Leaving the EU: Timber Industry

David Rutley Excerpts

Wednesday 31st October 2018 Westminster Hall

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (David Rutley)]

As always, it is an honour to participate in this debate under your chairmanship, Mr Davies, and I congratulate the hon. Member for East Lothian (Martin Whitfield) on securing it. Continuing the wood gags, I was concerned at the start of the debate that I would be stumped by his line of questioning, but he has been very clear, for which I am grateful.

Forestry and timber processing is a growth sector, as the hon. Gentleman said, with 82,000 jobs in the UK, and it contributes £2 billion each year to the economy. In the Budget this week, it was good to see the Chancellor announce £60 million to plant trees, including £10 million to do so in urban areas and £50 million to encourage large-scale afforestation through the woodland carbon guarantee. It is important to discuss the impact of the UK’s departure from the EU on this sector and I welcome the opportunity to do so in this debate.

Like all Departments, DEFRA is working incredibly hard to understand the implications of exiting from the EU. We have been taking note of the potential risks, coming up with mitigating actions and looking at what the opportunities will be, in this and other sectors, as well as ensuring that contingency planning is in place, regardless of what scenario we might move into.

Strengthening the timber trade, and enhancing the sustainable management of the woodlands and forests that support the trade, will continue to be a real priority for DEFRA. In the 25-year environment plan, we committed to increase forest cover in England from 10% of land area now to 12% by 2060. That is an area equivalent to the size of Dorset. I know that that is not north of the border, but the hon. Gentleman will be aware that it is big area. Meeting that target will require increases in both private and publicly funded planting, including from the timber industry. That will be music to the ears of my hon. Friend the Member for Brecon and Radnorshire (Chris Davies). Clear opportunities for the sector lie ahead as well.

This is a growth sector, and the value of our forests is on the increase. Market conditions are good and British wood is competitive with imports, leading to increased levels of domestic production, which we need to start thinking about and preparing for. UK mills produce around 3.5 million cubic metres of sawn wood each year. The increase in house building is increasing demand for wood, and 27% of housing starts in 2017 are expected to use timber frames. That is a good opportunity, and we want to be ready to support it through increased domestic production.

At a UK level, timber availability is forecast to increase in the short to medium term and then decline to current levels after 2030. We are gearing up and moving forward. We recognise that increasing domestic production will also boost the rural economy, which many of us represent.

[Martin Whitfield]

I am very grateful that the shadow Minister, my hon. Friend the Member for Stroud (Dr Drew), is here. Does the Minister feel that more credit should have been given to the timber industry in the Agriculture Bill, which is currently passing through the House?

[David Rutley]

That is a good question, and I will come on to it—we will not duck it.

As the hon. Member for East Lothian said, we are the second-largest importer of timber behind China— 82% of our wood production uses imported wood. Increased import costs caused by currency fluctuation or regulatory barriers could therefore pose a challenge to the timber trade, but there is capacity in the UK to increase our use of our own forestry resource. There is a real opportunity for import substitution, which over time will help to mitigate any rise in import costs or increase in tariff barriers and will help bring more of the UK’s woodlands under active, sustainable management. That is something we all want to see.

[Chris Davies]

Will the Minister tell us what schemes will be put in place to ensure that native woodlands are managed properly and that that timber goes into the firewood sector, while commercial soft wood is targeted at the building sector?

[David Rutley]

We have a number of schemes in place, and the Agriculture Bill will introduce environmental land management systems, which will help us to promote the production of different wood types. I can meet my hon. Friend after the debate to discuss that question in more detail.

There are clear opportunities ahead, which are good commercially and make sense, given our wider ambition to increase woodland coverage and meet our carbon targets. The hon. Member for East Lothian mentioned Scotframe. The issues he raised are matters for the Scottish Government, but I am keen to discuss new timber-based construction with business, and the 25-year environment plan commitment to use more domestic timber in construction points to where we want to go. Using our timber in construction will help us create what some people call a conveyor belt of carbon sequestration here at home, helping us to meet not only the housing targets that the hon. Gentleman outlined but our long-term objectives under the Paris agreement.

Our new environmental land management system will focus public money on the provision of public goods, and put forestry and agriculture on an equal footing. Trees and woodlands provide multiple capital benefits, including carbon sequestration, soil quality preservation and reduced water run-off. There is clearly more work to be done, but that exiting development will help to address some of the hon. Gentleman’s concerns.

The hon. Gentleman also raised concerns about VAT. The Government are committed to keep the VAT regime as similar as possible to what we have now. If there is no deal, we will introduce postponed accounting for goods imported into the UK. That was stated in the technical notice entitled “VAT for business if there’s no Brexit deal”, and a written answer from 8 October gives more detail about that. If the hon. Gentleman has more concerns, I will gladly discuss them, but the Government have set out clearly that that is our aim.

The hon. Gentleman also made some important points about EU readiness. We are preparing for any eventuality, but our primary aim is to secure a deal. In our planning for the unlikely scenario of a no deal, we are working to ensure that timber importers face as little inconvenience and as few additional costs as possible in the event that they need to conduct extra due diligence at the borders. Current due diligence checks on imports from outside the EU will remain the same, so in a no-deal scenario a large number of importers will not notice any increased costs. Although we recognise there will be some additional costs for businesses that import from EU countries—I will talk more about that in a minute—we will give them support and advice to ensure the costs are minimised as far as possible. A number of technical notices have been published in the public domain to provide such information, reduce the grey areas that businesses are working with, and give them greater clarity.

[Martin Whitfield]

Does the Minister accept that the paperwork relating to imports and exports from within the EU far exceeds the paperwork relating to imports and exports from outwith it, should that become necessary following our departure?

[David Rutley]

As I was trying to explain, our aim is to ensure any added burden is kept to a minimum. The technical notices help to set that out, but there is clearly more work to do.

We want to ensure businesses can continue to trade with the EU in a no-deal scenario, which is why the Office for Product Safety and Standards will support and advise UK exporters about what documentation they might need to give EU customers so they can fulfil their due diligence requirements. We are working hard to ensure that the supply of timber for building is not interrupted—I know that is a priority for the hon. Gentleman—and we will work with those who face any additional costs or burdens to ensure these are minimised. We are also making good progress in driving up planting rates across the country so we have a resilient timber supply for the future. We are on track to meet our commitment to plant 11 million trees by 2022 and an additional 1 million trees in our towns and cities.

As part of our planning, we are working to ensure that biosecurity standards continue to be met in ways that support trade and the smooth flow of goods. Our plant health biosecurity arrangements protect the environment from pests and diseases, and we will continue to protect the nation’s plant health biosecurity during and after our exit from the EU. That is a clear priority.

We are considering our import controls for plants and their products, including timber and forestry material, for a range of scenarios. The Government are working to ensure that systems and processes are in place so that trade continues to flow after exit.

We have set out our technical notices, including one entitled “Importing and exporting plants and plant products if there’s no Brexit deal”. Timber currently managed under the EU plant passport regime will need to enter the UK with a phytosanitary certificate in a no-deal scenario. Checks will take place remotely after the border to minimise impacts on businesses and ensure the continued smooth flow of goods.

The hon. Gentleman talked about the number and weight of regulations. Our aim is to ensure that, although we will have to adjust to any eventuality, the burden is kept to a minimum.

[Martin Whitfield]

May I extend to the shadow Minister and the Minister an invitation to meet the APPG and its members so we can take these discussions further?

[David Rutley]

I welcome that opportunity. It would be good to meet the APPG and Confor, which provides its secretariat services, to discuss these issues in more detail. I am a new Minister in this area, and it would be a pleasure to do that.

[Chris Davies]

As chairman of the APPG on forestry, may I ask whether we could have a joint meeting with the Minister?

[David Rutley]

My goodness—that sounds like an incredibly good idea. Joined-up thinking! I like the sound of that. I will gladly arrange that meeting.

The hon. Member for East Lothian talked about illegally harvested timber. We will ensure that there is a successor arrangement in a no-deal scenario, and are creating a UK forest law enforcement, governance and trade system.

I think all hon. Members recognise that UK forestry and timber processing is a growth sector, and that the value of our forests is on the increase—not just commercially, but in terms of natural capital. Market conditions are good, which gives us the opportunity to increase British wood production. Although the UK’s exit from the EU may pose challenges for the forestry and timber-processing industries, we are working flat out to ensure that those issues are mitigated. We want to create more opportunities for the production of domestic timber. That will fit neatly with the commercial opportunities and what we are trying to do with our 25-year environment plan and our clean growth strategy. I know that is important to the hon. Gentleman and to others who participated in the debate. I thank him for securing this important debate, and I assure him that achieving those objectives is very important to me in my new ministerial role.

Question put and agreed to.