Woodlands for Wales, a strategy published by the Assembly Government in 2001, set a 50-year vision of a forestry sector that would deliver a range of economic, social and environmental benefits. The forthcoming revised strategy is likely to broaden the FCW remit further to address the challenges of climate change. The report also found that, at this key time in the evolution of forestry policy, different parts of the organisation do not share a common view of its strategic direction. Effective leadership is needed to both unite staff around a shared vision that reflects the widening forestry remit, and respond to the competing demands of stakeholders.

The Assembly Government allocates FCW’s budget every three years based on forecasts of likely timber income. While the Assembly Government may provide FCW with additional resources to meet deficits accrued through falling timber income, the amount and timing of such income is uncertain. Also, the Assembly Government does not allow FCW to hold cash reserves or equity capital to smooth the impact of market fluctuations. The report highlighted FCW’s short-term approach to financial management which partly reflects these funding arrangements with the Assembly Government. FCW has also failed to carry out effective medium term financial planning.

The report acknowledges the improvements FCW has made to timber forecasting, and welcomes the likely impact of this on FCW’s capacity to carry out effective financial planning. However, a number of improvements remain necessary if FCW is to optimise the value of its timber, including developing robust contingency planning to meet fluctuating timber incomes and appraising the potential costs and benefits of different ways of selling timber.

The report also recommends that FCW:

• Clarifies its corporate strategy and priorities;
• Strengthens core business processes and integrates them with strategic objectives;
• Manages its resources more effectively, particularly through a more strategic and long-term approach to financial management; and
• Respond to change effectively so that internal and external stakeholders have a clear understanding of FCW’s strategic direction.

Auditor General for Wales, Jeremy Colman said today:
“The Forestry Commission Wales has done well to meet the majority of its financial and performance targets but it needs to develop its core business processes if it is to capitalise on future opportunities and maintain a sound financial future.” 

Notes to Editors:

• This report considers if Forestry Commission Wales (FCW) is well placed to deliver its objectives now and in the future.
• FCW, which is part of the Forestry Commission Great Britain, acts as the Assembly Government’s Department of Forestry. FCW is responsible for managing the 38 per cent of Welsh woodlands owned by the Assembly.
• FCW, on behalf of the Assembly Government, advises on the development of forestry policy and its implementation. They also encourage sustainable woodland management within the private sector and are responsible for administering grants and regulatory work, including licensing for felling and replanting.
• In 2007-2008, FCW received £22.3 million of its annual £45 million turnover from the Assembly Government. FCW also generates around £9 million annually from timber sales, as well as receiving funds from European grant schemes.
• The Wales Audit Office is independent of government and is responsible for the annual audit of some £20 billion of annual public expenditure.
• Its mission is to promote improvement, so that people in Wales benefit from accountable, well-managed public services that offer the best possible value for money. It is also committed to identifying and spreading good practice across the Welsh public sector.
• The Wales Audit Office was created in April 2005 through the Public Audit (Wales) Act, 2004, which expanded the functions of the Auditor General for Wales and enabled the transfer of staffs from the Audit Commission in Wales and National Audit Office in Wales to his employment.