Scrap subsidies to Scotland’s conifer forests, urges report

<span>Wood is stacked in a mixed conifer woodland in the Scottish Borders after tree-felling for fuel.</span><span>Photograph: David Cheskin/PA</span>
Wood is stacked in a mixed conifer woodland in the Scottish Borders after tree-felling for fuel.Photograph: David Cheskin/PA

A report has called on ministers to scrap the huge subsidies and tax breaks given to conifer forests because they do too little to combat the climate crisis.

The report from the Royal Society of Edinburgh said the tens of millions of pounds in subsidies given to the timber industry should instead be spent on longer-living native forests, which have greater and clearer climate and biodiversity benefits.

It said the Scottish and UK governments are wrong to argue that public subsidies are needed to help plant more, larger conifer forests. These plantations are largely monocultures using a single species that have a relatively short lifespan.

Instead, public subsidies should be diverted to planting millions of native broadleaf trees, including in urban areas, which capture and keep more CO2, support more plant and animal species, store more carbon in the soil, and have a far longer lifespan.

Related: Dip in UK woodland’s ability to capture CO2 as felled trees not replaced

The RSE report found that:

  • In Scotland, ministers have subsidised forestry by more than £390m over the last decade, with roughly 80% of that spent on commercial conifer plantations, as well as extra subsidies for haulage.

  • Timber companies and landowners pay no corporation tax on their income from forests; profits from timber sales are tax-free; there is no capital gains tax on the value of the trees, and 100% inheritance tax relief on the forestry property.

  • Forest owners were also able to sell carbon credits, adding to the attractiveness of forestry as an investment.

  • These grants, tax breaks and carbon credits had helped to substantially drive up land prices in Scotland, up by 73% in a single year, greatly distorting the land market and pricing people out.

  • Government agencies are not properly enforcing policies which require environmental impact assessments on new forest projects; their approach is “inadequate” and “passive”.

The RSE, Scotland’s national academy, said significant changes in government strategy were urgently needed at a time when governments are cutting public spending, including on nature recovery.

“Our scarce public funds must be used to maximise benefits for both the public and our environment,” said Prof Pat Monaghan, regius professor of zoology at the University of Glasgow and one of the report’s authors.

She said: “We now face the twin crises of climate change and biodiversity loss. We must ensure that our investments in tree planting are done in ways that reduce our carbon emissions without reducing our precious and fragile biodiversity.”

The RSE said it was very surprised the Treasury had no data on how much tax the exchequer had foregone due to these tax breaks, even though these policies had been criticised repeatedly in recent decades.

While tax breaks for forestry are the same as those for farming, this support for forestry appeared to be based on the notion that having a domestic timber supply was of strategic importance at time of war – a policy that had been scrapped in the 1950s.

The Department for Environment, Farming and Rural Affairs, which oversees policy and funding for England, set aside £222m between 2020 and 2024 for woodland on private land. But 77% of English woodland is native broadleaf, compared with 29% in Scotland.

Prof Ian Wall, who chaired the RSE’s inquiry, said: “The role of trees – the right trees in the right place – in improving biodiversity, carbon-capture, and wellbeing in both urban and rural environments cannot be overstated.”

Scottish Forestry, the government agency, and Confor, the timber industry body, said there was clear evidence that conifers stored up to four times more carbon at a faster pace than slower-growing hardwood trees. The timber industry in Scotland supported 20,000 jobs and generated £800m for the economy.

Scottish Forestry said it would study the report but added: “Public forestry grants are a vital means to stimulating woodland creation and we will continue to support funding for both conifer and broadleaf planting.”

Confor said modern regulations already required conifer forests to be multipurpose, with a greater mix of species and more emphasis on eco-tourism. The World Bank had forecast the move to use timber instead of carbon-intensive concrete and steel in construction would require four times as much timber by 2050.

“Government grants provide a contribution to the cost of establishing a new forest and compensate for the loss of income from the previous land use. Once established no other grants are provided,” Confor added.

“We simply don’t recognise the RSE’s assertions that public policy is driving the planting of as many trees as possible rather than ‘the right tree in the right place’. This is not supported by an analysis of what is being planted or the public policies that sit behind tree planting.”

A Treasury spokesperson confirmed forestry enjoyed tax relief and exemptions, but said: “We are committed to keeping the tax system simple by not introducing different tax-treatments for all the different types of tree in the UK.”