Saving nature or saving money?

The government avoids more questions than it answers on England's woodlands.

Over the past month, opposition to the government's proposal to sell off up to 15,000 hectares of English forest and woodland has been gradually mounting. A few days ago, Environment Secretary Caroline Spelman responded to her critics in the Guardian, claiming to be "setting the record straight on the sale of England's woodlands". However, she avoids more questions than she answers.

She addresses the more sensationalist suggestions - namely that woodlands could be sold off in a "free-for-all of golf courses, holiday parks or housing developments" - but ignores the central issues: access to the countryside, tree planting, and how, if at all, her plans will actually help biodiversity.

Spelman says that a major motivation for the plans is the "need to enhance biodiversity", including planting more trees and of the right sort. However, she makes no mention of how exactly selling off the Forestry Commission's forests would help with this goal, and how new, private forest owners would do a better job.

She points out that "[a]round 70 per cent of England's woodland is already under private ownership - some of them already participating in woodland schemes that actively preserve the environmental and public benefits our woodlands deliver", but this in itself does not justify her proposals.

Moreover, while the new owners would still be subject to planning and forestry regulations, it is not at all clear how new forms of management would differ from that of the Forestry Commission. In particular, our Environment Secretary avoids mentioning how, if at all, public access to the woodlands would be altered. There is also no mention of how the sale would work: would conservation and other environmentally-conscious organisations be treated preferentially?

Earlier this year, a government economic study estimated that the Forestry Commission provides £2100 per hectare in value if benefits such as carbon sequestration, protection from erosion, and absorbing pollution are accounted for. The government needs to show that its reforms will not damage the natural capital behind these environmental services, and ideally that they will enhance it. So far they have done neither.

There is also the question of where the money for acceptable private management of England's forests is going to come from. Charities' incomes face heavy cuts over the next few years as a result of the coalition's austerity measures. Philanthropy cannot realistically be expected to take up all the slack left by the roll-back of the state.

Depending on who is willing and able to purchase the forests, there is no guarantee that the same levels of resources would be available to spend on conservation as the Forestry Commission lose their most profitable land.

Similarly, Spelman makes no mention of how, if at all, the taxpayer can expect to benefit. Before this year's spending review, the Forestry Commission received a £30m annual subsidy, but generated £63m income a year. If the organisation were stripped of its most profitable assets and its income fell, the taxpayer would have to step in to meet any funding gaps.

Indeed, she seems more interested in Cameron's ideological pursuit of a small state for its own sake than in pragmatic cost savings, saying that the plans are "no fire sale by a cash-strapped state". Instead, she suggests that, "frankly, those who live closest are most likely to protect it".

However, like much of the Big Society project, the benefits of her plans seem poorly specified, and based more on wishful thinking than anything else. It's not at all clear that those nearest to forests are the most likely to buy them. And, even if this were the case, it is something of a simplification to conflate geographical proximity with an affinity for conservation.

Spelman says that "[p]ublic is not always good, nor non-public bad.". Quite. But, by the same token, public is not always bad, nor non-public good. She and her ministerial colleagues need to make the case that selling off our forests is not pure ideology and will provide tangible benefits.

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Stability is essential to solve the pension problem

The new chancellor must ensure we have a period of stability for pension policymaking in order for everyone to acclimatise to a new era of personal responsibility in retirement, says 

There was a time when retirement seemed to take care of itself. It was normal to work, retire and then receive the state pension plus a company final salary pension, often a fairly generous figure, which also paid out to a spouse or partner on death.

That normality simply doesn’t exist for most people in 2016. There is much less certainty on what retirement looks like. The genesis of these experiences also starts much earlier. As final salary schemes fall out of favour, the UK is reaching a tipping point where savings in ‘defined contribution’ pension schemes become the most prevalent form of traditional retirement saving.

Saving for a ‘pension’ can mean a multitude of different things and the way your savings are organised can make a big difference to whether or not you are able to do what you planned in your later life – and also how your money is treated once you die.

George Osborne established a place for himself in the canon of personal savings policy through the introduction of ‘freedom and choice’ in pensions in 2015. This changed the rules dramatically, and gave pension income a level of public interest it had never seen before. Effectively the policymakers changed the rules, left the ring and took the ropes with them as we entered a new era of personal responsibility in retirement.

But what difference has that made? Have people changed their plans as a result, and what does 'normal' for retirement income look like now?

Old Mutual Wealth has just released. with YouGov, its third detailed survey of how people in the UK are planning their income needs in retirement. What is becoming clear is that 'normal' looks nothing like it did before. People have adjusted and are operating according to a new normal.

In the new normal, people are reliant on multiple sources of income in retirement, including actively using their home, as more people anticipate downsizing to provide some income. 24 per cent of future retirees have said they would consider releasing value from their home in one way or another.

In the new normal, working beyond your state pension age is no longer seen as drudgery. With increasing longevity, the appeal of keeping busy with work has grown. Almost one-third of future retirees are expecting work to provide some of their income in retirement, with just under half suggesting one of the reasons for doing so would be to maintain social interaction.

The new normal means less binary decision-making. Each choice an individual makes along the way becomes critical, and the answers themselves are less obvious. How do you best invest your savings? Where is the best place for a rainy day fund? How do you want to take income in the future and what happens to your assets when you die?

 An abundance of choices to provide answers to the above questions is good, but too much choice can paralyse decision-making. The new normal requires a plan earlier in life.

All the while, policymakers have continued to give people plenty of things to think about. In the past 12 months alone, the previous chancellor deliberated over whether – and how – to cut pension tax relief for higher earners. The ‘pensions-ISA’ system was mooted as the culmination of a project to hand savers complete control over their retirement savings, while also providing a welcome boost to Treasury coffers in the short term.

During her time as pensions minister, Baroness Altmann voiced her support for the current system of taxing pension income, rather than contributions, indicating a split between the DWP and HM Treasury on the matter. Baroness Altmann’s replacement at the DWP is Richard Harrington. It remains to be seen how much influence he will have and on what side of the camp he sits regarding taxing pensions.

Meanwhile, Philip Hammond has entered the Treasury while our new Prime Minister calls for greater unity. Following a tumultuous time for pensions, a change in tone towards greater unity and cross-department collaboration would be very welcome.

In order for everyone to acclimatise properly to the new normal, the new chancellor should commit to a return to a longer-term, strategic approach to pensions policymaking, enabling all parties, from regulators and providers to customers, to make decisions with confidence that the landscape will not continue to shift as fundamentally as it has in recent times.

Steven Levin is CEO of investment platforms at Old Mutual Wealth.

To view all of Old Mutual Wealth’s retirement reports, visit: products-and-investments/ pensions/pensions2015/