There are considerable risks with merging the cultures, pensions, estates, IT and branding of three organisations into one. There are dangers that that costs will not be controlled, that cultures will clash rather than meld, that focus and purpose will become blurred and that a new identity will be slow to form whilst the old brands wither. For these reasons restructuring should not be considered lightly.
In the Treasury’s cautionary warning, there needs to be a ‘compelling case’. You have to be convinced that the new organisation will be better and more efficient than the old ones. This could be because you know that the new system will work superbly or because you know that the existing one is broken.
So far the team responsible for making the case for a merger between the Environment Agency, Countryside Council and Forestry Commission in Wales is afraid to publically base their argument on the idea that the current system is broken. Instead they are forced to take a heroically optimistic view of the new body’s future. In doing so, they hope to construct a solution to a problem that they are loath to acknowledge.
That problem is that environmental regulation in Wales does not work well. In general it finds it difficult to balance wider benefit against specific threat. This is partially the result of European legislation but it is also magnified by our institutional structures.
Let me illustrate this with two examples. The Welsh Forestry Commission has spent five years getting an agreement with the Countryside Council for Wales over the appropriate extent of Pine Forest as opposed to open sand dunes on the Anglesey coast. I am not alone in thinking that an agreement could and should have been reached in a speedier and less costly fashion. This dispute had little or nothing to do with the economy. Rather, it was about trying to balance the interests of local people who were largely in favour of the trees, red squirrels (I think you can guess whose side they are on) and European directives on restoring sand dunes.
My second example is current and has great economic importance and you may find it passing strange that it is never mentioned in any documents on the merger proposal. The largest power station built in the UK in 25 years is almost completed in Milford Haven. It is due to open next year but that is now in doubt because the Countryside Council for Wales opposes its cooling system. Our other regulatory body, the Environment Agency gave the developers a green light some time ago. However, the Countryside Council is firmly signalling red.
Now, there may be some who regard a disagreement between the Countryside Council for Wales and the Environment Agency as constructive tension. However, that would not be the view of anyone in the Welsh Government who had responsibility for infrastructure planning or inward investment. By the way, the company involved – RWE – has not only invested £800 million in this project, it is also considering spending billions on new nuclear power at Wylfa.
Whatever your view of these developments it is not difficult to understand why the Welsh Government would prefer a different system of regulation. A merger between the Countryside Council and the Environment Agency would result in a single voice. Its governance would be crucial. How will it balance economic, social and environmental pressures whilst gaining and keeping the confidence of the Welsh Government in its decisions?
Even without a merger there are two strong arguments in favour of breaking up the England and Wales Environment Agency. Financially, Wales appears to get a poor deal. As things stand we make little use of the services for which we pay. Also it makes sense to devolve the control of water resources to Wales, a power that is likely to be of increasing importance in future.
But why include the Wales Forestry Commission in this merger? Control over our estate is entirely devolved and the costs shared across the rest of the UK are good value and in any case are entirely voluntary. We play no part in wider Environmental Regulation so why are we included? What do we bring to the table? I heard a senior civil servant answer this by saying “forestry is collateral damage in a wider cause”. Perhaps it would be more accurate to think of us as a dowry to sweeten the merger for the weaker partner.
What makes us desirable is our land, 6 per cent of Wales. This land asset is already managed on behalf of the Welsh Government and its foresters are answerable to the Minister for the care of that estate. Where is the benefit in transferring the land to a new body? The board of the Forestry Commission in Wales finds the case for its inclusion in the merged body a very optimistic assessment of the benefits and risks.
In particular, there are risks to the estate itself. Unless the IT, Pensions, and VAT costs all prove to be as optimistic as hoped, the new body will quickly find it has a difficult decision to make. It will have to cut back its services or sell some assets – the main asset of course being the forests.
In addition to the possibility that we may need to underwrite revenue costs, there are also significant capital costs in the new body. It would be responsible for flood prevention. What happens if, as is quite likely, a major flooding incident occurs in the next few years? There could then be a call for a flood prevention scheme for which there would be insufficient capital. It could be in a marginal seat in an election year. Imagine the clamour for action. Moreover, the merged body would have the capital assets to get the work done. All it would have to do would be to sell some forests.
Set against these risks are the alleged benefits to environmental stewardship gained by having one environmental regulatory body for Wales. The objective case for this is that measured by results, as opposed to aspirations, our environment has supported a declining biodiversity over recent years. However, a closer analysis of these results shows an exception to this adverse trend. Woodlands are generally improving. Why would anyone therefore conclude that the body responsible for the management of woodlands needs to be abolished?
Space doesn’t allow me to detail other arguments against our inclusion, save to mention that the Commission is an unusual public body in that it trades in the market place. We sell wood and always have. As a result there is, in part, a commercial culture in the Forestry Commission. In my view this is a considerable strength. It helps us gain the trust and respect of the wood industry and of farmers and landowners in general. It is the base on which we develop our increasing interest in renewable energy. It reminds us that the countryside is not only a place to visit it also needs to generate an income for those who live there.
The Forestry Commission isn’t perfect and I am not complacent. There is far more we can do, especially in helping to develop employment opportunities. However, I cannot see how this merger would help. In fact I think it is likely to do the opposite.
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