Councils to receive millions from shale gas developments

Published on Monday, 13 January 2014 09:24
Written by Daniel Mason

The prime minister, David Cameron, will announce that councils can keep 100 per cent of business rates they collect from shale gas sites – double the current 50 per cent figure.

This commitment could be worth up to £1.7m a year for a typical site. It will be directly funded by central government.

Community benefits for local people will also be strengthened. Last year, the industry announced that local communities would receive £100,000 when a test well is fracked – and a further 1 per cent of revenues if shale gas is discovered. This could be worth £5 to £10m for a typical producing site over its lifetime.

The industry has today confirmed it will further consult on how this money can best be shared with the local community, with options including direct cash payments to people living near the site, plus the setting up of local funds directly managed by local communities.

The decision to back the shale gas industry is part of our long-term economic plan to build a stronger, more competitive economy, create more jobs and secure a better future for Britain.

Cameron said: "A key part of our long-term economic plan to secure Britain's future is to back businesses with better infrastructure. That's why we're going all out for shale. It will mean more jobs and opportunities for people, and economic security for our country."

Shale gas represents a huge economic opportunity for the UK with research from the Institute of Directors showing investment could reach £3.7bn a year and support 74,000 jobs in the oil, gas, construction, engineering and chemicals sectors. The industry will today set out proposals on how best to secure a role for UK companies as part of its supply chain as shale gas production develops in the UK.

Today's action builds on the action the government has already taken to back our shale gas production sector, which has already unlocked investment.

In the Autumn Statement 2013, we introduced the most competitive tax regime in Europe for shale gas; new operators in this emerging industry will now have an effective tax rate that is lower than in the US.

We have streamlined and simplified the regulation of exploration activity through the Environment Agency, including developing a single application form for permits and we will go further in 2014 - the Environment Agency aims to reduce permitting times for low-risk activity from 13 weeks to approximately two weeks during 2014.

Centrica last year announced an investment of up to £160m in shale gas projects in the Bowland shale. GDF Suez recently announced a £25m investment for several shale gas and coal-bed methane projects in Cheshire and the East Midlands. The 14th onshore licensing round, planned for later this year, is expected to bring more new entrants to the market, helping ensure the UK is able to get the most value from its onshore oil and gas.

Source: Prime Minister's Office

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