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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David Cameron's starter homes: poor policy, but good politics

David Cameron's electoral coalition of buy-to-let retirees and dual-earner couples remains intact: for now.

The only working age demographic to do better under the Coalition was dual-earner couples – without children. They were the main beneficiaries of the threshold raise – which may “take the poorest out of tax” in theory but in practice hands a sizeable tax cut to peope earning above average. They will reap the fruits of the government’s Help to Buy ISAs. And, not having children, they were insulated from cuts to child tax credits, reductions in public services, and the rising cost of childcare. (Childcare costs now mean a couple on average income, working full-time, find that the extra earnings from both remaining in work are wiped out by the costs of care)

And they were a vital part of the Conservatives’ electoral coalition. Voters who lived in new housing estates on the edges of seats like Amber Valley and throughout the Midlands overwhelmingly backed the Conservatives.

That’s the political backdrop to David Cameron’s announcement later today to change planning to unlock new housing units – what the governmen dubs “Starter Homes”. The government will redefine “affordable housing”  to up t o£250,000 outside of London and £450,000 and under within it. and reduce the ability of councils to insist on certain types of buildings. He’ll describe it as part of the drive to make the next ten years “the turnaround decade”: years in which people will feel more in control of their lives, more affluent, and more successful.

The end result: a proliferation of one and two bedroom flats and homes, available to the highly-paid: and to that vital component of Cameron’s coalition: the dual-earner, childless couple, particularly in the Midlands, where the housing market is not yet in a state of crisis. (And it's not bad for that other pillar of the Conservative majority: well-heeled pensioners using buy-to-let as a pension plan.)

The policy may well be junk-rated but the politics has a triple A rating: along with affluent retirees, if the Conservatives can keep those dual-earner couples in the Tory column, they will remain in office for the forseeable future.

Just one problem, really: what happens if they decide they want room for kids? Cameron’s “turnaround decade” might end up in entirely the wrong sort of turnaround for Conservative prospects.

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.