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Oral contraception for grey squirrels is currently in development to curb population numbers, an environment minister has revealed.
Animal science researchers are also looking at ways to breed infertility into females to humanely curb their population, said Tory frontbencher Lord Goldsmith of Richmond.
Grey squirrels and other non-native invasive species are costing the UK economy about £1.8 billion a year, he added.
Lord Goldsmith outlined the impact of the vermin as he was pressed over the implications for the Government's target to plant 74,000 acres (30,000 hectares) of new woodland a year across the UK by 2025, which is needed to tackle climate change.
Grey squirrels, originally from North America, were released in Britain by 19th century landowners, and rapidly spread.
As well as displacing the native red squirrel across most of the UK, the greys also pose a threat to woodlands through the damage they cause to trees by bark stripping.
Raising this at Westminster, Tory hereditary peer Lord Astor of Hever, who declared an interest as the owner of woodlands, said: "What effective guidance will the Government give to ensure that these trees are not subsequently destroyed by grey squirrels?"
Lord Goldsmith said: "Invasive non-native species like grey squirrels and others like muntjac deer clearly do threaten our native biodiversity.
"They cost the economy about £1.8 billion a year, they negatively impact on our trees and woodlands.
"The Forestry Commission provides advice on maintaining red squirrel habitat and managing grey squirrels.
"But, longer term, the Roslin Institute is researching ways to breed infertility into female grey squirrels, which would provide a more humane way of reducing their numbers.
"In addition we support work by the UK Squirrel Accord to develop an oral contraceptive to reduce the grey squirrel population."
Last week, the Royal Forestry Society called for a grey squirrel cull. This can include shooting but they have also been funding research into contraception.
Royal Forestry Society chief executive, Simon Lloyd told the Telegraph that new trees will not survive to “deliver the carbon capture or biodiversity objectives if grey squirrels cannot be controlled”.
His comments followed a report, by the Forestry Commission, National Resources Wales, the National Forest Company and the woodland Trust, that estimated that grey squirrels will cost the sector at least £1.1 billion in the next 40 years. Lord Goldsmith’s announcement will likely receive a supportive nod from Prince Charles, who is an avid fan of red squirrels.
In 2017, it had been reported that the Prince of Wales backed Government plans to sterilise grey squirrels using traps filled with Nutella and oral contraceptive during a meeting with members of the UK Squirrel Accord.
At the time, the Government’s Animal and Plant Health Agency (APHA) believed it would humanely reduce their numbers by up to 90 per cent.
On the occasions of his 70th birthday the Prince published a 1,960-word letter in Country Life magazine, recounting his love of red squirrels.
He wrote: “They come into the house at Birkhall and we get them chasing each other round and round inside.
“If I sit there quietly, they will do so around me.
"Sometimes, when I leave my jackets on a chair with nuts in the pockets, I see them with their tails sticking out, as they hunt for nuts - they are incredibly special creatures.”