricultural landscape. They have told me that they view with apprehension any legislation likely to interfere with that aim. It is not without significance that bodies such as the Council for the Preservation of Rural England, the Association of County Councils and the Countryside Commission—the latter body, of course, has a statutory duty to advise Ministers on matters related to the conservation and enhancement of the natural beauty and amenities of the countryside—have all found it necessary to make their views known about the damage they believe will occur to the environment if the capital transfer tax proposals on woodland go ahead in their present form.

These are bodies which are not normally concerned in any way with taxation or with individuals. The views of the Countryside Commission are worthy of note, and they were put clearly and positively when the Commission said to the Chancellor that these new taxes—and here I quote: … could be accompanied by a lasting deterioration in the countryside. My Lords, can we ignore that warning, coming from that source? It was none other than Engels, who said in 1892: A great nation never learns better or quicker than by undergoing the consequences of its own mistakes. But that can be an expensive way of learning.

My response to that would be that a good Government—if they can see in advance the consequences of their mistakes—should not hesitate to take such action as would avoid making those mistakes. That is not humiliating: it is courageous, it is sensible, and it is respected. I feel some sympathy with the noble Lord, Lord Beswick, this afternoon, not least because he is overcoming an indisposition—and, incidentally, we are glad that he has recovered sufficiently to be present—but, frankly, because all Governments make mistakes. Some two years ago, I had to stand at the Dispatch Box from which the noble Lord will reply today and try to defend the Government of which I was a very insignificant member over the actions on forestry which they proposed and which met with massive disapproval, particularly on the production of their White Paper on Forestry and that disastrous cost-benefit analysis, which will be remembered with anguish by many of your Lordships. We were given Hell—and, with respect, quite rightly so—but what we did was "peanuts" compared with what the present Government are doing.

However, there is a moral in this. The then Government entered into consultations and thought again. New arrangements were worked out to the satisfaction of all and a bad position was retrieved. I respectfully suggest to the noble Lord, Lord Beswick, that he urges upon his Government—and he has influence in this sphere—to think again and to realise that it is easier to destroy than to create. All the effort and expenditure which has been so wisely entered into by Government Departments, independent bodies and individuals will be to no avail if the present proposals for taxing woodlands remain as they are.

It will not be just private individuals who are affected but all of us: our nation and our nation's heritage. Forestry has a large part to play in Britain for the whole country and for our future benefit. The State must aid private forestry, as this document suggests, but, equally, the State must let private forestry aid the State. My message to the Government is, "Forget this Directive and reconsider what you are doing not just to the woodlands but to the whole environment". For, after all, it is our duty, as a mere fleeting generation—and it is a very short passage that we enjoy here—to preserve our environment for the enjoyment and appreciation not only of our own generation but for those who will follow.

5.9 p.m.

The Earl of LONSDALE

My Lords, the Motion of the noble Lord, Lord Inglewood, is timely and we should all be grateful to him for bringing it forward. It brings to the fore the need for increased forest areas in the EEC, for the various purposes which the Draft Directive mentions, one of which is to improve the agrarian structure and to make forestry form part of a really effective pattern of land use in which it is harmonised to the best possible advantage with agriculture and the environment.

I am not as critical as my noble friend Lord Ferrers of the Draft EEC Directive. I think it contains a good deal of sound material applicable to this country. It also says that forestry provides employment in rural areas where the opportunities for agricultural employment are decreasing, and that an important objective of forestry is the production of wood, and that all member-States are net importers, and the Community as a whole imports nearly half of its requirements of forest products. The Draft Directive also says that an increase in wood production therefore seems desirable and that forestry makes major contributions to the beauty of the landscape and to the conservation of fauna and flora. There is a lot of good stuff in the Draft Directive which needs to be studied carefully.

The Motion of the noble Lord, Lord Inglewood, is also timely in that it provides us with an opportunity to consider the timber industry of Great Britain in an EEC context. I must begin by declaring the inevitable interest that most of us who are speaking in this debate have, as Lord Inglewood said. I am an owner of woodlands, one of which won a gold medal in the time of one of my forbears and another gold medal in the time of another of my forbears. Such is the scale. The noble Lord, Lord Inglewood, is an expert at growing oak trees. The speciality of my properties is sycamore trees. The life of oak and of sycamore is very long, and hence these medals come not necessarily to one's own generation but to future generations or past generations. I am also a member of the Home-Grown Timber Advisory Committee, which is charged with the duty of advising the forest Authority. I am also Chairman of the Forestry Committee for Great Britain which is the representative organisation for the private sector in Scotland, England and Wales. As a member of the English Tourist Board, I am proscribed, however, from talking about leisure and recreational or tourist potential of forestry, because my membership is an office of profit; so I shall leave that aspect of forestry, hopefully, to other noble Lords to develop.

It has been acknowledged by all of your Lordships that the home-grown industry is in a state of confusion and uncertainty. First, the White Paper of June 1972 caused a hiccough. My noble friend Lord Ferrers has referred to it. It culminated, however, in new guidelines for forestry on 5th July 1974. But in those new guidelines, which concentrated to some extent on hardwoods, integration with agriculture, the appearance of the landscape and amenity and recreation, the need for an expanding private forestry industry was reiterated. The forestry industry is built upon the Forestry Act 1919 and the Forestry Act 1945 which provided incentives for expanding our national forests. The second factor, of course, which has thrown the industry into confusion and uncertainty is the White and Green Papers on CTT and on wealth tax, which were published on 8th August 1974. To give some idea of the effect, the Commission's planting in 1973/ 74 was 45,471 acres of bare land and 8,206 acres of replanted land. Those figures, and indeed all these figures which I quote, are taken from the Commission's Annual Report for 1973/74.

The Commission has a target laid down by Parliament to plant 45,000 acres of bare land every year, so it was obviously achieving its target, despite the fact that in 1972/73 it could acquire only 12,000 acres of land and therefore was biting into its reserve of plantable land, and in 1973/74 it could acquire only 17,000 acres. But the situation is quite different this time round. I understand that it will buy at least 45,000 acres quite comfortably this time round. I state that only to illustrate that plantable land is not now a reason for a fall-off in planting. Plantable land is again available since the fortunes of agriculture declined.

Now the private sector. In 1973/74 the private sector planted 46,700 acres of bare land, almost the same as the Commission, and replanted 9,900 acres, again almost the same as the Commission. But in 1974/75, this current planting season, all the estimates are to the effect that not much more than 24,000 acres will be planted by the private sector or replanted, as against 56,300 acres in the previous winter. This is what the uncertainty has done and this will undoubtedly have an obvious effect on employment. The CTT proposals have, as I say, produced this current uncertainty and confusion and caused this steep decline in planting—no shortage of land. The old tax system designed for forestry developed over the years from 1910 and the 1919 and 1945 Acts set out the targets for an expansion of the industry. The fiscal system for forestry is part and parcel of the incentives for an expansion of the industry which was called for by Parliament. The possibility of a growing crop being taxed several times before it can be harvested and produce cash has entirely removed the incentive to plant more trees, let alone hardwoods, because the expense is so much greater and the time taken to maturity is so much longer.

In debate on the CTT clause in the Finance Bill in another place, the Chancellor of the Exchequer suggested that all the hardwoods were being planted by the Commission. This is not true in fact. In 1973/74 the Commission planted 576 acres of hardwoods, while the private sector planted 2,965 acres of hardwoods. The private sector planted 84 per cent. of all the hardwoods planted and the Commission planted 16 per cent. We are both planting hardwoods, but it is the private sector which thinks most about the countryside because its woodlands are in small blocks and small areas and the traditional areas for high landscape value. That is why private forestry plants so much more hardwood than the State sector.

The inclination of woodland owners not to plant any more because of CTT is obviously directly contrary to the statement of 5th July 1974 which, among other things, provided for additional incentives in order that more hardwoods would be planted. But the private sector can only die, and die rapidly, under the CTT proposals. At the same time, it did not seem to be the Chancellor's wish to kill off the private sector in any sphere of commerce and industry. On 14th May 1974, Mr. Healey said to the CBI: Wrong decisions by me could in time destroy the private sector of a mixed economy. I can assure you, as you asked me to, that Her Majesty's Government has no intention of destroying the private sector or encouraging its decay. We want a private sector which is vigorous, alert, imaginative—and profitable. The private sector of the forestry industry can be none of those things if the CTT proposals go through unamended. Mr. Healey also said in his Budget Statement of 12th November 1974 in another place, at column 259 of Volume 881 of the Official Report : The Government … have a duty to see that firms which are alert and vigorous can be profitable as well. But such firms can be profittable only if the system of price control and taxation within which they operate makes this possible. Any adjustments to the system which the Government have to make for this purpose cannot rightly be regarded as State aid ". In other words, it is suggested that if an industry needs a special tax system because only with it can it survive and thrive, it should have a special tax system. Many times through the years the Forestry Committee for Great Britain have suggested that the more obvious examples of advantage being taken of the tax system ought to be dealt with, and could be dealt with, without upsetting the tax system as a whole.

I mentioned employment The figures for employment are startling. The best estimates of employment in the forestry industry have been agreed with the Forestry Authority, and the best estimates are that there are 13,100 forest workers in the private sector, 10,850 in the State sector and 12,000 odd in the processing industries which process the timber. If planting by the private sector stops and management by the private sector declines, a very large part of the 13,100 who are employed in the private sector will find themselves looking for other jobs. This will lead to further depopulation of the countryside, particularly if one thinks that about one in six of those who are employed in the countryside of South-West Scotland are employed in forestry, most of which is private forestry.

I hope that a subsequent speaker will go into the importance of home-grown timber in an import-saving role. At this moment I will merely say that in 1962 the imports of timber and timber products were £414 million, but that in 1973/74 it is estimated that there will be imports amounting to £2,083 million—a five-fold increase in 13 years. This is because of the higher price of timber and a much greater usage of timber and paper than was ever expected when the White Paper of 1943 was produced. Therefore what one must ask is whether Her Majesty's Government still want an expanding forestry industry which is in line with the EEC Draft Directive. Do Her Majesty's Government want a healthy and vigorous private sector within the forestry industry, and, if so, what steps will Her Majesty's Government take to make this possible?

5.23 p.m.

Lord BOLTON

My Lords, I, too, must claim an interest in the odd gold medal! I imagine that every shade of opinion in your Lordships' House will be in agreement with the main reasons for encouraging forestry within the European Community, as set out in their discussions and papers of 1971 and 1972. Speaking as an active participant in the forestry industry, I am concerned, like many others, that the United Kingdom will not fulfil the stated objectives or ideals if the present fiscal concessions are withdrawn or are not adequately replaced during the debates and discussions that are proceeding in another place.

Forestry is a very long-term investment. It is not merely a financial investment. As the noble Earl has just said, it is an investment in the social, cultural and environmental stakes of all rural communities. In so far as urban dwellers are able to share in the beauties of the countryside, they, too, have a stake in the future of forestry. The Forestry Commission, or, indeed, any other similar public or national body which might be envisaged, could, by its very nature, only be geared to running large units and not the enormous number of scattered, smaller units which can only be economic and viable if they remain as autonomous units. These units, strongly encouraged by the EEC in their various papers, are an integral part of the British countryside. As I have said, the EEC has recognised this clearly in many of its Papers.

Should private silviculture be placed in jeopardy by precipitate fiscal policies which may not have taken into account the enormous implications, I fear that the very nature and appearance of a great national heritage will disappear. It will certainly lead to the increasing depopulation of many rural areas which again, as the noble Earl has said, badly need that population and that work. The many thousands of workers in private forestry and the many ancillary industries attached to private forestry will suffer heavily, too. It takes great faith to plant a seedling which probably will not mature for 70 to 150 years. However, while I and others regard social and amenity aspects as of prime importance in this particular debate, I would also respectfully remind your Lordships that in two World Wars the supply of home-grown timber was deeply appreciated by many industrial parts of the nation.

In conclusion, may I say that 200 or 300 years ago an Englishman declared that when Englishmen had not the faith to return home and plant an acorn England was finished. My Lords, I should not like to see that happen.

5.26 p.m.

Viscount NORWICH

My Lords, may I add my thanks to those which have been expressed previously this afternoon to the noble Lord, Lord Inglewood, for having drawn our attention to this Report and draft recommendation. I never address your Lordships' House without a feeling of deep humility, and I do not think that I have ever addressed your Lordships' House with a feeling of greater humility than I have this afternoon. First, because, to my great regret, it may well be that I shall have to leave before the end of this debate—for which I crave your Lordships' indulgence but I have an appointment which I cannot break—and, secondly, because not only have I not planted a single tree in my life but I do not actually own any. I owned four trees, but they were all elms which became diseased; and all four had to be chopped down two years ago. Therefore I regret to say that my experience is minimal and my knowledge very little more than that.

Also, when I speak about conservation, normally I declare an interest as a member of the Executive Committee of the National Trust. In this case, obviously the question of capital transfer tax does not apply to the National Trust, which itself is a charity. Therefore I can speak only as a lover of the countryside and as one who is determined to do everything he can, within the limits of his very small powers and ability, to see that that countryside is protected.

The proposed Council Directive that we are looking at this afternoon states that member-States will be required to bring in schemes to encourage afforestation and that, within such schemes, member-States will be required to pay 60 to 90 per cent. of the cost of the qualifying operations. So far it seems to me to be so good that I see nothing inherently reprehensible or undesirable about it. I think the problem is that before we can agree or disagree on such a policy, it is vital that we clear our minds about our own domestic policies with regard to woods and forests. The problem is basically a very simple one. Therefore I will not take very long to express it. quite apart from the fact that the noble Earl, Lord Ferrers, has already made most of the points that I wanted to make. If we are to continue with our past policies of encouraging afforestation, there can be nothing new in that. We have had the principle of Government help for afforestation for a long time. Never have we had it in a more enlightened form than with the Dedication Scheme of last July. This offered, essentially, very nearly four times as much grant for those wishing to plant new forests of deciduous trees and hardwoods as the amount which might be available for those who wish to cover an even greater acreage of this country with those gloomy and grim expanses of conifers which have done so much in the last 20 or 30 years to destroy the beauty of so much of our countryside.

If this Dedication Scheme were to continue I have no doubt that the situation over the next ten or twenty years would be enormously improved. This is a carrot —and an important and valuable carrot— to encourage people to improve the countryside and its general aspect. But, suddenly, since the last Finance Bill we are faced with not one stick but the possibility over the long term of five or six different slicks, the cumulative effect of which will infinitely outweigh the potential benefits of this single carrot. Those sticks are the regular and repeated imposition of capital transfer tax, perhaps five or six times over the 150 odd years which a deciduous forest takes to grow to maturity.

It seems inevitable that those who own such forests will be faced with the necessity every 25 or 30 years—however long it may be—to pay this tax once again, because as we all know from bitter experience that once a tax has been imposed it becomes increasingly difficult ever to get it removed. Thus the owners of such forests will almost certainly be forced—however much it may be against their will—either to chop them down before maturity and replace them with conifers or simply to chop them down before maturity and not replace them at all. Once again, inevitably, the result can be only the ruination of much of our countryside and immeasurable and irreparable loss, not only to those who might have direct benefits as the possessors or the immediate enjoyers of those forests but to the bird and animal life that inhabit them, as, indeed, to every inhabitant of this country for whom the view of such woods and forests on the horizon, on the hills, in the valleys, is of such vital importance to the beauty of this country as we know it.

This is a terrible prospect but the situation would obviously be much worse if we did not feel that Her Majesty's Government were already acutely conscious of it. Fortunately—and I hope the noble Lord, Lord Beswick, will not contradict me a little later—I think I may say that we are fairly confident that Her Majesty's Government are well aware of the long-term dangers of the capital transfer tax as it is at present threatened. We had assurances almost exactly two months ago from the Parliamentary Secretary to the Minister of Agriculture, Fisheries and Food; we have had not so much assurances but rather clear indications from the Chancellor himself on the 21st of last month, and we have had further indications from Mr. Joel Barnett as recently as yesterday. From all of this, it seems that the Government are well aware of the dangers, and are not only aware of them but are, I hope, eager and anxious to do something about the position.

That being the case, I do not want to press the subject too hard from these Benches. I am perfectly certain that, thinking, as they already do, that they may be wrong, Her Majesty's Government will give us reason within the next few days to thank them for having got us out of this agonising shadow which remains over us at present. I believe the best thing we can do is to express our hopes, our convictions and our desperate pleas that this matter should be looked at most carefully and that by the simple solution of merely levying tax, at least so far as deciduous forests are concerned, only on the sale rather than the inheritance of timber, the danger may be averted.

5.36 p.m.

Lord CAMPBELL of CROY

My Lords, I hope the Government will consider carefully the remarks that have just been made by the noble Viscount, speaking as he does as an authority on conservation matters. I hope now in a fairly brief speech to have the opportunity to emphasise the importance of the forestry industry in Scotland, and I must start by declaring a small interest, because I own some woodlands on a small scale at my home in the North of Scotland and part of them are under the Dedication Scheme.

I join in thanking my noble friend Lord Inglewood and the Select Committee for their lucid and concise Report, and also for his most helpful presentation of it to us today. It seems to me that the main point from the Report is that the EEC are proposing the encouragement of forestry, and particularly private forestry, although it is restricted to schemes associated with farming, and afforestation is suggested, with financial incentives, although some clarification is needed as to what is meant by "fiscal incentives" by the EEC.

My noble friend Lord Lonsdale suggested that something might be said about the question of the balance of payments. I understand that after Japan, Britain is the second largest importer of timber in the world, and it may be asked why have we in this country over many years and under successive Governments allowed our balance of payments to be so burdened. Why is it that only about 10 per cent. of our own needs in timber and timber products, including paper, are provided from our home-grown timber at present? I believe the answer is that Governments have always been thinking in the short term, but more recently we have been thinking further ahead and I believe we ought now to be thinking in terms of 10, 20 and more years ahead and not just about the balance of payments for this year and next year, however important they are.

When I mention timber products, of course I am thinking of pulp for paper and board. In recent years two integrated mills, large for the United Kingdom, have been established, one in Scotland at Fort William and another at Workington, and Government help on a generous scale was forthcoming and was used because of the employment that was provided. These mills were built to use indigenous timber. We could increasingly produce more timber at home and not have to pay for so much of our needs in foreign currencies. There is still suitable land available; for example, land which is not attractive agriculturally and for which trees are the best, or sometimes the only possible crop. They then provide good jobs in rural areas where the jobs are needed and also, with a little care, the afforestation can improve the countryside. These considerations apply particularly in large areas of Scotland, because about half the forestry operations, both private and by the Forestry Commission, take place in Scotland and therefore future policy is of great concern to us North of the Border. I know that at least three of my noble friends from Scotland are proposing to take part in the debate.

It is not surprising that while I was sharing the responsibility for the Forestry Commission in recent years, it was decided that its headquarters should be moved to Edinburgh—I understand that this move should be completed in a few months' time—because that is the centre of the main forestry growing areas in Britain. Indeed, about 80 per cent. of all forestry in the country is North of a line drawn approximately through Yorkshire. The Forestry Commission have unique functions, because they are not only responsible for a large proportion of forestry, but are also the authority for administering schemes applying to the private sector. This unusual function has been carried out well by the Commission.

I am glad to see the noble Lord, Lord Taylor of Gryfe, in his place. I know he may feel that in his position as Chairman of the Forestry Commission, he is debarred from speaking in this debate, but no doubt he is listening to everything that is said. I know he has been endeavouring to assist progress to the benefit of the community as a whole, because, as I have said, those in the Forestry industry can make long-term contributions to our economy. Enlightened forethought and co-operation with farming, tourism, recreational interests and the general public can also lead to benefits being gained for the countryside. I believe the noble Lord recognises this fact, and has been giving encouragement.

But there is a threat which I must mention, which has been raised before in the debate. Hanging over the forestry industry today, there is the threat of the Government's capital transfer tax. This has not been adapted to apply to this long-term process. At the very time when the EEC are sensibly proposing encouragement to domestic forestry industries, including financial incentives, the Government's proposals would kill off more than half the British industry, the private sector. The noble Earl, Lord Ferrers, elaborated on this. I would say only that the existing tax system has, for over sixty years, recognised that to tax a crop several times during its long growing life would make it impossible for forestry to be carried on. If the Government persist in removing this system without replacement, most private owners will have to give up forestry because they cannot afford to incur enormous losses for themselves and their successors.

Do the Government really wish to increase imports of timber, pulp and paper —already over 80 per cent. of our needs —and deprive themselves of the hitherto expanding domestic contribution to the balance of payments? An adapted form of the capital transfer tax should be applied to forestry. Provisions should be included, as they can be without difficulty, to prevent last-minute purchases of woodlands to avoid paying full tax, sometimes known as "the death-bed arrangement", by providing for five to seven or ten years' transfer before death. I must point out again that unless this is done as many as 30 million seedlings and transplants may have to be destroyed in the coming months, according to one estimate, and a rundown in employment started.

The Chancellor of the Exchequer has been calling for investment in British Industry as a whole. Forestry is an industry in which modernisation and investment can increase employment instead of reducing it, as in many other industries, and in areas where jobs are needed. Other industries such as steel and textiles very ofter suffer from redundancies when investment takes place in modern plant. This is something which the noble Lord was addressing us about earlier this week. In forestry, of course, there is modernisation, but with afforestation, on the whole, it means more jobs, not less. As the noble Lord, Lord Inglewood, said, the financial return is small and distant. Unless continuity is assured over the years no one can be expected to face the inevitable losses of growing the trees which the country needs.

Let us also consider the lamentable results of wholesale felling when no money is left for clearance, far less for replanting. The effects on the countryside would be savage. The woods and glades of today would be reduced to devastated acres of stumps and scrub. In Scotland, this enforced destruction of the landscape would be most damaging to employment, to the tourist industry and to all who depend on tourism in Scotland, such as the shops, garages and other services, not only in the rural communities, but also in sizeable towns.

I hope, too, that newspapers and publishers are fully alive to the threat to their supplies of newsprint, and paper which I have mentioned. There have been newsprint troubles for the Press in recent years when supplies have been difficult. At present, about 9 per cent. of the newsprint used by the Press in this country is produced from home-grown timber. It is important that our newspaper industry should not become virtually dependent on supplies of newsprint from abroad. Today at Question Time, the noble Lord, Lord Beswick, was particularly helpful in a reply to me, saying that the Government —if I may paraphrase his words—were in favour of a mixed economy. He said that in some cases private investment was not forthcoming, and therefore public investment had to take its place. But this is not the case in the forestry industry. Here we have private investment, long-term investment, available. It can be used, and the taxpayers' money need not be used either directly or in interest on loans, provided that that investment is not penalised or expropriated, which is what the present proposals look like.

I am glad to note that the proposal in the EEC document that forestry is to be encouraged, although we think that the restriction to planting woodlands on farms is unnecessary. We think it should extend much more widely to undertakings also which apply only to forestry. In Scotland, and I believe also in some parts of England and Wales, there are large areas where the terrain is difficult and suitable for growing trees, but not for farming. First and foremost, I suggest that we must ensure the future of a healthy forestry industry here in Britain.

5.48 p.m.

Lord MOLSON

My Lords, I must declare an interest as President of the Council for the Protection of Rural England. My only purpose in intervening in this debate is to emphasise the tremendous importance which the whole amenity movement attaches to the proper development of forestry, and especially the encouragement of hardwoods. Of course, we are not opposed in suitable cases to the planting of conifers but have many times in the past criticised the covering of grand open spaces with excessively large quantities of conifers, all of exactly the same hue. We naturally rejoiced when the present Government, on the advice, I think, of the Forestry Commission, introduced a new subsidy last summer in order to encourage the planting of a much larger proportion of deciduous trees, especially among conifers, in order to break the line and the monotony, and to give us that unique beauty which deciduous trees have, especially in Autumn.

My noble friend, Lord Campbell of Croy, said we must take a reasonably long view, and ought to look thirty or forty years ahead. I beg the Govern- ment to look much further ahead than that from the point of view of amenity. As has been said by several noble Lords with great forestry experience, hardwoods last for 150 years and only come to their full glory and beauty when they are a hundred years old. It is our duty in this generation to look ahead and to make sure that one hundred years hence the beauty of the English and Scottish and Welsh countryside is preserved for those who come after us.

I do not wish to criticise the capital transfer tax. On some occasion I may think it appropriate to do so. My concern this afternoon, in speaking for the Council for the Protection of Rural England, is to ask that forestry shall be treated in an exceptional way. The owner of beautiful woods, with all that they give to the glory of the countryside, should be treated in the same way as the owner of works of art which are of national beauty and importance. The Treasury in the past, I am glad to say, has managed 'to administer a scheme under which works of art of national importance are taxed only when they are sold. I ask the Government to consider the English countryside as of no less importance in the whole capital wealth of beauty of the nation as that which is represented by pictures and other works of art. My Lords, the Labour Party has a good record, or certainly many individual members of it have an extremely good record, in the matter of the preservation of amenity. I thought that the reply of the Chancellor of the Exchequer in the House of Commons a short time ago held out great hopes that he will show the flexibility of mind that is necessary to ensure that this capital transfer tax shall not have an adverse effect upon the amenities of the country.

I ought perhaps to declare a minor interest. I am a small woodland owner, of about 50 acres. Last winter I sold and cleared a small wood and replanted it, and in choosing the trees with which I planted and the way in which I left a Scottish burn visible from the road I had in mind the preservation and indeed the enhancement of the beauty of our part of Scotland. I am not necessarily referring to companies in this matter, who, incidentally, of course, are not affected by this capital transfer tax. But I hope that the Government will make sure that those individual owners —I believe they are the great majority— who try to add something to the beauty of the countryside for posterity shall be enabled to do so. My Lords, I apologise that I shall probably not be able to remain to the end of the debate, owing to a longstanding engagement, and I hope that nothing I have said is so controversial as to make it obligatory for me to remain.

5.54 p.m.

Lord LOVAT

My Lords, I should like to add my thanks to the noble Lord, Lord Inglewood, for introducing this debate, which should not be a controversial one. Unlike the noble Lord, I can make no claim to winning gold medals for forestry. Essentially I am a farmer, but my father was the first Chairman of the Forestry Commission, which took birth in 1919. When I went up to Oxford he thought I was being extremely idle—I was reading History—and he insisted that I take a forestry degree at the same time. I should have got into bad trouble if I had not passed both exams, which I somehow managed to do.

My Lords, the question before us, as I see it, is this. The present Government have the thought that private forestry is a sector in which certain taxes can be avoided. I can assure the noble Lord who is to reply, with my hand on my heart, that no person who grows trees and loves timber does it from that point of view. One is thinking in the long term, and one cannot stress sufficiently, although every speaker has done this, that the long term is what counts in forestry. Sir Walter Scott summed it up better than anybody when he was talking about trees: They are aye growing while we are sleeping. That is a nice way of putting to the Government the importance of homegrown timber which is not in competition with the Forestry Commission but which this country most certainly cannot do without at the present time, the balance of payments being what it is.

The last speaker, Lord Molson, said that the Labour Government had looked after forestry very well. Well, I think they have; I am not going to pick a quarrel on that. Mr. Attlee's Government introduced the Dedication Scheme which I think began in 1946, and several speakers have mentioned "Plant a tree in '73". When Lord Beswick was out of the Chamber the noble Earl, Lord Lonsdale, quoted something that the Chancellor of the Exchequer said in 1974. I think I might read it again, because I believe it is important if consistency in forestry is to be preserved. We are all agreed it is a long-term policy. Mr. Healey said: Her Majesty's Government has no intention of destroying the private sector or encouraging its decay. We want a private sector which is vigorous, alert, imaginative and profitable. I do not think one can completely reverse that very wise statement if some extremists on the Left Wing of his Party consider that private interests are taking advantage of growing trees.

I am a member of the Scottish Woodland Growers' Association, and we are fully aware of the deathbed purchase, which we are the first to agree is a wrong thing. The stopping of any alleged abuse of the tax system has our full support, and at least ten years ago the private sector expressed its concern to the Board of Inland Revenue about the so-called deathbed purchase and its willingness to see the rules amended to stop this practice. But to amend a rule and to prevent an abuse is one thing; to introduce a new tax system—and I am speaking now about the gift tax—which without qualification could destroy the entire private sector of the industry is quite another. I hope the noble Lord, Lord Beswick, will bear this in mind, because we are planting trees for the nation and not for ourselves.

We are importing £2,000 million worth of timber in a country which is growing only 8 per cent. of the national requirement, and in a country which can grow timber better, I am informed, than any other country in Europe, where other nations are fully aware of the importance of timber as an integral part of their agricultural requirements. Belgium produces 43 per cent. of its national requirement, France no less than 84 per cent., and Italy 56 per cent.

In my forestry experience—and I have been planting trees for 43 years since I inherited from my father and became a Member of your Lordships' House—I have always been led to believe that the Baltic supplied an enormous quota of timber at the nod of a head. This is not so. The Baltic and Scandinavians have cut back their resources to such an extent that I myself have had an inquiry from Scandinavia to send trees as pulp from Invernessshire to Gothenburg in Sweden. This is an amazing state of affairs which one can hardly believe.

These are facts, and one must not run away from them on a gift tax blanket which will be penal in this industry. Confidence is already shaken, and it is not only the forester, the proprietor, who is concerned, as many noble Lords have pointed out; it is the nurseryman, the contractor, the man who makes the fencing wire, the man who digs the ditches with his small machinery, the new School of Forestry in Inverness, the farmer who loses his shelter belt. Moreover, there is the drainage of the hillside. When trees are cut down you have flooding in the river system for years afterwards. The water table, too, rises and falls. As your Lordships all know, shelter from trees for animals is the equivalent of food; it keeps animals warm in the cold winter nights. This is particularly important in the Highlands of Scotland, which is the greatest potential area for growing more timber.

If noble Lords think that the Forestry Commission can take over all that the private sector is doing, they are wrong. It is not physically possible to do this. Neither is the proprietor who can no longer plant trees likely to sell to the Forestry Commission; he will put sheep and cattle on that hill. One of my problems on a large estate—and I declare my interest in farming—is that I have had to think long and hard before planting trees where I thought hill cattle or sheep could do better. I calculated that on the present price of mutton and of homegrown timber, sheep had to produce twins every year to match a forestry plantation of even conifers—which have been perhaps criticised too much even when the land is suited to their needs.

Do not think that because private growers could not continue, the Forestry Commission could do so single-handed. It is not true. I have known all the Chairmen of the Forestry Commission— some of them by their Christian names— since the Commission started. We have as good a man as any in the present holder of the office, the noble Lord, Lord Taylor of Gryfe. I am sure that he will make a case out for us. It is nothing more than good common sense, which I have no doubt he will pass on. I am only sorry that he cannot speak to make it clear to the noble Lord, Lord Beswick, and the Government across the way.

6.4 p.m.

Lord CRAIGTON

My Lords, as noble Lords have pointed out, in one major respect the Council Directive is hardly suitable for the British scene. The current form of the proposal refers to the large number of agricultural holdings where agriculture is practised on land which is not suitable for this purpose but which is very suitable to forestry. In essence, this is not a British problem. However, I agree with my noble friend Lord Lonsdale that what concerns us is referred to in this Report. Paragraph 3 of the explanatory notes sets out the two wider objectives, which are indeed our objectives; first, an increase in wood production, and of similar importance "— that is, to wood production, and in certain circumstances of even greater importance are the contributions which forestry makes to the beauty of the landscape, to the conservation of flora and fauna, and to the protection of the soil. Apart from the noble Viscount, Lord Norwich, I alone have no interest to declare. In fact, all I know about forestry I learnt from my noble friend Lord Dundee, who spent a day with me and told me so much about softwoods. However, I am interested in the environment. The effect on forestry of any change in the taxation system which leads to enforced felling and, as noble Lords have said, a reduction in planting, will have a disastrous effect on the environment. My noble friend Lord Lovat has already pointed out that Britain, as compared to the rest of Europe, has far too few trees already. If money has to be raised in this way, it is the best oaks, the most beautiful hardwoods, which will be the first to go, and with them much of our wildlife and our scenic beauty.

The danger here is greater than one might suppose. Last October the Countryside Commission issued a discussion paper entitled, New Agricultural Landscapes, which suggests that with today's modern farming methods many of our hedges are doomed, and that from every conservation point the tree-planting schemes must take the place of the hedges we shall lose. So from a conservation point of view, we need more and not less woodland than we have now. Ornithologically, the majority of British terrestrial birds depends upon woodland, particularly broad-leafed woodland, for their livelihood. Some of them live inside the woods, some of them live on its edges which to them are the equivalent of hedges, and which they will also lose. Furthermore, all the species that we have need our present variety of woodland in the variety of areas in which they now are.

I agree that it is true that in the last few hundred years a number of species have successfully adapted to man-made environments; the suburban garden, the town centre, and the hedgerow. But— and this includes many of the birds which have adapted themselves to man-made conditions—the majority of our species need the woodlands for some or all of four purposes: feeding; nest sites; song posts, and roosts. Thus, these same woodlands—and in some cases conifer forests—while important to the birds are equally important to a significant proportion of other living things which are largely dependent upon the association of themselves with woodlands for their continued survival. Every noble Lord here can think of some.

Do we really want our bluebell woods to be denied to future generations? Do we really want to jeopardise the continued existence of 22 out of our 57 native species of butterfly, which, too, are closely associated with our British woodlands? I agree with other noble Lords that it seems incredible that any Government should even consider dealing a body blow to the production of a natural reserve which socially, economically, aesthetically and environmentally will become more and not less necessary to Britain as the years go by.

6.9 p.m.

Viscount INGLEBY

My Lords, I speak from the Cross-Benches, which is perhaps quite a good place to speak from in a forestry debate. I am glad to see— at least I think I see—that the table on which the Hansard writers are writing is made of good English oak. My quali- fications for speaking are really only two: first, that I love trees, I plant one almost every day during the winter; and, secondly, that I live on the North Yorkshire moors. Those who know them will appreciate the shelter that woodlands afford. Though you may appreciate the shelter, you may not realise that the North Yorkshire moors were forest for much longer than they have been heather, bracken, and bilberry.

They became forests after the last Ice Age and they remained so for a long time until man started clearing them by burning and by grazing. It is this burning and grazing that has changed what was originally a good forest brown earth soil into the black peaty soil that we have today. My policy is to plant a mixture of hardwoods and softwoods in these places because this will in time restore the fertility of the soil.

Of course, there are many other benefits of planting. There is first the benefit of the jobs—and in our area the population has halved in the last 20 years. There are the benefits to the landscape. It is a very bare and bleak landscape and the provision of mixed trees will add greatly to its beauty. Then, of course, there is the timber which will be produced. One would think that every Government would encourage these objectives, and indeed every Government since 1910 have done this. It was Lloyd George who introduced the Amendment exempting forestry from his new estate duty. But recently we have been faced with this threat of capital transfer tax. Since woods would normally change hands in company with agricultural land, there would be a heavy rate of capital transfer tax to pay; and as various speakers have pointed out this might have to be paid between three and seven times in the lifetime of a tree. It was Sir Henry Rider Haggard who said, "One should always think twice before cutting down a tree ", and I am very glad indeed that the Chancellor has said that he is prepared to think again. Common sense surely leads to only one conclusion: if you are going to have a capital transfer tax on a tree it must be paid when the tree has reached maturity, when it is felled, and when the owner has the wherewithal to pay the tax.

Last August, as various speakers have mentioned, the Government introduced a new Dedication Scheme under which the owner accepts a measure of control from the Commission. He consults with the Commission about the plan of operation and the Commission in their turn consult with the local planning authority, the Ministry of Agriculture and the various amenity bodies, so that at the end of the day a scheme is produced in which all interests are represented. Such a scheme would ensure sound forestry, good land use, environmental benefits to the landscape and reasonable public access. Most people probably do not get a chance of planting trees before they are 40 years of age. One cannot expect anything back for 20 years, so an owner will not see much back in his own lifetime. In addition, a great deal of care is required to look after the trees. If he is going to provide all these benefits, is there not a good case for exempting woodlands from the capital transfer tax?

6.14 p.m.

Lord STANLEY of ALDERLEY

My Lords, my staff, I think, have interpreted the Council's Directive in words that I hope I can understand. First of all, I must declare that I do not know one tree from another. My only knowledge of trees was taught me by a sergeant-major, who told me they were "bushy topped ". I want to support the Committee's concern over the effect of Article 6, paragraph 1, which reads: No aid shall be granted for any conversion of forest areas and uncultivated areas into agricultural use ". My Lords, if this Article means that no aid shall be given to convert uncultivated areas into agricultural, as opposed to forestry, use, all I can say is that the authors of this document must have some similar characteristics to my daughter's donkey.

First of all, this could be very damaging to the expansion of British agriculture. Secondly, there is some derelict land now that is so for economic reasons. As we know, economic pressures change quickly and it could very rapidly become worth while to cultivate this land for agriculture. Thirdly, some land is derelict now because we do not know how to drain it, but we are learning every day how to drain. New techniques are coming out. Only yesterday I heard of an interesting one which in the future might make some of these areas suitable for agricultural production as opposed to forestry. Apart from the enormous potential that exists in reclaiming areas such as the Wash and Morecambe Bay for intensive and arable use, I am most concerned that the Community should realise that there is enormous potential in draining and converting into productive pasture many areas of our wetter West.

My thoughts, of course, are in my own county of Anglesey. It may be that the Welsh Black lives in a marsh and the Welsh sheep lives off slate, but I can assure your Lordships that they do much better on grass. All that has to be done is to drain and fence. I know that this is a hobby of mine. The latter point of fencing seems to be forgotten always by our legislators—God bless them! Anyone who has read the work of Dr. Wynn Parry of the University of Wales on permanent pasture will know that, correctly drained and fenced, these new pastures will produce some 6 cwt. of beet during the summer season without nitrogen. It was with great humility that I learned this, and I did this in Anglesey, much to my surprise. The real snag is that you must drain, which costs, say, £100 an acre, and you must fence, and even if they are 20-acre fields it comes out at £80 an acre. I do not like to say it again, but, due to the shortsightedness of a previous Government (whose colour I shall not mention) there is no fencing grant. As I understand it, this Community Directive will follow the same line. Indeed, if we were reclaiming land it might also take away the drainage grant, which we still have.

Another snag is that these wet uncultivated lands are often farmed by farmers with little capital, so they are unable to improve them. I am sorry to turn the clock back, but I can think of no better use of the country's money than giving aid for the drainage and fencing of these uncultivated areas. If I persuade your Lordships to such a view, my only regret is to those who want to shoot snipe. Finally, may I point out that to convert swamp into productive pasture takes, say, two years. I am sorry to annoy your Lordships who are great foresters, but I am sure you will agree that this will give a quicker return than growing trees, which I gather takes up to 150 years, and in areas such as Anglesey the planting of trees is fraught with hazards. They either get blown over or they may get polluted by fluoride.

I hope that then noble Lord, Lord Beswick, will, as usual, tell me that I have got it wrong again and that this Directive does not mean as much as I think it could mean. At least I have not, as have other noble Lords, troubled him with the problem of DDT. I think the Government have done a very good job in this matter and I do not think I have any capital left to bother about. I hope this Directive does not mean as much as I think it could mean.

6.20 p.m.

Earl WALDEGRAVE

My Lords, I hope I shall be forgiven if I do not follow very closely the noble Lord, Lord Stanley of Alderley, on his difficulties with Article 6 of this Directive, because I agree with most other Members of your Lordships' House who have spoken today that we should congratulate the noble Lord, Lord Inglewood, on having brought our attention to the Report of this Committee and to the proposed Council Directive. I am happy to support it with the noble Lord, Lord Inglewood, because he and I were both Parliamentary Secretaries to a Minister by the name of Soames who may have had something to do with this Council Directive—in any case the better part of it.

The noble Lord and I both left Mr. Macmillan's Government in July 1962 with a number of others, the noble Lord to come to your Lordships' House and I to depart to the Forestry Commission. I am sorry that the noble Lord, Lord Taylor of Gryfe, is not in his place now —he was earlier—because he was one of the Commissioners, when I was Chairman, and a better colleague one could not have had. He will of course be frustrated—and here he comes!—none the less by the Addison Rules, which mean that although knowing all about the Forestry Commission he has to sit silent, while Parliamentary Secretaries who know little about it have to speak on there forestry matters. There is one gold medal, not for a forest or a wood, to which I think the noble Lord, Lord Taylor of Gryfe, and I could perhaps both aspire; that is, that when we were working in the Forestry Commission we were lucky enough to get Dame Sylvia Crowe to join us as an adviser, and what wonderful work she has done for the amenity side of forestry in this country.

My Lords, the proposed Directive must be welcomed by anybody who has even the remotest belief in forestry. In so far as the Directive seeks to encourage afforestation, it seeks to improve existing woodlands and the production of wood for industry, and to provide for recreational needs. I, for one, am glad that it also states, quite clearly, that it relates principally to State assistance for private forestry. It has been a great genius of this country that in forestry matters we have been able to run both private and public forestry in double harness—and very successfully—on non-Party lines, without quarrels, right from the beginning of the Forestry Act 1919. Long may that position continue.

As has been referred to in this debate, the noble Lord, Lord Beswick, has already mentioned the fact—and he also stated this in answer to a Parliamentary Question at the beginning of our Sitting today—that he believes in a mixed economy and wishes to see a vigorous private sector. We are glad to hear that, I am sure. Forestry is an important industry for this country. It is not taken seriously enough. Forestry produces timber, obviously, but it also produces raw material for paper and all the things that go into the paper industry. Soon after the 1919 Act in this country forestry used to be largely concerned with producing pitwood for coal mines. It is now as largely concerned in producing pulp wood for the enormous paper industry, thereby saving us a great deal of imports.

There are now great pulp mills in this country, in the North of England, in Scotland and in the South of England, and these are important. They give a great deal of rural employment and this must not be forgotten in districts of the United Kingdom where rural employment is difficult. In the West of Scotland; in my own country, the West of England, and in Wales a great deal of employment is provided by forestry, the pulp mills and the ancillary industries. But, over and above all, many noble Lords have said this afternoon what an overwhelmingly important contribution forestry makes to the whole amenity and environment, as it is now called, of the countryside with which we are now so deeply concerned.

Most people probably prefer what is called hardwood—the deciduous tree, the oak, the ash, the elm, the beech and the sycamore. These are the very trees that are threatened today, not only by Mr. Healey (if he is, in fact, threatening them) but by animals that are almost more difficult to catch. They are, for instance, threatened by the grey squirrel. We heard that the noble Lord, Lord Inglewood, grows oaks. He will find that his oaks will soon be eaten when squirrels get up as far as Cumberland—mine have been. We heard that the noble Earl, Lord Lonsdale, has a great sycamore interest. He will not have any sycamores when the squirrels get there, I am sorry to say— again, mine have gone. Beech are now tremendously attacked by grey squirrels, and it is just at this time when many of our most decorative, beautiful and valuable hardwoods are being attacked by the grey squirrels (let alone Mr. Healey) that the Dutch elm disease has come into this country and swept away all our coffin boards, which will be a really great loss to the countryside.

It is at this time when the hardwoods of this country, to which the general public is so addicted and which it loves so much, are threatened by natural causes that they are also threatened by unnatural causes like Budget proposals, capital transfer taxes, wealth taxes and so on. I cannot believe that this will really come about when it is known that these woodlands are also threatened in other ways which may be far more effective in bringing them to an end.

Noble Lords have reminded us that ever since the estate duty was introduced —and the capital transfer tax will now take its place—it has been recognised, as Mr. Lloyd George did in 1910, that you needed different rules to deal with a crop like timber, which takes 80, 100, 150 or 200 years to grow. I am sure the Treasury will one day understand that more or less elementary truth. If there have been loopholes found in any tax system, the proper thing to do is to block them and not, in the old phrase, "empty the baby out with the bath water" and do away with all the trees, because nobody could then avoid tax on them. So I am sure that that will not really happen.

My Lords, I do not think I want to say anything more about the general position, except to add that there is one point which I am surprised has hardly been mentioned this afternoon. Nearly all the private woodlands, which are of such importance in this country—mostly quite small areas of woodlands of 100 or 250 acres, which are quite big woodlands in the private sector—are subject to the dedication contract. These contracts of dedication were voluntarily entered into and, so far as I know, cannot be broken. A dedication contract which cannot be broken will have been entered into in totally dissimilar fiscal circumstances, when a man agreed to leave his land always growing timber—always in woodland. He will have taken advice from trustees and lawyers, believing that it was right in the national interest, as well as in his own interest, that a certain area of his land should be dedicated in perpetuity for the growing of trees. Then, much later, he will have found that the whole basis of the tax law had been arbitrarily changed so that nobody in his senses would, or could, advise anybody to dedicate on a permanent contract. I cannot believe that this can really be sustained, and I am sure that when the Treasury realises the position and remembers that there is a dedication contract to which most of the private woodland in this country is subject, it must be advised not to break one of the basic considerations of the contract, which was that since estate duty was introduced, woodlands have always been, and would always be, treated in the necessary way, because timber is a long-growing crop and not a quick turnover crop like a bicycle. My Lords, that is all I have to say.

6.32 p.m.

The DUKE of ATHOLL

My Lords, when I was first elected to your Lordships House—and, I think, unlike anyone else here, I was elected to this House—I was taken around by a very eminent Member of long standing who had been of even longer standing in another place. He told me that I must always be very careful to declare an interest. However, he said, "In this House we do not bother to declare an interest in agriculture or forestry, as all Peers are expected to take an interest in agriculture and forestry." Things seem to have changed slightly since then; so, in order to make sure that I do not transgress the conventions of your Lordships' House, I hasten to declare that I have a financial interest in forestry and that anything I may say may be tinged by that interest. None the less, I should hope that it would not be too tinged.

My Lords, it is seldom that one is 13th on the list of speakers and can agree with almost everything that has been said by the 12 previous speakers. I had slight doubts about what my noble friend Lord Stanley of Alderley said but, apart from that, I do not think that I have any reservations at all. However, it is equally seldom that one has a debate in which there are no speakers from the Government side—except for the Minister who is to reply—but in which there are 13 speakers from the Opposition side. However, I do not suppose that any noble Lord opposite would find it easy to defend the indefensible, so they are not trying to do so.

My Lords, we are considering today the EEC Directive on forestry but, if the Chancellor does not change his mind about the capital transfer tax, in a few years' time there will be no private forestry in this country for the EEC or anyone else to try to influence. A reduction in planting has already taken place in the forestry year 1975. In the forestry year 1974, in round figures, the private sector planted 36,400 acres in Scotland. The forestry year runs from 1st October to 30th September. In the forestry year 1975—that is, from 1st October last year to 30th September this year—it is anticipated that the private sector will plant 17,900 acres, or just under half what was planted last year. This represents a loss of 23 million plants, again in round figures, 18 million of which will have to be destroyed because they will not be any good for planting next year. A further fact is that we import about 90 per cent. of our timber products. Therefore, it seems that the Chancellor, with a total disregard for the long-term interests of this country, is trying to kill off private sector forestry by introducing capital transfer tax and making it apply to a crop such as timber which takes anything between 60 and 150 years to mature. As the noble Viscount, Lord Ingleby, said Mr. Lloyd George, in 1910, introduced the Amendment on which subsequent capital taxation of forestry has been based. The effect was that one pays the tax only when one benefits from the crop. That was 65 years ago, or almost exactly the life of a conifer in the most advantageous site in Britain, or about half the life of a broad-leafed tree growing anywhere in Great Britain. Even Mr. Lloyd George would, I think, be disappointed by the action of the present Chancellor.

My Lords, I hope that I have made it clear that, if there are no Amendments to the Finance Bill as at present drafted, there will be no private forestry in this country in a few years' time. Not only that: existing woods will be neglected, unless they are very near maturity, and they will become overrun with brambles in the South of England and with bracken in the Northern part of the country. Personally, I think that this would be undesirable. Many other noble Lords have spoken of how disastrous this would be to the environment and I simply want to endorse all that they have said.

My Lords, I think it is interesting that in Scotland 46 per cent. of the woodlands are in private hands and that this figure is lower than in any other country in the EEC. In West Germany, for instance, it is 69 per cent.; in France, it is 90 per cent., but we all know that the French are great individualists. The figure over the whole of the EEC is 82 per cent. It has also frequently been pointed out that both this Government and the last Government wanted to encourage the planting of hardwood trees and they have done this by altering the Dedication Scheme; and we now get very much bigger grants for planting hardwood than for planting conifers. I think that this is a very good thing. In fact, the alteration has been more favourable to England than to Scotland, but that does not matter and I am sure that this is a good thing to have done in the interest of the whole country. At the moment, an average of the last four years shows that just over 80 per cent. of the hardwood plantings have been planted by private forestry, whereas between 17 and 18 per cent. of the plantings have been by the Commission. If, therefore, private forestry planting were reduced virtually to zero, the planting of hardwoods would also be very considerably diminished. I do not say that the figures which I have given would necessarily apply, because the Forestry Commission might take over some of the planting of hardwoods which private individuals undertake; but it would certainly tend to work in that way.

Furthermore, in many cases private forestry is closely integrated with agriculture, and for the Forestry Commission to take over the private sector would be very costly to the taxpayer. Many of the woods which private people plant are too small and uneconomic in size for the Forestry Commission. On the whole, the pattern of the British countryside has been developed because many people have been prepared to plant a few small woods in order to improve their landscape for the sake of the environment. Obviously a body like the Forestry Commission would not be able to do this because they are responsible to the Treasury for their finances.

My Lords, I hope that the Chancellor will take note of what has been said, universally, I think, by all noble Lords who have spoken this evening, and will act upon it. It is a pity that he is being so slow about it. I wish that Governments—and this applies to Governments of all shades—would think before they interfere with forestry. The previous Government did away with the Dedication Scheme as it then operated, as my noble friend Lord Ferrers has pointed out. This was a disaster. It reduced confidence in forestry, which is essential because it is such a long-term operation. The present Government have proposed the capital transfer tax, and even if they now alter it, confidence has been eroded to an even greater extent than it was by doing away with the Dedication Scheme in 1972. These two factors, my Lords, have meant that people are bound to think twice before planting trees. They do not feel that they have the long-term assurances which up to the early '70s they felt they had from Governments of every complexion in this country. My Lords, I hope that the Chancellor will take note.

6.42 p.m.

Lord BESWICK

My Lords, I share the humility expressed by the noble Viscount, Lord Norwich, when he mentioned that he spoke in the presence of such a formidable body of knowledge and experience. I doubt whether I have before heard of such a rich collection of medals attained and never indeed have I heard the words "declaration of interest" repeated so often. But I have benefited myself, with one reservation which I will eventually give, from what has been said. I agree with the noble Lord, Lord Inglewood, and the noble Earl, Lord Ferrers, when they expressed indebtedness to the Select Committee for setting out so concisely the issues involved in the proposed Council Directive, and I compliment the noble Lord, Lord Inglewood, on the way he opened the debate this afternoon.

Of course I give an assurance that the views which have been expressed will be brought into the reckoning when the time comes for Community discussions on this Directive to proceed beyond the examination of its finer points and into debating its merits on principle. I give that assurance with considerable confidence and with a gayer heart, for, as I understood it—and I am not sure that my understanding was the same as that of the noble Earl, Lord Waldegrave— the noble Lord, Lord Inglewood, was not exactly enamoured of the Council's Directive. Certainly to that extent I share his views. Our own Select Committee have fastened upon those features of the proposals which court caution where the Unted Kingdom interest is concerned, and in general Her Majesty's Government share the Committee's reservations on these features. May I first qualify, in one matter of detail, the references to the Committee. Towards the end of their Report the Committee welcome the proposal that provision should be made for the improvement of existing unproductive woodland and shelter-belts. There are two features here which noble Lords should bear in mind and it may well be that the Committee would not dissent from either of them. First, I hope that noble Lords are in no doubt that there is already provision, under our Farm Capital Grant Scheme, for grant-aiding the planting of shelter belts in our hill fanning areas where they can be of such great importance to farm husbandry. Secondly, both the Forestry Commission and private woodland owners have made great strides in rehabilitating our woodlands after the Second World War fellings, and our own plans are adequate to cope with whatever has still to be done in the so-called unproductive woodland remaining.

The noble Lord, Lord Stanley of Alderley, referred to drainage in this connection. I will consider the appeal he made. I think that there is no question in the Draft Directive of any restriction on drainage, but I will write to him when I have had an opportunity of seeing the implications of what he had to say on that point. As the noble Lord, Lord Inglewood, said, the Committee have also fairly recorded the Government's doubts about the vires of some parts of the Draft Directive. These doubts—which I may say have been echoed by other member countries and indeed by the legal services of the Council of Ministers—centre around the fact that (as the Committee themselves have indicated) timber is not among the agricultural products scheduled in Annex 2 to the Treaty of Rome and as such does not form any part of the Common Agricultural Policy. In these circumstances, and whatever the merits of any measure to improve existing unproductive woodland, the Government could not agree to its inclusion in this set of proposals. That would imply a suggested extension of the Common Agricultural Policy.

This brings me to what the Government regard as the central issue, which the Committee have clearly exposed. In practice, and shorn of any trimmings, this revolves around two simple questions: first, is there a case for any kind of Common Forestry Policy within the Community? Secondly, if there were such a case, should this or any other substantial Community provision for forestry be built upon and within the Common Agricultural Policy, and funded at its expense? So far as the Government are concerned, even if there were a case —and we are not convinced that this is so—we should question the justification for founding it upon the Common Agricultural Policy and our reasons are much the same as those given by the Committee. Having said that, I emphasise that the Government fully accept that agriculture and forestry are sister industries; and that, by an effective pattern of land use, each can complement the other to mutual (and to our national) advantage.

For practical evidence of this, I need only point to the successful measures of integration between farm and forest which have been pioneered both by the noble Lord, Lord Dulverton, at Fossfern and by the Ministry of Agriculture and the Forestry Commission at the experimental centre at—I hope I have it right —Pwllpeiran. Indeed, the Government, like the previous Administration, have acknowledged that it is integration with agriculture and other forms of good land use such as environmental benefits— rather than merely" encouraging forestry "—which should be the cornerstone of the Forestry Dedication Scheme.

All this is consistent with the preamble to the Draft Directive; indeed the details of our new Scheme were notified to the EEC Commission who had no objections. Where we begin to part company with the Commission's proposals is when they project a mandatory Scheme for consciously encouraging what I might describe as a "one way traffic "; that is to say, out of food production and into timber. Thus the basic contribution towards planting costs would be payable only if a substantial proportion of the area concerned had previously been given over to farming. Then again, there are the proposed embargoes on land reclamation for agriculture by any who received afforestation grants under the Directive and upon domestic schemes of grant-aid by member countries which, like the United Kingdom, may already be encouraging the reclamation of land suitable for agriculture.

Of course there is always scope for negotiation at Brussels. Certain of my colleagues are demonstrating this. But in this instance it seems fair to ask whether the real effort should be directed towards sorting out problems of detail or whether it would be more realistic to go back to fundamentals; and more specifically to consider whether the entire concept makes sense in the present-day circumstances of the enlarged Community. The fact is that this proposed measure was conceived before the United Kingdom entered the EEC and against the anxiety about structural surpluses within the Six. I need hardly say that our own problem is precisely the reverse. We have no surplus acres to cause an embarrassing glut of food. On the contrary, our problem is the loss of agricultural land for various purposes. The Government position is that the problem should be examined and debated in that broad context rather than that this should be put into the CAP.

My Lords, I was glad to see in the Select Committee's Report, and to hear confirmation of it from the noble Lord, Lord Inglewood, that the financial proposals were unacceptably unfair as far as we were concerned. Even on the most optimistic assessment of our receipts and payments within the Community balance sheet, this measure means that the United Kingdom must be a heavy net loser. This must be so because of our land hunger and because the needs of home food production so circumscribe the acreage we can release from afforestation. Additionally, the terms of the proposed Directive operate against any member-country where, as in the United Kingdom, a sizeable proportion of the annual planting programme is undertaken by the State and where Government assistance to the private sector is built partly upon tax relief. Both these features are accommodated within the Commission's proposals, but neither of them would qualify for a FEOGA grant.

The Government view on this complex and controversial draft is that policy and provision for forestry is best left for individual member-States to fashion and update according to their own circumstances. In Britain we have lately done just that; and have now reshaped our domestic measures to accord with modern needs on lines which I would fairly claim—and I think that this has general support from what has been said—are politically bipartisan. We now have a revised programme for State forestry and a new Dedication Scheme which, while recognising that investment decisions in afforestation as very much a matter for the individual, nevertheless offer positive incentives that are simple to administer for those who are prepared to plant and manage their woodlands in a manner consistent with sound forestry practice and good land use, including integration with agriculture and environmental and recreational benefits. I accept what was said by noble Lords of the importance of hardwoods as part of the amenity aspect of this matter and noble Lords have already referred to the fact that there is an additional grant where hardwoods are planted.

Reference was made by the noble Earl, Lord Waldegrave, to the effect of the capital transfer tax on new contracts drawn up under the Dedication Scheme. There has been a good deal of discussion about the negative effect of this new tax on the new scheme. If I may say so, I think it is premature for the noble Earl to talk about breaking contracts. There has been a substantial flow of applications ; although the greater part of the area including early applications inevitably relating to decisions taken before last August when the tax White Paper was published. About 10 per cent. of the applications relate to land already planted. A total of 241 applications had been approved, or were under consideration, by the 31st January, covering 28,235 acres of planting.

My Lords, I must say that one agreeable feature of this debate has been the absence of any Party-based rancour. There has been criticism levelled against the 1972 Conservative Administration; the noble Lord, Lord Inglewood, on the other hand, gave generous praise to my old colleague, Tom Williams. Reference was made to the CTT. I made a list of those noble Lords who referred to this. I find that the noble Earl, Lord Ferrers; the noble Earl, Lord Lonsdale; the noble Lord, Lord Bolton; the noble Viscount, Lord Norwich; the noble Lord, Lord Campbell of Croy; the noble Lord, Lord Lovat; the noble Lord, Lord Craigton; the noble Viscount, Lord Ingleby; the noble Lord, Lord Stanley of Alderley; the noble Earl, Lord Waldegrave, and the noble Duke who wound up, all used very strong language in this regard. I think that they were wrong, if I may say so, in suggesting that the intentions of the present Government or of the Chancellor of the Exchequer were, as one noble Lord phrased it, "the despoliation of the countryside ". I think that it was wrong when one noble Lord, I think it was the noble Duke, said that it ws intended to kill private forestry. That was not the intention.

The Duke of ATHOLL

My Lords, if I said that was the intention, then I withdraw my remark. What I said was that the effect would be to kill off private forestry.

Earl FERRERS

My Lords, the same goes for me! I used the words, "despoliation of the countryside ". This was a reference to the effect and not to the intention.

Lord BESWICK

My Lords, if the effects were there and the intention was to do this, then one can say logically that you criticise an intention to do all these wicked things. The odd thing about our country and the people who happen to govern it is that they are not motivated by wicked thoughts. I should have thought that the attitude of the one speaker from the Liberal Benches would have been better. He indicated that he thought something might be done. He was very generous in this regard.

Reference has been made to the statement made by the Chancellor of the Exchequer on 22nd January that we were looking at this—and we wanted to look at it. There is a problem here. It was the noble Lord, Lord Lovat, who said that no one who plants a tree is trying to do anything but plant a tree and that tax considerations do not come into it. In fact, four-fifths of the trees planted other than by the Forestry Commission in recent years have been planted by investment companies who had tax considerations in mind, and hedges against inflation as well. There is a difficulty here. Let us recognise that it is a difficulty that we must face up to.

We want, however, to see whether something can be done about the special problem of the woodlands. Last night (I am not sure at what hour of the night or morning) the Chief Secretary said that the Government were considering what form of relief they could offer. He said that they had come to no conclusion, but favoured an outline scheme somewhat as follows: (a) no tax will be payable on the value of the timber growing on woodland transferred on death, but on a sale thereafter, either of the woodland itself or of standing or felled timber, tax becomes payable on the sale proceeds attributable to the trees not, as under estate duty, on the value of the timber at the death: (b) On any lifetime gift, or other transfer not at full market value, the deferred charge would be triggered and the tax now charged in respect of the earlier death would be allowed as a deduction in arriving at the value transferred by the current transfer for the purposes of arriving at the tax charge on the gift itself; (c) The arrangement would be tied to five years' ownership and probably to dedication under the Forestry Commission schemes.

This was something he indicated and was not a rigid proposal. It is a tentative outline. If noble Lords on further consideration of this—and they have an opportunity of reading it—care to comment to me on any feature of it, I will see that what they have to say is considered.

7.2 p.m.

Lord INGLEWOOD

My Lords, I am sure that we are all very grateful to the noble Lord, Lord Beswick, for listening to the debate and replying at such length and with such care, especially when it is not so long since he was far from well. I hope his voice has not been strained by speaking for too long. We are also grateful that he has taken us into the Government's confidence and given us an idea of how these proposals might be modified to achieve a greater sense of fairness and to avoid the major damage to which reference has been made. We shall study with interest what he has said. There is no doubt from the attendance in the Chamber, at least on one side, from the number of speeches, from the contents of the speeches and also—I hope the noble Lord the Chief Whip will notice—the brevity of the speeches, that this debate has been worth while and has justified the time that we have been allowed.

It is understandable that the debate should have ranged away from the EEC Directive to forestry prospects in our own country, which must be very relevant when we are considering draft proposals emanating from the Continent such as we have been doing today. I was exceedingly glad that the noble Lord has been able to tell us something hopeful at the end of his speech. From various exchanges in the Committee stage in another place it was clear that the Chancellor of the Exchequer was very mixed up about the effects of his proposals. If he had carried them through as they were originally put to us there is no doubt that in a very few years— it is no good pretending otherwise—the face of the countryside would have been changed for the worse; something like half the private woodlands would have been reduced to scrub, the best oak, as has been said, going first. There would be an increase in our dependence on imported timber and a number of good men would be put out of good jobs. I should like to think that that would not happen. If it were to happen any future proposals emanating from the EEC would be irrelevant to what remained of the industry in this country, which would be too lame to stagger along.

I am going to mention one new point as I think it is very relevant. No noble Lord has mentioned that, unlike oil or coal, timber is the only raw material where reserves are continually being replaced. They are replaced slowly, and in a normally stocked forest in this country, half hard and half soft wood, the increment is something like 3½ per cent. or 4 per cent. per annum only. I just say that for the Record. Finally, may I say to the noble Lord, Lord Beswick, that if he seeks any further information he will be welcome to visit us at home. We can go for a long walk in a most beautiful part of the country and I will not deliver a third speech but will just answer his questions, including financial questions. And now I hope that he, with all other noble Lords, when I ask them to take notice of this Report, will echo the words of the great Evelyn who, when speaking about forestry, said: It is what all who are owners of land may well contribute to, and with infinite delight as well as profit, who are filled with the laudable ambition of imitating their illustrious ancestors and serving their generation.

On Question, Motion agreed to.