Forestry

HL Deb 11 January 1995 vol 560 cc176-213

3.7 p.m.

Lord Taylor of Gryfe

rose to call attention to the Government's Forestry Review of August 1994 and its impact on the future of forestry in the United Kingdom; and to move for Papers.

The noble Lord said: My Lords, before I deal with the substance of this Motion, I observe from the list of speakers that the reply to the debate will be made by the noble Earl, Lord Lindsay. I should like to congratulate the noble Earl on his promotion and wish him well in the duties that he now undertakes.

At the same time—and I mean no disrespect to the noble Earl—I deplore the absence of the Minister of State who is responsible for these matters in the Government. The fact that the Minister of State is absent and the most junior member of the Government Front Bench, however able—and I know that he is able in this regard—is to deal with the matter may be taken by industry and by Parliament (and I speak as the chairman of the all party parliamentary group of both Houses dealing with forestry) as indicating that the Government have a rather low estimate of the importance of forestry in this nation.

Having made my protest, I can now turn to the substance of the debate. It is almost two years since we had a debate in this House on forestry. At that time there were 25 speakers, who were allowed, I think, five minutes each. Today we have a rather more generous allocation. But the Government should be aware of the interest in this matter and its importance, indicated by the fact that again we have a fairly long list of speakers.

On the last occasion the Minister indicated that there were two important matters before him. First, he had just announced the appointment of a special inter-departmental committee to consider forestry—not only the incentives but also the ownership and management of the Forestry Commission estate. Some of us were nervous about that. However, on winding up on that occasion the Minister gave an assurance. He observed that the most important consensus reached is that in Britain we must continue to plant more trees. He said: It continues to be our policy to encourage the expansion of woodland cover in Great Britain".—[Official Report, 14/4/93; col. 1143.] I notice that the noble Lord, Lord Strathclyde, has just withdrawn from the Chamber. Two years previous to that debate he had said: I have every confidence that the industry itself will increase the number of plantings".—[Official Report, 27/3/91; col. 1066.] Two years before that his right honourable friend the Secretary of State for Scotland gave similar assurances. He stated: It remains the government policy to expand forestry wherever possible". Today in this debate we can measure those assurances against the record. I hope that we shall do so.

However, before I criticise the Government, perhaps I may reiterate some of the basic factors which justify an expanding forestry policy. First, apart from Ireland this country has the lowest forestry cover in Europe. Ten per cent. of our land area is under forestry as against 30 per cent. in Germany and 26 per cent. in France. That is despite the fact that in this country we have the land, the climate, the soil and certainly the expertise to take advantage of this important renewable resource.

Secondly, we are constantly reminded that this country has a serious balance of payments problem. The total consumption of wood and wood products in Britain has increased by more than 30 per cent. in the past 10 years. It will increase even more, and more rapidly, because of the devaluation of sterling. The present import bill for wood and wood products is £6.3 billion, which is a sizeable part of our balance of payments deficit. In this country I wish that we would spend more time talking not only about export promotion but about import substitution too. It is an area in which forestry can make some contribution.

Thirdly, we have had many debates in this House stressing the importance of Britain's manufacturing industry and its decline. In the past eight years the wood processing industry in this country has invested more than £1 billion in new plant and equipment. That has all been done on the assumption that there would be a continuing supply of home-grown timber to meet its needs. In Scotland alone the Caledonian Paper Mill invested some £215 million in the past few years in new plant and equipment. Those companies require long-term contracts providing continuing supply of home-grown timber. While the private estates will play some part, only the Forestry Commission can supply the bulk and the continued supply of timber to those new industries.

At present the Forestry Commission is meeting its commitments to the pulp mills and wood processing factories. However, that is being done only because people planted trees 20 and 30 years ago. Twenty years ago the Forestry Commission planted 20,000 to 30,000 hectares a year. I refer to the Forestry Commission Corporate Agenda which was recently published. It makes this sad announcement: Because of financial constraints our new planting programme … has shrunk below 1,000 hectares this year. Our planned programme this year is 824 hectares, the lowest [planting programme] in the 75 years history of the Forestry Commission". I wonder how the investors in the wood processing industry who have been given the assurances that the Government are committed to an expanding forestry policy will consider those figures.

Another aspect which justifies an expanding forestry policy has been discussed in this House on various occasions. It is the importance of forestry in catering for the growing leisure industry. Last year the Forestry Commission welcomed 50 million day visitors into its woodlands. Those are not people just passing through; they visit for at least three hours on each occasion. I am quite sure that the urban population is becoming tired of the faxes, the mobile telephones, the trivia on television and the dullness and pollution of urban life. It will require more and more availability of access to woodlands. I am happy to say that not only is the Forestry Commission pioneering that but the private sector is also responding. I was delighted to read recently in The Times that the noble Duke, the Duke of Buccleuch, one of our most enthusiastic foresters and one of the largest landowners in this country, has joined the Ramblers Association. It is not that the noble Duke is able to take full advantage, I regret to say, of the trekking in which ramblers engage, but it was an indication by the noble Duke that he was anxious to encourage public access to private woodlands; and I commend him for that.

Similarly over the new year I walked in the woodlands above Dunkeld and Pitlochry in Scotland—a beautiful area. The sun was shining and snow was on the hilltops. The local authority had combined with the noble Duke, the Duke of Atholl, and the Forestry Commission to plan a great network of the most interesting and beautiful walks in that area. The Forestry Commission pioneered that, but the combination of the private sector working in partnership with the commission is opening up the country.

Having established, I hope, that there is a basic case for forestry I should now like to examine the Government's attitude to the Forestry Commission. This year is the commission's 75th anniversary and we all welcomed the recommendation in the report now before us that the commission should remain in public ownership. That was a great relief not only to people like myself who are anxious to encourage that view but to landowners, environmentalists, trade unionists and ramblers who all pressed the Government to ensure that the Forestry Commission remained public property. We are delighted that it will be so. However, I notice in the commission's annual report that while it will remain in public hands, the Government are allowing that important organisation to decline quite dramatically.

More than 20 years ago when I was chairman of the commission, we planted about 23,000 hectares per annum. That has decreased to about 800 hectares this year. The majority of that will be in broadleaves which make some contribution to the environment but none whatever to the economic necessity of supplying our wood-using industries. The commission's annual report for this year states that—I am sure that there will be rejoicing in the Treasury—this year the Forestry Commission will be self-financing. How is that possible? It is quite easy: all you do is to sell off your existing stock on which you have incurred costs in the past and on which you have accepted the charges in your past accounts and you then enhance your income. That is running down a business. At the same time as you are selling off your stock you are not replacing it, so it may cause rejoicing in the Treasury that the Forestry Commission is self-financing but there is no rejoicing in the wood-processing industries, which assume that they will have a continuing supply of stock.

Another aspect which indicates the Government's declining interest in the Forestry Commission is the disposals programme. A few years ago the Government said that they would have one or two tidying-up operations in selling off bits of the forestry estate. The tidying-up operation has now exceeded 187,000 hectares of public land which has been sold at a depressed price because there has been a poor market for land in the past few years.

Although they have given repeated assurances that they believe in an expanding forestry policy, the situation is that the Government are constantly and steadily running down the operations of the Forestry Commission, which is the dynamic sector of the whole forestry industry. That would not be so bad if the private sector were planting and expanding to compensate for the decline in the public sector. But that is not so.

I have a paper before me from the Forestry Industry Committee of Great Britain which states: We continue to express our disappointment over the Review of Incentives for Forestry Investment promised", by the Government. We have a situation where there may be increased applications for grants at the moment because they have been held up until the review took place, but there is a constant decline in new planting and expansion of forestry. I ask the Government to tell us how they see the future of the Forestry Commission in the light of the facts that I have reported. I ask them too whether their incentive programmes are working in relation to private sector forestry. I await their assurances with great interest. I beg to move for Papers.

3.25 p.m.

Lord Beaumont of Whitley

My Lords, first I wish to thank the noble Lord, Lord Taylor of Gryfe, for having initiated this debate. Yesterday he kindly said that he was pleased that I was taking part in it and I was so disorientated, first, by jet lag and, secondly, by your Lordships' deliberations on the European Communities (Finance) Bill, that I asked whether he would be making a speech. He kindly refrained from laughing outright and I am delighted to have been able to hear the trenchant speech which he has just made.

Secondly, I wish to welcome the noble Earl, Lord Lindsay, to the Front Bench to reply to the debate. We shall miss him very much from the Committee on Sustainable Development in which he has played such an active part over the past few months. Without in any way dissociating myself from the comment about the absence of the Minister of State, I can assure the noble Lord, Lord Taylor, that if the Government were to choose a Whip to answer on this subject they have chosen the best possible person, not just the most junior.

Thirdly, I wish that the noble Lord, Lord Mackie, were here to speak from these Benches with his great personal and practical knowledge. However, I shall talk on a rather wider scale about my overall ecological anxieties. I find that the review seems to lack an overall dimension, along with, it seems, the whole of the forestry set-up in the country today.

There are many aspects of forestry but there are three major ones. The first is the effect it has on the ecological system, both globally and nationally, and the micro-effect of that on the biodiversity of the animals and plants which live in the forests and on the habitat. There are great doubts in the review as to whether the arrangements for the care of biodiversity are properly looked after. Secondly, there is the aesthetic side, which is not to be underrated. A certain amount of attention has been paid to it over recent years, but it is important that this beautiful country of ours should have the right kind of forestry in the right places. Thirdly, there is the economic side, with the question of renewable resources.

There appears to have been a certain muddle about consultation on the matter and I have received brief after brief complaining about lack of consultation. One brief went so far as to suggest that the Government were in breach of Agenda 21, in which the relevant part on forestry states: Governments should promote and provide opportunities for the participation of interested parties, including local communities … industries … in the development, implementation and planning of national forest policies". The consultation has been less than it should have been. As I have already suggested, there is uncertainty about the amount of care that is applied to conservation matters. The Friends of the Earth state: We are particularly concerned over the implications for the management of the many areas of importance for wildlife and biodiversity over which the Forestry Enterprise is currently custodian". There appear to be huge areas of uncertainty as to how, in practice, this role will be transferred to the new body. For example, paragraph 3.26 of Our Forests—The Way Ahead states: Provision will be made for direct expenditure on recreation. conservation and heritage activities". But no indication is given as to what will be the extent of this provision nor as to how it will be determined.

Similarly, it is stated that further consideration will be given to arrangements for the provision of non-market benefits. But there is no indication as to how that will occur or by whom it will be given; nor is there any commitment to implementing any findings of these considerations. It is particularly worrying that the new trading body is to work to "demanding, but achievable" financial targets, but nowhere can we find any commitment set down for the trading body to work to equivalent environmental targets. That is particularly worrying given the commission's role as the manager of several hundred sites of special scientific interest, some of which also have other designations as recognition of their international importance. 0 As if those two problems were not enough, the third one is that the sustainable economy, to which we and the Minister are committed and in which we are both intensely interested, demands that we should move towards less consumption of the world's forests and more consumption —or rather a larger percentage consumption—of our own. In a country where the consumption of newspapers and their contents reminds one rather of drug addiction, there should be some governmental guidance or control on the management of demand. Worldwatch paper No. 117, states: Per capita paper consumption is soaring worldwide, a disheartening trend for the environment because the pulp and paper sector is the biggest polluter among wood products industries".

It is for this country to play its part in world sustainable development. This appears to be another area of the whole industry on which the Government, in the particular paper that we are considering today, do not really seem to have set their mind. We produce more and more wood—of which we consume more and more. Recently the Government, in their transport policy, abandoned the idea that we can go on building more and more roads for more and more cars. The time has come for them to consider not only whether or not they should produce more and more wood, but to do something about stemming the consumption of the wood that we have.

3.34 p.m.

Lord Rees

My Lords, I add my thanks to the noble Lord, Lord Taylor of Gryfe, for having provided the opportunity for this long overdue debate on forestry. The noble Lord was able to set a particular tone for the debate. He has a unique combination of experience in forestry in both the public and private sectors. We are much in his debt. I should also like to add my congratulations to my noble friend Lord Lindsay who will reply to the debate. I regret that the noble Lord, Lord Taylor, should make any stricture on the noble Earl's first appearance on the Front Bench. I know that with his particular experience of Scotland, and indeed of South Wales, he will have a notable contribution to make, not only to this debate but to other debates in which he will be called upon to answer for the Government.

It is singularly appropriate that we should at last have an opportunity to debate forestry in the aftermath of the Statement by the Secretary of State for Scotland on 19th July. In the time that is available to me I shall have to limit my remarks. I shall not attempt to cross swords (in, I hope, a gentlemanly way) with the noble Lord, Lord Taylor, about the Forestry Commission and the way that it has been treated, except to say that I certainly accept that it continues to have a special position both in its regulatory role and in its research role. I also accept—and this is where I part company from the noble Lord—that there is quite a case for sharpening both its commercial management and the disposal, at least in part, of some of its assets. I can only speak, for example, of South Wales, which I perhaps know a little better than does the noble Lord. There are still many pocket handkerchiefs of forest land owned by the Forestry Commission which I do not believe add substantially to its commercial, regulatory or research role.

Nor shall I touch on the national forest, which was mentioned in the Secretary of State's Statement, or on the environmental and recreational aspects of forestry. All those can be approved provided they are not supported and sustained at the expense of the private landowner, who has a difficult enough time in the present climate.

I turn briefly to commercial forestry. I may be proved wrong in the course of the debate, but I assume that no one in the House this afternoon, at least in this context, adopts the Manchester liberal approach that there is no call for any kind of government intervention or support in the management of this national resource. Were it necessary to debate the point, I would merely draw attention to the investment, quite a lot of which has recently come from abroad, in the wood processing industry which has been made on the assurance of a secure supply of native timber, in particular of native softwoods. I draw attention to the impact on employment' in many parts of the United Kingdom where there are limited alternative job opportunities. That aspect can never be ignored.

It has been the continued policy of all post-war administrations that there should be a sustained and encouraged policy of fresh planting, particularly of softwoods. Indeed, we were assured that government policy was that planting levels should be sustained at about 33,000 hectares almost immediately before the new regime was introduced by the Finance Bill 1988. As noble Lords will recall, that regime deprived forestry of all the income tax and corporation tax reliefs that were then available. As was forecast by many people, and on a modest scale by myself, as a consequence of those measures there has inevitably been a dramatic and evident reduction in planting levels. By 1993–94 only 16,000 hectares were planted, of which 5,000 hectares were conifers. I am extremely sorry that my noble friend Lord Lawson of Blaby did not remain in his seat. I would have been very happy to debate the unwisdom of the measures contained in the 1988 Finance Bill which, I am bound to say, I feel were introduced without proper consultation. Certainly, I was unaware of any widespread consultation before those measures were introduced.

I feel that it is a rather shabby and lame excuse to say that where budgetary matters are concerned they have to be sprung on an unsuspecting public. Certainly, I and my noble friend Lord Lawson in earlier years always forecast measures which had such wide policy implications, not least by publishing a Green Paper or some draft clauses, so that the world could be apprised of what was in train and those matters could be properly debated. However, it is perhaps a little late to return to 1988. I hope that we shall be able to continue to keep under close review this area of public policy.

Certainly, by the summer of last year—in July—the time had come to review the impact of those particular measures to see what had been the consequences. It was self-evident that there had been a dramatic and unattractive decline in planting levels. So the question must have arisen, even in Whitehall, of how much and in what form assistance was necessary to restore forestry commercial planting to the kind of levels that the Government had proclaimed to be necessary and advisable in 1988.

The Secretary of State has made modest increases in the grant regime—I believe about 14 per cent. overall—offset, I have to say, by a rather unattractive reduction in the restocking grant, the reason for which entirely escapes me. It may well have been that in exchanges in the other place that was fully explained, but I see no very real justification for the reduction in the restocking grant. I am sure that it will have a damaging effect on forestry practice.

At this early stage, it is perhaps churlish to be so critical of the proposals contained in the Statement of July. However, I must ask the noble Earl what the Government's response would be if, in a few years' time, there proved to be no increase or no substantial increase in planting, particularly coniferous planting. If I may coin a phrase, will the Government be prepared to go "back to basics"?

Will the Government compare the cost of grants with the cost of tax reliefs, if tax reliefs can be regarded as a cost by government? Will they reflect, consider and compare whether the system of mixed grants and tax reliefs has produced more planting than the pure system of grants, bearing in mind that a system of "pure" grants will always be under constant and relentless pressure from the Treasury to be maintained at the lowest possible level?

There has been much ill-considered criticism of the system of tax reliefs. I merely remark that Schedule B was perhaps a hangover from an earlier regime; but the Schedule D reliefs were precisely the same as those available to any other business. It is ridiculous to regard that particular regime as the basis for large schemes of tax avoidance.

So it is time to look at the whole question with a much more open mind; it is time to compare the support for forestry given in this country with that given to our competitors in France and Germany, as the noble Lord pointed out; and it is time to consider whether a reversion to a combined system of tax reliefs and grants might not at last provide the planting levels for commercial woodlands that the country needs. I hope that when he winds up, the noble Earl will give some encouragement to forestry and persuade us that the Government will preserve an open mind on this very sensitive issue.

3.43 p.m.

Lord Barber of Tewkesbury

My Lords, I too thank the noble Lord, Lord Taylor of Gryfe, for initiating this debate. I have to declare an interest. As I have no intention of sailing under false colours, I want to make clear that it is a considerable interest. I am chairman of a company which has a forestry division that looks after 150,000 hectares—something like 12 per cent. of all the private woodlands in the United Kingdom. I have a nursery business here and in the Republic of Ireland which produces something like 40 million trees a year. So the interest is considerable and I want to make that absolutely clear.

My contribution to the debate—which I must make in seven minutes—is to offer your Lordships five particular points. My first, tedious though it is, is something of a repetition of what the noble Lord, Lord Rees, said. It is an inescapable thought, which to me has always been a historical question: would forestry have been taken out of the taxation system in the 1988 Finance Act had it not been for the juxtaposition of bitter and wholly justified critical publicity about the ravaging of the flow country and the equally bitter front pages of the tabloids castigating richly endowed entertainment figures for becoming yet richer through the taxpayer?

But whatever the fiscal and ethical issues, the pre-1988 years delivered a very satisfactory deal for the taxpayer. There can be no doubt—this is fact and not just supposition —that fiscal encouragement for new planting was and is much cheaper per hectare than grant aid, probably by a factor of three. One wonders, too, whether at the time any consideration was given to bringing forestry fully into the taxation system—at both ends, akin to any other industry and in particular common treatment with agriculture— rather than pushing it into unknown waters and, as some would say, delivering a grievous wound, from which the forestry industry has not yet recovered. Also, let us not forget the employment part of that wound. There has been widespread redundancy on private woodlands as the transitional period from 1988 to 1993 ended. One forestry contracting company had to lose a third of a labour force which was several hundred strong and would have lost even more had there not been success in finding export markets for the nurseries.

Secondly, it is worth recalling that against the background of failure to achieve annual planting targets, depletion of the national conifer forest has been growing apace. The figures are interesting. In 1981 to 1989 conifer plantings were 93 per cent. of the total trees planted during those years; but in 1992 to 1993 they had dropped to 33 per cent. and were only 24 per cent. of the level attained under the last two years of taxation relief. Yet, there we have the long fibre material required as a feedstock for the UK processing industry which we can grow faster than our competitor supplying countries. I do wish that that point could be emphasised more. We can all derive satisfaction from the environmental enhancements that have come through the expansion of hardwoods. But it is the softwoods' commercial engine that generates the money and justifies the processing investment of recent times. So there is a pressing need to keep things in desirable balance and to aim for the right kind of equilibrium.

The other day I was pained to find a press release from one of the conservation lobbies. It deplored the new incentives for conifers, minuscule though they may be. Incidentally, can we not strive in the whole environmental field for a better rapprochement and acceptance of balance by all with an interest, for the drip drip of criticism has had a profound effect on public opinion, which has never had the opportunity of hearing the drip drip from the other side?

Thirdly, in reading the back history, one is struck by the expectations that the policy review engendered. The private forestry side had truly believed that the Government had committed themselves to considering all the incentives for encouraging investment. Bold steps were confidently anticipated. Instead, in the event, there came a review which was mainly concerned with amending the woodland grant scheme. Instead of something dramatic and exciting, there was a reshuffling, part of which was to reduce seriously the restocking grants. That is most unhelpful to the serious long-term owner and unlikely to spur the incorporation of environmental features in the subsequent rotation. Many voices—I do not associate myself wholly with them—have referred to tinkering and reshuffling, with a smidgen of icing on the cake.

One is struck by the unanimity of the view that the measures will not put fresh life into the industry on the scale needed. The Forestry Industry Committee of Great Britain, the Timber Growers' Association, the Country Landowners' Association and the forestry companies all seem to be in accord and agree that new commercial planting needs new investment. It will not be done on any significant scale by existing landowners as, on average, planting by volume and parcel size will usually be low. Again, it must be emphasised that new non-landowning investors are much less interested in grant handouts than in reliefs; and, more importantly, their advisers—the trustees, lawyers and accountants—will see little in the outcome of the review to justify investment diversification.

Fourthly—I have one eye on the clock—in the interests of bringing in new investment, can we look forward to the time when middle-sized shareholders can buy into collective forestry investment schemes? Can we look forward to a more flexible, "loosened up" Securities and Investments Board approach to encouraging those schemes which cannot at present be openly marketed? Have not HMG ignored something which is wholly in accord with their policy of widening the investment base?

Lower down the scale from the medium-sized investor, there must be large numbers of people who would like to have a positive stake in our forests and woodlands. We underestimate the vicarious pleasures which people have in being part of something which is attractive, desirable and interesting. We have seen the astonishing success of the Woodland Trust in attracting funds from 200,000 members, many of whom go nowhere near the forests they buy. In my time as chairman of the RSPB I was staggered to learn that only a minute proportion of our members went anywhere near the bird reserves; they gave money because they wanted to keep the avocets or whatever flying.

Why can members of the public not have it made easier for them on various levels to hold a more direct personal stake in our forests by some bold, imaginative plan or plans to enable them to subscribe? Why can we not introduce a forestry owning democracy? As I said earlier, it is no good saying that the investor can currently invest in forestry via a broad spread property unit trust. That is not what we are talking about at all.

My fifth and concluding point will perhaps seem a strange one to the Front Bench. It concerns my real sympathy for Ministers. I am even more sympathetic today when I see the noble Earl, Lord Lindsay, who was my former colleague on the Sustainable Development Committee. Poor things! They are forever beleaguered by demands, entreaties and supplications from all and sundry for infinite amounts of money to come from finite resources. Often, having delivered, they are then reviled by churlish and ungrateful voices telling them that it is not enough. In many instances—and this is one of them—tinkering merely prolongs the problem. What is required is an analysis of where the threshold point is which, once breached, allows the whole flood to arrive and resolve the problem. Moreover, in this instance a great volume of informed opinion is saying that if fiscal reliefs were reintroduced there would be remarkable cost benefits.

In relation to what the noble Lord, Lord Rees, said, there would be no satisfaction at all on the doubters' side to be able to say in two or three years' time, "We told you so". I hope that we are all wrong. However, I hope that in two years' time—that is all we need to find out how satisfactory the scheme is—the Government will look at the body of the forestry industry and, if it is ailing, will give it the required shot in the arm to keep it going.

Baroness Trumpington

My Lords, perhaps I may gently remind the House that when the clock says seven we are in fact in the eighth minute. We are starting to run behind and I am sure your Lordships will want my noble friend to give us our money's worth.

3.52 p.m.

Baroness Nicol

My Lords, I thank my noble friend for introducing the debate. However, I cannot agree with his worries in regard to the noble Earl on the Front Bench opposite. From my experience of his performance in Committee I know that he will do a competent job, provided we do not continue to overrun and that we give him sufficient time. I welcome him to his place on the Front Bench.

One of the snags of being given a short time to debate these questions is that one cannot follow up many of the points made by other speakers and must simply plug on with one's own interests.

The Government committed themselves to achieving "sustainable forestry" both at Rio and Helsinki. The meaning of "sustainable" is often questioned in this and other contexts. I am impressed by the definition of "sustainable forestry" given by the Director General of the Forestry Commission in a speech to the World Wildlife Fund last year. He said, what does the term actually mean? Certainly that trees that are felled are replaced. But it is much more than this. It is also about maintaining all the other values of the forest: its values for protecting soils and water, its biodiversity, its landscape value, its social and cultural values. At the same time, the forest needs to be capable of maintaining a flow of timber indefinitely. It needs to be economically sustainable. If it is not economically sustainable, its continued existence must be in doubt". I can find no fault with that definition and we should keep it before us in this discussion. It is an admirable description.

Achievement of those aims depends on a degree of stability in the industry—my noble friend Lord Taylor of Gryfe referred to that, as did others—and the kind of continuity which I believe can only be achieved by continuing and positive government involvement. Of course we need a thriving private sector, but it was clearly demonstrated during the consultation period last year that the private sector wishes to retain that strong state presence—not least in research about which little has been said either in government statements or this afternoon.

The timber processing industry in particular is vulnerable to variations in the supply and cost of its raw materials. Left to the private supplier alone, large fluctuations could damage the processing industry and deter future investment, thus putting in doubt the continuation of thousands of jobs. I believe that figure to be around 40,000, but unfortunately I do not have the up-to-date information.

Is our state forestry to be privatised or not? In his Statement on 19th July last year the Secretary of State for Scotland said, Our conclusion is that, at this stage of their development, the Forestry Commission woodlands should remain in the public sector".—[Official Report, Commons, 19/7/94; col. 177.] Later, in the same Statement, the Secretary of State said that Forest Enterprise would be replaced by a next steps agency.

A recent autobiography by a former Chancellor of the Exchequer—the noble Lord, Lord Lawson, to whom reference has already been made this afternoon—states that next steps agencies are simply regarded as stepping stones to privatisation. The Government's conclusions from the Forestry Review, published a month or so after the July Statement, opens the section on the Forestry Commission's management of its estate with this paragraph: Over the past 15 years, the proportion of Britain's forests and woodlands in private ownership has risen from less than 50% to 63% … With most new planting now undertaken by the private sector and with the continuation of the Forestry Commission disposals programme announced in 1989, this trend will continue". That seems to be very much at variance with what the Secretary of State said on 19th July. Clearly, in defiance of advice and widely expressed opinions that the present balance between the public and private sectors should be maintained, the Government intend to pursue their aim of privatisation. I hope that when the noble Earl sums up he will be able to reassure me on that point.

I remind your Lordships that no further legislation would be required for the disposal of the forest estate, so there would be no further opportunity for Parliament to express its view. It is simply necessary for the Secretary of State to order disposals.

Finally, I come to the question of access. The Government seem at last to recognise the importance to millions of people of access to the forests and woodlands of the Forestry Commission. Encouragement to private owners to allow access is very important also. The noble Duke, the Duke of Somerset, wrote in the July edition of the Journal of Forestry, referring to access to private forests, By keeping the jewels of the countryside from public scrutiny we feed both envy and ignorance. We cannot expect the public to appreciate forestry if it is symbolised by a ring fence, a barred gate and a no entry sign, nor can we expect them to understand the need for sound management, including the need to control access, unless we show them, listen to them and help them. In the process we too can learn, for education should be a two way process".

I can quote no better authority for the need for better access. I welcome the Government's more positive approach to access but fear that, despite the undertaking to pay legal fees, many local authorities will be unable to afford the expenditure, especially in Scotland where many landowners appear to have large expectations of the worth of access to their forests. I hope, therefore, that we shall be given some reassurance by the Minister in his summing up.

3.59 p.m.

Viscount Addison

My Lords, I, too, thank the noble Lord, Lord Taylor of Gryfe, for bringing to the attention of the House the Government's Forestry Review, which was completed in August 1994. Noble Lords will recall the constructive debate in the House on the forestry industry in April 1993, when the noble Lord called the attention of the House to its then current position and future prospects. Much has happened since then and it is opportune that noble Lords should return to the forestry issue at this time.

When I spoke during the debate in April 1993, I raised the following issues: first, given the low level of forest cover in the UK, there was room for a significant expansion; secondly, woodlands and forests had the potential to produce a range of benefits including timber, landscape, wildlife habitats, and public access and recreation; thirdly, there should be a provision which allows for tree planting on set-aside land within the arable area payment scheme; fourthly, commercial forestry—conifers—should not be neglected by the Government; fifthly, woodland management was costly and landowners needed help to meet these costs to ensure that the existing woodland resource did not fall into decline; sixthly, a coherent national strategy was needed for both the management of the existing woodland resource and to co-ordinate, in broad terms, new planting. It is pleasing that I can address noble Lords today in the knowledge that at least some of these issues have now been achieved. However, there are some areas of disappointment as well.

Turning first to the positive points, it was extremely good news to hear at the end of last year that the European Commission had committed itself to bring a proposal to the Council of Ministers that would allow farmers to plant trees on set-aside land. It was also good to see that the Government increased their support for commercial forestry within the review of forestry incentives. Unfortunately, the restructuring of the grant bands for conifer planting has meant that those wishing to plant fewer than 10 hectares of woodland and who cannot claim the better land supplement will find that the amount of grant they can claim will have fallen compared with the previous position. This will affect many potential applicants, given that the average size of application under the woodland grant scheme involves only some two to three hectares. However, the Government have made a clear commitment to encourage new planting of commercial woodlands and we shall have to wait to see whether the commitment turns into trees in the ground.

I turn now to the disappointments. Much was expected from the Forestry Review Group and therefore, in only considering the woodland grant scheme, it left many concerned that major opportunities had been missed. Forestry and woodland operate in a much broader framework than just the woodland grant scheme and all aspects of that framework should have been examined together. There is still a clear need, as I said in April 1993, for a coherent national strategy for forestry and woodlands within which rural industries can develop and operate effectively. Without this there can be no significant increase in the woodland cover of Great Britain and there is a risk that a large proportion of valued woodland will be lost through under-management.

Within that strategy, consideration must be given to the taxation framework within which forestry has to operate, the development of markets for home grown timber, particularly from broad-leaved woodland, and also the application of regulation in the forestry sector. The major disappointment must be on woodland management. The conclusions of the Forestry Review Group and the changes which followed have done little or nothing to improve the situation here. In their report Focus on Woodlands, the CLA stated that in 1993 only 63 per cent. of woodland was in active management and further that 40 per cent. of the actively managed woodland faced a decline or complete cessation in management. I had hoped most strongly that the review group would have dealt with this issue and to say that I am disappointed that it has not is a severe understatement. Indeed, some of the decisions made by the Government will have further reduced the incentive to manage woodlands.

One has only to consider the very large reduction in grants for restocking of woodlands to see major problems. This will have a disastrous impact on those owners with woodlands reaching maturity, particularly those with broad-leaved woodlands which have been unmanaged for some time and where the value of timber is negligible. Those wishing to establish even age spreads in their woodlands and to restructure conifer woodlands will now think twice before doing so. I do not have to tell your Lordships of the environmental benefits that will be foregone. Many will now find it uneconomic to fell and replant in accordance with good silvicultural management.

It will almost certainly be the case that unproductive woods, if they are defined as derelict and unmanaged, will not have had the benefit of a planting or replanting grant in the past, whereas productive woods will almost always have had a planting grant. There is, therefore, a strong case to allow restocking grants at the same level as grants for new planting at least in cases where no grant had previously been claimed and the wood is unproductive to the extent that proceeds from preparing it for replanting do not exceed the cost of preparation.

A further setback for woodland management was the removal of the standard management grant. The remaining annual management grant will only be available on woodlands of very high environmental value, which will preclude a large proportion of woodlands. Without more sensible taxation arrangements for forestry, the decision to remove the standard management grant must be seen as misguided.

There is an opportunity for the Government to address some of these issues again within the context of the forthcoming rural White Paper announced recently by the Minister of Agriculture, Fisheries and Food and the Secretary of State for the Environment. Forestry and woodland, as the second biggest rural land users after agriculture, should have high priority within the White Paper. Given the problems created by the Forestry Review for woodland management, this is something upon which it would be sensible to concentrate. The Government would be wise not to let this opportunity slip by.

To conclude, while some positive steps forward have been made to increase the incentives to plant trees, the situation for woodland management is much more bleak. While the Government may believe that they have completed their work on forestry incentives, I, and many others, contend that there is still a great deal of work to be done, not least to reverse some of the potentially damaging decisions made in relation to incentives for woodland management. The changes made to the woodland grant scheme must be seen as a backward step for woodland management and it is essential that the Government revisit this area before turning their backs on our valuable existing woodland resource.

I therefore direct the following questions to the Government through my noble friend Lord Lindsay. First, will the Government say why they have not yet produced the much needed national strategy for forestry and woodlands and indicate when it will be available? Secondly, will the Government give their rationale for reducing their commitment to woodland management and review again the incentives offered for woodland management to bring them up to more realistic levels? Thirdly, can the Government give their reasons for not considering adequately the "option to tax", as suggested by the CLA, as a means of encouraging woodland management? Will they now look again at that point more seriously? Finally, will the Government confirm that forestry and woodlands will have a high priority within the forthcoming rural White Paper and will they also indicate the areas upon which it will be concentrating?

4.8 p.m.

The Duke of Somerset

My Lords, there is little doubt from what has been said in this debate, and what has been published, that private growers have been deeply disappointed by the review and its conclusions. I know that a lot of organisations spent a great deal of time thinking, considering and proposing to the group. The review turned out to be rather superficial and a limited reassessment of the existing WGS and to be a decision on the future of Forest Enterprise. So, if I may, I shall deal with the WGS conclusions first and declare as usual an interest as a woodland owner.

Forestry debates have always heard calls for consistency and for confidence because the industry—I emphasise that word —is a long-term one: many decades pass before any financial return. It is true that successive governments since the war have pursued a policy of forest expansion and that this has led to a growing quality timber resource attracting some advanced wood processing technology to the country. However, since 1988 the plethora of changing grant schemes and the rebuff of major private sources of wealth in that year's Budget have caused a continuing crisis of confidence everywhere in the industry. This review failed to address the practicalities of policy implementation.

It is a fact that new coniferous planting (the raw material for the processing industry) has declined sharply, being at its lowest level for 20 years. If we are to retain the investment mentioned before, including the employment skills so vital to the rural areas, we must protect this source of wealth. I believe that the review has jeopardised that. It may strengthen environmental planting, but we need both: amenity and commercial planting.

Other noble Lords have mentioned some of the faults but they are so important that perhaps I may repeat one or two of them. The review will not attract new money into the creation of new forests for it has refused to establish readily tradeable, unitised investment vehicles. Not only that, but the Treasury has refused to remove anomalies between forestry and agricultural land taxation. Why is capital expenditure in the latter sector allowable but not in forestry? The Government want to have planting on better quality, lower sites, yet loans taken out to buy them for forestry do not attract tax relief.

Furthermore, the review has substantially cut the restocking grant, which is a major blow for those felling low-quality hardwoods. It has also abandoned the standard management grant for silvicultural purposes. What signals does that send to us growers? To me it says, "Please plant hardwoods in tubes at wide spacings". They grow very slowly into multi-branched lollipop trees of only firewood and dubious amenity quality. If we are going to go to the expense of growing a nice oak or ash, why cannot it not be a quality one, of utilisable value, that at the same time provides the environmental benefits that we all want? For instance, we need encouragement for pruning.

I believe that the pendulum has swung too far away from growing quality timber. It is the same with conifers in WGS III. The emphasis is on public access, open spaces, wildlife, etc.; all of which is very important and highly laudable. But let us grow quality produce at the same time. The silvicultural management need should be recognised in the new grant structure along with the other aims. However, the increase in the new planting grant for larger conifer planting schemes is to be welcomed, as is the faster payment of the grant.

The increased stocking rate for broadleaves in new planting is 2,253 per hectare. That will help quality as well. But can the Minister say why that is reversed under the restocking rules where the requirement is for a mere 1,100 per hectare? Therefore, although the review did recognise the importance of productive forestry and softwoods, do the actions support the words?

Perhaps I may turn briefly to the other main conclusion. I certainly welcome the retention in public ownership of Forest Enterprise with its continuing example of multi-purpose forestry that it now achieves so well. I hope that it will be careful not to distort the market for the private grower. The Forest Authority needs to be strengthened, in my view, and to become the authoritative voice in forestry, including the overseeing of Forest Enterprise. It should not be simply a body dealing with grants and licences or it will lose its promotional voice. It needs to encourage a better understanding of forestry, as it does, for instance, through its annual financial assistance to the Forestry Trust for Education and Conservation, whose booklet Woodlands to Visit now includes over 600 woodlands which are opened annually by the owners. Its ability to monitor the effectiveness of forestry policy could be weakened, leading to a lack of sensitive policy development.

It must continue to increase and develop standards and priorities and do research while overseeing Forest Enterprise and promoting forestry in the continuing land use debate. One suggestion is to devolve policy implementation to country level to differentiate between England, Scotland and Wales. That could be linked with partnerships with other bodies to further a cohesive land use strategy to make the rural heartbeat thrive. Above all, there is a need for the authority to make judgments rather than simply to act as an arbiter between consultees and applicants.

As regards a matter of detail, I ask the Minister for confirmation that the intention of the Forestry Commission to purchase the freehold of land that it currently leases will not be achieved by compulsory purchase.

Finally, as president of the RFS, I joined with other forestry organisations in a letter to the Secretary of State lamenting the outcome of the review. His response appears to miss the point at issue—that is to say, investment of new money and new land. I hope the Government do not believe that everything is on track for a prosperous industry. They have certainly done a great deal with the UK in the forefront of progress over concerns of forestry exploitation, set-aside use, sustainable management and the Rio Summit. But the conditions for progressive management of our own forests are still not wholly in place, leading to continued concern.

4.15 p.m.

Lord Astor of Hever

My Lords, I also declare an interest as a woodland owner. I welcomed the Government's manifesto commitment to review the, effectiveness of the incentives for forestry investment". I understood that this review was to be comprehensive, addressing all those land and financial issues which will determine the future of forestry. However, it has been confined to the WGS and was, I fear, received by the industry with dismay. Forestry operates in a much broader policy framework and every aspect should have been examined.

A vital component missed was any consideration of the taxation regime within which forestry operates. At a time when the Government are encouraging farmers to diversify into forestry, why is it that capital expenditure on fencing, drainage or roading, on a tractor or on a building used for forestry, is not allowable, when it is if it is used for agriculture? Why is it that interest payable on loans for purchasing land for agriculture is eligible for tax relief, but that payable on land for forestry is not? Clearly that acts as a disincentive to farmers to switch land to trees. Is it not time to treat land in the same way whether it is planted with a crop of wheat or of trees?

It is regrettable that the fortunes of forestry have been so closely tied to government incentives but, sadly, as long as the CAP distorts the agricultural competitive position, that will be so. I believe that it is worthwhile remembering that forestry grants amount to less than 1 per cent. per annum of agricultural grants, while timber prices reflect a world market in contrast to agriculture, which is protected by the EU.

On a positive note, I applaud the Secretary of State's public recognition of the importance of productive forestry and in particular of softwood timber. WGS III contains a number of detailed structural improvements and has a greater scope of flexibility than its predecessor. However, the new scheme fails to address the vital issue of attracting new private money into the creation of new forests. The 1988 Budget essentially narrowed the investment base to existing landowners and encouraged, through larger grants, the planting by them of less commercial woodlands.

Over the past 10 years, Britain's forestry processing sector has attracted, as the noble Lord, Lord Taylor, said, over £1 billion of investment, much of it from overseas. Clearly, if we are to maintain an expanding and successful forestry products industry we need to maintain the expansion of the resource base on which it relies. The Timber Growers Association regards it as too narrow an investment base. We need to broaden it to embrace the smaller investor, very much in line with government philosophy. That is currently thwarted because the Government have not made the minor legal and regulatory changes to permit the marketing of unitised investment vehicles through which small investors can buy and sell quoted shares and be accorded the same tax treatment as individual investors.

Finally, a word on bureaucracy: forestry is the most regulated industry of all. We have a Government dedicated to reducing red tape for business and industry, and very successfully so, but there is a feeling in forestry circles that all that red tape has been carefully gathered up and dumped on them. Putting woodland planting through the whole gamut of the local planning organisation is a heaven-sent opportunity for bureaucratic aggrandisement. An example of that lunacy is the ethnic cleansing of allegedly bad or non-native trees. One council wrote to my forestry adviser: while walnut was indeed introduced by the Romans, it cannot be considered a native tree and is therefore disallowed". What would happen if we ethnically cleansed our farming industry? Examples abound of indicative landscape strategies, potential archaeological sites and abuse of tree preservation orders by the planning process. That is sad, as it makes many professional forestry regulators timid and not bold, forgetting also that a great deal of forestry is a subjective art, not a sterile science.

I welcome the current review of the Forestry Commission consultation process. There has to be a more streamlined procedure to obtain planting approval and to enable the Forestry Authority to make a judgment. The bureaucratic hurdle of applying for grant or licence approval, which can be extremely prolonged and expensive, is the single biggest cause of complaint among private woodland owners and managers. Could the Forestry Authority be given greater power to make its own decisions rather than acting as arbiter between the applicant and the consultees? Indeed one wonders why the Forestry Authority is so named, as to many in the industry it has no authority.

4.21 p.m.

Lord Northbourne

My Lords, I should like to follow the noble Lord, Lord Astor of Hever, in pleading for less heavy-handed regulation. It was not, however, on that point that I put down my name to speak. It was because the report misses what I believe to be an important point. Paragraph 2.10 on page 10 states: The Government also wish to see an improvement in the potential timber quality of broad-leaved planting without reducing the area being planted. The key here is to achieve higher density levels, since high timber quality depends critically on density of stocking". Good quality broadleaved timber also depends on consistently good management and the availability of funds for maintenance when needed.

We lost 5,000 trees as a result of the 1987 storm. Incidentally, if it had not been for that storm I should probably have had to declare an interest as a timber grower. As I mooched around the woods following the storm and looked at the desolation, I found myself reading the rings on many of the trees where the butts had been cleaned up. The story of the rings is extremely interesting. Back in the 1860s, when agriculture was prosperous and my great-grandfather was a keen forester, the trees were planted and grew very fast for a certain period. Then the depression of the latter part of the last century came along. The forester was sacked; money was not spent on maintenance; and the rings on the trees were closer together. At the turn of the century and at the time of the first world war, more money was clearly spent, maintenance was carried out, and the trees started to grow well again. After the war, during the 1920s, there was another depression and my father was hit by double death duties. No maintenance was carried out and the rings grew narrow again. The timber was unsaleable after the 1987 storm but it would have been difficult to sell even at a good time because it was not of good quality. We have to take on board the fact that in private forestry a crop of broadleaved trees will stretch across three, or probably four, generations.

Can anything be done about maintenance? I should like to suggest three possible alternatives to try to achieve the objective of ensuring good management and adequate funds for maintenance throughout the life of the crop. One possibility would be joint ventures between an individual and the new forest trading body because that is an immortal body, or possibly with organisations such as the forestry group, to which the noble Lord, Lord Barber, referred. To ensure continuity, it would be possible to have a joint venture with a leasehold interest in the forest, with the landowner having the right to undertake maintenance and to claim against the joint venture for the cost of doing so, while it would be possible for the permanent body to carry out the maintenance if that was not carried out otherwise. That would ensure that the trees would be a good quality crop that would sell for a good price.

Another alternative would be to give some sort of advantage under the grant scheme to owners who were able to make a commitment and to show that the funds would be available for on-going maintenance and that they were employing people capable of carrying out that maintenance.

Yet another possibility might be that instead of paying a very large planting grant and a relatively small maintenance grant, the opposite course was taken. That is because of a well-known fact in the world of subsidies, to which my father drew my attention during the war when there was a subsidy for tons of wheat and another for acres of barley. And that is precisely what we got—tons of wheat and acres of lousy barley. If the larger part of the subsidy were paid for maintenance, there might be a better chance of getting a more marketable and more valuable crop.

Therefore, I call upon the Government to devise a scheme which offers incentives to landowners to make some sort of binding commitment as to management and the availability of funds for maintenance throughout the life of the crop.

4.26 p.m.

Viscount Mersey

My Lords, we are debating the review Our Forests - The Way Ahead. Paragraph 1.3 contains a real corker of a sentence. It reads: The Government are also committed to the continued expansion of the forest area. Grants are targeted to encourage continued new planting of conifers to meet commercial demand from the wood-processing industry". But with the removal of tax incentives three years back, no private forester in his right mind would plant conifers. He must be devious. He must practise other forms of forestry; he must be ingenious. That is what I hope that I am in my own small way as I practise forestry in West Sussex. I should add that it is a hugely enjoyable pastime. It is not particularly profitable now. Even under the old Schedule B and D regime, the tax concessions were no more than a help to what I would call a "loss leader". The simple reason is that the value of the harvested crop has always been less, in my experience, than the cost of the re-establishment of that crop. The planting grants are good news, but planting is only the start of a long battle of man against the elements: drought, hurricane, deer, rabbits and squirrels. There is the weeding of six years. There is the fencing, ploughed under to stop rabbits tunnelling beneath it. Above all, there is the beating up. One of our plantations we beat up 10 years running.

When all is said and done, forestry is good fun, like gardening. But it must be obvious that when my right honourable friend Mr. Lamont removed the tax benefits from private, forestry three years back, private forestry became a luxury that only the seriously rich could afford. My noble friend Lord Lindsay will know of the massive decline in private planting.

However, it is not my business today to spread doom and gloom in all directions, because there are other forms of forestry. In some areas I say, "Hang the expense and go for oak, ash and beech". That is a luxury that enhances what people now call the "feel-good" factor. Economic madness it may be, but environmental madness it is not. It feels good that I am, in a very small way, fighting global warming. It feels good also that I am planting trees that will marginally lessen our timber imports 100 years from now. It also feels good to watch those fine trees grow up as hosts to a new population of songbirds—blackbirds and nightingales—and wild flowers—bluebells and yellow archangels; and perhaps even purple emperor butterflies.

Alas, I can afford to do that in small areas only. In the main, we turn now to short rotation crops—for instance, chestnut coppice which we harvest every 12 years, but, above all, the six-year rotation Christmas tree. It may be a bit of a nonsense that I can get as much money for a five-foot Norway spruce as I can for an 80 foot one; but that is the state of the market, and I do not complain. Not only can we harvest Christmas trees every six years— 10 times as frequently as mature conifers—we can also space our trees at three foot, not six, thus quadrupling the number of trees per acre. So a Christmas tree plantation will, in theory, yield 40 times as much as a traditional plantation.

There is a new market which may be important. It is short-rotation coppice to fuel power stations. My right honourable friend Mr. Tim Eggar thinks it important. As an alternative energy source, he puts it ahead of all others—wind, solar, tidal, waves and geothermal. Better still, while the short-rotation coppice grows, it fixes carbon dioxide, so it helps global warming. I am keen to move into that field, and I should like to know how to set about it. Perhaps in his inaugural reply my noble friend Lord Lindsay will be kind enough to tell me. As I see it, the present hitch is that timber yields less heat per tonne than fossil fuels. We shall therefore need huge quantities of wood to supplant coal. Huge quantities mean huge transport costs. Our over-burdened road system could be landed with an extra armada of heavy timber wagons pumping out greenhouse gases. Then, of course, the environmental benefits of short-rotation coppice would cease. So we need short road journeys. That means many small power stations close to coppice plantations. I am talking about power stations of 6 or 7 megawatts—hundreds of them hooked into the national grid.

I have seen such stations in Scandinavia. Many are unmanned. Many are portable. The Finns, for instance, dismantle such mini-power stations and re-erect them close to new fuel sources. That "small is beautiful" concept is alien to the path we are following in generating electricity, which is more accurately reflected by "the bigger the better". I am thinking especially of Drax which is a coal-fired station yielding a massive 5,000 megawatts. The answer must be a mix—many small, wood-burning power stations and a few, environmentally friendly big ones: nuclear, not coal; Sizewell C, not Drax C. "Small is beautiful" may even feature in the forthcoming nuclear review.

So that is the way I see forestry today—short-rotation crops with what I call a patriotic sprinkling of oak and ash growing to magnificent maturity. It is a far cry from traditional forestry: the growing of trees for timber. The main casualty is the mainstay of wooding: the conifer. There seems little point now in the private forester planting Scots pine, larch or hemlock. That is a pity because we import 94 per cent. of our timber.

On page 9 of the review, I read: There is concern, however, about the level of conifer new planting in appropriate areas, which has fallen significantly in recent years and was only just over 5,000 hectares in 1993/94". That is a real concern, all right, but it is one that any private forester could have foreseen three years back.

4.34 p.m.

The Earl of Kintore

My Lords, I too thank the noble Lord, Lord Taylor of Gryfe, for introducing this forestry debate. He of course speaks with considerable authority, having been chairman of the forestry commissioners for seven years. I congratulate the Government on their excellent choice of another Scot to be chairman of the forestry commissioners. I know that it is an excellent choice, as some years ago I worked for Sir Peter Hutchison in Glasgow and Aberdeen. Sir Peter is listening to the debate, and I wish him well in his new challenge.

We have had the review, and for a small-time forester like myself woodland grant scheme Mark III appears adequate. But I wonder whether it will do anything for the larger areas. Indeed, I am told by a forestry adviser that he had the opportunity of having two schemes approved under either WGS II or WGS III and his client would be £8,000 and £12,000 worse off under WGS III.

At this stage perhaps I may make a strong plea that there be considerable, even total, remission of the requirement to plant a proportion of broadleaves within purely commercial conifer plantations in non-sensitive areas. The present requirement for the broadleaves places disproportionate costs on any scheme. I am amazed also by the number of people who have to be consulted to approve my small plantings, and wonder whether there could not be a threshold of, say, five hectares before there is automatic consultation with other parties.

I fear that the reaction to WGS III will be as disappointing as it was to WGS II. We have a crisis of confidence as no one is sure that the Government are committed to the long-term interests of forestry. We need a steady, good policy for a minimum of six full-time term Parliaments; that is, 30 years. I realise that that is a long time in political terms, but unless major planters can see the long-term commitment, there will be little new commercial planting.

We have also a problem with land values, as farmers are at last making a little money, aided by grants and subsidies. Land which would attract forestry better land supplement of £600 per hectare is probably selling for farming for £2,500 per hectare. To persuade a farmer to tie up a piece of land with commercial trees for 30 years will require the better land supplement to be quadrupled. But some saving could be achieved and cash flow made easier if the new woodlands establishment grants were paid annually instead of at 70 per cent. after planting and 30 per cent. at year 5, as at present.

A massive amount of new commercial conifer planting should be done. I realise it is all very well for me to stand here like a big Christmas fairy telling the Government how to run their forestry policy; but I do not control the magic. The Government do. So let the wand be waved and the word go out to the nurserymen that it is to be Sitka spruce and to the landowners that the Government promise never to do bad again —like changing the rules overnight as in 1988–but only good—like increasing and index-linking grant—with the further word that to make up for the shortfall in planting since 1988, the area to be planted in the next three years is to be quadrupled and planting grants doubled. If the Government do that, the main forestry debate in March 2025 will find them receiving acclaim for their foresight, with foreign wood processors investing in our Sitka stock and the imbalance of trade on the timber account a thing of the past. In 2025, the noble Earl, Lord Lindsay, will be a Tory grandee and probably the doyen of his party in this House. He will reflect how lucky it was that he took the advice offered by that Cross-Bencher in January 1995.

4.40 p.m.

Lord Clinton

My Lords, like other Members of your Lordships' House, I am delighted that this debate is taking place today. It is some time since we had such a debate but not too long. However, a great deal has happened and I believe that again we are at a crossroads. I pray and hope that as soon as possible the industry can settle down with a sustainable future which will be of benefit to all those who invest and are employed in it.

At the end of last year, with the Minister, my noble friend Lord Howe, I had the privilege to plant trees in Devon on the 75th anniversary of the Forestry Commission. He is an extremely good tree planter and a great supporter of forestry. Although my noble friend is not here at this particular moment, I can certainly recommend his tree planting. We were repeating the original planting which my great-grandfather, the second chairman of the commission, had done in 1919 and which I had repeated on the 50th anniversary, 25 years ago. I hope that that goes some way towards illustrating the longevity of the industry. I hope that the future for the Forestry Authority and the Forest Enterprise will be secure for the benefit of our industry.

The authority cannot and must not concern itself only with grants and licences. There is a much broader aspect than that. That is a view which I support. There is much to be done and in my short speech I hope that I shall be able to show that that must be so.

As a new member of the Forestry Commission's regional advisory committee for the Midlands, Wye, Avon and the West Country, at a recent seminar which included all the other members of the RACs we considered the future role of the Forestry Authority. There was no doubt in my mind and in the minds of all those present that it was essential for the future that there should be a Forestry Authority and that it should show leadership. At the same time, it should have power to make its own judgments as well as showing authority to other bodies as the leader in forestry, especially in matters of planning.

As part of the Forestry Commission, the Forestry Authority should be a voice for promoting timber, woodlands and forestry. The body should set standards of silviculture, which I believe it does already, and should concern itself with the land use debate in a task which will need to look at a wide variety of interests and at the same time show leadership in this field.

Like others, I believe that this body should be strong and have an important part to play in English forestry south of the Border and in central policy at national level to encourage the future development of forestry. Also, it should be able to make sure that the private sector is allowed to compete on equal terms with the Forest Enterprise and, if necessary, the Forestry Authority should direct its policy towards that end.

The present arrangements which allow for joint sales of timber with the Forest Enterprise are to be welcomed. I hope that that co-operation will continue. It deserves the support that it is getting and it is useful and extremely helpful to private timber growers.

Private woodland owners need to have government support and an authority to which we can talk. At the same time, it should support our endeavours with regard to the use of land and make its presence felt in times of controversy when we need a body of well-informed opinion on our side. The authority's policy should be robust enough to operate effective oversight of the Forest Enterprise as well as formulating policies for the future.

I am more than ever convinced that unless we have a strong Forestry Authority all the work and good will of which we are the inheritors will be lost for future generations. I hope that the Minister and all others responsible for making those very important decisions are able to carry that forward to our mutual benefit.

4.45 p.m.

The Earl of Perth

My Lords, first, I congratulate the noble Lord, Lord Taylor of Gryfe, on his luck in the Ballot. I recall very well a little while ago suggesting to him that we really needed a forestry debate. He took that seriously and managed somehow or other to win the Ballot today. His speech was well worth listening to, as were the speeches of all who have spoken in the debate. I felt very humble listening to the expertise of those who have spoken already. The main impression that I have received is that the industry is in the shadow of the Treasury. The Treasury has too great an influence. It ruined things in 1988 and we have not seen the end of that today.

The noble Lord, Lord Rees, placed great emphasis on that failure and on how we are not doing what we should for forestry. If one reads Our Forests—The Way Ahead and the conclusions of the 1984 review, one would think that everything is rosy and happy. I am afraid that that impression is far from the truth. It puts a slant on one or two matters which do not cover the fundamental issue; namely, that a short while ago the Government said that the target was 33,000 hectares or more per year and we are nowhere near reaching that target. Indeed, we have heard what little the Forestry Commission, in its role as landowner, is to do this year. It is really a disgrace. It is under 1,000 hectares. For the rest—that is, private forestry—we must make serious changes to the support which the Government give.

I must declare an interest. Some 20 years ago I did an excambion with the Forestry Commission and so I have a small unit of forestry or woodland near to where I live. I have faced a great problem ever since. The problem was that the Forestry Commission planted the whole area in a couple of years. That is no criticism because that was one small section of its whole ownership. But it was a very serious problem for me. I wanted to get what was planted in two years on some kind of rotational basis. I have struggled to achieve that. I have gone some way in that direction but I can see that in another 30 years I, or whoever inherits—it is a family trust—will succeed in that aim. But the point that I am trying to make is that forestry is very long-term and a seriously difficult business.

The idea, which seems to be quite widely prevalent, that in some way or another forestry is a form of tax evasion is absolute nonsense. How can there be tax evasion over 50 years, or even 100 years, if one is talking about hardwoods? I hope that that weakness in our public relations can be changed. We should make the point that help for the forestry industry is absolutely necessary. If we can improve and attract capital from, for example, the City, that is very good. Why is it that when industry receives money to help with employment everybody rejoices, but when the help is for forestry for some extraordinary reason people say, "Oh, it is tax evasion. Why should they have that?" That reaction is all wrong. I wish to return to one point. In 1988 the whole system of forestry help was turned upside down. We have seen the results since. I wish to make one plea above all others to the Government. If, in some five or 10 years, by some good fortune the point is reached at which all is well with the forestry industry and perhaps our best hopes are being exceeded, they must not change the system of taxation in relation to what has been planted before. In 1988 they gave us five years' grace for continuing as before. Five years, in relation to our whole period of planting, is not enough. What they must do is say, "What has been done, has been done. But now we are to have a new regime which does not affect the past". I hope that the Government will bear that in mind.

I have one small point to make and then I must stop. All the effort today is directed towards the environment, access, and so on. Will the Government consider helping the small woodland owner by saying that they will insure woods for, say, 20 or 30 years—the dangerous time for fires and so on will then be over—on condition that access is given? I conclude by saying that I believe that the Forestry Commission, and especially the Forestry Authority as the organisation is now divided into two parts, is doing a pretty good job on our behalf. I hope that it continues to do so.

4.51 p.m.

Lord Forester

My Lords, I, too, should like to thank the noble Lord, Lord Taylor, for introducing such an important subject. Surprisingly enough, considering my name, I must admit that I have an interest in the subject. I do grow trees, as I clearly should.

It cannot be said too often that we desperately need more trees, especially commercial trees. As the noble Lord, Lord Taylor, said, we import £6.3 billion worth of timber every year. We import something well over 85 per cent. of all the timber that we require. The planting of conifers has dropped by 50,000 hectares since 1971.

The Government subsidise the production of food and wine, which is in abundance and not required; they even pay farmers to grow nothing. Why can they not give some real and regular incentive to a product the demand for which is virtually insatiable? Throughout the 1970s and 1980s we planted and that was fine. We then reached the fateful Budget of 1988, about which so much has been said, and there was a downturn in planting. The saw milling and wood processing industries have invested hundreds of millions of pounds in renewing and modernising their equipment. They knew what was being planted. They assumed that planting would be at the same level. They did not think there would be such a great cut-off.

There is now a short-term supply of timber. That is certainly the case where I live in the West Midlands. Local timber buyers are having to import roundwood trees from Ireland and even from Estonia to make up the shortfall and keep their mills going. That is an additional 10 per cent. of what they saw—that is, 10 per cent. of the paltry 15 per cent. which is all we produce in this country.

On top of that, conservation is putting a considerable constraint on felling in the private sector. The review did not include the operation of felling controls, tree preservation orders and procedures for consultation on woodland grant schemes. Surely tree preservation orders should be restricted to trees or groups of trees for which felling licences are not already required. Otherwise, we have to go through the process twice. That simply makes it slower and more expensive. I do not believe that there can be any doubt that we need to grow more timber, more commercial timber. The review does not give sufficient incentive to achieve that aim.

My noble friend Lord Addison covered the replanting of existing woods. To my mind, that is even more important than new planting. It is at least twice as expensive because it is all hand labour. But those are the woods that produce the timber for the building industry— the timber we so badly need. I believe that the grant for replanting needs to be double, not half, the grant for new planting.

New planting is an altogether different game. I congratulate my noble friend and the Government on their achievements with forestry set-aside. There is now a big new opportunity for lowland planting on better land which will become available. We have a real opportunity to plan our timber production and to do it better. But, sadly, that is the only good point we have.

Planting trees is the easy part; maintaining them is infinitely more difficult. Again, as my noble friend Lord Addison said, the new annual management grant of £35 per hectare per annum has to be laughable. It is half one man day per year per hectare. What good will that do? We have to manage the trees if we are to gain some production from them. We need a specific, targeted scheme to encourage management, particularly of neglected woodlands.

Finally—I see that I still have a minute left—the complexity involved in applying for any grant is a major deterrent. The maze of different grants from various bodies —about six of them—is a minefield. I have been meaning to plant some trees recently, but in the past three years the Government have dashed from the woodland grant scheme to the farm woodland scheme and then to the farm woodland premium scheme. That is three schemes in three years for the forestry business which is long term in nature. We cannot plan with a different grant every year.

If we want a significant and sustained increase in woodland cover and the better management of our existing woodlands, we need a better policy on grant taxation and regulation. We must have long term grants so that we can plan for the future. We want replanting grants to be much larger than new planting grants, and we need maintenance grants. Above all, all sources of public funding for forestry should surely be delivered through the Forestry Authority as a "one-stop shop" for forestry. I put in an application this year for planting. It has not as yet come back from the Forestry Commission. I must wait until it does so before I can send it to the Ministry of Agriculture, Fisheries and Food to obtain the other half of the grant. That has to be changed.

4.58 p.m.

The Earl of Lytton

My Lords, I shall try to keep my comments brief. However, I should like to preface my remarks by saying that I speak from the heart and from my experiences on Exmoor and not in any other capacity, although I am a chartered surveyor and a member of various organisations related to the land.

On Exmoor we have over 30 per cent. of tree cover on the estate and over half of that is completely non-economic woodland. It is scrub conifer which is not native, having been imported by one of my forebears. There is some old, part overgrown and part self-seeded, coppice oak; and there is some self-seeded birch and oak scrub. We have had to come to terms with the concept of multi-use: shelter for livestock in exposed locations, amenity, sporting and with the public's view of us, in landscape terms, as they pass down the A.39. Therefore, the regulatory framework is very important to us.

I suppose I should be pleased and flattered that some of our coppice oak woodland is within a site of special scientific interest. But I have to say that I am rather less pleased that some of our scrub conifer, non-native as it is, is designated under Section 3 of the Wildlife and Countryside (Amendment) Act as being woodland particularly important to conserve. Unfortunately, nature does not think it is worth conserving either because, as it was planted in the 1840s, it is in a process of blowing flat. The policy void is evidenced most graphically by the bleached fingers of dead conifers pointing skywards in silent testimony.

There is no incentive for this sort of woodland as far as I can ascertain. There is no grant aid when and where it is needed. One agency wants no conifers at all; another wants something that will not grow on that site. A third will only assist if there is a clear commercial purpose but will not give a special management grant even if there is a small possible commercial purpose at some stage in the future. A fourth agency wants everything left alone and for some the area of work is too big in terms of acreage; for the others it is too small. There is a great deal of misinformation around.

We have heard the noble Lord, Lord Astor, mention his experiences. I will share mine with your Lordships which relate to whether beech, a characteristic of Exmoor, is native or non-native. The national park says it is non-native. I asked English Nature about it. That body advised me that it had been brought in with the Romans, although perhaps it had not reached Exmoor at that time. But it confided in me that its personnel had been taking some peat samples on the moor and had found copious beech pollen in cores 3,000 years old.

I have not yet discovered whether policy has changed. However, good forestry strategy has been dissipated and diluted under a number of agencies. I see bureaucracies getting fatter and the product of this great fruit machine in terms of works on the ground or environmentally important woodland is very small indeed. Therefore, for me, a forestry administration whose functions are not divided this way and that will be the only organisation to which I can relate.

As regards relating to the Forestry Authority I expect to be treated at least on similar terms to those which Forest Enterprise will apply to Croydon Hill because what is good for Croydon Hill, as far as I am concerned, ought to be good enough for me as well. However, I need a long-term strategy. Noble Lords have said that forestry is long term. Over 1,000 feet above sea level on Exmoor I can assure your Lordships it is very long term indeed because forests only grow at half the rate they grow elsewhere. On environmental grounds and as regards environmental objectives I must say that the Forestry Review was clearly written by someone who lives in another world to the one I occupy.

We are talking about critical natural capital. I think this House will know what I am talking about in terms of the efforts I try to make to put my own resources into maintaining, managing and providing an incentive for the next generation to carry on the baton when I am gone and no longer there to argue with all these authorities. Someone else will have to do it.

Over the Christmas holiday period I took my family to see "HMS Victory". We were told that to construct that ship 60 acres of oak woodland were felled. To see the size of some of the timbers in that ship, which is still there today after all that time, made me realise what a massive amount of work there is to be done to bring back that sort of resource, which was built up over hundreds of years of continuous, integrated and concerted management. That is what I feel we have to aim for under any new regime.

5.5 p.m.

Lord Carmichael of Kelvingrove

My Lords, this has been a most interesting debate and it will become obvious as we proceed through the wind-up speeches that the number of experts on forestry in the House seems to be growing year by year. I have learnt a great deal from what was said today and the debate has been a great supplement to the reading I have done. I must congratulate and thank the organisations which have sent briefs. The Royal Society for the Protection of Birds sent an excellent brief. The Country Landowners' Association also sent a brief. I hope noble Lords will not tell too many people in Glasgow that I am congratulating that body. The Royal Scottish Forestry Society also sent a brief, as did a number of other organisations. I think we must all accept that the very nature and breadth of debates in this House mean that we could not undertake them without such excellent briefs from people involved in these matters.

I am delighted that the noble Earl, Lord Lindsay, will reply to the debate. I understand the comments of my noble friend Lord Taylor of Gryfe, who was lucky enough to win a ballot to hold this debate. In that situation one expects no one less than the Prime Minister to reply to the debate. I am sure that the noble Earl, Lord Lindsay, will give us a good summary of the points that have been raised in the debate. If he does not have time to answer all the points that have been made, doubtless he will reply to noble Lords in writing. I am mainly concerned with how we get the best out of our land and our forests. I was delighted to hear the speech of the noble Earl, Lord Perth, for whom I have a great regard. He made a strong plea for leaving the Forestry Commission alone. There is no doubt that the Forestry Commission is very worried these days, as are many people who are interested in our forests, about some of the things that are being proposed and have been carried out as regards the Forestry Commission.

The Forestry Commission has provided a reliable and secure source of timber for the downstream wood industries. A forecast of timber availability from state forests is published on a five yearly basis for the industry. The Forestry Commission goes to great lengths to ensure that actual supply equates with published projections. Short-term considerations are not compatible with an industry where it takes in the region of 50 years for a softwood tree to reach full maturity and up to 120 for an oak. Because of its size the commission is able to provide guaranteed supplies of timber through the use of long-term contracts. Timber manufacturers have responded by putting their trust in the Forestry Commission, investing millions of pounds in plant and jobs.

A director of the largest paper mill in Scotland using domestic timber told the Glasgow Herald that, certain things have to be right for that investment to take place … one of those things is a guaranteed wood supply". The Government have received similar advice from industrialists in England and Wales. Private forestry, with the best will in the world and with all our best wishes for its survival, cannot provide timber users with the same guarantee of long-term supplies. Private forests are generally too small to provide the volumes required, and those involved in private forestry tend to withhold supplies if there is a slump in world timber prices. If one is managing a private forest, understandably one does not wish to sell one's product if perhaps the following year or in two years' time the price of timber will increase. But that does not help the manufacturer who has probably invested at least as much in his machinery as have the owners of private forests.

Over £1 billion has been invested in timber processing over the past eight years. Any action which threatens to undermine the security of timber supplies is likely to be reflected in declining investment. Growing uncertainty and declining investment across the UK will lead to job losses and obviously a greater amount of imports when things get better. Forestry and primary wood processing employed more than 42,000 people in 1992, and the manufacture of timber and wooden furniture accounted for a further 179,000 jobs.

We are particularly concerned about the question of access. The Forestry Commission is widely respected for providing access to a vast area of the British countryside. Nowhere is the longstanding freedom to roam policy operated by the commission better illustrated than in the 25 forest and woodland parks which have been established throughout the United Kingdom. Some parks close to urban fringes, such as the David Marshall Lodge park just north of Aberfoyle, attract a steady flow of people, particularly at weekends, who thoroughly enjoy them. That particular park is very well kept.

Other parks are located in some of the most unspoilt and beautiful parts of the countryside. They are deemed by the commission to have a special value in terms of the amenities they offer to visitors and for their potential as wildlife conservation sites. All are designed to provide easy access for visitors.

More than 50 million day visits were made to Forestry Commission land last year. A large proportion of those visits were to the forest parks, but the growth of outdoor pursuits in recent times—for example, mountain biking, orienteering and so on—will ensure that public demand for access will continue to increase in the future. Forests are a valuable educational resource which schools can take advantage of at no charge. Provision has been made in some parks for forest classrooms. Those facilities are likely to be lost if the Forestry Commission is privatised.

The Minister may think that I am dwelling too much on privatisation, but I do not have time to go into the contradictory statements that have been made by the Secretary of State for Scotland, by the Prime Minister at the last election and also by Sir Hector Monro, who is much on the side of the angels in this matter in that he does not want forestry to be privatised.

In relation to private forests the Minister will be aware that the Government stated in their 1992 manifesto that they would make provision for public access to forests. Does he realise that not a single access agreement has been put in place in any of the forests sold to 'private enterprise so far under the programme of creeping privatisation which began in 1981? So far 179,000 hectares have been disposed of in that way.

I have to hurry, but I must point out that 3,500 submissions were received in connection with the review process, which obviously included the possibility of privatisation. According to the Minister in another place, Sir Hector Monro, a large majority of the submissions which addressed the question of privatisation were opposed to it, with many referring to concerns about implications for access, environmental considerations and timber production. There can be no doubt that if forestry is to be properly managed in a way which reflects the diverse range of demands upon it it needs to remain under the control of a single strategic authority.

In order to allow the Minister to reply to this very important debate and the number of extremely knowledgeable speeches that have been made, I shall resume my seat now. I shall listen to the Minister with great interest.

5.14 p.m.

The Earl of Lindsay

My Lords, I rise with great gratitude for the kind remarks made in today's debate. I also congratulate the noble Lord, Lord Taylor, on securing this debate in the first place.

In April 1993 your Lordships debated forestry just after the Government had set out to review the effectiveness with which its forestry policy was being implemented. I took part in that debate. Today's debate is also timely because the Government are considering responses to the conclusions of that review as set out in the consultation paper Our Forests—The Way Ahead. In its consideration the Government will, I am sure, welcome the clear and cogent views expressed by your Lordships this afternoon. Your Lordships' House is exceptionally knowledgeable when it comes to forestry matters. Like the noble Lord, Lord Carmichael, I feel that I have learned much this afternoon listening to the experts in this Chamber. Like the noble Earl, Lord Perth, in many ways I have been humbled by the wealth of experience and knowledge that has been demonstrated today.

The noble Lord, Lord Taylor, was himself a chairman of the Forestry Commission. I should like to echo the remarks made in welcoming the new chairman, Sir Peter Hutchison, and in particular those of the noble Earl, Lord Kintore. In Sir Peter I am sure that we have a man of vision and leadership who will pick up the baton carried so ably by his predecessor, Sir Raymond Johnstone.

It may help if I briefly recall the main aims of the Government's forestry policy. These are the sustainable management of our existing woods and forests and the steady expansion of tree cover to increase the many diverse benefits that forests provide. Those aims were set out in the Government's statement of September 1991. They were not changed by the Forestry Review and arc unlikely to change in the foreseeable future.

The Forestry Review looked at two aspects of policy implementation: first, the effectiveness of the incentives for forestry investment, and, secondly, the options for the ownership and management of Forestry Commission woodlands. I can assure the noble Lord, Lord Beaumont, that the Forestry Review took account of a large number of comments from a wide range of sources. Therefore there was full consultation.

Turning first to incentives, many noble Lords expressed concern over some of the changes to the woodland grant scheme. Yet, taken overall, the package represents an increase of more than 10 per cent. in the incentives available for private forestry. The changes will lead to a much more effective implementation of forestry policy.

The noble Lord, Lord Taylor, was particularly concerned about new planting, and especially conifer planting. He cited figures to show that conifer planting had fallen in recent years. The Government are fully aware that a critical factor in attracting investment to the wood processing industry is the prospect of a steadily increasing supply of suitable raw materials.

The UK's woods and forests have the capacity to reach a sustained yield of some 14 million cubic metres a year—some 20 per cent. of our present needs. Increasing our tree cover will add to that potential. However, the wood produced in our forests must be of the kind that industry needs if it is to have any commercial value. I hope that that reassures the noble Lord, Lord Barber, and the noble Duke, the Duke of Somerset, who thought that perhaps the pendulum had swung too far.

We acknowledge that the greatest demand is for softwoods. The Government want to see a continued increase in conifer planting to meet the industry's needs. Part of the revised grant package therefore is aimed at encouraging the further planting of conifers and mixed forests.

My noble friend Lord Rees asked what action the Government would take if the new package was not successful. We are confident that the package will be successful, but it will be monitored. As in all aspects of government policy, the effects of incentives will be continually assessed. Taken together, the grants for planting conifers on the better land for schemes over 10 hectares will rise by nearly 30 per cent. We have every confidence that that will stimulate further conifer planting.

Since introducing the woodland grant scheme in 1988, we have had considerable success in stimulating the planting of broadleaved woodlands. The Government wish to see an improvement in the potential timber quality of broadleaved planting without reducing the area being planted. I stress to the noble Lord, Lord Taylor, that high timber quality depends crucially on the stocking density. We have therefore made changes to the conditions of the scheme to ensure that adequate stocking densities are achieved.

We have also sought to simplify the grant scheme by reducing the number of grant bands and reducing the instalments from three stages to two. I stress to the noble Lord, Lord Forester, and to other noble Lords who were concerned about the arrangements for different grants from different bodies, that the Forestry Commission's consultation arrangements for planting and felling proposals have been reviewed with the aim of streamlining them.

In the publication, Our Forests—The Way Ahead, Enterprise, Environment & Access, we indicated that £1 million a year would be available for the establishment of woodlands of high environmental potential in areas where they will be particularly valued. Details of those schemes, which will run for a pilot period of three years, were recently announced. One such scheme involves the New National Forest.

The standard management grant which the commission used to offer has had a slow uptake. I know that the management grants are a source of great concern to many noble Lords, but consultation suggested that this was not likely to have a widespread and significant impact on woodland management. It has therefore been dropped and a single grant, similar to the former special management grant and paid at the rate of £35 per hectare per year, has been introduced. I know that my noble friends Lord Addison and Lord Forester believe that the grant is inadequate. But there has been a very good uptake of the former special management grant under the old woodland grant scheme. That would indicate that, far from being insignificant, woodland owners should benefit from that. I also stress to the House that we are not reducing the commitment so much as refocusing it. In that sense, I add that we are widening the eligibility criteria to encourage management for greater environmental benefits, including access, and to include woodlands under 10 years of age.

I am pleased to report that progress on allowing tree planting on set-aside land has been made within the European Union. At the December Agricultural Council, the European Commission tabled a report in response to UK pressure which concluded that farmers putting eligible land into forestry schemes under accompanying measures should be able to count that land towards their set-aside commitments. We shall need to await the Commission's proposals but we hope that when adopted they will have the effect of increasing new planting in the UK.

Over the next three years the Government expect to spend some £100 million on private forestry. The changes that we have made will target those incentives more effectively so that we achieve the best value for the taxpayers' money while stimulating an increase in tree planting.

One aspect of the Forestry Review which aroused great concern—and none more so than in your Lordships' House when we last debated forestry—was the Government's consideration of the future management of Forestry Commission woodlands. In the light of the review, which examined the full range of the options, we have concluded that at this stage of their development the Forestry Commission woodlands should remain in the public sector. In order to obtain further improvements in efficiency and value for the taxpayer's money—it is a point made by my noble friend Lord Rees—Forestry Enterprise is to be established as a Next Steps Agency. That will carry forward and develop the process begun with the separation of Forest Enterprise within the commission in 1992.

I know that there is some concern in some quarters that Forestry Enterprise will become ever more commercially oriented at the expense of the wider non-market benefits that forestry can and does provide. The noble Lord, Lord Beaumont, has doubts as to how these will be achieved. However, Forestry Enterprise will be managed to the high standards that we have come to expect on the basis of sustainability and multiple-purpose benefits. Not all forests can provide equal benefits. In discharging its statutory duty to balance its commercial conservation and environmental objectives, the commission may need to pursue a more commercially oriented approach in some areas, while in other areas above average attention to non-commercial duties may well be required.

The constitution and remit of the new agency will be set out in a framework document which will be agreed with the Forestry Commissioners and with Ministers. A copy will be placed in your Lordships' House in due course.

I now turn to the commission's disposals programme, which the noble Lord, Lord Taylor, and the noble Baroness, Lady Nicol, among others, mentioned. That was begun in 1981 and in 1989 the commission was given a target of disposing of 100,000 hectares of forest land between then and the end of the century. I stress to the noble Lord that that is a target with a ceiling on it. So far, about 40,000 hectares of that latter programme have been achieved.

It is important to put the programme into perspective. It enables the commission to sell some of its holding to improve its efficiency through rationalising its estate. The commission has over 1 million hectares of land under its control. The remaining programme from now until the end of the century represents the sale of only 1 per cent. of its land each year.

The Forestry Review confirmed that millions of people enjoy access to our forests. The Government recognise the need to strengthen the arrangements for protecting public access to commission forests which are sold as part of the disposals programme. Our proposals were set out in Our Forests—The Way Ahead. I believe that there has been some confusion today over the extent of the Government's commitment to that programme. It is proposed that greater account of public access will be taken when woods are selected for sale by the commission. A classification of woodlands based on the level of existing public access will therefore be introduced and there will be a presumption against the sale of woodlands with a high level of public access. But sales have taken place. I stress to the noble Lord, Lord Carmichael, in contradiction of what he said, that, up to September 1994, 18 woodlands have been sold with access agreements; and a further 19 agreements are completed or nearly completed for areas which will be sold.

Lord Carmichael of Kelvingrove

My Lords, at his leisure, perhaps the Minister will give me a list of the sites for which that arrangement has been made, and perhaps will place that list in the Library.

The Earl of Lindsay

My Lords, I shall be happy to do so.

For other woodlands used regularly by the public, every effort will be made to secure an access agreement before they are sold. The Forestry Commission will encourage local authorities to enter into access agreements. The commission will pay the authorities' reasonable legal expenses in drawing up the appropriate agreements.

The noble Baroness, Lady Nicol, was worried that, quite apart from the legal expenses being covered, the local authorities were taking on an ongoing financial burden. That may possibly be the case where there is considerable recreational infrastructure involved in those areas of land. But I must immediately stress that, in those types of properties, it is unlikely that the Forestry Commission will be selling in the first place. It is more likely that the Forestry Commission will be selling those sites with lower public access and therefore with much lower running costs, so solutions are hopefully sought on that issue.

Baroness Nicol

My Lords, I am grateful to the Minister for that answer. However, no one has ever defined what "higher level of access" means. What criteria will be applied?

The Earl of Lindsay

My Lords, that is being considered at present in the review. I believe that three tiers of access are envisaged. Suitable criteria will be attached to each. The details of each tier have yet to be finalised. However, those who are considering the problem will also read the report of the debate, so I hope that comments made by noble Lords will be carried forward into that review programme. The new arrangements are presently being worked out, as I said. As soon as the conclusions are available—that will be shortly—they will be announced.

While dealing with transactions, I can assure the noble Duke, the Duke of Somerset, that the Forestry Commission will not use compulsory purchasing powers when buying freeholds of leased areas.

Many noble Lords have referred to the 33,000 hectare planting target. I believe that it is fair to say that in areas, both within and outside the industry, there are many who now regard that target with some scepticism. The target was set in 1987 when quantity seemed to be the only criterion on which we should be working. What has emerged since 1991–92 especially, is that as important as how much we plant is what we plant and how we plant it. Therefore a preoccupation with the planting target is now seen to be potentially misleading. What matters is that we should continue to achieve a steady expansion. Here the Government have been successful. Since 1988 they have grant aided well over 100,000 hectares of new forests and woodlands. I stress that point to those noble Lords who felt that there had perhaps been a downturn in activity or commitment. I also stress to my noble friend Lord Addison and others who questioned the extent to which there is a strategy which looks forward, that, quite apart from the review that we have studied today and the UK sustainable forests programme, there is also the anticipated rural White Paper which was recently announced. At its centre, that will have the role of woodlands and forestry—as it were, the rural heartbeat, as the noble Duke, the Duke of Somerset, described it.

I should add that planting by restocking woodland is also important. Today restocking is almost at the same level as new planting and will increase in future as more and more woodlands reach maturity and timber is harvested from them.

The removal of tax relief was mentioned by my noble friend Lord Rees and others. I can only repeat what has been said many times in the House, that it was done with the best interests of the forestry industry uppermost. We have now put the industry on a more publicly acceptable footing through a grants-only regime. Government grant-aid has been substantially increased since 1988.

My noble friends Lord Addison and Lord Astor of Hever and others asked about limited tax relief for estate woods, and suggestions have come from the Country Landowners' Association on that score. The main problem with tax relief for management, as we have found in the past, is that it is an ineffective incentive in terms of delivering policy as there is little control over the type of work being supported. Of course, the recent review increased the grants because of that.

Points were made by my noble friend Lord Barber and others on taxation and investment vehicles. All I can say is that, in the various reviews that are still ongoing, such thoughts will be considered and taken on board.

The noble Lord, Lord Taylor, mentioned the lack of new planting by the commission. That is simply a reflection of the Government's wish to encourage the private sector to undertake more new planting. However, the commission has a substantial programme of restructuring and restocking its forests and that programme will continue in the years ahead. It still retains a substantial estate of its own. In questioning whether the commission could or could not be self-financing, I point out that, quite apart from the income received from disposals, the commission will have an increasing income from the greater productivity of its maturing forests.

Other points were made by noble Lords, and I stress that I shall write to them on those which I do not manage to cover in the remaining few minutes. My noble friend Lord Mersey dwelt at length on the short rotation coppice, having described his own pleasures and pains in being a forester in East Sussex. I stress that both the Forestry Commission and the Government are committed to the continued development of SRCs, as they are known. The Forestry Commission research division has recently been awarded a £500,000 research contract by the DTI to develop SRC into a commercially more viable means of energy production. There is a tranche of grants, some for set-aside land and some for non-set-aside land. The bottom line is that we expect that it will support the planting of about 2,500 hectares of short rotation coppice per year.

I apologise to noble Lords whose points have not been answered in full. Apart from the promise to write to them, I also stress what I mentioned earlier, that the Forestry Commission is carrying out an internal review of the Forestry Authority with a view to improving its performance and efficiency. Once again, that review has a fairly wide remit and therefore the many good points made by noble Lords such as my noble friends Lord Clinton, the Duke of Somerset and Lord Addison will be read with care.

We in the Government have every confidence in the future of the forestry industry in this country. We have only to look back over this century to see the enormous progress that has been made. Currently, the broad approach of multi-purpose forestry, carried out on a sustainable basis, receives wide support in the country. Indeed, it is the cornerstone of the actions being taken, both here and in countries throughout the world, in the follow-up to the commitments entered into at the Earth Summit in Rio. I am pleased that we have had the opportunity this afternoon, thanks to the noble Lord, Lord Taylor, to discuss the main issues. The Government will take careful note of the comments made by noble Lords and I am confident that, as the proposals are taken forward, they will give further impetus to forestry in this country by placing the industry on a stronger and more confident footing as it looks towards the next century.

5.35 p.m.

Lord Taylor of Gryfe

My Lords, I opened the debate by congratulating the noble Earl, Lord Lindsay, on his appointment, although I regret the absence of the Minister of State. Let me assure the noble Earl that that was no reflection on his competence but simply his status in the government machine. In addition to the noble Earl's summing up, we are grateful to him for his manner of handling the contributions that have been made. I reiterate that so much good advice and experience exist around the House that it is a great pity that the Minister of State is not in his place to convey that advice and information through the appropriate channels. However, I thank the noble Earl and wish him well in his new duties.

I wish to correct one point as a matter of fact in his summing up. The total disposals of the Forestry Commission are 187,000 hectares. The noble Earl said 40,000 hectares, but it is only 40,000 hectares within the programme of 100,000 hectares that was announced. The total disposals are way beyond that. There is nothing more for me to say except to congratulate all, including the Minister, on their contributions. The mass of good advice and experience in the House certainly justifies my putting my name down for the ballot. I thank all who have spoken with such knowledge in offering advice to the Government. I particularly welcome the noble Earl's concluding remark that the Government are committed to a steady expansion of woodland cover. That has been said before, but it has been noted and is in the record. I can only hope that the record will justify what has been said. I should have welcomed a few more reassurances on the future of the Forestry Commission. However, I beg leave to withdraw my Motion for Papers.

Motion for Papers, by leave, withdrawn.