Annual Report and Accounts 2020-21

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Contents The Commission is the Performance report 2 government department responsible Overview 2 for protecting, improving and Foreword by Sir William Worsley, expanding ’s woodlands and increasing their value for people, Chair 2 nature and the economy. It is made up Purpose and activities of the of three main parts: Forest Services organisation 3 who are the government’s expert Issues and risks 10 forestry advisors; Forest Research who Performance summary 12 deliver internationally-renowned Long-term expenditure trends 12 forestry and tree-related research to Performance analysis 13 England, and ; and Key performance indicators 2020- Forestry England who manage the nation’s forests. There is also a small 21 13 Commissioners’ Office. Sustainability report 21 Accountability report 25 This Annual Report and Accounts Corporate governance report 25 includes Forest Services and the Directors’ report 25 Commissioners’ Office (as Core Statement of Accounting Officer’s Forestry Commission) and Forest responsibilities 26 Research. Governance statement 27 Remuneration and staff report – Forestry England, as a public corporation, produces a separate subject to audit 36 Annual Report and Accounts. Parliamentary Accountability and Audit Report 50 Honours Losses and special payments – subject to audit 51 The following Forestry Commission Fees and charges – subject to audit nominees were successful in the New 51 Year Honours: Remote contingent liabilities – ▪ Dr Anna Brown, MBE. Head of Plant subject to audit 51 Health, Forestry and Contingency. The certificate and report of the For services to forest pathology. Comptroller and Auditor General to ▪ Mark Warn, BEM. Wildlife Ranger. the House of Commons 52 For services to forestry. Financial statements 57 Consolidated statement of comprehensive net expenditure 57 Consolidated statement of financial position 58 Consolidated statement of cash flows 59 Consolidated statement of changes in taxpayers’ equity 60 Notes to the accounts 61

Annual Report and Accounts 2020-21

Performance report Forestry Commission provided support to the sector through this significant shift. This will help protect the health Overview of our forests while allowing UK to trade efficiently and effectively. The performance report overview provides: The Forestry Commission has worked tremendously hard on the England ▪ Foreword by Sir William Worsley, Trees Action Plan. While we Chair acknowledge that the ▪ the purpose and activities of the targets set by the government will be a Forestry Commission challenge, I have seen and experienced ▪ the main issues and risks that could the excitement about the new grants affect delivery of objectives and support that will allow us to deliver ▪ a performance summary this work. This will provide an uplifting strategy for the sector and Foreword by Sir William communities. We will continue to Worsley, Chair provide advice and guidance on making sure that the right tree is This has been a challenging year for planted in the right place and for the everyone. We have all been affected right reason, from the humble conifer and tested in different ways. I am to the beautiful broadleaf. immensely proud of how staff at the Forestry Commission continued to put But our focus has not only been on their heart and soul into their work to work to support increasing rates of keep our forests open, and our planting trees. The Forestry business moving, despite all the Commission have worked hard over challenges. We have a crucial role to the past year to make sure our forests play in the nation’s recovery, as the are resilient to todays and future government focuses its attention on challenges. We all need to think woodland creation and the general actively about the future of our public connects with nature in a way I landscapes, and not just assume they have not seen in my lifetime. We will be the same as in the past. learned a lot so quickly, not least how Increasing visitor numbers, climate to work effectively remotely and not at change, introduced pests and diseases the expense of carrying on our all pose a risk to our trees. Well regulatory role. We have delivered our designed and managed woods can duties within deadlines while following improve the environment and make shifting scientific advice and the countryside look better. Simply government guidelines on working bringing neglected woodlands back into safely. I am very much looking forward management is a good first step. to the country opening up again and Observing and responding to stressed excited for the increasing number of trees is important as healthy trees visitors that value our green spaces. mean longer lasting, resilient, and productive forests. This allows The UK left the European Union on continuity of enjoyment of the 31 January 2020, with the transition woodlands for generations, including period ending on 1 January 2021. New for timber production to provide the arrangements have been put in place wood products that we all need. for trade in regulated timber, wood products, bark and forest reproductive It is important that our woodlands are material. Despite the pandemic, the commercially viable, bringing green

2 Performance report Annual Report and Accounts 2020-21 jobs and expanding our green Department and has a Royal Charter. economy. The UK is the biggest net Forest Research and Forestry England importer of timber in the world after are agencies of the Forestry China. Actively-managed and Commission. Forest Research and the productive woodland makes a huge Forest Services’ Plant Health Forestry contribution to the economy of the UK team operate across by and to our collective effort to combat agreement with the UK and devolved climate change. We must also administrations. Forestry England and collectively keep up the focus on the rest of Forest Services operate in woodland resilience to meet the England only. threats from climate change, pests and diseases. Delivery of our objectives in 2020-21 While the year has certainly brought with it many challenges it has also This Annual Report summarises the shown us that great change is possible. performance of the Forestry I am excited about the opportunities Commission. Forest Research accounts this presents us. The 26th United are consolidated within this report but Nations Climate Change Conference are also published separately. As a meeting in Glasgow this year will public corporation, Forestry England’s provide room for us to share our accounts are not consolidated. All expertise and commitment on the annual report and accounts are world stage. available on www.gov.uk.

Purpose and activities of the The Board of Forestry Commissioners organisation provides a collective overview to the Forestry Commission and its agencies. Who we are Each agency, as well as Forest Services, has established its own Board The Forestry Commission are the comprised of Commissioners and government’s forestry experts for executive staff of the respective England, responsible for protecting, organisations. These individual Boards improving and expanding England’s make decisions specific to each woodlands and increasing their value organisation. These are underpinned for people, nature and the economy. by the Forestry Commission Executive We champion forests and forestry in Board which is a Forestry Commission England and beyond. group of executive members championing forestry that meets to We achieve this by enabling provide direction for collective landowners to protect, improve and decisions and sharing of knowledge expand their woodlands and also and policy. through the management of 250,000 hectares of the nation’s forests by our Our priorities agency, Forestry England. The decisions we make are underpinned by The Forestry Commission works to internationally recognised standards of increase the value of woodlands to sustainability based on scientific society and the environment. evidence and research led by our Everything we do is focused on agency, Forest Research. achieving the following objectives: protecting our trees, improving our The Forestry Commission is a woodland assets, and expanding our non-ministerial Government woodland resources.

Performance report 3 Annual Report and Accounts 2020-21

Protecting the established population in the London and Surrey area, using Protecting our trees, woods and evidence to create a risk-based forests from increasing threats approach. We worked with woodland such as pests, diseases and climate owners to manage their woods change sustainably in light of this pest, and to maintain preparedness for any future Due to climate change and increased outbreaks. globalisation of trade, pests and diseases pose a serious risk to The coronavirus outbreak constrained England’s forests and woodlands. our focus on sweet chestnut blight, but Together with Defra, the Forestry surveillance has continued across a Commission has worked hard to reduce range of sites to determine the extent the number of tree health incidents by of spread of the disease. We are now mitigating risks and containing developing further surveillance plans outbreaks. In 2020-21 the focus of our for the coming year which will help work has been on helping our guide the actions that will need to be customers manage their woodland taken to eradicate or contain it. when affected by a range of pests and diseases, such as ash dieback, There is cautious optimism about our Ramorum disease (Phytophthora work on trapping and eradication of the ramorum), sweet chestnut blight and Eight-toothed Spruce Bark Beetle (Ips oak processionary moth (OPM), as well Typographus) in Southeast England. as monitoring and where possible We now have three flight periods taking action to limit the evolving risks (Spring 2019, Summer 2019 and for the other forestry related pests and Spring 2020) of data which shows that diseases on the Plant Health Risk Ips Typographus is regularly being Register. caught in spruce forests in the Southeast of England. Although We are seeing the effects of the spread confident of the position on the main of ash dieback. This will have a big outbreak site, we remain extremely impact on canopy cover, habitat and concerned about the status of spruce in therefore biodiversity across England. Kent and East Sussex. Given the We have developed our advice, evidence we have, we will firm up working closely with Defra, and our sanitation felling plans for the capacity to support the forestry sector Southeast of England that will be as well as landowners with their long cheaper and more effective in the long term plans for managing their run, than dealing with another woodlands. established population.

A coordinated response to identifying Aerial surveys to assess and identify and eradicating five interceptions of Phytophthora ramorum disease OPM within the UK protected zone were continued last season, despite provided, and we worked with Defra to COVID-19 restrictions. 20 flights introduce strengthened national covering over 800,000 hectares of legislation to protect oak trees against woodland were flown resulting in the OPM through movement and import identification of 457 target sites, and controls. The moth caterpillars are a the issue of 210 Statutory Plant Health pest to oak trees and a hazard to both Notices (SPHNs). This in turn human and animal health. We have translated to 23 new 10-kilometre also continued work to understand and squares recorded as infected contain the spread of this pest from (2019-20: nil).

4 Performance report Annual Report and Accounts 2020-21

To reduce the risk to our environment Applications for five-year felling and trees we inspected 3,133 licences have increased by 21% since consignments of controlled timber, of 2019-20 and we are now receiving which five were found to be over 87% of these applications via this non-compliant. These were at online portal. A felling licence Grangemouth and Immingham ports, demonstrates that trees are authorised associated with material which came for felling and that timber has been from China, Kuwait, Russia and legally produced. Turkey. We found a further 87 cases of solid wood packaging We investigate and prosecute alleged materials/dunnage which were incidents of unlicensed tree felling and non-compliant. These consignments take appropriate enforcement action were re-exported or destroyed in a where we find evidence of alleged biosecure way. illegal felling, including seeking prosecution. We are responding to a We have maintained the same level of continued increase in the number of inspections for goods imported from reported incidents of unlicensed tree third countries as well as carrying out felling and have improved our capacity checks on high priority wood, wood to assess these. This allows more products and bark imported from the consistent investigations, better EU from January 2020 as part of the evidenced cases and more phased new import regime. We prosecutions. We continue to prepared and fully engaged with the modernise this area of work and are sector and international partners in using new technology, such as earth readiness for the end of the transition observation, and sharing good practice period on 31 December 2020. We across the Defra group to ensure that continue to implement a prioritised our enforcement activity remains plant passport approach and have effective and proportionate. carried out compliance audits for the first time. We found no evidence of In the last year we received 998 new major non-compliance and are working reports of alleged illegal felling with Professional Operators to fully (2019-20: 586). During the year, from comply with the regulations, including the existing and new reports: the change from an EU to UK format plant passport. ▪ 38 restocking notices to restock land were served by the Forestry At the Annual Meeting of the Commission Organisation for Economic ▪ 53 enforcement notices to restock Co-operation and Development (OECD) land were served by the Forestry Forest Seed and Plant Scheme in Commission September, Amanda Campbell was ▪ 6 formal warnings were issued appointed to the role of Vice-Chair of ▪ 110 active cases were still pending the OECD Forest Scheme. This gives a Forestry Commission decision the UK the opportunity to fully engage with the remainder closed or with the OECD and signals that we are awaiting action committed to maintaining the high standards of Forest Reproductive In 41 instances where we believed an Material regulation in the future. incident was particularly serious, we referred the case to Defra Investigation Our new online portal for felling licence Services (DIS) to consider for applications, Felling Licence Online, is prosecution. now embedded in the sector.

Performance report 5 Annual Report and Accounts 2020-21

▪ 2 cases investigated by DIS England. The percentage of woodland resulted in a summary conviction that is actively managed has remained for illegal felling at 59%, totalling 772,000 hectares of ▪ 5 cases resulted in a formal caution woodland. ▪ 32 cases are still being investigated by DIS The increase in the number of ▪ 2 cases were closed without further applications for felling licences and action. woodland management planning grants reflects strong demand for timber and Improving woodfuel over the last year and an increase in the number of owners Improving our woodland assets, actively managing diseased stands of making them more resilient to ash. Through our partnership work we threats and increasing their have continued to join up supply contribution to economic growth, chains and highlight strong timber people’s lives and nature prices and favourable trading conditions to woodland owners We published a position statement and considering entering the market. guidance on supporting the resilience of woodlands in England to climate Countryside Stewardship, administered change. We are continuing to support by the Rural Payments Agency, is our the Forestry Climate Change Working main grant programme for woodland Group’s Action Plan through our Future improvement. The Higher Tier Grant Forests Action Plan. Activities that are provides incentives to landowners and underway include a review of policies, managers to actively manage and grants and regulations to assess improve the condition of their whether and how they might be woodlands in line with agreed improved to support enhancing woodland management plans. The woodland’s resilience to climate Forestry Commission provides expert change, and Forest Research is advice on its delivery for woodlands developing a Climate Change alongside our partner . Knowledge Hub. This year the budget for the Higher Tier woodland programme was Active woodland management is exceeded, and Defra provided essential for conserving and enhancing additional funds to cover the increase biodiversity, increasing the resilience of in commitments. Whilst the level of the woodland by improving its applications remained similar as in structure and species diversity, and previous years, the average size of optimising the value and productivity applications increased by 40%, of the timber crop. We support demonstrating considerable interest in long-term woodland management woodland improvement. Applications planning, which can include a ten year through the Countryside Stewardship felling licence to permit tree felling to Woodland Tree Health grant continue improve the condition and resilience of to be popular with most of the 202 woodlands in the longer term. In applications received focusing on ash 2020-21 we received 486 Woodland dieback. The Forestry Commission has Management Plans covering a total of instigated and actively participated in 40,021 hectares. the broader programme of Countryside Stewardship simplification, with a In the same period, we issued 2,195 number of changes being made in the felling licences, of varying lengths, to application, processing and claims enable management of woodlands in

6 Performance report Annual Report and Accounts 2020-21 stages of Countryside Stewardship that raising by the UKSA to support will be enacted in 2021. research into a fertility control for grey squirrels continues and the project is We continue to work with Natural now in its third year. While the England supporting their development pandemic has made things more of Biodiversity Net Gain Metric 3.0, challenging, it has not prevented an which will measure biodiversity gains important part of the fieldwork being and losses in relation to development, carried out over the summer. A total of to ensure that the metric appropriately £810,000 has been raised so far, represents how trees and woodlands however a further £190,000 needs to contribute to biodiversity. be secured for this work which will ultimately benefit red squirrel In April 2020 Forest Services recruited populations, tree health and wider a small team of Deer Officers to deliver biodiversity. on the ground deer management advice and best practice to We encouraged innovation in the landowners, managers, agents and timber markets through the Forestry practitioners, to raise awareness and Innovation Fund. As a result of work help facilitate more effective undertaken by Vastern Timber of management. The Deer Officers Wootton Bassett there is now potential provide advice and support to for a significant increase in the use, Woodland Officers on deer through thermal modification, of UK management issues and drive specific grown ash, sycamore and poplar in actions within Area Teams linked to exterior construction where enhanced national strategies. Deer Officers work dimensional stability and improved cooperatively with woodland creation, durability are required. Through the resilience and tree health staff, Forestry Innovation Fund they have developing measures to mitigate deer been able to undertake extensive impacts to woodland creation and testing and accreditation against strict management. EU standards to enable this development. A Deer Advisor was also recruited to lead and coordinate the Forestry Expanding Commission’s deer management activity, ensuring that delivery on the Expanding our woodland resources ground has clear strategic direction, to increase their economic, social and that operational activity and and environmental value strategic/policy development reflect each other. The Deer Advisor will work Government funding supported the to embed deer impact mitigation within new planting of 2,178 hectares of land critical existing and future policy, with trees in England in 2020-21 regulations and incentives to ensure (2,330 hectares in 2019-20), despite deer management is effectively the restrictions placed due to outbreak represented. of COVID-19. We are now working with Defra to deliver England’s contribution We continued to support the UK to the new government’s commitment Squirrel Accord (UKSA) and are to increase planting rates across the working with the UKSA Director to UK to 30,000 hectares per year by explore options to put the Accord on a 2025, supported by the Nature for self-funding basis. Work on the draft Climate Fund announced in the March red squirrel action plan being prepared 2020 budget. by the UKSA and Defra continues. Fund

Performance report 7 Annual Report and Accounts 2020-21

Forestry Commission is leading on four launched May 2021. The England projects to support these ambitions; Woodland Creation Offer (EWCO) these are: will support landowners and land managers to create new woodland ▪ planting on private land – which will through the Nature for Climate deliver a new suite of grants, Fund. It will support the creation of regulations and guidance to support over 10,000 hectares of new tree planting in England launched woodland by end 24/25. May 2021 ▪ launched an assessment of the ▪ planting on public land, which will existing forestry workforce to inform expand the nation’s forests through the sector development work long term leasehold agreements, ▪ commissioned scoping work to and will work with other public develop a new notification system landowners and managers to assess giving nursery businesses visibility and realise the potential for tree of upcoming tree planting schemes planting on their land ▪ commenced improvements works for ▪ sector capacity, which will work Forestry England nurseries jointly with the forestry sector to develop an upscaled, upskilled and We provide many opportunities and more resilient sector support for landowners to create UK ▪ promotion and engagement, which Forestry Standard (UKFS) compliant will support increased awareness of woodland. and interest in woodland creation and long-term management In November 2019, the government through bespoke engagement with launched the Woodland Carbon landowners and managers, to build Guarantee, an innovative £50 million the pipeline of proposals that will scheme to help accelerate woodland support tree planting ambitions. planting rates and develop the domestic market for woodland carbon Forestry Commission has secured for the permanent removal of carbon funding for the Nature for Climate dioxide from the atmosphere. The Fund. To support this work in 2020-21 guarantee provides participants with a we have: new long-term income stream, underpinned by government, which is ▪ recruited or agreed to the accessed through an online auction recruitment of 100 new roles process. We held three auctions in primarily in Forest Services to 2020 (February, June and October) support existing and future and had 154 applications, of which 76 woodland creation work were successful, and will help stimulate ▪ launched an updated version of the the creation of 2,314 hectares of new woodland creation planning grant woodland specifically to help mitigate ▪ developed and launch a leasehold climate change. Woodland Partnership offer (led by Forestry England) The Woodland Carbon Code ▪ developed and launched a Local encourages a consistent approach to Authority Treescape Fund and woodland carbon projects providing extension of the Urban Tree monitoring, reporting and verification Challenge Fund processes, including for projects that ▪ developed and finalised a new are successful in being offered England woodland creation offer, Woodland Carbon Guarantee contracts. and a woodland management We have worked with Scottish innovation fund offer, which Forestry, which manages the code on

8 Performance report Annual Report and Accounts 2020-21 behalf of England, Scotland and Wales, jointly with the Rural Payments Agency to update the woodland carbon code by providing advice and guidance to and further promote its uptake, landowners who want to create particularly for new initiatives that woodland. In 2020-21 we received 161 have developed following the applications that will, if and when declaration of the Climate Emergency approved, result in 685 hectares of by the Westminster Government. woodland creation and in excess of 1.54 million trees being planted. We continue to refine and improve the environmental protection measures The Woodland Creation Planning Grant and processes in place for woodland (WCPG) provides support for the creation, assisting the planning and development of a proposal to create implementation of in lower productive, multi-purpose woodland. risk areas of England, as well as Having an approved woodland creation flagging the low sensitivity areas of the plan can support applications to other country for woodland creation. Part of sources of government funding. In this work has been to update the Low 2020-21 we received 130 applications, Risk Map for woodland creation to which will result in a total of 5,703 better represent the distribution of best hectares of new woodland if all plans and most versatile agricultural land result in successful woodland creation and introduce a buffer for all Sites of schemes. The WCPG offer was updated Special Scientific Interest. We continue in November 2020 to support a wider to promote better understanding of soil range of woodland creation proposals. conditions and the Ecological Site Classification online tool to support We have administered the HS2 appropriate species choice for both Woodland Fund that supports creating current and future climates. new native broadleaf woodland and restoring existing plantations on We helped local authorities to assess sites (PAWS) within how woodland creation can form part 25 miles of the HS2 route Phase One. of their response to the climate In 2020-21 we received 12 emergency, such as the Forest of applications. Planting has started or Cornwall project and the Essex Forest been completed in 30 out of 34 Initiative. agreements to date. Overall, £5 million is available to be allocated to projects We are working with the Woodland until the end of 2023, £1.474 million of Trust and the Community Forest Trust which has been committed to to plant more than 50 million trees agreements that correspond to between Liverpool and Hull as part of 124 hectares of woodland creation and the Northern Forest initiative. 80 hectares of PAWS restoration. A further £602,401 has been The Woodland Carbon Fund supports provisionally allocated to schemes in the planting of new productive progress, which should result in a woodland for carbon sequestration. further 90 hectares of woodland The scheme offers one off capital creation and 14 hectares of PAWS funding for the creation of new restoration. woodland. Last year we received nine applications, averaging at Applications for the Urban Tree 34.1 hectares. Challenge Fund in its first year exceeded our expectations and budget, We deliver the Countryside with 20,094 trees planted in 2019-20 Stewardship Woodland Creation Grant and 25,478 trees planted in 2020-21.

Performance report 9 Annual Report and Accounts 2020-21

A further 5,875 trees are committed to has been acquired by Forestry England be planted in 2021-22 from the first at Monkridge, West Woodburn and is round of applications. We received currently in the planning stage, with further applications in the second year the planting of 149,000 trees of 2020-21. As a result, 92,663 were anticipated to start in the autumn of planted in 2020-21 and a further 2021. 72,892 trees are committed to be planted in 2021-22. The strong demand for new woodland and increase in woodland creation Following the consultation on the proposals has bought into sharp focus England Tree Strategy, we have the need to balance ambitions for worked with Defra to develop and woodland expansion with the need to publish the strategy: the England Trees protect and recover important existing Action Plan, in 2021. Through the habitats and species. We are working £500m Nature for Climate Fund, we with Natural England to develop a aim to treble woodland creation rates, decision making framework to help reflecting England’s contribution to ensure the Government’s Trees Action meeting the UK’s overall target of Plan and Peat Action Plan planting 30,000 hectares per year by commitments are effectively delivered the end of this parliament, as well as on the ground. doing more than ever before to protect and improve our existing trees and The Forestry Commission are also woodlands, and in doing so, contribute working with the British Trust for to the green economy and improve our Ornithology, Natural England and national wellbeing. We will be working others to produce tools which will closely with Defra and other partners identify important areas for the to implement this plan over the coming recovery of breeding waders based on months and years. scientific modelling of Bird Atlas and environmental data sets. We worked with Defra, the Environment Agency and Natural Issues and risks England to develop joint priorities by local area. This has included The important issues and risks that opportunities to deliver the could affect the Forestry Commission in government’s 25 Year Environment delivering our objectives are: Plan’s ambitions for biodiversity, flood prevention, woodland and forestry. Delivering government policy

Northumberland County Council has The outcome of the 2020-21 Spending been working with partners to develop Review and Defra Business Planning the Great Northumberland Forest as exercise secured significant additional part of the Government’s commitments resources for 2021-22, mostly to to support a carbon net zero ambition support the Forestry Commission’s by 2050. The first phase involves the contribution to delivering projects creation of three new forests covering funded by the Nature for Climate Fund, 500 hectares and up to one million but also to support increased Plant trees. The first has been Health activity. Successful delivery of created by Forestry England at Rushy policy remains dependent on sustained Knowe planting 118,000 trees over levels of funding through future 145 hectares, with support from the spending reviews to support the Forestry Commission’s Woodland delivery of increasing ambitions, Carbon Fund. A second 80 hectare site

10 Performance report Annual Report and Accounts 2020-21 including the England Trees Action Plan Forest Services adapted its operations published late spring 2021. to ensure continued delivery, such as through more desk based decisions, Risks to delivery of government and adapted helicopters for aerial ambitions remain. While towards the surveillance for plant health. However, end of 2020, government supported there have been some negative planting was on track to plant impacts such as an increased backlog 11 million trees by 2022, the more in felling licences. recent government ambition to plant 75,000 acres (30,000 hectares) of new Coronavirus is also expected to have a woodland a year by 2025, to help meet negative impact on woodland creation the commitment to net zero emissions rates. We continue to work with Defra by 2050, is extremely challenging. In and the forestry sector to assess the recent months there has been a slower impacts and what might be done to uptake of woodland creation grants, mitigate them. with land managers citing uncertainty around the future environmental land During 2020-21, Government Internal management offer and transition as Audit Agency (GIAA) considered how reasons to delay. risks arising from the impact of COVID-19 have been managed to COVID-19 enable the Forestry Commission to move towards a new business as usual, The Forestry Commission responded and its preparedness for dealing with promptly to the need to safeguard staff future related incidents. They were and the public from the risk of satisfied that there had been contracting COVID-19. Key risks were appropriate consideration and response actively managed through frequent to COVID-19 risks in the areas of Executive Board meetings, and with governance and incident management, regular interaction and formal updates workforce, operations and supply to non-executive directors. chain, business planning and funding, communications, corporate support, Activities continued where possible in and data and security. line with Government guidance and additional support mechanisms were EU exit provided for staff on volunteering and redeployment programmes, IT, The United Kingdom formally left the wellbeing, and absent staff. European Union on 31 January 2020, moving into what is known as a Incident management plans defined ‘Transition Period’, which ended on actions and communications for the 31 December 2020. The EU and UK COVID-19 response, and recovery agreed upon a Trade and Cooperation plans and return to work plans were Agreement on 24 December 2020, introduced. which is now in force. This deal governs arrangements for business, The financial impact of COVID-19 on trade and travel. From 1 January 2021, the commercial operations within both changes to legislation were made to Forestry England and Forest Research enable retained EU law to operate has been significant. With support from effectively and to address other Defra officials a successful case was deficiencies arising from the UK’s made to HM Treasury for financial relief withdrawal from the EU. This meant to mitigate the impact. that requirements for the import, export and movement of wood, wood

Performance report 11 Annual Report and Accounts 2020-21 products and bark from the EU 2024-25 following a series of national changed. In the period 1 January 2021 pilots from 2021. to 31 March 2021, inspections of high priority regulated wood and wood Cyber security products were carried out, although no interceptions of quarantine pests were There continues to be a risk to our made. Through this period trade was technology, data and networks from reported to be at lower than the growing level of national and anticipated volumes, due in part to international cyber-attacks. Security companies having stocked up ahead of has been carefully considered and the end of the Transition Period and integrated into the rollout of our new the ongoing impacts of the COVID-19 IT systems; and is also overseen by pandemic. We did see an uplift in the the Forestry Commission’s Security issuing of export phytosanitary Risk Management Forum. certificates which are now required for trade to the EU and to Northern Performance summary Ireland. Resources to fund our activities in Pests and diseases England and our cross border functions come from Defra, the European Union, There is a risk that an inability to local authorities, the private sector and adequately control pests and diseases non-governmental organisations. results in significant damage to trees in the public and private sectors and In addition to the expenditure shown in economic and natural capital losses. our accounts, Forestry Commission Ips typographus and oak processionary manages grant schemes on behalf of moth pose particularly significant new Defra. These schemes total a further risks to the timber industry and wider £3.3 million (2019-20: £5.6 million) of treescape. The Forestry Commission public funds that are administered by continues to work closely with the Forestry Commission staff. Chief Plant Health Officer to manage and mitigate against a number of Long-term expenditure trends serious risks highlighted in the UK Plant Health Risk Register, including Spending Review 2020 provided the threat of Xylella fastidiosa. adequate additional funding to support delivery of the Forestry Commission’s Rural Development delivery contributions to the England Tree Planting Programme, Future Farming & The sixth year of the current Rural Countryside Programme, and tree Development Programme (RDP) saw health. However, the Forestry the move to issuing new Countryside Commission was obliged to make Stewardship agreements after further recurrent reductions to its 1 January 2021 under domestic rather business as usual (BAU) activities to than EU regulations. The EU help bridge Defra’s continuing funding requirement to pay 95% of 2019-20 gap. annual claims by 30 June 2020 was achieved across the RDP including The package of agreed savings Forest Services legacy grants. Forest measures, whilst significant, is not Services continues to contribute to the expected to significantly disrupt front development of the Environmental line activities in 2021-22, although Land Management scheme. This will continued recurrent savings will replace Countryside Stewardship in

12 Performance report Annual Report and Accounts 2020-21 inevitably adversely impact on published annually in the Forestry delivery. Commission Key Performance Indicators report available on It is hoped that a multi-year www.gov.uk. Comprehensive Spending Review in the autumn of 2021 will provide the Together they show our contribution to necessary financial assurance to protecting, improving and expanding underpin delivery. forestry and woodlands in England. The indicators reflect our strong Performance analysis commitment to deliver the Government’s plans for the Key performance indicators environment as set out in the 25 Year Environment Plan; in particular by 2020-21 increasing new planting of trees and increasing the area of woodland. The Our range of key performance indicators also enable monitoring of indicators (KPIs) for Forest Services our key aspiration to bring far more include the headline indicators set out woodlands into management, and to below. keep protecting them from tree pests and diseases. Forest Services’ Five-Year Strategy identified the need to review our KPIs The indicators are also one of the to ensure that these remain good sources of information for our measures of the positive differences we evidence-based decision making and are making in the real world and are convey key trends in forestry in improved where necessary. The England to all our stakeholders in and outcome of the review is an enhanced beyond Government. They are suite of indicators approved by the produced to adhere to the standards of Forest Services Board. the Code of Practice for Statistics (Office for Statistics Regulation and UK The headline indicators are reported Statistics Authority, 2018), and the here, and interim updates where data year-end outturns have again each are available will be published been successfully assured by the quarterly in our Headline Performance Government Internal Audit Agency. Updates. The full suite will be

Performance report 13 Annual Report and Accounts 2020-21

Expansion of woodland: Area of woodland in England

Source: Forestry Statistics 2020 (Forest Research), based mainly on the National Forest Inventory and Forestry Commission administrative data.

The area of woodland in England is 2020 figure is an increase of 2,000 1,311 thousand hectares at 31 March hectares on the previous year, and the 2020. That is the most recent date for total is 10.1% of the land area of which information is available. The England. Over the past ten years the next update of this statistic is due in area of woodland has increased by an Provisional Woodland Statistics: 2021 average of 2,000 hectares per year. Edition (Forest Research). The March

14 Performance report Annual Report and Accounts 2020-21

Expansion of woodland: New planting of woodland and trees in England

Source: Forestry Statistics 2020 (Forest Research) and Forestry Commission Key Performance Indicators.

There was a total of 2,178 hectares of the Rural Development Programme for recorded new planting of woodland in England, supported the creation of 689 England in 2020-21, including that with hectares of woodland. This is only 55% and without central government of the area planted the previous year, support. and the smallest area planted with this support since 2016-17. Government funding from all ten counted sources supported the planting In 2020-21 applications for the of at least 1,892 hectares in 2020-21, Woodland Carbon Fund and corresponding to about 3.8 million Countryside Stewardship were trees with a significant new somewhat constrained by some contribution from the Community landowners and agents preferring to Forests Trees for Climate Programme wait and see what form support for funded by the Nature for Climate fund. landowners might take following the Other contributions have come with UK’s exit from the European Union and support from the Woodland Carbon awaiting the opening of new incentive Fund, the High Speed 2 Woodland schemes funded through the Nature for Fund, Forestry England, the Climate Fund, announced in March Environment Agency, the National 2020. Interest, however, in new Forest Company, and the Northern planting remains strong as evidenced Forest partnership. by management information on the volume of applications to the Woodland Of this, the Countryside Stewardship Creation Planning Grant. woodland creation grant and English Woodland Creation Grant, as a part of

Performance report 15 Annual Report and Accounts 2020-21

Improvement of woodland: Percentage of woodland that is sustainably managed

Source: Forestry Commission administrative data and the National Forest Inventory (Forest Research).

As at 31 March 2021, 59% of all includes all woodland in the nation’s woodland in England was sustainably forests managed by Forestry England managed; totalling 770,000 hectares and all woodland on Defence of woodland in management. The Infrastructure Organisation training equivalent figure for woodland other areas. It is recognised that other than in the nation’s forests was 51%, woodland might be considered as totalling 556,000 hectares of woodland managed as well. in management. Evidence suggests markets for timber Our definition of ‘sustainably managed’ remain relatively strong. There is scope is woodland managed to the UK to further increase the area of Forestry Standard that has a Woodland woodland sustainably managed to Management Plan, or for which we meet demand for UK grown timber, to have made a previous grant of felling help manage tree pests and diseases, licence in the last 15 years. It also and to improve woodland resilience.

16 Performance report Annual Report and Accounts 2020-21

Improvement of woodland: Percentage of the annual growth of trees in English woodlands that is harvested

Source: Forest Research statistics on UK wood production and trade and National Forest Inventory team forecasts.

There is an opportunity to considerably harvested remains high, reflecting increase the hardwood harvest if new strong demand and also the age markets are developed. The proportion structure of the conifer woodland of softwood annual increment that is resource.

Performance report 17 Annual Report and Accounts 2020-21

Protection of woodland: Number of tree pests and diseases established in England in the last ten years

Source: Forestry Commission administrative data

The number of additional tree pests year period 2000-09 to a low of three and diseases becoming established in in 2007-16. England within a rolling ten year period fell from a peak of seven in the ten Four tree pests and diseases became ‘established’ in England in the most

18 Performance report Annual Report and Accounts 2020-21 recent ten-year period 2011-20, England where it is under official namely: control. Ongoing surveillance has identified new outbreak sites in Kent 1. Chalara dieback of ash and Nottinghamshire. (Hymenoscyphus fraxineus) considered established in 2012. Ash dieback is 4. Elm zigzag sawfly (Aproceros present in most parts of the United leucopoda), considered established in Kingdom and continues to spread. New 2018, and continuing to spread in planting for replacement of trees lost is south east England and the east included in the support offered by the Midlands. Local Authority Treescapes Fund. There are other tree pests and 2. Oriental chestnut gall wasp diseases, some of which have become considered established in 2016. This is established in England. These include a larval pest of sweet chestnut trees for example Phytophthora ramorum present with a distribution limited to considered established in 2003, with a southern England and the Midlands. limited distribution, and under official Research is underway to investigate control to reduce the spread and potential biological control of this pest. intensity. Information on a range of forestry pests in England is available 3. Sweet chestnut blight caused by the from the pest and disease resources fungus Cryphonectria parasitica, has webpage provided by Forest Research. been identified at a number of sites in

Protection of woodland: Percentage of known tree felling carried out with Forestry Commission approval

Source: Forestry Commission administrative data.

In the year to 31 March 2021, some this indicator will be based on the date 99.79% of known tree felling was that the application was approved to carried out with Forestry Commission more accurately reflect the small approval. This and future reports of

Performance report 19 Annual Report and Accounts 2020-21 proportion of applications that are We have processes in place for amended, withdrawn or refused. receiving and investigating reports of alleged illegal felling. When we become Over recent years the figures for tree aware of illegal felling, this is felling where approval was sought has frequently, though not always, in remained significantly greater than the anticipation of property development. known level of tree felling undertaken We are exploring how to better without Forestry Commission approval. identify, act upon and mitigate illegal felling where it takes place.

20 Performance report Annual Report and Accounts 2020-21

Sustainability report performance improvement targets for reducing fossil fuel-based energy and The Forestry Commission carries out reducing waste and our use of water. sustainability reporting in line with the Our EMS is designed to conform to BS Greening Government Commitments EN ISO 14001 2015 as we strive for (GGC) and HM Treasury’s Financial certification under the new standard. Reporting Manual reporting All sustainable woodland management requirements. The environmental activity of Forestry Commission is impacts of the organisation’s forest measured and managed through management support activities on the conformance to the United Kingdom built estate are managed through our Forestry Standard (UKFS) and is Environmental Management System independently certified by accredited (EMS) which is designed to deliver our UKFS assessors using the UK Woodland environmental policy, with Assurance Standard.

Performance measurement 2017-18 2018-19 2019-20 2020-21 Total miles 3,180,614 1,259,800 2,751,680 786,046 tonnes CO e 752 735 608 198 Business travel1 2 Expenditure 1,102 802 789 274 (£000) Consumption 5,643,123 4,347,251 6,642,602 2,606,756 Electricity, gas and (KwH) other heating fuels Expenditure 392 387 428 201 2,3 (£000) tonnes CO2e 1,667 1,417 596 387 Total energy tonnes CO2e 2,419 2,152 1,385 585 (Scopes 1, 2 and Expenditure 1,494 1,189 1,217 475 3) estate and travel (£000) Amount 198 1,585 810 115 Estate and office (Tonnes/m3) waste4 Expenditure 219 133 53 35 (£000) Quantity 18,554 33,421 14,715 11648 Estate and office (m3) water4 Expenditure 15 34 23 17 (£000) 1. COVID-19 restrictions have caused a large reduction in business travel in 2020-21, with public transport being the most impacted. There have been problems in calculating an accurate financial figure for Business Travel due to issues with the system being used. A new fleet management system planned to be implemented in 2021-22 will allow more accurate recording of costs in the future. 2. Reduced use of facilities and reduced staff numbers at sites due to COVID-19 has caused lower consumption so far. 3. Consumption and CO2e values have been reduced by 42,156KwH/10 tonnes CO2e for solar power generated. 4. Missing waste data for Linmere House will be updated with next year’s results. Estimated based on use from last year. own environmental impacts, whether Overview as a tenant or landlord. Prior year comparison figures include buildings The Forestry Commission works with and sites that were part of our Central others to enable sustainable forest and Services function. Currently, core land management and to manage its Forestry Commission independently

Performance report 21 Annual Report and Accounts 2020-21 occupies and reports on a smaller ▪ continuing to discharge our estate. Elsewhere, Forestry regulatory role on tree health, Commission staff occupy Forestry bio-security and other roles England buildings; the sustainability ▪ working through transition to ISO data of this occupation are included in 14001 2015 standard and Forestry England’s reports and not re-certification currently segregated. All of Forest ▪ cooperating with Forestry England Research data is included in this to reduce their environmental report. impacts ▪ reducing energy needs from fossil There are fluctuations in the data fuel derived sources and supporting shown due to work to remove sustainable wood fuel and hazardous material from the site of the renewable energy in the rural sector new Forest Research entomology and ▪ administering grants and delivering pathology quarantine laboratory. There advice and regulations, to protect, has been emergency works on the improve and expand England’s drains and sewers at Alice Holt woodlands resulting in a large removal of sewage. Cooperation and governance Summary of future strategy The Forestry Commission cooperates The Forestry Commission Executive with others where buildings are shared Board has approved the 2018 Energy to enable them to report on and Infrastructure Strategy which is greenhouse gas emissions, waste now being applied across all of the management and use of resources as properties and travel activities of core required by government reporting and Forestry Commission. The Strategy regulatory requirements. seeks to reduce carbon emissions, increase energy efficiency and move Sustainable business in core Forestry away from fossil fuels. Commission is overseen by the Director of Estates and the Sustainable During 2020-21 our main priorities Business team in Forestry England. have consisted of: They are responsible for formulating and championing the Forestry ▪ working with Aveico to provide Commission’s environmental policy and energy and waste reporting services delivery through our integrated EMS. and data Agreed terms of reference are as ▪ processing collected data, providing follows: managers with information to plan business performance improvement ▪ be responsible to the Forestry and to inform GGC reporting to England Board for the efficient Defra operation of the business ▪ writing planning, policy and sustainability programme guidance documents for all areas of ▪ set priorities and objectives for the the business, incorporating business sustainability programme sustainability into all relevant areas and ensure that these are achieved in combination with Forestry ▪ ensure that objectives set for England Forestry Commission also meet the ▪ increasing awareness and uptake of requirements of Forestry England the Woodland Carbon Code and that jointly agreed targets are adopted as policy by managers within these units

22 Performance report Annual Report and Accounts 2020-21

▪ review the EMS at planned intervals the Forestry Commission. It to ensure its continuing suitability, emphasises the importance of adequacy, and effectiveness practising reduction through ▪ ensure that Forestry Commission procurement. Furthermore, our achieves its commitment to gaining Environmental policy has been ISO 14001-2015 certification rewritten to include the increase of recycling and reuse of materials along with elimination of consumer single use Greenhouse gas emission plastics across all offices by the end of 2020. The Forestry Commission collaborates with Forestry England to review and Waste is still higher than usual in actively manage the built estate to 2020-21 due to work to remove optimise occupancy and minimise CO2 hazardous material from the site of the emissions from fossil fuel-derived new Forest Research entomology and energy use. The adopted energy and pathology quarantine laboratory. There infrastructure strategy sets to reduce has also been emergency works on the all fossil fuel derived energy and drains and sewers at Alice Holt increase renewable technologies for all resulting in a large removal of sewage. direct burnt (scope 1) emissions as well as increasing the use of biomass Resource consumption (water) alternatives. Core Forestry Commission’s reported CO2 emissions from business travel are use of water is low as reflects the use reduced where possible through at one site only. Elsewhere use is ongoing support for flexible working reported under Forestry England. The arrangements, the provision of Forestry Commission works with audio-conferencing facilities including Forestry England to initiate water the recent integration of Microsoft saving measures. Teams to reduce the need to travel. Ultra-low emission vehicles are sought Sustainable procurement wherever possible (larger four-wheel drive vehicles are needed for aspects The Forestry Commission has worked of the business). Wherever possible to ensure that sustainable solutions are electric vehicles are added to the fleet part of goods, services and works we during phased replacements, where purchase. Internal guidance this is not possible due to capacity or incorporates sustainability at each range efficient alternatives are sought stage of the procurement cycle, linking along with new innovative solutions to Government Buying Standards considered. where relevant. We require our contractors to contribute towards our The COVID-19 crisis has driven aim of being as sustainable as possible emissions down dramatically, with and to help reduce waste and energy reduced travel and office occupancy. requirements wherever possible. We We will endeavour to maintain as many encourage innovative solutions to our of these benefits as possible in a post requirements. COVID-19 environment. We have focused on our timber policy Waste and specifications. Only timber and timber products originating either from Forestry England has rewritten its independently verified legal and waste guidance which is adopted by sustainable sources (such as Grown in

Performance report 23 Annual Report and Accounts 2020-21

Britain, PEFC/FSC certified timber or on diversity of tree species and woodland products) or from a licensed genetics Forest Law Enforcement Governance and Trade (FLEGT) partner can be Rural proofing used. We have also encouraged the use of sweet chestnut in fencing A large proportion of England’s forests operations as alternative to treated are situated in rural parts of the softwood materials. country, outside towns of more than 10,000 people. Many businesses that Sustainable construction rely on woodland to provide employment and income are also The Forestry Commission cooperates based in rural communities. Working with landlords in their endeavours to with forestry employers, education improve the built estate in terms of providers and trade associations we energy efficiency and sustainable helped shape the Forestry Skills Plan construction. that will address the shortage of skilled machine operators, chainsaw operators Climate change adaptation and improve business skills within the sector. A skilled forestry work force Our assessment of climate risk, increases productivity and benefits approach to climate change adaptation, rural communities. One of the themes including our activities in the nation’s of the plan, talent attraction, is forests and our interactions with the especially important to ensure an wider forestry sector are set out in expanding workforce is in place to detail in our Adaptation Reporting meet the strong demand for timber. Power Report first published in 2013, Other themes covered by the plan are and reviewed in 2016-17 with a designed to provide the workforce with programme of new and continuing practical skills and technical work now in place, including: knowledge, education provision and support from employers to keep skills ▪ UKFS climate change guidelines up to date and productivity maximised. under-pinning our incentives and This will help woodland owners and regulatory functions managers benefit from the currently ▪ resilience at the core of three of high timber prices. seven programmes of the Science and Innovation Strategy for Forestry in Great Britain ▪ working closely with the forestry sector to encourage the uptake of adaptation measures through the Climate Change Working Group (CCWG), its Climate Change Accord

and Action Plan M. Seddon 15 June 2021 ▪ jointly published with the CCWG an Accounting Officer actions plan progress report Forestry Commission ▪ published Forestry Commission climate change and forestry position statement ▪ published Managing England’s woodlands in a climate emergency guidance including a greater focus

24 Performance report Annual Report and Accounts 2020-21

Accountability report Composition of the management board

Corporate governance The composition of the various report governance fora, their structure and activities are set out in full within the The corporate governance report Governance Statement. describes the Forestry Commission’s governance structures. It comprises The membership of the Board of the directors’ report, the statement of Commissioners during 2020-21 was: Accounting Officer’s responsibilities and the governance statement. This meets ▪ Sir William Worsley, chair Forestry accountability requirements to Commission Parliament as set out in Chapter 5 of ▪ Mary Barkham, non-executive Part 15 of the Companies Act 2006 and commissioner, term ended Schedule 7 of SI 2008 No 410 and 31 October 2020 amended by HM Treasury’s Financial ▪ Julia Grant, non-executive Reporting Manual. commissioner ▪ Liz Philip, non-executive Directors’ report commissioner ▪ Jennie Price, non-executive Relationship with Defra and the commissioner wider Defra group ▪ Peter Latham, non-executive commissioner The Defra ministers who had ▪ Julian Evans, non-executive responsibility for the Forestry commissioner, from 1 June 2020 Commission during the year were: ▪ Hilary Allison, non-executive commissioner, from 1 June 2020 ▪ George Eustice MP, Secretary of ▪ Sandy Storrie, non-executive State from 13 February 2020 commissioner, from 1 June 2020 ▪ Lord Zac Goldsmith, Minister of ▪ Ian Gambles, executive State from 10 September 2019 commissioner ▪ Lord Gardiner, Parliamentary Under Secretary of State from 9 January Significant interests held by Board 2018 members

Various meetings were held with the A register of interests of all Board Secretary of State and other ministers members is maintained by the Forestry by the Forestry Commission chair and Commission and published on other Forestry Commission senior staff www.gov.uk. throughout 2020-21. Personal data related incidents Chair and Chief Executive There were no protected personal data The Chair of the Forestry Commission, related incidents reported for Forestry Sir William Worsley, has been in post Commission in 2020-21 (2019-20: nil). since 10 February 2020. Ian Gambles was Chief Executive Officer, the senior Supplier payment policy executive within the Forestry Commission during 2020-21. His The Forestry Commission complies with replacement, Richard Stanford will government’s better payment practice arrive in August 2021. code. Unless otherwise stated in the

Accountability report 25 Annual Report and Accounts 2020-21 contract, we aim to pay within five Statement of Accounting days of receipt of goods and services Officer’s responsibilities or the presentation of a valid invoice, whichever is the later. In 2020-21 Under Section 5, subsection 7 of the 96.1% (2019-20: 99.2%) of invoices Government Resources and Accounts for core Forestry Commission and Act 2000, HM Treasury has directed 96.1% (2019-20: 99.3%) of invoices the Forestry Commission to prepare of the Forestry Commission were paid accounts for each financial year. The within the statutory 30 days or agreed accounts are prepared on an accruals due date. Arrangements for handling basis and must give a true and fair complaints on payment performance view of the state of affairs and of the are notified to suppliers in contracts. income and expenditure, changes in taxpayers’ equity, and cash flows of During the year £31 late payment the department for the financial year. interest and charges were incurred (2019-20: nil). Throughout 2020-21 The Chief Executive, Forestry England we have striven to pay our suppliers has been designated by the Forestry within our normal payment terms, but Commission Chief Executive Officer as have experienced some delays, Accounting Officer for that part of the particularly where suppliers have department’s accounts relating to the refused to move to electronic invoicing. Agency’s activities and the associated assets, liabilities and cash flows. The Auditors Forestry Commission Chief Executive Officer had continued the designation The Forestry Commission’s accounts of the Chief Executive, Forest Research are audited by the Comptroller and Agency as Accounting Officer for that Auditor General under the Government part of the department’s accounts Resources and Accounts Act 2000. The relating to the Agency’s activities and audit fee was £46,000 (2019-20: the associated assets, liabilities and £45,480). In addition, the notional fee cash flows. None of these for the audit of the Forest Research appointments detract from the Forestry Agency was £41,000 (2019-20: Commission Chief Executive Officer’s £39,000). No fees were charged for overall responsibility as Accounting other services (2019-20: nil). Officer for the department’s accounts. The relationship between the Disclosure of audit information to Accounting Officers, together with their the auditors respective responsibilities, is set out in the Defra/Forestry Commission So far as the Accounting Officer is framework document. aware, there is no relevant audit information of which the auditors are In preparing the accounts, the unaware. The Accounting Officer has Accounting Officer is required to taken all the steps that he ought to comply with the requirements of the have taken to make himself aware of government Financial Reporting Manual any relevant audit information and to and in particular to: establish that the auditors are aware of that information. ▪ observe the Accounts Direction issued by HM Treasury, including the relevant accounting and disclosure requirements, and apply suitable accounting policies on a consistent basis

26 Accountability report Annual Report and Accounts 2020-21

▪ make judgements and estimates on responsibility for ensuring that the a reasonable basis and prepare the Forestry Commission’s business is annual report and accounts so that conducted in accordance with the law they are fair, balanced and and proper standards, that public understandable money is safeguarded and properly ▪ state whether applicable accounting accounted for, and used economically, standards as set out in the efficiently and effectively in accordance government Financial Reporting with Managing Public Money. Manual have been followed, and disclose and explain any material This Statement covers the Forestry departures in the accounts Commission, comprising Forest ▪ prepare the accounts on a going Services and the Commissioners’ concern basis Office, and fully complies with the Corporate Governance Code where The responsibilities of an Accounting relevant and applicable to the Forestry Officer (including responsibility for the Commission. In addition, our agencies propriety and regularity of the public Forestry England and Forest Research finances for which an Accounting publish separate Governance Officer is answerable, for keeping Statements within their Annual proper records and for safeguarding Reports. Forestry Commission assets) are set out in Managing Public Money The purpose of the governance published by HM Treasury. framework

The Accounting Officer is required to The governance framework comprises confirm that the annual report and the systems and processes, and culture accounts as a whole is fair, balanced and values, by which the Forestry and understandable, taking personal Commission is directed, controlled and responsibility for the judgements led. It enables the Forestry required to ensure this. Commission to monitor the achievement of its strategic objectives Governance statement and to consider whether those objectives have led to the delivery of Introduction and scope of appropriate, cost effective outcomes responsibility which are also compliant with the law and with policy. Ian Gambles was appointed by the Principal Accounting Officer of Defra as The system of internal control is a Accounting Officer for the Forestry significant part of that framework and Commission for 2020-21. Ian Gambles is designed to manage risk to a held this position for the entirety of reasonable level. It cannot eliminate all 2020-21 but left before the publication risk and can therefore only provide of this Annual Report and Accounts. reasonable and not absolute assurance Mike Seddon, Chief Executive and of effectiveness. The system of internal Accounting Officer of Forestry England, control is based on an ongoing process was appointed as interim Accounting designed to identify and prioritise the Officer of the Forestry Commission risks to the achievement of the until the arrival of the new Forestry Forestry Commission’s policies, aims Commission Chief Executive Officer in and objectives. Evaluating the August 2021. The Accounting Officer’s likelihood of those risks being realised financial responsibilities mirror those of and the impact should they be realised, the Principal Accounting Officer. He has

Accountability report 27 Annual Report and Accounts 2020-21 and to manage them efficiently, completion of devolution. Forestry effectively and economically. Commission activities in Wales became part of Natural Resources Wales in The governance framework has been in April 2013 and the Forestry place at the Forestry Commission Commission has never operated in throughout 2020-21 up to the date of . the production of the annual report and accounts, with the combined Forestry Only international forestry policy is Commission Audit and Risk Assurance reserved but the Forestry Commission Committee (ARAC) operating from continues to operate some cross- November 2020, and accords with border functions, such as biosecurity at HM Treasury guidance. the UK border and forestry research, which are co-funded with the devolved The governance framework administrations. Defra is responsible for forestry policy in England. The Forestry Commission is a non-ministerial government As required under section 2(3) of the department and has a Royal Charter, Forestry Act 1967, the Commissioners dated 25 March 1920, which makes the have appointed a National Committee. entire organisation a single legal However, no activities have been entity. It is headed by a Board of delegated to it and it is not expected to Commissioners. The Forestry meet. They have instead, through Commissioners are appointed by Royal administrative action, delegated Warrant and may regulate their own relevant and appropriate functions to procedure, under the provisions in the the sub-boards of the delivery arms of Forestry Act 1967. the Forestry Commission namely Forestry England, Forest Services and The Forestry Act 1967 (as amended) Forest Research. Officials from Defra and the Forestry Act 1979 set out the and the Devolved Administrations act principal legislative framework within as members of the sub-boards where which the Forestry Commission appropriate. Overall responsibility, operates. The Forestry Commissioners however, remains with the Board of are established by statute and derive Commissioners. their powers primarily from the Forestry Acts but also from other How we operate legislation such as the Environmental Impact Assessment (Forestry) The governance structure in operation (England and Wales) Regulations 1999. throughout 2020-21 is outlined below Under the Plant Health Act 1967, the and shows the most numerous Commissioners are the competent interactions between the groups. authority for the protection of forest Further information on the Forest trees and timber from attack by pests Research Board and the Forestry and diseases. England Board can be found in their respective Annual Report and Forestry Commission activities in Accounts. Scotland ceased in April 2019 on

28 Accountability report Annual Report and Accounts 2020-21

Solid line = Governance board structure

Dotted line = Executive management structure

* Although the Board of Commissioners has appointed a Committee, as required by the Forestry Act, no activities have been delegated to it and it is not expected to meet. The Board of Commissioners has instead, through administrative action, delegated relevant and appropriate functions to the sub-boards of Forestry England, Forest Services and Forest Research.

** As executive agencies Forestry England and Forest Research produce their own separate Annual Report and Accounts. They include details of their sub-board’s duties, membership, and frequency and content of meetings.

*** The Executive Board draws upon the executive leadership of all parts of the Forestry Commission to take strategic decisions on common issues.

Accountability report 29 Annual Report and Accounts 2020-21

Forestry Commissioners government’s forestry and woodlands policies in England The Board of Commissioners consists ▪ maintaining an overview of of a chair and up to ten other members corporate risk appointed by Her Majesty the Queen. Sir William Worsley has been Chair The Board of Commissioners met in since 10 February 2020. July and December 2020.

The Board of Commissioners is Papers for these meetings and further responsible for: information on the Board of Commissioners are available on ▪ ensuring that Commissioners’ www.gov.uk. statutory duties are fulfilled ▪ ensuring that any statutory or The Forest Services Board administrative requirements for the use of public funds are complied This Board is appointed by the Forestry with Commissioners to enable them, as ‘the ▪ ensuring that the board operates appropriate forestry authority’ in within the limits of its statutory England to discharge their duties and authority and any delegated exercise their powers set out in the authority agreed with the sponsor Forestry Act 1967 and other relevant department, and in accordance with legislation, including the Plant Health any other conditions relating to the Act 1967. The Board also provides use of public funds leadership for Forest Services by ▪ taking into account guidance issued supporting, guiding, constructively by the sponsor department in challenging, and directing the Forest reaching decisions Services executive team in the ▪ ensuring that the board receives development and delivery of its and reviews regular financial strategy. information concerning the management of the Forestry The main duties of the Forest Services Commission Board are to: ▪ ensuring the board is informed in a timely manner about any concerns ▪ discharge functions delegated to about the activities of the Forestry them by the Board of Forestry Commission; and provides positive Commissioners assurance to the department that ▪ set the strategic direction for Forest appropriate action has been taken Services’ activities on such concerns ▪ direct the executive in the conduct ▪ demonstrating high standards of of business within Forest Services corporate governance at all times, ▪ ensure that Forest Services’ including by using the independent activities contribute to the delivery audit committee to help the Board of relevant Government policy and to address key financial and other the Forestry Commission’s overall risks strategic objectives ▪ oversight of any changes to the role ▪ approve the strategy and Business or governance structure of the Plan for Forest Services and the Forestry Commission consolidated Annual Report and ▪ delegating to the three sub-boards Accounts and Corporate Plan for (under the provisions in the Forestry Commission Forestry Act) such functions as are ▪ promote forestry policy as a means required to support the to deliver wider government

30 Accountability report Annual Report and Accounts 2020-21

objectives and provide insight to on matters that require decision, future opportunities for forestry in resolution or co-ordinated action across England the Forestry Commission. ▪ advocate forestry expertise as a means to maintain the Forestry The membership of the Forest Services Commission’s reputation and Board during 2020-21 was: achieve Government’s policy and objectives ▪ Sir William Worsley, chair Forestry ▪ regularly receive and review Commission information on financial and ▪ Liz Philip, non-executive operational performance of Forest commissioner Services against agreed objectives ▪ Hilary Allison, non-executive ▪ demonstrate high standards of commissioner, from 1 June 2020 corporate governance at all times, ▪ Sandy Storrie, non-executive to help the Board to address key commissioner, from 1 June 2020 financial and other strategic risks ▪ John Lockhart, non-executive faced by the organisation member, from 1 August 2020 ▪ ensure adequate systems and ▪ Ian Gambles, executive internal controls are in place to commissioner and Forestry safeguard resources including by Commission Chief Executive Officer using the independent audit ▪ Richard Greenhous, Director Forest committee Services ▪ ensure that any statutory or ▪ Steve Meeks, Forestry Commission administrative requirements for the Finance Director use of public funds are complied ▪ Steph Rhodes, Forestry Commission with England Tree Planting Programme ▪ ensure that effective relationships Delivery Director are maintained and the Forestry ▪ Edward Barker, Defra Natural Commission’s reputation is upheld Environment Trees and Landscape with stakeholders, customers, Directorate suppliers, employees and other government departments across The Forest Services Board met in June, England, including by establishing September, November and December links with local delivery teams and 2020, and February and March 2021. Forestry and Woodlands Advisory Committees Papers for these meetings and further ▪ ensure effective communication information about the Forest Services both internally and externally Board, including membership and through focused and consistent attendance, are available on messaging showing evidence and www.gov.uk. accountability for decisions made ▪ address matters of relevance to the The Forestry Commission wider Forestry Commission (i.e. Executive Board Forest Research and/or Forestry England as well as Forest Services) The Forestry Commission Executive Board, which is chaired by the Forestry The Forest Services Board will share Commission Chief Executive Officer, information as appropriate with the has the shared purpose to champion Forestry England Board, the Forest forests and forestry in England and Research Board and the Forestry beyond. The Executive Board brings Commission Executive Board, ensuring the executive leadership of all parts of collaboration and cooperative working the Forestry Commission together to

Accountability report 31 Annual Report and Accounts 2020-21 take strategic decisions on matters Through its work the ARAC provides where Forestry England, Forest independent assurance to the Board of Services and Forest Research can Commissioners and the sub-boards of achieve more by taking a common Forestry England, Forest Services and approach. Forest Research on those important activities which support the The Forestry Commission Executive achievement of objectives. Assurance Board met in July and December 2020, is also provided through review of the and January and March 2021. It also annual report and accounts and the met monthly from April to June 2020 findings from work carried out by to discuss and agree the Forestry internal and external auditors. The Commission’s response to COVID-19, ARAC operates in accordance with the and on further occasions to discuss principles contained in HM Treasury’s other specific topics such as Offer Audit and Risk Assurance Committee 2020. Handbook.

Papers for these meetings and further The Forest Research ARAC met in May information about the Forestry 2020, and the Forestry England and Commission Executive Board, including Forest Services ARAC in September membership and attendance, are 2020. The Forestry Commission ARAC available on www.gov.uk. met in November 2020 and February 2021 and discussed a wide range of Audit and Risk Assurance issues including: Committee ▪ risk management The Board of Commissioners has ▪ anti-fraud and corruption established a Forestry England and arrangements Forest Services Audit and Risk ▪ security risk Assurance Committee (ARAC) to ▪ safeguarding support it in assuring itself of the ▪ reputational risk effectiveness of the internal control, ▪ the interim Annual Report and governance and risk management Accounts 2020-21 framework. ▪ external and internal audit strategy and reports The Forestry Commission ARAC ▪ the draft Governance Statement formally took over the work previously 2020-21 undertaken by the Forestry England ▪ a review of the Committee’s and Forest Services ARAC, and the structure and effectiveness Forest Research ARAC, from 1 November 2020 when the work of Further information on the Forestry both committees was combined into a Commission ARAC, including single ARAC. membership and attendance, is available on www.gov.uk. Forestry England, Forest Services and Forest Research maintain their own Performance risk registers which are overseen by the ARAC, along with the Forestry All of the committees and boards have Commission Strategic Risk Register linkages through shared membership. which is owned by the Forestry Each sub-board provides a non- Commission Executive Board. executive commissioner as a member of the ARAC. This ensures a breadth of knowledge and understanding of the

32 Accountability report Annual Report and Accounts 2020-21 organisation and forestry issues, which continues to provide moderate enhances the contribution made by assurance, and that the move to the non-executives and thus the new governance arrangements has effectiveness of all the committees. enhanced the adequacy and Each board and committee receives effectiveness of the framework of relevant reports from the other governance, risk management and committees and the non-executives control. Plans to ensure continuous play an active part in agreeing and improvement of the system are in selecting items for inclusion in place. agendas. The Forestry Commission has The Forestry Commission ARAC has continued to apply the principles of HM been assessed as being in line with Treasury’s Code of Good Practice for requirements for public sector bodies Corporate Governance in the context of as per HM Treasury guidance. its own circumstances as a non-ministerial department, which Review of effectiveness encourage the adoption of practices set out, where relevant and practical. The Accounting Officer has responsibility for conducting, at least The ARAC reviews its effectiveness in annually, a review of the effectiveness line with best practice as set out in of the governance framework. The HM Treasury’s Audit Committee review is informed by the work of Handbook. internal audit, the agency Accounting Officers and the executive managers Each of the three sub-boards also across the Forestry Commission who undertake an annual effectiveness have responsibility for the development review. and maintenance of the governance and control framework, and comments Work to date has not identified any made by the external auditors in their control weaknesses and has supported management letter and other reports. findings from management accounting inspections and the work of internal Annual Assurance Statements are and external auditors. produced by senior executive managers from across the Forestry Whistleblowing Commission, with content supported by the results of the annual The Forestry Commission is committed programme of GIAA audit assignments, to ensuring a high standard of conduct and effectiveness reviews conducted by in all that it does, and, has a duty to the sub-boards and the ARAC. identify and remedy any area of malpractice. This is achieved by The GIAA Head of Internal Audit for the encouraging a culture of openness, Forestry Commission has prepared a where employees feel confident and suite of annual reports and assurance able to raise any matters of concern. statements which include an overall assessment of the adequacy and The Whistleblowing policy and effectiveness of risk management, procedure has recently been refreshed control and governance within each ensuring it acts as a modern, entity. accessible resource for those requiring it. The overall opinion is that internal control within the Forestry Commission

Accountability report 33 Annual Report and Accounts 2020-21

The Forestry Commission has a Significant governance and risk dedicated whistleblowing officer. One issues case was carried forward to the investigation stage in 2020-21. The Please see the main issues and risks to case revealed a data breach due to a delivery set out in the Overview section mistake, but there was very limited of the Performance Report. opportunity for fraud and no harmful impact was identified as a result of this Other governance and risk issues are breach. A range of recommendations as follows. have been made to the business that have included refreshed training across Financial review teams that deal with sensitive information, strengthening our Spending Review 2020 resulted in information security culture, as well as additional funding in 2021-22 to take better systems and processes for forward the Forestry Commission’s dealing with data transfers. All of the contributions to the England Tree information governance changes and Planting Programme, Future Farming & strengthening will be carried out over Countryside Programme, and dealing this year, COVID-19 related delays with tree health pest outbreaks. notwithstanding. In addition, a procurement issue was raised at However, the baseline has required the year-end and is in the early stages of Forestry Commission to absorb investigation. inflationary and other pressures, and to assist Defra in bridging funding Risk management shortfalls which will require difficult decisions to continue to live within our The Forestry Commission’s risk means. This followed previous management policy demonstrates the reductions imposed on the Forestry full commitment of the Forestry Commission budget in 2018-19, 2019- Commission to effective risk 20 and 2020-21. management, adopting best practice in the identification, evaluation and The cancellation of Comprehensive control of risks. Spending Review 2020 (CSR20) led to a one year settlement for 2021-22 and By adopting its risk management uncertainty of future funding streams, policy, the Forestry Commission particularly with regard to the Forestry recognises risk management as an Commission’s contribution to England important function in helping to ensure Tree Planting Programme, and Future it achieves its aims and objectives. Farming and Countryside Programme, where staffing commitments have The Forestry Commission’s necessarily been made. arrangements for recording and managing strategic risks received Pay substantial assurance from GIAA following a review during 2020-21. Pay continues to be a contentious and challenging issue given pay bill Ministerial direction restraint, perceived problems within the current pay model and is the main No ministerial directions were given area of concern flagged in Staff during the year. Surveys. The Offer 2020 Project seeks to address issues which are within the Forestry Commission’s control subject

34 Accountability report Annual Report and Accounts 2020-21 to discussion and agreement with England and Forest Research; Forestry Commission Trade Unions and ensuring that robust business the . The ability to take continuity processes are introduced, this work forward has been negatively and that measures are taken to impacted by the government’s ensure that the Forestry introduction of the ‘pay pause’ in 2021- Commission is able to return to full 22. operational capability once the threat has lifted Knowledge and information ▪ playing an effective part in the management delivery of the Government’s 2019 manifesto commitment to create A four year project was approved by 30,000 hectares a year of new the Executive Board in November 2020 woodland across the UK by the end to further help our understanding of of this Parliament the value of knowledge and ▪ securing sufficient funding from information management in supporting Defra to support the delivery of the our decision making, and to identify Forestry Commission’s business and and introduce necessary improvements corporate plan targets at a time of including the use of the latest significant financial constraint technologies. across the department and government in general Security ▪ managing the transition to achieve success in a post EU exit The Forestry Commission Security Risk environment Management Forum (SRMF) has been ▪ handling the transition from established to oversee the introduction Countryside Stewardship to the of an improved information security Environmental Land Management culture across the organisation, scheme, with a focus on securing covering cyber, information, physical the benefits of moving away from and personnel security. The Forestry the Common Agricultural Policy Commission operates within Defra ▪ continuing to develop an security framework. appropriate response to the increasing threat of cyber security Modelling and Quality Assurance attacks ▪ handling the continued biosecurity A sensible and proportionate approach threat and the potential substantial to quality assurance has been adopted cost of counter-measures; and across the Forestry Commission, ▪ mitigating and adapting to climate incorporating lessons learned from an change as an organization and internal review of the Urban Tree through the delivery of our Challenge Fund. functions

Wider circumstances and future Throughout 2021-22 the Forestry challenges Commission will remain focused on managing these challenges either The main challenges for the Forestry directly, or in partnership with other Commission as an England only body bodies across the Defra group and during 2021-22 and beyond are: wider government, whilst continuing to maintain business continuity across the ▪ managing the continued financial broad range of its operations and and operational impact of meeting stakeholder expectations. COVID-19, particularly on Forestry

Accountability report 35 Annual Report and Accounts 2020-21

Overall, the governance arrangements Unless otherwise stated below, the for the Forestry Commission are senior staff covered by this report hold working effectively. appointments which are open-ended. Early termination, other than for Remuneration and staff misconduct, would result in the individual receiving compensation as report – subject to audit set out in the Civil Service Compensation Scheme. The remuneration and staff report sets out Forestry Commission remuneration Further information about the work of policy for directors, reports on how the Civil Service Commission can be that policy has been implemented and found at sets out the amounts awarded to www.civilservicecommission.gov.uk. directors. It also provides details on remuneration and staff that Parliament Non-executives are generally and others see as important to appointed as Office Holders for a fixed accountability, as set out in Chapter 6 term of three years with a maximum of the Companies Act 2006 and SI notice period of one month. Contracts 2013 No. 1981 and amended by HM are renewable for further fixed terms if Treasury’s Financial Reporting Manual. both parties agree. In the event of early termination, for whatever reason, Employment contracts there is no provision for compensation.

The Constitutional Reform and Details of letters of appointment for Governance Act 2010 requires Civil the non-executives and senior staff Service appointments to be made on who do not have open-ended merit on the basis of fair and open appointments who served during the competition. The Recruitment year are: Principles published by the Civil Service Commission specify the circumstances when appointments may be made otherwise.

Date of current contract / Unexpired term

letter (months*) Sir William Worsley 10/02/2020 22

Hilary Allison 01/04/2020** 24

Julian Evans 01/04/2020** 24

Julia Grant 01/11/2019 19

Peter Latham 01/04/2019 12

John Lockhart 01/08/2020 28

Liz Philip 01/04/2019 12

Jennie Price 01/04/2019 12

Sandy Storrie 01/04/2020** 24 Mary Barkham*** 01/11/2017 - * months remaining from 31 March 2021

36 Accountability report Annual Report and Accounts 2020-21

** Appointment formally confirmed 4 June 2020 due to COVID-19 related delays *** Mary Barkham’s contract ended on 31 October 2020

Remuneration policy Remaining Board members receive annual salaries paid in accordance with Fees for non-executive Commissioners the standard Forestry Commission and members who are not Forestry Staff Pay Agreement negotiated Commission or Defra employees, and through collective bargaining with the remuneration for senior civil servants, recognised trade unions. Their are determined in accordance with performance is monitored and guidelines prescribed by the Cabinet reviewed through the Performance Office. The Performance Pay reviews Management System of the Forestry for Senior Staff Grades are undertaken Commission. by Defra within the stipulated Cabinet Office guidelines with the aim of paying Remuneration (salary, benefits in any agreed Senior Civil Servant pay kind and pensions) – subject to award in Autumn. Any base pay audit increases awarded will be backdated to the pay settlement date of 1 April The following sections provide details 2020. The reviews and moderation are of the remuneration and pension undertaken across the Defra group interests of the civil servants who are based on Performance reviews, members of the Forestry Commission position in the salary range and cross Executive Board and the Forest group moderation. Services Board.

Benefits in Pension Bonus kind (to Benefits (to Salary Total payments nearest nearest £100) £1,000) £000 £000 £ £000 £000 Ian Gambles 2020-21 90-95 - - 29 120-125 1 Chief Executive Officer 2019-20 110-115 5-10 - 33 150-155 Steve Meeks 2020-21 75-80 - - (79) (10)-(5) Finance Director 2019-20 75-80 - - 25 100-105 Richard Greenhous 2020-21 75-80 0-5 - 36 110-115 Director Forest Services 2019-20 70-75 0-5 - 34 110-115 Jo Ridgway 2020-21 70-75 - - 25 95-100 HR Director 2019-20 55-602 - - 22 75-80 Steph Rhodes 2020-21 65-70 - - 38 100-105 Head of Policy and Strategy Forest Services/ 2019-20 55-60 - - 23 80-85 England Tree Planting Programme Director3

1. Figure quoted is full time to 31 January increase or decrease due to a transfer 2020 and reduced to four days per week of pension rights. from 1 February 2020 2. Figure quoted is four days per week to The salary and pension entitlements of 29 February 2020, and full time from the following members of the Forestry 1 March 2020 3. England Tree Planting Programme Commission Executive Board are director from 14 September 2020 disclosed as follows:

The value of pension benefits accrued Forest Research Annual Report and during the year is calculated as (the Accounts real increase in pension multiplied by 20) less (the contributions made by the ▪ James Pendlebury, Chief Executive individual). The real increase excludes of Forest Research increases due to inflation or any

Accountability report 37 Annual Report and Accounts 2020-21

▪ Meirion Nelson, Finance Director of the appraisal process. Bonuses relate Forest Research to the performance in the year prior to which they become payable to the Forestry England Annual Report and individual. The bonuses reported in Accounts 2020-21 relate to performance in 2019-20 and the comparative bonuses ▪ Mike Seddon, Chief Executive of reported for 2019-20 relate to Forestry England performance in 2018-19. ▪ Tristram Hilborn, Chief Operating Officer of Forestry England Fair pay disclosure – subject to audit The salary and pension entitlements of the members of the Forest Research Reporting bodies are required to Board and Forestry England Board are disclose the relationship between the borne and disclosed in each of the remuneration of the highest-paid agencies Annual Report and Accounts director in their organisation and the 2020-21. median remuneration of the organisation’s workforce. Salary The banded remuneration of the ‘Salary’ includes gross salary; highest-paid director of Forestry overtime; recruitment and retention Commission in the financial year allowances; and any other allowance to 2020-21 was £115-120,000 (2019-20: the extent that it is subject to UK £115-120,000). This was 3.39 times taxation. This report is based on (2019-20: 3.46) the median payments made by Forestry remuneration of the workforce, which Commission and thus recorded in these was £34,650 (2019-20: £33,970). accounts. In 2020-21, no (2019-20: nil) Benefits in kind employees received remuneration in excess of the highest-paid director. The monetary value of benefits in kind Remuneration ranged from £19,000 to covers any benefits provided by £78,000 (2019-20: £17,000 to Forestry Commission and treated by £79,000). HM Revenue and Customs as a taxable emolument. No benefits in kind were Total remuneration includes salary, paid in 2020-21 (nil in 2019-20). non-consolidated performance-related pay and benefits-in-kind. It does not Bonuses include severance payments, employer pension contributions and the cash Bonuses are based on performance equivalent transfer value of pension. levels attained and are made as part of

38 Accountability report Annual Report and Accounts 2020-21

Disclosure of salary, pension and compensation information for 2020-21 – subject to audit

Real increase Accrued pension at (decrease) in Employer pension age at 31 pension and related CETV at CETV at Real increase contribution to March 2021 and lump sum at 31 March 31 March (decrease) in partnership related lump sum pension age 2021 2020 CETV pension account £000 £000 £000 £000 £000 to nearest £100

Ian Gambles 20-25 0-2.5 498 450 28 - 35 - 40 plus a 0 plus a lump sum Steve Meeks lump sum of 950 998 (82) - of 0 115 - 120 25 - 30 plus a 0 - 2.5 plus a lump Richard Greenhous lump sum of 352 319 17 - sum of 0 - 2.5 40 - 45 Jo Ridgway 5-10 0-2.5 111 83 17 -

Steph Rhodes 15-20 0-2.5 227 197 20 -

Civil Service pensions pension age on 1 April 2012 remained in the PCSPS after 1 April 2015. Those Pension benefits are provided through who were between 10 years and 13 the Civil Service pension years and 5 months from their normal arrangements. From 1 April 2015 a pension age on 1 April 2012 will switch new pension scheme for civil servants into alpha sometime between 1 June was introduced – the Civil Servants 2015 and 1 February 2022. All and Others Pension Scheme or alpha, members who switch to alpha have which provides benefits on a career their PCSPS benefits ‘banked’, with average basis with a normal pension those with earlier benefits in one of the age equal to the member’s State final salary sections of the PCSPS Pension Age (or 65 if higher). From having those benefits based on their that date all newly appointed civil final salary when they leave alpha. servants and the majority of those (The pension figures quoted for already in service joined alpha. Prior officials show pension earned in PCSPS to that date, civil servants participated or alpha – as appropriate. Where the in the Principal Civil Service Pension official has benefits in both PCSPS and Scheme (PCSPS). The PCSPS has four alpha the figure quoted is the sections: three providing benefits on a combined value of their benefits in the final salary basis (classic, premium two schemes.) Members joining from or classic plus) with a normal pension October 2002 may opt for either the age of 60; and one providing benefits appropriate defined benefit on a whole career basis (nuvos) with a arrangement or a ‘money purchase’ normal pension age of 65. stakeholder pension with an employer contribution (partnership pension These statutory arrangements are account). unfunded with the cost of benefits met by monies voted by Parliament each Employee contributions are salary year. Pensions payable under classic, related and range between 4.6% and premium, classic plus, nuvos and 8.05% of pensionable earnings for alpha are increased annually in line members of classic, premium, with Pensions Increase legislation. classic plus, nuvos and alpha. Existing members of the PCSPS who Benefits in classic accrue at the rate were within 10 years of their normal of 1/80th of final pensionable earnings

Accountability report 39 Annual Report and Accounts 2020-21 for each year of service. In addition, a active member of the scheme if they lump sum equivalent to three years are already at or over pension age. initial pension is payable on retirement. Pension age is 60 for members of For premium, benefits accrue at the classic, premium or classic plus, 65 rate of 1/60th of final pensionable for members of nuvos, and the higher earnings for each year of service. of 65 or State Pension Age for Unlike classic, there is no automatic members of alpha. (The pension lump sum. classic plus is essentially a figures quoted for board members hybrid with benefits for service before show pension earned in PCSPS or alpha 1 October 2002 calculated broadly as – as appropriate. Where the member per classic and benefits for service has benefits in both the PCSPS and from October 2002 worked out as in alpha the figure quoted is the premium. In nuvos a member builds combined value of their benefits in the up a pension based on his pensionable two schemes, but note that part of that earnings during their period of scheme pension may be payable from different membership. At the end of the scheme ages.) year (31 March) the member’s earned pension account is credited with 2.3% Further details about the Civil Service of their pensionable earnings in that pension arrangements can be found at scheme year and the accrued pension the website is uprated in line with Pensions www.civilservicepensionscheme.org.uk Increase Legislation. Benefits in alpha build up in a similar way to nuvos, Cash equivalent transfer values except that the accrual rate is 2.32%. In all cases members may opt to give A Cash Equivalent Transfer Value up (commute) pension for a lump sum (CETV) is the actuarially assessed up to the limits set by the Finance Act capitalised value of the pension 2004. scheme benefits accrued by a member at a particular point in time. The The partnership pension account is an benefits valued are the member’s occupational defined contribution accrued benefits and any contingent pension arrangement which is part of spouse’s pension payable from the the Legal & General Mastertrust. The scheme. A CETV is a payment made by employer makes a basic contribution of a pension scheme or arrangement to between 8% and 14.75% (depending secure pension benefits in another on the age of the member). The pension scheme or arrangement when employee does not have to contribute, the member leaves a scheme and but where they do make contributions, chooses to transfer the benefits the employer will match these up to a accrued in their former scheme. The limit of 3% of pensionable salary (in pension figures shown relate to the addition to the employer’s basic benefits that the individual has accrued contribution). Employers also as a consequence of their total contribute a further 0.5% of membership of the pension scheme, pensionable salary to cover the cost of not just their service in a senior centrally-provided risk benefit cover capacity to which disclosure applies. (death in service and ill health retirement). The figures include the value of any pension benefit in another scheme or The accrued pension quoted is the arrangement which the member has pension the member is entitled to transferred to the Civil Service pension receive when they reach pension age, arrangements. They also include any or immediately on ceasing to be an additional pension benefit accrued to

40 Accountability report Annual Report and Accounts 2020-21 the member as a result of their buying include the increase in accrued pension additional pension benefits at their own due to inflation, contributions paid by cost. CETVs are worked out in the employee (including the value of accordance with The Occupational any benefits transferred from another Pension Schemes (Transfer Values) pension scheme or arrangement) and (Amendment) Regulations 2008 and do uses common market valuation factors not take account of any actual or for the start and end of the period. potential reduction to benefits resulting from Lifetime Allowance Tax which may Remuneration of non-executives – be due when pension benefits are subject to audit taken. The non-executive Forestry Real increase in CETV Commissioners received the following remuneration for their services during This reflects the increase in CETV that the year ended 31 March 2021. is funded by the employer. It does not

2020-21 2019-20 Fees Expenses Fees Expenses

£000 £000 £000 £000 Sir William Worsley1 39 - 6 - Sir Harry Studholme2 - - 35 5 Dr Mary Barkham3 7 - 25 3 George McRobbie - - 12 - Julia Grant 12 - 12 1 Liz Philip 12 - 12 3 Jennie Price 12 - 12 - Peter Latham 12 - 12 1 Sandy Storrie 12 - - - Julian Evans 12 - - - Hilary Allison 10 - - - John Lockhart4 5 -

1. Sir William Worsley is Chair from 10 February 2020 2. Sir Harry Studholme was Chair until 9 February 2020 3. Mary Barkham’s contract ended on 31 October 2020 4. John Lockhart, from 1 August 2020

The expenses disclosed above include COVID-19 restrictions dramatically all expenses, whether taxable or non- reduced business travel with a taxable, incurred and reclaimed while corresponding reduction in expenses travelling on Forestry Commission claimed by non-executives. business.

Accountability report 41 Annual Report and Accounts 2020-21

Staff report

Number of Senior Civil Servants by band

Band Number of Senior Civil Servants 2 1 1A 1 1 3

Average number of persons employed – subject to audit

2020-21 2019-20 Permanently employed staff Others Total Total Number Number Number Number Forestry Commission 230 42 272 255 Forest Research 225 25 250 241 Total 455 67 522 496

Staff costs – subject to audit

2020-21 2019-20 Permanently employed staff Others Total Total £000 £000 £000 £000 Core Wages and salaries 8,445 965 9,410 8,492 Social security costs 938 89 1,027 914 Other pension costs 2,241 215 2,456 2,253 Inward secondments - 53 53 86 Agency and temporary staff - 489 489 738 Total gross staff cost 11,624 1,811 13,435 12,483 Recoveries in respect of outward (31) - (31) (53) secondments Total net staff cost 11,593 1,811 13,404 12,430

Forest Research Wages and salaries 8,441 607 9,048 8,429 Social security costs 934 55 990 894 Other pension costs 2,176 152 2,328 2,205 Agency and temporary staff - 175 175 113 11,551 989 12,541 11,641

Total gross staff cost 23,175 2,800 25,976 24,124 Recoveries in respect of outward (31) - (31) (53) secondments Total net staff cost 23,144 2,800 25,945 24,071

Staff costs comprise staff employed by The Principal Civil Service Pension core Forestry Commission and staff Scheme (PCSPS) and the Civil Servant employed within Forest Research. and Other Pension Scheme (CSOPS) – known as alpha are unfunded

42 Accountability report Annual Report and Accounts 2020-21 multi-employer defined benefit of £33,000 (2019-20: £32,000) were schemes but Forestry Commission is paid to one or more of the panel of unable to identify its share of the three appointed stakeholder pension underlying assets and liabilities. The providers. Employer contributions are scheme actuary valued the PCSPS as age-related and ranged from 8% to at 31 March 2012. Details can be found 14.75%. in the resource accounts of the Cabinet Office: Civil Superannuation. Employers also match employee contributions up to 3% of pensionable For 2020-21, employers’ contributions earnings. In addition, employer of £4,656,000 were payable to the contributions of £600 (2019-20: £700), PCSPS (2019-20: £4,364,000) at one 0.5% of pensionable pay, were payable of four rates in the range 26.6% to to the PCSPS to cover the cost of the 30.3% of pensionable earnings, based future provision of lump sum benefits on salary bands. on death in service and ill health retirement of these employees. The Scheme Actuary reviews employer contributions usually every four years Contributions due to the partnership following a full scheme valuation. The pension providers at the balance sheet contribution rates are set to meet the date were £nil. Contributions prepaid cost of the benefits accruing during at that date were £nil. 2020-21 to be paid when the member retires and not the benefits paid during Ill-health retirement this period to existing pensioners. No one (2019-20: nil) retired early on Employees can opt to open a ill-health grounds; the total additional partnership pension account, a accrued pension liabilities in the year stakeholder pension with an employer amounted to £nil (2019-20: £nil). contribution. Employers’ contributions

Staff composition – subject to audit

2020- 2019- 21 20 Directors and senior civil Permanently servants employed staff Others Total Total Number Number Number Number Number Core Male 3 132 20 155 142 Female 2 93 22 117 113 Total 5 225 42 272 255 Forest Research Male 3 127 12 142 144 Female - 95 13 108 97 Total 3 222 25 250 241 Consolidated 8 447 67 522 496

Accountability report 43 Annual Report and Accounts 2020-21

Details of the Forestry Commission Staff turnover 2020-21 Gender Pay Gap report is available from www.gov.uk. There is a new reporting requirement to show our staff turnover. In future Sickness absence data years we will report prior year data for comparison. In 2020-21, Forest Working days lost per Services and Commissioner’s Office Year staff year had a staff turnover percentage of 2020-21 3.3 3.96%, Forest Research had a staff turnover of 9.90%. 2019-20 7.3 2018-19 7.6 Reason for leaving % of staff Our vision is that everyone working End of fixed term contract 1.58% with the Forestry Commission remains Redundancy 0.40% safe and well and our woodlands are Retirement 0.79% safe and enjoyable places to visit. We Resignation 1.19% remain committed to the Forest Industry Safety Accord and have Compensation for loss of office – representatives on the Steering Group subject to audit and the eight Working Groups including Managing Safety, Electricity, Haulage Three members of staff left under and Forest Training. Voluntary Exit and Voluntary Redundancy terms in the year to Accidents and reportable incidents 31 March 2021 (2019-20: 21). They received a total compensation payment There were no reportable accidents of £59,679 (2019-20: £1,175,569). (those causing incapacity for more than 7 days) in 2020-21 (2019-20: One member of staff left under nil). Compulsory Early Retirement or Compulsory Redundancy terms in the year to 31 March 2021 (2019-20: 1).

44 Accountability report Annual Report and Accounts 2020-21

Reporting of Civil Service and other compensation schemes – exit packages – subject to audit

Number of Number of other Total number of exit compulsory departures agreed packages by cost band Exit redundancies package cost band 2020-21 2019-20 2020-21 2019-20 2020-21 2019-20 <£10,000 1 - 2 - 3 - £10,000 - - 1 - 4 - 5 £25,000 £25,000 - - - 1 5 1 5 £50,000 £50,000 - - - - 9 - 9 £100,000 £100,000 - - - - 2 - 2 £150,000 £150,000 ------£200,000 Total number of 1 1 3 20 4 21 exit packages

Total resource £2,637 £18,030 £59,679 £1,164,156 £62,316 £1,182,462 cost / £

Forestry Commission Central Services additional costs are met by the staff who have departed in 2019-20 department and not by the Civil due to the restructuring of corporate Service pension scheme. Ill-health services have their exit package costs retirement costs are met by the shared between Forestry Commission, pension scheme and are not included Scottish Forestry and Forestry and in the table. Land Scotland. The total costs are disclosed here for transparency Staff policies purposes. At the beginning of March 2020 as the Redundancy and other departure costs COVID-19 pandemic hit the UK, a small have been paid in accordance with the COVID-19 HR response team lead by provisions of the Civil Service the HR director was established liaising Compensation Scheme, a statutory with the Cabinet Office and Defra on scheme made under the new policy, questions and Superannuation Act 1972. Exit costs communications for staff. Weekly are accounted for in full in the year of meetings with the Forestry Commission departure. Where the department has Trade Unions were held and in turn agreed early retirements, the emerging policy and guidance was

Accountability report 45 Annual Report and Accounts 2020-21 operationalised throughout the and confidence in leading and inspiring organisation to great effect. teams, fostering exemplar behaviours, with continuing professional During lockdown 28 meetings each development at its core. week were attended by three members of the HR COVID-19 four person COVID-19 inevitably slowed the response team, over 150 pieces of progress of this important work, so it guidance were read and adapted, began in September 2020 with the implemented and cascaded, and over development of a pan-Forestry 75 FAQs were written and kept Commission project group and updated. Since the autumn of 2020, a engagement with senior stakeholders good deal of time has been taken up to begin to shape the programme and engaging with Defra to roll out mass approach. The vision, aims and testing for eligible Forestry Commission objectives of the programme have now sites. Policy and process has had to been agreed by the Executive Board follow quickly behind the mass testing and the project group continues to phased launches. develop the programme, working with Civil Service Learning to develop a In line with the easing of lockdown one bespoke programme. The aim is to we were delighted to reopen sites, offer a modern, innovative blended providing spaces for the public to use, learning programme, which will use the coping with extremely high numbers of most up-to-date neuro-scientific visitors and new audiences, introducing approaches to development. The new COVID-19 secure workplace programme will also focus upon critical guidelines. The Forestry Commission competences needed to be an continues to adapt to new guidance exemplar Forestry Commission and lockdown situations, with COVID- manager. This will be rolled out to 19 safe working protocols and managers and leaders across the workspaces, while providing a safe business with the most senior staff space for visitors to access the nations being offered places from autumn forests. 2021. The intention is to offer the programme to further groups of Critical to our success was the high managers swiftly afterwards. level of wellbeing support used and developed at this time. Staff feedback Training has proven time and again how helpful such resources have been and continue Following lockdown on 23 March 2020, to be. Wellbeing is a key priority within a decision was taken to pause face-to- the soon to be launched Forestry face training for the wellbeing of our Commission People Strategy. staff. This enabled our training providers to develop alternative Leadership development solutions to traditional face-to-face learning and enabled us internally to Following the results of the staff adapt face-to-face delivery in an engagement survey 2019, the Forestry innovative way. Commission Executive Board asked for a management development All staff during the period were programme to be developed. The encouraged to engage in learning and ambition of this programme is to development activities to progress encourage and enable a culture change their continuing professional which will allow all managers to focus development (CPD). COVID-19 upon improving levels of competence provided a huge range of learning

46 Accountability report Annual Report and Accounts 2020-21 opportunities for staff. From having to to develop additional online learning work differently adapting their working for the recruitment process and styles and practices as well as in the performance and attendance way they undertook their roles during management. This work continues into the unfolding global pandemic. 2021-22. Naturally during this period, some routine professional skills and Diversity, inclusion and wellbeing qualification training was disrupted and changed or placed on pause. This will The Forestry Commission continues to be a focus of attention for the coming strive towards building a diverse and year, based upon business needs. inclusive environment for all staff and visitors. Providers such as Civil Service Learning and HEY Mind, our Mental Our Diversity and Inclusion strategy Health training provider, quickly sets out how we are doing this, making adapted the learning they offer and sure we fulfil our requirements under were able to deliver it online from the Equality Act 2010: Seeking to September 2020, making it easier for eliminate unlawful discrimination, colleagues with disabilities or caring harassment and victimisation, advance responsibilities to attend as no travel is equality of opportunity, and foster required. In fact, accessibility to good relations between those who training and meeting attendance has share a protected characteristic and improved during COVID-19. Before those who do not. A more ambitious COVID-19, some staff were unable to Diversity and Inclusion strategy is due reach meetings due to travel and time to launch in April 2021. This is in line constraints. with significant societal changes in recent times. HR worked hard to respond to staff development needs in respect of The public body equality duty requires personal resilience and wellbeing. As a us to demonstrate how we deliver result, many staff have undergone equality outcomes by publishing annual some form of training or learning this equality information - which enables year. A range of on-line sessions were the public to hold us to account, and offered, including lunch and learn. We publishing equality objectives. Further have continued to work tirelessly information about these objectives and throughout the year to ensure on-line how we are achieving this is available reading resources, blogs and videos via our annually reported Equality are available to complement externally Monitoring Report available on gov.uk. provided training, and in-house and Current programmes of work to informal/impromptu sessions. These increase the diversity of our workforce have all been critical to the support include our Women in Forestry and development of our staff. This Programme and our LGBTQ+ focus upon wellbeing and resilience has Supporters Network. A review of all been important as both are skill sets workforce policies is underway from an which have been required during this equality, diversity and inclusion challenging time. perspective.

Further work has been undertaken to In 2020 we launched a new Inclusion finalise and launch online induction Ambassadors programme as part of modules, which give a high-level view our zero tolerance approach to any of all parts of the business to new form of discrimination, bullying and starters in FE and FS. Work is ongoing harassment. Our staff are trained to

Accountability report 47 Annual Report and Accounts 2020-21 tackle both conscious and unconscious communications campaign titled Be discrimination and promote inclusion Well, Stay Well focused on key within their teams, using regular elements of personal wellbeing, ‘conversation starters’ to increase championed by senior managers across knowledge and understanding of the business and the sharing of diversity alongside inclusive practice. personal stories. This campaign has received high engagement at a crucial We will continue to build a culture of time and demonstrates the positive trust to encourage staff to update their cultural progress being made. diversity information which will in turn help us understand the diversity of our iTrent integrated HR and payroll workforce and positive steps we can system take. In addition to the above objectives, we will continue to review In June 2020, the iTrent Career and our diversity data sources to take Development module was launched. positive steps to meet our public sector The system enables colleagues to equality duties. browse the training available online, and book themselves onto available COVID-19 has shone the spotlight on training sessions. the importance of forests and green spaces in supporting people's health Work is planned to develop the use of and wellbeing. Externally we have management information tools which continued to promote and inspire will allow us to analyse training data people to connect with forests for their for inclusion in a dashboard. This may health and wellbeing. then be used to assist HR and senior managers with workforce planning and The health and wellbeing of our staff potential training gap analysis. has also continued to be a top priority. Internally, our revised staff wellbeing Workforce policies offer was launched at the end of February 2020 providing greater clarity The Forestry Commission will enjoy a and structure to the wealth of options suite of streamlined, user friendly and available to staff at different stages of legally compliant workforce policies their life and in different that will enable efficient business circumstances. During the COVID-19 decisions in respect of staffing. pandemic, staff have continued to be supported to work in new and flexible Another pause due to COVID-19 ways as part of our commitment to occurred in this area, as critical embed wellbeing within every aspect of resources were redeployed to leading the business. To ensure all staff had the workforce elements of the the tools they needed, we ran pandemic across the Forestry resilience workshops for 180 Commission. The Whistleblowing Policy employees to enable them to increase has been redeveloped with the their own resilience during the introduction of a simpler process to pandemic. support business decisions. The Discipline and Grievance polices are As the Mental Health First Aider currently being reviewed with an aim Network continues to embed, we have to focus upon early resolutions. All begun refresher training for this group workforce policies have policy owners to ensure their skills and knowledge with agreed timelines during 2021-22 remain up to date. During the autumn for delivery. Work in this area is much of 2020, a dedicated wellbeing needed and welcomed by managers

48 Accountability report Annual Report and Accounts 2020-21 and staff alike. There is a good deal of change required to modernise. Trade union facility time Offer 2020 Relevant union officials The aim of the Offer 2020 project is to develop a new employee offer including Number of Full-time improvements to pay, benefits, employees who equivalent recognition, learning and development, were relevant union number work-life balance and wellbeing. officials during 2020-21 In November 2020, we launched a new 22 21.01 employee discount site which gives access to a range of exclusive Percentage of time spent on discounts at some of the UK’s best facility time known and reputable retailers, visitors attractions and places to eat. We were Percentage of Number of also launched a new Cycle to Work time employees provider and a staff gym discount 0% 0 scheme. 1-50% 21 51-99% 0 Following the imposition of a ‘pay 100% 1 pause’ by Treasury, we will be to submit a business case to the Cabinet Percentage of pay bill spent on Office towards the end of 2021. facility time

Employee consultation and trade Percentage of the total pay 0.29% union relationship bill spent on facility time

The Forestry Commission continues to Paid trade union activities have a productive and respectful relationship with the Forestry Time spent on paid trade union Commission trade unions. To activities as a percentage of total paid encourage employee consultation and facility time hours during the year was communication, a Tier 1 Forestry 103.34%. Commission Trade Unions staff council meeting is held twice each year for the Expenditure on consultancy whole Forestry Commission. Tier 2 staff council meetings are held no less During the year Forestry Commission than twice yearly for Forestry England, incurred £87,000 on consultancy Forest Services and Forest Research. services largely related to Offer 2020 Key issues discussed include the (2019-20: £35,000). COVID-19 pandemic, Offer 2020 project, workforce policies, Expenditure on agency and organisational design, wellbeing, temporary staff mental health, and health and safety issues. Costs incurred on agency and temporary staff during the period total £664,000 (2019-20: £891,000). The reduction in spend is partly due to conversion of agency resource to

Accountability report 49 Annual Report and Accounts 2020-21 permanent positions and partly due to No. of new engagements further reduction in Rural Development between 1 April 2020 and 31 Programme for England legacy grant March 2021 2 workload as commitments expire. Of which… No. assessed as caught by IR35 Nil Off-payroll engagements No. assessed as not caught by IR35 2 Defra are required to disclose information in their annual report and No. engaged directly and are on accounts relating to the review of tax the departmental payroll Nil arrangements of public sector No. of engagements reassessed employees. Information relating to for consistency/assurance off-payroll engagements for Forestry purposes during the year Nil Commission is reported below for No. of engagements that saw a consistency with Defra’s annual report change to IR35 status following and accounts. the consistency review Nil

Table 1: For all off-payroll Table 3: For any off-payroll engagements as of 31 March 2021, for engagements of board members, more than £245 per day and that last and/or, senior officials with significant for longer than six months. financial responsibility, between 1 April 2020 and 31 March 2021. No. of existing engagements as of 31 March 2021 2 Number of off-payroll Nil Of which… engagements of board members No. that have existed for less and/or senior officials with than one year at time of significant financial reporting 2 responsibility, during the No. that have existed for financial year. between one and two years at Number of individuals that have 28 time of reporting Nil been deemed ‘board members No. that have existed for and/or, senior officials with between two and three years at significant financial time of reporting Nil responsibility’, during the No. that have existed for financial year. This figure should between three and four years at include both off-payroll and on- time of reporting Nil payroll engagements No. that have existed for four or more years at time of reporting Nil Parliamentary

Table 2: For all new off-payroll Accountability and Audit engagements, or those that reached Report six months in duration, between 1 April 2020 and 31 March 2021, for more The parliamentary accountability and than £245 per day and that last for audit report brings together the main longer than six months. parliamentary accountability documents within the annual report and accounts. It reports the summary of outturn, a comparison of outturn against the Supply Estimate voted by Parliament, and explanations of any

50 Accountability report Annual Report and Accounts 2020-21 variances between the Estimate and outturn.

Losses and special payments – subject to audit

Total losses and special payments for the Forestry Commission, across 11 payments is £567,000.

This value is driven by a Forest Research loss of £478,000, relating to an EU Research ThermoLIDAR project following liquidation of the company running the project. Legal efforts continue to recoup this loss.

Fees and charges – subject to audit

The Forestry Commission has complied with the cost allocation and charging requirements set out in HM Treasury and Office of Public Sector Information guidance.

Remote contingent liabilities – subject to audit

In addition to contingent liabilities reported within the meaning of IAS 37, the Forestry Commission also reports liabilities for which the likelihood of a transfer of economic benefit in settlement is too remote to meet the definition of contingent liability. There are currently no remote contingent liabilities.

M. Seddon 15 June 2021 Accounting Officer Forestry Commission

Accountability report 51 Annual Report and Accounts 2020-21

The certificate and report of the Opinion on regularity Comptroller and Auditor General to the House of Commons In my opinion, in all material respects the income and expenditure recorded Opinion on financial statements in the financial statements have been applied to the purposes intended by I certify that I have audited the Parliament and the financial financial statements of the Forestry transactions recorded in the financial Commission and its Group for the year statements conform to the authorities ended 31 March 2021 under the which govern them. Government Resources and Accounts Act 2000. The financial statements Basis for opinions comprise: Group and Parent Statements of Comprehensive Net I conducted my audit in accordance Expenditure, Financial Position, Cash with International Standards on Flows, Changes in Taxpayers’ Equity; Auditing (ISAs) (UK), applicable law and the related notes, including the and Practice Note 10 ‘Audit of Financial significant accounting policies. These Statements of Public Sector Entities in financial statements have been the United Kingdom’. My prepared under the accounting policies responsibilities under those standards set out within them. The financial are further described in the Auditor’s reporting framework that has been responsibilities for the audit of the applied in their preparation is financial statements section of my applicable law and international certificate. accounting standards as interpreted by HM Treasury’s Government Financial Those standards require me and my Reporting Manual. staff to comply with the Financial Reporting Council’s Revised Ethical I have also audited the information in Standard 2019. I have also elected to the Accountability Report that is apply the ethical standards relevant to described in that report as having been listed entities/ public interest entities. I audited. am independent of Forestry Commission in accordance with the In my opinion, the financial ethical requirements that are relevant statements: to my audit of the financial statements in the UK. My staff and I have fulfilled ▪ give a true and fair view of the our other ethical responsibilities in state of the Group and of the accordance with these requirements. Forestry Commission’s affairs as at 31 March 2021 and of the Group I believe that the audit evidence I have and Forestry Commission’s net obtained is sufficient and appropriate operating expenditure for the year to provide a basis for my opinion. then ended; and ▪ have been properly prepared in Conclusions relating to going accordance with the Government concern Resources and Accounts Act 2000 and HM Treasury directions issued In auditing the financial statements, I thereunder. have concluded that Forestry Commission's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

52 Independent auditor’s report Annual Report and Accounts 2020-21

Based on the work I have performed, I appears to be materially misstated. If I have not identified any material identify such material inconsistencies uncertainties relating to events or or apparent material misstatements, I conditions that, individually or am required to determine whether this collectively, may cast significant doubt gives rise to a material misstatement on Forestry Commission's ability to in the financial statements themselves. continue as a going concern for a If, based on the work I have period of at least twelve months from performed, I conclude that there is a when the financial statements are material misstatement of this other authorised for issue. information, I am required to report that fact. My responsibilities and the responsibilities of the Accounting I have nothing to report in this regard. Officer with respect to going concern are described in the relevant sections Opinion on other matters of this certificate. In my opinion, based on the work The going concern basis of accounting undertaken in the course of the audit: is adopted in consideration of the requirements set out in HM Treasury’s ▪ the parts of the Accountability Government Reporting Manual, which Report to be audited have been require entities to adopt the going properly prepared in accordance concern basis of accounting in the with HM Treasury directions made preparation of the financial statements under the Government Resources where it anticipated that the services and Accounts Act 2000; and which they provide will continue into ▪ the information given in the the future. Performance and Accountability Reports for the financial year for Other Information which the financial statements are prepared is consistent with the The other information comprises financial statements. information included in the Annual Report, but does not include the parts Matters on which I report by of the Accountability Report described exception in that report as having been audited, the financial statements and my In the light of the knowledge and auditor’s certificate thereon. The Chief understanding of Forestry Commission Executive as Accounting Officer is and its environment obtained in the responsible for the other information. course of the audit, I have not My opinion on the financial statements identified material misstatements in does not cover the other information the performance and Accountability and except to the extent otherwise Report. explicitly stated in my certificate, I do not express any form of assurance I have nothing to report in respect of conclusion thereon. In connection with the following matters which I report to my audit of the financial statements, you if, in my opinion: my responsibility is to read the other information and, in doing so, consider ▪ adequate accounting records have whether the other information is not been kept or returns adequate materially inconsistent with the for my audit have not been received financial statements or my knowledge from branches not visited by my obtained in the audit or otherwise staff; or

Independent auditor’s report 53 Annual Report and Accounts 2020-21

▪ the financial statements and the Auditor’s responsibilities for the parts of the Accountability Report to audit of the financial statements be audited are not in agreement with the accounting records and My responsibility is to audit, certify and returns; or report on the financial statements in ▪ certain disclosures of remuneration accordance with the Government specified by HM Treasury’s Resources and Accounts Act 2000. Government Financial Reporting Manual are not made; or My objectives are to obtain reasonable ▪ I have not received all of the assurance about whether the financial information and explanations I statements as a whole are free from require for my audit; or material misstatement, whether due to ▪ the Governance Statement does not fraud or error, and to issue a certificate reflect compliance with HM that includes my opinion. Reasonable Treasury’s guidance. assurance is a high level of assurance but is not a guarantee that an audit Responsibilities of the Accounting conducted in accordance with ISAs Officer for the financial statements (UK) will always detect a material misstatement when it exists. As explained more fully in the Misstatements can arise from fraud or Statement of Accounting Officer’s error and are considered material if, Responsibilities, the Chief Executive as individually or in the aggregate, they Accounting Officer is responsible for: could reasonably be expected to influence the economic decisions of ▪ the preparation of the financial users taken on the basis of these statements in accordance with the financial statements. applicable financial reporting framework and for being satisfied I design procedures in line with my that they give a true and fair view; responsibilities, outlined above, to ▪ internal controls as the Chief detect material misstatements in Executive as Accounting Officer respect of non-compliance with laws determines is necessary to enable and regulations, including fraud. the preparation of financial statement to be free from material My procedures included the following: misstatement, whether due to fraud or error. ▪ Inquiring of management, Forestry ▪ assessing Forestry Commission's Commission's head of internal audit ability to continue as a going and those charged with governance, concern, disclosing, as applicable, including obtaining and reviewing matters related to going concern supporting documentation relating and using the going concern basis to Forestry Commission's policies of accounting unless the Chief and procedures relating to: Executive as Accounting Officer ▪ identifying, evaluating and anticipates that the services complying with laws and regulations provided by Forestry Commission and whether they were aware of will not continue to be provided in any instances of non-compliance; the future. ▪ detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud; and ▪ the internal controls established to mitigate risks related to fraud or

54 Independent auditor’s report Annual Report and Accounts 2020-21

non-compliance with laws and controls, testing the regulations including Forestry appropriateness of journal entries Commission's controls relating to and other adjustments; assessing the Forestry Act 1967. whether the judgements made in ▪ discussing among the engagement making accounting estimates are team and involving relevant internal indicative of a potential bias; and and or external specialists, evaluating the business rationale of including regarding how and where any significant transactions that are fraud might occur in the financial unusual or outside the normal statements and any potential course of business. indicators of fraud. As part of this discussion, I identified potential for I also communicated relevant identified fraud in the following areas: laws and regulations and potential revenue recognition, posting of fraud risks to all engagement team unusual journals and; members including internal specialists ▪ Obtaining an understanding of the and significant component audit teams Forestry Commission and the and remained alert to any indications Group's framework of authority as of fraud or non-compliance with laws well as other legal and regulatory and regulations throughout the audit. frameworks that Forestry Commission and the Group A further description of my operates in, focusing on those laws responsibilities for the audit of the and regulations that had a direct financial statements is located on the effect on the financial statements or Financial Reporting Council’s website that had a fundamental effect on at: the operations of Forestry www.frc.org.uk/auditorsresponsibilities Commission. The key laws and This description forms part of my regulations I considered in this certificate. context included the Government Resources and Accounts Act 2000, In addition, I am required to obtain Managing Public Money and evidence sufficient to give reasonable employment, taxation and pensions assurance that the income and legislation. expenditure reported in the financial statements have been applied to the In addition to the above, my purposes intended by Parliament and procedures to respond to identified the financial transactions conform to risks included the following: the authorities which govern them.

▪ reviewing the financial statement I communicate with those charged with disclosures and testing to governance regarding, among other supporting documentation to assess matters, the planned scope and timing compliance with relevant laws and of the audit and significant audit regulations discussed above; findings, including any significant ▪ enquiring of management, the Audit deficiencies in internal control that I Committee and in-house legal identify during my audit. counsel concerning actual and potential litigation and claims; Report ▪ reading minutes of meetings of those charged with governance and I have no observations to make on the Board; and these financial statements. ▪ in addressing the risk of fraud through management override of

Independent auditor’s report 55 Annual Report and Accounts 2020-21

Gareth Davies 21 June 2021 Comptroller and Auditor General

National Audit Office 157-197 Buckingham Palace Road Victoria London SW1W 9SP

56 Independent auditor’s report Annual Report and Accounts 2020-21

Financial statements

Consolidated statement of comprehensive net expenditure for the year ended 31 March 2021

2020-21 2019-20 Core Consolidated Core Consolidated Note £000 £000 £000 £000

Revenue from contracts with 3 (1,918) (13,884) (3,148) (15,378) customers Total operating income (1,918) (13,884) (3,148) (15,378)

Staff costs 2 13,435 25,976 12,483 24,124 Other operating expenditure 2 39,102 47,176 28,184 35,776 Total operating expenditure 52,537 73,152 40,667 59,900

Net operating expenditure 50,619 59,268 37,519 44,522

Other comprehensive expenditure Net (gain)/loss on revaluation of 4 - 109 - (93) property, plant and equipment Net gain on revaluation of Euro - - - (15) receivable Comprehensive net expenditure 50,619 59,377 37,519 44,414 for the period

All income and expenditure is derived from continuing operations.

The notes on pages 61 to 80 form part of these accounts

Financial statements 57 Annual Report and Accounts 2020-21

Consolidated statement of financial position as at 31 March 2021

31 March 31 March 2021 2020 Core Consolidated Core Consolidated Note £000 £000 £000 £000 Non-current assets Property, plant and equipment 4 - 19,930 - 13,372 Intangible assets 5 1,108 1,145 1,001 1,001 Investment in associate - 75 - 75 Trade receivables, financial and 7 8 26 15 28 other assets Total non-current assets 1,116 21,176 1,016 14,476

Current assets Inventories - 57 - 110 Trade receivables, financial and 7 779 2,466 549 5,278 other assets Cash and cash equivalents 8 6,472 11,008 3,443 5,337 Total current assets 7,251 13,531 3,992 10,725

Total assets 8,367 34,707 5,008 25,201

Current liabilities Trade payables, financial and 9 (16,131) (19,683) (9,261) (11,400) other liabilities Provisions 11 - (9) (59) (59) Total current liabilities (16,131) (19,692) (9,320) (11,459)

Total assets less current liabilities (7,764) 15,015 (4,312) 13,742

Non-current liabilities Trade payables, financial and 9 - - - (99) other liabilities Total non-current liabilities - - - (99)

Total assets less total liabilities (7,764) 15,015 (4,312) 13,643

Taxpayers' equity General fund (7,764) 7,711 (4,312) 6,082 Revaluation reserve - 7,305 - 7,561 Total taxpayers' equity (7,764) 15,015 (4,312) 13,643

M. Seddon 15 June 2021 Accounting Officer Forestry Commission

The notes on pages 61 to 80 form part of these accounts

58 Financial statements Annual Report and Accounts 2020-21

Consolidated statement of cash flows for the year ended 31 March 2021

2020-21 2019-20 Core Consolidated Core Consolidated Note £000 £000 £000 £000 Cash flows from operating activities Net operating expenditure (50,619) (59,268) (37,519) (44,522) Adjustment for intercompany (8,395) - (7,380) - transactions Adjustment for non-cash 2 744 1,722 883 2,254 transactions Decrease in inventories - 53 - 18 (Increase)/decrease in trade 7 (223) 2,814 557 (1,253) receivables, financial and other assets Increase/(decrease) in trade 9 6,870 8,184 (5,298) (5,632) payables, financial and other liabilities Less movement in Defra supply 9 (5,671) (5,671) 5,214 5,214 creditor Less movement in Euro - - - 15 receivable not passing through the OCS Use of provisions 11 (55) (64) (691) (707) Net cash outflow (57,349) (52,230) (44,234) (44,613)

Cash flows from investing activities Purchase of property, plant and 4 - (7,587) - (1,651) equipment Purchase of intangible assets 5 (336) (373) (174) (174) Proceeds on disposal of non- - - 146 146 current assets Net cash outflow (336) (7,960) (28) (1,679)

Cash flows from financing activities Funding from Defra 66,051 71,198 49,929 51,629 Repayment of prior year Defra (5,337) (5,337) (10,551) (10,551) creditor Net cash inflow 60,714 65,861 39,378 41,078

Net increase in cash and 3,029 5,671 (4,884) (5,214) cash equivalents

Cash and cash equivalents 8 3,443 5,337 8,327 10,551 at the beginning of the period Cash and cash equivalents 8 6,472 11,008 3,443 5,337 at the end of the period

The notes on pages 61 to 80 form part of these accounts

Financial statements 59 Annual Report and Accounts 2020-21

Consolidated statement of changes in taxpayers’ equity for the year ended 31 March 2021

Core Consolidated General Revaluation Taxpayers' General Revaluation Taxpayers' fund reserve equity fund reserve equity Note £000 £000 £000 £000 £000 £000 Balance at 31 March (4,746) 143 (4,603) 3,455 7,673 11,128 2019 Net Defra 44,592 - 44,592 46,292 - 46,292 funding Notional charges Auditors' 2 45 - 45 84 - 84 remuneration Defra corporate 2 553 - 553 553 - 553 services Comprehensive (37,519) - (37,519) (44,414) - (44,414) net expenditure for the year Intercompany (7,380) - (7,380) - - - adjustments Net gain on revaluation of Property, plant 4 - - - (93) 93 - and equipment Euro receivable - - - (15) 15 - Realised element of 143 (143) - 220 (220) - revaluation reserve Balance at 31 March (4,312) - (4,312) 6,082 7,561 13,643 2020 Net Defra 55,043 - 55,043 60,190 - 60,190 funding Notional charges Auditors' 2 46 - 46 87 - 87 remuneration Defra corporate 2 473 - 473473 - 473 services Comprehensive (50,619) - (50,619)(59,377) - (59,377) net expenditure for the period Intercompany (8,395) - (8,395) - - - adjustments Net gain on revaluation of Property, plant 4 - - - 109 (109) - and equipment Realised element - - - 147 (147) - of revaluation reserve Balance at 31 March (7,764) -(7,764)7,7117,30515,016 2021

The notes on pages 61 to 80 form part of these accounts

60 Financial statements Annual Report and Accounts 2020-21

Notes to the accounts Management have made significant judgements in respect of Forest NOTE 1 Statement of accounting Research’s development activities, policies where they have judged that the development activities undertaken by These financial statements have been Forest Research have not met the prepared in accordance with the conditions outlined in IAS 38, 2020-21 government Financial Intangible Assets, and therefore no Reporting Manual (FReM) issued by HM assets have been recognised by Forest Treasury and are in accordance with Research, or consolidated within these directions issued by the Secretary of accounts. The activities are reviewed State for the Environment, Food and on an on-going basis against the Rural Affairs. criteria of IAS 38.

The accounting policies contained in 1.2 Accounting convention the FReM apply International Financial Reporting Standards (IFRS), as These accounts have been prepared on adapted or interpreted for the public an accruals basis under the historical sector context. cost convention, modified to account for the revaluation of property, plant Where the FReM permits a choice of and equipment, intangible assets and accounting policy, a judgement has certain financial assets and liabilities. been made to select the most appropriate policy to suit the particular 1.3 Going concern circumstances of Forestry Commission, for the purpose of giving a true and fair In line with HM Treasury’s Financial view. The accounting policies have Reporting Manual, the information been applied consistently in dealing presented in these financial statements with items which are considered is based on the assumption that the material in relation to the accounts. Forestry Commission will continue to provide existing services in the future, 1.1 Significant judgements and with no legislation changes currently estimation uncertainty expected.

The preparation of financial statements The statement of financial position at requires management to make 31 March 2021 shows taxpayer’s judgements, estimates and equity of £7.7 million (at 31 March assumptions that affect the reported 2020 £6 million). In common with amounts of assets and liabilities, other public bodies across government, disclosures of contingent assets and the future funding for our liabilities will liabilities and the reported amount of be sourced from our parent income and expenditure. All estimates department (Defra funding formed are based on knowledge of current 98% of our 2020-21 funding). facts and circumstances, assumptions Parliament approves this funding concerning past events, and forecasts annually. of future events and actions. Where appropriate, the relevant notes to the Forestry Commission’s funding for accounts provide further detail on 2021-22 is included within the Defra estimation techniques. estimates which have already been approved by Parliament. A three-year government spending review (SR21) is commencing in the summer of 2021 to

Notes to the accounts 61 Annual Report and Accounts 2020-21 determine future funding for annual subsidy limit, to Forestry government departments including England, which is accounted for as Defra for the period 2022-23 to expenditure in the Forestry 2024-25. Continued support of the Commission accounts. Forestry Forestry Commission from 2022-23 Commission receives a dividend from onwards will be considered and Forestry England reflecting the reviewed as part of this Spending expected rate of return on funding Review. provided. The dividend rate has been agreed with HM Treasury and is Based on the above information it has currently set at zero per cent whilst therefore been considered appropriate Forestry England is loss-making. If to adopt a going concern basis for the Forestry England makes a surplus preparation of these financial before revaluation gains on biological statements. assets in the future, HM Treasury’s real rate of 3.5 per cent will apply. 1.4 Basis of consolidation 1.6 Administrative and programme These accounts comprise a expenditure consolidation of the Forestry Commission delivery and management The classification of expenditure and units, Forest Services and income as administration or Commissioners’ Office, as the Core, programme follows the definition set and Forest Research, an executive by HM Treasury. Administration costs agency of the Forestry Commission. and income reflect agreements reached Transactions between entities within with HM Treasury and Defra regarding the consolidation boundary have been classification of the activity as non- eliminated. Grants that include an frontline services. Where an activity element of co-financing from the has been classified as a front line European Union are accounted for by service, the associated income and Defra. expenditure is recognised as programme. The nation’s forests in England are managed by Forestry England, an 1.7 Property, plant and equipment executive agency of Forestry Commission, which has been classified Legal ownership of all land and by the Office for National Statistics as buildings is vested in ministers. Legal a public corporation. As a public ownership of the timber, including corporation, the assets (including the uncut trees, is vested in the Forestry nation’s forests), liabilities, income and Commissioners and accounted for by expenditure of Forestry England are Forestry England. Legal ownership of not consolidated in the accounts of other tangible assets is vested in the Forestry Commission, or Defra. Forestry Commissioners and accounted Forestry England produces its own for in Forestry Commission, Forest Annual Report and Accounts, which are Research and Forestry England as available on www.gov.uk. appropriate.

1.5 Funding to, and public 1.7.1 Recognition and valuation corporation dividend from, Forestry England Freehold land and buildings are subject to professional valuation at no more Forestry Commission makes an annual than five yearly intervals. These funding payment, equal to the agreed valuations are carried out by

62 Notes to the accounts Annual Report and Accounts 2020-21 professionally qualified staff members, ▪ Office machinery and equipment – who adhere to the principles outlined in £2,000 the Royal Institution of Chartered Surveyors (RICS) Red Book. The most 1.7.2 Subsequent expenditure recent valuation was carried out on 31 March 2018 and was reviewed by Subsequent expenditure is included in Savills, Chartered Surveyors. the asset’s carrying amount or recognised as a separate asset, as Land is stated at fair value, which in appropriate, only when it is probable practice is open market value. that future economic benefits Buildings are stated at depreciated associated with the item will flow to replacement cost, i.e. fair value less Forestry Commission and the cost of accumulated depreciation. Between full the item can be measured reliably. The valuations, all land and buildings are carrying amount of the replaced part is revalued annually as at 31 March using derecognised. All other repairs and specialist indices. maintenance are expensed during the financial period in which they are In accordance with IFRS 13, Fair Value incurred. Measurement, all non-property tangible assets are carried at fair 1.7.3 Valuation movements value. Valuations on non-property tangible assets are carried out as Increases in the carrying amount follows: arising on revaluation of property, plant and equipment are credited to ▪ Assets in the course of construction the revaluation reserve. Decreases that valued at purchase cost as a proxy offset previous increases of the same for fair value, and subject to full asset are charged against the valuation on being brought into use revaluation reserve; all other ▪ Plant and machinery carried at fair decreases are charged to the value less accumulated Consolidated Statement of depreciation, subject to a full Comprehensive Net Expenditure. Each revaluation every five years by year the difference between professionally qualified staff and depreciation based on the revalued subject to annual revaluation using carrying amount of the asset charged indices provided by the Office for to the Consolidated Statement of National Statistics Comprehensive Net Expenditure and ▪ Office machinery and equipment depreciation based on the asset’s carried at fair value less original cost is transferred from the accumulated depreciation, with revaluation reserve to the general purchase cost used as an fund. approximation for initial fair value, and subject to an annual 1.7.4 Depreciation revaluation using indices provided by the Office for National Statistics Land, assets under construction, and assets held for sale are not Capitalisation of assets is subject to a depreciated. minimum threshold, or threshold range, as follows: All other owned property, plant and equipment are depreciated, less ▪ Freehold land – nil estimated residual values, over the ▪ Buildings – £10,000 following timescales: ▪ Plant and machinery – £3,000

Notes to the accounts 63 Annual Report and Accounts 2020-21

▪ Buildings – 1 to 60 years cost and amortised over an estimated ▪ Vehicles, machinery and equipment useful economic life of seven years. – 4 to 20 years ▪ Office machinery and equipment – 1.9 Income 3 to 20 years Operating income relates directly to Leased assets are depreciated over the the operating activities of the Forestry unexpired term of the lease, other than Commission. Income is accounted for buildings held under a finance lease, in accordance with the five stage which are depreciated over the lesser model set out in IFRS 15 Revenue from of the unexpired term and 60 years. contracts with customers and is Lease premiums on freehold buildings recognised when performance are depreciated over the unexpired obligations are satisfied. term. 1.10 Government grants receivable All assets residual values and useful lives are reviewed, and adjusted if Grants from the government are appropriate, at 31 March. accounted for in accordance with IAS 20 as adapted by the FReM. 1.8 Intangible non-current assets 1.11 Directly funded grants Intangible non-current assets are payable defined as identifiable non-monetary assets without physical substance. Grants payable to individuals and These comprise software licences and bodies by the Forestry Commission in internally developed information accordance with its statutory powers technology software, including assets and duties are accounted for as they under construction. are approved for payment. No provision is made in the financial Acquired computer software licences statements for grant offers made but are initially capitalised on the basis of not yet approved for payment, the costs incurred to acquire and bring although they are quantified in note to use the specific software, and 13. subsequently revalued to depreciated replacement cost. Acquired computer 1.12 Co-funded grants payable software licences are amortised over their estimated useful lives dependent The Forestry Commission acts under upon the period of the licence. delegated authority from Parliament to administer third party grants paid from The Forestry Commission expenditure Objective 1 and Woodland Grant on research activities is written off to Scheme payments made under the the Statement of Comprehensive Net national European Agricultural Expenditure as incurred. Guarantee and Guidance Fund and the European Agricultural Fund for Rural Capitalisation of internally developed Development. Once grants become software is contingent on fulfilment of recognised, contributions from the the criteria noted in IAS 38 (Intangible European Union are claimed. If grants Assets) and includes capitalisation of are subsequently recovered because of internal IT employee costs on projects. failure to fulfil the condition of the Internally developed software assets relevant woodland grant scheme, the are valued at depreciated replacement amount of co-financing may be repayable to the EU. All such

64 Notes to the accounts Annual Report and Accounts 2020-21 transactions are reflected in the cases where recovery is not expected accounts of Defra. will be fully provided for.

1.13 Foreign currency transactions 1.14.2 Financial liabilities

The function and presentational These comprise trade and other currency of the Forestry Commission is payables and other financial liabilities sterling. (including derivatives). They are initially recognised at fair value and are Transactions in foreign currencies, subsequently measured at amortised mainly related to the work of Forest cost. Research, are translated into sterling using the rate at the date of the 1.15 Cash and cash equivalents transactions. Balances held in foreign currencies are translated at the rate of Cash and cash equivalents include cash exchange ruling at the date of the in hand and current balances held with Statement of Financial Position. banks and other financial institutions, and other short-term investments. Exchange differences are recognised in the Statement of Comprehensive Net 1.16 Pensions Expenditure in the period in which they arise. Past and present employees are covered by the provisions of the 1.14 Financial instruments Principal Civil Service Pension Scheme (PCSPS), full details of which can be 1.14.1 Financial assets found in the Remuneration and Staff Report and in note 2. The Forestry Commission discloses receivables and other financial assets Although the Principal Civil Service with a positive fair value in this Pension Scheme (PCSPS) is an category. Receivables are non- unfunded defined benefit schemes, in derivative financial assets with fixed or accordance with explicit requirements determinable payments that are not in the FReM, departments, agencies quoted in an active market. and other bodies account for the Receivables are valued in accordance schemes as if they were defined with IFRS 9 Financial Instruments, as contribution plans. Costs of the adapted for Government. Receivables elements are recognised on a have been impaired in accordance with systematic and rational basis over the the expected credit loss model below; period during which it benefits from employees’ services by payment to the Age of debtor (months) Provision schemes of amounts calculated on an accruing basis. Liability for payment of 0-6 0% future benefits is a charge on the 7-12 20% schemes. The PCSPS pension scheme 13-15 50% undergoes a reassessment of the 16+ 75% contribution rates by the government actuary at four-yearly intervals. Aged debtors are individually analysed based on known history. Newly aged 1.17 Contingent liabilities receivables with good payment policy may not be discounted and known Contingent liabilities are disclosed in accordance with IAS 37. In addition,

Notes to the accounts 65 Annual Report and Accounts 2020-21 where applicable certain statutory and regulations and normal commercial non-statutory contingent liabilities are practice, income and expenditure disclosed for parliamentary reporting shown in the Consolidated Statement and accountability purposes under HM of Comprehensive Net Expenditure is Treasury’s Managing Public Money. net of VAT. Any VAT due to or from HM These include liabilities where the Revenue and Customs at the year-end likelihood of economic costs and is included in the Forestry Commission benefits are remote but there is a accounts as a receivable or payable in requirement to report them to the Statement of Financial Position. Parliament where applicable. Irrecoverable VAT is charged to the Consolidated Statement of 1.18 Provisions Comprehensive Net Expenditure in the year in which it is incurred. The Forestry Commission provides for obligations arising from past events 1.21 Segmental reporting where there is an obligation at the Statement of Financial Position date, it Operating segments are reported in a is probable that settlement of the manner consistent with the internal obligation will be required, and a reporting provided to the chief reliable estimate of the obligation can operating decision-maker. The chief be made. Where material, the operating decision-maker responsible estimated future cash flows are for allocating resources and assessing discounted using the real discount rate performance of the operating segments set by HM Treasury. has been identified as the Forestry Commission Executive Board. In 1.19 Subsidiaries, associates and applying IFRS 8, management has joint ventures determined that the Forestry Commission operates as one operating Investments held in subsidiaries, segment. associates or joint ventures that are outside the consolidation boundary, 1.22 Impending application of and where Forestry Commission does newly issued Accounting Standards not exercise in-year budgetary control, not yet effective are accounted for in accordance with HM Treasury’s Financial Reporting IAS 8, Accounting Policies, Changes in Manual. Where such an investment is Accounting Estimates and Errors, in another public sector entity it is requires disclosures in respect of new reported at historical cost less any IFRSs, amendments and impairment. Where an investment is in interpretations that are, or will be another entity it is accounted for applicable after the reporting period. following the requirements of IAS 39. There are a number of IFRSs, amendments and interpretations that C-Cure Ltd is classified as an associate have been issued by the International of Forest Research and is consolidated Accounting Standards Board that are using the equity method in accordance effective for future reporting periods. with IAS 39. Those with relevance to Forestry Commission are outlined below. None 1.20 Value Added Tax have been adopted early.

The Forestry Commission is registered The following standards will be applied for Value Added Tax (VAT). To comply upon formal adoption in the FReM. with the government accounting

66 Notes to the accounts Annual Report and Accounts 2020-21

▪ IFRS 16 – Leases. The IFRS 16 is expected to have some implementation of this standard has impact in financial reporting terms. been deferred and is effective from Operating lease commitments largely our 2022-23 accounts. It will relate to a Memorandum of Terms of supersede all existing IFRS Understanding (MOTU) lease for space standards on leases. It is likely to in an office block, which ends in August result in a uniform accounting 2022. The impact of implementation of treatment for all leases, with the IFRS 16 will therefore be immaterial. distinction between operating and finance leases removed. IFRS 17 is not expected to have ▪ IFRS 17 – Insurance Contracts. This material impact. This will be assessed standard is effective from the when further guidance is forthcoming 2023-24 accounts. This standard from HM Treasury. will apply to all types of insurance contract and proposes a building blocks approach based on the expected present value of future cash flows to measuring insurance contract liabilities.

Notes to the accounts 67 Annual Report and Accounts 2020-21

NOTE 2 Staff and other costs

2020-21 2019-20 Core Consolidated Core Consolidated £000 £000 £000 £000 Staff costs Wages and salaries 9,410 18,458 8,492 16,921 Social security costs 1,027 2,017 914 1,808 Other pension costs 2,456 4,784 2,253 4,458 Agency and temporary staff 542 717 824 937 13,435 25,976 12,483 24,124

Other costs Travel and subsistence 142 205 781 1,393 Staff transfers 11 11 2 2 Corporate services charges 805 805 925 925 Computer costs 17 2,061 110 1,850 Accommodation and office services 128 1,409 46 1,398 Communication 135 250 196 280 Training 85 124 53 130 Losses and compensation 6 573 65 83 Legal expenses 236 245 285 316 Partnerships and publicity 4,442 7,206 3,886 5,980 Private woodland grants 3,204 3,204 1,999 1,999 Research and development 47 47 12 12 Other expenditure 2,239 2,453 2,000 2,207 11,497 18,593 10,360 16,575

Rentals under operating leases Land and buildings - - 491 497 - - 491 497

Forestry England funding 26,775 26,775 16,014 16,014 Forestry England capital grants 86 86 436 436 26,861 26,861 16,450 16,450

Non-cash costs Depreciation - 917 4 1,241 Amortisation 229 229 188 189 Loss on disposal of property, plant - 2 3 97 and equipment Provisions Provided in year 11 29 92 92 Not required and written back (15) (15) (2) (2) Notional charges Auditors' remuneration 46 87 45 84 Defra corporate services 473 473 553 553 744 1,722 883 2,254

Total 52,537 73,152 40,667 59,900

1. Further analysis of staff costs is located in the Staff Report on page 42.

68 Notes to the accounts Annual Report and Accounts 2020-21

NOTE 3 Income

2020-21 2019-20 Core Consolidated Core Consolidated £000 £000 £000 £000 Revenue from contracts with customers Forest Research MOU income from: Scotland - 4,079 - 4,079 Wales - 907 - 907 Other charges to public sector forestry bodies in: Scotland 349 2,853 1,806 4,429 England 552 1,874 285 1,571 Wales - 597 47 149 901 10,310 2,138 11,135 Project and partnership income 652 652 720 720 EU income - (17) - 182 Other income 365 2,939 290 3,341 Total 1,918 13,884 3,148 15,378

Internal income from Forest Research of £9,122,000 (2019-20: £7,068,000) was removed on consolidation.

Notes to the accounts 69 Annual Report and Accounts 2020-21

NOTE 4 Property, plant and equipment

Plant and Office Assets under Land Buildings machinery machinery construction Total £000 £000 £000 £000 £000 £000 Cost or valuation At 1 April 2020 1,417 18,734 5,630 - 1,897 27,678 Additions - - 1,924 - 5,663 7,587 Reclassifications - 4 146 - (150) - Disposals - - (208) - - (208) Revaluation 26 (335) 11 - - (298) At 31 March 1,443 18,403 7,503 - 7,410 34,759 2021 Depreciation At 1 April 2020 - 11,076 3,230 - - 14,306 Charged in year - 404 514 - - 918 Disposals - - (206) - - (206) Revaluation - (200) 11 - - (189) At 31 March - 11,280 3,549 - - 14,829 2021 Carrying value At 31 March 1,443 7,123 3,954 - 7,410 19,931 2021 At 31 March 2020 1,417 7,658 2,400 - 1,897 13,372 Asset financing Owned 1,443 7,123 3,914 - 7,410 19,891 Leased - - 40 - - 40 Total 1,443 7,123 3,954 - 7,410 19,931 Asset ownership Forest Research 1,443 7,123 3,954 - 7,410 19,931 Total 1,443 7,123 3,954 - 7,410 19,931

Land and Buildings were valued as at 31 March 2018 by professionally qualified staff employed by the Forestry Commission and approved by Mr Mark Street, FRICS who was Head of Estates. The results of this valuation were also subject to professional review by Savills, Chartered Surveyors. The next professional valuation is due on 31 March 2023. In the intervening years, the assets are revalued using the indices detailed in note 1.7.

Plant and Machinery are usually valued at five-year intervals. A professional valuation last took place on 31 March 2016. Professionally qualified staff employed by the Forestry Commission undertook the valuation which was approved by Jeffrey Livingston, CEng, Project Officer. In the intervening years, revaluations are on the basis of indices provided by the Office of National Statistics (ONS) or internal professional staff as appropriate. Due to the procurement of a new fleet management system and significant asset deliveries arriving at year-end the decision has been made to delay the full revaluation to 31 March 2022.

Depreciation expense above has been charged in other operating expenditure in the Consolidated Statement of Comprehensive Net Expenditure.

70 Notes to the accounts Annual Report and Accounts 2020-21

Plant and Office Assets under Land Buildings machinery machinery construction Total £000 £000 £000 £000 £000 £000 Cost or valuation At 1 April 2019 1,380 18,537 5,298 33 1,168 26,416 Additions - - 529 - 1,122 1,651 Reclassifications - 380 13 - (393) - Disposals - (288) (143) (33) - (464) Revaluation 37 105 (67) - - 75 At 31 March 2020 1,417 18,734 5,630 - 1,897 27,678 Depreciation At 1 April 2019 - 10,342 2,931 31 - 13,304 Charged in year - 778 463 - - 1,241 Disposals - (52) (138) (31) - (221) Revaluation - 8 (26) - - (18) At 31 March 2020 - 11,076 3,230 - - 14,306 Carrying value At 31 March 2020 1,417 7,658 2,400 - 1,897 13,372 At 31 March 2019 1,380 8,195 2,367 2 1,168 13,112 Asset financing Owned 1,417 7,658 2,322 - 1,897 13,294 Leased - - 78 - - 78 Total 1,417 7,658 2,400 - 1,897 13,372 Asset ownership Forest Research 1,417 7,658 2,400 - 1,897 13,372 Total 1,417 7,658 2,400 - 1,897 13,372

Notes to the accounts 71 Annual Report and Accounts 2020-21

NOTE 5 Intangible assets

Software Internally Assets Under licences developed Construction Total £000 £000 £000 £000 Cost or valuation At 1 April 2020 40 10,101 - 10,141 Additions 37 336 - 373 At 31 March 2021 77 10,437 - 10,514 Amortisation At 1 April 2020 40 9,100 - 9,140 Charged in year - 229 - 229 At 31 March 2021 40 9,329 - 9,369 Carrying value At 31 March 2021 37 1,108 - 1,145 At 31 March 2020 - 1,001 - 1,001 Asset financing Owned 37 1,108 - 1,145 Total 37 1,108 - 1,145 Asset ownership Core - 1,108 - 1,108 Forest Research 37 - - 37 Total 37 1,108 - 1,145

Software Internally Assets Under licences developed Construction Total £000 £000 £000 £000 Cost or valuation At 1 April 2019 40 9,933 - 9,973 Additions - 174 - 174 Disposals - (6) - (6) At 31 March 2020 40 10,101 - 10,141 Amortisation At 1 April 2019 39 8,918 - 8,957 Charged in year 1 188 - 189 Disposals - (6) - (6) At 31 March 2020 40 9,100 - 9,140 Carrying value At 31 March 2020 - 1,001 - 1,001 At 31 March 2019 1 1,015 - 1,016 Asset financing Owned - 1,001 - 1,001 Total - 1,001 - 1,001 Asset ownership Core - 1,001 - 1,001 Total - 1,001 - 1,001

Intangible assets are all owned, rather than leased.

The Grants and Licences Online System (GLOS) has been capitalised and included within the Internally Developed Software asset class. The carrying amount at 31 March 2021 is £330,000 and is being amortised over eight more years.

72 Notes to the accounts Annual Report and Accounts 2020-21

NOTE 6 Financial instruments

Financial instruments by category

Consolidated 31 March 2021 31 March 2020 Loans and Available Loans and Available receivables for sale Total receivables for sale Total £000 £000 £000 £000 £000 £000 Financial assets - 75 75 - 75 75 Trade and other 1,785 - 1,785 5,362 - 5,362 receivables (excluding prepayments) Cash and cash 11,008 - 11,008 5,337 - 5,337 equivalents Less provision for (57) (57) (57) - (57) impairment Total assets 12,736 75 12,811 10,642 75 10,717

Consolidated Other Other financial financial liabilities Total liabilities Total £000 £000 £000 £000 Finance lease 20 20 149 149 liabilities Trade and other 8,337 8,337 5,192 5,192 payables (excluding statutory liabilities) Total liabilities 8,357 8,357 5,341 5,341

As the cash requirements of the Forestry Commission are met through the Estimate process, financial instruments play a more limited role in creating and managing risk than would apply to a non-public sector body. The majority of financial instruments relate to contracts to buy non-financial items in line with the Forestry Commission expected purchase and usage requirements and the Forestry Commission is therefore exposed to little credit, liquidity or market risk.

Notes to the accounts 73 Annual Report and Accounts 2020-21

NOTE 7 Trade receivables, financial and other assets

31 March 31 March 2021 2020 Core Consolidated Core Consolidated £000 £000 £000 £000 Amounts falling due within one year Trade receivables 286 1,383 531 3,966 Provision for impairment (57) (57) (57) (57) Trade receivables - net 229 1,326 474 3,909 VAT receivable 397 397 1 1 Other receivables 16 20 12 15 House purchase and other loans to 5 8 7 10 employees Prepayments and accrued income 132 715 55 1,343 779 2,466 549 5,278

Amounts falling due after more than one year House purchase and other loans to 8 14 11 19 employees Prepayments and accrued income - 12 4 9 8 26 15 28

Total current and non-current 787 2,492 564 5,306

The carrying amounts of trade and other receivables are a reasonable approximation of their fair value.

Trade receivables of £246,000 were past due but not impaired as of 31 March 2021. These relate to a number of customers for whom there is no recent history of default.

NOTE 8 Cash and cash equivalents

2020-21 2019-20 Core Consolidated Core Consolidated £000 £000 £000 £000 At 1 April 3,443 5,337 8,327 10,551 Net change in balances 3,029 5,671 (4,884) (5,214) At 31 March 6,472 11,008 3,443 5,337

31 March 31 March 2021 2020 Core Consolidated Core Consolidated £000 £000 £000 £000 Held at Government Banking Service 6,472 11,008 3,443 5,337 Total 6,472 11,008 3,443 5,337

74 Notes to the accounts Annual Report and Accounts 2020-21

NOTE 9 Trade payables and other current liabilities

31 March 31 March 2021 2020 Core Consolidated Core Consolidated £000 £000 £000 £000 Amounts falling due within one year Trade payables 407 1,443 600 887 Other payables 287 290 222 232 VAT payable - 46 - 356 Other taxation and social security 272 272 209 209 Accruals 4,157 5,806 2,637 3,594 Deferred income - - 256 256 Contract liabilities - 394 - 237 Finance lease payables - 20 - 50 Payments received on account - 404 - 242 Defra Supply creditor 11,008 11,008 5,337 5,337 16,131 19,683 9,261 11,400

Amounts falling due after more than one year Finance lease payables - - - 99 - - - 99

Total current and non-current 16,131 19,683 9,261 11,499

The carrying amounts of trade and other payables are a reasonable approximation of their fair value.

The carrying amounts of trade and other payables are denominated in the following currencies:

31 March 31 March 2021 2020 £000 £000 GBP Sterling 19,494 11,383 Euro 134 105 US Dollar 41 - New Zealand Dollars 14 11 Total 19,683 11,499

NOTE 10 Contract balances

31 March 31 March 2021 2020 £000 £000 Contract liabilities 394 237

All income disclosed within contact liabilities is expected to be received in the coming year.

Notes to the accounts 75 Annual Report and Accounts 2020-21

NOTE 11 Provisions for liabilities and charges

Core Consolidated Early Early departures Other Total departures Other Total £000 £000 £000 £000 £000 £000 Balance at 31 59 - 59 59 - 59 March 2020 Provided in year 5 6 11 5 24 29 Not required (14) (1) (15) (14) (1) (15) written back Utilised in year (50) (5) (55) (50) (14) (64) Balance at 31 - - - - 9 9 March 2021 Expected timing of discounted cash flows Not later than one - - - - 9 9 year Total - - - - 9 9

Core Consolidated Early Early departures Other Total departures Other Total £000 £000 £000 £000 £000 £000 At 1 April 2019 660 - 660 676 - 676 Provided in year 92 - 92 92 - 92 Not required (2) - (2) (2) - (2) written back Utilised in year (691) - (691) (707) - (707) Balance at 31 59 - 59 59 - 59 March 2020 Expected timing of discounted cash flows Not later than one 59 - 59 59 - 59 year Total 59 - 59 59 - 59

Early departure costs

The Forestry Commission meets the additional costs of benefits beyond the normal PCSPS benefits in respect of employees who retire early by paying the required amounts annually to the PCSPS over the period between early departure and normal retirement date. The Forestry Commission provides for this in full when the early retirement programme becomes binding on the Forestry Commission by establishing a provision for the estimated payments, and discounting the provision at the HM Treasury-stipulated rate of (0.95)% (2019-20 (0.5)%).

76 Notes to the accounts Annual Report and Accounts 2020-21

NOTE 12 Commitments under leases

Operating leases

Operating lease rentals are charged on a straight-line basis over the term of the lease. Total future minimum lease payments under operating leases are given in the table below for each of the following periods.

31 March 31 March 2021 2020 Core Consolidated Core Consolidated £000 £000 £000 £000 Land Not later than one year - 7 - 7 Later than one year and not later than - 22 - 26 five years Later than five years - - - 4 - 29 - 37 Buildings Not later than one year 496 496 486 486 Later than one year and not later than 167 167 567 567 five years 663 663 1,053 1,053

Total 663 692 1,053 1,090

Finance leases

Total future minimum lease payments under finance leases are given in the table below for each of the following periods.

31 March 31 March 2021 2020 Core Consolidated Core Consolidated £000 £000 £000 £000 Plant and machinery Not later than one year - 21 - 50 Later than one year and not later than - - - 100 five years - 21 - 150 Interest element - (1) - (1) Present value of obligations - 20 - 149

NOTE 13 Capital commitments

There were £426,000 contracted capital commitments at 31 March 2021 (2019-20: £3,077,000) for an entomology and pathology quarantine laboratory at Forest Research.

Notes to the accounts 77 Annual Report and Accounts 2020-21

NOTE 14 Other financial commitments

31 March 31 March 2021 2020 Core Consolidated Core Consolidated £000 £000 £000 £000 Not later than one year 2,138 2,138 4,290 4,290 Later than one year but not later than 4,222 4,222 4,979 4,979 five years Later than five years 488 488 - - Total 6,848 6,848 9,269 9,269

The commitments in the table above represent the signed commitment values for grant payments for the woodland carbon fund, woodland creation planning grants and the urban tree challenge fund.

NOTE 15 Contingent liabilities disclosed under IAS 37

The Woodland Carbon Guarantee is a £50 million scheme that aims to help accelerate woodland planting rates and develop the domestic market for woodland carbon for the permanent removal of carbon dioxide from the atmosphere.

It provides the option to sell captured carbon in the form of verified carbon credits, called Woodland Carbon Units, to the Government for a guaranteed price every five or ten years up to 2055-56. If preferred, credits can be sold on the open market rather than to the Government.

The Forestry Commission’s liabilities under the Woodland Carbon Guarantee are contingent on others deciding to exercise their rights to sell the Woodland Carbon Units to the Government. The limit of this liability under the Guarantee at 31 March 2021 is £16.6 million. This contingent liability is backed by Defra and, if realised, will be funded as part of the Defra Spending Review process.

NOTE 16 Operating lease receivables

The future minimum lease payments receivable under non-cancellable operating leases are as follows:

31 March 31 March 2021 2020 Core Consolidated Core Consolidated £000 £000 £000 £000 Not later than one year - 5 - 5 Later than one year but not later than - 20 - 20 five years Later than five years - 58 - 63 Total - 83 - 88

78 Notes to the accounts Annual Report and Accounts 2020-21

NOTE 17 Consolidated related-party transactions

Forestry Commission’s agency Forestry England is regarded as a related party. During the year, Forestry Commission provided an annual subsidy of £26,775,000 to Forestry England (2019-20 £16,014,000).

In addition, Forestry Commission has had various material transactions with other government departments and other central government bodies. The main entities within government with which Forestry Commission has had dealings are High Speed 2 Ltd, Scottish Forestry, Forestry and Land Scotland, Government Internal Audit Agency, and Defra.

Other than transactions with the James Hutton Institute, there were no other material related party transactions in year. The following information is provided for completeness: all transactions were carried out at arm’s length.

Woodland Grants

The Forestry Commission administers a variety of Woodland Grant schemes. The following payments were made in relation to these schemes:

Recipient 2020-21 2019-20 £000 £000 Sir William Worsley, Forestry Commissioner (chair) 33 30

James Hutton Institute

Ian Gambles, Chief Executive during 2020-21, is a director of the James Hutton Institute, a charitable company limited by guarantee, which delivers fundamental and applied science to drive the sustainable use of land and natural resources. Transactions in year are as follows:

2020-21 2019-20 £000 £000 Sales 78 130 Purchases 17 24

Forest Research made purchases of £17,000 plus VAT from James Hutton Institute in relation to a project focussing on global threats from Phytophthora (2019-20: £24,000). Sales invoices for £78,000 plus VAT (2019-20: £130,000 plus VAT) were raised for grants for Plant Health Centre projects and a review of evidence summaries. Sales of £5,000 plus VAT were outstanding to Forest Research as at 31 March 2021 (2019-20: Nil).

Notes to the accounts 79 Annual Report and Accounts 2020-21

James Latham PLC

Peter Latham, non-executive commissioner, is a retired Chair of James Latham PLC a timber distribution company. Transactions in year are as follows:

2020-21 2019-20 £000 £000 Sales 3 3

There were sales of £2,000 outstanding as at 31 March 2021 (2019-20: £1,000).

Lockhart Garratt Ltd

John Lockhart, non-executive member, is a director of Lockhart Garratt Ltd, a Forestry and environmental planning consultancy whose clients will receive funding and grant support from the Forestry Commission. Transactions in year are as follows:

2020-21 2019-20 £000 £000 Purchases 3 3

There were no outstanding transactions as at 31 March 2021 (2019-20: Nil).

Others

Some members of the Forestry Commission Executive Board and the Forest Services Board are also members of the Forestry England Board, and are directors or trustees of organisations for which Forestry England had transactions throughout the year. Details of these transactions can be found in the Forestry England Annual Report and Accounts 2020-21.

Key management compensation

Key management personnel are deemed to be the members of the Forestry Commission Executive Board and the Forest Services Board.

Refer to the Remuneration Report for further details of remuneration of the Forestry Commission Executive Board and the Forest Services Board.

NOTE 18 Events after 31 March 2021

In accordance with the requirements of IAS 10, events after 31 March 2021 are considered up to the date on which the accounts are authorised for issue by the Accounting Officer. The authorised for issue date is the date of the Comptroller and Auditor General’s audit certificate.

There were no reportable events after the end of the reporting period.

80 Notes to the accounts

CCS0321137210

978-1-5286-2456-5