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Fracking firm tax breaks 'illegal'

Tax breaks to spur controversial "fracking" for gas in the UK announced by Chancellor George Osborne could be illegal, environmental campaigners said.

Mr Osborne said in his Autumn Statement that he would introduce "a new tax allowance to encourage investment in shale gas that halves tax rates on early profits".

Ministers are strongly backing the use of the hydraulic fracturing process - pumping water underground at high pressure to split rocks and release oil and gas - to exploit UK shale reserves.

They say the emerging sector will create jobs, help reduce energy prices and make Britain less dependent on imported energy.

But opponents have raised fears of the impact on local communities, including the possibility it could contaminate or reduce local water supplies and cause mini-earthquakes.

Friends of the Earth executive director Andy Atkins said; "Handing tax breaks to climate-wrecking fracking firms simply highlights the fact that George Osborne hasn't done his homework.

"They won't lower bills, MPs say they are unjustified - and they could be illegal."

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