The sell-off of England's forests

The government wants to sell off swathes of publicly owned forest but the idea has sparked strong opposition. Simon Wilson reports.

What is the government up to?

It wants to sell off swathes of the publicly owned forest in England and turn the Forestry Commission from an owner of forests into a regulator. Currently, the government department responsible "for the protection and expansion of Britain's forests and woodlands" manages some 258,000 hectares (638,000 acres) in England. This is made up of about 1,500 forests, including so-called "heritage forests", such as the Forest of Dean and the New Forest. It also encompasses industrial-style plantations, such as Kielder Forest in Northumberland. It is this land amounting to about 18% of the woodland in England that the government wants to sell off.

How much is it hoping to raise?

In the first instance the government has announced plans to sell 15% of the public forest estate by 2015 the most it can authorise without the need for an act of parliament. The aim is to raise £100m. If parliament gives the go-ahead to sell the other 85% probably on 150-year leases it will trigger the biggest change in land ownership since World War II. Estimates of the windfall for the Treasury vary between £150m and £370m over ten years. Right now that looks like a big if a large number of rural Tory and Lib Dem MPs have already come out against the proposals, along with the Archbishop of Canterbury and the National Trust.

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So what's the case against?

That if it ain't bust, you don't fix it. In the words of Wednesday's House of Commons motion against the proposals: "This House believes that the government's intention in the Public Bodies Bill to sell off up to 100% of England's public forestry estate is fundamentally unsound; notes that over 225,000 people have signed a petition against such a sell-off; recognises the valuable role that the Forestry Commission and England's forests have made to increasing woodland biodiversity and public access with 40 million visits a year; further recognises that the total subsidy to the Forestry Commission has reduced from 35% of income in 2003-2004 to 14% of income in 2010-2011; further notes that the value of the ecosystems services provided by England's public forest estate is estimated to be £680m a year [and may] increase substantially in the future through the transition to a low-carbon economy as a carbon market emerges."

Who will buy the forests?

That depends. The heritage forests where concerns over public access and rights are most pronounced are likely to be acquired by local authorities, trusts and voluntary bodies. There may well be opportunities for private buyers to acquire small woodland plots for recreational purposes with the added attraction of a possible capital gain.

But in general terms, investors and businesses are most likely to be interested in commercial forestry opportunities. The twin attractions here, of course, are the potential for strong capital growth, plus decent tax advantages. According to Simon Hart of forester UPM Tilhill, the price of woodland has near-doubled over the past five years (17% a year, on average) as house prices remained all but flat.

What are the tax perks?

Where a forest is "managed on a commercial basis and with a view to the realisation of profits", all income arising from timber sales is tax free. There are also plenty of tax concessions available to help maintain and manage the plot. Growth in the value of the timber (though not the land itself) is exempt from capital-gains tax. And once you have owned woodland for more than two years, it doesn't count towards your estate for inheritance-tax purposes. As for recent growth, the iShares S&P Global Timber & Forestry fund (which invests in the world's 25 largest timber-related firms) is up 30% in the past year.

Should the forests be sold?

Yes

1. The Forestry Commission was founded after World War I in case of a shortage of timber pit props in future wars. It's an anachronism and the state no longer has any strategic interest in being in the forestry business.

2. Middle England has been needlessly spooked over the access issue: in reality not much will change, rights will be protected under long-term leases and the government will raise some much-needed cash.

3. The Forestry Commission only owns 18% of England's woodland. And in many cases it has converted ancient forests and heathlands into vast, ugly, industrial coniferous forests.

No

1. The sell-off poses a huge threat to access. Only 38% of existing private woodland is open to the public, so why should privatised forests be any different?

2. The idea that community groups and charities can take over forests is just Big Society' wooliness. Meanwhile, in commercial hands, rights of way might in theory be protected, but there will be no incentive to maintain car parks, paths and stiles.

3. Forests are not merely timber factories; they are part of the nation's common inheritance. The net gain for the Treasury (a few tens of millions a year at best) means the whole enterprise will create an awful lot of PR pain for very little financial gain.