If fracking is just oil which needs tax breaks to compete, what's the point?

If George Osborne likes expensive energy, at least renewables are carbon neutral.

George Osborne has announced that the fracking industry is to be taxed at significantly lower levels than the rest of Britain's extractive industries. The Guardian's Terry Macalister and Fiona Harvey report:

The Treasury has set a 30% tax rate for onshore shale gas production. That compares with a top rate of 62% on new North Sea oil operations and up to 81% for older offshore fields.

The oil industry has high levels of taxation because natural resources are considered collective property: the state owns all oil, gas, coal, gold and silver in the UK. That means that the oil companies ought to make a profit on the extraction of the oil, but not on the ownership of it. In practice, the distinction is long forgotten, but the high tax rates (and requirement for a license before exploitation begins) keeps the spirit alive.

The discount on shale gas production – or "fracking", as it's more commonly known – is to make what might otherwise be an uneconomical method of extraction slightly more business friendly. As such, the question which needs to be asked is whether we actually want this extraction to be business friendly or not. If, as seems likely, we already know about more conventional oil and gas than we could actually burn, then the business case for fracking is irrelevant: we should not extract those fuels, because we should not burn them.

Obviously, George Osborne, several years on from "vote blue, go green", doesn't particularly care about climate change, so that argument isn't going to hold. But there's a curious disconnect between the rhetoric around fracking, even from its supporters, and the practice here.

Fracking was supposed to be the end of peak-oil fears. Rather than running out of easily extractable oil, and being forced to switch to renewables, we can instead make the most of the rising oil price to use more expensive methods of extraction. That puts off the switch just a bit further into the future, and lets another generation of politicos bury their heads in the sand. (Alright, supporters of fracking don't include that last bit)

But if fracking needs financial support to be competitive with conventional oil then it's not really anything other than a more expensive way to dig up fossil fuels. And if we want more expensive forms of energy, we already have some which are carbon neutral and can't run out. Why would we want fracking against them?

Yoko Ono poses with an installation of hers. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Leader: On capitalism and insecurity

The truth behind Philip Green's business practices is out, as Theresa May pledges to ensure the benefits of growth are shared amongst workers.

Although it sounds contradictory, we should count ourselves lucky to read about the hideous business practices at Sports Direct and the management failures that led to the collapse of British Home Stores (BHS). Such stories are hard to investigate and even harder to bring out into the open. That both firms were excoriated by select committees proves that parliament still has teeth.

It is less comforting to wonder why the two retailers were allowed to operate as they did in the first place. Sports Direct pursued “Victorian” working practices, according to Iain Wright, the chair of the committee on business, innovation and skills. The firm is being investigated over allegations that it did not pay the National Minimum Wage, while staff were treated in a “punitive” and “appalling” manner. They were penalised for taking breaks to drink water, and some claimed that they were promised permanent contracts in ­exchange for sexual favours.

Days later, another select committee castigated Sir Philip Green, the former owner of BHS, describing what had happened at the company as the “unacceptable face of capitalism”. The Green family extracted more than £300m from BHS – “systematic plunder”, according to the parliamentary report – even as its pension fund was accumulating a deficit of £571m. Although the committee also criticised Dominic Chappell, who bought BHS a year ago, it concluded: “The ultimate fate of the company was sealed on the day it was sold.”

It would be easy to dismiss Sports Direct and BHS as isolated cases. Yet there is an important connection between them and it is one that illuminates the tides in British politics. Both highlight how economic insecurity has become central to the lives of far too many people in the UK.

Sports Direct treated workers with contempt and left them terrified of losing their employment. The downfall of BHS, meanwhile, cost 11,000 workers their jobs and left its pensioners needing government assistance. Sir Philip Green retains his title, although the shadow chancellor, John McDonnell, has called for it to be rescinded. After all, the committee found “little to support the reputation for retail business acumen for which he received his knighthood”.

In this climate, it is easy to understand the widespread mistrust of private companies. As the business, innovation and skills select committee report concluded: “Although Sports Direct is a particularly bad example of a business that exploits its workers in order to maximise its profits, it is unlikely that it is the only organisation that operates in such a way.”

Anger about the behaviour of companies such as BHS and Sports Direct is rife and was palpable during last month’s referendum on the European Union. In Bolsover, the constituency in which Sports Direct has its main warehouse, 71 per cent of voters opted to leave the EU. Little wonder that voters there did not feel inclined to listen to warnings from the same big businesses that treated them and other people they knew so badly. The company, whose buildings occupied the site of a former coal tip pit, also relied on immigrants who would be less able to insist on employment rights.

Now that the problems have been elucidated so clearly, we must strive to find solutions. As Britain negotiates its exit from the EU, the hard-won labour gains of the 20th century – workers’ rights, provision of state pensions and the minimum wage – must be protected and expanded.

The new Prime Minister, Theresa May, has rightly taken heed of public anger against corporate greed. She has pledged (in statements that could have come from Ed Miliband) to curb irresponsible behaviour and ensure that the benefits of growth are shared. She has supported ideas such as worker representatives on company boards and strengthening the power of shareholders by making their votes on director ­remuneration binding, rather than advisory.

While the Conservatives audaciously try to portray themselves as the “workers’ party”, Labour must campaign hard to ensure that Mrs May backs up her promising rhetoric with meaningful policies. For the good of the nation, business leaders such as Sir Philip Green and Mike Ashley of Sports Direct must be held to account for their actions.

This article first appeared in the 28 July 2016 issue of the New Statesman, Summer Double Issue