People have 11 weeks to comment on government proposals for payments from a shale wealth fund in a consultation which opened today.
The consultation document said:
“Local communities should be the first to benefit from the shale wealth fund, and they should get to decide how a proportion of the funding is used”.
It also proposed part of the fund should be spent regionally on “enhancing the regional economy”. But the government did not recommend what proportion should be spent locally and regionally and only suggested the balance between the two payments should remain “flexible”.
Yesterday, Downing Street said Theresa May had intervened in the consultation proposals to include an option to make direct payments to local people affected by shale gas developments. Anti-fracking and environmental groups described this option as a “bribe that would not work”. DrillOrDrop report
Details of shale wealth fund
The consultation document gave details for the first time of how the government thinks the fund would operate. The document said:
- The fund would initially consist of up to 10% of the revenue from tax on shale gas company profits
- It could provide up to £1 billion over 25 years
- The money would be shared between local communities and wider shale gas regions
- The first payments would go to local communities
- There would be a £10 million maximum pay-out to each community or region associated with an individual shale site over its lifetime, estimated at 25 years.
- The fund would be new money and “would not be used to replace to replace existing government funding”
- It would be additional to the shale industry community benefit scheme (£100,000 for each exploration well and 1% of production revenues)
The government proposed the first priority of the fund would be communities local to shale developments.
“These proposals make clear that the benefits of shale will go to local people first, and individuals and communities who host developments will be directly involved in the decision making about how the tax revenues from shale are spent.”
The document raised the issue of how “local community” might be defined but made no proposal. It also discussed possible ways in which local funding might be governed and spent without making a recommendation:
“There will clearly be a trade-off for communities in either choosing to benefit from SWF [shale wealth funds] directly, which may result in a relatively small per-household payment, depending on the revenues and the size of a particular community, or in investing in an asset which benefits the community at large.”
Some newspapers have suggested individual payments could be variously £10,000, £13,000 or £20,000.
Yesterday’s MailOnline said:
“In the sleepy village of Balcombe, West Sussex – focus of huge anti-fracking protests – £10million split between its 735 households would result in £13,605 per home.”
But this assumed that the entire £10 million would go in direct payments, which is not government policy.
There is no figure in the consultation on what households in shale gas areas might expect to receive. But any payment from the fund, local or regional, relies on shale companies extracting gas for sale, making a profit and paying tax. Local payments under the scheme may not go to communities affected by exploration activity because exploration and production sites may be in different places.
The consultation said the fund could “contribute to a significant legacy for areas hosting shale developments”.
The regional part of the fund would take tax revenue from more than one shale site and, the document suggested, make larger investments. It said these could include infrastructure projects and gave as an example the Northern Hub and Transpennine rail upgrade. At £1 billion, this would use the entire fund, including the local element, over the estimated lifetime of the fund of 25 years.
Regional funding could make direct grants to local authorities or Local Enterprise Partnerships, the government suggested. Alternatively, there could be a regional fund to which organisations make project bids.
The government said the consultation sought to explore:
- What the government’s priorities should be for the shale wealth fund
- How funding should be allocated to different stakeholder groups
- The extent to which the industry community benefits scheme and the Shale Wealth Fund should be aligned
- How the funding should be delivered to ensure that households and communities benefit
- How funds are spent and how the process should be administered
- Are the priorities correct?
- Should local communities receive revenues before the regional level
- What proportion of funding should be allocated between the two priorities?
- Should there be flexibility on the proportion of funding to local and regional levels?
- How should “local community” be defined?
- Should it be defined on a case by case?
- Should there be a set of principles for defining “local community”?
- Should the government align any “local community” part of the fund with industry community benefits scheme?
- At a local level, should local people determine how the fund is spent?
- How could the government ensure that all local residents benefit as directly as possible from the fund?
- Should the fund be ring-fenced for a specific purpose and, if so, should this be determined locally or centrally?
- At the local level, would an appropriate use be to make direct payments to households?
- Who should make decisions on fund allocation at a local level? Should this be an existing body (eg parish or district council), the same community-led panel as the industry scheme, or a new body?
- How can government ensure decisions are as directly influenced by local residents as possible?
- How should boundaries be defined for the regional strand of the shale wealth fund?
- What kind of investments should be made from a regional level of the shale wealth fund?
- Should the regional level of the shale wealth fund be administered? Should this be by direct grants to specific organisations or through an open bidding process? How can views of residents across the regions be best taken into account?
- How should a regional shale wealth fund be governed? Are there existing regional organisations, or local or national governance structures that would be particularly suited?
Responses should be made by Tuesday 25 October.
They can be
- Online through Surveymonkey
- By email to firstname.lastname@example.org
- By post to: Energy Branch Energy, Environment and Agriculture Team HM Treasury 1 Horse Guards Road London SW1A 2HQ
Link to consultation webpage