Section 13 - National Forest Estate
1 As described in Section 9, Scottish Ministers own a substantial amount of property which is managed by different parts of the Scottish Government for a wide range of purposes. There is further Scottish Government property held and managed by other Scottish Non-Departmental Public Bodies.
2 The most extensive holding owned by Scottish Ministers is Scotland's National Forest Estate ( Fig. 11) which covers around 650,000 ha and is managed on behalf of Ministers by the Forestry Commission. The National Forest Estate includes over a third of Scotland's woodland area and is one of the people of Scotland's major assets.
Ownership and Management
3 The development of the land holding now recognised as Scotland's National Forest Estate, started with the creation of the Forestry Commission ( FC) by the Forestry Act 1919. The FC was constituted as a statutory corporation managed by a Board of appointed Commissioners, and this remains the case, with the FC now operating under the Forestry Act 1967 as amended. The title to the ownership of land acquired by the Government for planting by the FC from 1919 onwards was vested in Ministers, with the title to any land acquired in Scotland being held by the Secretary of State for Scotland. The ownership of this land then transferred from the Secretary of State to Scottish Ministers at devolution under the Scotland Act 1998.
4 Since devolution, the identity of the land managed by the FC in Scotland, through Forestry Commission Scotland ( FCS), has been promoted as Scotland's National Forest Estate. Forest Enterprise Scotland ( FES), an agency of the Forestry Commission, is responsible for management of the Estate to implement Scottish Government policies, including the Land Use Strategy, the Scottish Forestry Strategy and the Scottish Biodiversity Strategy. The perception might be that FCS and FES are part of the Scottish Government, but this is not the case. While responsibility for forestry was devolved in 1999, the responsibilities of the Forestry Commissioners in Scotland were not, and these remain reserved to Westminster. Thus, FCS only describes itself in publications as 'serving' as part of the Scottish Government, because FCS and FES are both parts of the FC with its reserved responsibilities.
5 The creation of FCS in 2003 followed the UK Forestry Devolution Review in 2002 and was part of a wider re-structuring of the FC's UK wide operations, so that they were in line with the devolution of responsibilities for forestry to Scotland, Wales and England in 1999. This UK wide arrangement over the FC now appears to be coming to an end, as the FC's responsibilities in Wales were transferred to Natural Resources Wales in 2013 and on-going discussions at Westminster also seem likely to replace the FC and its responsibilities in England at some stage. The devolution of the FC's responsibilities in Scotland to the Scottish Parliament and Government therefore seems likely, whether by choice or default.
6 The Group regards FCS and FES as positive outcomes of devolution in 1999 and recognises the high degree of devolved arrangements currently in place. This means that, if the remaining responsibilities of the FC in Scotland under the current legislation were devolved, there would be very little immediate effect on the operations of FCS in Scotland. Arrangements would need to be put in place for continued co-operation on forestry at a UK level over aspects such as pests, diseases and international agreements. However, the creation of the Joint Nature Conservation Committee that resulted from the devolution of the Nature Conservancy Council's responsibilities to Scottish Natural Heritage and English Nature, is an example of how such matters can be addressed.
7 The Review Group considers, however, that the current arrangements have become an anomaly and that devolution of the FC's responsibilities would be a positive development. The change would end the current ambiguity arising from FCS's position 'serving' the Scottish Government and enable Scotland's national forest services to be fully integrated into the Government. The Group considers that there would also be benefits from FCS no longer being bound by some of the terms of the Forestry Act 1967. The roles of trees, woodlands and forests as part of the delivery of public policy have expanded greatly since the time of the 1967 Act as reflected now, for example, in the importance of climate change and the emphasis in the Scottish Government's policies on the ecosystem services provided by Scotland's land and environment. 
8 The Group considers that the FC's responsibilities should be devolved and that FCS, with its responsibilities for managing Scotland's National Forest Estate, should be fully integrated into the Scottish Government. One of the changes in the context of this Report would be that, compared to the terms of the 1967 Act, FCS would become fully able to acquire and manage land for whatever range of public policy purposes that the Scottish Government might decide as part of delivering those purposes.
Extent and Purposes
9 The current extent and composition of Scotland's National Forest Estate has developed over time and continues to evolve. During the period from 1961-1980, the size of the FC's holding in Scotland continued to increase as very few sales took place.  In 1980, the then Conservative UK Government decided following a review of forestry policy, that the FC should sell a proportion of its estate. This was to meet Government objectives of expanding the private sector and reducing the FC's annual call on Government funding. The Forestry Act 1981 provided Ministers with the powers to dispose for any purposes, land acquired for purposes connected to forestry.
10 That policy continued in force between 1980 and 1997, and during that time 73,000 ha. of land and forests were sold in Scotland.  The policy was rescinded by the incoming Labour UK Government in 1997 and replaced with a new policy. This limited the FC to selling certain restricted types of land that were surplus to requirements and did not contribute to its objectives, as well as areas for development where that was in the public interest. Following devolution, the Scottish Government continued this policy until 2005. During the six year period 1999/2000 to 2004/05, 13,166 ha. were sold by the FC and 3,201 acquired. This net reduction of nearly 10,000 ha. resulted in a net capital income of over £10 million. 
11 The new policy from 2005 arose from discussions about the static nature of the Forest Estate and the growing recognition of the wider range of public interest purposes that woods and forests can serve. Following a public consultation in 2003 on the Future Role of Scotland's National Forests, the Scottish Ministers agreed that " FCS should proceed with a re-positioning approach, selling areas with low potential to deliver public benefits to invest in programmes (including the land / woodland acquisition) which would make a significant contribution to delivery of the Scottish Forestry Strategy". 
12 FCS introduced a re-positioning programme in 2005/06. This was aimed at selling off more mature forests in remote locations which were not deemed to be delivering significant public benefits, and using the income raised to buy generally bare land, closer to the majority of the Scottish population. This new land was then developed as multi-purpose woodland delivering public benefits in line with the aims of the Scottish Forestry Strategy. The programme was to be at no additional public cost and to be cost neutral within FCS, with £10 million as an annual sales target which would subsequently be re-invested in land purchase, tree planting on the land and any associated infrastructure developments.
13 In the first eight years of the programme until the end of 2012/13, 29,943 ha were sold for £79.75 million and 24,604 ha acquired for £59.38 million, with the total expenditure on the new land including planting and related costs being £81.45 million.  Income and expenditure therefore essentially balanced out at the intended target of £10 million a year. The net loss of just over 5,000 ha from the National Forest Estate means that the overall reduction in its size between 1999-2013 has been just over 16,000 ha. or approximately a 2.5 % reduction. 
14 The Review Group's understanding is that FCS's re-positioning programme is now considered largely complete but that it will continue at a reduced annual level of £5m and there will be a review of the programme in 2015/16.
15 The scale of the re-positioning programme to date in terms of land sold and land bought, has been small compared to the overall size of the National Forest Estate. However, there is a substantial core of the National Forest Estate where disposing of sites might not be considered in the public interest. These sites range from what FCS describes as 'national treasures' through to sites which help maintain a critical mass of commercial forests. The commercial aspect is important as timber production from the National Forest Estate plays an important role in sustaining a timber processing sector which benefits forestry generally in Scotland.
16 The Review Group also recognises that the existing history of disposals of FC woodlands over many years, means that FCS is increasingly constrained in the sites that can be sold without giving rise to local community concerns. The Group considers FCS's National Forest Land Scheme, introduced in the same year as FCS's re-positioning programme, to be a positive mechanism for providing an opportunity for local communities to buy or lease National Forest Land. As discussed later in the Report, the Group recognises that other factors have been limiting community acquisitions including issues over the current Scottish Government interpretations of State Aid and the Scottish Public Finance Manual ( Section 18).
17 The Group also appreciates that FCS faces challenges in acquiring land due to high land values and its limited budget for acquisitions. Land prices can be particularly high in acquiring land for woodlands in and around towns. High land values are also a major constraint against FCS acquiring heather moorlands that would be highly suitable for woodlands or forests, but which are currently managed as part of private estates for grouse shooting or deer stalking. As discussed later in the Report, the high value placed on these activities by some people means that the land prices for these areas are beyond what would normally be considered a realistic price to pay for land for tree planting ( Section 23).
18 The Scottish Government's policies aim to expand the importance of woodlands and forests as a land use in Scotland, with the Government's target being to create 100,000 Ha of new woodland by 2022. As the Scottish Forestry Strategy reflects, trees, woodlands and forests can deliver many different economic, social and environmental public benefits that contribute towards achieving a wide range of public policy objectives.
19 The National Forest Estate is an important part of delivering the Scottish Forestry Strategy and the wider public interest agenda which it represents. As part of that role, the Review Group considers that the forthcoming review of FCS's re-positioning programme should not be restricted to considering future acquisitions that are only funded by income from selling parts of the Estate. The size of the National Forest Estate has been reduced by over 85,000 ha over the last 35 years, with around 16,000 ha of that since devolution, and planting on the Estate currently only accounts for around 500 ha or 5% of the Scottish Government's target of 10,000 ha. of new planting a year. The Group considers that the Government should be investing in an acquisition programme by FCS, based on the value this could contribute to the delivery of the wider policy objectives in the public interest.
20 FCS is already involved in delivering these types of multiple objectives. Examples include creating new woodlands in and around towns and providing opportunities for new entrants to agriculture ( FCS established 7 starter farms on National Forest Estate land in 2012/13).  FCS's 9,600 ha project around Loch Katrine since 2005, is an example of creating a major new public forest in an existing water catchment area ( Fig. 12). While that project is on existing public land leased from Scottish Water, the Group considers that there could be more opportunities where public investment by FCS in large scale acquisitions is warranted as part of catchment management and flood control, as well as for the many other public interest benefits new forests could bring.
21 The Group considers that ongoing acquisitions and disposals by FCS should also contribute directly to the Scottish Government's objectives of increasing the number of land owners in rural Scotland. While acquisitions of National Forest Estate land by local communities are part of this, the opportunities for increasing the number of land owners should be a consideration in any disposal. Larger scale acquisitions of private estate land could also create opportunities for parts of the lands purchased and not required by FCS, to be re-sold into smaller scale ownership.
22 The Review Group considers that the National Forest Estate and the capabilities of FCS should be seen as being at the centre of a more integrated public policy framework for the acquisition and disposal of rural land to help deliver multiple public interest objectives. The Group recognised that public finances are restricted and subject to many calls. However, the Group considers that relatively small amounts of funding in government terms could enable a significantly stronger and more integrated land acquisition programme.
23 The Review Group considers that the size and composition of the National Forest Estate should continue to evolve to meet changing circumstances. The Group recommends that the Scottish Government and Forestry Commission Scotland should develop a more integrated and ambitious programme of land acquisitions in rural Scotland, as part of delivering multiple public interest policy objectives.