Labour wants to amend regulations for shale gas exploration. Photo: Getty
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Slowing the coalition's dash for gas: Labour will overhaul shale gas regulations

Labour’s amendments to the Infrastructure Bill would overhaul the existing framework and give us a regulatory regime that is fit for purpose.

In 2012, the Royal Academy of Engineers and the Royal Society produced a joint paper examining the regulatory regime for shale gas. They found that the “health, safety and environmental risks associated with hydraulic fracturing” could be safely managed if proper regulation was in place. David Cameron took this as an all clear to go "all out for shale" and has since pushed ahead recklessly in his dash for gas, citing the most optimistic job projections and endorsing the misleading notion from George Osborne that somehow shale gas is automatically cheap.

The reality is that there are clear flaws in the existing framework, and without robust regulation and comprehensive monitoring then extraction of shale cannot go ahead. Environmental Impact Assessments are mandatory for sites over one hectare – shale gas operators have been buying up 0.99 hectare plots. The integrity of the well has to be inspected by an independent party – but the current definition of “independent” allows that person to be on the shale gas company’s payroll. Baseline assessments of levels of methane in the groundwater remain optional. But despite these obvious loopholes, David Cameron’s government have repeatedly side-lined genuine and legitimate environmental concern and seem prepared to accept shale gas at any cost.

That is not acceptable, and is why Labour will today propose a fundamental overhaul of the regulations for shale gas in a series of amendments to the coalition's Infrastructure Bill.

Each of our eleven amendments closes a loophole in the existing regulations which David Cameron has chosen to ignore. We require baseline assessments of methane in the groundwater, monitoring and reporting of fugitive emissions and properly independent inspections of well-integrity. We will introduce a presumption against development in protected areas such as national parks and will empower planning authorities to consider the cumulative impact of shale gas developments on an area, rather than considering individual applications on a case by case basis.

This measures are vital if we are to have a regulatory regime that is fit for purpose. But instead of fixing the regulatory framework, the Tories have tried to cut the “green tape” on shale, desperate to present shale gas as the silver bullet to all of our energy problems.

And whilst the coalition appears increasingly ambivalent about our climate change commitments, Labour are clear that shale gas extraction cannot come at the cost of our carbon budgets or longer term targets. That is why we will legislate for a 2030 target for the effective decarbonisation of the power sector.

Despite hyperbolic claims from those with an absolutist opposition to the development of any fossil fuels, the Committee on Climate Change concluded that, “meeting a given amount of UK gas demand via domestic shale gas production could lead to slightly lower emissions than importing LNG.” While eight out of ten homes still rely on gas for heating, shale gas may have a role to play in displacing some of the gas we currently import and improving our energy security – it is not about increasing how much gas we use, but where we get it from. That is why we should not absolutely rule out a potential source of the gas we will continue to need - but the regulatory regime needs to properly stand scrutiny and be effective.

Between David Cameron’s reckless dash for gas and the absolute anti-fossil fuel position of a small minority, there is a rational and evidence-led approach to shale gas that recognises the potential benefits but is not prepared to sacrifice proper environmental protection. Labour’s amendments to the Infrastructure Bill would overhaul the existing framework and give us a regulatory regime that is fit for purpose.

Tom Greatrex is the Labour MP for Rutherglen and Hamilton West and shadow energy minister

Tom Greatrex is shadow energy minister and Labour MP for Rutherglen and Hamilton West

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Q&A: What are tax credits and how do they work?

All you need to know about the government's plan to cut tax credits.

What are tax credits?

Tax credits are payments made regularly by the state into bank accounts to support families with children, or those who are in low-paid jobs. There are two types of tax credit: the working tax credit and the child tax credit.

What are they for?

To redistribute income to those less able to get by, or to provide for their children, on what they earn.

Are they similar to tax relief?

No. They don’t have much to do with tax. They’re more of a welfare thing. You don’t need to be a taxpayer to receive tax credits. It’s just that, unlike other benefits, they are based on the tax year and paid via the tax office.

Who is eligible?

Anyone aged over 16 (for child tax credits) and over 25 (for working tax credits) who normally lives in the UK can apply for them, depending on their income, the hours they work, whether they have a disability, and whether they pay for childcare.

What are their circumstances?

The more you earn, the less you are likely to receive. Single claimants must work at least 16 hours a week. Let’s take a full-time worker: if you work at least 30 hours a week, you are generally eligible for working tax credits if you earn less than £13,253 a year (if you’re single and don’t have children), or less than £18,023 (jointly as part of a couple without children but working at least 30 hours a week).

And for families?

A family with children and an income below about £32,200 can claim child tax credit. It used to be that the more children you have, the more you are eligible to receive – but George Osborne in his most recent Budget has limited child tax credit to two children.

How much money do you receive?

Again, this depends on your circumstances. The basic payment for a single claimant, or a joint claim by a couple, of working tax credits is £1,940 for the tax year. You can then receive extra, depending on your circumstances. For example, single parents can receive up to an additional £2,010, on top of the basic £1,940 payment; people who work more than 30 hours a week can receive up to an extra £810; and disabled workers up to £2,970. The average award of tax credit is £6,340 per year. Child tax credit claimants get £545 per year as a flat payment, plus £2,780 per child.

How many people claim tax credits?

About 4.5m people – the vast majority of these people (around 4m) have children.

How much does it cost the taxpayer?

The estimation is that they will cost the government £30bn in April 2015/16. That’s around 14 per cent of the £220bn welfare budget, which the Tories have pledged to cut by £12bn.

Who introduced this system?

New Labour. Gordon Brown, when he was Chancellor, developed tax credits in his first term. The system as we know it was established in April 2003.

Why did they do this?

To lift working people out of poverty, and to remove the disincentives to work believed to have been inculcated by welfare. The tax credit system made it more attractive for people depending on benefits to work, and gave those in low-paid jobs a helping hand.

Did it work?

Yes. Tax credits’ biggest achievement was lifting a record number of children out of poverty since the war. The proportion of children living below the poverty line fell from 35 per cent in 1998/9 to 19 per cent in 2012/13.

So what’s the problem?

Well, it’s a bit of a weird system in that it lets companies pay wages that are too low to live on without the state supplementing them. Many also criticise tax credits for allowing the minimum wage – also brought in by New Labour – to stagnate (ie. not keep up with the rate of inflation). David Cameron has called the system of taxing low earners and then handing them some money back via tax credits a “ridiculous merry-go-round”.

Then it’s a good thing to scrap them?

It would be fine if all those low earners and families struggling to get by would be given support in place of tax credits – a living wage, for example.

And that’s why the Tories are introducing a living wage...

That’s what they call it. But it’s not. The Chancellor announced in his most recent Budget a new minimum wage of £7.20 an hour for over-25s, rising to £9 by 2020. He called this the “national living wage” – it’s not, because the current living wage (which is calculated by the Living Wage Foundation, and currently non-compulsory) is already £9.15 in London and £7.85 in the rest of the country.

Will people be better off?

No. Quite the reverse. The IFS has said this slightly higher national minimum wage will not compensate working families who will be subjected to tax credit cuts; it is arithmetically impossible. The IFS director, Paul Johnson, commented: “Unequivocally, tax credit recipients in work will be made worse off by the measures in the Budget on average.” It has been calculated that 3.2m low-paid workers will have their pay packets cut by an average of £1,350 a year.

Could the government change its policy to avoid this?

The Prime Minister and his frontbenchers have been pretty stubborn about pushing on with the plan. In spite of criticism from all angles – the IFS, campaigners, Labour, The Sun – Cameron has ruled out a review of the policy in the Autumn Statement, which is on 25 November. But there is an alternative. The chair of parliament’s Work & Pensions Select Committee and Labour MP Frank Field has proposed what he calls a “cost neutral” tweak to the tax credit cuts.

How would this alternative work?

Currently, if your income is less than £6,420, you will receive the maximum amount of tax credits. That threshold is called the gross income threshold. Field wants to introduce a second gross income threshold of £13,100 (what you earn if you work 35 hours a week on minimum wage). Those earning a salary between those two thresholds would have their tax credits reduced at a slower rate on whatever they earn above £6,420 up to £13,100. The percentage of what you earn above the basic threshold that is deducted from your tax credits is called the taper rate, and it is currently at 41 per cent. In contrast to this plan, the Tories want to halve the income threshold to £3,850 a year and increase the taper rate to 48 per cent once you hit that threshold, which basically means you lose more tax credits, faster, the more you earn.

When will the tax credit cuts come in?

They will be imposed from April next year, barring a u-turn.

Anoosh Chakelian is deputy web editor at the New Statesman.