Sunday 20 February 2011

Our Enemies - On Why Forest Privatisation Failed

State-owned forests live another day

Feb 17th 2011, 11:02

by Bagehot

TIMBER! So shouted the wags on the opposition benches of the House of Commons yesterday, as David Cameron said he was not happy with how his government's plan to privatise English forests was going.

Labour hecklers might also have been referring to the career of the cabinet minister in charge of forests, Caroline Spelman, which now resembles a tree freshly struck by lightning: still upright and covered with leaves, but stone-dead beetle-food at the core.

Late last night, more formal word came: a public consultation on selling hundreds of thousands of hectares of state-owned woodland is to be cancelled, and instead a panel of experts will meet to discuss woodland biodiversity and public access. In plain English, an about-face for the government.
Much has been said about the government's ineptitude in selling this policy, some of it by me. When I visited a woodland the other day for a print column, I also came away with the distinct impression that—especially in the wake of the credit crunch—the public is wary of the idea that the profit motive can co-exist with altruism.

That is a big problem for Mr Cameron's Big Society, which does not really add up if it does not include a hefty role for the private sector.
Much has also been written about the slightly puzzling maths of this privatisation, notably when it turned out that an impact assessment conducted by Mrs Spelman's own department predicted that it would not save very much money. There is also the fact that the Forestry Commission rather efficiently cross-subsidises its stewardship of nice pretty woods and forests by flogging timber from the dark, ugly conifer plantations with which it disfigured the landscape in the post-war decades.

Defenders of the policy have also pointed out, correctly, that opponents of the privatisation have been spreading all manner of ludicrous scare-stories, implying that ancient woodlands like the Forest of Dean could soon be ringed with barbed-wire fences, while new private owners raze the trees within to build golf courses and holiday villages. Other opponents seem upset by the thought of anyone making money from cutting down trees at all, which is akin to weeping when a farmer harvests a field of wheat. Timber, after all, is also a crop.

I think one more aspect of this sorry tale needs wider circulation. This was not a bad idea because it was a privatisation. It was a mess because it was on its way to being seen as a rushed and bungled privatisation. And even the flintiest free-marketeer knows to beware botched sell-offs of state assets: few things are as deadly to public acceptance of an economy based on competition.

I spoke to the Environment Secretary for my column, and she admitted up front that the scheme was "not principally about revenue-raising." Instead, the plan emerged from the incoming government's decision to review all arms of the state and its associated agencies, bodies and quangos, and examine which of them made sense. When Mrs Spelman took office, she discovered that her sprawling department of the environment, food and rural affairs funded 92 arms-length bodies.

Various tests were applied to each of them. The most important principle was this: that the state should only do what only the state can do.
In Mrs Spelman's view, the Forestry Commission—a regulator that was also the seller of 70% of the timber entering the British market—failed this classic test that has triggered countless privatisations over the years. "The Forestry Commission is selling Christmas trees, for goodness sake. What is the state doing selling Christmas trees?" she asked me.

And here is the thing. The principle that the state should only do what only the state can do is a pretty sound starting point for policy-making. It is just that—with the benefit of hindsight—the Forestry Commission does not pass this test in a clean-cut way. At least, not in a way that is so cut-and-dried that a simple public case can be made for it.
If the commission only owned commercial timber plantations, it would be easy to know what to say: sell them.

If instead the commission only owned a few "heritage woods", it should not have been beyond the wit of Whitehall to transfer their management into the hands of willing charities like the National Trust, with suitable guarantees about back-up funding. But the problem is that the commission is neither fish nor fowl. It owns ugly, profitable woods; it owns ancient and famous forests; and it also owns a whole host of small and medium-sized woods that are used for a mix of commercial forestry and recreation; it employs scientists who track diseases and pests that threaten British trees; it is also a regulator.

It once had a terrible record of planting conifers in straight lines all over the country, but in recent years has become much more concerned about restoring ancient broadleaf trees, so it is also an environmental protection agency.
Quite probably a privatisation was still the right way forward, with a better minister to sell it and more willingness to spend political capital and defend from first principles the shrinking of non-essential bits of the state.

But why was the Forestry Commission so high on the government's agenda, in its first year in office, given that it is a small, cheap and relatively efficient bit of the state?
Thinking back to Mrs Spelman, dutifully scanning her 92 arms-length bodies, I recall waves of press stories about the new government's plans for a "Bonfire of the Quangos" (I also recall how most of the stories focussed on the pay and pensions of those agencies' bosses, a populist angle much encouraged by government spin-doctors). It would be pretty depressing if the forests were added for the sake of bulking up that pyre and attracting a few quick headlines, rather than because they were prime candidates for a well-crafted sale.