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Individual householders to benefit from fracking 'shale wealth fund'

Published 07/08/2016

Undated handout photo of a shale gas well in North Yorkshire.
Undated handout photo of a shale gas well in North Yorkshire.

Individual households will be given cash payments potentially running into thousands of pounds in recompense for fracking in their area, under new plans announced by Theresa May.

A £1 billion shale wealth fund unveiled by former chancellor George Osborne in November will set aside up to 10% of the tax proceeds from fracking to benefit the communities hosting wells.

But now the Prime Minister is amending the scheme so the money can go direct to residents rather than being given to councils or community trusts to spend, as Mr Osborne planned.

It is expected that the new Fund could deliver as much as £10 million to each community where wells are sited. Downing Street declined to estimate how much payouts could be worth, but it is thought that individual households could receive between £5,000 and £20,000.

The change could go some way to countering resident resistance to fracking, but is likely to be characterised by critics as a "bribe" to householders which could divert cash away from community priorities like infrastructure or skills training.

Speaking ahead of the launch of a consultation on the Fund, Mrs May said she wanted to make sure that individuals benefit personally from economic decisions.

And indicated that the model could be applied to other Government programmes, such as the Community Infrastructure Levy charge on property development in England and Wales.

"The Government I lead will be always be driven by the interests of the many - ordinary families for whom life is harder than many people in politics realise," said Mrs May.

"As I said on my first night as Prime Minister: when we take the big calls, we'll think not of the powerful but of you.

"This announcement is an example of putting those principles into action. It's about making sure people personally benefit from economic decisions that are taken - not just councils - and putting them back in control over their lives.

"We'll be looking at applying this approach to other Government programmes in the future too, as we press on with the work of building a country that works for everyone"

Under Mrs May's changes, the option of giving money direct to residents will have to be considered when decisions are made on how to share proceeds from the Shale Wealth Fund, though cash could still go to councils to fund community improvements.

A British Geological Survey (BGS) study of shale gas across the north of England estimated total reserves of 1,300 trillion cubic feet - the equivalent of more than 500 years of UK gas consumption at current levels.

The Government is seeking comments on its proposals for a Shale Wealth Fund and will publish its response to the consultation later this year.

Greenpeace UK chief scientist Doug Parr said: "The Government has tried to sweeten the fracking pill with cash payments before, and it didn't work.

"Over the last two years, public opposition has soared and support for shale has tanked. People's concerns about climate change and their local environment cannot be silenced with a wad of cash.

"You can't put a price on the quality of the air you breathe, the water you drink, and the beauty of our countryside."

Ken Cronin, chief executive of trade body UK Onshore Oil & Gas, said: "The onshore oil and gas industry in the UK continues to believe that local people should share in the success of our industry and be rewarded for hosting sites on behalf of others in the country.

"That is why we launched the industry's community benefits scheme and community engagement charter in 2013. These are additional to the proposed Shale Wealth Fund.

"The overarching objectives of secure, affordable and low-carbon energy continue to be a driving force for our industry. Just 12 years ago, Britain was a net exporter of gas, but imports now make up nearly half of our gas demand, at a cost to this country of around £10 million a day. Recent estimates by National Grid are that, without shale, the UK could be importing over 90% of its gas by 2040."

Green Party MEP Molly Scott Cato said the proposed payments to individual households amounted to "little more than bribes".

"This is bound to set household against household and can only exacerbate community tensions," said Ms Scott Cato, who pointed to a recent poll suggesting just 19% of people in the UK support fracking.

"Following hard on the heels of the Hinkley fiasco, this misguided policy to encourage fracking demonstrates again that the Government has no strategic energy policy," she said.

"It is also another worrying indication of the failure of commitment to tackle climate change, first demonstrated by May in her abolition of the Department of Energy and Climate Change."

Labour's shadow energy secretary Barry Gardiner said: "An incentive to do the wrong thing is properly called a bribe and Theresa May is using this bribe to set neighbour against neighbour. It is not right for communities and it is not right for the country.

"We need a clean, secure, low-carbon future in the UK not a dirty fossil fuel one."

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