There is something murky down in the forest. In 2010, the Cameron government was so shocked at the reaction to its planned privatisation of the Forestry Commission that it backed off. It said it had abandoned the whole idea. It lied. It just privatised in secret.

Plans have emerged of the commission’s proposals for Mortimer Forest outside Ludlow, an exquisite stretch of woodland in the Welsh Marches. A company called Forest Holidays wants to erect an estate of 70 luxury chalets in the forest. It is, in truth, a scattered luxury hotel, serviced by car parks, toilets, recreation areas and “landscaped lookouts”. The company already has 10 such estates and plans many more, with up to 90 chalets in each. These are not rural communities or compact villages.

Forest Holidays was created in the 1960s by the Forestry Commission, which still holds a 14% share in the company. Under a bizarre 2012 “framework agreement”, the company is given the right to develop as many as 30 sites across the forestry estate at any one time, with no eventual limit. It pays the commission a rent per chalet of an average £3,000 a year, and rents out the chalets for up to £4,000 a week, an eye-popping margin. Some of the leases are for a phenomenal 125 years. According to the Sunday Times, it already ranks fourth in Britain among private companies for profits growth.

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This might all seem small beer, another example of the oleaginous workings of “parastatal” Britain. The country may have less woodland per acre than anywhere in Europe, but it can surely handle a few private estates of “hot tubs and fluffy towels”. As the company said recently, it is as yet developing only an “infinitesimal” share of the commission’s estate.

So, what happened last December? A company called Phoenix Equity acquired 42% of Forest Holidays for £110m. This valued the company at an extraordinary £262m. The reason was soon clear when Forest Holidays’ chief executive, Bruce McKendrick, justified the high price on the grounds that “the [forestry] commission has a million hectares of forest, so we’ve got plenty to keep us going for many years to come”. That is equity-speak for “we struck a goldmine”.

The Forest Holidays deal, in effect with the government, is extraordinary. The government has granted a private company exclusive access to exploit a public land bank. There will be no competitors, no rival bidders and no limit to its growth. Indeed the company and the commission make planning applications jointly, as if they were one and the same.

The agreement also promises that, provided the sites are not in a nature reserve or protected area, they cannot be opposed. Should anyone object, such as an uppity planner, the Forestry Commission has “a duty to help bypass regulations”. With 14%, it has more than duty – it has a clear incentive. This means that a body that exists to maintain Britain’s forests is party not just to their privatisation but to their complete exploitation – and for as long as 125 years.

It is small wonder this whole saga has been shrouded in secrecy. The Mortimer Forest plan has been with Hereford council for three years, only seeing the light of day in February. Doubtless because of the privatisation row, the 2012 deal stipulated that the commission commit itself to secrecy. It would ensure “that the media and the public are not aware of new development site selection”. For a public body explicitly to promise to conceal evidence of its dereliction of duty is amazing.

A spokesman for the Mortimer campaigners, Colin Richards, is a passionate defender of forest wildness. To him, the chalet development will destroy the tranquillity of what is, in this case, not even a particularly large forest. As a result of the development, he says: “Wildlife habitat on publicly owned land will be destroyed in favour of a busy private holiday park. The whole project is a wolf in sheep’s clothing.”

The Forestry Commission denies that it is engaged in privatisation, despite actually holding shares in the relevant private company. It argues that “the forests are still publicly owned, and the Forestry Commission retains control of what can happen on the land through the business framework agreement”. But the terms of this agreement are biased in the company’s favour, and they indicate a blatant conflict of interest. It is like London Zoo going into taxidermy.

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I love forests. I have no objection in principle to their privatisation – a tree is a tree – provided it is subject to objective planning and impartial regulation. There is none of that here. Chalet parks in public forests offend every dictate of rural planning. They are space-hungry, traffic-generating and energy-inefficient. Today, buildings (and jobs) should be concentrated on and around existing settlements, not left to sprawl wherever the money is good. Worst of all, these parks derive their private value by diminishing the public value of where they are located.

The future of the British countryside is in the balance. Traditional town and country planning is in abeyance, following David Cameron’s dismantling of structure planning. Whitehall now forces through almost any development application, irrespective of quality or setting. No village or town is safe from a Persimmon 300-unit volume executive estate. There is no requirement to respect local character, once elementary planning practice.

The Forestry Commission used to be the despoiler of Britain’s uplands, with its conifer acres, monocultures and acid rivers. It has lately improved, especially in its commitment to biodiversity and public recreation. Yet the Forest Holidays deal puts its entire estate into play. It is selling off a public land bank already worth £262m, yet hardly a penny (other than 14%) is coming to the taxpayer. This is pure banana republic. Forest Holidays describes its chalets, as they scatter through Britain’s woodlands, as “sheer decadence”. That says it all.

• Simon Jenkins is a Guardian columnist