---

23 Feb 2005 : Column 127WH—continued

 
23 Feb 2005 : Column 128WH
 

Forestry Commission

3.30 pm

Mr. Roger Williams (Brecon and Radnorshire) (LD): I am very pleased that we have the opportunity today, albeit in a short debate, to discuss the important issue of forestry. I thank the Minister for attending and contributing to the debate. In terms of land use, forestry is probably second only to agriculture. This debate is important and timely given the current Forestry Commission consultation, the quinquennial review of Forest Enterprise and other political parties' proposals to alter the structure of our national forests and how their governing bodies operate.

Forestry has always been important to the UK. When the defence of the realm was dependent on the construction of ships of oak, timber was at a premium and there was always a concern that there was not enough of good enough quality with which to build those ships. It was said at that time that the final contribution that retired admirals could make was to go round with bags of acorns and plant them in the hope that they would grow into trees of the size and quality necessary to build ships. In the first world war, it was regarded strategically that we did not have enough timber to produce pit props and as such the coal production that was necessary for the war effort was being curtailed.

Things have moved on, but forestry is still important. There has been a considerable amount of political upheaval and change and some financial difficulties for the forest industry lately. I welcome the devolution of responsibility to the nations, but even with that we still trade across the borders. One of the most important saw-mills in my constituency—BSW Timber in Newbridge—sources its timber not only from Wales but from throughout the south of England. The policies that the Forestry Commission and Forest Enterprise are operating in England are important for the devolved authorities, too.

Forestry is also an important industry for my constituents, a number of whom are timber producers in the sense that they own forests and woodland, and for those who are involved in extracting and processing timber from those forests. I have, from time to time, heard complaints locally that Forest Enterprise does not operate its business in a way that helps those small businesses on which the rural communities are so dependent. Some of the complaints have been about contracts being offered in very large amounts of more than 5,000 tonnes, which the smaller gangs find it difficult to cope with and which brings in the multinational companies with their more industrialised type of harvesting. Such harvesting may bear down on costs per tonne, but it does not necessarily lead to better quality logs being presented for processing. Some of the smaller saw-mills say that timber is coming to them in a worse condition now than for many years. I will talk more generally about Forest Enterprise in a minute or two.

Lembit Öpik (Montgomeryshire) (LD): Does my hon. Friend agree that one reason why this is such an important issue in our shared county of Powys is that much of the local economy depends on small and
 
23 Feb 2005 : Column 129WH
 
medium-sized businesses, which are disproportionately affected when the large companies come in and effectively squeeze them out of the forestry business?

Mr. Williams : I thank my hon. Friend for making those comments, and I associate myself with them. It is sometimes said that Wales is the most efficient spruce factory in the world, as growing conditions are very good. The small companies and businesses in the timber business are very important to supporting the rural communities in England and Wales that they serve.

A great feature that has affected not only Forest Enterprise and the state forest but private timber-growers has been the collapse of commodity prices in recent years. Some of the best logs at roadside would have reached perhaps £55 a cubic metre in the past, but are now selling at roughly £33 a cubic metre. The private and public sectors have had to take account of the reduction in commodity prices.

I welcome the fact that a number of the Baltic nations have realised the recklessness of their activity in the world market, and want to go up a quality and not just compete on price. They are looking again at their trading relationship with Britain and considering whether it can be put on a more commercial basis, instead of their dumping timber in this country at very low prices. I am concerned at some reports from Russia about forests not being managed sustainably. There are reports that certain harvesting has taken place to release cash for people who have come back into land after the fall of communism. Some people have come into private ownership but have no traditional skills in forestry management, and as such have seen the harvesting as a cash benefit. The Government should take countenance of that, and ensure that the timber coming into this country has been produced from sustainable sources.

Given that background, it has been difficult for the Forestry Commission and Forest Enterprise to balance the social and environmental side of their remit with the obvious need for economic viability. I have some sympathy with them; that is not an easy balancing act. I commend much of the work that has gone into producing the public goods—that is, the work that has gone into access, recreation and conservation issues. In light of the recent pronouncement of the Minister for Rural Affairs and Local Environmental Quality on the use of mechanically driven vehicles on public footpaths and rights of way, perhaps forest land could be a suitable place for those more intrusive types of recreation.

It is important to note that although current timber prices have hampered both public and private forestry, the UK timber industry comprises producers and processors employing nearly 30,000 people. It is estimated that £2 billion will be invested in saw-mills and paper and board-mills in the next 15 years, and that will add to that employment.

Investment is taking place in my constituency, and the firm involved informs me that it really values the presence of Forest Enterprise, as it guarantees a flow of product into its saw-mills. A number of people question the way in which Forest Enterprise is managed, and I have no doubt that suggestions will have been made.
 
23 Feb 2005 : Column 130WH
 
Some have suggested to me that Forest Enterprise should be privatised, and could be run better by private individuals or companies. When the UK Forest Products Association met recently, it certainly reinforced the view that Forest Enterprise plays a valued role in providing continuity of supply of commodity and therefore enables saw-mills and other processors to plan their investment on the basis that they have assured throughput. That is the conclusion that I have come to, too.

The social and environmental benefits of forests are clear. Research carried out for the Woodland Trust in its report, "Making Woodland Count: its Contribution to our Quality of Life", shows that forest areas meet 11 of the 15 Government headline quality-of-life indicators for sustainable development. They provide opportunities for recreation, wildlife and physical activity, which are so important to making our young people fit and healthy.

It is also important to consider UK forestry in economic terms. It is right that the Forestry Commission is partially funded through the sale of timber from public forests. However, it is important that Forest Enterprise takes into account the effect that its sales will have on the market price for domestic timber producers. Given the already depressed state of timber markets, it is vital that the market price is not adversely affected by sales from Forest Enterprise that are designed to balance its own books. It is important that efficiency is not confused with the over-simplistic goal of turning a short-term profit or short-term cash flow. The criticism has been put to me that Forest Enterprise has been going into stands that are not mature—not ready for felling—and as a result producing timber of not very good quality, which further depresses the commodity price.

The Forestry Commission has recently increased its emphasis and spending on non-core business activities while neglecting, some would say, its core business of timber production. It must consider commercial timber production as a key element, because we will not be able to finance the public goods unless the core business is profitable. The situation that I have described is down to the direction of Government. I support the intentions of the policy, but its implementation has sometimes been counter-productive. It is vital that a real commitment remains to supporting domestic commercial forestry, as that is the surest way of achieving the social and environmental aims of the Forestry Commission.

I welcome the proposals to reform the powers of the Forestry Commission. The strengthening of ties with the private and voluntary sectors is vital for the health of the industry. That will allow for the provision of public goods, rather than leaving the fate of the industry to depressed timber prices. The issue of restocking orders is also important for sustainable practice. I draw the Minister's attention to the excellent work carried out in that regard by the Welsh Minister for Rural Development in 2003. He made the important point that the quality of restocking should be considered with particular emphasis on the expansion of ancient woodland, especially in areas where that would have a direct effect on local communities.

Having said that, I have heard criticisms about the proposals to have at least 50 per cent. of land in continuous cover—that is, people do not go in and
 
23 Feb 2005 : Column 131WH
 
clear-fell but have trees of different age groups in a plantation. This issue is of great importance. We believe that rushing into that will have a deleterious effect on the quantity of timber produced and the continuity of supply, so we would like it to be considered again.

In the few minutes remaining to me, I shall outline the Liberal Democrat proposals for the future of Government involvement in forestry in the UK. That can have only limited scope in the recommendations for Scotland, Northern Ireland and Wales. First, it is vital that a viable and sustainable public forestry service is maintained. That not only preserves the valuable public assets of woodlands and forests but benefits the industry as a whole—processors and saw-mills. The role of the service should encompass acting as a facilitator to private forest concerns through the grants system operated by the Forestry Commission and through the responsible activities of Forest Enterprise. Short-term losses should not lead to panic decision making; rather, it is through considered strategic thinking that the Forestry Commission will best serve the needs of the industry and the public.

Timber growing and processing is vital to the economy of the UK, but it is also important for communities and the environment. Competitiveness is compatible with sustainability, and the Government should be playing their part in ensuring that the forestry in this country achieves that.

3.44 pm

Lord Commissioner of Her Majesty's Treasury (Mr. Nick Ainger) : I congratulate the hon. Member for Brecon and Radnorshire (Mr. Williams) on securing this debate. We do not often have debates on forestry or the Forestry Commission, and I hope that I can address some of the points that he raised.

In the hon. Gentleman's opening remarks, he touched on the history of the Forestry Commission and how it developed originally from a wartime need over many centuries to provide wood for our ships. When the commission was established in 1919, the commissioners were charged with the general duty of promoting the interests of forestry, the development of afforestation and the production and supply of timber. Later, a general duty of promoting the establishment and management in Great Britain of adequate reserves of growing trees was added to the commissioners' duties.

In 1967, the Forestry Act consolidated previous legislation and is the basis of the Forestry Commission's activities today. It was not until only 20 years ago that the commissioners were required to achieve a reasonable balance between the creation of new forests, the management of existing forests, the production and supply of timber and, most importantly, the conservation and enhancement of natural beauty and the conservation of our natural environment. After more than 60 years of focus on timber supply, the commission had a duty to change, which it has embraced with ever-increasing enthusiasm. Today, the Forestry Commission, in both organisational and activity terms, is unrecognisable from what it was only 20 years ago. I know that some people are still trying to catch up with the dramatic change that has been made.

The woodland resource created in the last century now has the capacity through enlightened management to deliver a wide range of social, economic and
 
23 Feb 2005 : Column 132WH
 
environmental benefits and make a positive contribution to sustainable development. The pace of change has increased, and today forestry is a devolved issue, as the hon. Gentleman mentioned. The Forestry Commission is responsible separately to Ministers in England, Scotland and Wales, and collectively on Great British functions. The current structure of the commission reflects those changes.

Much of the commission's work is with private woodland owners, to whom it provides grants and advice, but a significant part of its work is delivered by the commission's Forest Enterprise agency. More than three quarters of the commission's staff based in England work for Forest Enterprise, and the agency is the manager or steward of the national forest estate. It is a unique national asset. Its current range of activities vividly illustrates how much it has evolved, and I will give some examples of how it has developed.

The agency is England's largest provider of countryside recreational opportunities. It offers a vast range of activities, from open access for walkers and cyclists on all its freehold land to activities such as horse riding and motor rallying in selected woodlands. Forest Enterprise manages more than 100 self-catering cabins in woodland sites, which make a significant contribution to local economies. In 17 campsites across England, it provides nearly 5,000 pitches, generating additional income of more than £2  million a year.

The cabins at Keldy in the north york moors have recently received a major facelift in Forest Enterprise's largest ever investment in recreation. Some 62 superb new cabins are equipped to top-quality self-catering standards and built from sustainably produced timber, over half of which was grown in the UK. They will provide an additional 50,000 bed nights each year, as well as contributing £1.5  million to the local economy.

The business overall is profitable. In 2002–03, it showed a net surplus of nearly £800,000 and earned a real rate of return on capital invested of 8.5  per  cent. In 2003–04, the surplus rose to £1.3  million. The commission is now developing a public-private partnership that will ensure that the returns on the investment can be sustained at no cost to the taxpayer. However, it is not only in fields of recreation and leisure that Forest Enterprise has been playing a leading role. The public forest estate has been independently certified for sustainable timber production. Indeed, it was the first state forest service anywhere in the world to have its operations certified in that way.

Enhancing biodiversity has equal importance to timber production. Great efforts are being made to improve the ancient woodland on the estate and to bring all 41,000 hectares of sites of special scientific interest on the public forest estate into favourable condition. That was the point that the hon. Gentleman was making about clear-felling. Clearly, different management systems are now required to meet the aims and obligations. In England, clear-felling and continuous forestry systems have their place, but they should be site-specific. The precise choice is for the managers in the region, taking account of the relevant environment gains and standards.

The process of dedicating the whole of the freehold national forest estate to public access under the provisions in the Countryside and Rights of Way Act
 
23 Feb 2005 : Column 133WH
 
2000 is under way, and will be completed next year. That will help to ensure that public access will continue to be available in perpetuity. However, it is not just in our countryside that the Commission's expertise is providing real benefits. It has also been very active in delivering social, environmental and economic benefits for our towns and cities. It is at the forefront of work to restore former industrial land, and to create a green infrastructure for future developments.

There have been good examples of this new role in three of the 12 community forests. In Thames Chase to the east of London, in the Red Rose forest near Manchester and in the Mersey forest, a £9 million Treasury-funded capital modernisation fund project has enabled Forest Enterprise to create 1,300 hectares of new woodland. Forest Enterprise has bought land, planted trees and created footpaths through the new woodland. Local people have enthusiastically played their part, helping to design and develop the new woodland. There are many more similar projects right across England.

If the commission is to continue to be an effective delivery body, it needs to operate within clearly defined policy frameworks. In our rural strategy, published last year, we made a commitment to transfer responsibility for strategic forestry policy in England to the Department for Environment, Food and Rural Affairs, and that has now been done. That is allowing the Forestry Commission to broaden its responsibilities as the lead delivery body for forestry; that includes taking on responsibility for community forestry and the farm woodland premium scheme.

The new forestry policy unit in DEFRA will act as an advocate for forestry in Government, contributing to all the cross-cutting policies in which forestry does, or could, play a part. One of the first tasks of the policy unit will be to undertake a review of the England forestry strategy that we published in 1998. The strategy set out a five to 10-year vision of our priorities and programmes for forestry and has been a very successful framework for support for forestry in England. However, with the changing policy and delivery landscape, now is an ideal time to refresh the strategy. The new forestry policy unit and the commission will work closely with each other.

We are not, however, looking at forestry in isolation. One of the key elements of the draft Natural Environment and Rural Communities Bill, published two weeks ago, is the establishment of an integrated agency to help protect and improve our natural resources. The commission will become a close working partner of the new agency, ensuring that there is a comprehensive and coherent approach to land management, whether woodland or not. That alignment of the Forestry Commission will build on the success of partnerships that the commission has established with English Nature, the Countryside Agency and the rural development service.

The Forestry Commission provides grant support for the management of existing woodlands and the creation of new woodlands through the woodland grant scheme. Owing to exceptional demand the commission closed the scheme to new applicants in June last year, and an additional £3 million of funding for the current year was announced last October on top of the £18.5 million
 
23 Feb 2005 : Column 134WH
 
already in place. The success of the scheme means that more than 24,000 hectares of new woodland was established between April 2000 and March 2004. The Forestry Commission is well on the road to meeting the England rural development programme target of 30,000 hectares of new woodland in the seven-year period ending in 2006. The replacement England woodland grant scheme is expected to open for applications in July and will provide a framework for the delivery of public benefits through incentives for the stewardship of existing woodland and the creation of new woodland.

The hon. Gentleman made a couple of points about timber markets and imports, and it has been suggested that Forestry Commission timber production is depressing the timber market for private growers. The Forestry Commission regularly publishes production forecasts and details of its planned production. That assured supply has been one reason for continued investment in the UK processing sector. One of the hon. Gentleman's points was that that supply is seen by many producers, particularly processors, as the basis for their investment and future investment. About 85 per cent. of the UK's wood supply comes from imports. Timber from UK sources has to remain competitive with those imports, which could easily increase. That means that the world market, and not the level of Forestry Commission production, sets prices for UK-grown timber.

By their very nature, the economics of forestry arouse a great interest in many people. It is a complex area in terms of assessing the relative costs and benefits, which are often interdependent. That is the nature of multi-purpose forestry—action taken to implement one objective frequently delivers benefits for many objectives. They are complex matters that I cannot do justice to in this debate. In April 2003, an economic analysis of forestry policy was commissioned by DEFRA and the Treasury. I will arrange for a copy of the final report to be sent to the hon. Gentleman and for copies to be placed in the Library.

We have a sustainable procurement policy supported by the UK Timber Trade Federation, which implements a responsible purchasing policy through its members. I am pleased to note that all Forestry Commission woods are certified together with an increasing number of owners' woodlands. We estimate that more than 70 per cent. of all wood produced from UK forests is now certified, and 50 per cent. of the output from UK saw-mills is also certified. That independently verified assurance of their sustainable management provides a real advantage in the competitive marketplace.

Mr. Roger Williams : I thank the Minister for the points that he is making. However, it is sometimes said to me by timber growers that certification is an expense: it produces public goods but little economic benefit for the timber producer, because people pay nothing more for it. As there is a public good, would the Government consider subsidising or paying for certification of private woodlands?

Mr. Ainger : As the hon. Gentleman knows, there are various farm assurance schemes for agriculture, which are in the interests of the producer. The Government do not subsidise farm assurance schemes, and I cannot see their subsidising timber production at this stage.
 
23 Feb 2005 : Column 135WH
 

The hon. Gentleman raised a good point about the size of contracts for felling and clearing timber. I know that the issue is being examined, and I will bring his comments to the attention of the chief executive to see whether we can make further improvement and make smaller contracts available for smaller, local businesses.

The Forestry Commission has a long and varied history, throughout which it has demonstrated that it delivers the policy priorities of the day. As the needs of society have changed, so has the role and structure of the Forestry Commission. As we enter an exciting period for delivery of rural policy, with the publication of the draft Natural Environment and Rural Communities Bill, I am sure that the Forestry Commission will continue to adapt to the changing demands placed on it, and I am equally sure that it will continue to deliver good value for our country.

---