§ 3.55 p.m.
§ The Minister of State, Scottish Office (The Earl of Mansfield)
My Lords, with the leave of the House, I will now repeat a Statement being made in another place by my right honourable friend the Secretary of State for Scotland. The Statement reads as follows:
§ "With the projected rise in demand for timber into the next century and with the world's forests likely to come under increasing pressure, the Government believe that long-term confidence in both forestry and wood processing industries in this country is fully justified. We look for a steadily increasing proportion of our requirements of timber to come from our own resources. A continuing expansion of forestry is in the national interest, both to reduce our dependence on imported wood in the long term and to provide continued employment in forestry and associated industries.
§ "Recent difficulties in the pulp and paper sector, which represents only an eighth of the market for wood grown in this country, do not change that conclusion. Forest owners have adjusted to the changed markets. Export opportunities in Europe for small roundwood are being successfully exploited. Looking further ahead, our industries, with the more advanced processes being developed in this country, are expected to be capable of absorbing the rising production from our existing forests, and of enlarging their present 9 per cent. share of the home market.
§ "There should be scope for new planting to continue in the immediate future at broadly the rate of the past 25 years while preserving an acceptable balance with agriculture, the environment and other interests. We see a greater place for participation by the private sector in new planting, but the Forestry Commission will also continue to have a programme of new planting, in particular where it will contribute to the rational management of their existing plantations, and also in the more remote and less fertile areas where afforestation will help maintain rural employment.
§ "The main basis of policy for the future must remain the successful and harmonious partnership between the private sector and the Forestry Commission. In accordance however with the Government's support for private enterprise and our policy of reducing public expenditure, a determined effort will be made, by making better use of the capital invested in their existing assets, to reduce that part of the Commission's grant-in-aid which finances the Forestry Enterprise. We therefore propose to provide opportunities for private investment in these assets, including the sale of a proportion of the Commission's woodlands and land awaiting planting, with lease-back arrangements where it is important to maintain continuity of management to meet wood supply requirements or to preserve environmental interests. In planning its broad implementation of this policy, the Forestry Commission will take account of the views of the organisations concerned. We will seek an early opportunity to take the necessary powers for private investment in Commission assets on these lines.742
§ "Following a review of the administration of grant-aid and felling licensing carried out under the auspices of Sir Derek Rayner, we propose to make these less complex and less costly to administer. A single new scheme will be introduced at the start of the next forest year on 1st October 1981, of which the main features will be planting grants, a simplified plan of operations and a minimum of legal formalities. The Basis III Dedication Scheme and the Small Woods Scheme will accordingly be closed as from 1st July 1981. Existing Dedication Schemes will continue for present participants, although some procedures will be simplified and individual dedication agreements will not be renewed on a change of ownership. The felling licensing system will be simplified to recognise the change in circumstances since this was introduced. Copies of a consultative paper, on which the various interested parties are being invited to comment, have been placed in the Vote Office.
§ "As my right honourable and learned friend the Chancellor of the Exchequer has already informed the House, the Government intend to continue the current income tax arrangements for forestry in order to maintain confidence in the private sector".
§ My Lords, that concludes the Statement, and I need hardly acid that copies of the consultative paper are available in the Printed Paper Office.
§ 4 p.m.
§ Lord Taylor of Gryfe
My Lords, I should like to thank the noble Earl for repeating the long-awaited Statement on the future of forest policy. I should like to commend the earlier part of the Statement in which he assured us that a continuing expansion in forestry is in the national interest. We have always believed that forestry required a very long-term view to be taken, and the continuing commitment of the Government to the support of forestry is welcomed, I am sure, in the public sector as well as in the private sector. I very much support the sentence in the Statement to the effect that, looking further ahead, our industries with the more advanced processes being developed in this country, are capable of absorbing the rising production. At the present time we have the ridiculous situation of pulp wood from Scotland being exported to Scandinavia to be re-imported into Scotland as pulp and paper, with all the added value involved. I am quite sure this is a temporary difficulty.
The Statement that the Forestry Commission will continue to have a programme of new planting is very welcome. But I should like to ask the Minister what the extent of that programme might be since, in a later paragraph, he says that the basis of policy in the future must remain the successful and harmonious partnership between the private sector and the Forestry Commission. The partnership has been based on equality in the past. The planting programme of the Commission and the planting programme of the private sector were largely equal over a reasonable period. But if the Statement continues to say that the Commission's grant in aid is to be reduced, would the noble Earl give us some indication of what the grant in aid might provide in the way of opportunities for planting as far as the Commission is concerned?
743 I note that it is the intention to introduce further opportunities for private investment in forestry by the operation of lease-back arrangements and by the sale of Forestry Commission assets. I should be interested to learn what the lease-back arrangements were to be. Is it a case of institutional investment in forestry while the forests will remain under the continued management of the Commission? I note also that it is proposed that there should be a sale of a proportion of the Commission's woodlands. May I say that any dismemberment of the Forestry Commission would be resented, not only on this side of the House but also on the noble Earl's side of the House, where the partnership which was existed between the private sector and the Forestry Commission is something which has been worthwhile and sensible. This applies not only to their working together in the field, but also in research and the other support which the Forestry Commission provides to private forestry.
So far as the rationalisation of the dedication procedures are concerned, this will be very much welcomed. All of us who are engaged in forestry suffer from great frustrations by the administrative delays which are sometimes involved in securing agreement for the development of new woodlands; I am glad that the dedication scheme is to be re-examined and that the commitment of the existing dedication scheme is accepted because that represents a legal commitment. So far as the termination of the Dedication 3 Scheme is concerned, I would welcome further comment; because if this is to be replaced by a purely planting grant, this involves no long-term future commitment such as a dedication scheme provides. A planting grant is a planting grant; but a dedication scheme is a more lengthy commitment by the Government to support. It would be interesting if the noble Earl would enlighten us on that point.
I am delighted to learn that there is no intention to change the existing fiscal arrangements for private forestry. I am quite sure that people who invest in forestry require some incentives; and the present arrangements encourage people to put money in what is a long-term investment with a very small immediate return. I presume that the new arrangements which the noble Earl has outlined will require legislation. At that time, we shall be able to examine in greater detail what is proposed in the Statement.
§ 4.6 p.m.
§ Viscount Simon
My Lords, in the absence of my noble friends who have a much greater knowledge of this industry than I have, it falls to me to thank the noble Earl for repeating the Statement. It seems to me that the Statement envisages a major reorganisation of this important industry, and I would suggest that it needs a full-scale debate in the near future of this proposal. I hope that that debate might take place before the Government have completed the task of drafting their Bill, because we all know how difficul it is to get changes made in a Bill once it has gone so far through the machine that it is in draft. I was very interested, as I am sure were all noble Lords, by the suggestion of the sale by the Forestry Commission of woodlands to private enterprise to be leased back for management by the Forestry Commission. I should 744 like to repeat the question put by the noble Lord, Lord Taylor of Gryfe: whether the Government envisage that the people who buy these woodlands will be simply financial enterprises who look at the amount they have to pay and the amount they get back by way of lease; or whether they will encourage genuine foresters, people interested in forestry, to go in for these transactions. I must say that it is quite a new way of "privatising" an industry—to use that horrible word, the use of which is becoming too common—and it seems to me a little like a desperate attempt to find some means of reducing the public sector borrowing requirement by getting in some capital.
There is only one other point I should like to ask about. It seems that if sections of woodland are put up for sale in this way it will be inevitable that the best woodlands will go and the less satisfactory, the more difficult ones, will be the ones left to the Forestry Commission. Will not the result be that the return on the Forestry Commission's undertaking will be less than it was before? This will counteract to some extent the financial saving that the Government hope to make by collecting a certain amount of capital.
§ 4.9 p.m.
§ The Earl of Mansfield
My Lords, if I may answer the noble Lords on the Front Benches opposite, may I thank them for their general welcome of the Statement and the matters it contains—a cautious welcome, but nonetheless a welcome for that. This is a radical and far-reaching look at our forestry industry, and I concede, as the noble Lord, Lord Taylor of Gryfe, implied, that we have taken some time to do it. But there have been a number of extraneous factors which have intruded and have caused what was going to be a good, hard look to become a good, hard, long look at what we propose for the future. The noble Lord, Lord Taylor of Gryfe, asked, ineffect, what the extent of the role of the Forestry Commission will be in the future. I can tell him that both on its authority side and on its enterprise side we do not envisage, still less do we wish, that it should in any way be diminished. I will give that undertaking.
Of course, we make no bones about the fact that the prospect of sales, either of forest land or of land which the authority has acquired for planting purposes but not yet planted, is to an extent a wish to enable the private side of forestry to participate financially in the acquisition, growing, harvesting and management of forests. I anticipate that, as the private sector comes into the management of forestry, so, to an extent, will the planting of forests by the Forestry Commission—I repeat "to an extent"—decline. Overall, the total area we expect to be planted between now and, let us say, the end of the century will, we anticipate, be approximately the same in degree as has been planted since the war in the past 25 or 30 years. There is no question of the relationship or the partnership between the private sector and Forestry Commission being dismembered or in any way adversely affected.
The noble Lord and the noble Viscount asked about the scheme for selling and selling plus lease-back. Without being facetious, may I say that there is no prospect and it is not envisaged that the forests at present under the control of the Forestry Commission will be put onto the shelves like goods in a supermarket 745 so that would-be investors can take and pay for those which commend themselves to them. Then, as the noble Viscount implied, the best would go and the worst would remain.
The Forestry Commission will be totally in charge of the sales which take place. I anticipate that there may be many forests and many areas of woodland where for management purposes, environmental or commercial considerations and, not least, employment considerstions, such woodlands will not be for sale or alternatively—and this particularly applies to employment—will be for sale and leaseback. So there is absolutely no danger of the jewels in the Forestry crown being sold off with only the less exciting, less profitable and less easy to manage woodland remaining.
The noble Viscount, Lord Simon, asked who the investors will be. We anticipate in the first instance that there will be a number of financial institutions connected with the City and possibly pension funds, who will be very keen to invest their policyholders' money in this type of long-term investment. It may well be that the Forestry Commission will find itself in good competition with Lord Taylor's present employers. But we are informed that the investors are there and this is the type of investment in which they would be keen to engage on a long-term basis. There is no reason why a private individual should not invest in this way. I very much hope that there are a few who will consider that this investment would commend itself to them.
I think that the noble Viscount also said that this to him represents a desperate attempt to reduce the public sector borrowing requirement. To an extent it is going to do just that; but I would prefer to put it before the noble Viscount in this way: what this represents really is the release and better use of capital which is locked up in the Forestry Commission for years and years, and we think that it is much better that capital from the private sector should be locked up in this way, if such a course commends itself to the investors, than should be the public's cash. To that extent there will be a diminution or reduction of the public sector borrowing requirement, but we think that that will be a very good thing.
I am asked whether there will be legislation. Indeed there will so far as sales are concerned. It will be introduced into the other place in a matter of days rather than weeks. I am also asked whether there should not be a debate on this major reorganisation. I am sure that the Government would welcome that, although time considerations are always our enemy. No doubt the "usual channels" will make such arrangements if the House feels that they are required.
§ Lord Taylor of Gryfe
My Lords, I wonder whether I may ask one more question. In the event of certain assets belonging to the Forestry Commission being sold or being involved in leaseback arrangements with consequent revenue, will these revenues accrue to the Forestry Commission for further development and planting or will they be simply taken by the Treasury?
§ The Earl of Mansfield
My Lords, the noble Lord will know that there are long-standing and extremely strict rules by which hypothecation of revenue is not 746 allowed in this country and never has been. In fact, the money will go to the Treasury; but I can assure the noble Lord that, although it will go to the Treasury, it will not be swallowed up without trace and arrangements will be made for it to be well used.
§ Lord Strathclyde
My Lords, I am sure that all noble Lords who are interested in forestry to any degree at all will be most grateful to the noble Earl for the Statement that he has made. May I ask one small, simple question which may be of interest to forestry owners? Will the noble Earl define more clearly what he meant when he talked of small round timber?
§ The Earl of Mansfield
My Lords, there are various scales of timber which can be put to different uses. I would say that this is the timber which is the product of forests probably at their first or second thinnings.
My Lords, I shall intervene for only a few minutes. A matter I raised some little time ago—
My Lords, I want to ask a question. The noble Earl will remember that I brought forward a question as to what can be done regarding adopting a scheme of dedication. In this way forests can be planted by individuals or groups in order to commemorate or to continue to pay tribute to those who in a particular way, either politically or in some other way, have rendered help to the nation. I tried to explain last time—and that is why I asked the question—that it is actually in practice at present in the Jewish National Fund, which raises its money from individuals and plants forests throughout the land. Is there any step that the noble Earl might take in order to consider that proposition?
§ The Earl of Mansfield
My Lords, there is absolutely nothing to stop individuals or groups of individuals from planting trees for whatever purpose in any suitable place. The question of course arises as to whether public money should be granted for such purposes, unless there is a commercial crop at the end of it. I cannot really conceive that anybody would want to plant a commemorative forest of sitka. But I suppose it is possible, certainly, in regard to the broad leafed species. The short answer to the noble Lord's point is that there is no reason why these commemorative trees should not be planted in a proper place.
§ Lord Sherfield
My Lords, is the noble Lord aware that a by curious coincidence the report of the Select Committee on Science and Technology on the Scientific Aspects of Forestry and its accompanying volume of evidence has been published on this very day? May I, on behalf of the Select Committee, ask him for an undertaking that in working out the policy that he has just proclaimed he will give the most careful attention to the recommendations contained in this report?
§ The Earl of Mansfield
My Lords, I should like to pay tribute to the noble Lord, Lord Sherfield, and his Select Committee. As he said, they have conducted a very wide-ranging inquiry into the scientific aspects 747 of forestry. Not only do my right honourable friends and I welcome the attention which has been given to this topic but we shall be studying the report in considerable detail, together with the recommendations that are made. It would be premature of me, particularly as the report has been published only today, to deal with the matter in any depth, but questions of research are extremely important and we shall announce our conclusions in due course.
§ Lord Ross of Marnock
My Lords, does the noble Earl appreciate how difficult it is to understand exactly where we are, when we are told that a Bill is going to be introduced in another place dealing with some of these points and at the same time there is a consultative document? What are the policy aspects that are firmly determined—which surely must be when the are in a Bill—and what are the aspects there for consultation? He was very short today on targets, although my noble friend pressed him twice on that subject. I think we want a little more information. It is not good enough to say that it will go on more or less the same as it has since the end of the war. If the noble Earl knows the position since the end of the war, he will realise that there has been considerable variation from five years to five years. Most of us who are interested in forestry were hoping that there would be a considerable stepping up in relation to forestry.
There is one other point. Is there going to be in this Bill any change in respect of the powers of the Commission, who have powers for the compulsory purchase of land? They have never used them because they have been able to get land, but now we are being told that they have to sell that land. This will make it very difficult indeed to reach planting programmes that we do not even know about. That is why I should like to know a little more about planting programmes and the Government's intentions in respect of them. I feel like the spokesman for the Liberal Party: that this was not initiated by the Forestry Commission—not even by those in the Scottish Office who are interested in forestry—but rather as a result of pressure in relation to the financial problems of the Government.
§ The Earl of Mansfield
My Lords, may I deal with those matters one by one? The legislation, first, is to enable sales of forest and land to take place. At the moment there are restricted powers for the Secretary of State for Scotland, and no powers at all for the English Ministers. Therefore that is the purpose of the legislation which is to be introduced. The consultative paper, which is available in the Printed Paper Office, is entirely concerned with private forestry, and it is on the administration of felling control and the new proposals for grant aid upon which we wish to consult all the interested parties before we bring the new scheme into effect at the commencement of the next forest year. So the noble Lord will see that these relate to two totally different matters.
Then the noble Lord berates me, or at any rate the Government, for not giving precise targets for the expansion of forestry. May I just say this? Previous governments, and not least the one which the noble Lord adorned with such distinction, have accepted the 748 need for general direction and also short-term programmes for the Forestry Commission, but not precise long-term targets for the industry as a whole, which would be unrealistic. Many of the factors are not under direct government control, especially those affecting the private sector, which we wish to play an increasing role.
Finally, we cannot commit future Administrations to a programme which they might not be able or willing to fulfil for a variety of reasons. May I say what we think ought to happen? Since 1919 the area of productive forest in this country has about doubled. If matters go on up to the end of the century—say between 1980 and 2000—as they have done since the end of the war, then the area of productive forest should increase by yet another third. That is the sort of target, bearing in mind all these imponderables, that we should like to see achieved.
§ Lord Lovat
My Lords, may I ask the Minister whether we cannot at least have a full-scale debate on what we have heard this afternoon? It has come as a great surprise to me, as a forester of nearly 50 years' standing—and I agree entirely with the noble Lord, Lord Taylor of Gryfe—that it looks as though the Forestry Commission will be badly cut about. Forestry must be a continuous process. As Sir Walter Scott said,Trees are aye growing while you are sleeping".That is something that should be remembered. The forestry industry in this country is not in a satisfactory state. We buy an enormous amount of timber from abroad and we find the greatest difficulty in selling our own production. The whole of this aspect should be considered, but it requires a full-scale debate to discuss the whole situation more thoroughly.
§ The Earl of Mansfield
My Lords, I entirely agree with my noble friend when he says that these matters are very important. They are indeed long-term and they vitally affect one of the most important sectors of our economy, not least for the rural areas. The matter of a debate is one for the usual channels, but my noble friend the Chief Whip is in his place and I have no doubt he has taken note of everything that has transpired this afternoon.
§ Lord Byers
My Lords, we have been on this Statement now for 33 minutes. May I ask the Government Chief Whip whether it is not about time that the House moved back to the main debate?
§ Lord Denham
My Lords, I am, of course, in the hands of the House on this matter. It would be improper for me to try to curtail your Lordships if the House wished to ask further questions for elucidation; but I am quite happy to agree with the noble Lord, Lord Byers, that perhaps we might move on now.