Forestry | Land Matters

Planting forests is a sure way to grow rich

13. May 2013 · 7 comments · Categories: Environment, Forestry, Land Reform, Land Rights, Land Use, Who Owns Scotland

I studied forestry at Aberdeen University at the time of the rapidly expanding afforestation of the Flow Country of Caithness and Sutherland. One day, the Chief Executive of Fountain Forestry, the company that was the leading player in this misadventure, gave a lecture to us. Afterwards, he invited questions. “Why, I asked, was the Government giving huge tax breaks to folk like Terry Wogan and Shirley Porter – the vulgarians of the metropolis in London – to plant trees in the far north of Scotland? Why did it not simply award the money in the form of grant aid to the crofters and farmers of the region to plan the trees instead?” It was a naive question but I quickly learnt that asking such questions was not welcome, even in a University where asking questions is meant to be what one does.

Ever since then I have been curious as to why a land use with so much potential to revitalise rural economies, support communities and provide a home and workplace for families like it does in the rest of Europe should instead be an elite formation designed to enrich a landed class drawn from anywhere but the locale. Some of the facts behind this are explored in a recent report I wrote – Forest Ownership in Scotland.

The topic is brought to mind today by the advertisement of a 403 hectare forest for sale in Kincardine-shire. Burn of Sheeoch (pictured above & sales brochure here) is offered for sale by Bidwells at a guide price of £2,500,000. It was bought in 1982 for £441,000 by the Post Office Staff Superannuation Fund from Baron Craigmyle and planted in 1983-84 with substantial public grants. In 1995 the Fund sold it for £200,000 to Spero Nominees Ltd., a nominee company with a fully paid-up share capital and total assets of £4 and wholly owned by Deloitte & Touche Holdings Ltd. (see below).

In other words this forest was acquired by a global accountancy firm on behalf of someone – we know not whom. In 2007 the land was transferred for free to a company called Walbrook Trustees (UK) Ltd. which is wholly owned by Barclays Wealth Advisory Holdings (Guernsey) Ltd. The 2012 accounts of Walbrook describe the company’s principal activity as the “provision of trust services“. It made no profit or loss in 2012, has total assets of £7,650 and “it is anticipated that the Company will be put into Member’s Voluntary Liquidation during 2013“.

But not before Roderick Leslie Melville has earned a nice commission on a sale of £2.5 million which will be paid to a ghost company in Guernsey about to go into liquidation. The forest “benefits” from a Long Term Forest Plan approved by Forestry Commission Scotland in April 2013 providing access to a “range of forest management grants“.

The seller (Wallbrook, Guernsey, soon to be liquidated) will also be “entitled to share in the benefit of any renewable development at the property and receive 50% of all payments by or on behalf of the landowner within the 10 years following sale and shall be entitled to these payments for a period of 25 years from the date the first payments are received.”

So my naive question of 30 years ago remains unanswered. Vast sums of public money have subsidised the creation and ongoing management of this forest and future revenue streams of public money for renewable energy contracts will also flow to some anonymous offshore nominee company following receipt of a capital tax free payment of £2,500,000.

I don’t understand why the Scottish Government and Parliament continue to preside over such a scam.

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Who owns Scotland’s public forests?

08. May 2013 · 7 comments · Categories: Forestry, Land Reform, Land Values

The Forestry Commission is planning to sell the 790 hectare Tioran Forest on the Isle of Mull and have advised the community that it has the opportunity to acquire it under the National Forest Land Scheme (NFLS).

I have blogged about Mull and forestry already and how it appears that the Scottish Government is intent on turning the island into a resource colony for distant multinational corporations. The sale of this large public forest adds to that sense of unease.

This sale raises further important questions, however.

If the community is to be successful in taking ownership of this land (and it appears keen to do so), it will have to pay the full market price for the property. I don’t know how much this forest is worth but I would guess one would not get much change from £1 million. Where is a fragile community to raise such a sum of money?

If we are serious about community forestry, there is a better way to go about this. The Forestry Commission owns no land. It is not a landowner. Instead, the land that it manages across Scotland is owned by Scottish Ministers and the FC merely manage it on their behalf.

Section 3(1) of the Forestry Act 1967 states clearly that

3 Management of forestry land.

(1) The Commissioners may manage, plant and otherwise use, for the purpose of the exercise of their functions under this Act, any land in Scotland placed at their disposal by the Scottish Ministers under this Act or in England and Wales placed at their disposal by the Minister under this Act, and—

(a) the power of the Commissioners under this subsection to manage and use any land shall, without prejudice to the generality of that power, include power to erect buildings or execute works on the land;

(b) any timber produced on land so placed at the Commissioners’ disposal shall belong to the Commissioners.

As an alternative to the complex and expensive process of buying this land, Scottish Ministers could, since the FC no longer with to manage it, simply appoint an appropriately constituted community body on Mull and “place” the forest “at their disposal” under an agreed scheme of delegated authority. This would require a modest amendment to the Act to the effect that Ministers have the power under secondary legislation to appoint other bodies as capable of having the Scottish Ministers’ estate “placed at their disposal”.

No money would change hands. The forest would remain in public ownership and would be managed by local people for the benefit of the Mull economy.

The silliness of the proposed NFLS transfer is illustrated by a similar situation in Cowal, Argyll. On 22 February 2013, Colintraive and Glendaruel Development Trust was awarded a grant of £311,500 from the Scottish Land Fund to part finance the acquisition of the 615 hectare Stronafian Forest in south-west Cowal. The Scottish Land Fund monies come not from the National Lottery as was the case ten years ago (when I was a member of the Fund) but from Scottish Ministers. It is part of the Scottish Consolidated Fund – taxpayers money.

So Scottish Ministers paid £311,500 to Colintraive and Glendaruel Development Trust to part finance the acquisition of a forest being sold by …. Scottish Ministers!

In other countries across Europe, public forests are not the sole responsibility of the State. Regional Governments, Counties and Communes and Municipalities own extensive forests. See the map below for an illustration of this where in France over 20% of public forests are owned by Communes.

See previous blogs which highlight this here and here together with a report and essay on forest ownership in Scotland.

Some years ago I edited an editorial by the historian, James Hunter , in which he observed that “the Forestry Commission is to Scottish forestry what collectivisation was to Soviet agriculture.”

Why is Scottish forestry policy so primitive?

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Nigel Lawson’s 1988 Budget

15. March 2013 · 3 comments · Categories: Environment, Finance & Money, Forestry, Land Use, Politics

When I was at University in 1980s studying forestry, Forestry Commission land was being sold off and the private sector was booming with generous tax breaks on offer to investors to plant trees. Particular controversy erupted over the rapid expansion of afforestation in the so-called “flow country” of Caithness and Sutherland where one company in particular, Fountain Forestry, was recruiting wealthy investors such as Shirley Porter and Terry Wogan to buy land and plant trees. The tax incentives were significant and on one occasion when the Director of Fountain Forestry came to Aberdeen to give a lecture I asked a question at the end hits talk. “Why“, I asked, “is the government giving millions of pounds in tax relief to very wealthy pop stars and celebrities in London to buy and afforest land 500 miles away in Caithness and Sutherland. Why does the government not simply give this money as grants to the landowners and farmers in the north of Scotland?”

I don’t remember his answer but I do remember being asked afterwards by my Professor why I had asked such a “provocative” question. I had not realised that it was anything other than a straightforward question about forestry policy but I quickly realised that any question about power, land and money made a lot of people rather uncomfortable. For me this was all the encouragement I needed to find out more. My activism on this and other issues at the time probably cost me a career in forestry which was at that time dominated by the aristocracy and big landowners.

So when, 25 years ago today, Nigel Lawson stood up in the House of Commons and abolished this tax dodge I was delighted. The announcement was a shock to the forestry world and a reminder that gravy trains don’t last forever. The budget was memorable also as the occasion when Alex Salmond got thrown out of the Chamber for interrupting Lawson’s speech. Anyway, here is the relevant passage (the whole speech is available on the Margaret Thatcher Foundation website).

I now turn to income tax.

The way to a strong economy is to boost incentives and enterprise. And that means, among other things, keeping income tax as low as possible.

Income tax has now been reduced in each of the last six Budgets—the first time this has ever occurred. And the strength of the economy over that period speaks for itself.

However, reforming income tax is not simply a matter of cutting the rates. I also have to look at all the various allowances and reliefs to ensure that they are still justified. With this in mind, I have a number of proposals to announce.

First, forestry. I accept that the tax system should recognise the special characteristics of forestry, where there can be anything up to 100 years between the costs of planting and the income from selling the felled timber.

But the present system cannot be justified. It enables top rate taxpayers in particular to shelter other income from tax, by setting it against expenditure on forestry, while the proceeds from any eventual sale are almost tax free.

The time has come to bring it to an end. I propose to do so by the simple expedient of taking commercial woodlands out of the income tax system altogether. That is to say, as from today, and subject to transitional provisions, expenditure on commercial woodlands will no longer be allowed as a deduction for income tax and corporation tax. But, equally, receipts from the sale of trees or felled timber will no longer be liable to tax.

It is, perhaps, a measure of the absurdity of the present system that the total exemption of commercial woodlands from tax will, in time, actually increase tax revenues by over £10 million a year.

At the same time, in order to further the Government’s objectives for the rural areas, I have agreed with my right hon. Friends who have responsibilities for forestry and for the environment that, in parallel, there should be increases in planting grants. Full details of the new grant scheme will be announced next week.

The net effect of these changes will be to end an unacceptable form of tax shelter; to simplify the tax system, abolishing the archaic schedule B in its entirety; and to enable the Government to secure its forestry objectives with proper regard for the environment, including a better balance between broad-leaved trees and conifers.

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