PM unveils new plans for fracking

Richard Furlong - City Surveys Group

Home » PM unveils new plans for fracking

Published: 16th August 2016

This Article was Written by: Richard Furlong - City Surveys Group


A government consultation has set out plans for payments from the Shale Wealth Fund to go directly to local people in communities that play host to shale gas or ‘fracking’ installations.

Shale gas extraction, or hydraulic fracturing (fracking), releases gas that is trapped inside porous rock below ground by injecting water into the rock at high pressure.

The gas is forced out and back up the well where it can be collected and used for energy generation and other typical applications.

However, critics object to the process, arguing that the disruption below ground risks contaminating water sources and may even increase the risk of low-strength earthquakes in the area.

In 2014 the government unveiled plans to set aside 10% of the taxes raised by fracking, which would be ring fenced for use by the communities that play host to shale gas wells.

But under a newly published consultation, more of this money may go directly to individuals living in those areas, rather than being allocated via councils and other organisations.

The consultation document explains: “The government is clear that local people should have greater control and say in decisions that affect them.

“More than this though, we are committed to delivering an economy that works for all, through ensuring the benefits of economic growth and investment are spread as widely as possible.”

The document also points out that existing reward schemes cover other areas of energy and infrastructure – so that, for instance, communities where renewable energy plants are installed will receive their share of the economic benefits of those installations too.

In terms of geographical location, the proposals affect a swathe of the north of England, running from the Humber Estuary at Mablethorpe, north along the east coast to near Whitby, and in the west from Morecambe down the Welsh border to around Shrewsbury.

None of the proposed areas for fracking are much further south than The Wash, although the Jurassic Weald Basin south of London is also currently being assessed.

In the meantime, the proposal explains that fracking in the north would play a part in helping to deliver the economic improvements of the Northern Powerhouse initiative.

“It is clear that a thriving shale industry could play an important role in the regions in which it is developed, i.e. most likely in the Midlands and the Northern Powerhouse, driving local growth and investment and creating new jobs,” the consultation document adds.

The four main questions asked by the consultation are therefore:

  • What should be the government’s priorities for the Shale Wealth Fund?
  • How should the Shale Wealth Fund be allocated to different stakeholder s?
  • How should the Shale Wealth Fund be aligned with the industry community benefits scheme?
  • How should the Shale Wealth Fund be delivered, for example to households and communities, and deciding how it should be spent?

The document goes on to set out the terms of the Shale Wealth Fund, which will account for 10% of all taxes raised from fracking, and will not replace existing comparable funding, but will be used to supplement it on top.

Payments to communities could be made for up to 25 years, with £1 billion paid out in total, and communities consulted on how this money should be spent.

Each individual community will be subject to a maximum payout, which has been proposed at £10 million, although the document states that this may be revisited in future.

It stresses the deliberate local delivery of this funding – so that areas like the North, where the largest deposits of shale gas can be found, will receive the larger share of the economic benefit from fracking.

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