Forestry Tax and Grant Regime (Hansard, 5 July 1989)

§ The Minister of State, Scottish Office (Lord Sanderson of Bowden)
My Lords, as the private planting grant-aided in the year to 31st March 1989 included a substantial amount undertaken before the 1988 Budget—or subsequently with the benefit of transitional tax reliefs—it is too early to say what impact the new forestry tax and grant regime will have on planting levels.

§ Lord Jenkin of Roding
My Lords, in view of the reported burning of many millions of small nursery saplings and of the widespread expectation that forestry planting this year may be no more than a third of the level that it reached last year, is there not a case for a much greater publicity drive to alert companies—perhaps foreign companies—which might be prepared to invest in forestry in this country? They were not able to take advantage of the previous tax regime, whereas they can take advantage of the new grant regime. If this is not done we shall face a shortage of timber in the years to come.

§ Lord Sanderson of Bowden
My Lords, I take my noble friend's point on this matter. The secretary of the Royal Forestry Society has said that prospects for forestry seem to be better. It is a question of attracting different types of investor. With the 1160 information coming from the Forestry Commission and the dedicated work of the Forestry Industry Committee of Great Britain, I am absolutely certain that we shall achieve over time what my noble friend requires.

§ Lord John-Mackie
My Lords, does the Minister agree that his noble friend's Question would have been much better asked before the Budget? If some assessment of what might happen had been made then, we would not have had this cock-up, which, as the noble Lord said, is messing up 40 million young trees.

§ Lord Sanderson of Bowden
My Lords, I recall that it was not only on these Benches that the changes in the Budget last year were welcomed. One of the experts who has nursery trees in his business, Mr. Christie of Fochabers, has said: The Government's long-term policy is not far wrong. We think it will come right. Demand for timber is there". It is not just one-sided in this matter.

§ Lord Rees
My Lords, if, as seems likely, actual planting, as opposed to grant applications, which are always notoriously an unreliable guide to such matters, falls short—it seems likely to fall far short of the Government's figures—what measures will they propose to restore confidence in this much battered area of economic activity?

§ Lord Sanderson of Bowden
My Lords, my noble friend is an expert on these matters. He will recall that I said that with such a big change we expected that there would be a dip in planting in the year ahead and perhaps in the years ahead. However, we feel that it was in the long-term interests of the industry to move to the new position. These matters are kept under review by myself and my colleagues.

§ Lord Lloyd of Kilgerran
My Lords, the Minister was enthusiastic about the potential prosperity of forestry in the United Kingdom. Does he have the same enthusiasm for the future of forestry in Wales? In this connection I must declare an interest as the owner of a few hundred acres of forestry planted 1,000 feet above the little town of Tregaron.

§ Lord Sanderson of Bowden
My Lords, I know that the noble Lord is an expert on matters concerning Wales. I undertand his point, but I should make it clear that the long-term future of the timber industry in this country is assured. At the turn of the century the Forestry Commission, which is a major part of the forestry industry, though somewhat reduced in size, will be supplying substantially more timber to the industry than it does at present.

§ Lord Lloyd of Kilgerran
My Lords, the noble Lord has set out the position for the whole country. I asked about the position in Wales. As far as I have understood him this afternoon he made no mention of Wales.

§ Lord Sanderson of Bowden
My Lords, if the noble Lord wishes to have details of the position in Wales I shall be perfectly happy to write to him. But, overall, the industry is in good heart.

§ Lord Eden of Winton
My Lords, in keeping the matter under review, will my noble friend bear in mind that there is a strong case for making a distinction between the planting of broad-leaved hardwood timber and the planting of coniferous timber? Is he not aware that the planting of broad-leaved trees may well suffer as a result of the tax proposals? Is it not therefore most urgent that this matter is reviewed?

§ Lord Sanderson of Bowden
My Lords, my noble friend may be aware that the broadleaf policy is being reviewed at present. The Government will come forward with their acknowledgment of the consultation which has recently taken place. As regards the question of broadleaves as such, I must say that I do not share my noble friend's pessimism; in fact, only last month I attended the opening of a new nursery in Scotland where 75 per cent. to 80 per cent. of the good business being carried on was in broadleaves.

§ Viscount Thurso
My Lords, the noble Lord has referred to a long-term policy for forestry on the part of the Government. Can he tell me where I may discover what that policy is?

§ Lord Sanderson of Bowden
My Lords, as the noble Viscount knows, we have targets for forestry planting in this country which he will be aware cover both the woodland grant scheme and the forestry grant scheme. In both cases those targets are constantly watched. In addition, I do not think that it is insignificant that investors in the industry—to quote, Caledonian Paper, which has a factory in Irvine that will be opened tomorrow—do not believe that the future of forestry in this country is under threat.

§ Lord Stodart of Leaston
My Lords, does my noble friend realise the significance of, and does he not also draw great encouragement from, the fact that a former distinguished member of the Treasury—namely, my noble friend Lord Jenkin—has made encouraging remarks about forestry?

§ Lord Sanderson of Bowden
Yes, my Lords. I believe that there is a sound future for forestry. Of course, when a major change in budgetary arrangements takes place there must be concern as to whether the whole situation will improve. But my noble friend is quite right, I have no doubt that there is a very good long-term future for the prosperity of this industry. Indeed, I take note of what my noble friend Lord Jenkin said as regards publicity.

§ Lord Jenkin of Roding
My Lords, perhaps I may say in response to my noble friend—

Noble Lords
Question!

§ Lord Jenkin of Roding
My Lords, the question I wish to ask is whether my noble friend recollects that, as Financial Secretary to the Treasury, I actually published in 1970 a very encouraging White Paper 1162 on forestry? I must say that I hope my noble friend will follow up his last remarks about publicity with some urgency. I believe that without such action we shall be in danger of having a considerable gap in planting which we shall regret in the years ahead.

§ Lord Sanderson of Bowden
My Lords, I acknowledge that a good deal is going on in this respect; however, there is always room for more.