To ask the Secretary of State for Scotland whether the rate of discount for calculation of compensation has been agreed between the Nature Conservancy Council and the representative body for private forestry as provided for under annex A of the financial guidelines to the Wildlife and Countryside Act 1981; and if he will make a statement.
The former Nature Conservancy Council did not reach agreement with the representative body for private forestry on the appropriate rate of discount to apply as provided for under the guidelines. There are a number of outstanding cases in Scotland involving afforestation proposals in respect of which application for afforestation grant was submitted prior to May 1989 when it was announced that compensation would no longer be offered for the refusal of grant where it was refused solely on nature conservation grounds. In deciding how such compensation in these cases can most appropriately be determined, the fact that such forestry planting would have been eligible for grant from the Forestry Commission and, prior to the 1988 Budget, to tax allowances, means that in general it should be expected to earn a commercial rate of return comparable to other forms of investment. On the advice of the Forestry Commission, I have concluded that it would have been reasonable for those undertaking such investments to have expected a real return of 6 per cent. on the assumption of no real increase in timber prices and I believe that this figure reflects a realistic view of the rate of return that investors in forestry might have been seeking. I am accordingly advising NCCS—and, as from 1 April 1992, Scottish Natural Heritage—that this figure should be used in negotiating management agreements in any of the outstanding cases where application for forestry grant was submitted before 10 May 1989.In general, I would find it hard to justify compensation under paragraph 3 of annex A of the guidelines based on a calculation of net revenue forgone which exceeded an estimate of the unrestricted value of the land and its crop, unless some exceptional circumstances so warranted.The review of the guidelines which will be undertaken later this year will take account of this change.