HL Deb 17 February 1987 vol 484 cc1033-83

4.58 p.m.

Lord Gallacher rose to move, That this House takes note of the report of the European Communities Committee on EC Forestry Policy (24th Report, 1985–86, H.L. 259).

The noble Lord said. My Lords, in moving that note be taken of the report of the Select Committee on EC Forestry Policy, may I first express thanks to all organisations who gave evidence to the Select Committee, and to Members of the Sub-committee dealing with the environment some of whom sat in during preparation of the report. We look forward to the maiden speech of the noble Duke, the Duke of Somerset, whose quality as a Member of our Subcommittee we have come to appreciate in recent days.

The report is concerned with two Commission documents, a discussion paper dealing with Community action in the forestry sector issued in 1985 and the complementary memorandum to that document issued in 1986. It is necessary to point out that there is no existing Community forestry policy. The Commission has urged the need for such a policy and the European Parliament is now preparing for this.

Community assistance towards forestry has until now consisted of isolated action. Between 1980 and 1984 some £290 million of Community funding was made available for this purpose. Member states as a whole are not yet convinced that a Community initiative is either necessary or superior to individual action. However, the persistence of agricultural surpluses under the common agricultural policy has resulted in a modification of views by member states.

I believe that caution is still necessary as regards Commission proposals because they do not contain financial provisions, especially concerning schemes to take land out of agricultural use for forestry. However. the Commission has signified its intention of making proposals for Community action in a programme for forestry following this discussion paper.

The discussion paper gives four reasons for a Community initiative: first, a reduction in agricultural surpluses in which forestry is seen as an alternative crop; secondly, the overall Community deficit in wood and wood products which gives scope for increased production within the Community; thirdly, the maintenance and expansion of activity and employment in rural areas which would flow from a Community policy; and fourthly, the need to stop the increasing destruction of European forests by atmospheric pollution and fire, the latter being of particular relevance in Mediterranean member states. In order to achieve those aims the Commission wants to extend the forest area by making better use of the existing woodland and protecting forests.

Dealing, first, with the extension of the forest area, it is pointed out that the Community has a very large trade deficit in wood. Half of its requirements are imported. And the value of those imports is given as £12 billion. In the United Kingdom alone the trade deficit in 1984–85 was £4½ billion. Ninety per cent. by volume of United Kingdom wood and wood products are imported. Since the establishment of the Forestry Commission in 1919, it has been policy in the United Kingdom to extend the forestry estate, and, certainly, Britain is a very large timber market in its own right. The director-general of the Forestry Commission believes that there is a good market for home-produced timber. However, forestry is a very long term business stretching over 50 to 100 years, and the possibility of new and alternative products during such a long time span cannot be entirely ruled out.

Until now United Kingdom afforestation has been mostly confined to poorer quality land. In the past five years 87 per cent. of planting has taken place in Scotland. By this token, it can be said that by comparison, England may be underforested. Yet, as we all know, there is very substantial overproduction of cereals in England.

Her Majesty's Government envisage new, normal planting of 33,000 hectares of forest a year, which is an increase of 3,000 hectares since the Select Committee deliberated. In addition, a new farm forestry programme has been announced of 36,000 hectares over the first three years with annual payments of up to £125 per hectare to cover the gap between planting and first income.

In both conventional and farm schemes, the Government have made it clear that they will especially encourage the growing of broadleaved trees. That will please conservationists. In the evidence that we took there was much emphasis in favour of broadleaf varieties. There is a general welcome in Britain for extending the forest area, but there is also some concern about where and how this extension should take place as well as its effect on habitat and wildlife.

If agricultural land is taken out of production, the question arises as to the type of land to be used for forestry. The National Farmers' Union favours bringing forestry "down the hill" on to better land: that is to say, lowland arable farms. This was also favoured by a number of environmental bodies with a strong preference for broadleaves on farmland where it is stated that better soil, plus more shelter, will equal faster growth plus more valuable timber. I turn to the question of making better use of existing forests. It may be said that in general Britain does a good job. The Forestry Commission manages 48 per cent. of the woodland area, the remainder being privately owned. Unproductive woodland in Britain amounts to 170,000 hectares. The director-general of the Forestry Commission gave us three ways of making better use of the existing forests: more productive species and tree-breeding for genetically improved stock; the use of fertilisers to improve growth; and positive management for unproductive woodland. The commission sees a role for forestry associations in making better use of existing forests. These associations are not found to any great extent in Britain.

Environmental considerations have caused the Forestry Commission to suggest a Community code of ecological conduct for forestry. In general, the evidence that we took expressed more concern about extending the forest estate than about the existing forest. The commission, in recognition of its environmental role, had additional duties imposed on it in 1985. It must now endeavour to achieve a reasonable balance between development, management, production and supply, enhancement of natural beauty and conservation of nature.

Some concern was expressed about protecting the forest, particularly against pollution damage, forest fires, damage by insects and pests, damage from gales—particularly windthrow in the west and north-west parts of the country—and from deer, with a distinction being drawn between red and roe deer in terms of damage caused. The document also mentions tropical forest in developing countries. The Commission accepts that action in respect of Community forest cannot be taken without having regard to the impact on the tropical forest.

Over-exploitation of tropical forests is said to be due to factors other than exports. The Timber Trade Federation told us that less than 10 per cent. of the felled crop of tropical forest timber goes to international trade. The main causes of over-exploitation are said to be expansion of agriculture, the use of wood as a fuel and poorly managed industrial logging. The Royal Society for the Protection of Birds told us that a policy of broadleaf cultivation in the Community would help to alleviate problems arising from the loss of tropical forest.

Turning to the opinion of the Committee, we find the Commission's proposals consistent with the policy of Her Majesty's Government to extend the forest estate which now amounts to 9 per cent. of UK land surplus. We support expansion to produce marketable timber. We consider that once viable woodlands are producing timber, industries will develop to make use of that timber. I believe that all noble Lords will be gratified by the recent news of a new pulp and paper mill scheduled for development at Irvine in Scotland by a Finnish company. Others who have a closer acquaintance with Scottish affairs than I will undoubtedly give details of this major development. However, it is significant that Finland is a country which also aids small farmers to plant trees.

Although the Committee recognises forestry's potential use of better quality land and received much evidence in favour of this, we believe that planting better quality land in the lowlands should supplement existing upland planting. In the important matter of conservation, the Committee sees value in the proposals made to it by the Countryside Commission for Scotland. That commission wanted further control beyond the present voluntary system. It was suggested that a system of planting licences should be administered by the Forestry Commission, analogous to the well-tested felling licence system of the commission. The scheme envisages a licence being necessary, above an agreed minimum area, before a grant is given and before tax relief is agreed. Consultation with a wide range of bodies would be carried out with, where necessary, involvement of the regional advisory committees.

Both the National Farmers' Union and the Scottish National Farmers' Union thought that, if woodlands were to be established on farms, public interest would be served if agricultural departments of Her Majesty's Government and the Forestry Commission supervised the arrangements. The Scottish National Farmers' Union did not object to the licensing system for the planting of larger areas than those envisaged under its proposed scheme.

This submission by the Countryside Commission for Scotland led the Committee, in its report, to favour the voluntary system of consultation for extending the forest area rather than making it subject to the full rigours of the planning system. In passing, I should like to say that this was the course favoured by the majority of organisations which gave evidence to us.

Turning to the question of incentives and the ramifications of Schedules B and D of income tax law, we take the view that the present scheme of incentives should continue even though it is recognised that these are of value to persons of large income. If a farm forestry is to be encouraged it will be necessary to develop payment tax incentives to assist those with low incomes. It may be helpful to the House if the Minister is able to say something about this matter if not in detail at least in principle.

Taking substantial areas of agricultural lowland for forestry, that is to say, taking land out of cereals production, is possible. But it is expensive. Continuity of management of forestry is considered essential and, given the long term nature of the operation, the matter presents special problems. Various schemes were put forward to us for this purpose. Under the schemes, the average annual cost of agricultural support in terms of area was £150 per hectare. The Community must devise a method of paying to take unwanted agricultural land out of production and afforesting it in order that farmers will not be worse off as a consequence. The Committee recommend that the Community should bear some of the cost of the transfer.

Although small, unproductive woods are not a major United Kingdom problem, they do exist in the southern half of Britain. Such woods are often on good soil but have over-mature trees producing a low annual increment. In this situation, increased productivity should be preceded by felling and then marketing of low grade mature timber. If markets can be found for such timber the regeneration of small woods is possible with aid of the not insubstantial broadleaved woodland grant. We recommend examination of more and improved markets for low grade hard wood.

Advice to owners is also an important aspect particularly with new people—for example, farmers—entering the forestry industry. There are various options open to Government. The role can be taken over by the Forestry Commission or by the Agricultural Training Board which might have its remit extended. It is also possible that forestry associations could be formed in accordance with the commission's suggestion. And organisations like Silvanus in southwest England might be extended.

As regards transport, one might consider taking timber to the mill rather than the development of small mills. In its document the Commission states its wish to see an adequate network of forest roads. The problem is not so acute in Britain where forests are now fairly close to the highway. However, that situation may change; so the Committee recommend that in order to avoid undue damage to roads, new heavy timber lorries should have five axles as a requirement for operation.

With reference to the proposed ecological code, we accept the need for environmental protection in view of the landscape and habitat impact of new forests. But we do not see a Community code as being practical because of the different conditions in the 12 member states. The Committee believes that the consultation procedure which I have outlined is the key to environmental protection. On the other hand, we see scope for Community action as regards atmospheric pollution and plant health. In the 1983–84 Session, the Select Committee reported that at that time it had received no evidence of air pollution damage to forests other than from locally known sources. Even so, the risk from acid deposits is growing and this confirms our belief that a Community monitoring programme is essential.

It is important to ask what is the relevance of these matters to the United Kingdom? There are two questions to be asked and answered. First, is an action programme for the whole Community possible? If the answer to this question is yes, then the second question is whether or not there would be any benefits for the individual member states including the United Kingdom from such a programme. Conditions vary greatly, and therefore a single programme is difficult throughout the member states. The Committee takes the view therefore that three of the four reasons given by the Commission for its initiative are perhaps best left to member states. But the fourth reason is certainly relevant; that is to say, forestry as a potential use for agricultural land to reduce surpluses which have arisen from the failure to adjust the common agricultural policy over the years. It is important to press for Community funding for any proposals under this head.

It is possible that the two documents mentioned in our report can be criticised for the absence of financial details. But these are in the nature of discussion documents and the Committee believes that this degree of precision concerning finance is not possible so early in the formulation of a community policy.

We now move to a stage where financial details are required if there are to be Commission proposals. The question is one of some urgency, particularly in view of the Statement made in your Lordships' House on 9th February concerning the extension of farm forestry. The Statement was given a considerable welcome on all sides of the House. There are some dangers that if we jump the gun before the Commission has said how much funding it is prepared to make available, we may be paying totally for something for which Community assistance ought to be available. The Committee resisted the temptation to put forward its own financial proposals for farm forestry, although we were very interested in a number of the proposals made to us including the proposal for reversed mortgages made by the National Farmer Union. When the basis of Community funding is made clear, it should be possible to devise arrangements which are of considerable importance.

I have outlined briefly what is contained in our report. I hope that the number of speakers due to take part in this debate is indicative of the degree of interest which this subject has aroused. I beg to move.

Moved, That this House takes note of the Report of the European Communities Committee on EC Forestry Policy (24th Report, 1985–86, H.L. 259).—(Lord Gallacher.)

5.15 p.m.

Lord Middleton

My Lords, I have a strong reason for supporting the noble Lord, Lord Gallacher, tonight, because as a member of the Select Committee on the European Communities I had the pleasure of serving on the sub-committee which produced this report, under the chairmanship of the noble Lord. I should also like to say how delighted I am that the noble Duke the Duke of Somerset will be speaking on this matter. He has recently joined the sub-committee of the noble Lord, Lord Gallacher, which now has the advantage of his practical knowledge of land management. We look forward to listening to his maiden speech.

The report of the Select Committee was published on 4th November 1986. One month later the National Audit Office produced a report which throws doubt upon our first and main conclusion, which was that the expansion of forestry, particularly in the United Kingdom, should be supported. I am delighted that in their statement last week the Government have accepted our view.

Forestry policy in Great Britain has been the subject of criticism for many years both on financial grounds and amenity grounds. On the other hand, many people say that to have to import 90 per cent. of our timber requirements at an annual balance of payments deficit running now at £4½billion is unacceptable, and therefore the United Kingdom forest industry should expand. The report of the audit office has added fuel to that debate and I do not wish to plunge too deeply into the arguments. However, because the committee's conclusion that the forest estate in the United Kingdom should be extended is such a crucial one upon which all our other recommendations must hang, perhaps I may mention the following points.

First, it has been the urgent need to reduce agricultural surpluses in the EC that has produced this call for action on forestry by the commission. The audit office report seems to have been compiled within the rather narrow ambit of a cost-benefit exercise in a United Kingdom context. The report ignores the wider European context altogether. The pressing need to relieve the taxpayer of the burden of supporting an unreformed CAP must surely override the much smaller worries raised by the auditor-general concerning the cost-effectiveness of a gradual build-up of a United Kingdom forest industry by means of state support.

Secondly, the auditor-general seems to pay insufficient regard to the peculiar nature of forestry as a business caused by the very long time-lag between initial outlay and the finished product. His report acknowledges, under the heading "Economic Aspects" on page 4, that: The heaviest costs in forestry are incurred in the early years. Then, in a blinding glimpse of the obvious, he says: For existing Estates therefore it is generally financially worthwhile to maintain the plantation until it is matured and harvested. That reinforces the view long held by many of us that it is better to wait until your crop is ready before you cut it.

There are in the auditor-general's report figures which show how young and immature the nation's forests are. Of the Forestry Commission's 900,000 hectares of woods, nearly 700,000 were planted post-World War II, so at least seven-ninths of the state forests are under 40 years old. The rapid increase in private sector planting has happened much more recently, so the majority of these too are immature. Any cost-benefit analysis of an industry before it comes into full production must be fraught with difficulties. How much more so when you try to assess an industry whose product takes between 40 and 150 years to finish.

This is perhaps a frivolous criticism, but I got the impression reading the Audit Office report that there was being committed a mistake that many of us made when we started gardening: that of pulling up the plant to see if it was growing; wondering if we were right to have planted it; wondering if we ought to go on watering it and feeding it; and possibly destroying it in the process.

The report casts doubt too on the cost benefit of providing employment through forestry work in the rural areas, and the question is posed; would it not be better to spend the money in the towns? But if, as is the case in many parts of Scotland, forestry is the only way to earn a living, must there not be a social benefit that is difficult to put a price on? Should you, by starving the only local industry of funds, and with the oil industry in decline, force the woodmen to join the urban unemployed? Finally, perhaps it is worth noting that the £2 billion at 1984–85 prices of funding from the Exchequer since 1945 in order to establish our national forest is the cost equivalent of just six months' timber imports.

I should now like to concentrate on the other key recommendation in our committee's report. Referring to our support for the expansion of forestry we say: This expansion should be carefully managed". Despite the potential for trees providing an alternative crop to those now in surplus, we were sceptical about the prospect of much of this extension of woodlands taking place on cultivable land in the lowlands. It would be a complete reversal of that deforestation which has been taking place since axes were first invented. Even in the depressed 1930s I think that little if any arable farmland went back to trees, though admittedly there were none of the kind of incentives for tree planting that have recently been proposed by the Government.

Many of those who gave evidence would like to see more trees—particularly broadleaved trees, as the noble Lord, Lord Gallacher, reminded us—in lowland Britain. We were in favour of financial support such as is now being given by the new broadleaved woodland grant scheme. We were clear that, without incentives either by means of direct grant or through the tax system, the maintenance of a timbered landscape in the lowlands could not continue. I can vouch for that as a woodland owner myself. Perhaps I should declare an interest as a recipient of many of those grants.

Even with greater financial encouragement such planting could, as the noble Lord, Lord Gallacher, has just said, only supplement planting at the level now suggested by the Government, which must surely continue to take place in the uplands, chiefly in Scotland. But where in the uplands, my Lords?

There is every economic reason—and this was made quite clear in the auditor-general's report—for growing trees on better-class land and for keeping them off the poorer land. But the committee took the view that in the context of curbing agricultural surpluses a more likely sequence of events—more likely, that is, than large areas of arable land being planted with trees—would be one where the trees move, as it were, downhill. The noble Lord, Lord Gallacher, referred to this.

Lest this should sound too much like the closing scenes of "Macbeth", I should explain that we envisaged arable crop production becoming less viable economically on marginal land and being replaced by grass and livestock. In this process sheep farming on the poorer uplands would move downhill, or to wherever the grazing was better. This would release the poorer grazing land for forestry, but for trees it would provide a much better class of land than that previously available.

That is perhaps an over-simplification. The process might not be so clear-cut as that. After all, there is room for both trees and sheep in the uplands. Furthermore, hill farming subsidies might delay such a trend. Nevertheless, that broadly is how we saw some arable land going out of production and into stock and some grazing land going out of stock and into trees. This redirecting of new tree planting would be greatly helped by the new government initiative. The shift away from the hilltops and the peat bogs towards better land, which we envisaged, should be speeded up by means of the kind of incentives that have recently been proposed.

The reverse has been the case up to now because in Scotland the Department of Agriculture has, so we were told, been reluctant to release grazing land for tree planting. We recommended that the department take a more relaxed view, and indeed that is essential if the new government initiative is to succeed.

The government initiative which should help to direct planting away from the poorer land is welcome not only because it is economically more efficient to grow trees on better land but also because it will relieve the pressure on some land that is environmentally sensitive. The sub-committee was made aware of the conflict of interest on this type of land by several witnesses, and notably by the Nature Conservancy Council who supplied us with a well-presented and well-argued booklet entitled, Nature Conservation and Afforestation in Britain. This document sets out the scientific case for care in the selection of land to be planted while recognising the need for more trees.

We accepted the NCC advice by concluding, as we did, that: The Committee strongly believe that threatened wildlife species should be protected and existing habitats preserved. Wildlife considerations must be taken into account before planting takes place. This form of management of the expansion of forestry will be helped by the Government's recent initiative, but a more direct control mechanism is required if sensitive areas are to be protected. As the noble Lord, Lord Gallacher, reminded us, we rejected the idea of bringing forestry into the planning system. I think that of the organisations that gave evidence only the Countryside Commission for England and the CPRE wanted that.

The noble Lord, Lord Gallacher, has referred to the fact that we saw merit in the Scottish Countryside Commission's suggestion that there should be a planting licensing system administered by the Forestry Commission, who would consult with the local authorities and bodies such as the NCC on proposals for new planting. If a planting scheme were not compatible with the interests of conservation, then the licence would be withheld, which would mean no planting grant and no eligibility for tax concessions. Such denial would, in our view, be a considerable constraint on extending the forestry area into environmentally sensitive country.

If such a suggestion proved acceptable to the Government and if it came into operation then I recognise that the Forestry Commission might, in the face of conflicting evidence from interested parties, at times have difficulty in identifying areas that should not be planted. It occurs to me that the environmentally sensitive area concept that the Government have already promoted might be useful in this situation. I note from last week's government statement that the number of these areas is to be increased.

As a member of the Nature Conservancy Council, I recently paid a visit to Scotland where members of the council were shown one of the four Scottish areas that were to be designated environmentally sensitive. I was a little surprised to learn that the Scottish Countryside Commission felt that the most important criterion for choosing these areas was that of visual amenity. I should have thought that conservation was just as important as preserving the landscape. If you can do both, so much the better, and I think that is also the view of the NCC.

The choice by owners and occupiers in an environmentally sensitive area of a system of land management beneficial to the environment is a voluntary one. Nevertheless the fact of an ESA designation would surely carry weight if a planting licensing system such as we recommend were in force. Designation and the reasons for it would surely be helpful for the consultation process which we envisage taking place where planting was controversial.

I raise this matter now as one of urgency because there is a very serious conflict of interest between forestry and conservation boiling up in what is called the "flow" country of Caithness and Sutherland. Much of that boggy and inhospitable area has already been planted with conifers, to the detriment, so the scientists say, of a special type of habitat which has probably never grown trees since the Ice Age and which in world terms is scarce and precious for the wildlife it sustains. The scientific interests of many more square miles in that sensitive area are threatened by afforestation. The scale of the problem would seem to make it one that could not appropriately be solved by means of the 1981 Countryside Act procedure.

It is in the interests of conservation and in the longterm interests of private forestry that some way of resolving this problem be found, and found quickly. I throw out the suggestion that an ESA-type designation for the flow country, plus the adoption of the kind of planting licensing system that we recommend, plus the financial incentives outlined in the new government proposals might together resolve it and might form an acceptable pattern of control for this kind of special case.

More trees are needed in the UK and wildlife habitats ought to be safeguarded. As the NCC pointed out to us, there is plenty of room for both. I believe that there is every reason to encourage private investment in forestry, especially in the disadvantaged parts of our countryside. But we have to devise a sensible means of control when controversial planting proposals are put forward. I hope the Government will give this particular urgent matter their consideration.

On their general policy for encouraging tree planting so recently announced, they are to be congratulated. The ideas of the Government and those of the Select Committee appear to be in harmony, and this is a happy situation.

5.33 p.m.

Lord Mackie of Benshie

My Lords, I too would like to congratulate and thank the noble Lord, Lord Gallacher, both for the way he introduced the report and for the work that he has done as chairman of Sub-committee D. I do not think he will object to a little flattery. He is one of the best chairmen of this sort of committee I have ever seen. He handles witnesses extraordinarily well. No matter what the evidence, they go away feeling that they have been taken extremely seriously and are happy. That is a very important factor in being a chairman of one of your Lordships' scrutiny committees.

The report simply sets the scene for the Government to take action, and that is what reports are supposed to do. I too look forward greatly to hearing the maiden speech of the noble Duke, the Duke of Somerset, and also the speech of the other noble Duke, the Duke of Buccleuch, whose family is probably regarded by farmers as the most enlightened landlord in Scotland. We ought to have an extremely interesting debate.

Funnily enough, I read the report as well as looking at the conclusions, although I have only just become a member of that committee again. Looking at the conclusions, I think that the expansion should be carefully managed—that is absolutely right and proper—and it will need a great deal of management. It also needs to be courageous, because we have an enormous problem on our hands. The new factor in the report is the alternative use of agricultural land. We have this enormous agricultural surplus, which is still growing.

I saw a report on cereals. It said that, in spite of the good export potential to Spain because of the drought this year, the stock in this country—not intervention stocks of grain—was still growing and it is larger than last year. This situation obtains all over the Community. Various estimates are being made of the amount of land that needs to come out of agricultural production. The NFU is talking about nearly 4 million acres in this country and certainly something like 20 million acres in the Community overall. This is an incredible switch, an entirely new situation and one about which everyone is concerned.

A whole lot of solutions have been put forward, and forestry is one. It is the most significant and certainly the most obvious. We are dealing with an enormous deficit in timber production in this country. We have a lot of surplus acres. Therefore it seems certain that we should plant trees.

I too would like to join the noble Lord, Lore Middleton, in criticising the Auditor General's Report. One of the worst things about it was that it took the whole affair of timber production in this country at constant prices. Nearly all the experts giving evidence to the committee said that in their view there was to be a timber shortage in the near future and if there was no timber there would be an increase in expenses as the timber in Canada and the Scandinavian countries got further and further away from the centres. A new superstructure had to be put in before the timber could be got out. The FAO forestry committee has said in addition that it quite definitely envisages a shortage of timber in the next century. All of this seems to show that the simplest and best answer for our surplus acres is to put them into trees.

I think we can quantify the amount of money that is available from the saving in cereals production. It is very difficult to do that for milk, but we can do it reasonably easily for cereals. A number of estimate; were made of the cost of agricultural support, ranging, I think, from about £115 a hectare to the £300 a hectare mentioned by other witnesses. But on cereals if, as the noble Lord, Lord Stodart, suggested in the previous debate, you take the 35:2 tonnes an acre of land out of cereals, this year certainly they are paying an export restitution or subsidy—whatever you care to call it—of £80 to £100 a tonne, plus the cost of storage That gives a figure of more like £100 an acre, and it is still saving money.

The insistence of the noble Lord, Lord Gallacher on the Community making this money available will save us all money and will certainly do something towards making the policy of turning over to trees possible and viable.

Again, the Government are talking about an increase in general planting of, I think, 37,000 hectares a year, which is quite a lot of trees. Then they are talking about farm planting going at 30,000 acres or thereabouts a year. I am not being nasty to the Government, but this is a drop in the bucket when you look at the land that has to come out of agricultural production. That is why I say we have to look hard at the farming scene—how one makes a farmer into a forester, how one allies the environmentalist with practical production, and, most importantly in any environment, how to keep people in the countryside, because nobody is interested in total wilderness acres.

Tax incentives are necessary for a great deal of planting. Some of the groups carrying out economic forestry have shown the way. Eskdale Muir, which I have seen, shows how one can ally mass planting with an improvement in the appearance of the countryside, in the wildlife and in other ways. The Government must also consider the Forestry Commission planting more; otherwise we shall not achieve the acreage under trees we require.

It is a curious anomaly that if we have the misfortune to have a Labour Government following a Conservative Government—which I also consider to be a misfortune—we should probably have more trees planted. The Labour Party believes in higher taxation of rich men, so that under a Labour Government a government scheme for private forestry may do better than under a Tory Government. God forbid, that we continue either. But it is necessary that the Forestry Commission plants more trees on its own.

The Forestry Commission will need a great deal of expansion in personnel. If we are to expand farm forestry, we shall need oversight and people who can train farmers. We shall need people who can plan and people who can also combine all the various interests. It probably can be best done from within the Forestry Commission. But the vital element is farm forestry.

A number of schemes have been put forward. All of them can work in their various ways. A number of different schemes could work, but the essential element in farm forestry, as the report and as every witness said, is that, first, the farmer recovers 100 per cent. of the cost of his planting and, secondly, that he has an income thereafter for as long as it takes to get into thinnings and or regular income from the blocks planted each year. Without that one cannot possibly persuade any farmer to plant. His income (particularly if one considers Scottish farm income over the last three or four years) will not be enough for him to put money into any improvement whatsoever. But if a scheme is produced that gives 100 per cent. of the establishment and an annual income thereafter, one has a chance of doing something. I should like the Government to confirm that.

I know that the pilot scheme announced recently states that how long the payment will last will be a matter for examination. It is certainly a matter for thought, But it is a matter of urgency and no farmer could plant unless he was guaranteed some form of annual income. There are many schemes for covering this, but if an annual income is to be paid, the Forestry Commission or another expert body must inspect the security in the form of the trees to see that they are being properly managed.

For all these reasons I believe that research will need to be speeded up, more money will need to be spent on it and the staffing of the Forestry Commission or the overseeing bodies needs to be considered. Also we need to study the co-operative schemes so that in an area where much farm forestry has been planted in smaller patches, be it 40 or 100 acres, at least there is a scheme for the marketing of the trees from the different farms.

The whole thing bristles, if that is the right word, with difficulties. All of us are agreed on the necessity and the fact that there is money to be saved by coming out of grain and into wood farming. The Government must be more courageous than they have been about forward planning. I hope that they regard the suggested plan as a pilot scheme and will bend every effort to persuade the CAP and the EC generally to produce a European or Community-wide scheme at the earliest possible moment.

The report has given the facts and pointed the way. I hope the Government will be able to respond. I should particularly like the Minister to tell me—if my figures are right on the amount that could be saved—how much could be saved by taking land out of cereals at the present time and not historically.

5.46 p.m.

The Duke of Somerset

My Lords, I beg your Lordships' indulgence as I address you for the first time this evening. I should also like to declare an interest as a woodland owner.

The report we are discussing in its first statement comes straight to the point with the fact that the Community has no existing forestry policy bar a few specific measures. Two important reasons have prompted the consultation papers on which the report is based. It is on those two reasons that I should like to concentrate this evening. The first is the problem of agricultural surpluses and the second is the continuing reliance on imported timber and wood products currently costing the EC £12 billion per annum.

Those two points are also at the centre of the debate over British forestry policy. Some of the issues involved can be regulated on a Community basis but the others need to be resolved nationally. The EC embraces widely differing geographical and climatic extremes—to quote from the report—"from Athens to the Baltic". But agricultural over production is a problem in all these areas.

Can trees replace agricultural crops on enough land to make a difference? In the United Kingdom I believe the answers are, first, economic and then environmental. Economically one must examine broadleaves, softwoods or mixtures. Pure broadleaved timber production, with rotations of 120 years or so, and with the constant menace of the grey squirrel, is basically uneconomic. It would require an even larger and longer lasting grant than the £125 per hectare announced last week to be attractive to farmers as an agricultural alternative. The marketing of this type of timber is also most unsophisticated.

Softwoods however are viable. Production has been centred in the uplands and on rougher ground rejected for agriculture. Their rate of return, after taking into account grants and tax provisions, is competitive and has attracted outside money to the United Kingdom. If this planting could move down the hill on to better ground, growth rates would be improved. Environmentally conifers have attracted criticism. Some of this is due to past forest management mistakes, now acknowledged. But present day planting with regimes that are well thought out will lead to fine woods of mixed ages and species. These would be most attractive.

As the Countryside Commission for Scotland stated in the report, people do not like change in well loved landscapes, but they become used to it and often find it attractive in the long run. Likewise, contrary to what some people believe, conifers can encourage bird life. In Scotland where planting still accounts for only a very small percentage of the land area, the two different types of habitat have a distinct benefit to wildlife.

Trees provide shelter, roosting places and food. A pure conifer forest harbours three times the number of birds and a greater diversity of species than the grass or heath it replaces. Buzzards and red kites have particularly benefited. The compromise is to have mixtures. I particularly like the suggestion by the CLA in the Verney report of a mixed woodland grant scheme, varying with the species of tree. However, the fact remains that the more broadleaves that are grown the more expensive the operation is to the taxpayer.

Let me now turn to what may be done to encourage growth. The policy of the United Kingdom has remained constant for some time. With the benefit of the Forestry Commission, governments have encouraged an increase of forest area. That policy is consistent with the EC proposals.

There are two ways of increasing the acreage. As we have heard, one is farm forestry. That is linked to the falling fortunes of agriculture supported by grants and producing income to the farmer. The recently proposed £125 per hectare for tree growth on the best land compares with the annual public support for agriculture of about £150 per hectare. It is important though that that new money should not detract from the necessary improved new management of existing small parcels of woodland on farms. It has been demonstrated by the Dartington Amenity Research Trust that many of those can be brought lucratively back into production. Again, more research is needed on marketing techniques.

The second area of timber production to offset our large import bill is called mainstream forestry; that is, woodlands on a larger scale managed by the private sector and the Forestry Commission, with inherent advantages of economies of scale, better access, existing infrastructure and jobs. One of the main objectives is to attract investment into the processing sector, which in turn establishes markets from which small woodlands may profit. Production from Britain's forests is likely to double in the next 15 years, and substantial investment has been made over the last two years with that in mind. Seven new or improved mills are operating. Those investments rely on a constant long-term source of raw material. They are also proof that the policy of expansion, pursued for many years, is paying worthwhile dividends.

It would be disastrous to choke off future supply by removing either Schedule B or Schedule D tax arrangements, which are vital in the larger scale private estate. Present policy is for the bulk of new planting to be carried out by the private sector, which occupies 56 per cent. of the forest area. If Schedule B were removed, the marginal economic advantages of managing broadleaves would disappear; and without Schedule D offset, planting on any scale would have to stop.

It can be demonstrated that the existing economics of private forestry are fragile in that the annual planting target of 30,000 hectares is not being met. The rate of return is not high enough and the land is not being made available. The threat to future supplies will undoubtedly hit the expansion of the processing mills, thus leading to loss of markets and jobs.

I hope your Lordships will agree that, given the right support, forestry can not only enhance our countryside by occupying previous agricultural land but also substantially reduce our UK annual import bill of £4.5 billion.

5.55 p.m.

The Earl of Onslow

My Lords, congratulating Dukes on their maiden speeches is a very rare and privileged occurrence. The noble Duke's grasp of his subject was impressive and his advice to the Government was worth while.

There is one point which I should like to take up and emphasise. The noble Duke has said that more mills have come into production. Our energy prices for processing mills here are much higher than those in Scandinavia and in Canada, I understand. That is why large amounts of Scottish timber are exported to Scandinavian mills for processing. That is something which the Government can certainly look into.

The report is clear, well written and excellent. I find that I agree with a great deal of it. Perhaps that is why I think it is good, because one does not always think things are good when one does not agree with them. It has also emphasised that timber growing is extremely long term. Nelson's second-in-command at Trafalgar would always plant oak trees on those very rare occasions when he came back on leave, because he said that the Royal Navy would always need oak. Was it not lucky that one of his coppices or woods was felled to provide for the building of anti-magnetic minesweepers in the last war? That shows how the long-term requirements can be seriously planned.

It is essential that the common agricultural policy should pay for this. As the noble Lord, Lord Mackie of Benshie, said, it is ridiculous to subsidise cheap grade feed wheat at £86 to £100 per tonne; and then there is storage to be considered. On two tonne per acre farm that means about £160 per acre. Instead, we should be thinking of planting on the three-and-a-half tonne to four tonne per acre farm, because that is where the surpluses are going to cease to be grown. It would be perfectly reasonable not to grow those for £50 an acre when it is possible to achieve very much more with four tonnes of feed grain.

I hope that my noble friend can clear up the confusion about shelter belts and hedges. Surely those should come into the grants which the Government intend to pay. I am referring to the parts of the report which I think are the most important and which seem to make sense. With regard to the unification of the grants system, tax reliefs and grants should be given only when the Forestry Commission or ADAS, but preferably the Forestry Commission, has said, "Yes, that is environmentally sensitive; yes, that is conservation-sensible; yes, that makes good timber growing policy as well". I believe that what has offended people very much are the straight lines on the Scottish hills, with furrows going down the hill which seem to be there for ever and which do not blend in naturally with the countryside.

I am privileged to fish on Helmsdale. The Helmsdale strath is a very beautiful strath. In some parts of it quite large areas of pine forest have been planted. They look as though they have been there for ever, although they were planted only 20 or 30 years previously. They fit round the hills; they are not square, not regulated. Further up the strath there are some in blocks going down the hill; they bear no relationship to God or man, just a relationship to the straight lines of the fencing posts. That is what offends people most about block granting of single species conifers in the Highlands.

While I am on that, I have a friend who has a picture of Box Hill, painted in 1780. There is not a tree on Box Hill: it is used solely for sheep grazing. I am absolutely prepared to bet my bottom dollar that if the owner of Box Hill, which I believe is the National Trust, decided that they wanted to clear all the scrub off Box Hill and put down old-fashioned, long-term grass, every single conservationist within a radius of 15 or 20 miles would be screaming. So one has to be careful in recognising what one is actually conserving. Also, one must remember when one is conserving trees and looking at tree planting that it is an ever-growing, ever-changing, ever-transforming situation. That is something we must always take into account.

Paragraph 102 of the report, which is the one referring to new planting, is extremely important. I think that the report helps Her Majesty's Government and I sincerely hope that they will take it on board and will act upon it because it seems to me that it produces a consensus with which very few of us would disagree. In other words, it is taking seriously the conservation aspect. The report realises that we need more timber and that we can do something to get rid of these horrendous common agricultural grain mountains, which are ruining the world trade, impoverishing native third world agriculture and producing an unnecessary amount of friction between ourselves and our main ally. By planting some of these high-yielding lands with trees and making it worth while for people so to do we will then have contributed to something to which we all aspire.

6.2 p.m.

Viscount Ridley

My Lords, I should like briefly to add my congratulations to the noble Duke whose maiden speech we all so much enjoyed. Having seen something of his woodlands some years ago, I can assure your Lordships that he speaks from great expertise and knowledge and I hope that we shall hear him often.

It was a privilege to have served on the Committee and I consider the report among the best of the numerous publications on forestry which seem to be issued almost weekly at the moment. It is politically very difficult now, if not impossible, to pay farmers to grow nothing at all. So there must be a strong case for the expansion of forestry in this country. The Government also seem to have concluded last week that it is better to pay farmers to grow trees than to grow nothing whatever.

However, the Committee expresses some doubts, particularly in paragraph 103, which I believe to be very realistic. I should like to underline some of the reasons for scepticism. If there is to be a significant contribution towards reduced cereal crops, obviously there will need to be a large acreage planted in the drier counties of eastern England. That is where most of the corn surpluses are created. It would not be effective to plant more trees on the uplands. I live in a relatively dry eastern area myself, and so I have had some experience of the difficulties of establishing trees in such areas.

I tend to think that the report does not sufficiently emphasise the problems. Young trees can be very slow to grow in dry country. Every single animal in the countryside is bent on eating them—I exonerate only the fox in this respect—and such trees are very vulnerable to periods of drought. Establishment will be even slower in the case of broadleaved trees. It follows that the time which it takes to establish a plantation of any kind is very considerable and that the time to harvest can be very long indeed.

Financial incentives, if they are to do the trick, have to extend for very long periods. I remember some years ago felling a 120-year-old oak wood. The proceeds equalled exactly one year's crop of winter wheat. Those figures are of course out of date. But it puts the issue in some perspective. We shall have to see whether the recently-announced incentives will prove adequate.

No one can expect any return on a tree which he plants during his lifetime. Current yields barely pay the cost of replanting after filling. The value of thinning seldom covers the cost of extraction and, even if timber can be grown successfully, finding a market can be very difficult indeed and may always be so. Although we import over 90 per cent. of our timber requirements, there seems to me to be very little sign yet that home-grown timber can compete efficiently with imports at present prices. Therefore, planting trees of any kind is an act of faith, if ever there was one.

It is perhaps not sufficiently emphasised in the report how totally irreversible such processes can be. The planting of trees effectively means that this land is "tree" for ever and after. Removing stumps and replacing drains after even 40 years can be much more expensive than the total worth of the land. No farmer, given the choice, will plant his best land but only the poorer, wetter areas and the fields which have yielded less. So the reduction in cereal crops which we seek may be much less than we expect. To put it another way, we shall need an enormous expansion in forestry to have any significant effect on cereal surpluses.

I do not believe that the report mentions at all the landlord-tenant relationship. When one considers the complications for everyone involved in the ownership or otherwise of milk quotas, I think this is an omission. I ask the Government to treat that as an awful warning, to try to get it right and to give some guidance on the matter.

The control of forestry is I think mentioned in paragraphs 43 to 48. I agree strongly with the Committee's decision not to support planning control over forestry. That must be absolutely right, although I think a case could be made for an exception in national parks in England and Wales. It is much better to introduce the system of planting licences, which has been well argued in the report. What is important is that there should be not only no grant without such a licence but no tax relief either.

For some people, grant (which is costing the nation, we believe, some £6 million a year) will be more useful than any amount of tax relief, costing, I believe some £10 million and most effective obviously for the wealthier. I like the noble Lord, Lord John-Mackie's advocacy of more forestry under a Labour government. It seems a splendid price to pay.

Is it worth considering a system whereby you could either have grant or tax relief? That would allow much more generous grants to be given to smaller farmers and perhaps much more generous tax relief for the larger farmers—more effective incentives at no greater cost to the country.

Income tax relief—your Lordships will be well aware of it, so I shall not describe it—is extremely generous to forestry at the moment. It could hardly be more so; but capital taxation remains a major deterrent. The situation is in fact worse than it was under estate duty, because tax is now payable on the larger sums realised when timber is sold rather than being related to the value of timber when a death occurs. That point is touched on in paragraph 111 of the report, and I believe it is something which has to be looked at.

If it is national policy to increase timber and grow more forestry, then £10 million a year in tax relief seems to be a very cheap price to pay, especially as most of this is lost revenue. I doubt very much whether the Treasury would have got it anyway. There would be some other loophole through which it would disappear. It is probably much cheaper to do this than to pay the Forestry Commission to plant more trees.

An objection one frequently hears is that many barristers, pop stars and other wealthy people cash in on this tax relief. Some of them do not even know where their investment is sited. It is very difficult to distinguish between a genuine traditional owner and a new owner. I ask: does it matter, if the object is to have more trees?

Finally, your Lordships will remember that Lloyd George once said that a fully-equipped Duke costs as much as two Dreadnoughts to maintain. I do not think he was referring to either of the two noble Dukes taking part in this debate. However, one might perhaps paraphrase his remarks and bring them up to date by saying that a fully-equipped snooker champion now costs as much as a Chieftain tank.

6.10 p.m.

Lady Saltoun of Abernethy

My Lords, first I should like to join other noble Lords in congratulating the noble Duke, the Duke of Somerset, on a really excellent maiden speech. Thanks to him, and to all the other noble Lords who have painted the canvas, I shall be able just to touch up in a few places. Next I must declare an interest as the owner of some small plantations, mainly for shelter, and as the wife of a more considerable forest owner.

The noble Lord, Lord Middleton, has mentioned the National Audit Office's review of the Forestry Commission's objectives and achievements bemoaning the low returns from public investment in forestry, which followed hard upon the heels of the report that we are now debating. I have a sense of déjà vu. Ever since the end of World War I, the history of forestry in this country has been like a fairy tale without a happy ending and the Treasury has been the Bad Fairy. In 1919, a baby was conceived of the forestry sub-committee presided over by Mr. Francis Acland consisting of representatives of the various departments concerned, some experts and others. All signed their report without reservations, except Bad Fairy Treasury. The result was the Forestry Bill giving birth to the Forestry Commission which received Royal Assent on 19th August 1919.

The Second World War devasted for a second time the woodlands of this country, and between 1945 and 1972 the confidence of foresters and investors in our forest industry was built up by Good Fairy Government—and, largely, by Good Fairy Labour Government—with a system of grants and capital and income tax reliefs designed to take into account the unique nature of forestry, and to encourage owners to rehabilitate their woodlands under the dedication scheme with its planting and management grants.

Then, in June 1972, came the Government's Consultative Document on Forest Policy accompanied by Bad Fairy Treasury's cost-benefit study. Two years of argument followed and we were left with the Basis III Dedication Scheme with no management grant and lower basic planting grants. By 1976, the level of new planting had just about halved. Now, again, Bad Fairy Treasury is back weaving her nasty spells. I hope that the Government will not weaken this time in playing Good Fairy and telling Bad Fairy Treasury to get lost, by implementing the recommendations of this report with, I hope, financial assistance from the European Community.

I should like to see a return to the Basis II Dedication Scheme or something like it, with the addition of some kind of income support grants which might, or might not, be repayable on harvesting the crop, depending on whether capital gains tax was payable. For I have no doubt that in general—and there are exceptions to which I shall come—the most profitable way of growing timber is to persuade someone else to do it for you, even if you have to give him considerable financial inducement to do so. I hope that the Government have really taken on board the absolute necessity of growing more timber.

I should like, however, to draw your Lordships' attention to the CLA's reservations on page 175 of the report on the willingness and desirability of farmers doing their own planting. They say that the majority of farmers do not have the traditional interest in the growing and management of woodlands which landowners and owner-occupier farmers have and, are, at best uninterested in the woods on their farms or even regard them as a positive nuisance. Forestry is a skilled business and if healthy and productive woodlands are to thrive they must be properly managed. I wonder whether it might not be better to devise some scheme by which the planting and management of individual farmer's woodlands should be done by either private forestry firms or even the Forestry Commission, so that the necessary expertise was available and so that a number of small plantations could be planted in accordance with some coherent scheme for the area and managed more economically.

An interesting letter appeared in the Scotsman on 29th December, 1986 from the Director of the University of Edinburgh Centre for Human Ecology. He advocates what I think all foresters regard as the commercial ideal—sustained yield forestry. Put at its simplest, you plant a certain number of trees every year for the number of years it takes the trees to grow to maturity. By then your first year's trees are mature so you fell them and replant and so on every year, and by then you have a regular annual income for ever.

Of course, you need a fairly large area to make it viable and you have to allow for thinning, but that gives you some return before maturity. If you want to do it with mixed species all growing at different rates, it becomes quite complicated. It is quite an easy thing to achieve when you are felling the virgin forest, but difficult and costly in the early years to start again from scratch. But I wish that we could make a start and I suggest that this is something the Forestry Commission could do best. And I therefore very much hope that the Government will reconsider any plans they may have for divorcing the Forestry Commission from forest ownership.

It is true that we shall not be able to rely for much longer on cheap imported timber from the tropical rain forests and other foreign sources. This was foreseen right back in 1919. Lord Clinton, in the debate on the Second Reading of the Forestry Bill, said: We know that the main supply of the Empire in Canada, vast reserve as it is, is disappearing at a rate very much greater than its annual growth."—[Official Report.] He added that we were mostly dependent for our own supplies on Russia to which the same applied.

In 1961, I was taken to see the timber operations in the virgin forest in Canada, north of Quebec City. When we had got to the farthest lumber camp, I asked what was being done about replanting. The answer was "Nothing, because it will never run out". Now it is running out and the Canadians are very worried; and it is the same story everywhere. So we must try to become more self-sufficient in our own timber requirements. I welcome this report most warmly. It is the best news that the forestry industry has had for a very long time.

6.16 p.m.

The Duke of Buccleuch and Queensberry

My Lords, first I declare an interest as one who is much involved in the growing of trees for commercial purposes, for aesthetic reasons and also for conservation. It is always a pleasure to listen to the lucid logic of my noble friend Lady Saltoun and to have the chance of saying so when I follow her. Let me also say what a pleasure it was to hear my noble friend the Duke of Somerset making his maiden speech. His knowledge and grasp of forestry came over very clearly and it is good to see someone in his age group with this interest.

I join with others in the applause for the work of the Select Committee, many of whose members are taking part in this debate and they leave little more to be said on the subject. Nevertheless, I believe that one point needs to be stressed. It is that it is advantageous that public opinion should see the merits of forestry expansion and that it deserves to be better informed than hitherto.

I am sure that all your Lordships who have a practical knowledge of forestry and a first-hand concern for the countryside will know every bit as well as I do the absurdity of the anti-forestry campaign, with all its hysterical exaggerations. Yet it is amazing how a handful of people who present themselves as Davids fighting Goliaths, seeking to save the last 10 per cent. of our landscape from total and irretrievable destruction, manage to trigger the imagination of editors and journalists. No doubt this is the stuff of which good stories are made, true or false.

Yet some 90 per cent. of the country is not afforested, and not even the most enthusiastic forester envisages more than about another 8 per cent. of tree coverage spread over the next decade or two, still leaving 80 per cent. of the country unafforested. Furthermore, a large part of the present 10 per cent. forestry cover is of a kind that is smiled upon by knowledgeable conservationists and landscape appreciators.

Of course there are examples of unattractive forests dating from the early days of the big schemes, before aesthetic lessons were learnt, and there are still occasional examples of bad plantations in conspicuous and sensitive areas, but even these are quite exceptional. Most of us who try to continue the tradition of integrating forestry with other interests, as was done by many generations before us, are most conscious of the fact that it was simply because of their achievement that the British landscape is as beautiful and as varied as it is today, which is what makes us all want to go on conserving it.

With 90 per cent. of our land surface still unafforested, surely there is little need for panic about a gradual increase of a mere 8 per cent., especially when it can mainly be done in such a way as to enhance rather than spoil the landscape for ramblers and conservationists. There are still vast open spaces that will seldom feel the foot of one rambler in a 1,000. Is it right to stifle desirable development of increasing economic importance nationally for the sake of the very occasional but sometimes noisy over-conservative reactionary who resists change, whether it is good or bad?

If forestry expansion is to enjoy more enthusiastic public support, it is important that the industry, and perhaps the Government should take more active steps to open the eyes of the general public and the media by means of fact-finding visits and demonstrations which refute much of the present distortion that goes on.

The EC's recognition of the future role of forestry is welcome, and it is right that all of us involved with the day-to-day management of the countryside should seek the best possible ways of translating sensible thinking into practicable action. Mercifully, we have an Administration who do not lack men of wisdom or the ability to listen to the voices of those groups and organisations that represent the grass roots and the tree roots.

The CLA's latest working party report, chaired by that most eminent forester-cum-conservationist, Sir Ralph Verney, poses many practical solutions to problems that would otherwise block progress. Another organisation that deserves mention is the Timber Growers' Organisation, which has already shown itself to be a powerhouse of constructive thought. At the same time I firmly believe that the role of the Forestry Commission will assume ever greater importance, rather than less, in influencing the right kind of afforestation and watching over the taxpayer's legitimate interest.

Finally, it always surprises me how little attempt seems to be made at high level in the EC or in government quarters to make long-range predictions about the future supply/demand situation for both foodstuffs and timber. It appears to be generally assumed that the present situation will continue more or less as it is for ever, yet casting our minds back over the last 100 years will confirm that cycles have come and gone. Is it too much to hope that someone will indulge in a little more long-range forecasting? Certainly on present expectation there is every reason to keep up pressure on the EC to back forestry in a big way.

6.23 p.m.

Lord Inglewood

My Lords, I am speaking in a more guarded way than some noble Lords who will be taking part in this debate, maybe because I have taken part in so many forestry committees throughout the whole of my adult life. In particular I remember in committees the Forestry Commission, the CLA and the timber growers' organisation when we faced the brave future; we knew that there would be problems, yet I do not think we realised how difficult it would be to work out a forestry policy, as indeed has proved to be the case.

Forestry policy is always difficult. There is the different geography, the different climate—there is difference of every sort. If it is difficult to work out a forestry policy for one country, how much more difficult it is to work out something for the Community!

Wherever one goes in Europe one finds that farmers are not national foresters. Something that we have discussed here from time to time is the potential advantages to farmers if they would transfer some of their land from normal agricultural crops to timber; but it does not work that way in practice and it costs the most enormous sums in subsidy.

There are further difficulties ahead of us. There is the geography, and there is the long-term scale. One says that it will take some time before a farmer understands the return that he will get. The chances are he will get it in the next generation or even further ahead. That is not really very attractive to him. To switch farming from land to forestry is very difficult in practice. All these interests about which we are speaking must have a reasonable economic outcome or there will be general disappointment.

There are on the other hand benefits and happy results that can arise from forestry. I shall mention—with no economic and financial interest—one thing only. Looking out of my bedroom window this morning, several hundred miles away from here, I saw not an ordinary common bird but a rough legged buzzard eating a pigeon, exactly 12 yards from the wall of the house. Beyond that there were three roe deer, one buck had a good head and beyond that something that would probably have given you the most pleasure of all—the red squirrel. Forestry has that side to it. There are the big things to think about as well as the smaller ones, and we have not to be too hopeful until we have solved the difficulties.

6.26 p.m.

Lord Sherfield

My Lords, I too should like to congratulate the noble Duke, the Duke of Somerset. It is heartening in this rather elderly assembly to hear such a valuable and knowledgeable speech from a young Member of the House, I calculate that he is at least 15 years younger than the average age of the new entry to this House which has recently been announced. I hope that your Lordships will hear him often, and not only on forestry.

It is seven years now since your Lordships' Select Committee on Science and Technology published the first of its two reports on the scientific aspects of forestry. It pursued the subject and took further evidence, and published a supplementary report in July 1982.

As a result of these reports two specific steps were taken. The first was to set up, under the chairmanship of the Forestry Commission, the Forestry Research Co-ordination Committee, which has developed into an active body doing important work. The second was to set in motion the progress which has led to new schemes to encourage the planting and management of broadleaved woodlands. Later in 1984 the Select Committee undertook a short inquiry into the relationship between agricultural and environmental research, whch was prompted by its concern about integrated land use. This reinforced that Committee's opinion that integrating forestry, agriculture and other land uses is an important way of using land to the best advantage.

In these reports there is no mention of the European dimension. Forestry was not, I think, in the minds of the negotiators of the Treaty of Rome, and in 1980 the Commission had only a vestigal interest in it. It is really the glaring contrast between the European agricultural surpluses and the European timber deficit which has led the Commission to take the first tentative steps to involve itself in foresty policy and research. This involvement is, in my opinion, much to be welcomed, and the report before your Lordships is therefore timely.

Decisions on forestry policy, as the evidence to Lord Gallacher's sub-committee shows, must remain primarily in national hands if only because these decisions have to relate to the very different forestry circumstances of the member countries, but that there will be a role for the Commission in this area I have no doubt.

In the debates on forestry policy that have taken place in the House since the reports of the Science and Technology Committee, to which I have referred, the Government have endorsed the policy of encouraging the forestry industry and extending the area under forest. They have also emphasised the desirability of a greater role for the private sector both in planting and through purchase of forest and forestry land from the Forestry Commission.

But the carrying out of this policy has been continually influenced from two directions: from the Treasury and from the environmental lobbies, both national and local. I must declare an interest here as a mini-forester operating on a very small scale. The Treasury has, in my experience, hitherto regarded the support of the forest industry in this country as a misuse of resources and it mounts an attack on it from time to time, notwithstanding the declared intention of the Government to support the expansion of the industry. The latest assault comes, not directly from the Treasury, but from the National Audit Office which recently published a report which has since been strongly rebutted by the forestry industry. The noble Lord, Lord Middleton, and others have dealt with this and I need not pursue it further.

The pressures of environmentalism come from a wholly different direction. However, they reinforce what, for shorthand purposes, I shall term the Treasury case, by demanding restrictions on the type and extent of plantings which reduce the prospective economic returns. Therefore, the private forester, like the Forestry Commission itself, with its dual role as Authority and Forest Enterprise, and its multiple responsibilities under both heads, has found himself or herself squeezed between the hammer of Treasury control and the anvil of environmentalism.

Take the broadleaved scheme. This scheme was very much to be welcomed, but its attractions are reduced on the one hand by the level of grant available and on the other by the restrictions hedging it round—for example, the limitation on the proportion of conifers which may be planted as a nurse crop. That limitation reflects, as I understand it, a compromise between the Forestry Commission and the Nature Conservancy Council. As a result, although the Forestry Commission told the Select Committee that it is reasonably satisfied with the progress of the scheme, I believe it would be more successful if it were more flexible. The noble Duke, the Duke of Somerset, spoke with great authority on that point.

More generally, some of the environmental lobbies and especially local objectors threatened to bring about a situation of stalemate in which it is hardly possible to cut down an old tree or to plant a new one. When I was thinking about what to say in this debate, I came across a headline in my local paper: Village Uproar as Tree gets the Chop". The tree was of course on its last legs! When I read of the passionate opposition to various extensions of planting, especially of conifers, I am reminded of an 18th century epigram which may be familiar to some of your Lordships: Papillia, walking with her amorous spark Says to her swain 'how charming is a park'; A park is purchased, but the fair he sees Suffused in tears, 'Oh odious, odious trees'". Such appeared to be the situation until last week, when the Government Statement on the alternative use of agricultural land opened new avenues for the development of the forestry enterprise. There has been a great fuss about the planning implications of the Statement, which are outside the scope of this debate. However, I believe that the forestry proposals can be wholeheartedly welcomed. We must now await the promised document and scrutinise the small print. But it certainly seems that the hammer of the Treasury may have been stayed, although the anvil of environmentalism is probably still in place.

I hope that the new document, if it does not itself contain them, will foreshadow the issue of precise guidelines so as to assist local authorities, landowners and farmers to apply the new policy of increasing the forest area, and that those guidelines will be flexible in their treatment of the levels of grant and the mix of trees.

The Science and Technology Report of 1980 proposed that there should be experiments in community forestry—that is, community with a small 'c' as opposed to the European Community. The idea was that a community would manage its own area of woodland for its own needs, for timber, firewood, and so on. The suggestion was not taken up in 1980. However, this is a lost tradition which could be revived with local authority support and with Forestry Commission advice. I understand that it is practised in other states of the European Community and there may be something which we can learn from them.

Moreover, the idea has now been taken up by the Woodland Trust, which has started schemes in Worcestershire and Hertfordshire. That is something which could be expanded and developed in collaboration with farmers in the planting of new woodland under community management. I suggest that the Government and the Forestry Commission should look at the proposal again. It could be a useful element in the development of new policies.

One further point concerns the planting of small woodlands and particularly hardwoods. Such planting is seriously handicapped in parts of England and certainly in the South by the ravages of deer—roe, fallow and muntjak. The noble Lord, Lord Gallacher, referred to this point in his opening speech. This makes successful establishment of a small plantation both frustrating and expensive. Control is difficult, especially in the creeping suburbia of the South and the South-East. This is a problem to which I do not see an easy answer at the moment, and I wonder whether it has been considered in this context by the Government and the Forestry Commission.

Turning again to Europe, the essential fact is that it has a big timber deficit. Of all the European countries, the United Kingdom has the largest deficit, partly because it is still building up its forest stock and relatively little of that stock is mature. The case for strong encouragement of forestry expansion is admittedly long term. The involvement of the European Commission, if it cannot take direct action except to a limited extent, may at least have the effect of impressing on member governments the wider strategic issues involved in European forestry development. There may also well be advantages for forestry research.

I conclude by commending once more the three reports of the Select Committee on Science and Technology relating to forestry to the attention of the Government and of the House. The thrust of many of the recommendations is very much in line with the new policy announced last week.

6.37 p.m.

Viscount Ullswater

My Lords, I should like to start this evening by adding my congratulations to the noble Duke, the Duke of Somerset, on his maiden speech. I know that he has joined the European Communities Committee and I hope that he will be contributing to the reports of that committee and also to the debates in your Lordships' House.

The noble Lord, Lord Gallacher, has initiated this important debate on the reports on the EC forestry policy. It comes at a most opportune moment. The press is full of the debate on alternative uses for agricultural land. The Government have published a paper on their views of those alternative uses. The Minister of Agriculture outlined those views at the recent rather stormy annual general meeting of the NFU where he, in my opinion, rather unfairly received a vote of no confidence.

The report, from a committee of which I have the honour to be a member, touches on only one of those alternative uses, although its main terms of reference were to comment on the discussion paper on Community action in the forestry sector. Much has already been said today about various aspects of that report and I am going to confine my short remarks to three aspects of it.

First, I should like to comment on the support given by the committee to the expansion of forestry in the United Kingdom at paragraph 139 in the summary of conclusions and recommendations. The National Audit Office review mentioned by the noble Lord, Lord Middleton and others gives the Forestry Commission faint praise for achieving a strategic reserve of timber and comments more on the valuable recreational asset of the existing forestry estate. It ducks the environmental aspect altogether and concludes in paragraph V of its summary: There appear to be no significant economic benefits from new planting arising from balance of payment or strategic considerations". It then goes on to make this rather unhelpful statement about the private sector in paragraph Y of the summary: In NAO's view it was not clear whether the costs to the Exchequer from the present grant and tax incentive regime were matched by commensurate benefits in national economic terms". I think that this is an unnecessarilly gloomy approach and does not really address itself to the situation facing the Community at the present time.

Surpluses of milk, beef and cereals are very real, and are expensive to store and dispose of. A diversion of land from the growing of food to the growing of timber represents a viable alternative. Farming has gone up the hill in good times and come down the hill in bad times. This time it may be followed down the hill by forestry where the planting of trees on better quality land has much more chance of yielding a better economic return than on the poorer high land. Our committee is hopeful that the planting of trees in the better quality land will be done at the same time as the continued afforestation of the uplands. This should increase the rate of planting of new forests by this method.

My second point is a personal opinion and therefore I am straying to some extent from the conclusions of the report. I do not believe in my heart that farmers make good foresters, and I think that the noble Lord, Lord Inglewood, would agree with me. It is unwise to go too far down the road of economic timber production from scattered woods on individual farms. Forestry is a long-term crop of some 40 years or more and needs different and varied skills for its management by more than one generation of farmer until its harvest. Farmers can learn these skills, of course, and many of them will plant trees and look after them well, but I feel that they will be exceptions to the rule.

It is my experience that it is only those interested in the sporting or amenity value of small woods who will have the incentive to look after them in a constructive way. This is a most important facet of our countryside and should not be overlooked from the income earning potential. I am aware of the uplift of sporting letting from the low level of about £1 per hectare for the sporting rights on, say, a mainly arable farm in the South of 500 hectares with a little cover, to £5 per hectare. For that rent the same farm would need about 10 one-hectare woods planted with a mixture of conifers and hardwoods to provide cover for game birds and managed with pheasants in mind.

The increase in the income attributable to the woods alone taken over a 30-year period would be more valuable than the timber itself. The cashflow would be greatly improved, let alone the provision of habitat for other animals and birds and the visual amenity. I have taken these figures from a letter to the Field of March 1987 written by the director of game conservancy at Fordingbridge. Many of the woods planted in the southern half of the country were originally planted in the latter half of the last century. They were planted for a variety of sporting and amenity reasons; for example, as shooting cover for pheasants and partridges and as good holding places for foxes.

There may be some value in the old art of coppicing for the production of biofuel from some of the smaller areas of lowland farms. This should be considered for possible grant aid. It should not be the policy of the Community to promote the production of low grade timber from scattered woodlands. A very good marketing operation is required and that cannot be justified economically in terms of import saving or rural employment.

The last point I should like to mention is the very great value of the incentives provided by the Government for the growing of marketable timber in the United Kingdom. It is not enough to have planting grants and maintenance grants because of the very long cycle of tree production. At best this stretches from one generation to the next, and in case of hardwoods even to the third or fourth generation before the felling and replanting takes place.

There is a need for favourable treatment by the Inland Revenue in regard to both income tax and capital taxes. The report makes a sensible suggestion in paragraph 111 when it recommends, exemption from Capital Gains Tax… of land which is marginally economic for use in agriculture and is sold for an approved change of land use". I would go further and say that the land for growing woods should be exempted from capital gains tax when a sale or transfer is made. It is a pretty bogus form of valuation and is only a tax on inflation. The land is locked into the production cycle of the trees and without a heavy investment is not available for any other form of production, even when the trees have been felled and removed.

It may be seen that forestry is being singled out for special treatment from the Inland Revenue. But if we are being encouraged to turn a proportion of our land over to conservation areas and ESAs I think that they too will have to receive the same amount of special treatment for their survival. It may come in the form of grants but it will add up to the same thing in the end.

This report makes a great deal of sense in today's terms when the production of food from every available acre has been taken from the top of the list. In the search for alternatives more attention will be paid to forestry. I hope that this House will take note of this report.

6.47 p.m.

Earl Bathurst

My Lords, I should like to join noble Lords on all sides of the House in congratulating the noble Duke, the Duke of Somerset, on his splendid maiden speech. All branches of the forestry industry and your Lordships' House on many subjects other than forestry will welcome what he has said today and look forward to what he has to say in the future.

I have the honour to represent the forestry industry in various ways; in particular through the Association of Professional Foresters, if I may declare this interest, whose members are expert and professional people; men and women up and down the country, whose livelihoods depend on forestry. On behalf of the whole industry I should like to congratulate the noble Lord, Lord Gallacher, on his splendid report, on the debate that he has instituted in your Lordships' House and perhaps above all on his brilliant summary of the report which he gave us earlier.

There has been much comment but I should like to mention just two points. Funnily enough, to my surprise, the noble Lord, Lord Gallacher, mentioned one of them. I refer to just about the last paragraph of the report, which refers to roads. This is an important question. Should there be Community assistance to minor roads or should there be a national contribution? I believe it is a minor point in this evening's debate but not to people on the ground, to the general public.

We are talking about a considerable public relations exercise. If people go holidaying in the Highlands, whether in Scotland or in Wales, or in lowland areas with minor roads, these huge timber trucks are a great difficulty. I have no doubt from what is happening on the other side of the Atlantic—in Sweden, Germany and France—that there will be more trucks which will be still bigger. It must be a difficulty for the county councils concerned. My noble friend Lord Ridley is not at present in the Chamber, but he is an expert on county council business. It would seem unfair that ratepayers should bear the cost of the forestry industry. Equally, the forestry industry would find it very difficult, as is made clear in the noble Lord's report, to finance the road work that is necessary. That is a serious problem.

I am certain, too, that the whole of the forestry industry will welcome the earlier statements made by the noble Lord. One of his first statements this evening was that this country must grow marketable timber. I cannot see any point in tying up land for perhaps 120 years with broadleaf trees—at the very minimum 40 years for a softwood to get the proper benefit. What is the good if public and private money is expended and in the end there is no marketable timber? What are the markets? I could not quite make out whether my noble friend Lord Onslow said it was his ancestors who had grown oak. It was chopped down and made into—

The Earl of Onslow

It was Nelson's second-incommand.

Earl Bathurst

I did not quite understand that from my noble friend. However, minesweepers were required to be made from this oak coppice. In the Second World War Mosquito aeroplanes and gliders were made from beech. I have no doubt that there will be still more uses for timber, mixed with chemicals of one sort or another, which will have a strategic requirement in the end. Timber is a marketable product. According to all the reports from Europe and the United States it will be a softwood that is needed for construction, for paper and for chemicals.

It is no good thinking that the wood will come from the third world, from the underdeveloped countries, which is a point made in the report. As development takes place in the third world, so there will be an enormous explosion in the requirements for their timber and timber-like products, quite apart from paper required for writing a letter or printing a novel.

Much has been said this evening on farm forestry or forestry on the farm. There are many problems, but I wonder whether we are not being just a little too pessimistic on the economic value of such a venture. It is not going to be a huge venture immediately. A field of 10 or 12 acres is fairly big. One farmer would be quite pressed to plant the whole of that in a year. Probably two years will be necessary. Where does the expertise come from? My noble friend Lord Ullswater suggested, as did other noble Lords, that perhaps farmers are not very good foresters. However, there are many expert foresters. Forestry advice is available from companies, from individuals and from cooperatives—which is another point—and it can be obtained by farmers. The problem is finding the cash to pay.

It is good to learn that Her Majesty's Government are putting £125 a hectare into the possibility of creating woodlands on farms. It will be interesting to see how far that will progress and how long it will last. I suggest that 20 years are necessary before a worthwhile return is obtained. It will be interesting to see.

If I understood the noble Lord, Lord Mackie, correctly, he suggested that there is an annual Common Market subsidy of £112 on every hectare of land which is used for growing food. That is a lot of money every year. It is perhaps a little less than the £125 that the Government are offering; but that £112 is every year going into something that is not required, whereas the £125 is going into a product which, whatever else we know, must be required in 40 years' time. Perhaps we do not know much of what we shall need to eat but I am certain that we do know that timber and timber-like products will be used.

I welcome the steps that Her Majesty's Government are taking to encourage forestry to come down the hill. We appreciate all the problems which have been so splendidly set out by the noble Lord, Lord Gallacher, and his Select Committee. I would not say that they are resolved but at least they are put down for resolution. I am certain that all branches of the forestry industry will look forward to helping those projects to be put into operation, together with a strong, effective and operative Forestry Commission.

6.56 p.m.

Baroness Elliot of Harwood

My Lords, I should like to begin what will be only a very short speech by thanking the noble Lord, Lord Gallacher, our chairman, for the way in which he handles our committee. He makes a marvellous job of it. One need only read the report to see how much consultation we had before we even started to write the report. On page 43 there is a list of 32 witnesses and companies that have been consulted. Our report has been drawn from a wide selection of important opinions. That is due largely to the noble Lord, who was determined to get to the bottom of everything in the best possible way. I congratulate him.

I also congratulate the noble Duke, the Duke of Somerset. He is, so to speak, a new boy on the committee but he has already made a very good contribution and we all enormously enjoyed his maiden speech this evening. I hope he will continue to attend our committee and to give his opinions, which are extremely valuable.

Among all your Lordships I suppose I live in the middle of the largest forest area in Europe. It is a hill area. I have seen thousands and thousands of acres of hill land planted. I now see the same thousands of acres being clear felled. I do not object to that. It is part of a great industry and it is important. However, I am glad that in this report we refer to developing forest on lower ground.

To be quite honest, being a hill farmer I do not think there is an indefinite amount of hill land which can be taken for forest unless you do away with the sheep industry. However, the sheep industry is one of the few industries in agriculture where there is no surplus. Therefore, from that point of view it is important that we should look at the future increase of forestry, not only in the hills but in the lowland areas.

I also believe that we are absolutely right to look upon this as one of the methods of continuing production in this country of a product which is not in excess; that is, 90 per cent. of United Kingdom timber requirement is imported. There is room for a big increase in home production. Last year 87 per cent. of new forest planting was done in Scotland alone. That is why I am anxious that some of the planting should now go to the lower lands.

We have stated quite clearly, and I think the Government appreciate the point, that if farmers are to give up land for trees and timber, that land cannot produce crops for food and farmers cannot live from it. They must get some help from the Government or the EC in the way of subsidies—that has been made clear by all those who have spoken this evening—because there is no return on trees for 15 or 20 years. That is clearly stated at paragraph 111 of our report. Already vast areas of hill land have been afforested. If we want to keep the sheep industry and hill land we must look elsewhere in order to develop forestry and not take the only land on which sheep can be grazed.

There is another point to be made. If it is desired to keep the rural community intact and people living in hill areas such as the Highlands and the hill land of Wales, there must be farming in those areas, otherwise people will leave. If people are to be encouraged to stay in the hill land and in the rural communities, the land must be available for farming as well as for forestry.

I agree too with the observations in the report that some of the big companies should undertake the large expansions. As well as the Forestry Commission of course, the Economic Forestry and Tilhill Forestry are the companies which can best deal with a large increase in forest areas. I agree also with the noble Viscount, Lord Ullswater, that farmers are not really foresters. I plant a lot of trees that are shelter built but that can hardly be called afforestation. It is done only in order to care for the cattle and sheep that are on the hills. I think he is right—

Lord John-Mackie

My Lords, perhaps I may just interrupt the noble Baroness. Would she be more enthusiastic if she were actually getting something for it? Would she be more enthusiastic about trees if she were getting money for planting them?

Baroness Elliot of Harwood

Yes, my Lords, to some extent, but I still think that there is a great deal to be said for preserving the community. If thousands of trees are planted, people cannot live there. People do not live in the forest but in villages around the forest. Foresters do not live in the rural areas as do hill farmers and other farmers. One has to hold a balance. I should not be prepared to give up a lot of land on which I had been grazing sheep unless I were given something in the nature of a subsidy in order that I should be able to live. I agree with the noble Lord, Lord John-Mackie, that that is one of the questions that must be considered.

One of my criticisms of the present forestry industry is that it does not have facilities on a large enough scale for dealing with trees when they have been cut down. In our border area we have to send the trees to North Wales for manufacture. Some of them even go to Sweden to be turned into pulp. Some of them are sent a hundred and more miles for manufacture. I think that the Commission or the Government should look at this question and ask whether or not it is advisable to have some proper equipment or manufacturing industry for trees in the areas where they are being grown so that they do not have to be transported for so many hundreds of miles, which is a very costly operation.

I agree with the noble Earl, Lord Bathurst, that we have not given enough thought to the problem of roads and their cost. In my area the roads that are used for transporting timber are continually having to be widened and bridges rebuilt. They were never meant for the enormous double lorries that take away vast quantities of timber for manufacture. Roads are something at which the Government will have to look. It is becoming difficult to get about in certain areas. Roads represent a problem if one has to transport timber a long way and this matter is not being given sufficient attention.

As regards the market for timber, I ask why we have to send timber to Sweden to be turned into pulp. Surely if paper pulp is wanted it can be manufactured here. We are not very good at marketing and we ought to look more closely at the marketing of timber. We do not encourage enough variety in marketing in this country. The other day I was talking to a builder who told me that he never used home grown timber but always imported timber because home grown timber was not of the kind that he wanted. The market that he represents is one that we are not supplying. Perhaps we cannot do so, but I think that someone should look into this matter. Marketing is something which we ought to consider.

Finally, the summary of our recommendations makes very interesting reading. The key to forestry expansion lies in the amount of money that the Government and the EC are willing to give to those farmers—and I speak as a farmer—who are prepared to give up land from which they receive a return every year when they sell sheep, cattle or crops, to be used for something on which they will not get any return for something like 20 years.

7.7 p.m.

Lord Mottistone

My Lords, I too should like to offer congratulations to my ex-colleagues of Sub-Committee D which sat under the able leadership of the noble Lord, Lord Gallacher. Your Lordships will find my name in Appendix 1 of this report, but I must confess that I did not take any part in the production of it. However, I am therefore in a good position to say how splendid it was.

In a way it is sad to come to the end of 10 years of happy service with my colleagues in Sub-Committee D, which I shall miss. I hope that my other commitments will allow me to creep back into the committee at a later date. In the meantime, the members are lucky to have instead the noble Duke, the Duke of Somerset. If he makes such a good contribution to the meetings of Sub-Committee D as he did to our debate when delivering his maiden speech tonight, he will be of great service.

I agree with the sense of most of the report. I first felt that forestry might be an answer to the surplus problems of the CAP when we had the good fortune to be taken by my noble friend Lord Brookeborough to Northern Ireland where they have their own particular problems. I particularly agree with the part of the report which states: encouraging appropriate expansion of woodland in appropriate places". It is the word "appropriate" that matters. In the Isle of Wight, which is my part of the world, the experience with forestry has not been a happy one. About 60 years ago my father was appealed to as a patriot to allow the Forestry Commission to plant fir trees over large areas of downland. The land was beautiful in itself and we had some of the best views in the whole country. At that time the trees were said to be needed to ensure that in time of war we should not go short of pit props, as had been the worry during World War I. In the event the trees did not grow fast enough for use in World War II. In the late 1940s and 1950s they had started to ruin the beautiful views and encumber the downs, by which time pit props were no longer required. Indeed, the trees now cannot economically be disposed of from the Isle of Wight. It is the kind of situation of which my noble friend Lord Ridley was warning us.

In order to give back our views the trees could be cut and left to rot, but that would create an appalling eyesore such as I have seen only in New Zealand where they do not seem to mind about such things because they have an enormous space of beautiful downland to ruin. Therefore 60 years on from their planting most of the firs are an unnecessary and unmarketable encumbrance.

I should add that there was quite enough woodland, including conifers, to satisfy the wildlife enthusiasts before these firs were even planted. We should like to see our elms back. Dutch elm disease struck the Isle of Wight harder than any other part of the United Kingdom in terms of the number of trees in proportion to acreage. My burst pipes a month ago were a direct result of having to cut down the diseased elms to the north-east of my house some 10 or 12 years ago. However, paragraphs 124 to 126 of the report are not encouraging about replacing small copses with trees such as elms.

The theory of encouraging farmers to grow trees sounds all right, and my right honourable friend the Minister for Agriculture, Fisheries and Food in his recent Statement indicated that he is certainly taking active steps to provide financial backing to that encouragement. However, one worries about whether it will be possible to provide enough financial encouragement to compensate for having the farmland down to trees, as several noble Lords have questioned.

One also worries about whether the farmers will know the best trees to plant for use a couple of decades hence—notwithstanding the advice that my noble friend Lord Bathurst said they might get from experts—or about whether the disaster on Mottistone Down will be repeated in other parts of the country. I hope not.

7.12 p.m.

The Earl of Bessborough

My Lords, as a Member of the Select Committee on Science and Technology of the noble Lord, Lord Sherfield, that dealt with forestry, and as a former Member of the European Communities Committee, I, too, should like to congratulate the noble Lord, Lord Gallacher and the Members of his Committee, upon this most interesting, useful and—as we have seen—very well received report. I would also congratulate the noble Duke, the Duke of Somerset. I only wish that we had more active Dukes in this House on his form.

A considerable amount of thought has gone into the search for alternative crops—including forestry—to assist in the reduction of agricultural surpluses within the European Community. I should like to think that, in accordance with paragraph 51(a), there will be an establishment grant at 90 per cent. of capital outlay and also, in accordance with paragraph 52, £1,150 per hectare at the time of planting and £75 per hectare for the next 24 years. This, I consider, would be reasonable. Like my noble friend Lord Middleton, I declare an interest as chairman of a charitable trust which owns forest and woodland. I agree also with paragraph 111 that current income tax reliefs should continue and that there should be exemption from capital gains tax.

If current annual public support for agriculture is on average about £150 per hectare and the farmer already receives this amount, it is difficult to believe that this will encourage the transfer of land out of farming especially if it is Grade I, II or III. In the event of some control being introduced to reduce the area of cereals being grown and the transfer of land becomes a real possibility, some form of dedication—as I think the noble Lady, Lady Saltoun, suggested—may be required if only to safeguard newly planted areas being returned to agriculture.

Obviously, it is unlikely that all the organisations listed on page 45 will have their wishes and aspirations fulfilled. As the value of new trees after the payment of grant is likely to be worth about £7 each, the choice of species should be left to the Forestry Commission district officers—those concerned with private woodlands—after due consideration of soils and the general environment.

In the view of my own advisers in West Sussex, the breeding and producing of genetically improved stock may require wider initial tree spacing—say, five metres apart or 500 per hectare. The wide spacing on better soils should lead to new stock becoming more windfirm with unproductive thinning at about 20 years becoming unnecessary. This wider spacing would also permit more sunlight thus allowing a greater range of herbage to develop. This would generally assist in creating a favourable environment for insects and ground nesting birds. Moreover, the new wider spacing may well give the countryside the appearance of being well wooded as in pre-Dutch Elm disease days without becoming a dark impenetrable mass.

The European Community's trade deficit in wood and wood products can be relieved only by expansion and a willingness to change on the part of those responsible for establishing new woodlands. It would also require more tolerance on the part of the public and the organisations representing them as to what is sylviculturally necessary in order that the ultimate needs of Western Europe may be achieved. To maintain and expand economic activities and employment in rural areas will require more investigation into the wider uses of wood and wood products such as improved chipboard to allow existing smallwood and coppice to be utilised, and the possibility of converting woodchips into clean and easily packaged fuel blocks similar to those at present being manufactured from straw.

I was glad to read the announcement of my right honourable friend Mr. Jopling on 9th February regarding new policies for alternative land use, diversification, and the environment, important elements of which relate to forestry and farm woodland. I am certainly not one of those who would wish to knock my right honourable friend's declared policies and I am glad to see that the Government are taking new initiatives—I greatly welcome them—to encourage the development of farm woodlands, taking land out of agricultural production and building on existing forestry grant schemes.

I note, too, that provision will be made for annual payments to cover the gap between planting and the likely first income from most types of timber. I hope that the kind of grants which I mentioned earlier might be acceptable. However, I agree that payments are bound to vary area by area in recognition of the fact that the agricultural income foregone by planting trees instead of plants will be higher in some areas than in others. I think that that is the Government view. My noble friend Lord Belstead will no doubt further enlighten us.

I see that the maximum rate of aid proposed by the Government is to be £125 per hectare and that the aim is to plant up to 36,000 hectares over the next three years after which the scheme will be reviewed. I am glad to see that detailed arrangements will be the subject of consultation with interested parties prior to the introduction of legislation and that the scheme will incorporate provisions for the protection and enhancement of the environment including special encouragement for broadleaved trees.

I am also glad that the Government propose an expansion of the forestry programme with particular emphasis on the private sector and that as my noble friend Lady Elliot suggested, the planting of a higher proportion of trees on low ground will be encouraged by the release to forestry of better quality land.

I have already spoken—indeed, even from the pulpit of our cathedral—about environmentally-sensitive areas. I shall not go further into that subject. My noble friend Lord Middleton spoke very effectively upon it.

Above all, I believe that Western Europe, and especially Britain, must grow more home-grown timber so that in the long-term we do not have to import such massive quantities. In that connection, I agree wholly with the two letters in The Times today from Dr. Ian Brotherton of Sheffield University and Mr. Jeffrey Bartlett of the British Paper and Board Industry Federation.

Finally, I should like to have said a few words on forestry in developing countries, with reference to paragraph 134 of the report. I am sorry that the Committee was not able to go into that matter in greater detail. However, I agree strongly that attention should be paid to expertise in the regeneration of forests which have been exploited for timber, and also to the importance of schemes such as Tree 2000 to which I have already referred in our Lordships' House in order to help reclaim deserts. Last year, I was very glad to learn that the ODA was prepared to match pound for pound the donations of a charitable organisation involved in such valuable schemes. In particular, I have in mind Tree 2000 of which His Royal Highness the Prince of Wales is patron, and in which I declare an interest having the honour to be president.

I have been greatly interested in the most useful and well-received report of the noble Lord, Lord Gallacher, and again I congratulate him.

7.23 p.m.

Lord Taylor of Gryfe

My Lords, we on these Benches very much welcome the report submitted by the noble Lord, Lord Gallacher, on behalf of his Committee. It is rather surprising that, despite the attachment of the Community to the common agricultural policy, any policy statement on other forms of land use seems to have escaped it. However, the fact that agricultural land is to be taken out of production and alternative use is to be found for that land requires the Community and the Government to look at the alternatives. In a sense, Lord Gallacher's Committee anticipated the Government Statement which was made last week. It endorses the use of better quality land for forestry purposes.

This has been an excellent debate and the noble Lord, Lord Gallacher, and his Committee must be encouraged by the unanimous support which has been voiced from all parts of the House for his very sensible and informative report. The fact that, out of the 19 speakers in the list, there are only two speakers from the official Opposition and only two speakers from the Alliance, does not indicate any lack of enthusiasm or concern for this subject on these Benches.

However, I am concerned about one matter. When I was chairman of the Forestry Commission I always regarded it to be part of my responsibility to support and encourage private forestry alongside the Forestry Commission. We had a very healthy partnership in which both sides of the industry played a co-operative role. I am looking at the figures for new planting for 1979 as compared with those for 1986. In 1979 the Forestry Commission planted 11,800 hectares; the private sector planted over 8,000 hectares. The figures for 1986 showed that the Forestry Commission planting dropped from 11,800 hectares to 4,300 hectares and that the private sector increased from 8,000 hectares to 19,000 hectares. I am not against private forestry. I hope that it will be encouraged and I hope that it will expand. However, I see dangers in destroying the kind of balance and relationship which always existed to the advantage of this industry. It is not sufficient to regard the Forestry Commission simply as an agent which will conduct research which is available to the private sector and which will distribute the grants to the private sector. It is not a Civil Service department.

In order to discharge those responsibilities it must have contained involvement in forestry. Therefore, I should very much welcome a statement from the Minister giving an assurance for the future of the Forestry Commission. Recently in reply to a Question the Minister said that the selling off of Forestry Commission land was simply a tidying up process. Some tidying up, my Lords! I should very much welcome an assurance that the partnership which has been so good for forestry in this country will be restored.

Without any reservation I support the recommendations contained in the report. As has been said by other noble Lords speaking in this debate, the report arrives at a very appropriate and welcome time. First, we have the National Audit Office. I shall not discuss that matter at length tonight because there is an excellent commentary on the National Audit Office report recently produced by the Forestry Industry Committee of Great Britain which I commend to your Lordships. I take one phrase from the NAO statement, which I welcome. It says: A sound financial case appears to exist for forestry investment in better quality land". That comment from the National Audit Office is certainly consistent with the contents and the recommendations of the report that is now before the House.

The second reason why the report is welcome is the reference which was made by the noble Duke, the Duke of Buccleuch, in dealing with the environmental lobby. There is no doubt that a very high-powered, public relations, well-supported, well-financed campaign is now being waged in order to frustrate further forestry expansion. It is based on a false premise, but nevertheless it is dangerous.

I was recently speaking to the editor of a newspaper because his paper had given widespread publicity to this particular campaign. At the time I was commenting on another newspaper. He said: "Tom, a newspaper has to have a cause". I said that I thought the purpose of a newspaper was to provide information. He said: "No, you must have a cause in the newspaper industry". Attacking forestry happens to be part of his obsession and his cause. Consequently, his readers are regularly served with distorted advice and biased reports in order to support the cause.

If one talks to the foresters in the forest, one discovers that they do not work in forestry in order to earn large sums of money. They work in the forests because they like the work and they enjoy the work, but they also love the countryside. We are not talking about vandals, although some of the environmentalists would suggest that foresters are despoiling the countryside. The noble Lord, Lord Dulverton, who I regret is not here today, was the chairman of the Red Deer Commission. His experiments at Fassfern demonstrate that it is possible to combine good woodland management with good environmental practice. This has been shown at the EFG plantations at Eskdalemuir.

At the weekend I was walking in Perthshire. It had been snowing there, and the conifers stood sharp and black in the countryside. They were not planted as armies in serried ranks. They were planted with a sensitivity to the whole environment. It has been said that trees should be planted like the shadows of passing clouds on the hills, and there is something to be said for that idea. Trees should have some form and shape and follow the contours in order to be attractive. Noble Lords who have been concerned with forestry are also concerned that these principles of environmental care should be respected.

Little has been said about the role of forestry in giving people access to the countryside. I shall not quote the figures, but the provision of picnic places and access for hill walkers are all part of sensible forestry planning. Such development opens up the countryside to people who wish to enjoy the quietness of a rural environment. I should like to support the provision in the recommendation that no change should be made in the tax structure. It is easy to say that certain pop singers and Terry Wogan, and snooker players have plantations in Scotland—good luck to them! If they are prepared to invest money in renewing a natural resource, they are to be welcomed.

I am also glad that the committee has resisted the pressure that has been on them recently to introduce planning into forestry. Local county council or district council planners are not the appropriate people to assess planning in forestry. I am attracted by the recommendation of the Countryside Commission for Scotland. How practical their evidence appeared to me. The commission suggested that in order to avoid a development of forestry without grant, when the Forestry Commission refuses an application for a grant, there should be prohibition on anyone planting without a grant. This situation has given rise to difficulties in certain sensitive areas in Scotland. We are attracted to the idea that the commission should have powers to license planting in the same way as they have powers to license felling. Such a planning constraint may encourage more sensible planting.

I should like to say to the environmentalists that in the past six years £500 million has been invested in downstream industries in forestry. Two weeks ago in Irvine a Finnish company decided to invest £200 million in a new pulp and paper plant. Unemployment in the Irvine valley is now running at 28 to 30 per cent. This investment has been made possible because for the past 30 to 50 years we have planted trees. I wish that the environmentalists who want to protect every square inch for the birds would talk to some of the workers in Irvine who welcome very much this form of investment.

At one time timber was imported freely into this country and it was then processed further. Now every country is exporting added-value timber. They do not export logs any more. Pulp is exported into this country. It is important that we should develop our own timber resources without having to maintain other people in other countries in employment. The committee did a first class job. The report arrived at a very appropriate moment and I hope that the Government will regard it as the basis of their future policy in relation to forestry.

7.35 p.m.

Lord John-Mackie

My Lords, along with the noble Lord, Lord Mottistone, I was a member of Sub-Committee D, but I am now no longer. I took part in the early stages of the preparation of this report. Owing to certain circumstances I was not able to take part at the end. I had to make amendments by letter, and they were not too well accepted in some quarters. However, I welcome the report. There could be no better person to chair the committee and present it today than my noble friend Lord Gallacher. It is a pleasure to serve under him on any committee. What I say now is going to be a little disorganised. I have been sitting here scoring out points which I was going to raise but which have been covered by other noble Lords.

First and foremost I should like to say that the importance of this report is easily noted not only by the number of noble Lords taking part but, if I may say so, by the quality of the speeches. That comment applies very much to the maiden speech of the noble Duke, the Duke of Somerset, who I am glad to see is a comparatively young man on this side of the House. Although the noble Duke is not on the Benches immediately behind me, we welcome the younger men here. Sometimes when I look around, with all due respect to certain Members over there, we are getting on in years, to put it mildly!

Although I agreed with much of what the noble Duke said, he will find later on that I do not agree with one point that he made. Some time ago we had a late night debate on an Unstarred Question. The noble Lord, Lord Gray, was speaking for the Government. After I had spoken he thanked me for replying to all the points which had required a reply. I hope that I am not going to take the wind out of the sails of the noble Lord, Lord Belstead, because I should like to reply to one or two of the points which have been made by noble Lords, although I do not wish to add too much to what has already been said.

The report is wide-ranging. If one goes through it carefully it would be almost possible to write a Reith lecture and still have some information to spare, because there is a tremendous amount in it when it is read fully. Much of the evidence requires looking at again. The essential point about the report is that it supports the expansion of forestry in its own right.

Noble Lords have mentioned the world position of forestry. In particular the noble Lady, Lady Saltoun, mentioned her experience in Canada. I had the same experience in the USA when I visited a big forest in the Rockies just after the war. Trees were being cut down at sawing height, which left a stump of almost five feet. I commented that this was a ridiculous waste of wood and the people there swept their arms round and said, "Look at it, thousands and thousands of acres". I have returned to Canada since then and find (as did the noble Lady, Lady Saltoun) that it is a different situation today. The world situation for wood has deteriorated tremendously. I understand that world forests are being cut down at the rate of 50 acres per minute, which is an appalling figure.

I have argued with many people the necessity of forestry, especially with regard to the amount of paper which is floating about today: for example, with newspapers. The counter argument is that the situation will sort itself out; that people will not read newspapers in the future but will rely on the radio and television. People in business will not read newspapers. They will use computers, all of which will save paper. I found it difficult to come up with an answer to that until I attended a lecture by Dr. David Bellamy concerning the spread of civilisation and its effect on the environment. Dr. Bellamy produced the slightly indelicate statistic that if following this civilisation—which has spread everywhere—everybody used toilet paper, there would not be a tree left. I do not know whether that is a good argument to use, but we cannot possibly say that trees will not be needed in the future.

I think it was the noble Lord, Lord Middleton, who mentioned first the audit report. I cannot see how any economist, however clever, can possibly look forward 50 years, and probably 150 years, and decide that he can tell us what to do with regard to planting trees today. That point was very well put, and it is one that we must look to, particularly as regards our balance of payments. The figure has been mentioned and I need not go into it again. We have a tremendous amount to save there.

Many noble Lords have given the figures for this growing industry. As the noble Lord, Lord Taylor of Gryfe, has just said, these new plants for processing wood are being built because people see the raw material that they require growing up for the future. That is what they are looking to. The more trees we plant the more raw material we are likely to have. It is a pity they have to come from abroad. I cannot help thinking that we are falling behind there, but there it is, and they are welcome at the present time.

I should like to see forestry—and again I emphasise this—in its own right almost doubling its present day production. I am sorry that I use the measurement of acres. I have not yet got accustomed to hectares. We are planting about 60,000 acres; that is not including restocking. That is about 60,000 acres of new planting. The noble Lord, Lord Taylor, gave the break-up between private and public forestry. I should like to see that 120,000 acres planted—it will take a bit of time to get up to that figure—half privately and half by the Forestry Commission.

I am sure that the noble Lord, Lord Belstead, has heard not only from the noble Duke, the Duke of Buccleuch, but from quite a lot of other people that it is essential to give the Forestry Commission its head and to go back to the situation where it is half and half with private forestry. We have the tremendous help that it is able to give to private forestry. We should get back to that position. Quite a few noble Lords mentioned that, and it is essential that it should be done.

If we could get to that figure we should reach 9 million to 10 million acres in about 40 years' time in this country, which would be a reasonable amount of trees spread over the country. Admittedly there will be a lot in the hills and so on, but that is the target I should like to see.

This planting is bound to be phased out as we reach the limit of what we think we need in this country, but restocking becomes greater as trees are cut down and that gives a balance in the labour situation. It is important that labour should see ahead that it is not just to be phased out when planting stops. The cutting down and restocking will stabilise the labour force in forestry, and that is important.

Quite a lot of argument goes on about whether forestry or farming uses the most labour. If you compare a hill farm where there is probably just a shepherd or, at the most, two depending on the size of the farm, forestry uses a lot more men. As you move down the hill and agriculture gets more intensive, the balance may be slightly different. On the whole the figures that I have seen are that forestry uses more labour than agriculture and in its ancillary industries it uses much more. That may change if you go right down to intensive farming, although I cannot see a lot of forestry going on to some of our intensive farms in this country.

Let me say a word about planning. I am glad that the committee came out against planning. There were only two witnesses for it. If we have the licensing that the Forestry Commission is anxious to bring in for felling and planting, and if the regional advisory committees are strengthened, that is all that is needed. In a meeting we had the other day somebody likened this to self-regulation. But I do not think that we should use that word too much now; it is not a very popular one in certain other places.

On the question of the environment there are strong feelings. Some are genuine and some, as the noble Lord, Lord Taylor, says, are worked up by the press and one thing and another. I think they go about it the wrong way. I should like to mention the noble Lord, Lord Dulverton, who asked me to apologise for his not being here. He has had to go to Kenya to deal with some forestry affairs there. He has given an example second to none on his estate at Fassfern in Scotland, where forestry and sheep farming have gone together. He has gone to great lengths to plan it properly and look after the environmental side. Not only has he done that, but the farming side has prospered because of the shelter and what he has done to improve the pasture that is left. He is keeping far more sheep than he did before, and that is something that people should see.

The noble Duke, the Duke of Buccleuch, also has a farm which he arranged for me to see many years ago when I was in the Forestry Commission. He had planted a big proportion of it in trees and put in roads. The benefit to the farming was tremendous. It was a big area of forestry on a farm, and giving far better returns that it would otherwise. If the noble Baroness, Lady Elliot, would go and look at some of her neighbours such as the noble Duke—and I can recommend others who have done this—perhaps she would have more trees on her estate and help the situation there. I am sure that it can be done. A lot of people are showing that.

The noble Lord, Lord Sherfield, was hard on the environmentalists. I am not sure whether he was hitting them with the hammer or with the anvil, or whether it was the forestry that was being hit between the two, but I agree with him. I should like to make the point on the environmental question that the environmentalists— and not only the environmentalists, but the Government—should look at the situation in large-scale forestry. Today forestry land is very expensive, as no doubt the noble Lord, Lord Taylor, and many others in the House tonight could tell.

If you pay a lot of money you cannot afford to leave great wide rides spaced alongside roads, streams and so on unless you are compensated for them. There is a strong case when a plan is put forward for private forestry or, for that matter, involving the Forestry Commission, that there should be compensation for the price of the land that is not producing anything but is essential to the environment, the wildlife and the flora and fauna. That is a point to which we do not pay enough attention.

Let me make a point or two about farmers being bad foresters. I think they are bad foresters. There is an expression in Aberdeenshire that farmers should "Aye be sticking in a tree". That is exactly what they did. They just stuck in a tree and paid no attention to it afterwards. I should imagine that 50 per cent. of them did not survive.

If we have a sticking in a tree attitude, we are not going to get very good results from farm forestry. We have a lot to do in training farmers in forestry before trying to get them to plant too many trees. I think it was the noble Viscount, Lord Ullswater, and the noble Earl, Lord Bathurst, who emphasised this.

I think that the noble Viscount, Lord Ullswater, was worried about game strips. I am not a great sporting farmer, but we have a few pheasants and partridges. I find that the cheapest thing is a bit of kale or to leave a bit of game strip every year rather than having expensive plots of forestry. I throw that out to the noble Viscount for what it is worth. We do not find shooting very profitable, although I was interested in the figures he gave on the subject.

The noble Viscount, Lord Ridley, rightly pointed out the difficulty between landlord and tenant if the tenant, or the landlord for that matter, wanted to plant trees. That is something that would need to be looked at. As the noble Duke, the Duke of Buccleuch, knows, we had a meeting—he was at it—to discuss forestry. I should like to think that we will follow it up, as he suggested, and in some way have a parliamentary all-party group to counter the propaganda which everyone has emphasised should be countered. I think I have told the noble Baroness, Lady Elliot, that she should visit some of these farms which I have mentioned and I am sure she will take my advice in due course.

I turn now to points that I wish to make very strongly. This report and the commission's plans are concerned with an increase in forestry. But running through the report is the odd suggestion that this will be an alternative crop for land coming out of farming in order to stop the production of surpluses, particularly grain. True, the committee does not emphasise the point. Nor are there any details of acreage. The furthest the report goes is to say in paragraph 121 that surpluses would be eased. That word "eased" in my opinion is too strong.

Taking this country alone, never mind the rest of Europe. it is estimated—and the figure has been quoted—that 2½ million acres will have to come out of production. This will increase as years go on, and we are told that the plant breeder, the scientist and other technological people will give us ever increasing yields. There is talk of all sorts of scientific help that will increase the yields of other produce besides crops.

It is obvious to anybody looking at the situation that something must be done at once about surpluses. I think my noble kinsman mentioned a figure which has not gone down in this country at all this year in spite of sizeable exports. Of course, we know about the cost which has also been emphasised by noble Lords.

Average new forestry planting in the last eight years has been about 60,000 acres. That does not include the restocking. But the land is out of agricultural production anyway. It is restocked land. The report says in paragraph 100 that it seems highly probable that the type of low quality land in the uplands which has been planted in the past will continue to form the main reserve of land which may be planted. I think that is only too right.

So how much of the 2½million acres of land which is producing this surplus will or, for that matter, could be taken up by forestry? When we had the socio-economic report in front of us from the EC, the director-general of the Forestry Commission was asked, point blank, "Would forestry have any effect on the surpluses?" He gave the point blank answer, "No", and I think he was quite right. After all, if you have 100,000 acres of forestry, and the Government have suggested 36,000 over three years, that is only one-twenty-fifth of the total. Even if you doubled the present acreage of 60,000 acres—and I checked this today—to begin with there are no tree plants that will do the job. It takes 1,200 an acre, and nurserymen will have to collect the seed and extend their nurseries. The plants would be ready at the earliest within three years, and it might be four. I discussed this matter with the noble Lord, Lord Middleton, and I checked it with the Commission today; and that is the figure.

In the meantime, is it possible to persuade nurserymen that there will be this demand in that time? We are exaggerating what forestry can do in taking land out of production completely. It is simply not going to solve the surplus problem except in a very minimal way. We should go ahead, as the report says, and increase the forestry in this country in its own right. Forestry is a long-term business. We should push ahead and try to get the acreage figure that I mentioned earlier. It is true that some of this will come out of grade 3 and grade 4 land, and we may get some planting of deciduous trees on even better land. But the effect will be so small as not to make any difference at all. It will certainly make no difference in the short term and no difference in the medium term. Although it may, in the long term, have some effect, it will not be nearly enough.

I do not want to say any more except that I would emphasise at this point once again that forestry should be looked on, as the report said in the very beginning, as standing on its own feet and as something which this country needs and which will help us in every way. It can help us environmentally and in monetary terms by saving imports and so on. I support that part of the report but I am sorry to say that I do not support the idea that it may ease the surplus a little.

7.55 p.m.

The Minister of State, Ministry of Agriculture, Fisheries and Food (Lord Belstead)

My Lords, this has been a very interesting debate ending with two speeches from two former members of the Forestry Commission, the noble Lords, Lord John-Mackie and Lord Taylor of Gryfe. The noble Lord, Lord Gallacher, and the Select Committee are to be congratulated on a report which is notable for its clarity and its good timing, because I think we are all looking to see what the commission will propose in its forthcoming forestry action programme.

I very much enjoyed the maiden speech of the noble Duke, the Duke of Somerset. He has first-hand knowledge of forestry, and, if I may say so, showed his real knowledge of the subject in the speech which he made this evening. We all thoroughly enjoyed it and from what I have gathered this evening it is a subject which will very possibly recur in the foreseeable future and I very much hope that the noble Duke will be returning to join in any further discussions on this or indeed on other subjects.

The history of forestry in the Community was set out very clearly in the report. There have of course been a number of proposals over the years which we in the United Kingdom have not been prepared to accept coming out of the Community. In particular we have, along with some other member states, consistently opposed the idea of a common forestry policy. Our reason has been that the conditions under which forestry is carried out vary greatly throughout the Community. But there are common problems to be faced. As the committee pointed out, although the noble Lord, Lord John-Mackie, could not entirely go along with this view of the committee, forestry can now be seen as at any rate part of the answer in solving one of the most serious problems: that of mounting agricultural surpluses.

The noble Lady, Lady Saltoun, suggested that the Government should make clear their genuine support for forestry expansion. I do that gladly. The Government welcome the firm recommendation by the committee that forestry in this country should continue to expand. Last week, as all your Lordships mentioned, the Government proposed an expansion of the forestry programme to a new level of 33,000 hectares a year, with particular emphasis on the private sector and a large proportion of planting down the hill, although, as the committee acknowledged, planting in the hills will continue to be important.

It was the noble Duke, the Duke of Somerset, who shrewdly put his finger on the point that although the Government may say that, the planting at the moment does not get up towards that level. This is a point which was repeated by other noble Lords during the debate. I think it is fair to say that the Government have always envisaged that it would take some years for new planting to rise from previously rather lower levels, certainly in the private sector. I am confident that planting levels will continue to rise significantly with the incentives now available and in prospect. The opportunity is being opened up by the need to find alternative uses for agricultural land, particularly down the hill and because of the relaxation in the criteria being followed by the agricultural departments in agreeing to the transfer of farm land to forestry.

Planting of the better land will bring benefits, not only by increasing timber production in the longer term but also for the environment. It will provide an alternative use for land now producing surpluses. It will contribute to jobs in rural areas and will allow the planting of more broadleaves and small woods, as already encouraged by existing grant schemes. All your Lordships have pointed to the fact that we are not sufficient in wood production either in this country or in the Community. As the noble Duke roundly said, it makes sound sense to use some of our surplus land for tree planting and we shall also be encouraging this on farms through our proposed farm woodland scheme.

What has to be recognised is that forestry is a long-term investment by any standards. The amount of planting that takes place depends critically on the confidence that landowners have in the long-term future of the industry and in the availability of appropriate incentives. The grant aiding of planting is one obvious incentive to which your Lordships have referred. We have in place the Forestry Commission's forestry grant scheme and the relatively new broadleaved woodland grant scheme, both of which are running successfully. I say in passing that the figures that the Forestry Commission has given me during this debate undoubtedly show that the results of the woodland grant scheme have been good; they have been better than the expectations. Indeed, the budget provision for the second year of the broadleaved grant scheme should be exceeded by 100 per cent.

The other incentive, to which many of your Lordships have referred briefly, is the question of tax incentives. The noble Lord, Lord Gallacher, specifically asked me to say a word about this, and though I shall not follow the noble Lord, Lord Mackie of Benshie, into his flights of fancy as to the political parties' different attitudes to forestry taxation, I should say that I know the taxation arrangements for forestry are subject to criticism by some people.

It was therefore with particular interest that I read the clear recommendation of the committee that the current income tax reliefs which apply to forestry in the United Kingdom ought to continue and that some further capital tax reliefs should be examined. If my noble friend Lord Ullswater will forgive me, I shall not follow him down the road of talking about more generous treatment for forestry under capital gains tax, but I shall certainly draw what my noble friend said and the other remarks about taxation on forestry to the attention of my right honourable friend the Chancellor of the Exchequer.

Nor shall I say anything about the National Audit Office, dealt with trenchantly by my noble friend Lord Middleton. All I would say is that there will be a Public Accounts Committee report and the Government will be giving a response when that happens.

I shall directly answer the questions that the noble Lord, Lord Taylor of Gryfe, put to me about confidence in the future of the Forestry Commission. As the noble Lord very well knows, our policy on the disposal of Forestry Commission land remains as it was set out in another place by my right honourable friend, who was then Secretary of State for Scotland, Mr. Younger, on 8th November 1984. In other words, my right honourable friend sketched out the Government's latest plans then for the rationalisation of the commission's estate in order to improve the efficiency and commercial effectiveness of the forestry enterprise. This programme is left to the Forestry Commission itself. Like all government policies this policy is kept under review, but we have no plans at present to change it.

Undoubtedly the expansion of forestry depends on confidence and the availability of the right incentives. But it also depends on the availability of suitable land. My noble friend Lord Middleton recorded in his speech that evidence had been given to the Select Committee that there had been a reluctance to clear land for planting by some of the agricultural departments. I would suggest that the agricultural departments in the United Kingdom are showing now a positive attitude towards approving the transfer of land to forestry, including better land. In particular, my right honourable friend the Secretary of State for Scotland recently announced a major relaxation in the criteria for such transfers in Scotland, following an earlier relaxation in England and Wales.

It is of interest that in the first six months during which the Department of Agriculture and Fisheries in Scotland has followed its new criteria there has been a marked increase in the total area of land cleared. This is an example of how the interests of agriculture and forestry are moving closer together. Another example of this is the Government's plan announced last week to introduce a farm woodland scheme which will be run as a joint effort by the agriculture departments and the Forestry Commission. I am sure we can produce an attractive package that will produce a sensible balance among a number of objectives.

It has to be remembered that the scheme will be designed not only to provide farmers with the opportunity for an alternative source of income but to be effective in reducing agricultural surpluses and to represent a good investment in national economic terms. The scheme will include special encouragement for broadleaved trees and we look for significant environmental benefits from it in enriching the landscape and providing better wildlife habitats. My noble friends Lord Ullswater, Lord Bathurst and Lord Inglewood all referred to the need to have good management advice for farmers if this is to be a success. That is something we need to return to when the consultation document on this new scheme is issued next month.

I have one other comment to make in passing. I think my noble friend Lord Bessborough was absolutely right when he said that he assumed that woodland grants would vary according to area. Indeed, the noble Lord, Lord John-Mackie, made it quite clear that that was his assumption too. I should like to make it clear to the House that our new woodland scheme is primarily addressed to the more marginal holdings where beef and sheep are likely to be more important than cereals.

However, if cereals land is planted to trees we should expect savings to be in excess of the £125 per hectare per year which is being proposed as a maximum for the new scheme. This is why last year we put forward proposals for a cereals land diversion scheme on a community-wide basis and one of the land use options under that scheme would also be forestry. As your Lordships know, ideas are now under active consideration as part of the socio-structural package. I hope we shall be hearing more about that from Community sources in the near future.

I was particularly glad that the noble Duke, the Duke of Buccleuch and Queensberry, pointed to the environmental benefits of forestry and the care that foresters take to maintain and improve the forests and woodlands in their charge. As I have always understood, there are no better examples than those which are in the charge of the noble Duke.

In 1985 the Government placed a statutory duty on the Forestry Commission to seek to achieve a reasonable balance between the needs of forestry and the environment. In doing so we recognised that for many years the commission has been taking increasing account of amenity and nature conservation. Since that new conservation duty was placed on it, the commission has issued a revised statement of its conservation policy based on the theme that the forest as a whole has conservation value.

This has been followed by a whole stream of initiatives, including consultations at national level with statutory and voluntary environmental organisations on the practical implementation of the policy, the drawing up of conservation plans for all the commission's forests, setting up local consultative panels to provide a forum for discussion and advice on environmental issues and agreeing a statement of intent with the Nature Conservancy Council about the management of the commission's 344 sites of special scientific interest.

As regards the Forestry Commission's oversight of private sector forestry, the comprehensive consultations that it carries out with other authorities before giving approval for planting and felling proposals I believe ensure that these are compatible with enviromental needs. Where there are conflicts of view the commission is required to go through a lengthy conciliation process including site meetings with the parties concerned and involvement of its regional advisory committees. There can be no question of the commission overriding objections of any of the authorities consulted without the endorsement of Ministers.

I was interested that both the noble Lords, Lord John-Mackie and Lord Taylor of Gryfe, were quite adamant about not wanting planning controls, and other noble Lords including my noble friend Lord Ridley spoke in the same vein. I welcome the views of the Committee that statutory planning control should not be extended to forestry. I do not think there is evidence that a bureaucratic system of planning controls would achieve anything that has not already been achieved through the present system of consultations to which I have just referred.

It is true that these consultations arise from applications for grant aid, and someone who is refused grant aid or who does not apply for it can go ahead and plant regardless. But I put it to the House that the vast majority of landowners follow the accepted rules and see it as being in their own interests that the standards applied to planting proposals should be high. Timber Growers U.K., the body representing the interests of private woodland owners, have also published a set of guidelines known as the Forestry and Woodland Code—a splendid publication designed to encourage the highest standards, including those for the environment in forest design and management. This has the support of the Nature Conservancy Council.

The idea of introducing planting licences, which has been supported by the Select Committee, and supported by some of your Lordships this evening, is an interesting one. For the reasons that I have just set out, the Government are not convinced that licensing is necessary, but I have taken careful note of the Committee's views on this subject and of the support of some of your Lordships, including the noble Lord, Lord Gallacher, and my noble friend Lord Middleton.

I am not suggesting that the present consultation arrangements could not be improved. For example, the Forestry Commission has been carrying out a review of the composition and procedures of its regional advisory committees. We hope to announce soon certain changes which will enable the voice of the public to be more readily heard when such cases come before the committees.

As we all know, there have been almost incessant calls for more broadleaved trees. I think your Lordships will be encouraged when I say that I understand almost a third of the woodlands accepted into the broadleaf woodlands scheme is classified as ancient seminatural woodland. What also may not be generally realised is that the Forestry Commission now requires, wherever it is sensible to do so, that planting schemes should contain at least 5 per cent. broadleaves—and that includes major coniferous planting schemes in the hills. The Commission itself is planting more broadleaves and has a number of regeneration projects in hand. The prospects for more forestry in the lowlands will also provide opportunities for a greater diversity of species including more broadleaves whether alone or in mixture with conifers.

One of the Select Committee's recommendations was that "co-operation, particularly in research, should be fostered within the Community over common environmental problems, such as atmospheric pollution and plant health regulations." I am pleased to be able to reassure the House that such co-operation already takes place freely and regularly.

Last year two Community regulations, providing for the added protection of forests against fire, and for the better monitoring of the effects of atmospheric pollution on forests, were adopted and are now part of Community law. The Government supported these regulations which were adopted during the UK Presidency.

Again, a revised Plant Health Directive covering, among other things, tree pests and diseases came into force at the turn of the year, and we shall he introducing the necessary domestic legislation within the next few months.

The Select Committee also gave weight to the need for research. I think we have a forestry research service—which is a division of the Forestry Commission—of which we can be proud and which I know has a high reputation internationally. We have built up a great reserve of knowledge over the whole range of forestry, and that knowledge is made widely available in published form. Your Lordships may be interested to know that the co-ordination of research over the whole range of forestry interests is being effectively implemented by the Forestry Research Coordination Committee, which was set up in 1982 in response to the report into Scientific Aspects of Forestry made by your Lordships' Select Committee on Science and Technology under the chairmanship of the noble Lord, Lord Sherfield.

I have noted that the report we are debating today calls also for research into the use of coppice wood as fuel, and into the possibility of agro-forestry. Again, I am glad to say that the Forestry Commission is already taking part in a substantial research programme into the use of coppice wood as fuel and that a collaborative programme on agro-forestry has been undertaken by the Forestry Commission, the agricultural departments and universities, and is being strongly promoted in both upland and lowland situations.

The Committee also called for research to he undertaken with the aim of promoting more and better markets for low grade hardwood timber. The House will be interested to know that market research has in fact been undertaken by the Forestry Commission to identify potential users of low-grade hardwoods, and an inquiry is about to be launched, in co-operation with private growers, to establish the potential availability of hardwoods. Discussions are also taking place between the Forestry Commission and the Timber Research and Development Association to formulate the terms of reference for research into the potential for additional uses of low grade hardwoods. A great deal is already going on in this area.

We now have a productive forest estate in this country of over 2 million hectares, with rather more than half of it in private ownership. Linked with that we have seen major investments in the wood processing industry. The noble Duke, the Duke of Somerset, made the point in his speech that we have been providing for the future, and several of your Lordships made the point that still a great deal of our forest estate is young. But with the announcement that a major pulp and paper mill is to be built in the west of Scotland, as the noble Lord, Lord Taylor, mentioned, we are now in the happy position of having secure markets for all the available wood supplies from our forests over the next decade.

Perhaps I may say to my noble friend Lady Elliot of Harwood that I understand that there are several major markets very near to Kilda, for example Thames Board Mills at Workington as well as at Hexham, and a saw mill in the forest itself. Exports of pulpwood to Scandinavia are virtually now at an end. This was a matter to which my noble friend the Earl of Onslow referred. Exports of pulpwood to Scandinavia are virtually at an end as domestic industries have expanded. We use a variety of woods, some of them from tropical countries which cannot he grown here, however.

I therefore suggest to the House that the position so far as wood use is concerned has become much stronger, and that timber growers and timber processors are working together to give us an industry which has much to offer this country in economic and social terms. This change of emphasis, if I may put it like that, was reflected in the recent setting up by the private sector of the Forestry Industry Committee of Great Britain. That is a committee which is intending to speak for the whole industry from nurserymen through to major industrial users of timber.

My noble friend the Earl of Onslow asked me one direct question about the differentiation between shelter belts and hedgegrows and the grant schemes at the smaller end by the Forestry Commission. My noble friend may know, but for the record the Forestry Commission grants are paid on a minimum area of a quarter of a hectare. Anything less could not be classed as forestry. Smaller amenity planting grants are available from the Countryside Commission, either directly or through local authorities. That can be of benefit for the planting of hedgerows, copses and spinneys.

The noble Lords, Lord Sherfield and Lord Gallacher, drew attention to the problems of red deer. I certainly agree that when deer populations are high trees need to be expensively protected by fencing or by tree shelters. The levels of grant available under the Forestry Commission's Broadleaved Woodland Grant Scheme and other grant schemes do however take account of that. The noble Lords, Lord Sherfield and Lord Gallacher, again particularly drew attention to a recommendation for community forestry projects. I hope I am not sounding dismissive when I say that there is no reason why any community or, indeed, a local authority should not create a community forest. Advice and grants are both readily available. The Forestry Commission's Broadleaved Woodland Grant Scheme could be appropriate here; and all of us are aware of occasions when conservation organisations may decide that what they want to do is to buy a particular area of woodland and, indeed, go for it in that particular way.

My Lords, I feel that is really all I ought to deal with, although I know that my noble friend Lord Middleton made some interesting points about environmentally sensitive areas. The noble Lady, Lady Saltoun, and my noble friend Lord Bessborough advocated the restoration of the dedication schemes, and my noble friend Lord Bessborough also made some extremely interesting technical points in his speech.

At this hour perhaps I may end by saying that there is no doubt at all that this debate has been of value to the Government. We are going to reach the stage where we have to take a view on the forthcoming Community proposals for forestry action in the Community. More than that, I think it has demonstrated that your Lordships recognise the increasingly valuable role which forestry can play. The challenge is to make sure that forestry develops in ways which are compatible with the needs of the environment, and I have tried this evening to go out of my way to acknowledge the Government's commitment to that.

Finally, I again thank the noble Lord, Lord Gallacher, and the committee for the work they have done in producing this report. This has made a balanced and constructive contribution to the Government's thinking on a wide range of crucial forestry issues and in many aspects has provided a heartening endorsement of the Government's present policies.

8.21 p.m.

Lord Gallacher

My Lords, as almost all the speakers who have taken part in the debate have said complimentary things about the report, it would be churlish of me to attempt any kind of reply to those remarks, particularly in view of the comprehensive reply which the Minister has given to it.

As the House has been in complimentary mood this evening, it may perhaps not be inappropriate if I were to express a word of appreciation to Mr. Stewart, who acted as specialist adviser to Sub-Committee D throughout this inquiry. I am sure my colleagues on that sub-committee will appreciate the reception given to its report, because the work of the sub-committee is not only on-going but occasionally, when we are against the clock, can be demanding. In that connection may I also mention the indefatigable Clerk to Sub-Committee D, Miss Tudor, not merely for being indefatigable but for her capacity to restrain the chairman in his wilder moments so firmly and yet so unobtrusively.

On Question, Motion agreed to.