Five questions answered on new fracking tax incentive for councils

Why is the government offering an incentive for fracking?

The government today announced that local councils will receive a higher percentage of fracking business rates revenues. We answer five questions on this new fracking incentive. 

What exactly is the government offering councils that support fracking?

UK Prime Minister David Cameron has said that English local authority councils will receive 100 per cent of the business rates received from fracking companies, instead of the usual 50 per cent. Normally the other 50 per cent would go to central government.

Why is the government offering this incentive for fracking?

Fracking, or hydraulic fracturing - its official name - is the process of drilling deep underground using high pressure and a mix of chemicals, water and sand to crack rocks and release the gas inside.

There has been much opposition against fracking in the UK, with protests regularly making the headlines. Those against the technique believe fracking could cause small earth tremors or contaminate water.

This latest tax incentive is designed to encourage councils to approve fracking in spite of local objections.

How much could local authorities reap from this new fracking tax law?

Government officials say the new business rate commitment would mean councils would keep up to £1.7m extra a year from each fracking site.

This is on top of a pledge by industry to give communities £100,000 for test drilling and a further one per cent of the revenues if shale is discovered.

This one per cent levy could provide "£10m per wellhead" according to Energy Minister Michael Fallon.

What else has the government said?

Cameron said:

A key part of our long-term economic plan to secure Britain's future is to back businesses with better infrastructure. That's why we're going all-out for shale. It will mean more jobs and opportunities for people, and economic security for our country.

Fallon told Radio 4's Today programme:

We want local councils and local people to benefit from this exploration. We expect 20 to 40 wells to be drilled in exploration over the next couple of years and I think it's very important that local communities see some of the benefit.

What have others said?

Jane Thomas, Friends of the Earth Senior Campaigner, said in a statement:

"This latest Government move highlights the depth of local opposition to fracking and the desperate lengths ministers are prepared to go to overcome it.

“People are right to be concerned about the impact of shale gas extraction on their communities - especially as experts say it won’t lead to cheaper fuel bills.

"This move raises potentially serious concerns about conflicts of interest, if councils that benefit from this money are also the ones who decide on planning applications from fracking firms in the first place.”

Labour shadow energy minister Tom Greatrex, speaking to the BBC, said: "Only by fully addressing legitimate environmental and safety concerns about fracking with robust regulation and comprehensive monitoring will people have confidence that the exploration and possible extraction of shale gas is a safe and reliable source that can contribute to the UK's energy mix.”

The Local Government Association, which represents councils in England, told the BBC: "One percent of gross revenues distributed locally is not good enough; returns should be more in line with payments across the rest of the world and be set at 10 per cent.

"The community benefits of fracking should be enshrined in law, so companies cannot withdraw them to the detriment of local people."

Fracking continues to be a contentious practice in the UK. Photograph: Getty Images.

Heidi Vella is a features writer for Nridigital.com

Photo: Getty
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Who will win in Manchester Gorton?

Will Labour lose in Manchester Gorton?

The death of Gerald Kaufman will trigger a by-election in his Manchester Gorton seat, which has been Labour-held since 1935.

Coming so soon after the disappointing results in Copeland – where the seat was lost to the Tories – and Stoke – where the party lost vote share – some overly excitable commentators are talking up the possibility of an upset in the Manchester seat.

But Gorton is very different to Stoke-on-Trent and to Copeland. The Labour lead is 56 points, compared to 16.5 points in Stoke-on-Trent and 6.5 points in Copeland. (As I’ve written before and will doubtless write again, it’s much more instructive to talk about vote share rather than vote numbers in British elections. Most of the country tends to vote in the same way even if they vote at different volumes.)

That 47 per cent of the seat's residents come from a non-white background and that the Labour party holds every council seat in the constituency only adds to the party's strong position here. 

But that doesn’t mean that there is no interest to be had in the contest at all. That the seat voted heavily to remain in the European Union – around 65 per cent according to Chris Hanretty’s estimates – will provide a glimmer of hope to the Liberal Democrats that they can finish a strong second, as they did consistently from 1992 to 2010, before slumping to fifth in 2015.

How they do in second place will inform how jittery Labour MPs with smaller majorities and a history of Liberal Democrat activity are about Labour’s embrace of Brexit.

They also have a narrow chance of becoming competitive should Labour’s selection turn acrimonious. The seat has been in special measures since 2004, which means the selection will be run by the party’s national executive committee, though several local candidates are tipped to run, with Afzal Khan,  a local MEP, and Julie Reid, a local councillor, both expected to run for the vacant seats.

It’s highly unlikely but if the selection occurs in a way that irritates the local party or provokes serious local in-fighting, you can just about see how the Liberal Democrats give everyone a surprise. But it’s about as likely as the United States men landing on Mars any time soon – plausible, but far-fetched. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.