George Osborne is taking the ‘global race’ to a new level today. The Chancellor is not just allowing Britain to enter the fracking revolution by unveiling a shale gas allowance, he’s also offering the most generous tax breaks in the world for the exploitation. The allowance will mean shale production income will be taxed at 30 per cent rather than 62 per cent. Osborne’s own MPs should be delighted that the government is keen to support an industry that could keep energy bills down and create thousands of jobs.
But Peter Lilley – who wrote in the Spectator recently about the need to get a move on with fracking – yesterday sounded a note of caution about whether the incentives were really necessary. He told a Westminster Hall debate yesterday that he didn’t think tax breaks were really needed. He said:
‘On the basis of my knowledge of the oil and gas industry, I think that they are probably unnecessary, and we should not give away unnecessary tax breaks; although if they are necessary, that would be fair enough.’
Perhaps more important than whether or not industry will jump to action now (as that seems a given) is whether the planning incentives for communities to accept fracking in their area are strong enough (it’s worth reading David Blackburn’s piece in this week’s magazine on the effect the threat of fracking is having on one West Sussex village). Of course, bringing new jobs to an area should be incentive enough, but ministers will be keen to prevent fracking pads from becoming the new wind farms that antagonise local communities and cause huge planning rows.
P.S. The Westminster Hall debate is on Hansard now. It was rather fractious. Here is one grumpy extract:
Barbara Keeley: I am already getting questions from constituents that I cannot answer about what chemicals are involved in the process, so that is clearly very important to people.
The trust goes on the state that it
“will treat each planning application for energy generation on its own merits and we would expect there to be a net gain in biodiversity in line with current legislation, local planning policies and the National Planning Policy Framework”.
The final point the trust makes, as we have already heard from the hon. Member for Brighton, Pavilion, is that
“the precautionary principle should be adopted until adequate scientific evidence exists as to the environmental impacts.”
Dan Byles: The hon. Lady is being very generous in giving way. I might have misheard her, but I think she said that she could not answer the questions about what chemicals are put into fracking fluid. If she looks on the Environment Agency website, she will see that they are listed in full, as required by the agency’s rules. That is entirely transparent.
Barbara Keeley: I do not think that that is my job—
Dan Byles: Of course it is.
Mr Lilley: Show some leadership.
Mr Peter Bone (in the Chair): Order.
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