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
Lucerne’s Hotel Château Gütsch, one of the lots in our Homeless Veterans appeal charity auction
charity appeal
Arts and Entertainment
Tony Hughes (James Nesbitt) after his son Olly disappeared on a family holiday in France
tv
News
people

Jo from Northern Ireland was less than impressed by Russell Brand's attempt to stage a publicity stunt

Sport
Nabil Bentaleb (centre) celebrates putting Tottenham ahead
footballTottenham 4 Newcastle 0: Spurs fans dreaming of Wembley final after dominant win
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Arts and Entertainment
The Apprentice candidates Roisin Hogan, Solomon Akhtar, Mark Wright, Bianca Miller, Daniel Lassman
tvReview: But which contestants got the boot?
Life and Style
A woman walks by a pandal art installation entitled 'Mars Mission' with the figure of an astronaut during the Durga Puja festival in Calcutta, India
techHow we’ll investigate the existence of, and maybe move in with, our alien neighbours
Arts and Entertainment
Jim Carrey and Jeff Daniels ride again in Dumb and Dumber To
filmReview: Dumb And Dumber To was a really stupid idea
Arts and Entertainment
Sir Ian McKellen tempts the Cookie Monster
tvSir Ian McKellen joins the Cookie Monster for a lesson on temptation
News
i100
Travel
Tourists bask in the sun beneath the skyscrapers of Dubai
travelBritish embassy uses social media campaign to issue travel advice for festive holiday-makers in UAE
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Ashdown Group: Helpdesk Analyst

£25000 per annum: Ashdown Group: An established media firm based in Surrey is ...

Ashdown Group: Java Developer - Hertfordshire - £47,000 + bonus + benefits

£40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...

Ashdown Group: Head of Finance - Financial Director - London - £70,000

£70000 per annum: Ashdown Group: Head of Finance - Financial Controller - Fina...

Recruitment Genius: Business Development Executive - Nationwide - OTE £65,000

£30000 - £65000 per annum: Recruitment Genius: This small technology business ...

Day In a Page

Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas
La Famille Bélier is being touted as this year's Amelie - so why are many in the deaf community outraged by it?

Deaf community outraged by La Famille Bélier

The new film tells the story of a deaf-mute farming family and is being touted as this year's Amelie
10 best high-end laptops

10 best high-end laptops

From lightweight and zippy devices to gaming beasts, we test the latest in top-spec portable computers
Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

The batsman has grown disillusioned after England’s Ashes debacle and allegations linking him to the Pietersen affair
Susie Wolff: A driving force in battle for equality behind the wheel

Susie Wolff: A driving force in battle for equality behind the wheel

The Williams driver has had plenty of doubters, but hopes she will be judged by her ability in the cockpit
Calls for a military mental health 'quality mark'

Homeless Veterans campaign

Expert calls for military mental health 'quality mark'
Racton Man: Analysis shows famous skeleton was a 6ft Bronze Age superman

Meet Racton Man

Analysis shows famous skeleton was a 6ft Bronze Age superman
Garden Bridge: St Paul’s adds to £175m project’s troubled waters

Garden Bridge

St Paul’s adds to £175m project’s troubled waters
Stuff your own Christmas mouse ornament: An evening class in taxidermy with a festive feel

Stuff your own Christmas mouse ornament

An evening class in taxidermy with a festive feel
Joint Enterprise: The legal doctrine which critics say has caused hundreds of miscarriages of justice

Joint Enterprise

The legal doctrine which critics say has caused hundreds of miscarriages of justice
Freud and Eros: Love, Lust and Longing at the Freud Museum: Objects of Desire

Freud and Eros

Love, Lust and Longing at the Freud Museum
France's Front National and the fear of a ‘gay lobby’ around Marine Le Pen

Front National fear of ‘gay lobby’

Marine Le Pen appoints Sébastien Chenu as cultural adviser