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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George Osborne's mistakes are coming back to haunt him

George Osborne's next budget may be a zombie one, warns Chris Leslie.

Spending Reviews are supposed to set a strategic, stable course for at least a three year period. But just three months since the Chancellor claimed he no longer needed to cut as far or as fast this Parliament, his over-optimistic reliance on bullish forecasts looks misplaced.

There is a real risk that the Budget on March 16 will be a ‘zombie’ Budget, with the spectre of cuts everyone thought had been avoided rearing their ugly head again, unwelcome for both the public and for the Chancellor’s own ambitions.

In November George Osborne relied heavily on a surprise £27billion windfall from statistical reclassifications and forecasting optimism to bury expected police cuts and politically disastrous cuts to tax credits. We were assured these issues had been laid to rest.

But the Chancellor’s swagger may have been premature. Those higher income tax receipts he was banking on? It turns out wage growth may not be so buoyant, according to last week’s Bank of England Inflation Report. The Institute for Fiscal Studies suggest the outlook for earnings growth will be revised down taking £5billion from revenues.

Improved capital gains tax receipts? Falling equity markets and sluggish housing sales may depress CGT and stamp duties. And the oil price shock could hit revenues from North Sea production.

Back in November, the OBR revised up revenues by an astonishing £50billion+ over this Parliament. This now looks a little over-optimistic.

But never let it be said that George Osborne misses an opportunity to scramble out of political danger. He immediately cashed in those higher projected receipts, but in doing so he’s landed himself with very little wriggle room for the forthcoming Budget.

Borrowing is just not falling as fast as forecast. The £78billion deficit should have been cut by £20billion by now but it’s down by just £11billion. So what? Well this is a Chancellor who has given a cast iron guarantee to deliver a surplus by 2019-20. So he cannot afford to turn a blind eye.

All this points towards a Chancellor forced to revisit cuts he thought he wouldn’t need to make. A zombie Budget where unpopular reductions to public services are still very much alive, even though they were supposed to be history. More aggressive cuts, stealthy tax rises, pension changes designed to benefit the Treasury more than the public – all of these are on the cards. 

Is this the Chancellor’s misfortune or was he chancing his luck? As the IFS pointed out at the time, there was only really a 50/50 chance these revenue windfalls were built on solid ground. With growth and productivity still lagging, gloomier market expectations, exports sluggish and both construction and manufacturing barely contributing to additional expansion, it looks as though the Chancellor was just too optimistic, or perhaps too desperate for a short-term political solution. It wouldn’t be the first time that George Osborne has prioritised his own political interests.

There’s no short cut here. Productivity-enhancing public services and infrastructure could and should have been front and centre in that Spending Review. Rebalancing the economy should also have been a feature of new policy in that Autumn Statement, but instead the Chancellor banked on forecast revisions and growth too reliant on the service sector alone. Infrastructure decisions are delayed for short-term politicking. Uncertainty about our EU membership holds back business investment. And while we ought to have a consensus about eradicating the deficit, the excessive rigidity of the Chancellor’s fiscal charter bears down on much-needed capital investment.

So for those who thought that extreme cuts to services, a harsh approach to in-work benefits or punitive tax rises might be a thing of the past, beware the Chancellor whose hubris may force him to revive them after all. 

Chris Leslie is chair of Labour's backbench Treasury committee.