§ 5 p.m.
§ Lord Carter rose to call attention to the importance of forestry to the United Kingdom; and to move for Papers.
§ The noble Lord said: My Lords, I begin by thanking the large number of noble Lords who have put their names down to speak in this debate, emphasising that forestry is now a vital part of rural policy. Over the last two years the national forestry policy has received a great deal of attention. We have had the report from the National Farmers' Union on farming trees; the report from the CLA about forestry and the landowner; the excellent report from the Select Committee of this House on the EC forestry policy; and about a year ago we had the Government's ALURE package with its initial proposals for a farm woodland scheme. We have now had the Farm Land and Rural Development Act to give statutory effect to the farm woodland scheme and in the last month we have had the Budget proposals on forestry and now we have the new woodland grant scheme.
§ Noble Lords will also remember the debate that we had in this House on the report of the Nature Conservancy Council, which seemed to be largely concerned with the afforestation problems of the flow country. Your Lordships may like to know that that is the last time I shall mention the words "flow country".
§ This is a carefully worded Motion intended to draw attention to forestry in all its aspects and to emphasise its importance to the UK economy. Forestry, like farming, is both a production industry and an environmental feature. On reading the various reports that I have mentioned, the reader is entitled to ask: what are the objectives of our forestry policy? There seems to be no clear definition of objectives with a statement of their relative importance. Is it the production of timber? Is it the provision of jobs in rural areas? Is it to provide an alternative use for agricultural land? Is it to enhance the landscape and the wildlife habitat; or is it—as some would say with a heroic sweep—all four?
§ Having now considered the combination of the proposals in the Budget, the farm woodland scheme and the woodland grant scheme, it is still no easier to decide on the objectives of our forestry policy. When considering the vicissitudes of government forestry policy in recent years, I have a strong suspicion that 1097 that well-known government servant, Mr. Push Me/Pull You, has been hard at work in the drafting of policy.
§ What is the perspective in which we should consider our national forestry policy? The world forestry picture is staggering in its majesty and insecurity. Four million square miles of tropical rain forest will be destroyed completely, at the present rate of destruction, in 40 years. Of the world's total forested area, there are some 50 million acres which are felled annually for agriculture, fuel and logging. Ten times the total area of the UK forest disappears every year. In passing, we note that the October hurricane was equivalent to the annual UK harvest of timber in one day.
§ It is estimated that some 40,000 different species of plant life world-wide could be extinct in the next 60 years. We should relate this impending ecological disaster to our annual import requirement of £5 billion of wood and wood products. We import some 90 per cent. of our requirements—the highest in Europe.
§ It seems to me extraordinary that all the reports which deal with the balance of payments aspects of our forestry policy completely miss the point about this world ecological problem.
§ The National Audit Office report on the policy and objectives of the Forestry Commission and the report of the Countryside Commission on forestry and the countryside completely ignored the effect on world timber production of the massive reliance that we have on imports of timber. The point is often made that only some 10 per cent. of our land area is afforested. As we know, it is one of the lowest proportions in Europe. I do not find this a compelling argument on its own. I am not a geographer, but this may have as much to do with topography as with economics. However, it emphasises the extraordinary and vulnerable position that we face, with a world shortage of softwoods forecast, and with 80 per cent. of our timber requirements being softwoods.
§ I mentioned earlier the employment aspect of forestry and the creation of rural jobs. It is estimated that some 40,000 jobs are provided directly in forestry. It has been said that forestry as an enterprise is capable of providing some six to seven times as many jobs as, say, sheep farming in the uplands. The CLA has said that there is potential for a further 16,000 jobs in the proper management of existing woodlands and a potential gain of 80,000 to 160,000 jobs downstream in the new pulp, paper and board mills which would be required to handle increased production. One-third of the UK's newsprint production, and almost half of our particle board requirement, is now provided from home resources. There has been investment of £600 million downstream in the last five years, with a further £400 million planned by 1995.
§ On the employment aspect, we should remember the essentially rural nature of forestry jobs. It is said that some 70 per cent. to 80 per cent. of forestry employment is within a 20-mile radius of the employee's home. One of the forestry companies has 250 employees in 35 parishes locally and a further 50 from outside the immediate area. There are many 1098 statistics that one can quote regarding our forestry industry. However, we have a picture of a growing and thriving industry that now seems to be thrown into turmoil by the proposals in the Budget on the taxation of forestry.
§ Here I have to admit to something of a dilemma. Not only the Labour Party but many environmental interests were in favour of closing the so-called tax loophole on forestry. We have had what one might describe as the Wogan effect on taxation policy. But it seems that the result of the Budget proposals is that we now face dire forecasts of a sharp decline in new planting, a decline in the standard of management of existing timber, substantial job losses, both direct and downstream, and destruction of the nursery stocks which will be no longer required. The forestry nurseries are mostly small businesses.
§ It is claimed that this position results from a loss of tax incentives that the National Audit Office calculates had an annual cost of only £10 million. I believe that we are entitled to put a simple question to the Minister. New planting was estimated to be worth some £28 million per annum before the Budget. Is he prepared to give the Government's estimate now of the annual value of new planting when the changes in the Budget come fully into effect after 1993?
§ There is also in the new woodland grant scheme a further anomaly. It seems that entrants to the farm woodland scheme will be penalised for planting conifers, either pure or in a mixture, relative to those who plant outside the farm woodland scheme. There are substantial differences in grant rates depending on the proportion of conifers and broadleaves and whether the planting takes place on improved arable land or grassland. We should ask the Minister to explain the rationale behind this apparent anomaly. What is the purpose of it?
§ I referred earlier to forestry as an alternative use of agricultural land. It is quite clear that forestry is the major alternative user of farmland. There are no new crops in the pipeline that have the potential to use agricultural land in the way that forestry does. But there seems to be some confusion about this if one considers successively the ALURE proposals, the objectives of the farm woodland scheme and now the woodland grant scheme. Indeed, in the original ALURE proposals on page 1, it was stated that the objective of the farm woodland scheme was to provide an alternative use for agricultural land to reduce arable production, but by page 2 it was said that the majority of the planting of farm woodlands would be on marginal land.
§ Do the Government accept the role of farm woodlands as a major alternative to agricultural production? As farmers we shall have to consider the Government's response alongside the set-aside proposals which we are now eagerly awaiting. As a farmer I shall have to weigh up the pros and cons of putting land aside under timber for 20 to 40 years, or for five years under set-aside with the chance of quickly returning to mainstream agricultural production. It will indeed be a very nice judgment. One will have to study the set-aside proposals extremely carefully against those in the farm woodland scheme and I suspect that some pretty 1099 sophisticated calculations will be required. I shall be interested in the Minister's views on that problem which will face farmers.
§ I said earlier that the Labour Party was opposed to the so-called tax loophole in forestry. It would be fair to say that the "Labour Listens" campaign does not include a visit to the forests and woodlands as part of its itinerary. But in considering the policy of the Labour Party towards forestry it is worth pointing out that before the last election, Mr. Brynmor John, the Opposition spokesman on agriculture and rural affairs in another place formed a study group of which I was a member. We produced a substantial discussion document on the future of rural policy. We proposed that a further 2½ million acres of forestry should be planted over the next 20 years at an annual planting rate of 25,000 acres per annum divided equally between the uplands and the lowlands. We also proposed the concept of a partnership between the Government and the landowner or farmer to increase the area under timber with the community having some share in the final proceeds in return for providing an annual income to the landowner or the farmer.
§ There is one other proposal in the Brynmor John document of which I was reminded forcefully when preparing for the debate and considering the number of government departments involved in forestry policy. I refer to the call made on a number of occasions for a single department of rural affairs. It was well put in the Daily Telegraph of 2nd April which argued for a countryside ministry embracing agriculture and the rural environment or, as we put it in our discussion document, a single department responsible for agriculture, forestry, fisheries and the protection of the rural environment both economically and ecologically.
§ I am aware that a large number of noble Lords wish to speak so I do not intend to take my full time. In considering the economics of forestry ownership. I am irresistibly reminded of the character described by R. S. Surtees as "a gentleman having no annual income—paid quarterly". Forestry as we know is a very long-term business. If we are to have the forestry industry that the nation requires for both the strategic and the economic reasons that I have described there must be stability of policy with fully understood and guaranteed incentives so that the forester can plan and can plant with confidence. I beg to move for Papers.
§ 5.15 p.m.
§ Lord Gibson-Watt
My Lords, I know the House will be grateful to the noble Lord, Lord Carter, for introducing this debate and for the excellent speech he has made, particularly relating to the employment aspects of forestry. I am a practical working forester and owner of woodlands. I was for 10 years a forestry commissioner. I am chairman of Timber Growers United Kingdom which represents all private forestry.
Anyone who is a taxpayer will applaud the Chancellor's Budget and its long-term objectives. What it does, as the noble Lord, Lord Carter, has 1100 said, is to pose considerable problems for the private forester—not just investment companies and their clients but traditional forestry owners, not all of them rich by present-day standards.
Under successive governments, both Conservative and Labour, the system of Schedule D/B has been recognised as the best system for what is a long term, or very long term, industry. That is to go. And to replace it, we have considerably increased planting grants. It remains to be seen whether these grants will retain confidence in the industry. I sincerely hope they will. But the Government will need to consider inheritance tax on woods and some sort of maintenance grant, which used to apply, if their target of 33,000 hectares is to be met and if woods are to be properly looked after.
After the Budget, reassurances came from the Secretaries of State for Scotland and Wales. The Secretary of State for Wales made a very good speech at the Economic Forestry Group lunch on 16th March. But as chairman of Timber Growers and spokesman for all private forestry in the United Kingdom—Scotland, Wales and England—I can say that it would help us very much if we knew the score and what was actually happening with the Government in relation to discussions on forestry in England.
Before the Budget, I and the others in our organisation informed all the Ministers responsible of all the possible damage that could be done to this rather young and fragile industry which saves so much in imports, provides over 40,000 jobs and, at a time of agricultural changes, seems to be the best alternative use of land in so many areas.
If the Government consider that the Schedule D/B system is too open-ended, so be it. That has been the Treasury view for many years. As I said earlier, these increased grants, large as they are, may not be adequate. The Government need to think further and to talk to those who know about the economics of private forestry. So far these consultations have not taken place. The system of allowing losses on Schedule D forestry against other income made it possible for the traditional owner occupiers and landowners to put their losses on forestry against farm profits, in effect treating both as one and the same business. The losses not only applied to planting, fencing, clearing and pest destruction—which one can call establishment—but also to maintenance, the clearing of rides, brashing and sometimes the pruning of trees and first thinnings. Normally first thinnings and, in the case of hardwoods, even the second thinnings, are done at a considerable loss. So it is not just a case of establishment; it is the continual management of the woods and the payment of skilled foresters that count.
If the Government now consider that the present system is unacceptable they have a responsibility to find alternative policies which will meet their 33,000 hectare target for private planting but will also find grant for the maintenance of woods; otherwise, they will be badly cared for.
Answer me this, my Lords. From where will the new investment for added forestry come? It will not 1101 be from the traditional owners, believe me. It is not simply about areas suitable for conifers that I speak but about the largely hardwood areas of the south and east where in October 15 million trees were destroyed. Timber Growers and the timber trade were glad to join the Forestry Commission on a working party which made recommendations to the Government. I am referring to what occurred in October of last year; six months ago. Some quite modest recommendations have been made in order to help the distressed woodland owners. The Government have done precisely nothing.
In northern France a transport subsidy was announced. In Britain there has been silence—a brooding silence equalled only by Shylock when asked for money. Ministers need to maintain confidence in the forestry industry. It is a small and growing industry; both the softwood and the hardwood parts. I ask them to discuss with us the way ahead because forestry can continue to play a significant part in the national economy.
§ 5.21 p.m.
§ Baroness Robson of Kiddington
My Lords, I should like to thank the noble Lord, Lord Carter, for introducing the debate. I agree with him that we accept the fact that the tax incentive to investors in afforestation had to be examined. As the noble Lord, Lord Gibson-Watt, has said, it is sad that the change also hits the traditional woodland owner. I should like to speak on their behalf and to deal with only two of the Government's aims for woodlands. They are to encourage timber production and to provide jobs in and increase the economic potential of rural areas. They are two aims with which we all agree, as do all the environmental lobbies including the Countryside Commission, the CPRE, the Country Landowners' Association and the Royal Society for the Protection of Birds.
One must ask oneself whether the woodland grant scheme will achieve those ends. The increase in the grant for planting—from £240 to £615 for conifers and from £470 to £975 per hectare for broadleaf—may at first seem generous. The grant is payable in three instalments: 70 per cent. on planting; 20 per cent. after five years; and 10 per cent. after a further five years.
Anyone who is involved in forestry—and I must declare an interest as I own a certain amount of forestry—knows that expenditure is heavy in the first 20 years in relation to conifers and even uplands. It is much greater on fertile lowlands and even greater on broadleaf plantations. The Timber Growers' Association estimates that the planting grants will cover only 55 per cent. of the cost of planting. It has carried out studies where it claims that, as regards upland conifer planting, the owner is short by approximately 55 per cent. of the cost. In respect of lowland planting of 20 acres of conifers the cost to him will be £12,000. In respect of broadleaved trees, over 10 years 50 per cent. must be paid by the owner; that is roughly £1,000 per hectare. That expenditure does not stop after 10 years.
Few traditional woodland owners can afford such an investment over the period of a number of years 1102 before the afforestation comes to harvest time. Unless woodlands are properly managed, once planted the chance of producing quality timber will be severely damaged. It is also worth mentioning that the encouragement to grow mixed woodlands, which as environmentalists we all wish to see, increases the cost of management even more.
We regret that the annual grant introduced for the farm woodland scheme has not been made available to ancient woodlands and new plantations. Perhaps the most disturbing issue of all is the danger to employment in rural areas under the new grant scheme. To provide jobs in rural areas the presently proposed grant system is in our view likely to diminish rather than increase the number of men employed in woodlands. Employment opportunities are greatest where there is an area of forest covering a range of age classes giving permanent employment. However, those are limited in scope because afforestation on such a scale is not always acceptable to other interests within the rural area.
The new grants do not encourage long-term employment in rural areas. A traditional woodland owner, given 70 per cent. of his grant, is unlikely to use local labour. I believe that he is likely to bring in a contractor with gang labour to carry out planting. He is then unlikely to be able to afford to employ forestry workers on a permanent basis to look after his woodlands. That creates not only a danger to employment in rural areas but an enormous danger of not producing the kind of timber that we hope to produce. I sincerely ask the Government to look at the question of allowing management costs for woodland owners because without that our timber industry will suffer.
§ 5.27 p.m.
§ The Duke of Somerset
My Lords, as a woodland owner I also think it right not only to thank the noble Lord, Lord Carter, for initiating this important debate but also the Government for giving us so many proposals for the future of the industry, even though everybody does not recognise forestry as an industry.
While not wishing to hark back too much to the good old days of Schedule B, I think that it would be fair to point out that the old taxation system was designed to bring in outside capital to build up a forest industry. In that it has been successful. Therefore, to vilify those who responded to that invitation is most unfair, especially in view of the misinformed media campaign. We do not need to be reminded of our 90 per cent. imports at a cost of £5 billion per annum to justify the old approach.
However, as we are embarking on a new system I should like to examine whether it will work economically as well as environmentally. Few farmers or landowners will embark on a planting programme without an economic end in sight, be it saleable logs or sporting coverts, however attractive other matters may be. Therefore one must consider whether the new rates of planting grant will allow this industry to continue to sustain rural life and employment.
1103 It was an interesting exercise to work out the cost of a typical hardwood planting, as I did on an area of 1.9 hectares in Devon. It is worth running through the figures quickly in order to illustrate the costs. They are the plants at 15p each; shelters at 50p each; stakes at 26p each; labour at 41p; chemical weeding at 8.8p; fencing and gates at 52p per tree. That totals £4,086 on this area. After deducting the new grant of £2,612 one is left with a minus figure of £1,474. This now has to be found out of other taxed income. In that, we have not even touched on the cost of professional advice or annual weeding.
The compounded cost of establishing such hardwoods net of the planting grant shows a very large negative figure indeed. By way of contrast, douglas fir on the same site on a yield class of 24 is yielding £24,000 a hectare at 55 years. Furthermore, although forestry is now tax neutral, a plantation is still liable to capital or inheritance tax for its life of 150 to 200 years. To be really gloomy, I could also point out that without a properly organised grey squirrel control programme, including educating some of our woodland visitors, quality establishment is going to be most unlikely.
Another worry is the eventual value of old hardwoods retained beyond their normal span for amenity purposes. They become degraded and saleable only in the diminishing mining market. Some hardwood mills are already closing due to lack of quality material. Therefore, although I do not wish to discourage hardwood planting, as I love them, one should realise the cost and point out that it is only for the public-spirited philanthropist and those able to look beyond economic considerations. Perhaps I may suggest what is needed to achieve this planting and to obtain environmental diversification: it is commercial management, meaning sustained maintenance and perhaps help with cleaning the uneconomic first thinnings and high pruning to achieve quality.
Therefore, as I have perhaps shown, it is coniferous planting that will have to sustain the infrastructure of the industry, the new pulp mills and rural employment which will take up these planting grants. Let us hope they emerge to maintain the 33,000 hectares per annum target, especially as the more attractive farm wood scheme is restricted to 12,000 hectares.
The traditional woodland estate will find it difficult to keep on staff, but I welcome the reduction in top rate tax as one good incentive. Finally, it is a pity, as we have already heard, that there was no consultation with the industry over the sudden changes. After all, the TGUK was set up in 1956 specifically to advise governments on new measures.
§ 5.32 p.m.
§ Viscount Mersey
My Lords, I rise to thank two people: the first is the noble Lord, Lord Carter, for initiating this debate; and the second is Sir John Hawkins, who planted many a fine wood of oak, ash and beech where my family lives in Sussex. He planted in the 1820s, and never lived to see his trees reach maturity. Such is the nature of traditional forestry: an act of patriotism, and act of altruism. For 1104 it is my family who benefits from Hawkins' oaks. it is we who enjoy them and thus I pay him this tribute 160 years after he planted. As we benefit, so we have a duty to continue planting for the benefit of those who will live in Sussex in 2100 AD.
Thus it was that when I inherited the woodland in 1973 I embarked on a heavy planting programme. The Hawkins trees were stag headed, going back, dying. They needed replacing. I must confess that I thought too that I was pursuing a sound financial policy. With all expenditure allowable under Schedule D and all income virtually pocket money under Schedule B, I reckoned that forestry was both patriotic and profitable. A wise old man from the Forestry Commission, a Mr. Cameron, came to look at my work and said merely, "I suppose you realise that all private foresters are mad". But I dismissed this as senile dementia. In later years, though, I would remember that remark.
All went well in 1973. We had good planting grants on about 50 acres. In 1974 we planted another 50 acres. In 1975 all 100 acres of infant woodland were destroyed by rabbits, hares and deer. The 1976 replant looked better, but then came the great drought, and this killed all our young trees and worse, the seedlings we bought from the nurseries in 1977 and 1978 had also been affected by drought and they died too. And so we beat up and beat up, all of course without grant. In 1980 we decided to fence. That costs five times as much as planting, and there is no grant. But by 1980 I was quite committed to continuing because to see seven years' labour simply wasted by throwing in the sponge was to me unpalatable, and after 1980 things got better. Our trees are thriving.
This story has a depressing start, but now there is a light at the end of the tunnel, becoming ever brighter. I tell it to show what a very small element of forestry costs is in the original planting. There are three big expenses in forestry: beating up, weeding and fencing. That is the traditional forestry that I know.
I learn with some surprise that there are people who go into forestry in order to make a quick buck, or perhaps a quick million bucks. It is, I suppose, possible to buy cheap land in Scotland, use government money to plant it and then sell out quick at a profit before all the hideous and costly complications of forestry set in. What I do not know is who buys these young plantations, for somewhere along the line the crunch will come and the crop will go wrong. The owner will then lose money.
Recent happenings in the flow country remind me not so much of forestry as of pyramid selling. It is all right for the first man in on the scheme but further down the pyramid there will be many a sucker. There will be men who buy 20 year-old plantations, for instance, only to find the whole lot demolished by hurricane Charlie. I have read of such speculators, yet I have never actually met a forester who has made money. Quite the reverse in fact. The foresters I know are spurred on by two motives: first, patriotism; and, secondly, a reluctance to see the whole of their original outlay wiped out by neglecting their plantations.
1105 We now face an agricultural slump and I certainly welcome government encouragement for alternative use of farm land, including forestry. However, at the same time as government have recognised the need for diversification, they have found out about the speculators: the pyramid sellers. Therefore, they seek to take forestry out of the taxation system altogether. As has been said by many other noble Lords, this will be quite disastrous for the typical and traditional forester.
It reminds me of the video nasties Bill. People abused the system. There were appalling videos. We had to legislate. But there were only six video nasties as against 36,000 perfectly decent videos. In catching the six we caught the other 36,000 as well. Is it beyond the wit of government to distinguish between the speculator and the traditionalist?
Would my noble friend convey my remarks to my right honourable friend the Chancellor of the Exchequer with a view to discussing possible amendments in the Finance Bill? Would he not give the ordinary traditional forester the same incentive to plan a fine countryside in 2100 AD as my generous predecessor Sir John Hawkins planned for us 150 years ago? There is many a peril in forestry. Sir John Hawkins' fine crop of mature trees blew down on October 16th last year, as did many other woodlands in South-East England. That is an additional reason for our right honourable friend to consider the forestry implications of the Finance Bill with the greatest care.
§ 5.39 p.m.
§ Lord Taylor of Gryfe
My Lords, by the end of this debate I hope the Minister will understand the very deep concern in this House about the new policy. The fact that the Government are departing from what has been a reasonably successful policy in the past creates a good deal of apprehension to all of us who wish to see an expanding forestry industry.
Perhaps I can congratulate the Government on fielding the noble Lord, Lord Sanderson, to answer for them on this matter. Not very long ago I read that it was the Department of the Environment which made announcements about large-scale conifer planting, which was likely to end in England. I believe that either the Department of the Environment or the Treasury should be answering here for the policy that has now been evolved by the Government. The noble Lord understands forestry because he lives among it on the borders of Scotland. Perhaps he will convey to the Government our serious concern and the recognition that they have few friends in the new policy that is being developed.
All that can be done today in five minutes is to put some questions to the Minister. In reply to a Question from me two weeks ago he confirmed that the target remains at 33,000 hectares. Last year was a good year for forestry in that 24,000 hectares were planted. With the diminishing encouragement for new plantations which is involved in the new policy, how does the Minister hope to achieve the target of 33,000 hectares that the Government have repeatedly assured us is their objective?
1106 Perhaps I may make a suggestion. In 1980 the Forestry Commission planted 15,800 hectares; the private sector planted 8,600 hectares. Last year the Forestry Commission planted only 5,300 hectares and planting by the private sector had increased to 19,400 hectares, making a total of 24,000 hectares. I am not against private sector planting but perhaps the Government can tell us whether, if the new policy results in a decline in private planting, they will compensate for that by expanding the Forestry Commission in order to ensure continuity in the supplies of timber, which is so important to downstream investment and which has been very encouraging in the past few years.
Import saving has been mentioned. A saving of £5 billion in the balance of payments is not negligible. For every £100 of home produced sitka spruce that is delivered to the pulp mills, £500 is saved in imports. If one imports pulp from Sweden or any other country, it costs £500 to import the equivalent of £100-worth of home produced timber. Economically there is a tremendously strong case for developing our own domestic supply.
In the time at my disposal I should like to make one further point. One of the great encouragements in forestry in the past few years which filled me with great pleasure when I was chairman of the commission was the opening up of the countryside to recreation. It is terribly important in the large conurbations of Glasgow, Liverpool, Manchester and so on that people should have access to the countryside. The Forestry Commission developed access policies for its forests and the private sector also developed such policies. Access will now cease because private sector forestry is now looking seriously at its costs. The great recreational potential for forestry will be diminished by the proposals that the Government have now produced. I suggest that this matter should be looked at seriously.
Last year there were over 20 million day visitors to the Forestry Commission estates. The private sector can also quote similar figures. Those figures will be diminished in the future. Redundancies are now being discussed in the large estates containing the traditional forests in Scotland where there is no possibility of alternative rural employment. Villages and remote communities will be destroyed. I appeal to the Minister to convey that very deep concern to his colleagues, and perhaps some amendment of the Finance Bill may be possible.
§ 5.44 p.m.
§ Lord Buxton of Alsa
My Lords, I am very grateful to the noble Lord, Lord Carter, for giving us the opportunity to discuss such an important subject. Like him, I shall not dwell this afternoon on the subject of the flow country. However, while I have the opportunity I should like to say that I am 100 per cent. in favour of forestry. Last year I planted three new broadleaved woods, and I shall be doing more. It is outrageous that people like myself and the Nature Conservancy Council, and any others who are deeply concerned about the destruction of one of Europe's ecological gems, should be vilified and thought to be anti-forestry. It is a ludicrous suggestion and I should like to leave it at that.
1107 I entirely support the Government's requirement placed upon the Forestry Commission and other departments for a reasonable balance between forestry and conservation. It would help everybody concerned—I put this to my noble friend Lord Sanderson for future consideration—if we understood what is meant by "reasonable balance". I have no idea what it means because I do not know who sets the balance and who decides. Presumably, "reasonable balance" means something which other bodies and people do not find unreasonable. Therefore the more information we have on that question the better. I am a member of the Nature Conservancy Council and I know that it also is not clear as to what is meant by "reasonable balance".
Perhaps I may say very briefly under headings or in the form of questions that after the past few months with everything that has happened and the changes that have taken place almost weekly about planting, especially in the North of Scotland, one is left with the inescapable impression that the Government are split down the middle on policy at the Border between Scotland and England. The Secretary of State for the Environment and the Minister at MAFF stated in clear terms:Approval should not normally be given in the uplands of England for new planting which consists predominantly of conifers".Had that situation applied to Great Britain we would all have sat back and breathed a sigh of relief, but that is not so. In fact, it appears that the Secretary of State for Scotland has implied the exact opposite, or something very dissimilar. He promises that further planting licences will be issued. That is another example of where there is confusion and I should be grateful if my noble friend would take it into account.
I am not an expert in this field, although I love planting, but I have read all the statements and communications about planting, quotas, hectares, acres and all the rest of it. Frankly, as a businessman with 50 years' experience, I cannot understand it all and I find it hopelessly confusing. Perhaps I may return to the figures. A figure of 33,000 hectares is intelligible but how is it arrived at? What does it relate to and who thought of it? What are the arguments in favour of it? How much of the area is in the lowlands and how much in the uplands? For example, how much is to be in the North of Scotland?
The most obvious question which occurred to me and which I have never heard answered is: how long is the figure of 33,000 hectares supposed to continue? Is it to go on until we have planted up to the last sand dune going into the sea? I do not know and I do not believe even the Government know when that point would be reached because I have not worked out how many plots of 33,000 hectares there are available in Great Britain. We should know at least on a five-year or ten-year basis what is intended.
In this regard, surely the amount of timber to be produced in the future is what matters. This question relates directly to what the noble Lord, Lord Taylor, has just been talking about. Surely the Secretary of State should be calculating how much timber is wanted (not the actual acreage to be planted) because the quality of the land is far more important than the 1108 planting area. I believe that we need more information about the volume of timber that is wanted, where it can best be obtained, and also where is the best quality and volume.
Finally, I am concerned at everything that has been said about the potential for employment of future generations in the North of Scotland; namely, in Sutherland and Caithness. I do not believe that this problem is yet understood by the Government. I have seen the growth of leisure and tourism in areas as far apart as the Antarctic, the Galapagos Islands and China. There is a hunger for open, unspoilt natural countryside and it is increasing all the time because of the new era of education and all that our children and grandchildren are learning about nature. If we allow that wonderful area, a jewel of Europe, to be eliminated through planting in the wrong places—not through planting itself—we will have done a grave disservice to the flow country and our descendants.
§ 5.50 p.m.
§ Viscount Ingleby
My Lords, I am fortunate enough to look after several hundred acres of woodland on the slopes of the North Yorkshire moors. Some are large coniferous woods. Some are small mixed woods. There is one superb natural woodland, of oak and ash, rowan, thorn and alder, which has not been much disturbed for hundreds of years. I regard myself not as the owner. Those trees were there long before I was ever thought of, and by the grace of God, I hope that some of them at any rate will be there for a great many more years to come.
As far as is practicable I should like everyone to be able to enjoy the woods. However, there are problems if the public are admitted to them. There is the greater risk of fire. There is the risk to nesting birds, especially game birds. There is a problem if dogs are not kept under control. Horses can bring their own special problems too. There is also the problem of litter. In short, if the woods are to be opened to the public there is a need for some kind of watchdog or warden. There may be a need, too, for considerable extra expenditure—for hardening roads to make them suitable for horses. Are the Government prepared to offer any extra help to those woodland owners who would like to manage some of their woods for the benefit of all?
§ 5.52 p.m.
My Lords, this debate, opened so well by the noble Lord, Lord Carter, is very timely. I should like to start by making three brief post-hurricane points. First, I understand that the Government are carrying out a sample air survey to try to decide how many trees were lost. The 15 million figure applies only to trees that were blown down flat. However, at least as many trees were so badly damaged that they will have to be felled or are so badly leaning that they will have to be felled. I suggest therefore that the real figure must be about 30 million.
Secondly, when referring to the storm that occurred in October, can we stop describing it as a "wind blow", a term which is not in the large Oxford 1109 English Dictionary, although the term "wind-blown" does apply to blowing into a breathalyser? Thirdly, five minutes ago I was handed a reply to a Written Question. I am glad to see that the Government are considering whether grant-aid for clearance to help woodland owners would be justified. I hope that we shall have a statement on that quite soon.
Through the failure of successive governments to pursue clear strategies, described so well by the noble Lord, Lord Carter, as a "pushmi-pullyu" policy, and through their failure to provide sufficient incentives, the British forestry industry is about half the size that it ought to be in the national interest. I greatly fear that taking commercial woodlands out of the income tax system will prove to be a serious blunder. It amounts to a unilateral breaking of an undertaking to woodland owners. It is a breaking of a contract—certainly morally and perhaps even judicially. Furthermore, it is retrospective although the cut-off does not come for five years. Both those aspects are absolutely wrong and unacceptable.
In essence, my reasons for using such strong words are these. First, the capital cost of the woodland grants scheme will be very large indeed, yet it provides, as my noble friend Lord Gibson-Watt said, nothing for maintenance. Weeding, brashing, thinning, controlling vermin, countering disease and many other activities amount to a regular annual drain on the owners of commercial woodlands. No account appears to have been taken of that. The drain goes on for at least 25 years and up to 50 years for hardwood. Therefore, those who are thinking of planting now will look with a leery eye at the costs; and I am afraid that they will be likely to plant on the cheapest land available, thus defeating the Government's intentions of taking improved grass land or good arable land out of production. I just do not think that this will work. That points at once to the fact that conifers are much more likely to be planted than hardwoods, bearing in mind that conifers produce at least two and a half crops in 100 years in comparison with hardwoods, which take 100 years to produce a crop.
In clobbering, which I think is the right word, two pop stars and a number of institutions which have planted trees on a large and insensitive scale, and by lending too much weight to the views of the conservation bodies—although I have been closely involved with them and I am only too well aware of the environmental impact of forestry—the Government have, unintentionally, I suppose, clobbered the owners of commercial woodlands both large and small. As for the farm woodlands scheme, it will be extremely expensive. It is complicated and bureaucratic. I hope and pray that it works but I very much doubt it.
What is the answer? We should go back to putting woodlands into the income tax system. It was cheap at the price and good value for money. This should be coupled with generous planting grants. Commercial woodlands should be removed altogether from inheritance tax. There is a strong case for that and I hope that the Government will give it careful consideration. That is all I have to say but I seek a positive assurance that in the national interest there will be an urgent and radical review of forestry.
§ 5.57 p.m.
My Lords, I am so personally convinced of the importance of forestry that I was somewhat astonished to see that so many noble Lords from all sides of the House feel it necessary to draw attention to that importance. The speeches we have heard so far show that something is wrong with forestry at the present time.
I have had long experience both in public and private forestry. I inherited a small estate some 58 years ago, when the Forestry Commission was only 12½ years old and I was 25. The very first thing I did then was to let a rabbit warren to the Forestry Commission for 2/6d—12½p—an acre. My son, who now owns the estate, still gets his 2/6d. However, as there is no halfpenny now, I expect that he gets 12p if I know the Treasury. I have seen the difficulties, practically and on the spot, of both the small man and the big man, and they are considerable. Unless there is a financial climate that makes forestry possible for the public sector—the Forestry Commission—and the private sector—the landlord and the private grower of timber and not necessarily the new syndicates—there will be the most awful disasters.
My rabbit warren has not grown good trees but it is now one of the most sought-after recreational estates in that part of Somerset. The Forestry Commission, in collaboration with the nature conservancy people, is using it as an amenity forest, as it was planted on an old lead mine and the trees have not grown very well.
There is always a difficulty in growing trees and you never know what it will be. However, there is also always a use for the land afterwards. That is my experience. My great grandfather planted oak because he was an admiral and thought that we would run out of shipbuilding material. Well of course we have not used his oak for shipbuilding, but we have found other uses for it. He and my uncle, whom I succeeded, planted a lot of pit wood because they were interested in the north Somerset coalfields—long since closed down. However, we have found that, unlike the coalfields, newspapers do not seem to get smaller and smaller; in fact you now buy them by the kilogramme on Sundays. Newspapers need pulp and our pit wood will now go into such pulp. So it is true to say that something always turns up to help the situation.
However, I must watch the wretched clock and not reminisce too much. The planting that I tried to do on a private scale when I owned the estate was of mixed plantations. I included naturally regenerated sycamore because it is such a useful agricultural country tree; it makes draining boards, wagon bottoms and stair-treads; it never splinters. Of course we also grew oak because that was the great building material in the pre-concrete and steel days, and we grew beech because it is such a beautiful tree. At that time grey squirrels had not yet been heard of, but they have since murdered all the beech. Furthermore, whenever we plant more beech trees in those little paper tubes, the roe deer eat the tops off when the tube is pushed over by the tourists.
1111 So there are always difficulties, but we hope that there will always be—I am sure there will—long-term uses for the natural product. Forestry is a sensible and natural land use. It must be said that we have far too little in this country and we need more. Hardwoods take at least 100 years to mature—150 years is even better—and softwoods up to 50 years. Many problems are of course unforeseeable. For example, who would have thought of elm disease, the pine beauty moth, the grey squirrel or the roe deer? We had never seen such things in Somerset in those days. However, even though we may not use the timber as we thought we would when we planted (for pit wood or to build battleships), we can generally find, and so far usually have, very good alternative uses, whether for recreation or for making pulp for the Sunday newspapers.
Finally, I should like to say that I am distressed to see the way that certain sections of the press are inveighing against the Forestry Commission. My small public experience in forestry was, first, 30 years ago in the Ministry of Agriculture, when I was the Minister partly responsible for forestry. After that, I was involved in the Forestry Commission in the mid-1960s, where for a very short time I was chairman. I am proud to say that I have never worked with such dedicated countrymen as I did when I worked with the Forestry Commission. Therefore, to say that such people are an uncivilised lot of commercial Philistines could not be further from the truth. I remember that Dame Sylvia Crow, the great landscape architect, came to help us when I was in the commission. I do not like to say that she fell into the open arms of our staff, but she was utterly welcome and did a frightfully good job. That shows that the commission is a good and humane body which should not be vilified. We were always under the strongest pressure to complete our programme and to "plant up", otherwise we were in trouble. Naturally, we tried to plant up but now we are told that we are a lot of barbarian Philistines who have spoilt the countryside.
I hope that we can—as in Sweden—continue to have a private forestry sector and a public forestry sector which will continue to have a close and co-operative relationship in this essential and important industry. However, that hope is absolutely dependent upon the Government creating a financial environment that will enable it to flourish.
§ 6.07 p.m.
§ Baroness White
My Lords, four voices from Wales are due to be heard in the debate, of which mine is one. The noble Lord, Lord Gibson-Watt, with his important national responsibilities, understandably used a fairly broad brush. However, I wish to concentrate especially on the Welsh scene.
Mr. Ridley's otherwise very welcome announcement on the protection of certain upland areas in England from excessive conifer plantations inevitably suggests greater pressure on Wales and Scotland if the Government's forestry target is to be met. Mr. Rifkind's response in Scotland has not been 1112 entirely reassuring. The Secretary of State for Wales may have spoken most eloquently at the economic forestry luncheon, but that occasion was a month ago and before the grant terms were generally known. Similarly, nothing of consequence has since been heard from the Welsh Office. A rather bland Written Answer in the other place on 22nd March carries, I am afraid, rather little conviction. This week I have been in touch with the two statutory bodies responsible for environmental standards in the Welsh countryside; namely, the Nature Conservancy Council and the Countryside Commission. I can only say that those organisations at the present time are confused and somewhat bemused as to what our situation in Wales is likely to be under the new forestry tax/grant regime. Neither organisation has so far had any firm guidance from the Welsh Office.
At present, conifer forests in Wales occupy, I am advised, 8.4 per cent. of the total land area. That figure represents over five times our area of heather moorland and three times the remaining area of broadleaved woodland. The policy of bringing forestry down the hill on to more productive land is likely to reduce losses of nature conservation interest. However, it is not yet known how successful the policy will be in Wales. Land prices would be a key factor and may prove to be the joker in the pack.
The woodland grant scheme, as previous speakers have already indicated, does not include measures to bring neglected established broadleaved woodland back into effective management. Much of the broadleaved woodland in Wales lacks such management and is declining with potentially significant losses to nature conservation and amenity.
I am aware that our Coed Cymru—related to the Countryside Commission, and in touch with other statutory bodies—is working hard to promote the management of existing woods. However, the recognition of the problems in the grant system would bring valuable benefits to the Welsh countryside. In the meantime, the Nature Conservancy Council has made it clear to me that it does not wish to see further large-scale losses through afforestation of our semi-natural vegetation and associated bird and animal communities.
I could go on into yet further detail but I recognise that there are many speakers who still wish to speak. Therefore all I shall say in conclusion is that it is quite clear to me from recent consultations that there is a need for the Welsh Office especially to take the initiative by having broader discussions—early and realistic practical discussions—on the need for a revised land use policy for the rural areas in the Principality.
§ 6.10 p.m.
§ Lord Rees
My Lords, I should like to add my thanks to the noble Lord, Lord Carter, for initiating this debate which gives us our first opportunity to debate the budgetary proposals and the measures which accompanied them. I am ready immediately to declare my personal interest as a woodland owner on a modest scale—I hope that this will not disturb the noble Baroness, Lady White—in the Principality and also as chairman of a forestry management company 1113 which, I hasten to add, is not engaged in either Caithness or Sutherland.
The Budget and the accompanying proposals were clearly designed to initiate profound changes in forestry. We are all anxious and entitled to know how the Government see those changes. My heart goes out to my noble friend Lord Sanderson who will be winding up the debate. I go further and say, like many other noble Lords, without I hope too much acerbity, that it is a pity that those questions could not have been the subject of public consultation before the Budget. I am not impressed by arguments about Budget secrecy, because the measures are not exclusively budgetary. Even if they were, there are plenty of good precedents for prior consultation and debate.
There are three issues as I see the broader question. How much afforestation does the country require? Where should it take place? What species, or what mixture of species, for planting should be encouraged? On the first issue, we have been assured, as other noble Lords have pointed out, that the Government are sticking to a target of 33,000 hectares per annum, and 12,000 hectares per annum under the farm woodland scheme. Voices are already saying, "Too much". It must be emphasised that the United Kingdom has the least forest cover of any country in Western Europe, with the possible exception of Southern Ireland and the Netherlands. We have a land and climate admirably adapted for growing trees. Our imports amount to a gross figure of £6 billion—the figure of £5 billion quoted by other noble Lords is the net figure—and there are not limitless supplies of timber in the world. We have also developed over the past decade—on the assurances I suspect of a stable regime—a wood-processing industry which needs sufficent supplies close to hand.
As to new planting, the emphasis of the Budget and statements made afterwards, is that, normally, coniferous planting will be permitted—just—in the uplands of Wales and Scotland but not in the uplands of England. I find that decision extraordinary and capricious. While some agricultural land will be taken out of farming, it is unlikely that that land will be in other than small pockets, and planting will no doubt make an aesthetic and ecological contribution. I hope that it will, but for economic purposes—forestry must be regarded as an economic activity—larger blocks will be required, and therefore we shall need to look to the hills of Scotland, Wales and England, which in any event, historically, before goats, sheep and charcoal burners got to work, were mostly covered in wood.
As to the species, there has been too much uninformed criticism of conifers. Much of that is based on a vision of stark rectangles, usually of one species—the sitka spruce—and often at an early stage in growth. I believe that we have learnt from the mistakes of the past. Again, it must he emphasised that the range of trees to be planted must be conditioned by altitude, rainfall and type of soil as well as likely yield.
I turn now to the fiscal changes likely to be initiated by the Budget. Apparently it will be permissible to 1114 obtain tax relief for investment in industry and business, not only under the normal provisions of Schedule D but also under the business expansion scheme. On the other hand, that relief will be denied to forestry. That is extraordinary discrimination. If forestry if to be taken out of income tax, logically it should be taken out of capital gains tax and inheritance tax, as other noble Lords have emphasised. Again, I ask—I hope that the noble Lord who will wind up the debate can answer this point—is that right and fair? Why should capital allowances on expenditure incurred before 15th March this year be phased out after five years without balancing charges or allowances? Again, why should relief on interest on moneys borrowed or rent on land leased before 15th March be disallowed? That point was made with great emphasis by the noble Lord, Lord Chelwood, and I find myself in sympathy with it. People are entitled to order their affairs and make long-term plans on the basis of the earlier regime.
As regards the new grant regime, I recognise that it is intended to be slightly more generous than tax relief at the top rate of 40 per cent. But the expenses of creating, maintaining and managing woods go beyond 10 years, or even beyond five years. What about, as other noble Lords have emphasised, the cost of fencing, road making and repairs, thinning and management? It is not just a question of compressing those costs into the first five years.
At the moment, we must suspend judgment on the proposals. The acid test will be whether the Government's planting targets are achieved. It may be that in the first year or two of the transitional period they will be. People already involved in a planting programme will continue for a while. After that, there must be considerable doubt. If the targets are not achieved, I hope that the Government will candidly recognise the flaws in their present measures and reconsider them—next time in consultation with those who have some experience of an important national activity.
§ 6.17 p.m.
§ Lord Burton
My Lords, I, too, should like to thank the noble Lord, Lord Carter. We must be realistic. Forestry in this country is not an economic proposition, but, having said that, there are many good reasons for growing trees. If one looks at the National Audit Office report on the Forestry Commission of December 1986, one sees that the commission was expecting a meagre return of 2.25 per cent. on all its new planting. That was on a heavily discounted capital input. If the real economics of forestry are considered, all costs—the value of the land, fencing, ploughing, planting, cleaning, vermin control, management and so forth—should all be given at least a notional compound interest rate.
By first thinning, one is faced with an enormous bill. For a short time I tried to run some of my forestry expenditure on a bank overdraft. Finances got totally out of control. I can honestly say that I have lost more money on forestry than on any other project.
The noble Lord, Lord Rees, referred to our climate being admirable for growing trees. But forestry has to 1115 compete in world prices. Conditions are different. For instance, in South Africa seedling plants have to be in the nursery for only six months instead of at least two years here. Fencing or plant protection costs are minimal in South Africa and the final crop is ready for felling after 25 years. Here, growth takes over 50 years. So one receives a return on one's money in South Africa very much more quickly, with consequent substantial reduction in one's compound interest rate.
Extraction costs in South Africa are minimal as the ground is dry and hard and mostly fairly flat. As a result, peeled logs are being sold and delivered into the pulp mill in Durban at about one-third of the price we get for unpeeled logs here. In Canada, the Scandinavian countries and Russia, the ground freezes hard in winter making extraction vastly easier than here. Furthermore, most of those countries are not subject to the windblow hazard that occurs here.
It is therefore unreasonable to expect forestry in this country to compete on the world market financially. The practices of five or six forestry companies in playing the tax situation as they did—and some of them totally ignored public opinion—was bound to cause trouble. It was not surprising that the Chancellor decided on the changes now coming into force. However, I feel that he did not appreciate the full implications. It is a pity that he could not simply have plugged the tax loopholes which allowed the forestry companies to act as they did. I am sure that fewer people would have lost sleep over that.
Now, the whole forestry industry in the country has been put in jeopardy—and not only the forestry industry. This is the final blow to our rural economy. Farming has already been put in an extremely difficult financial position with every prospect of things getting worse. Now the one major alternative has been dealt a death blow.
We recently felled a fine old Scots fir plantation. The proceeds from the timber have in no way covered the costs of re-establishment. That shows the economics of forestry. Yet we would not have received a felling licence unless we had undertaken to replant. This was tolerable as long as we could recover much of the cost from tax. But now this is to be denied. It will not even pay to fell standard timber as one will have to spend a greater sum on reestablishing one's woods.
After the wholesale devastation of our estate woods to provide timber for the country in two world wars, we dedicated our woodlands and set about re-establishing them. Part of this dedication scheme was a maintenance grant. Now the Government want the scheme wound up. I require a small area for a gravel quarry. I offered to replace the area lost to the scheme with land from elsewhere. But this is no longer permitted. I would have to give up the whole scheme and lose £2,000 a year of my maintenance grant. If the land changes hands the dedication scheme is terminated and the maintenance grant along with it. If I want to take advantage of the new grants, such as the hardwood grant, I shall lose my maintenance grant. How can one manage woods in the long term if this is how one is treated by the Government?
1116 I feel very aggrieved over the Government's forestry policy—if they have one. I do not believe it is wilful. I believe that we are controlled by urban dwellers who do not understand the problems and are susceptible to pressures from so-called conservationists. The result will be no commercial woods nor amenity woods. What a sad state of affairs! Rural employment is bound to suffer.
This morning one of my foresters gave in his notice. He will not be replaced. His house will be turned into a holiday cottage. It is not economic to employ him. There is one possible solution although it is one which does not appeal to me. There could be a tariff on cheap imported timber, thereby pushing up the price of our home-produced timber.
To answer the noble Lord, Lord Buxton of Alsa, I gather that the Forestry Commission is now using a satellite to decide what land is, and is not, reasonable to plant. I hope the noble Lord will be happier.
§ 6.24 p.m.
§ The Earl of Perth
My Lords, there is one good feature in the Government's policy on forestry. It is that they have reaffirmed that they want to plant, as a target, 33,000 hectares a year. But to achieve this they have made some fundamental changes in fiscal arrangements, which, as I have listened to all noble Lords today, fill us with fear and gloom. None of us knows for certain what is going to happen.
I have one request to make of the Government: that in the coming years they give us the most detailed figures possible of what is happening in the world of forestry; how much is planted; whether it is new planting or replanting; what varieties are being planted; whether it is conifers, hardwoods or a mixture; and where they are being planted—whether it is in England or Scotland or Wales. I feel that only in this way can we make a judgment on what is going to happen in an industry which is of great importance to the country from every angle.
If these figures are given in the way in which I hope they will be—and I think it is extremely important to get them well set out—then if by 1993 our worst fears are realised, or perhaps even before 1993, we can hope that changes will be made to enable the Government to achieve the target which they are sticking to at the present time.
§ 6.25 p.m.
§ Viscount Mountgarret
My Lords, I too should like to join in thanking the noble Lord, Lord Carter, for giving us a chance to debate this very important subject which is so dear to many of your Lordships' hearts. It is clear that on all sides there is deep concern at the Government's outline proposals for a substantial change in the forestry arrangements in this country.
There is one point on which in a way I must disagree with my noble friend Lord Rees. He said to the Government, "I hope that you may realise that these proposals which you are suggesting may prove to be ineffective and that the next time round you will consult". We do not want a next time round. There is time to consult now, time to make alternative provisions, perhaps in the Finance Bill. I hope very 1117 much that what we say today will be taken on board by the Government.
The late Sir Compton Mackenzie, in his enormous autobiography Ten Octaves, made a splendid remark which I have always remembered. In admiring the beauties of the Scottish hillside and the upland of the Cheviots and Lammermuirs, he said, "Spinach? Yes, I like spinach very much, but in the right place". It is in the wrong place in those areas where it is planted in no way in relation to nature at all, in large rectangular blocks, by people who might be called fly-by-night planters.
While effectively shooting the large-scale forestry investor in the foot, my right honourable friend the Chancellor has, in his Finance Bill, effectively shot or is about to shoot the traditional estate owner and forestry grower in the head. I entirely applaud the underlying intention of the Government. But unfortunately, as with so many things in life, when the government of whatever party try to get rid of something of which most of us basically do not approve, they tend to have the unfortunate habit of throwing the baby out with the bath water. I therefore ask: is there not some way in which the Government could deal with the objective which they are trying to achieve—in other words, the reduction of the abuse of tax benefits and advantages to the mega wealthy and at the same time not have a dramatic effect on the traditional timber grower and estate owner in this country?
Much has been said on how we wish to try to manage our woodlands from all points of view, mainly on the very lines outlined in the four points which the noble Lord, Lord Carter, made with reference to the new woodland grants scheme. But if we go down the route which is being outlined in the Finance Bill, there is no hope of achieving any of those four objectives, let alone the fifth, of providing an alternative to agricultural production and assisting in the reduction of agricultural surpluses. There will be absolutely no incentive and no benefit. No estate owner could conceivable afford this.
There are other matters outside pure commercial forestry, growing of woodlands, which give me a great deal of concern. There are two areas principally. One is the maintenance and looking after of hedgerow timber which forms an integral part of the amenities of our countryside. Hedgerow timber in no way brings in any form of meaningful income to any estate. We all know what the dead elms have done. We have had to set to work to clear those away. Then there are many estates which for many good reasons have fir trees which are over-mature and are dying back. They need cleaning up, felling and replanting.
I myself try to plant at home something like 500 hedgerow trees a year for several reasons, not only for the amenity of the countryside but also because hedgerow timber prevents excessive soil erosion and gives good shelter to livestock in what we hope are good summers. Unless this is done we are going to have a very strange countryside in the year 2100 AD. But no private owner will spend money out of his net income to do this sort of thing. It is purely amenity 1118 and there is no pecuniary benefit whatever. I hope that at least the treatment of hedgerow timber can be dealt with in a different way from the overall forestry plan.
Some of us suffer from tree preservation orders and there again one has difficulty in trying to maintain on a continuing basis the features of the woods subject to those orders. One tries to underplant so that there is something to come on when the bigger trees are felled. Again, there is no pecuniary interest there.
I conclude—I do not want to go as far as my noble friend Lord Chelwood in what he would require of the Government—by asking very sincerely whether it might be possible, by scrapping the Schedule B arrangements, for established woods that are in existence today to retain the benefit of tax advantages—that is, the Schedule D arrangements—or at least for hedgerow timber areas under one acre and woods subject to TPOs to be under the equivalent of Schedule D. Finally, please consult before you do anything.
§ 6.32 p.m.
§ Lord Middleton
My Lords, as a taxpayer I understand the Chancellor's case for taking forestry out of the income tax system. As a timber grower, I believe that the case has been so well put by other noble Lords that I can merely echo them in saying to the Government that if they wish to keep the private sector viable, let alone expanding at the rate envisaged in their statements of last year, they should not remove one form of subsidy without very careful consideration as to what to put in its place.
The new woodland grant scheme has been devised in a great hurry, without, as has been said so many times tonight, proper consultation. This new scheme has rightly been criticised by my noble friend Lord Gibson-Watt and by many others, in that planting grants alone do not encourage long-term management and maintenance. I myself have to manage woodlands in low ground England, mostly hardwoods already planted, and because of wartime fellings they are in the five to 50 years' age group. It is this kind of forestry that will be severely handicapped by the new measures.
Like my noble friend Lord Buxton, I am a member of the Nature Conservancy Council, so I suppose I am what he described as a so-called conservationist as well as being a forester. The NCC, in its 1986 publication Nature Conservation and Afforestation, welcomed the expansion of forestry provided the trees were planted in the right places. The House of Lords EC Select Committee, of which I am also a member, in its report last year, to which the noble Lord, Lord Carter, referred, said very much the same thing.
My noble friend Lord Buxton has reminded us that 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. Here lies the difficulty. We must steer a very careful course. The Nature Conservancy Council document to which I referred sets out the scientific case for care in the selection of land to be planted while recognising the need for more trees. It is because sufficient care in siting new plantations has 1119 not been exercised that public opinion has reacted sharply to environmental matters and has been led to overlook the national need for more trees. Hence the need for a reasonable balance. As my noble friend Lord Chelwood said, it is partly to pacify this growing public unease that we have had this sudden lurch by the Government in the past few weeks.
However, it is an ill wind that blows no good. A change from fiscal support to grant support could make it easier to strike a balance if a recommendation by the House of Lords Select Committee were to be accepted. We saw merit in a suggestion by the Scottish Countryside Commission that there should be a planting licensing scheme administered by the Forestry Commission, which would consult with the local authorities and with other bodies such as the Nature Conservancy Council on proposals for new planting. If a planting scheme were not compatible with the interests of conservation the licence would be withheld, which would mean no planting grant. If the tax concession is to be abolished, that would be a very strong constraint against extending the forests into environmentally sensitive areas. If because of conflicting advice the Forestry Commission were to run into difficulty in identifying areas that should not be planted, the Government would have to decide.
If the Government really are serious about encouraging forestry in the UK—and last year we were led to believe that that was the case—two things are essential. First, we must have a sensible system such as a licensing scheme for selecting land that should or should not be planted, remembering that trees and conservation are not necessarily mutually exclusive. However, in the rare cases where they are, it will be the duty of the Nature Conservancy Council to present the scientific case for conservation in its usual impartial and disciplined manner.
Secondly, we must have, as so many noble Lords have said tonight, a long-term commitment by government after full consultation to back their scheme for expansion with adequate support properly targeted, so that the woodland cover of lowland Britain can be maintained free of the kind of shadow which has hung over it since 15th March this year.
I beg the Government now to consider very carefully whether the woodland grant scheme—welcome though it is in principle—is adequately designed to achieve their forestry programme which clearly is broadly supported on all sides of this House.
§ 6.37 p.m.
§ Lord Moran
My Lords, listening to this debate I do not think I am alone in feeling some slight bewilderment about what the Government's policy on forestry now is. I hope that the Minister will with his customary lucidity make it all clear.
After the Chancellor's announcement on 15th March the Minister of State at the Ministry of Agriculture, Fisheries and Food said that the changes he had introduced,bring to an end arrangements that were seen by a great many of us as unjustified and unacceptableIt must surely be a gain that some major investment 1120 decisions on foresty will no longer be taken simply on the advice of an accountant for tax avoidance reasons. But the interim tax arrangements are to continue until 1993. Large areas have, I think, been approved for planting but are not yet planted. I hope that the Government can ensure that in the next five years there will be a minimum of abuse.
The day after the Chancellor's announcement we had a joint statement from the Secretary of State for the Environment and the Minister of Agriculture laying down that in England the uplands and ancient woodlands should be conserved, that new plantings of conifers should not be approved on the uplands and that afforestation should take place mainly on arable land and improved grassland no longer needed for food production. I thought myself that this was an admirable announcement. The Countryside Commission described it as,one of the most significant conservation measures of recent years".But no similar statement has, I think, yet been made by either the Secretary of State for Wales—and, like the noble Baroness, Lady White, and the noble Lord, Lord Rees, I find this a cause for puzzlement and anxiety—or by the Secretary of State for Scotland. If the Government are sticking to their planting target of 33,000 hectares a year, do they therefore propose that the planting of conifers in the uplands should take place entirely in Wales and Scotland? If so, in Wales at any rate, where there are now only half a million hectares of rough grazing left as against 1 million in England and heather moorland now accounts for only 1 per cent. of the land area, the outlook is disturbing.
The remaining areas of open hill with their merlins and other birds will be under severe threat. Given the now well-established link between conifer plantations and acidification, which I think no one has so far mentioned, the streams, rivers and lakes of upland Wales will be in danger of losing their fish, birds and other forms of life. That is a danger that we really must try to avoid.
Grants are a complicated business. Like my noble friend the Duke of Somerset, I worked out the cost of planting a small area of land with hardwoods and found that despite the grants it would involve me in a continuing loss. The woodland grants scheme announced on 23rd March has increased planting grants by a flat rate of £375 per hectare. That erodes the differential grant between broadleaves and conifers. I regret that. Like the noble Lord, Lord Carter, I do not altogether understand how the new scheme relates to the farm woodlands scheme and I shall be interested to hear what the Minister has to say on that.
Forests like the Forest of Dean, Ashdown Forest and the New Forest are among our greatest treasures. We need more of them. I still think that the most sensible pronouncement that I have read recently on forestry policy was the report of the Countryside Commission entitled Forestry in the Countryside, which argued for a forestry policy based on multiple objectives: timber production, an alternative to agricultural use, rural employment, public enjoyment, increasing the natural beauty of the countryside and creating wildlife habitats. It 1121 suggested, too, urban fringe forests and a new Midlands forest. It looks to me as though the Chancellor, the Secretary of State for the Environment and the Minister of Agriculture may have read this report while the Secretaries of State for Wales and Scotland may not.
It is sad that commercial forestry has got itself so bad a name. The planting of the flow country was, I think, a bridge too far. Fountain Forestry and the Forestry Commission have a lot to answer for. But we must now look to the future. The Forestry Commission will now be solely responsible for dispersing massive grants. It is an enormous responsibility. The grants are up to two and a half times as great as before. The Forestry Commission should, I believe, be at least two and a half times as careful as before to ensure that the right kind of forestry is promoted in the right places, with environmental benefits, not environmental damage.
§ 6.42 p.m.
§ Lord Dulverton
My Lords, this is a subject which, as some of your Lordships may know, is very close to my heart. However, I shall try to restrict myself very severely in this debate at this time of night when so many noble Lords are due to speak.
I wish to start by congratulating the noble Lord, Lord Carter, not only on introducing this debate but on the very able grasp which he has of a subject which I understand is fairly new to him. I congratulate him on his great lucidity and I thank him.
So many noble Lords have mentioned thoughts and words with which I thoroughly agree. Just one or two have not done so. I am afraid that one of them is my noble friend Lord Buxton of Alsa, who started off by saying that he thought forestry was a jolly good thing but then quite clearly revealed as he continued that he did not think that conifer forestry was at all a good thing as regards conservation. Distinguished as my noble friend is in the world of conservation, I cannot quite agree with all that he said.
§ Lord Buxton of Alsa
My Lords, I shall not extend the debate but I wish to say that I was referring only to the flow country.
§ Lord Dulverton
My Lords, I too claim interest as a conservationist. That is a ghastly word which has been coined so recently. I have among other things received an international award in that sphere of interest. I am in the World Wildlife Fund and other such bodies. I shall not mention them all, but I just put in that thought because I want to use it to preface some of my other remarks.
I declare another interest in my close association with Timber Growers United Kingdom. I was the chairman of its predecessor and I still maintain close relationships with Timber Growers, which I think is doing a good job. In view of that, I deplore the fact of our Government's sudden volte face when decades of effort by foresters have attracted £600 million worth of capital investment in highly modernised timber mills based on our forestry efforts in the past 50 years.
1122 I believe that the Government have killed all prospect of achieving their target of forestry expansion which was so recently proclaimed by them—33,000 hectares per year—because despite the increased planting grants they evidently do not know that the outgoings in the aftercare of woods continue for about 30 years after the planting of conifers. In so doing the Government have killed off the prospect of further timber mills with all the employment that they bring, and are even in danger of starving existing ones. Yet if they kept the incentive of Schedule D—I say incentive, not dodge—the private plantations would be as from now contributing 60 per cent. from the pockets of their private owners towards their establishment.
I have always deplored certain examples of insensitive plantings which ignore other land uses and interests. But there are so many examples of good integration. I invite any Member of your Lordships' House or indeed anybody else to come and have a look at just one of them with which I have been involved near Fort William. That was established on a fairly unproductive sheep walk which employed three men. For 30 years we have been planting trees, hopefully in a visually attractive pattern, and with the interests of wildlife in mind. We have off a proportion of the ground kept the sheep farming enterprise going and are producing more and better lambs than the whole place produced 30 years ago. We have increased regular employment on the place from about two and a half men to 22 men, with housing to accommodate them. That number will rise. The figure of 5,000 tonnes of thinnings, giving downstream employment, will rise greatly as the years go by.
The estate is still heavily dependent on endowment income. I am sorry that my noble friend Lord Buxton, who said that he would send one of his television people up there to have a look at it, has not yet managed to find time to do so. We can weather the storm, and we have been doing so for many years, but more recent foresters have been betrayed and possible future investors in forestry expansion have been put off. They will probably invest their money overseas.
I have one final point to make in order not to exceed my five minutes. I commend the thought given to us by my noble friend Lord Middleton about forestry planting licensing by the Forestry Commission. I think that that is a splendid idea and it should be carefully considered.
§ 6.48 p.m.
§ Viscount Brookeborough
My Lords, I very much support the sentiments and feelings expressed so far in support of our forestry. If we look back in time we see that by the Middle Ages much of the UK forests had been cut down. It was only then realised that there was just enough forest left to supply local needs. For a period there was a sustained management programme but this was largely abandoned with the discovery of coal as an alternative fuel and the acquisition of colonies which provided a cheap and seemingly inexhaustible supply of timber.
Although some individuals continued to carry out forestry management, it was not until 1919 that the 1123 Forestry Commission was founded. However, taking the long-term nature of forestry, we cannot deny that there has never been a stable long-term policy in the United Kingdom or indeed in the world as a whole. If there was any stability in the United Kingdom, it was destroyed in the last Budget.
We have now arrived at a point where the United Kingdom is only 10 per cent. self-sufficient in timber. Temperate regions like our own contain all the largest net importing nations, and we are second only to Japan in this respect. That might not be too serious if our deficit could be made up from neighbouring countries. However, that cannot be so as the next highest importers are those very neighbours—Italy, West Germany, France and the Netherlands. Thus the European Community is only about 50 per cent. self-sufficient and is itself the largest net importing area in the world.
It is important to note at this stage that, regardless of how much forestry we have available, in temperate regions most countries would still require to import about 15 or 20 per cent. of more specialised timber grown in tropical regions.
Although the area of temperate forest has more or less stabilised, deforestation of tropical forest is proceeding at an alarming rate. A figure of about 15 million hectares a year is believed by Jean-Paul Lanly to be a fair estimate. Although much of that deforestation is carried out in order to further agricultural interests, the net results have been poor and have led to a serious loss of soil fertility and to erosion, often within three or four years. It has even caused the total collapse of some civilisations such as the Mayans in Guatemala and the megalithic culture in Easter Island. Recently there was a documentary on television about the Panama Canal. The considered opinion was put forward that due to continued deforestation in the area it would not be long before the natural supply of water became insufficient for the canal to operate as at present.
Forecasts are that worldwide timber consumption will rise sharply. Yet there is already an acute shortage of fuel wood in the tropics which poses urgent human problems. Nigeria has already become a net importer having been a massive exporter until recently. The Ivory Coast is about to become an importer as well. The problem is that only a negligible proportion of tropical areas is under any kind of management and much of it ends up as degraded land. It is estimated that the sustainable production from 200 million additional hectares is needed to cover anticipated deficits of fuel and industrial wood by the year 2000.
So we can see that the forestry policy in the United Kindom and indeed worldwide is not just a question of economics: it is becoming a combination of economics, morality and sheer necessity. Economically, it is important to cut down on agricultural surpluses and use more of the land for planting, and much of the funds presently used for subsidies and storage should be diverted to planting. Morally, deforestation in the tropics is becoming indefensible and the destruction of the community life in those areas verges on being criminal. Out of necessity we must produce more timber ourselves 1124 before imports from the tropics are a thing of the past.
Your Lordships may be relieved that I have not talked a great deal about Northern Ireland. Northern Ireland is not in the tropics; however, it is part of the United Kingdom and therefore the sentiments expressed for United Kingdom forestry apply equally to Northern Ireland.
§ 6.54 p.m.
§ Lady Saltoun of Abernethy
My Lords, this afternoon I shall join the noble Lords, Lord Rees and Lord Dulverton, in taking up the cudgels in defence of the much maligned conifer, which is under heavy attack both from conservationists and, regrettably, from some Members of your Lordships' House who talk as if they were some kind of silvicultural vermin.
The noble Viscount, Lord Brookeborough, mentioned the world shortage of timber and the increase in demand. There are now four major papermills in this country, of which two, Thames Board in Cumbria and Shotton Paper on Deeside, are largely dependent on spruce, small roundwood and chips. A further mill, Caledonian Paper, will come into production at Irvine in 1989 and will also be dependent on spruce. The Highland Forest Products plant at Dalcross which makes oriented strand board, depends on supplies of scots pine. Cement Bonded Particleboard Ltd. at Caerphilly makes a new wood panel product which can replace asbestos, and it too depends on spruce roundwood.
Those plants can use only spruce or pine, as the case may be. It is no good saying to them, "Sorry we have no softwoods this year but we can offer you some nice oak", because they cannot use it. They must have an assured and increasing supply of softwoods. Of those, spruce is especially versatile and at different stages in its growing cycle can be used as the basic raw material for pulp and panel mills and sawmills.
I hope that I have now said enough to make it clear that to maintain the way of life to which we are accustomed in this country we need a constant and even increasing supply of conifers, just as we need agricultural products to feed ourselves. But no sensible person complains that fields of potatoes, turnips, rape and barley are ugly and tells us to grow roses instead because they will look nicer.
In North-East Aberdeenshire, where I live and where I have a small interest to declare, sitka spruce is one of the few trees and about the only commercially viable one which can be grown successfully. Without it the countryside would be bleak indeed, especially in winter when its dark green provides welcome colour as well as much needed shelter for man, bird and beast.
In Upper Deeside, which I also know well, pine and larch perform the same office at an altitude where no hardwoods except the ubiquitous birch and the odd rowan and gean will survive. But I defy anyone to see the pale green of the flushing larch in spring against the dark green of the pine and not think it lovely, or in autumn not to delight in the gold of the larch and the birch with the occasional scarlet of gean leaves and rowan berries against the dark green of the pine and a background of snow on the hilltops.
1125 I am not in any way trying to decry the beauties of hardwoods. I believe that the ideal is a mixture of both, even in national parks, where soil and climate permit. Conifers are not just spruce and pine. There is the lovely feathery tzuga heteropkyllia (or western hemlock) and the majestic wellingtonia, the douglas fir and the silver fir, to mention but four, and of course larch. However, we must always take into consideration the necessity for a crop. To the countryman there is a pleasure in the sight of a well-grown crop be it sitka, barley, pine or potatoes which is unknown to the town-dwelling armchair conservationist whose views are called public opinion and who nonetheless uses paper and timber products with the best of us.
I appeal to the Government to stand firm, to stand up to the anti-conifer lobby and to protect our conifer crops because we need them.
§ 6.58 p.m.
§ Lord Wise
My Lords, many of the excellent speeches which we have heard this evening have been devoted to the problems of large-scale forestry enterprises. I want to address my very brief remarks to the difficulties facing owners of some of the smaller acreages of mixed hardwood woodlands which were devastated by the October hurricane.
There are many farmers with perhaps 20, 30 or 40 acres of mixed woodland which are now in an appalling state. The problem lies in the fact that the cost of clearance is generally infinitely greater than the proceeds obtainable from the sale of any timber which might be salvaged. Many owners just do not have the necessary financial resources to meet that cost.
A contractor coming into a 20 or 30-acre woodland to carry out clearance work, bringing his heavy equipment and his labour force with him, is not prepared to clear an acre or so and then move everything out again. It is totally uneconomic for him to do so. He has to do the whole job and obviously wants to be paid for it as the work proceeds.
I was encouraged by the remarks of my noble friend Lord Chelwood regarding the Government's answer to his Written Question. Surely it would be a good thing if a reasonable clearing grant could be given to the owners of such woodlands, even if it had to be as a part alternative to a planting grant. This land cannot be replanted until it is cleared. Without some financial assistance much of that will never be done, resulting in all the ensuing adverse environmental consequences. Once the land is cleared it could then be replanted in stages, perhaps an acre or so at a time, whenever money is available. That would be to the benefit of all.
There is no longer any scenic beauty about these devastated woodlands. They are now just an awful blot on the landscape—trees leaning over and trees that are just broken, jagged stumps. It is impossible to walk through the woodlands, and they have very little value in terms of conservation, amenity or even future timber supplies. There does not seem to be much point in giving grant aid in order to plant other land alongside while leaving these woodlands as they are.
1126 My noble friend must be aware of the difficulties that face these people. I ask him to urge the Government to give, if they will, further thought to the question of grant aid for clearing even, as I said, if it is as an alternative to a planting grant. That must make good sense.
§ 7.1 p.m.
§ Lord John-Mackie
My Lords, I too should like to congratulate my noble friend Lord Carter and thank him for introducing this very important debate, the importance of which has been shown by the number of speakers and the extraordinary wealth of points that have been made. There is very little left for me to say. Any thunder that I may have had has been stolen already. In fact, I should like to say that I am rather sorry for the noble Lord, Lord Sanderson. If ever a Government Minister got a bellyful, he has had it tonight. I shall try to be as brief as possible in order to give him a little more time to reply to all the points that have been raised.
I was intrigued and somewhat depressed to hear the pessimism about conifer planting expressed by the noble Viscount, Lord Mersey. I think he is wrong. I certainly hope so. As has been said, the target for the Government's planting policy is to have an extra 4 million acres of forest in this country in the next 50 years. If they were to adopt the 120,000 acres a year suggested by my noble friend Lord Carter, they would achieve that target in 33 years. It represents about 81,000 acres a year.
The noble Lord, Lord Buxton, was a little vague about the acreage of forests in this country and where it was located. Perhaps I can enlighten him a little. In round figures there are 60 million acres in the country, of which 10 million acres are covered by cement and tar; 30 million acres are arable, ploughable land and 20 million acres are hilltops, moorland and such. At present there are roughly 3½ million acres of conifers on moorland and highland. If we plant double that figure, roughly three-quarters of the planting will be conifers and one-quarter hardwoods. If we double that, there will still be roughly 10 million acres of open land for ramblers and others to walk on. The extent of that land is so great that it makes me mad when people do not appreciate the amount of land that is left for people who want to climb hills and walk over the land; and, for that matter, there is enough for the noble Lord to shoot his grouse as well as for everything else.
As we know and has been pointed out, the Government are nowhere near reaching their target. My noble friend Lord Taylor made the point that one of the reasons for that was the curtailment of the Forestry Commission's planting programme. I hope that it will be corrected. The Government have been given plenty of advice tonight on how to obtain their target one way or another.
The noble Lord, Lord Moran, mentioned that there are three statutory bodies dealing with the environment: the Nature Conservancy Council, the Countryside Commission for Scotland and the Countryside Commission itself in England and Wales. I understand that the national parks come under the Countryside Commission. Those bodies all know the Government's target and have basically 1127 accepted it. As the noble Lord said, each of them has produced a brochure about its ideas on forestry. I have them here with me.
Like the noble Lord, I think that the brochure of the Countryside Commission is very good. The one from the Scottish Countryside Commission goes further than the other two. I make no bones about it: the Nature Conservancy Council produced a very long, detailed and well-documented report but, if I may say so, it blotted its copybook later on over the flow country. The main theme concerns fitting forestry into the environment. That is fine but it must be done through co-operation and with a good deal of give and take, which has not happened in the past. I have spoken to Mr. Wilkinson, who is the chairman of the Nature Conservancy Council, and to Sir Derek Barber, the chairman of the Countryside Commission, and I know the third chairman of the Countryside Commission for Scotland. They all agree. So let us get on with the job, remembering that three-quarters if not more of this forestry will be commercial and that too heavy an environmental restriction could do a lot of harm. I emphasise that point because it is very important.
We must have understanding so that our debt to the forest can continue. I should like to read from Our Debt to the Forest:Trees are surely among the best chosen gifts of nature to man. From rain and from the scorching sun they afford shelter whilst from the pressure of the blast they protect our homes and gardens. They provide the match-stick from which we procure a light and the log which blazes in our grate. They give us the door by which we enter our dwelling, the beam and rafter that support our roof, the floor on which we tread. For our meals they give us the table, for our rest the bed; for our household and farm tools the handle, for our travel the boat; for our evening smoke the pipe, for our worship the church pew. At life's beginning they present us with the cradle, at our journey's end the coffin. Music is in their leaves, nourishment in their fruits; and, whether in vast forests"—I repeat, whether in vast forests—in woodlands, in stately avenues, in parks, in gardens, or standing in solitary grace, they furnish a third part of the whole world's beauty".Need I say more?
§ 7.7 p.m.
§ The Minister of State, Scottish Office (Lord Sanderson of Bowden)
My Lords, first of all perhaps I may say how grateful I am to the noble Lord, Lord Carter, for initiating this debate. I believe that he put down a marker to have a debate on forestry before the Budget and obviously he had second sight, knowing that this was going to be a very interesting debate when it came along.
We are fortunate in having a great deal of expertise among noble Lords on the subject of forestry, which has provided us with a very stimulating debate. Very strong feelings have been expressed. I should also like to offer my congratulations to all noble Lords for being short and succinct in their speeches; perhaps "short and sweet" are not the apposite words to use. I may not be able to cover all the points that have been raised. I shall study any that I do not manage to cover and I hope to write to noble Lords accordingly.
In view of the major changes announced in the recent Budget regarding the Government's support arrangements for forestry, perhaps at the outset I 1128 may assure the House that the Government have in no way drawn back from their support for the British forestry industry. It is our wish to see a continued expansion of forestry in this country in ways which are acceptable in environmental and land use terms.
The Government's aim of 33,000 hectares of new planting a year has not altered. As my right honourable friend the Secretary of State for Scotland said on 16th March in another place:Forestry has an important role to play in the well-being of this country. The industry has the support of this Government and has an assured future".The noble Lord, Lord Carter, referred to the world timber production situation, and I noted carefully his remarks. Indeed, I can confirm that the figures mentioned about timber imports to the United Kingdom in 1986 were of the order of £4.9 billion net. This contrasts with the value of whisky exports of £1.1 billion and the value of our car exports of £1.4 billion in the same year. I think these figures underpin the importance that the Government must attach to investment in the United Kingdom timber industry.
I can understand, although I do not share, the deep concern of some noble Lords that the removal of the special tax reliefs for forestry may have a detrimental effect on future investment in the industry. The noble Lord, Lord Taylor of Gryfe, was very clear in his view about this. I acknowledge that the tax arrangements were of very long standing. Indeed, there is little doubt that they were instrumental in encouraging a great deal of the post-war investment in forestry. However, we are satisfied that the replacement of those arrangements with a more straightforward system of grants will provide a sound and viable future for forestry investment.
I have to challenge the noble Lord, Lord Carter, when he talks about confusion in the mind of the Government. It was not so long ago—on 17th February, in this House—that his colleague the noble Lord, Lord McIntosh of Haringey, talked about the tax situation being grotesque and absurd. It has changed—and I hope that the noble Lord notes that.
In addition, the major reduction in the top rates of tax from 60 per cent. to 40 per cent. would undoubtedly by itself have brought about a changed outlook for some forestry investors. However, we have not simply increased the grant aid as a form of quid pro quo. We have gone further and introduced a totally new scheme to be administered by the Forestry Commission and to be known as the woodland grant scheme, which we are sure will appeal to a much wider range of potential planters.
The noble Lord, Lord Taylor of Gryfe, was interesting on this point. He asked me to say who these people would be. I think that those who are tax exempt at the present time might be interested in forestry. It will depend very much on the yield that they receive from their forestry investment. The noble Lord, Lord Carter, knows only too well, that the farming industry has welcomed the changes.
I hope that the carers for the countryside—as, indeed, farmers are—will look very favourably and carefully at the incentives given by the new grant arrangements. The farming industry could very well have a vital role to play in whether this policy is successful or not. We have also taken the opportunity 1129 to widen the scope of the objectives to encourage the multi-purpose role of forestry and in particular to incorporate new provisions to conserve the environment.
The aims of the scheme also include a recognition of forestry's crucial role as a provider of jobs in rural areas. Several noble Lords have mentioned this. Indeed, with my responsibilities for the Highlands and Islands, which include fragile areas depending very largely on a multifarious collection of industries, forestry is very important. There is also a potential for alternative uses for agricultural land. Many people interested in the subject have asked the Government to encourage planting "down the hill". To promote this, a supplement of £200 per hectare for planting existing arable or improved grassland of less than 10 years of age has been incorporated into the scheme.
The noble Lady, Lady Saltoun, mentioned the question of timber production and its importance to the country. As well as increasing timber production, which must be an objective of every scheme that the Forestry Commission authorises, although it need not he the principal one, we shall be encouraging the planting of woodlands which enhance the landscape, conserve wildlife, and in the longer term offer opportunities for public recreation. The noble Lord, Lord Taylor of Gryfe, was gloomy on this issue. I look forward to discussing his views on this matter in this Chamber. I feel, as he does, that public recreation in the future is very important in the public and private sector in forestry areas.
The needs of the wood processing industries mean that conifers will continue to comprise a major part of new planting, depending on the individual circumstances. This was mentioned by the noble Duke, the Duke of Somerset, and by the noble Lady, Lady Saltoun. Much has been written and spoken about conifer planting in the United Kingdom. I can do no better than to quote the kinsman of the noble Lord, Lord John-Mackie, the noble Lord, Lord Mackie of Benshie, when he said in this House on 17th February at cols. 723–24:I think that an awful lot of nonsense has been talked about forestry and the terrible green blankets that cover the hills and ruin everything … a conifer forest interspersed with larch can look absolutely beautiful. Anybody who takes a run down Deeside in the autumn can see the staggering beauty of conifers properly planted and inter-laced with larches and the appropriate proportion of broadleaved trees. It is not true to say that they ruin the countryside, but … they need planning".Yes, this Government must safeguard the countryside. There must be suitable environmental safeguards so as to protect the natural beauty and wildlife of the countryside. The rates of grant include a substantial differential in favour of broadleaves that will mean that broadleaved trees, which were already forming a significant component of new planting, will feature more strongly now than in the past. Particular encouragement will be given to the planting of broadleaves in mixed plantations as a result of our decision to provide the same rate of grant for such planting as for pure broadleaves.
The noble Lord, Lord Carter, points to the fact that we have not increased the planting grant for conifers in the proposed farm woodland scheme. I 1130 may put it another way round. What the Government have done with the farm woodland scheme— which is designed to encourage planting on better land—is to weight the scheme more heavily in favour of broadleaves with a view to broadleaves accounting for at least one-third of all planting in the farm woodland scheme. Of course, conifer planting under the scheme will attract annual payment for 20 years and I am sure that farmers will make their decisions based on their own judgment as to which scheme is best for their own circumstances.
The noble Lord, Lord Carter, said there would be need for a very sophisticated examination of what it was best to do in set-aside, or whatever. I wish him well when he comes to make his decision. I hope that the decision on the farm woodland scheme will be welcomed generally.
The remit of the Forestry Commission includes a requirement to seek to achieve a reasonable balance between the needs of forestry and those of the environment. The noble Lord, Lord Buxton, asked what balance means. It means what is says. The Forestry Commission has added to its environmental expertise in recent years. I have seen the work of the commission's wildlife and conservation officers supported by an in-house research branch. This includes six landscape architects, a conservation consultant and a consultant landscape architect. I hope that its work in this area will receive the publicity that it deserves in the future.
I was very pleased to hear the noble Earl, Lord Waldegrave, pay a compliment to the commission. It published guidelines for the management of broadleaved woodland in 1985 and has now incorporated similar guidelines in the new scheme to apply to the management of all types of woodland. This, together with the strengthening of the commission's scrutiny and consultation arrangements which will arise as a result of the switch to a grants-only system of support, should ensure that the right type of forestry takes place in the right places. This is a matter to which the noble Lord, Lord Moran, referred.
Perhaps I may deal with particular points. The noble Lord, Lord Carter, raised this question, and the noble Lord, Lord Buxton, is included in the answer that I give on the forestry's purpose. It is a multi-purpose. It is for timber production, to create employment in rural areas, to provide an alternative to agricultural production, to enhance the landscape, to create new wildlife habitats and to provide recreation. This answers the point of the noble Lord, Lord Buxton. We believe that there is scope for 33,000 hectares a year planting. The last review was in 1980, before the 1987 update. With the significant changes that have taken place of late in the Budget this matter will be kept under constant review.
The noble Lord, Lord Gibson-Watt, and many others asked about inheritance tax. Noble Lords know that this is a question that I shall be only too pleased to draw to the attention of my right honourable friend the Chancellor of the Exchequer. While dealing with matters relating to tax, I shall look very carefully at what my noble friend Lord Rees has said on the various detailed points and also 1131 draw them to the attention of my right honourable friend.
However, the noble Lord, Lord Gibson-Watt, asked one very important question: do the Government listen? It would be quite wrong to accuse forestry Ministers of failing to listen to the industry. It is true to say that some commentators have of late gone overboard in their efforts, saying among other things that conifer planting seems strongly against the national interest and they talk of philistine attitudes. These are harsh words and I am delighted to think that the industry as a whole is getting its act together under the FJCGB. There must be overall understanding by the general public of the case for forestry. The industry can now do this knowing that its hands are no longer tied behind its back by the tax system. I emphasise, however, that the Government are determined to heed the environmental considerations. I am sure that application procedures for planting grants will thus gain in effectiveness so that the correct balance can be struck.
Many noble Lords on all sides of the House spoke about management grants. I understand what they were saying, although on occasion I thought that the words went a little further than I would perhaps have expected. A number of noble Lords are concerned about the effects that the withdrawal of Schedule D relief may have on the ability of private woodland owners, especially those with broadleaved woodland, to meet the cost of management. I remind the House that planting grants have been substantially increased under the new woodland grants scheme. They will be paid in three instalments over a period of 10 years which will cover the time when the bulk of the expenditure on the woodland will be incurred subject to satisfactory maintenance.
It also needs to be borne in mind that while the special tax for woodland owners has been withdrawn, they will benefit significantly from the lowering of tax rates, especially at the top end. They will benefit too from the fact that any income received from timber during the maintenance period will now be tax free. However, I have listened very carefully to what has been said. This is a subject that I am quite prepared to discuss with colleagues after this debate.
I move on to storm damage, which was referred to by my noble friend Lord Gibson-Watt and also by the noble Lords, Lord Wise and Lord Chelwood. I understand the concern of woodland owners affected by the storm to get on as quickly as possible with the difficult task of clearing up devastation in their woods and restoring them to their former state through replanting. The Government are giving careful consideration to the recommendations made by the forest Windblow Action Committee that additional financial assistance should be provided for this work. Clearly I cannot anticipate the outcome tonight, but we shall announce our decisions as soon as we can.
My noble friends Lord Gibson-Watt and Lord Rees asked about the position in England. I believe the reference was to a statement made by my right honourable friend the Secretary of State for the Environment in another place on 16th March concerning the avoidance of large-scale conifer 1132 planting in English uplands. Indeed, it was also mentioned, I believe, by the noble Lord, Lord Rees, who also asked who was responsible for forestry in England.
The responsibility for forestry in England rests with the Minister of Agriculture. The situation in England, however, is very special in that the amount of unimproved land in the uplands is relatively small. Very little large-scale conifer planting has taken place in the uplands of England and the new policy will not have a significant effect on the Great Britain planting figures. In any event, we expect to see more planting taking place in the English lowlands. But the situation is quite different in Scotland and Wales. In those two countries there is much hill land where planting is likely to be acceptable with safeguards which will produce valuable raw material for industry and will create jobs. We know only too well, as a result of the massive investment in Shotton and the proposed investment which will open next year in Irvine in Scotland, what this means to the economies of those two countries.
Brief reference was made by the noble Lord, Lord Buxton, to the flow country. Indeed, I am glad that the whole debate was not dominated by that issue. In the light of the interim view by my right honourable friend the Secretary of State for Scotland on 23rd January that he saw scope for forestry and nature conservation to coexist in Caithness and Sutherland, with planting taking place in those areas of lower conservation value, I understand that the Nature Conservancy Council has been drawing up a programme of SSSI notifications which will shortly be put to the Highland Regional Council's working party. We expect to have a report from the working party in the not too distant future. The Highland Regional Council has told me that it will define the term "flow country" on that occasion.
The noble Baroness, Lady White, and the noble Lord, Lord Moran, asked about the situation in Wales. Although my territorial remit does not extend to the Principality, I can say that there is much hill land in Wales where planting is likely to be acceptable with appropriate safeguards. My right honourable friend the Secretary of State for Wales has already made it clear that cases will be considered on their merits and the existing consultation arrangements—the effectiveness of which will be enhanced by the proposed new grants regime—will continue to balance environmental and forestry planting objectives in the upland areas of Wales.
Various other points were made by the noble Baroness, Lady Robson, about the farm woodlands scheme. As time is moving on, I should prefer to write to her and also to the noble Lord, Lord Moran, about the woodlands grants scheme and its relationship to the farm woodlands scheme.
However, I conclude by saying that those of us who are involved with the forestry industry are only too well aware that the wood processing industry has been transformed in recent years and the Government have no intention of seeing it turned back. All investment decisions in the pulp and paper industries are based on resources which have secured availability in the long term. This is something of which the Government are well aware.
1133 The new measures we have introduced will not herald any fundamental change in the Government's support for the industry, but will ensure that it is better able to fulfil its role in a way which is better compatible with the multi-purpose benefits which it is in a unique position to provide. I hope the whole industry will react positively to the changes made and that it will intensify its efforts to present the importance of the industry to the general public—I have said it once and I will say it again—so as to ensure that its role is better understood and appreciated, and that downstream activities are encouraged by the positive attitude of the Government to the industry.
§ Lord Carter
My Lords, I express my gratitude to all noble Lords who have taken part in what has been an excellent debate, both wide-ranging in scope and 1134 well informed in content, with speakers from all parts of the House united in supporting the potential of our forestry industry and using the opportunity to bring home to the Government the problems which we see facing the industry.
I am also extremely grateful to the Minister for the courteous way in which he has replied to the debate. I am sure he will report the views expressed to all his colleagues in the Government who share with him responsibility for forestry policy and to his right honourable friend the Chancellor of the Exchequer.
It remains for me only to beg leave to withdraw the Motion.
§ Motion for Papers, by leave, withdrawn.
§ House adjourned at twenty-nine minutes past seven o'clock.