Select Committee on Agriculture Fifth Report


The Agriculture Committee has agreed to the following Report:-



1. The Forestry Commission, which was established in 1919, is the Government department responsible for "advising on and implementing forestry policy in Great Britain".[1] It is headed by a Board of Commissioners. The Forestry Commission has two executive agencies: Forest Enterprise, responsible for managing the Commission's forests, and Forest Research, responsible for undertaking forestry research.[2] Prior to devolution the Forestry Commission fell under the responsibility of the Secretary of State for Scotland,[3] reflecting the greater relative importance of forestry north of the border. Following devolution these arrangements changed. The Forestry Commission now reports to the Minister of Agriculture, Fisheries and Food, Scottish Ministers and the National Assembly for Wales on forestry matters in each country, and to the Minister of Agriculture, Fisheries and Food on non-devolved issues such as international negotiations, plant health, research, direct support for Commissioners, pensions and the UK forest standard.[4] As a result of these changes, MAFF reported on the Forestry Commission for the first time in its Departmental Report 2000,[5] prompting us to include the Forestry Commission in our series of short inquiries into the activities of MAFF-sponsored public bodies.

Conduct of the inquiry

2. We announced our inquiry in October 2000, calling for evidence on the work of the Forestry Commission.[6] On 22 November 2000 we held a single session of oral evidence with Forestry Commission officials: Mr David Bills (Director General), Mr Paul Hill-Tout (Chief Conservator, National Office for England) and Dr Bob McIntosh (Chief Executive, Forest Enterprise). During the session, we requested further evidence from the Forestry Commission. Its response, other written evidence received and the transcript of oral evidence are printed with this Report. We are grateful to the Forestry Commission and to the other organisations and individuals who contributed to this inquiry.

3. In this short Report we concentrate on the Forestry Commission's relationship with Government. We examine the Commission's response to devolution, its funding arrangements and the limitations of the Forestry Acts 1967 and 1979. Finally, we also comment briefly on the implementation of the England Forestry Strategy.


4. In its original memorandum, the Forestry Commission told us that the principal statutory change following devolution was "to make the Commissioners accountable separately and distinctly to Ministers in each country".[7] It noted that its "own structures and practices pre-devolution already allowed it to respond well to local needs" and that it had strengthened its national offices.[8] The Director General, Mr Bills, told us that the Chief Conservators now "really act as deputy director generals in each of the three countries ... and I, myself, focus more on the GB or United Kingdom areas".[9] Full responsibility for forestry in Wales has not yet been transferred to the National Assembly but the Forestry Commission is confident that all lines of accountability are in place.[10] We commend the Forestry Commission's response to devolution. It is vital that the Commission retains its Great Britain perspective, particularly given that the UK forest standard provides a framework for forestry policy throughout the UK. We will retain a watching brief on both the non-devolved and English activities of the Forestry Commission in the future.

Funding the Forestry Commission

5. The Forestry Commission has experienced "serious financial difficulties" in recent years.[11] In 1999-2000 it sought supplementary estimates of £7.5 million from the Westminster Parliament and £5.6 million from the Scottish Parliament and it has been forced to seek a further £18 million this year.[12] These difficulties are caused in part by the way in which the Forestry Commission is funded. The Commission is "net funded"[13] by the Government. The grant-in-aid it receives covers only that part of its expenditure not met by its agencies' surpluses which, for the purposes of this calculation, are forecast in advance. Since its main source of income is Forest Enterprise's sale of 5½ million cubic metres of timber per annum,[14] the Commission's funding is "based largely on a forecast of timber prices over a three-year period".[15] The Forestry Commission's need for supplementary estimates in 1999-2000 and 2000-01 arose because actual timber prices were far lower than those estimated for the period of the Comprehensive Spending Review. The Commission acknowledged that the timber market is cyclical but described the fall in prices since 1998 as "unprecedented".[16] (The figure below illustrates one measure of the timber price over the last decade.) As a result of the reduction in income, Forest Enterprise was not able to fund new activities and might have to cut back on some of its existing recreational and biodiversity programmes.[17]

Figure: Coniferous Standing Sales Prices for Great Britain (per cubic metre overbark)

Source: Forestry Commission (based on Forestry Commission sales by Forestry Enterprise).

Note: overbark - trees as felled, before bark is removed.

6. The Treasury has recognised the Forestry Commission's difficulties and tried to address them through the Public Service Agreement performance targets set in 1998. One of the Forestry Commission's targets required it to "develop methods to benchmark the return from commercial forestry on the [Forestry Commission] estate against equivalent private sector forests and set an increased rate of return thereafter".[18] Dr McIntosh explained that "the Treasury were looking for ... some sort of expression of how the whole forest business was performing, not just the timber production side, but all the subsequent restocking of that, the amount we spend on recreation, conservation and heritage", in order to "find some way of benchmarking that with the private sector".[19] The disparate objectives of the Forestry Commission and the private sector made it "very difficult to come up with a clear comparison", with the result that "everyone, including Treasury", had abandoned the target as "too difficult".[20] A second PSA target - to organise a trial sale of future timber cutting rights to bring forward income[21] - met an equally ignominious fate. The proposal was found, by a working group chaired by the Chief Executive of Forest Enterprise and including representatives from the Treasury, to be both "ultra vires and not good value for money".[22] These failures illustrate how important it is for the Treasury to work with departments and other Government bodies to devise meaningful and practical targets, rather than simply imposing them first and examining their practicality later. Although the Treasury is right to set challenging targets, the appropriateness of the targets, and certainly their legality, must be fully considered before they are agreed.

7. The funding question has not been resolved and is now being discussed in the context of the quinquennial review of Forest Enterprise which is already falling behind schedule.[23] The Director General of the Forestry Commission, Mr Bills, favoured an option in which "the recreation, conservation, heritage programmes are funded notwithstanding timber prices" and the timber enterprise "has to make ends meet".[24] Separating timber income generation from the delivery of environmental and recreational outputs could have a detrimental impact on developing an integrated approach to forest management. Intangible benefits such as social or environmental outputs are also notoriously difficult to evaluate.[25] However, a mechanism must be found which would allow the Forestry Commission to be financed to deliver quantifiable environmental, recreational and heritage benefits, in a way that was not dependent on the income of the timber enterprise. Separate targets would need to be set for timber production which, we believe, should be based on forest management needs rather than income goals, with provision for prudent activity to protect future income flows. It makes no sense to force the Commission to sell at the bottom of the market to achieve an income target. We therefore recommend that the Forestry Commission and the Treasury consider a multi-annual volume target alongside annual efficiency targets for timber production, with net income being returned to the Treasury. We recommend the separate funding of recreation, conservation and heritage programmes, independent of the income generated from timber sales. It is essential that decisions are taken as soon as possible so that the Forestry Commission can plan ahead and is not kept in ignorance of its future structure or how it is to be funded. We recommend that the Government publish a timetable for decisions on funding arrangements for the Forestry Commission and for the completion of the quinquennial review of Forest Enterprise and ensure that the timetable is adhered to.

The Forestry Acts 1967 and 1979

8. The framework within which the Forestry Commission must work is dictated by the Forestry Acts of 1967 and 1979. We were told that the detail of the legislation "seriously constrained [the Forestry Commission] in terms of its working practices and ability to deliver current overall policy objectives"; for example, by making it difficult for the Forestry Commission to establish partnerships.[26] The Forestry Commission concurred, citing partnerships which it had wished to pursue but which had been ruled out because of the terms of the legislation. These included developing its cabin and camping sites through a public/private partnership[27] and purchasing land, with Scottish Natural Heritage and others, which would have been "managed for multiple objectives, including forestry, conservation and deer control".[28] Dr McIntosh argued that it was not the intention of the legislation to prevent the Forestry Commission forming partnerships, rather the wording which made it difficult.[29] He concluded that primary legislation would probably be needed to change it.[30] The Forestry Commission has not yet asked for legislative changes but has sought legal advice on how to do so.[31] We commend this approach and expect MAFF to look favourably on any proposals the Commission brings forward to amend the Forestry Act so as to allow it to pursue opportunities which assist it in meeting its objectives and targets. Consultation on any such proposals would be necessary but we would expect MAFF to bring forward the appropriate legislation in the following parliamentary session.

England Forestry Strategy and Partnership

9. The England Forestry Strategy was published in December 1998. It describes how the Government "will deliver its forestry policies in England" and sets out its "priorities and programmes for forestry for the next five to ten years".[32] The four programmes contained in the strategy and the Forestry Commission's role in delivering it are set out in the Commission's Service Delivery Agreement which will be amplified in the Commission's forthcoming corporate plan (see the table below for a brief summary).[33] The Forestry Commission has made some administrative changes in response to the England Forestry Strategy. It has realigned the work of its Conservancies (regional offices) to the boundaries of the Government Office regions and increased the number of its Regional Advisory Committees to one for each region. The Woodland Grant Scheme (WGS), which aims to encourage the creation of new woodlands and management of existing woodland by providing money towards the cost of the work,[34] has also been amended to reflect the priorities of the England Forestry Strategy.[35]

Table: England Forestry Strategy - the Forestry Commission's objectives
ProgrammeForestry Commission's role
rural developmentfacilitate the development of sustainable economies in the countryside
economic regenerationimprove the environment of areas disadvantaged by industrial decline and foster economic regeneration
access to recreationincrease opportunities for people to enjoy woodlands closer to where they live
conservation of the environmentincrease the role of woodlands in conserving the environment and enhancing the diversity of wildlife
Source: Forestry Commission - Service Delivery Agreement: 2000 Spending Review, November 2000.

10. We welcome the Forestry Commission's involvement in the England Forestry Strategy but are concerned that the delivery of the objectives could be a rather cumbersome process. This is a threat given the ever-growing number of partners involved (for example, National Forest, MAFF's England Rural Development Programme, the Regional Development Agencies, the Government Offices in the Regions and various major voluntary bodies[36]). We had a specific concern regarding applications for the WGS in the instances when funding is also required from MAFF's Farm Woodland Premium Scheme (FWPS). At present MAFF has to approve the application for FWPS and the Forestry Commission the application for WGS,[37] which means two applications are required for a single area of woodland. We recommend that MAFF and the Forestry Commission examine methods to align the administration of and payment for the two schemes and review the ease with which landowners and others are able to access advice and support on schemes furthering the Forestry Strategy. In general, the Forestry Commission has responded willingly to the need to work with other bodies to implement the Forestry Strategy. Its Director General agreed that "the general Government encouragement for joined-up or cross-sector approaches is sound" and explained that the Forestry Commission had been congratulated for improving engagement with its stakeholders.[38] We recognise that on many occasions it is appropriate for the Forestry Commission to work with other organisations and agencies. We expect the Forestry Commission to ensure that this is done in a structured manner, with the minimum bureaucracy and the maximum attention to the delivery of its objectives.


11. The Forestry Commission has responded well to the challenges of devolution: it has clear objectives and the organisation is confident in its many roles. However, it currently has two distractions: its inability to respond to opportunities because of the restrictions of the Forestry Act and the protracted discussions over its funding arrangements which have now been subsumed into the quinquennial review of Forest Enterprise. It is the responsibility of the UK Government, in particular HM Treasury, to resolve these difficulties and we expect to see rapid progress in this regard. The Forestry Commission would then be free to get on with its real task of responding effectively to the needs of all users of Great Britain's forests. We look forward to receiving annual Reports and Accounts from the Commission and to scrutinizing its activities in the course of our regular reviews of the work of MAFF and its associated bodies.

1  Ev. p. 1, para 2. Back

2  Ev. p. 1, para 6. Back

3  Ev. p. 2, para 9. Back

4  Ev. p. 1, para 2; Ev. p. 2, para 9; Q 4. Back

5  Ministry of Agriculture, Fisheries and Food, the Intervention Board, and the Forestry Commission Departmental Report 2000, Cm 4612. Back

6  Press notice no. 43, Session 1999-2000, 17 October 2000. Back

7  Ev. p. 2, para 9. Back

8  Ev. p. 2, para 10. Back

9  Q 3. Back

10  Q 7. Back

11  Ev. pp. 3-4, para 23. Back

12  Ev. p. 5, para 38; HC Debates, 9 November 2000, col 387W. Back

13  Q 33. Back

14  Ev. p. 5, para 38; Q 33. Back

15  Ev. pp. 5-6, para 38. Back

16  Ev. p. 3, para 23. Back

17  Q 71; Q 73. Back

18  Ev. p. 8, PSA target (iv). Back

19  Q 40. Back

20  Qq 40-41. Back

21  Ev. p. 8, PSA target (v). Back

22  Ev. p. 35, para 10; Q 47. Back

23  Q 59. Back

24  Q 56. Back

25  Q 77. Back

26  Ev. p. 24. Back

27  Q 27. Back

28  Ev. p. 35, para 2. Back

29  Q 24. Back

30  Q 24. Back

31  Q 27. Back

32  England Forestry Strategy [Forestry Commission (1998)], p. 1. Back

33  Q 80. Back

34 Back

35  Ev. p. 37, paras 27-29. Back

36  Qq 26, 28, 31. Back

37  Q 89. Back

38  Q 24. Back

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