The Agriculture Committee has agreed to the following
THE WORK OF THE FORESTRY COMMISSION
1. The Forestry Commission, which was established
in 1919, is the Government department responsible for "advising
on and implementing forestry policy in Great Britain".
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.
Prior to devolution the Forestry Commission fell under the responsibility
of the Secretary of State for Scotland,
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.
As a result of these changes, MAFF reported on the Forestry Commission
for the first time in its Departmental Report 2000,
prompting us to include the Forestry Commission in our series
of short inquiries into the activities of MAFF-sponsored public
Conduct of the inquiry
2. We announced our inquiry in October 2000, calling
for evidence on the work of the Forestry Commission.
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".
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.
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
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.
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.
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.
These difficulties are caused in part by the way in which the
Forestry Commission is funded. The Commission is "net funded"
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,
the Commission's funding is "based largely on a forecast
of timber prices over a three-year period".
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".
(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
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
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".
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".
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".
A second PSA target - to organise a trial sale of future timber
cutting rights to bring forward income
- 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".
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.
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".
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
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
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
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
and purchasing land, with Scottish Natural Heritage and others,
which would have been "managed for multiple objectives, including
forestry, conservation and deer control".
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.
He concluded that primary legislation would probably be needed
to change it.
The Forestry Commission has not yet asked for legislative changes
but has sought legal advice on how to do so.
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
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".
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).
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,
has also been amended to reflect the priorities of the England
Table: England Forestry Strategy - the
Forestry Commission's objectives
Source: Forestry Commission - Service Delivery
Agreement: 2000 Spending Review, November 2000.
|Programme||Forestry Commission's role
|rural development||facilitate the development of sustainable economies in the countryside
|economic regeneration||improve the environment of areas disadvantaged by industrial decline and foster economic regeneration
|access to recreation||increase opportunities for people to enjoy woodlands closer to where they live
|conservation of the environment||increase the role of woodlands in conserving the environment and enhancing the diversity of wildlife
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).
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,
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.
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
p. 1, para 6. Back
p. 2, para 9. Back
p. 1, para 2; Ev. p. 2, para 9; Q 4. Back
of Agriculture, Fisheries and Food, the Intervention Board, and
the Forestry Commission Departmental Report 2000, Cm 4612. Back
notice no. 43, Session 1999-2000, 17 October 2000. Back
p. 2, para 9. Back
p. 2, para 10. Back
pp. 3-4, para 23. Back
p. 5, para 38; HC Debates, 9 November 2000, col 387W. Back
p. 5, para 38; Q 33. Back
pp. 5-6, para 38. Back
p. 3, para 23. Back
71; Q 73. Back
p. 8, PSA target (iv). Back
p. 8, PSA target (v). Back
p. 35, para 10; Q 47. Back
p. 24. Back
p. 35, para 2. Back
Forestry Strategy [Forestry Commission (1998)], p. 1. Back
34 www.forestry.gov.uk/cs/grants.html Back
p. 37, paras 27-29. Back
26, 28, 31. Back