Councils are to keep the business rates revenues they raise from fracking sites. (A scheme originally suggested by the Institute of Directors.) Local authorities already keep half their business rates, so the practice itself is scarcely new. Nor is the principle of central government funding local government for a particular purpose: the New Homes bonus is a classic example. A proposal to distribute some of the gains of shale to local people is, however, more novel: the Guardian refers to “funds of up to £5m-£10m for a typical site over its lifetime – a lump sum of £100,000 when a test well is fracked, plus 1% of revenues. Direct cash payments could be made to homeowners living near fracking sites.”
Since a combination of shale and more nuclear are indispensable to keeping the lights on without simultaneously pushing carbon emissions up, the scheme is very welcome – and David Cameron will apparently be visiting a shale site today. I wonder if the timing is in any way related to his claim last week that there is a connection between last week’s floods and climate change (a view not shared by Owen Paterson). Conservative MPs who might loosely be described as climate change sceptics are often shale gas enthusiasts, and making a pro-shale announcement may help to cheer them up. The Prime Minister’s Policy Unit will also be taking an interest, or at least one of its new recruits will.
Namely, Alex Morton – formerly of Policy Exchange, and a regular contributor on this site about housing and planning, precisely the subjects he has now gone to Number Ten to specialise in. One of his leitmotifs was that local people, rather than simply local councils, ought to be offered some of the proceeds of housing growth. They could then choose to approve particular proposals and take the money, or turn the cash down and reject the proposals: the means would be local referendums. One Treasury source expressed a cautious interest to me in some pilots. We need shale and we need more houses, but without forcing them on neighbourhoods. The Morton scheme is worth reviving.