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.

 

Campaigners are today celebrating the “saving” of England’s public forests. But what about the real issue of who owns England’s publlic forests? And what if all that has happened is that the UK government is preparing to hand the entirety of England’s public forests over to an industry-dominated quango?

The UK Government today published its response to the Report from the Independent Panel on Forestry (IPF) which was set up to review the future of England’s forests in the aftermath of the huge public outcry over plans announced in 2010 to sell parts of the English Public Forest Estate. In this brief blog I want to draw attention to Section 9 and some interesting proposals on ownership of England’s forests.

It is popularly thought that the Forestry Commission GB (FC) owns the public forest estate in Great Britain (state forests in Northern Ireland are managed by the Forest Service of Northern Ireland). In fact the FC owns no land at all. The public forests across GB are owned by Government Ministers. In Scotland this the Scottish Ministers. In England it is the Secretary of State for Environment, Food and Rural Affairs and in Wales it is Welsh Ministers (though the FC in Wales is about to be merged into a new body Natural Resources Wales from 1 April 2013).

The outcry that followed the UK Government’s plans to sell “up to all” of England’s public forests led to a huge public campaign to “Save Our Woods” and to the establishment of the IPF and a today’s announcement from DEFRA. The public in England clearly want “their” forests to stay in “public ownership”. But this begs the question of what form of public ownership is best suited to serving the interests of the public. My own view at the time was that England’s forests are not really public forests at all – they are state forests owned by a Government Minister who has the freedom to do as he or she likes within the law and subject to Cabinet approval. The public are not involved at all (and the same applies in Scotland and Wales).

I wrote an article for the Observer at the time arguing that if folk want public forests they needed to think about ownership and consider a new model of public ownership that is removed from Government and is more local and accountable to “the public”. I cited the example of public forests in France, for example, where 20% of public forests are owned by 11,000 communes (30% of France’s 36,700 communes or municipalities).

So it is with some interest that I note that the UK Government intends to abolish Forestry Commission England and replace it with a “new, separate Public Forest Estate management body to hold the Estate in trust for the nation.” (Section 9 of DEFRA Response). The response, however, avoids the question of ownership. This new body will manage the English Public Forest Estate but it will not hold legal title to the land and will thus be in the same relationship to Government as the FC is today – the manager of state-owned land.

This proposal is fraught with risks for those who think they have “saved England’s forests for the public”. The Confederation of Forest Industries (CONFOR) has issued a statement welcoming the Government’s response in enthusiastic terms. I would not be surprised if in a few years time the new management body emerges as an industry-dominated quango, liberated from all but the remotest of control from DEFRA and in charge of the English Public Forest estate. I fail to see how that addresses the principal concern of campaigners – to keep England’s forests in public ownership and under public control.

Clearly this proposal provides a whole range of new uncertainties about the future of English forestry and there is a real danger that the new body will become captured by corporate elite interests. The move also heralds the end of the Forestry Commission itself which will soon no longer be a GB body given its forthcoming abolition in Wales. In Scotland, the FC is not devolved although forestry policy is as is the ownership and management of the Public Forest Estate in Scotland (and FC GB has its headquarters in Edinburgh). The Forestry Commissioners remain a body corporate appointed by the Queen but for how much longer? Do the developments in England signal the final full devolution of forestry to Scotland and the end of the Forestry Commission here too?

More importantly, the English proposals provide an ideal opportunity to challenge again the notion of state ownership of England’s forests and devise a new model of public ownership that is local and democratic. In my response to the Land Review Policy Group in Scotland (link available on this page), I argue that: –

“The Forestry Commission in Scotland should be reformed. The state forest service should be made more locally accountable through regionally elected Forest Boards responsible for developing strategic plans for forestry in each region of Scotland. Management of the national forest estate should be opened up to a wider range of bodies than the Forestry Commission. Currently, the estate, which is owned by Scottish Ministers, is put in its entirety at the disposal of the Forestry Commission under the terms of Section 3 of the Forestry Act 1967.”

Such an arrangement I suggest would also help to ensure the public ownership of England’s Public Forest Estate.

It was announced today that the Scottish Government is to spend £3m on building a pier to export timber from Mull’s forests and “boost the island’s timber business”. Whilst this may boost the timber harvesting business, it does nothing for the forestry economy and even less for the development of Mull’s economy. It is good news for the state forest service, for Mull’s mainly absentee investment forestry owners (part of a wider problem of absentee private ownership), and for the multinational companies which own the large sawmills in the south of Scotland and north of England. But it weakens the Mull economy by making it easier to extract and export the island’s natural resources.

In Norway, most sawmills “are located in rural areas, close to the raw material sources and with an important role in local economy and employment.” They produce around 2.3 million cubic metres of sawn timber per year from a forest resource of 96,325 square kilometres. Scotland produces 1.7 million cubic metres of sawn timber per year from a forest resource of 13,850 square kilometres.

Here is a medium-scale sawmill in Sjak kommune in Norway.

Sjak kommune has a population of 2280 people and has 9500ha of forest. Mull has a population of 2667 and around 10,000ha of forest,

Sjak kommune has two sawmills, and a timber house factory – illustrated below. All these industries are community-owned. Mull has no sawmills that I am aware of – the nearest one is in Morvern – Sound Wood.

Scotland’s idea of rural economic and industrial development is stuck in an unimaginative rut dominated by elite state and private industrial interests. Those of us who have been long arguing for a different development model have made little or no headway.

No Government Minister would stand up in Norway and proudly announce a £3 million investment to EXPORT an island’s raw materials. This money would be far better spent investing in timber processing and ancillary industries on Mull to boost jobs and investment in the Mull economy.

UPDATE 15 February 2013

The Forestry Commission has published a page with details of the project.