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Baroness Trumpington: My Lords, perhaps I may gently remind the House that when the clock says seven we are in fact in the eighth minute. We are starting to run behind and I am sure your Lordships will want my noble friend to give us our money's worth.

3.52 p.m.

Baroness Nicol: My Lords, I thank my noble friend for introducing the debate. However, I cannot agree with his worries in regard to the noble Earl on the Front Bench opposite. From my experience of his performance in Committee I know that he will do a competent job, provided we do not continue to overrun and that we give him sufficient time. I welcome him to his place on the Front Bench.

One of the snags of being given a short time to debate these questions is that one cannot follow up many of the points made by other speakers and must simply plug on with one's own interests.

The Government committed themselves to achieving "sustainable forestry" both at Rio and Helsinki. The meaning of "sustainable" is often questioned in this and other contexts. I am impressed by the definition of "sustainable forestry" given by the Director General of the Forestry Commission in a speech to the World Wildlife Fund last year. He said,

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    maintaining a flow of timber indefinitely. It needs to be economically sustainable. If it is not economically sustainable, its continued existence must be in doubt".

I can find no fault with that definition and we should keep it before us in this discussion. It is an admirable description.

Achievement of those aims depends on a degree of stability in the industry—my noble friend Lord Taylor of Gryfe referred to that, as did others—and the kind of continuity which I believe can only be achieved by continuing and positive government involvement. Of course we need a thriving private sector, but it was clearly demonstrated during the consultation period last year that the private sector wishes to retain that strong state presence—not least in research about which little has been said either in government statements or this afternoon.

The timber processing industry in particular is vulnerable to variations in the supply and cost of its raw materials. Left to the private supplier alone, large fluctuations could damage the processing industry and deter future investment, thus putting in doubt the continuation of thousands of jobs. I believe that figure to be around 40,000, but unfortunately I do not have the up-to-date information.

Is our state forestry to be privatised or not? In his Statement on 19th July last year the Secretary of State for Scotland said,

    "Our conclusion is that, at this stage of their development, the Forestry Commission woodlands should remain in the public sector".—[Official Report, Commons, 19/7/94; col. 177.]

Later, in the same Statement, the Secretary of State said that Forest Enterprise would be replaced by a next steps agency.

A recent autobiography by a former Chancellor of the Exchequer—the noble Lord, Lord Lawson, to whom reference has already been made this afternoon—states that next steps agencies are simply regarded as stepping stones to privatisation. The Government's conclusions from the Forestry Review, published a month or so after the July Statement, opens the section on the Forestry Commission's management of its estate with this paragraph:

    "Over the past 15 years, the proportion of Britain's forests and woodlands in private ownership has risen from less than 50% to 63% ... With most new planting now undertaken by the private sector and with the continuation of the Forestry Commission disposals programme announced in 1989, this trend will continue".

That seems to be very much at variance with what the Secretary of State said on 19th July. Clearly, in defiance of advice and widely expressed opinions that the present balance between the public and private sectors should be maintained, the Government intend to pursue their aim of privatisation. I hope that when the noble Earl sums up he will be able to reassure me on that point.

I remind your Lordships that no further legislation would be required for the disposal of the forest estate, so there would be no further opportunity for Parliament to express its view. It is simply necessary for the Secretary of State to order disposals.

Finally, I come to the question of access. The Government seem at last to recognise the importance to millions of people of access to the forests and

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woodlands of the Forestry Commission. Encouragement to private owners to allow access is very important also. The noble Duke, the Duke of Somerset, wrote in the July edition of the Journal of Forestry, referring to access to private forests,

    "By keeping the jewels of the countryside from public scrutiny we feed both envy and ignorance. We cannot expect the public to appreciate forestry if it is symbolised by a ring fence, a barred gate and a no entry sign, nor can we expect them to understand the need for sound management, including the need to control access, unless we show them, listen to them and help them. In the process we too can learn, for education should be a two way process".

I can quote no better authority for the need for better access. I welcome the Government's more positive approach to access but fear that, despite the undertaking to pay legal fees, many local authorities will be unable to afford the expenditure, especially in Scotland where many landowners appear to have large expectations of the worth of access to their forests. I hope, therefore, that we shall be given some reassurance by the Minister in his summing up.

3.59 p.m.

Viscount Addison: My Lords, I, too, thank the noble Lord, Lord Taylor of Gryfe, for bringing to the attention of the House the Government's Forestry Review, which was completed in August 1994. Noble Lords will recall the constructive debate in the House on the forestry industry in April 1993, when the noble Lord called the attention of the House to its then current position and future prospects. Much has happened since then and it is opportune that noble Lords should return to the forestry issue at this time.

When I spoke during the debate in April 1993, I raised the following issues: first, given the low level of forest cover in the UK, there was room for a significant expansion; secondly, woodlands and forests had the potential to produce a range of benefits including timber, landscape, wildlife habitats, and public access and recreation; thirdly, there should be a provision which allows for tree planting on set-aside land within the arable area payment scheme; fourthly, commercial forestry—conifers—should not be neglected by the Government; fifthly, woodland management was costly and landowners needed help to meet these costs to ensure that the existing woodland resource did not fall into decline; sixthly, a coherent national strategy was needed for both the management of the existing woodland resource and to co-ordinate, in broad terms, new planting. It is pleasing that I can address noble Lords today in the knowledge that at least some of these issues have now been achieved. However, there are some areas of disappointment as well.

Turning first to the positive points, it was extremely good news to hear at the end of last year that the European Commission had committed itself to bring a proposal to the Council of Ministers that would allow farmers to plant trees on set-aside land. It was also good to see that the Government increased their support for commercial forestry within the review of forestry incentives. Unfortunately, the restructuring of the grant bands for conifer planting has meant that those wishing to plant fewer than 10 hectares of woodland and who cannot claim the better land supplement will find that

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the amount of grant they can claim will have fallen compared with the previous position. This will affect many potential applicants, given that the average size of application under the woodland grant scheme involves only some two to three hectares. However, the Government have made a clear commitment to encourage new planting of commercial woodlands and we shall have to wait to see whether the commitment turns into trees in the ground.

I turn now to the disappointments. Much was expected from the Forestry Review Group and therefore, in only considering the woodland grant scheme, it left many concerned that major opportunities had been missed. Forestry and woodland operate in a much broader framework than just the woodland grant scheme and all aspects of that framework should have been examined together. There is still a clear need, as I said in April 1993, for a coherent national strategy for forestry and woodlands within which rural industries can develop and operate effectively. Without this there can be no significant increase in the woodland cover of Great Britain and there is a risk that a large proportion of valued woodland will be lost through under-management.

Within that strategy, consideration must be given to the taxation framework within which forestry has to operate, the development of markets for home grown timber, particularly from broad-leaved woodland, and also the application of regulation in the forestry sector. The major disappointment must be on woodland management. The conclusions of the Forestry Review Group and the changes which followed have done little or nothing to improve the situation here. In their report Focus on Woodlands, the CLA stated that in 1993 only 63 per cent. of woodland was in active management and further that 40 per cent. of the actively managed woodland faced a decline or complete cessation in management. I had hoped most strongly that the review group would have dealt with this issue and to say that I am disappointed that it has not is a severe understatement. Indeed, some of the decisions made by the Government will have further reduced the incentive to manage woodlands.

One has only to consider the very large reduction in grants for restocking of woodlands to see major problems. This will have a disastrous impact on those owners with woodlands reaching maturity, particularly those with broad-leaved woodlands which have been unmanaged for some time and where the value of timber is negligible. Those wishing to establish even age spreads in their woodlands and to restructure conifer woodlands will now think twice before doing so. I do not have to tell your Lordships of the environmental benefits that will be foregone. Many will now find it uneconomic to fell and replant in accordance with good silvicultural management.

It will almost certainly be the case that unproductive woods, if they are defined as derelict and unmanaged, will not have had the benefit of a planting or replanting grant in the past, whereas productive woods will almost always have had a planting grant. There is, therefore, a strong case to allow restocking grants at the same level

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as grants for new planting at least in cases where no grant had previously been claimed and the wood is unproductive to the extent that proceeds from preparing it for replanting do not exceed the cost of preparation.

A further setback for woodland management was the removal of the standard management grant. The remaining annual management grant will only be available on woodlands of very high environmental value, which will preclude a large proportion of woodlands. Without more sensible taxation arrangements for forestry, the decision to remove the standard management grant must be seen as misguided.

There is an opportunity for the Government to address some of these issues again within the context of the forthcoming rural White Paper announced recently by the Minister of Agriculture, Fisheries and Food and the Secretary of State for the Environment. Forestry and woodland, as the second biggest rural land users after agriculture, should have high priority within the White Paper. Given the problems created by the Forestry Review for woodland management, this is something upon which it would be sensible to concentrate. The Government would be wise not to let this opportunity slip by.

To conclude, while some positive steps forward have been made to increase the incentives to plant trees, the situation for woodland management is much more bleak. While the Government may believe that they have completed their work on forestry incentives, I, and many others, contend that there is still a great deal of work to be done, not least to reverse some of the potentially damaging decisions made in relation to incentives for woodland management. The changes made to the woodland grant scheme must be seen as a backward step for woodland management and it is essential that the Government revisit this area before turning their backs on our valuable existing woodland resource.

I therefore direct the following questions to the Government through my noble friend Lord Lindsay. First, will the Government say why they have not yet produced the much needed national strategy for forestry and woodlands and indicate when it will be available? Secondly, will the Government give their rationale for reducing their commitment to woodland management and review again the incentives offered for woodland management to bring them up to more realistic levels? Thirdly, can the Government give their reasons for not considering adequately the "option to tax", as suggested by the CLA, as a means of encouraging woodland management? Will they now look again at that point more seriously? Finally, will the Government confirm that forestry and woodlands will have a high priority within the forthcoming rural White Paper and will they also indicate the areas upon which it will be concentrating?

4.8 p.m.

The Duke of Somerset: My Lords, there is little doubt from what has been said in this debate, and what has been published, that private growers have been deeply disappointed by the review and its conclusions. I know that a lot of organisations spent a great deal of

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time thinking, considering and proposing to the group. The review turned out to be rather superficial and a limited reassessment of the existing WGS and to be a decision on the future of Forest Enterprise. So, if I may, I shall deal with the WGS conclusions first and declare as usual an interest as a woodland owner.

Forestry debates have always heard calls for consistency and for confidence because the industry—I emphasise that word —is a long-term one: many decades pass before any financial return. It is true that successive governments since the war have pursued a policy of forest expansion and that this has led to a growing quality timber resource attracting some advanced wood processing technology to the country. However, since 1988 the plethora of changing grant schemes and the rebuff of major private sources of wealth in that year's Budget have caused a continuing crisis of confidence everywhere in the industry. This review failed to address the practicalities of policy implementation.

It is a fact that new coniferous planting (the raw material for the processing industry) has declined sharply, being at its lowest level for 20 years. If we are to retain the investment mentioned before, including the employment skills so vital to the rural areas, we must protect this source of wealth. I believe that the review has jeopardised that. It may strengthen environmental planting, but we need both: amenity and commercial planting.

Other noble Lords have mentioned some of the faults but they are so important that perhaps I may repeat one or two of them. The review will not attract new money into the creation of new forests for it has refused to establish readily tradeable, unitised investment vehicles. Not only that, but the Treasury has refused to remove anomalies between forestry and agricultural land taxation. Why is capital expenditure in the latter sector allowable but not in forestry? The Government want to have planting on better quality, lower sites, yet loans taken out to buy them for forestry do not attract tax relief.

Furthermore, the review has substantially cut the restocking grant, which is a major blow for those felling low-quality hardwoods. It has also abandoned the standard management grant for silvicultural purposes. What signals does that send to us growers? To me it says, "Please plant hardwoods in tubes at wide spacings". They grow very slowly into multi-branched lollipop trees of only firewood and dubious amenity quality. If we are going to go to the expense of growing a nice oak or ash, why cannot it not be a quality one, of utilisable value, that at the same time provides the environmental benefits that we all want? For instance, we need encouragement for pruning.

I believe that the pendulum has swung too far away from growing quality timber. It is the same with conifers in WGS III. The emphasis is on public access, open spaces, wildlife, etc.; all of which is very important and highly laudable. But let us grow quality produce at the same time. The silvicultural management need should be recognised in the new grant structure along with the

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other aims. However, the increase in the new planting grant for larger conifer planting schemes is to be welcomed, as is the faster payment of the grant.

The increased stocking rate for broadleaves in new planting is 2,253 per hectare. That will help quality as well. But can the Minister say why that is reversed under the restocking rules where the requirement is for a mere 1,100 per hectare? Therefore, although the review did recognise the importance of productive forestry and softwoods, do the actions support the words?

Perhaps I may turn briefly to the other main conclusion. I certainly welcome the retention in public ownership of Forest Enterprise with its continuing example of multi-purpose forestry that it now achieves so well. I hope that it will be careful not to distort the market for the private grower. The Forest Authority needs to be strengthened, in my view, and to become the authoritative voice in forestry, including the overseeing of Forest Enterprise. It should not be simply a body dealing with grants and licences or it will lose its promotional voice. It needs to encourage a better understanding of forestry, as it does, for instance, through its annual financial assistance to the Forestry Trust for Education and Conservation, whose booklet Woodlands to Visit now includes over 600 woodlands which are opened annually by the owners. Its ability to monitor the effectiveness of forestry policy could be weakened, leading to a lack of sensitive policy development.

It must continue to increase and develop standards and priorities and do research while overseeing Forest Enterprise and promoting forestry in the continuing land use debate. One suggestion is to devolve policy implementation to country level to differentiate between England, Scotland and Wales. That could be linked with partnerships with other bodies to further a cohesive land use strategy to make the rural heartbeat thrive. Above all, there is a need for the authority to make judgments rather than simply to act as an arbiter between consultees and applicants.

As regards a matter of detail, I ask the Minister for confirmation that the intention of the Forestry Commission to purchase the freehold of land that it currently leases will not be achieved by compulsory purchase.

Finally, as president of the RFS, I joined with other forestry organisations in a letter to the Secretary of State lamenting the outcome of the review. His response appears to miss the point at issue—that is to say, investment of new money and new land. I hope the Government do not believe that everything is on track for a prosperous industry. They have certainly done a great deal with the UK in the forefront of progress over concerns of forestry exploitation, set-aside use, sustainable management and the Rio Summit. But the

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conditions for progressive management of our own forests are still not wholly in place, leading to continued concern.

4.15 p.m.

Lord Astor of Hever: My Lords, I also declare an interest as a woodland owner. I welcomed the Government's manifesto commitment to review the,

    "effectiveness of the incentives for forestry investment".

I understood that this review was to be comprehensive, addressing all those land and financial issues which will determine the future of forestry. However, it has been confined to the WGS and was, I fear, received by the industry with dismay. Forestry operates in a much broader policy framework and every aspect should have been examined.

A vital component missed was any consideration of the taxation regime within which forestry operates. At a time when the Government are encouraging farmers to diversify into forestry, why is it that capital expenditure on fencing, drainage or roading, on a tractor or on a building used for forestry, is not allowable, when it is if it is used for agriculture? Why is it that interest payable on loans for purchasing land for agriculture is eligible for tax relief, but that payable on land for forestry is not? Clearly that acts as a disincentive to farmers to switch land to trees. Is it not time to treat land in the same way whether it is planted with a crop of wheat or of trees?

It is regrettable that the fortunes of forestry have been so closely tied to government incentives but, sadly, as long as the CAP distorts the agricultural competitive position, that will be so. I believe that it is worthwhile remembering that forestry grants amount to less than 1 per cent. per annum of agricultural grants, while timber prices reflect a world market in contrast to agriculture, which is protected by the EU.

On a positive note, I applaud the Secretary of State's public recognition of the importance of productive forestry and in particular of softwood timber. WGS III contains a number of detailed structural improvements and has a greater scope of flexibility than its predecessor. However, the new scheme fails to address the vital issue of attracting new private money into the creation of new forests. The 1988 Budget essentially narrowed the investment base to existing landowners and encouraged, through larger grants, the planting by them of less commercial woodlands.

Over the past 10 years, Britain's forestry processing sector has attracted, as the noble Lord, Lord Taylor, said, over £1 billion of investment, much of it from overseas. Clearly, if we are to maintain an expanding and successful forestry products industry we need to maintain the expansion of the resource base on which it relies. The Timber Growers Association regards it as too narrow an investment base. We need to broaden it to embrace the smaller investor, very much in line with government philosophy. That is currently thwarted because the Government have not made the minor legal and regulatory changes to permit the marketing of

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unitised investment vehicles through which small investors can buy and sell quoted shares and be accorded the same tax treatment as individual investors.

Finally, a word on bureaucracy: forestry is the most regulated industry of all. We have a Government dedicated to reducing red tape for business and industry, and very successfully so, but there is a feeling in forestry circles that all that red tape has been carefully gathered up and dumped on them. Putting woodland planting through the whole gamut of the local planning organisation is a heaven-sent opportunity for bureaucratic aggrandisement. An example of that lunacy is the ethnic cleansing of allegedly bad or non-native trees. One council wrote to my forestry adviser:

    "while walnut was indeed introduced by the Romans, it cannot be considered a native tree and is therefore disallowed".

What would happen if we ethnically cleansed our farming industry? Examples abound of indicative landscape strategies, potential archaeological sites and abuse of tree preservation orders by the planning process. That is sad, as it makes many professional forestry regulators timid and not bold, forgetting also that a great deal of forestry is a subjective art, not a sterile science.

I welcome the current review of the Forestry Commission consultation process. There has to be a more streamlined procedure to obtain planting approval and to enable the Forestry Authority to make a judgment. The bureaucratic hurdle of applying for grant or licence approval, which can be extremely prolonged and expensive, is the single biggest cause of complaint among private woodland owners and managers. Could the Forestry Authority be given greater power to make its own decisions rather than acting as arbiter between the applicant and the consultees? Indeed one wonders why the Forestry Authority is so named, as to many in the industry it has no authority.

4.21 p.m.

Lord Northbourne: My Lords, I should like to follow the noble Lord, Lord Astor of Hever, in pleading for less heavy-handed regulation. It was not, however, on that point that I put down my name to speak. It was because the report misses what I believe to be an important point. Paragraph 2.10 on page 10 states:

    "The Government also wish to see an improvement in the potential timber quality of broad-leaved planting without reducing the area being planted. The key here is to achieve higher density levels, since high timber quality depends critically on density of stocking".

Good quality broadleaved timber also depends on consistently good management and the availability of funds for maintenance when needed.

We lost 5,000 trees as a result of the 1987 storm. Incidentally, if it had not been for that storm I should probably have had to declare an interest as a timber grower. As I mooched around the woods following the storm and looked at the desolation, I found myself reading the rings on many of the trees where the butts had been cleaned up. The story of the rings is extremely interesting. Back in the 1860s, when agriculture was prosperous and my great-grandfather was a keen forester, the trees were planted and grew very fast for a

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certain period. Then the depression of the latter part of the last century came along. The forester was sacked; money was not spent on maintenance; and the rings on the trees were closer together. At the turn of the century and at the time of the first world war, more money was clearly spent, maintenance was carried out, and the trees started to grow well again. After the war, during the 1920s, there was another depression and my father was hit by double death duties. No maintenance was carried out and the rings grew narrow again. The timber was unsaleable after the 1987 storm but it would have been difficult to sell even at a good time because it was not of good quality. We have to take on board the fact that in private forestry a crop of broadleaved trees will stretch across three, or probably four, generations.

Can anything be done about maintenance? I should like to suggest three possible alternatives to try to achieve the objective of ensuring good management and adequate funds for maintenance throughout the life of the crop. One possibility would be joint ventures between an individual and the new forest trading body because that is an immortal body, or possibly with organisations such as the forestry group, to which the noble Lord, Lord Barber, referred. To ensure continuity, it would be possible to have a joint venture with a leasehold interest in the forest, with the landowner having the right to undertake maintenance and to claim against the joint venture for the cost of doing so, while it would be possible for the permanent body to carry out the maintenance if that was not carried out otherwise. That would ensure that the trees would be a good quality crop that would sell for a good price.

Another alternative would be to give some sort of advantage under the grant scheme to owners who were able to make a commitment and to show that the funds would be available for on-going maintenance and that they were employing people capable of carrying out that maintenance.

Yet another possibility might be that instead of paying a very large planting grant and a relatively small maintenance grant, the opposite course was taken. That is because of a well-known fact in the world of subsidies, to which my father drew my attention during the war when there was a subsidy for tons of wheat and another for acres of barley. And that is precisely what we got—tons of wheat and acres of lousy barley. If the larger part of the subsidy were paid for maintenance, there might be a better chance of getting a more marketable and more valuable crop.

Therefore, I call upon the Government to devise a scheme which offers incentives to landowners to make some sort of binding commitment as to management and the availability of funds for maintenance throughout the life of the crop.

4.26 p.m.

Viscount Mersey: My Lords, we are debating the review Our Forests - The Way Ahead. Paragraph 1.3 contains a real corker of a sentence. It reads:

    "The Government are also committed to the continued expansion of the forest area. Grants are targeted to encourage continued new planting of conifers to meet commercial demand from the wood-processing industry".

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But with the removal of tax incentives three years back, no private forester in his right mind would plant conifers. He must be devious. He must practise other forms of forestry; he must be ingenious. That is what I hope that I am in my own small way as I practise forestry in West Sussex. I should add that it is a hugely enjoyable pastime. It is not particularly profitable now. Even under the old Schedule B and D regime, the tax concessions were no more than a help to what I would call a "loss leader". The simple reason is that the value of the harvested crop has always been less, in my experience, than the cost of the re-establishment of that crop. The planting grants are good news, but planting is only the start of a long battle of man against the elements: drought, hurricane, deer, rabbits and squirrels. There is the weeding of six years. There is the fencing, ploughed under to stop rabbits tunnelling beneath it. Above all, there is the beating up. One of our plantations we beat up 10 years running.

When all is said and done, forestry is good fun, like gardening. But it must be obvious that when my right honourable friend Mr. Lamont removed the tax benefits from private forestry three years back, private forestry became a luxury that only the seriously rich could afford. My noble friend Lord Lindsay will know of the massive decline in private planting.

However, it is not my business today to spread doom and gloom in all directions, because there are other forms of forestry. In some areas I say, "Hang the expense and go for oak, ash and beech". That is a luxury that enhances what people now call the "feel-good" factor. Economic madness it may be, but environmental madness it is not. It feels good that I am, in a very small way, fighting global warming. It feels good also that I am planting trees that will marginally lessen our timber imports 100 years from now. It also feels good to watch those fine trees grow up as hosts to a new population of songbirds—blackbirds and nightingales—and wild flowers—bluebells and yellow archangels; and perhaps even purple emperor butterflies.

Alas, I can afford to do that in small areas only. In the main, we turn now to short rotation crops—for instance, chestnut coppice which we harvest every 12 years, but, above all, the six-year rotation Christmas tree. It may be a bit of a nonsense that I can get as much money for a five-foot Norway spruce as I can for an 80 foot one; but that is the state of the market, and I do not complain. Not only can we harvest Christmas trees every six years—10 times as frequently as mature conifers—we can also space our trees at three foot, not six, thus quadrupling the number of trees per acre. So a Christmas tree plantation will, in theory, yield 40 times as much as a traditional plantation.

There is a new market which may be important. It is short-rotation coppice to fuel power stations. My right honourable friend Mr. Tim Eggar thinks it important. As an alternative energy source, he puts it ahead of all others—wind, solar, tidal, waves and geothermal. Better still, while the short-rotation coppice grows, it fixes carbon dioxide, so it helps global warming. I am keen to move into that field, and I should like to know how to set about it. Perhaps in his inaugural reply my noble friend Lord Lindsay will be kind enough to tell me.

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As I see it, the present hitch is that timber yields less heat per tonne than fossil fuels. We shall therefore need huge quantities of wood to supplant coal. Huge quantities mean huge transport costs. Our over-burdened road system could be landed with an extra armada of heavy timber wagons pumping out greenhouse gases. Then, of course, the environmental benefits of short-rotation coppice would cease. So we need short road journeys. That means many small power stations close to coppice plantations. I am talking about power stations of 6 or 7 megawatts—hundreds of them hooked into the national grid.

I have seen such stations in Scandinavia. Many are unmanned. Many are portable. The Finns, for instance, dismantle such mini-power stations and re-erect them close to new fuel sources. That "small is beautiful" concept is alien to the path we are following in generating electricity, which is more accurately reflected by "the bigger the better". I am thinking especially of Drax which is a coal-fired station yielding a massive 5,000 megawatts. The answer must be a mix—many small, wood-burning power stations and a few, environmentally friendly big ones: nuclear, not coal; Sizewell C, not Drax C. "Small is beautiful" may even feature in the forthcoming nuclear review.

So that is the way I see forestry today—short-rotation crops with what I call a patriotic sprinkling of oak and ash growing to magnificent maturity. It is a far cry from traditional forestry: the growing of trees for timber. The main casualty is the mainstay of wooding: the conifer. There seems little point now in the private forester planting Scots pine, larch or hemlock. That is a pity because we import 94 per cent. of our timber.

On page 9 of the review, I read:

    "There is concern, however, about the level of conifer new planting in appropriate areas, which has fallen significantly in recent years and was only just over 5,000 hectares in 1993/94".

That is a real concern, all right, but it is one that any private forester could have foreseen three years back.

4.34 p.m.

The Earl of Kintore: My Lords, I too thank the noble Lord, Lord Taylor of Gryfe, for introducing this forestry debate. He of course speaks with considerable authority, having been chairman of the forestry commissioners for seven years. I congratulate the Government on their excellent choice of another Scot to be chairman of the forestry commissioners. I know that it is an excellent choice, as some years ago I worked for Sir Peter Hutchison in Glasgow and Aberdeen. Sir Peter is listening to the debate, and I wish him well in his new challenge.

We have had the review, and for a small-time forester like myself woodland grant scheme Mark III appears adequate. But I wonder whether it will do anything for the larger areas. Indeed, I am told by a forestry adviser that he had the opportunity of having two schemes approved under either WGS II or WGS III and his client would be £8,000 and £12,000 worse off under WGS III.

At this stage perhaps I may make a strong plea that there be considerable, even total, remission of the requirement to plant a proportion of broadleaves within

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purely commercial conifer plantations in non-sensitive areas. The present requirement for the broadleaves places disproportionate costs on any scheme. I am amazed also by the number of people who have to be consulted to approve my small plantings, and wonder whether there could not be a threshold of, say, five hectares before there is automatic consultation with other parties.

I fear that the reaction to WGS III will be as disappointing as it was to WGS II. We have a crisis of confidence as no one is sure that the Government are committed to the long-term interests of forestry. We need a steady, good policy for a minimum of six full-time term Parliaments; that is, 30 years. I realise that that is a long time in political terms, but unless major planters can see the long-term commitment, there will be little new commercial planting.

We have also a problem with land values, as farmers are at last making a little money, aided by grants and subsidies. Land which would attract forestry better land supplement of £600 per hectare is probably selling for farming for £2,500 per hectare. To persuade a farmer to tie up a piece of land with commercial trees for 30 years will require the better land supplement to be quadrupled. But some saving could be achieved and cash flow made easier if the new woodlands establishment grants were paid annually instead of at 70 per cent. after planting and 30 per cent. at year 5, as at present.

A massive amount of new commercial conifer planting should be done. I realise it is all very well for me to stand here like a big Christmas fairy telling the Government how to run their forestry policy; but I do not control the magic. The Government do. So let the wand be waved and the word go out to the nurserymen that it is to be Sitka spruce and to the landowners that the Government promise never to do bad again —like changing the rules overnight as in 1988—but only good—like increasing and index-linking grant—with the further word that to make up for the shortfall in planting since 1988, the area to be planted in the next three years is to be quadrupled and planting grants doubled. If the Government do that, the main forestry debate in March 2025 will find them receiving acclaim for their foresight, with foreign wood processors investing in our Sitka stock and the imbalance of trade on the timber account a thing of the past. In 2025, the noble Earl, Lord Lindsay, will be a Tory grandee and probably the doyen of his party in this House. He will reflect how lucky it was that he took the advice offered by that Cross-Bencher in January 1995.

4.40 p.m.

Lord Clinton: My Lords, like other Members of your Lordships' House, I am delighted that this debate is taking place today. It is some time since we had such a debate but not too long. However, a great deal has happened and I believe that again we are at a crossroads. I pray and hope that as soon as possible the industry can settle down with a sustainable future which will be of benefit to all those who invest and are employed in it.

At the end of last year, with the Minister, my noble friend Lord Howe, I had the privilege to plant trees in Devon on the 75th anniversary of the Forestry

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Commission. He is an extremely good tree planter and a great supporter of forestry. Although my noble friend is not here at this particular moment, I can certainly recommend his tree planting. We were repeating the original planting which my great-grandfather, the second chairman of the commission, had done in 1919 and which I had repeated on the 50th anniversary, 25 years ago. I hope that that goes some way towards illustrating the longevity of the industry. I hope that the future for the Forestry Authority and the Forest Enterprise will be secure for the benefit of our industry.

The authority cannot and must not concern itself only with grants and licences. There is a much broader aspect than that. That is a view which I support. There is much to be done and in my short speech I hope that I shall be able to show that that must be so.

As a new member of the Forestry Commission's regional advisory committee for the Midlands, Wye, Avon and the West Country, at a recent seminar which included all the other members of the RACs we considered the future role of the Forestry Authority. There was no doubt in my mind and in the minds of all those present that it was essential for the future that there should be a Forestry Authority and that it should show leadership. At the same time, it should have power to make its own judgments as well as showing authority to other bodies as the leader in forestry, especially in matters of planning.

As part of the Forestry Commission, the Forestry Authority should be a voice for promoting timber, woodlands and forestry. The body should set standards of silviculture, which I believe it does already, and should concern itself with the land use debate in a task which will need to look at a wide variety of interests and at the same time show leadership in this field.

Like others, I believe that this body should be strong and have an important part to play in English forestry south of the Border and in central policy at national level to encourage the future development of forestry. Also, it should be able to make sure that the private sector is allowed to compete on equal terms with the Forest Enterprise and, if necessary, the Forestry Authority should direct its policy towards that end.

The present arrangements which allow for joint sales of timber with the Forest Enterprise are to be welcomed. I hope that that co-operation will continue. It deserves the support that it is getting and it is useful and extremely helpful to private timber growers.

Private woodland owners need to have government support and an authority to which we can talk. At the same time, it should support our endeavours with regard to the use of land and make its presence felt in times of controversy when we need a body of well-informed opinion on our side. The authority's policy should be robust enough to operate effective oversight of the Forest Enterprise as well as formulating policies for the future.

I am more than ever convinced that unless we have a strong Forestry Authority all the work and good will of which we are the inheritors will be lost for future

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generations. I hope that the Minister and all others responsible for making those very important decisions are able to carry that forward to our mutual benefit.

4.45 p.m.

The Earl of Perth: My Lords, first, I congratulate the noble Lord, Lord Taylor of Gryfe, on his luck in the Ballot. I recall very well a little while ago suggesting to him that we really needed a forestry debate. He took that seriously and managed somehow or other to win the Ballot today. His speech was well worth listening to, as were the speeches of all who have spoken in the debate. I felt very humble listening to the expertise of those who have spoken already. The main impression that I have received is that the industry is in the shadow of the Treasury. The Treasury has too great an influence. It ruined things in 1988 and we have not seen the end of that today.

The noble Lord, Lord Rees, placed great emphasis on that failure and on how we are not doing what we should for forestry. If one reads Our Forests—The Way Ahead and the conclusions of the 1984 review, one would think that everything is rosy and happy. I am afraid that that impression is far from the truth. It puts a slant on one or two matters which do not cover the fundamental issue; namely, that a short while ago the Government said that the target was 33,000 hectares or more per year and we are nowhere near reaching that target. Indeed, we have heard what little the Forestry Commission, in its role as landowner, is to do this year. It is really a disgrace. It is under 1,000 hectares. For the rest—that is, private forestry—we must make serious changes to the support which the Government give.

I must declare an interest. Some 20 years ago I did an excambion with the Forestry Commission and so I have a small unit of forestry or woodland near to where I live. I have faced a great problem ever since. The problem was that the Forestry Commission planted the whole area in a couple of years. That is no criticism because that was one small section of its whole ownership. But it was a very serious problem for me. I wanted to get what was planted in two years on some kind of rotational basis. I have struggled to achieve that. I have gone some way in that direction but I can see that in another 30 years I, or whoever inherits—it is a family trust—will succeed in that aim. But the point that I am trying to make is that forestry is very long-term and a seriously difficult business.

The idea, which seems to be quite widely prevalent, that in some way or another forestry is a form of tax evasion is absolute nonsense. How can there be tax evasion over 50 years, or even 100 years, if one is talking about hardwoods? I hope that that weakness in our public relations can be changed. We should make the point that help for the forestry industry is absolutely necessary. If we can improve and attract capital from, for example, the City, that is very good. Why is it that when industry receives money to help with employment everybody rejoices, but when the help is for forestry for some extraordinary reason people say, "Oh, it is tax evasion. Why should they have that?" That reaction is all wrong.

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I wish to return to one point. In 1988 the whole system of forestry help was turned upside down. We have seen the results since. I wish to make one plea above all others to the Government. If, in some five or 10 years, by some good fortune the point is reached at which all is well with the forestry industry and perhaps our best hopes are being exceeded, they must not change the system of taxation in relation to what has been planted before. In 1988 they gave us five years' grace for continuing as before. Five years, in relation to our whole period of planting, is not enough. What they must do is say, "What has been done, has been done. But now we are to have a new regime which does not affect the past". I hope that the Government will bear that in mind.

I have one small point to make and then I must stop. All the effort today is directed towards the environment, access, and so on. Will the Government consider helping the small woodland owner by saying that they will insure woods for, say, 20 or 30 years—the dangerous time for fires and so on will then be over—on condition that access is given? I conclude by saying that I believe that the Forestry Commission, and especially the Forestry Authority as the organisation is now divided into two parts, is doing a pretty good job on our behalf. I hope that it continues to do so.

4.51 p.m.

Lord Forester: My Lords, I, too, should like to thank the noble Lord, Lord Taylor, for introducing such an important subject. Surprisingly enough, considering my name, I must admit that I have an interest in the subject. I do grow trees, as I clearly should.

It cannot be said too often that we desperately need more trees, especially commercial trees. As the noble Lord, Lord Taylor, said, we import £6.3 billion worth of timber every year. We import something well over 85 per cent. of all the timber that we require. The planting of conifers has dropped by 50,000 hectares since 1971.

The Government subsidise the production of food and wine, which is in abundance and not required; they even pay farmers to grow nothing. Why can they not give some real and regular incentive to a product the demand for which is virtually insatiable? Throughout the 1970s and 1980s we planted and that was fine. We then reached the fateful Budget of 1988, about which so much has been said, and there was a downturn in planting. The saw milling and wood processing industries have invested hundreds of millions of pounds in renewing and modernising their equipment. They knew what was being planted. They assumed that planting would be at the same level. They did not think there would be such a great cut-off.

There is now a short-term supply of timber. That is certainly the case where I live in the West Midlands. Local timber buyers are having to import roundwood trees from Ireland and even from Estonia to make up the shortfall and keep their mills going. That is an additional 10 per cent. of what they saw—that is, 10 per cent. of the paltry 15 per cent. which is all we produce in this country.

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On top of that, conservation is putting a considerable constraint on felling in the private sector. The review did not include the operation of felling controls, tree preservation orders and procedures for consultation on woodland grant schemes. Surely tree preservation orders should be restricted to trees or groups of trees for which felling licences are not already required. Otherwise, we have to go through the process twice. That simply makes it slower and more expensive. I do not believe that there can be any doubt that we need to grow more timber, more commercial timber. The review does not give sufficient incentive to achieve that aim.

My noble friend Lord Addison covered the replanting of existing woods. To my mind, that is even more important than new planting. It is at least twice as expensive because it is all hand labour. But those are the woods that produce the timber for the building industry—the timber we so badly need. I believe that the grant for replanting needs to be double, not half, the grant for new planting.

New planting is an altogether different game. I congratulate my noble friend and the Government on their achievements with forestry set-aside. There is now a big new opportunity for lowland planting on better land which will become available. We have a real opportunity to plan our timber production and to do it better. But, sadly, that is the only good point we have.

Planting trees is the easy part; maintaining them is infinitely more difficult. Again, as my noble friend Lord Addison said, the new annual management grant of £35 per hectare per annum has to be laughable. It is half one man day per year per hectare. What good will that do? We have to manage the trees if we are to gain some production from them. We need a specific, targeted scheme to encourage management, particularly of neglected woodlands.

Finally—I see that I still have a minute left—the complexity involved in applying for any grant is a major deterrent. The maze of different grants from various bodies —about six of them—is a minefield. I have been meaning to plant some trees recently, but in the past three years the Government have dashed from the woodland grant scheme to the farm woodland scheme and then to the farm woodland premium scheme. That is three schemes in three years for the forestry business which is long term in nature. We cannot plan with a different grant every year.

If we want a significant and sustained increase in woodland cover and the better management of our existing woodlands, we need a better policy on grant taxation and regulation. We must have long term grants so that we can plan for the future. We want replanting grants to be much larger than new planting grants, and we need maintenance grants. Above all, all sources of public funding for forestry should surely be delivered through the Forestry Authority as a "one-stop shop" for forestry. I put in an application this year for planting. It has not as yet come back from the Forestry Commission.

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I must wait until it does so before I can send it to the Ministry of Agriculture, Fisheries and Food to obtain the other half of the grant. That has to be changed.

4.58 p.m.

The Earl of Lytton: My Lords, I shall try to keep my comments brief. However, I should like to preface my remarks by saying that I speak from the heart and from my experiences on Exmoor and not in any other capacity, although I am a chartered surveyor and a member of various organisations related to the land.

On Exmoor we have over 30 per cent. of tree cover on the estate and over half of that is completely non-economic woodland. It is scrub conifer which is not native, having been imported by one of my forebears. There is some old, part overgrown and part self-seeded, coppice oak; and there is some self-seeded birch and oak scrub. We have had to come to terms with the concept of multi-use: shelter for livestock in exposed locations, amenity, sporting and with the public's view of us, in landscape terms, as they pass down the A.39. Therefore, the regulatory framework is very important to us.

I suppose I should be pleased and flattered that some of our coppice oak woodland is within a site of special scientific interest. But I have to say that I am rather less pleased that some of our scrub conifer, non-native as it is, is designated under Section 3 of the Wildlife and Countryside (Amendment) Act as being woodland particularly important to conserve. Unfortunately, nature does not think it is worth conserving either because, as it was planted in the 1840s, it is in a process of blowing flat. The policy void is evidenced most graphically by the bleached fingers of dead conifers pointing skywards in silent testimony.

There is no incentive for this sort of woodland as far as I can ascertain. There is no grant aid when and where it is needed. One agency wants no conifers at all; another wants something that will not grow on that site. A third will only assist if there is a clear commercial purpose but will not give a special management grant even if there is a small possible commercial purpose at some stage in the future. A fourth agency wants everything left alone and for some the area of work is too big in terms of acreage; for the others it is too small. There is a great deal of misinformation around.

We have heard the noble Lord, Lord Astor, mention his experiences. I will share mine with your Lordships which relate to whether beech, a characteristic of Exmoor, is native or non-native. The national park says it is non-native. I asked English Nature about it. That body advised me that it had been brought in with the Romans, although perhaps it had not reached Exmoor at that time. But it confided in me that its personnel had been taking some peat samples on the moor and had found copious beech pollen in cores 3,000 years old.

I have not yet discovered whether policy has changed. However, good forestry strategy has been dissipated and diluted under a number of agencies. I see bureaucracies getting fatter and the product of this great fruit machine in terms of works on the ground or environmentally important woodland is very small indeed. Therefore, for

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me, a forestry administration whose functions are not divided this way and that will be the only organisation to which I can relate.

As regards relating to the Forestry Authority I expect to be treated at least on similar terms to those which Forest Enterprise will apply to Croydon Hill because what is good for Croydon Hill, as far as I am concerned, ought to be good enough for me as well. However, I need a long-term strategy. Noble Lords have said that forestry is long term. Over 1,000 feet above sea level on Exmoor I can assure your Lordships it is very long term indeed because forests only grow at half the rate they grow elsewhere. On environmental grounds and as regards environmental objectives I must say that the Forestry Review was clearly written by someone who lives in another world to the one I occupy.

We are talking about critical natural capital. I think this House will know what I am talking about in terms of the efforts I try to make to put my own resources into maintaining, managing and providing an incentive for the next generation to carry on the baton when I am gone and no longer there to argue with all these authorities. Someone else will have to do it.

Over the Christmas holiday period I took my family to see "HMS Victory". We were told that to construct that ship 60 acres of oak woodland were felled. To see the size of some of the timbers in that ship, which is still there today after all that time, made me realise what a massive amount of work there is to be done to bring back that sort of resource, which was built up over hundreds of years of continuous, integrated and concerted management. That is what I feel we have to aim for under any new regime.

5.5 p.m.

Lord Carmichael of Kelvingrove: My Lords, this has been a most interesting debate and it will become obvious as we proceed through the wind-up speeches that the number of experts on forestry in the House seems to be growing year by year. I have learnt a great deal from what was said today and the debate has been a great supplement to the reading I have done. I must congratulate and thank the organisations which have sent briefs. The Royal Society for the Protection of Birds sent an excellent brief. The Country Landowners' Association also sent a brief. I hope noble Lords will not tell too many people in Glasgow that I am congratulating that body. The Royal Scottish Forestry Society also sent a brief, as did a number of other organisations. I think we must all accept that the very nature and breadth of debates in this House mean that we could not undertake them without such excellent briefs from people involved in these matters.

I am delighted that the noble Earl, Lord Lindsay, will reply to the debate. I understand the comments of my noble friend Lord Taylor of Gryfe, who was lucky enough to win a ballot to hold this debate. In that situation one expects no one less than the Prime Minister to reply to the debate. I am sure that the noble Earl, Lord Lindsay, will give us a good summary of the points that have been raised in the debate. If he does not have time to answer all the points that have been made, doubtless he will reply to noble Lords in writing.

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I am mainly concerned with how we get the best out of our land and our forests. I was delighted to hear the speech of the noble Earl, Lord Perth, for whom I have a great regard. He made a strong plea for leaving the Forestry Commission alone. There is no doubt that the Forestry Commission is very worried these days, as are many people who are interested in our forests, about some of the things that are being proposed and have been carried out as regards the Forestry Commission.

The Forestry Commission has provided a reliable and secure source of timber for the downstream wood industries. A forecast of timber availability from state forests is published on a five yearly basis for the industry. The Forestry Commission goes to great lengths to ensure that actual supply equates with published projections. Short-term considerations are not compatible with an industry where it takes in the region of 50 years for a softwood tree to reach full maturity and up to 120 for an oak. Because of its size the commission is able to provide guaranteed supplies of timber through the use of long-term contracts. Timber manufacturers have responded by putting their trust in the Forestry Commission, investing millions of pounds in plant and jobs.

A director of the largest paper mill in Scotland using domestic timber told the Glasgow Herald that,

    "certain things have to be right for that investment to take place ... one of those things is a guaranteed wood supply".

The Government have received similar advice from industrialists in England and Wales. Private forestry, with the best will in the world and with all our best wishes for its survival, cannot provide timber users with the same guarantee of long-term supplies. Private forests are generally too small to provide the volumes required, and those involved in private forestry tend to withhold supplies if there is a slump in world timber prices. If one is managing a private forest, understandably one does not wish to sell one's product if perhaps the following year or in two years' time the price of timber will increase. But that does not help the manufacturer who has probably invested at least as much in his machinery as have the owners of private forests.

Over £1 billion has been invested in timber processing over the past eight years. Any action which threatens to undermine the security of timber supplies is likely to be reflected in declining investment. Growing uncertainty and declining investment across the UK will lead to job losses and obviously a greater amount of imports when things get better. Forestry and primary wood processing employed more than 42,000 people in 1992, and the manufacture of timber and wooden furniture accounted for a further 179,000 jobs.

We are particularly concerned about the question of access. The Forestry Commission is widely respected for providing access to a vast area of the British countryside. Nowhere is the longstanding freedom to roam policy operated by the commission better illustrated than in the 25 forest and woodland parks which have been established throughout the United Kingdom. Some parks close to urban fringes, such as the David Marshall Lodge park just north of Aberfoyle,

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attract a steady flow of people, particularly at weekends, who thoroughly enjoy them. That particular park is very well kept.

Other parks are located in some of the most unspoilt and beautiful parts of the countryside. They are deemed by the commission to have a special value in terms of the amenities they offer to visitors and for their potential as wildlife conservation sites. All are designed to provide easy access for visitors.

More than 50 million day visits were made to Forestry Commission land last year. A large proportion of those visits were to the forest parks, but the growth of outdoor pursuits in recent times—for example, mountain biking, orienteering and so on—will ensure that public demand for access will continue to increase in the future. Forests are a valuable educational resource which schools can take advantage of at no charge. Provision has been made in some parks for forest classrooms. Those facilities are likely to be lost if the Forestry Commission is privatised.

The Minister may think that I am dwelling too much on privatisation, but I do not have time to go into the contradictory statements that have been made by the Secretary of State for Scotland, by the Prime Minister at the last election and also by Sir Hector Monro, who is much on the side of the angels in this matter in that he does not want forestry to be privatised.

In relation to private forests the Minister will be aware that the Government stated in their 1992 manifesto that they would make provision for public access to forests. Does he realise that not a single access agreement has been put in place in any of the forests sold to private enterprise so far under the programme of creeping privatisation which began in 1981? So far 179,000 hectares have been disposed of in that way.

I have to hurry, but I must point out that 3,500 submissions were received in connection with the review process, which obviously included the possibility of privatisation. According to the Minister in another place, Sir Hector Monro, a large majority of the submissions which addressed the question of privatisation were opposed to it, with many referring to concerns about implications for access, environmental considerations and timber production. There can be no doubt that if forestry is to be properly managed in a way which reflects the diverse range of demands upon it it needs to remain under the control of a single strategic authority.

In order to allow the Minister to reply to this very important debate and the number of extremely knowledgeable speeches that have been made, I shall resume my seat now. I shall listen to the Minister with great interest.

5.14 p.m.

The Earl of Lindsay: My Lords, I rise with great gratitude for the kind remarks made in today's debate. I also congratulate the noble Lord, Lord Taylor, on securing this debate in the first place.

In April 1993 your Lordships debated forestry just after the Government had set out to review the effectiveness with which its forestry policy was being

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implemented. I took part in that debate. Today's debate is also timely because the Government are considering responses to the conclusions of that review as set out in the consultation paper Our Forests—The Way Ahead. In its consideration the Government will, I am sure, welcome the clear and cogent views expressed by your Lordships this afternoon. Your Lordships' House is exceptionally knowledgeable when it comes to forestry matters. Like the noble Lord, Lord Carmichael, I feel that I have learned much this afternoon listening to the experts in this Chamber. Like the noble Earl, Lord Perth, in many ways I have been humbled by the wealth of experience and knowledge that has been demonstrated today.

The noble Lord, Lord Taylor, was himself a chairman of the Forestry Commission. I should like to echo the remarks made in welcoming the new chairman, Sir Peter Hutchison, and in particular those of the noble Earl, Lord Kintore. In Sir Peter I am sure that we have a man of vision and leadership who will pick up the baton carried so ably by his predecessor, Sir Raymond Johnstone.

It may help if I briefly recall the main aims of the Government's forestry policy. These are the sustainable management of our existing woods and forests and the steady expansion of tree cover to increase the many diverse benefits that forests provide. Those aims were set out in the Government's statement of September 1991. They were not changed by the Forestry Review and are unlikely to change in the foreseeable future.

The Forestry Review looked at two aspects of policy implementation: first, the effectiveness of the incentives for forestry investment, and, secondly, the options for the ownership and management of Forestry Commission woodlands. I can assure the noble Lord, Lord Beaumont, that the Forestry Review took account of a large number of comments from a wide range of sources. Therefore there was full consultation.

Turning first to incentives, many noble Lords expressed concern over some of the changes to the woodland grant scheme. Yet, taken overall, the package represents an increase of more than 10 per cent. in the incentives available for private forestry. The changes will lead to a much more effective implementation of forestry policy.

The noble Lord, Lord Taylor, was particularly concerned about new planting, and especially conifer planting. He cited figures to show that conifer planting had fallen in recent years. The Government are fully aware that a critical factor in attracting investment to the wood processing industry is the prospect of a steadily increasing supply of suitable raw materials.

The UK's woods and forests have the capacity to reach a sustained yield of some 14 million cubic metres a year—some 20 per cent. of our present needs. Increasing our tree cover will add to that potential. However, the wood produced in our forests must be of the kind that industry needs if it is to have any commercial value. I hope that that reassures the noble Lord, Lord Barber, and the noble Duke, the Duke of Somerset, who thought that perhaps the pendulum had swung too far.

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We acknowledge that the greatest demand is for softwoods. The Government want to see a continued increase in conifer planting to meet the industry's needs. Part of the revised grant package therefore is aimed at encouraging the further planting of conifers and mixed forests.

My noble friend Lord Rees asked what action the Government would take if the new package was not successful. We are confident that the package will be successful, but it will be monitored. As in all aspects of government policy, the effects of incentives will be continually assessed. Taken together, the grants for planting conifers on the better land for schemes over 10 hectares will rise by nearly 30 per cent. We have every confidence that that will stimulate further conifer planting.

Since introducing the woodland grant scheme in 1988, we have had considerable success in stimulating the planting of broadleaved woodlands. The Government wish to see an improvement in the potential timber quality of broadleaved planting without reducing the area being planted. I stress to the noble Lord, Lord Taylor, that high timber quality depends crucially on the stocking density. We have therefore made changes to the conditions of the scheme to ensure that adequate stocking densities are achieved.

We have also sought to simplify the grant scheme by reducing the number of grant bands and reducing the instalments from three stages to two. I stress to the noble Lord, Lord Forester, and to other noble Lords who were concerned about the arrangements for different grants from different bodies, that the Forestry Commission's consultation arrangements for planting and felling proposals have been reviewed with the aim of streamlining them.

In the publication, Our Forests—The Way Ahead, Enterprise, Environment & Access, we indicated that £1 million a year would be available for the establishment of woodlands of high environmental potential in areas where they will be particularly valued. Details of those schemes, which will run for a pilot period of three years, were recently announced. One such scheme involves the New National Forest.

The standard management grant which the commission used to offer has had a slow uptake. I know that the management grants are a source of great concern to many noble Lords, but consultation suggested that this was not likely to have a widespread and significant impact on woodland management. It has therefore been dropped and a single grant, similar to the former special management grant and paid at the rate of £35 per hectare per year, has been introduced. I know that my noble friends Lord Addison and Lord Forester believe that the grant is inadequate. But there has been a very good uptake of the former special management grant under the old woodland grant scheme. That would indicate that, far from being insignificant, woodland owners should benefit from that. I also stress to the House that we are not reducing the commitment so much as refocusing it. In that sense, I add that we are widening the eligibility criteria to encourage

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management for greater environmental benefits, including access, and to include woodlands under 10 years of age.

I am pleased to report that progress on allowing tree planting on set-aside land has been made within the European Union. At the December Agricultural Council, the European Commission tabled a report in response to UK pressure which concluded that farmers putting eligible land into forestry schemes under accompanying measures should be able to count that land towards their set-aside commitments. We shall need to await the Commission's proposals but we hope that when adopted they will have the effect of increasing new planting in the UK.

Over the next three years the Government expect to spend some £100 million on private forestry. The changes that we have made will target those incentives more effectively so that we achieve the best value for the taxpayers' money while stimulating an increase in tree planting.

One aspect of the Forestry Review which aroused great concern—and none more so than in your Lordships' House when we last debated forestry—was the Government's consideration of the future management of Forestry Commission woodlands. In the light of the review, which examined the full range of the options, we have concluded that at this stage of their development the Forestry Commission woodlands should remain in the public sector. In order to obtain further improvements in efficiency and value for the taxpayer's money—it is a point made by my noble friend Lord Rees—Forestry Enterprise is to be established as a Next Steps Agency. That will carry forward and develop the process begun with the separation of Forest Enterprise within the commission in 1992.

I know that there is some concern in some quarters that Forestry Enterprise will become ever more commercially oriented at the expense of the wider non-market benefits that forestry can and does provide. The noble Lord, Lord Beaumont, has doubts as to how these will be achieved. However, Forestry Enterprise will be managed to the high standards that we have come to expect on the basis of sustainability and multiple-purpose benefits. Not all forests can provide equal benefits. In discharging its statutory duty to balance its commercial conservation and environmental objectives, the commission may need to pursue a more commercially oriented approach in some areas, while in other areas above average attention to non-commercial duties may well be required.

The constitution and remit of the new agency will be set out in a framework document which will be agreed with the Forestry Commissioners and with Ministers. A copy will be placed in your Lordships' House in due course.

I now turn to the commission's disposals programme, which the noble Lord, Lord Taylor, and the noble Baroness, Lady Nicol, among others, mentioned. That was begun in 1981 and in 1989 the commission was given a target of disposing of 100,000 hectares of forest land between then and the end of the century. I stress to

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the noble Lord that that is a target with a ceiling on it. So far, about 40,000 hectares of that latter programme have been achieved.

It is important to put the programme into perspective. It enables the commission to sell some of its holding to improve its efficiency through rationalising its estate. The commission has over 1 million hectares of land under its control. The remaining programme from now until the end of the century represents the sale of only 1 per cent. of its land each year.

The Forestry Review confirmed that millions of people enjoy access to our forests. The Government recognise the need to strengthen the arrangements for protecting public access to commission forests which are sold as part of the disposals programme. Our proposals were set out in Our Forests—The Way Ahead. I believe that there has been some confusion today over the extent of the Government's commitment to that programme. It is proposed that greater account of public access will be taken when woods are selected for sale by the commission. A classification of woodlands based on the level of existing public access will therefore be introduced and there will be a presumption against the sale of woodlands with a high level of public access. But sales have taken place. I stress to the noble Lord, Lord Carmichael, in contradiction of what he said, that, up to September 1994, 18 woodlands have been sold with access agreements; and a further 19 agreements are completed or nearly completed for areas which will be sold.

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