Examination of Witnesses (Questions 100
- 119)
WEDNESDAY 5 DECEMBER 2001
MR VIV
ASTLING AND
MISS SUSAN
BELL
100. The reason I was asking about your bids
was that I notice in your accounts that you have, over the last
two financial years, been drawing down money from your reserves.
Can you explain that, why that has been required?
(Miss Bell) The reserves are, in essence, money that
we have had from other donations, so they are used as land becomes
available to purchase it, for example.
101. Do you have a specific reserves policy?
(Miss Bell) Very often that reserve money is, as I
say, through sponsorship or donation, and there will be conditions
attached to that, there will be specific things that the sponsors
will want to see happen. For example, it is usually a land purchase,
and so as and when land becomes available, that is what it is
spent on.
102. I notice that you get from the Government
£189,000 in the form of a capital grant, but looking at note
5 on page 32 of the Financial Statement, would I be right in saying
that grant effectively is the Government covering your depreciation?
I say that because the value of the depreciation of the tangible
fixed assets of your organisation, together with the revaluation
of the fixed assets, magically comes to the £189,000 which
the Government provides.
(Miss Bell) We think the answer must be yes, but perhaps
we may check that for you.
103. I would be interested in that. Your bank
interest receivable seems to be going up. How have you managed
to get all this additional interest? What are the investments
that give you now £40,000 of income?
(Mr Astling) I think that will be both the private
sector donations, the corporate sponsorships, and possibly a slightly
later draw-down on our tender scheme monies. When there is a wet
winter, for example, the works will not have been done as quickly
as we would anticipate, and therefore the draw-down from us by
the tender scheme winners is slower, but we have already drawn
money down from our parent Department, so it stays with us slightly
longer.
104. Moving to note number 10 on page 34 of
your accounts, your disposals and the revaluation of your land
would appear to be causing you some losses, is that right?
(Miss Bell) Yes.
105. If you are expanding your land-holding
and you are making a loss on it, could there not be some future
problems? What has caused it to occur?
(Miss Bell) The minute you put trees on the land.
106. So you do not, that is a fact?
(Miss Bell) We are buying it at agricultural value
and we are selling it on, very often, to a community group or
whatever. By that point it is planted and it has been devalued
in financial terms.
107. So to be clear, when you buy the land,
because you think it is important as far as your objectives are
concerned, there is also a developing strategy for the disposal
of that land?
(Miss Bell) Yes.
108. Because you make a loss on it, do you have
some constraints or limitations as to how much you are prepared
to lose in terms of the overall pursuit of achieving your environmental
objectives?
(Miss Bell) We do not have a specific policy on that,
no, but there always has to be an exit strategy for whatever piece
of land we do take on. We are not actually in the business of
owning land long term, and very often there will be a loss incurred,
yes.
109. Given that you are going to buy more land,
and given that this could start to reduce the value of your operations,
is this a matter you are going to discuss with your auditors—having
a policy on this?
(Miss Bell) Yes, we could do, but—
Chairman: Do you want to phone a friend?
Mr Jack
110. Could I go on to a question of your future
commitments. One of the things that caught my eye was "The
Company is committed to make payments under the National Forest
Tender Scheme as follows", and within one year it looks entirely
manageable at £½ million, but then the next two to five
years we are up to forward commitments of over £1 million,
then in five years we drop back to £10,000. Does this go
back to the point you were making about the difficulties that
you have these future commitments you can identify, but you are
not certain whether you have the money to pay for them?
(Miss Bell) We have a verbal reassurance from the
Department that it is understood that these are phased payments,
and there is a verbal understanding that that will be covered
by the Department, or it will be covered either through grant-in-aid
or directly. Those are commitments entered into.
111. Are there any particular long-term financial
commitments which you have entered into on the basis of just verbal
assurances from Ministers?
(Miss Bell) Nothing other than the tender scheme which
is a phased scheme, so there is a built-in gap, if you like, of
five years between those two payments, then there is nothing beyond
that.
112. Looking to the question of your `Plant
a Tree' scheme and the `Adopt a Tree' scheme, what is the revenue
from that? Is it a very successful scheme?
(Miss Bell) I would not say it is very successful.
It has brought in about £6,000 this year. I think there is
scope for increasing that.
David Taylor: For clarification, I thought I
heard Michael Jack assert that the National Forest were drawing
on reserves of funds. If he did say that, it is not quite the
case, is it, because page 35, note 14, shows that, for instance,
in this year there is an extra £229,000 being added to reserves
which are now £400,000, at the bottom of that column on page
35, so I do not think there is a net draw on reserves.
Mr Jack: I did explain what the purpose of the
accounting procedure was in terms of the draw-down, so I am happy
that there is not a haemorrhaging of funds.
David Taylor: No, in fact there is a transfusion
in this case.
Mr Jack: Indeed.
Chairman: If Members wish to apply for a transfer
to the Treasury Select Committee, then I would entertain that!
Mr Todd.
Mr Todd
113. You have the quinquennial review, and you
are presumably awaiting its final publication, is that right?
(Miss Bell) We are awaiting it, yes.
114. Have you had any indication of what the
problem is? Is it presumably that DEFRA has been established and
the file and papers have been moved across the desk to someone
else?
(Miss Bell) I think that in part there is an inbuilt
delay because of that, but I think it also may well be taken into
consideration along with a number of other organisational potential
changes.
115. In what way?
(Miss Bell) If the Forestry Commission, for example,
is being looked at, are we being looked at in the context of that?
So I think there are a number of questions not so much to do with
the workings of the company per se, but how it is going to fit
into the wider order of structure.
116. Did you recommend any substantial changes
or any changes in your powers and responsibilities in the review?
(Miss Bell) No. Of course, it was a review by DEFRA
not us.
117. Yes, but it was an iterative process, so
you had the opportunity to say what you thought should happen,
did you not?
(Miss Bell) No, I think our strong message is that
this is a company that is delivering, that it is working well,
and I think it should be allowed to continue to work well until
the Forest has reached a momentum that is secure.
118. So some of the comments you have made to
us about, say, the constraints in the planning process you did
not make in the quinquennial review?
(Mr Astling) I am not sure we are within the scope
of the quinquennial review. The quinquennial review is about us,
what have we done over the last five years, should we continue
with that work over the next five years? That is the question,
I think, rather than some of the more refined points about powers
and so on.
119. It is certainly the opportunity to say
something about those, because if you do not, then you will not
get another chance in the formal process, will you?
(Mr Astling) I think we regard our annual review with
Ministers as an opportunity to raise issues that we have concerns
about, and that is, I think, a more direct and positive way actually.
A quinquennial review rather feels as though we are having something
done to us, rather than us being promotional.
(Miss Bell) There were two aspects. We were asked
specific questions particularly about the mechanisms that we used
and the efficacy of those, and they were reviewed. We contributed
names for the consultation process, but we were not actually asked
for our opinion on quite a lot of this, on the review itself,
other than to provide facts.
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