Select Committee on Environment, Food and Rural Affairs Minutes of Evidence

Examination of Witnesses (Questions 100 - 119)



  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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