Budget 2013: Energy - Cash for fracking: George Osborne's offer to local communities

 

A A A

Local communities whose lives are disrupted by the coming new industry of fracking – the extraction of shale gas – may be compensated with substantial financial grants, Mr Osborne indicated.

The Chancellor repeated the pledge he made last December, in his Autumn Statement, that there would be a generous new regime of tax allowances for energy companies to encourage development of the controversial technology.

But he went further and signalled that the Government would also look into the possibility of providing compensatory packages of community benefits, to seek to defuse opposition from people living near fracking wells.

Hydraulic fracturing, to give the technique its full name, involves the high-pressure pumping of a mixture of water, sand and chemicals into underground gas-bearing beds of shale rock. The effect is to shatter the shale and allow the gas to escape, and in the US the technology has undergone a dramatic expansion which has led to a substantial fall in gas prices. Mr Osborne would very much like a shale gas boom in Britain.

But the technique has drawbacks, not least that it can cause earth movements, and the only fracking operation Britain has seen so far, by Cuadrilla Resources near Blackpool, was suspended after two noticeable earthquakes in May 2011, but was allowed to resume in December 2012. There are also fears about groundwater contamination from chemicals used in the process.

So there is likely to be widespread local opposition to planning applications for fracking developments, and Mr Osborne moved to anticipate it when he told MPs: "By the summer, new planning guidance will be available alongside specific proposals to allow local communities to benefit."

Working out what these should be will be one of the first tasks of the Office of Unconventional Gas and Oil – OUGO – which has been set up within the Department of Energy and Climate Change (DECC) to regulate the anticipated shale gas industry. It will come up with proposals by the summer.

The Energy Minister John Hayes said: "Shale gas is an exciting opportunity and has the potential to create jobs and support UK energy security. Local communities must be able to benefit from any shale gas development in their area and the new office will look into how this can be properly achieved."

Mr Hayes's comments gave nothing away about exactly what benefits might accrue to co-operating communities. However, in a letter to the minister last year, the chief executive of Cuadrilla, Francis Egan, wrote: "There is a certain inconvenience that the local population bears in hosting development of this industry… We consider that there should be financial benefits [to the local population] in the form of a share of the tax take."

It is not yet clear if compensation would come from the Government or from fracking companies themselves, but the procedure is likely to resemble the well-known principle of "planning gain", whereby a developer is allowed to build houses on a playing field, say, in return for providing the local community with a swimming pool.

Mr Osborne's support for fracking met with hostility from environmentalists, who see it as an extension of fossil-fuel use at a time when renewable energy is seen as more necessary to fight climate change.

"Shale gas is not the solution to rising energy bills – it's dirty, unnecessary and its extraction will have an earth-shattering impact on local communities across the UK," said Andrew Pendleton of Friends of the Earth.

Voices
'Irritatingly Disneyfied': fashion vlogger Zoella
voices

News
people

Actress sees off speculation about her appearance in an amazing way

Arts and Entertainment
The last great picture - Winner 'Black and White' and overall 'Wildlife Photographer of the Year'
art
News
Carl Bernstein (left) and Bob Woodward (right) with former 'Washington Post' executive editor Ben Bradlee
people

The Washington Post editor helped Bob Woodward and Carl Bernstein bring down President Nixon

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Life and Style
tech

Board creates magnetic field to achieve lift

News
There have been various incidents of social media users inadvertently flouting the law
news

Life and Style
Stack ‘em high?: quantity doesn’t always trump quality, as Friends of the Earth can testify
techThe proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
News
Bourgogne wine maker Laboure-Roi vice president Thibault Garin (L) offers the company's 2013 Beaujolais Nouveau wine to the guest in the wine spa at the Hakone Yunessun spa resort facilities in Hakone town, Kanagawa prefecture, some 100-kilometre west of Tokyo
i100
Sport
CSKA Moscow celebrate after equalising with a late penalty
footballCSKA Moscow 2 Manchester City 2: Premier League champions let two goal lead slip in Russia
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Trainee Recruitment Consultant - SThree Group - Bristol

£18000 - £23000 per annum + Uncapped Commission: SThree: SThree Group has been...

Trainee Recruitment Consultant - SThree Group - Birmingham

£18000 - £23000 per annum + Uncapped Commission: SThree: SThree Group has been...

Trainee Recruitment Consultant - Birmingham - Computer Futures

£18000 - £23000 per annum + Commission: SThree: The SThree group is a world le...

Trainee Recruitment Consultant - SThree - £18k Starting Salary

£18000 - £23000 per annum + Uncapped Commission: SThree: SThree Group has been...

Day In a Page

Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

A new American serial killer?

Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

Sting to trap paedophiles may not carry weight in UK courts

Computer image of ‘Sweetie’ represented entrapment, experts say
Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

Return to Fukushima – a land they will never call home again

Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

Wildlife Photographer of the Year

Intimate image of resting lions claims top prize
Online petitions: Sign here to change the world

Want to change the world? Just sign here

The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
Ed Sheeran hits back after being labelled too boring to headline festivals

'You need me, I don’t need you'

Ed Sheeran hits back after being labelled too boring to headline festivals
How to Get Away with Murder: Shonda Rhimes reinvents the legal drama

How to Get Away with Murder

Shonda Rhimes reinvents the legal drama
A cup of tea is every worker's right

Hard to swallow

Three hospitals in Leicester have banned their staff from drinking tea and coffee in public areas. Christopher Hirst explains why he thinks that a cuppa is every worker's right
Which animals are nearly extinct?

Which animals are nearly extinct?

Conservationists in Kenya are in mourning after the death of a white northern rhino, which has left the species with a single male. These are the other species on the brink
12 best children's shoes

Perfect for leaf-kicking: 12 best children's shoes

Find footwear perfect to keep kids' feet protected this autumn
Anderlecht vs Arsenal: Gunners' ray of light Aaron Ramsey shines again

Arsenal’s ray of light ready to shine again

Aaron Ramsey’s injury record has prompted a club investigation. For now, the midfielder is just happy to be fit to face Anderlecht in the Champions League
Comment: David Moyes' show of sensitivity thrown back in his face by former Manchester United manager Sir Alex Ferguson

Moyes’ show of sensitivity thrown back in his face... by Ferguson

Manchester United legend tramples on successor who resisted criticising his inheritance
Two super-sized ships have cruised into British waters, but how big can these behemoths get?

Super-sized ships: How big can they get?

Two of the largest vessels in the world cruised into UK waters last week
British doctors on brink of 'cure' for paralysis with spinal cord treatment

British doctors on brink of cure for paralysis

Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
Ranked seventh in world’s best tourist cities - not London, or Edinburgh, but Salisbury

Lonely Planet’s Best in Travel 2015

UK city beats Vienna, Paris and New York to be ranked seventh in world’s best tourist destinations - but it's not London