Forestry: New Planting. (Hansard, 27 March 1991)

§ The Parliamentary Under-Secretary of State, Scottish Office (Lord Strathclyde)
My Lords, the 1066 Government have recently announced significant increases in the supplement for planting on better quality land, and woodland management grants will be introduced next year. We expect both these initiatives to lead to an increase in the area of new planting. Total new planting in each of the past three financial years, made up of private planting for which grants were paid and planting by the Forestry Commission, was as follows, rounded to the nearest 100 hectares: in 1987–88, 28,800 hectares; in 1988–89, 29,100 hectares (including 100 hectares under the farm woodland scheme); and for 1989–90, 19,500 hectares (including 2,600 hectares under the farm woodland scheme). The total area of new planting in the current financial year is expected to show little change from last year.

§ Lord Taylor of Gryfe
My Lords, does the Minister agree that the drop from the target of 33,000 hectares to 19,000 hectares in the past year is fairly alarming considering that this country imports £7 billion worth of timber and timber products each year? Does he further agree that if that tendency continues it will have very serious consequences for our balance of payments?

§ Lord Strathclyde
My Lords, I would not say that the situation is alarming, but I certainly agree that it is disappointing in that the past few years have seen a downturn in planting which has been mainly due to the change in taxation after the 1988 Budget. I believe that the position will recover. Forestry already plays an important part in our balance of payments. I have every confidence that the industry itself will increase the number of plantings in the course of the next few years.

§ The Earl of Radnor
My Lords, does my noble friend agree that this rather arbitrary target will never be reached until one of two things happens? The first alternative is that grants for both planting and management should be realistic and indexed so that they are not eroded by inflation. The second alternative is a return to something like the previous tax regime for the planting of trees. Will the Minister consider those two alternatives?

§ Lord Strathclyde
My Lords, I do not think that it will be any great surprise to my noble friend when I say that I do not think there is any prospect of returning to the tax regime that we had prior to 1988. We continually review the grant position. My noble friend will have noted from my original reply that we have substantially increased the rate of grant in better land areas. We shall continue to review the grant situation and see whether it needs changing as a result of the consultations that we have with the industry.

§ Lord Molloy
My Lords, since the Forestry Commission is vitally concerned with this programme, can the Minister say whether there is any danger of the commission itself being unable to produce and train the necessary foresters who will make the scheme a success? Can that aspect of the matter be looked at?

§ Lord Strathclyde
My Lords, there is no prospect of that

§ Lady Saltoun of Abernethy
My Lords, will the Government consider treating corporate bodies investing in forestry as though they were individuals for tax purposes so that they can pay dividends without being subject to income tax and so that the sale of their shares will not affect capital gains on any profits realised?

§ Lord Strathclyde
My Lords, that is a matter for my right honourable friend the Chancellor of the Exchequer. He is well aware of the noble Lady's point of view.

§ Lord Gisborough
My Lords, if forestry is to be tax-neutral, does my noble friend believe that it should be taken out of the realms of inheritance tax, particularly in view of the recent experience of storms and the long growing time of hardwoods which are now being encouraged?

§ Lord Strathclyde
My Lords, that, too, is a matter for the Chancellor of the Exchequer. I know that he is looking carefully at the views expressed in the last two questions.

§ Lord John-Mackie
My Lords, is the Minister still of the opinion that he gave to me in answer to a Question a month or two ago that the Forestry Commission is not in any way inhibited in its actions? He should know that it is allowed to plant only 4,000 hectares a year. Over and above that it has to sell plantable land to raise money. Perhaps I may ask another question. Does he adhere to the statement made by the then Secretary of State for Scotland in 1988 that there is no question of the Forestry Commission being privatised in any shape or form? I have the statement if the Minister would like to see it.

§ Lord Strathclyde
My Lords, I do not think there is any question of the Forestry Commission being inhibited in any way. Of course it is limited to a significant extent in increasing its planting because the private sector, generally speaking, is quite happy to do so. There are sales of Forestry Commission land on the basis of rationalisation of its main plantations. As for the question of privatisation, that is not on the agenda at the moment.

§ Baroness Strange
My Lords, is my noble friend aware that we planted last year 2.5 hectares of broad-leaved hardwood forest trees and that my husband and I spent our last wedding anniversary planting oak trees?

§ Lord Strathclyde
My Lords, it is particularly to my farsighted friend that our policies are aimed. Those who enjoy small scale forestry can see not only the economic benefit but the aesthetic benefit too.

§ Lord Carmichael of Kelvingrove
My Lords, with regard to the forest now planted by private interests with grants from the Forestry Commission and the Ministry of Agriculture, are any rights of access by the public built into the grants when they are made?

§ Lord Strathclyde
No, My Lords. When the private sector accepts grants from the Forestry Commission it 1068 is obliged in some cases to discuss with local authorities the prospect of access. But it is not a prerequisite.

§ Lord Dulverton
My Lords, is my noble friend aware that £700 million has been invested in Britain, largely from overseas, over the past few years in the most advanced technologies of timber processing? This has been based largely on the faith placed in government announcements that forestry production during the next decades would swell production to an extent which justified such great investment. But this will clearly not take place unless the Government's announced target of 33,000 hectares per annum of new planting is to be achieved. What has my noble friend to say about this aspect of the matter? I hope that we are not content to let these investors down.

§ Lord Strathclyde
My Lords, my noble friend is quite right. There has been substantial investment to the tune of close on £1 billion over the past 10 years in down-the-line production. That has tremendous spin-offs in terms of economic activity and employment in relatively fragile areas. But that production was put in place at a time when it was forecast that there would be an increase in the amount of trees harvested of some 50 per cent. to 9 million cubic metres by the end of this century. That figure will not change. Nor will that figure have changed investment decisions. I am confident that over the next 30 to 40 years we shall make up the shortfall in planting over the past two or three years so that we shall see increased production.

§ The Earl of Perth
My Lords, is the noble Lord aware that in the Republic of Ireland this year probably more trees will be planted than in Scotland, Wales and England put together? Will he seek the advice of the Irish Government on how this is achieved, and will the Government, in this case, follow that example?

§ Lord Strathclyde
My Lords, it is of course the Irish who are following our example over the past few years. In relation to our land area we have done more to build up our forestry area than almost any other country in the world. That is a record of which we are very proud.

§ The Lord Privy Seal (Lord Waddington)
My Lords, it is my duty to point to the clock. We must keep enough time for the next two Questions.