Supplementary Memorandum submitted by
the Chief Executive, National Forest Company
Thank you for your letter to our Chairman, Viv
Astling, dated 5 December. He has asked me to reply and to say
how much we welcomed the opportunity to give evidence to the Committee.
On the specific issue of capital grants received
from Government, covered in Note 5, on page 32 of our Annual Report
2001, I hope that the following details are helpful.
The figure of (£189,143) against Government
grantscapital, comprises £85,143 depreciation chargeable
in the current year against capital items acquired in earlier
years and a further £104,000 charge against capital ie write-off
upon revaluation of land purchased and subsequently disposed of,
in part. It is this latter item that I believe was of particular
concern to the Committee.
In the specific case in the Accounts in question,
a 27 hectare site, in two discrete parts, had been bought by the
National Forest Company (NFC) for the sum of £140,000 in
September 1999. Subsequently, the 15 hectare part of the site,
now converted to woodland, was sold on for community purposes,
for the sum of £20,000. The loss on the disposal of this
part of the site was £57,778 (£3,851 per hectare). The
remainder of the site had then to be re-valued to a figure of
£16,000, incurring a further loss of £46,222. These
"losses" total the £104,000 charge against capital
included in the overall figure of (£189,143).
The majority of land conversion to Forest uses
is achieved through the Tender Scheme, land restoration following
mineral extraction, partnership activity and through planting
associated with new built development. Land acquisition whether
by partner bodies, by means of grant from The National Forest
Company (NFC), or by the Company itself plays a relatively minor
role. It is not the intention that the NFC should become either
a major landowner in the area or a long-term holder of land. Under
the terms of the Company's agreed Land Acquisition Policy, it
is obliged to specify an exit strategy for such acquisitions as
it does undertake.
Unless it is achieved through planning obligations,
land conversion to Forest uses incurs a cost to the Company. This
can, in part, often be offset by external funding, whether that
be from other public, challenge fund, sources, from Landfill Tax
Credits or from private sponsorship or donation.
It is not within the Company's remit or powers
to be opportunistic, in commercial development terms, in its acquisitions.
The change of use to forest purposes, whether that is for tree-planting
or nature conservation, usually incurs a devaluation in the capital
value of the land. Such devaluation can be almost immediate, if
the land in question is sold on, or it can be written off over
a period. An example of the latter instance is the arrangement
with Forest Enterprise (FE) whereby the Company, with FE assistance,
purchases land with a leasehold offered to FE for a given period
with the sale of the freehold to FE, at a nominal sum, following
in a specified number of years.
I hope that this explanation answers the questions
raised but should any further information or background be required,
please do not hesitate to contact me.
12 December 2001