The Chancellor again emphasised in November's Autumn Statement and Spending Review that the government "backs the development of shale gas which strengthens the UK's energy security, while providing generous benefits to local communities".
The Chancellor evidenced this intent by announcing further details in relation to the proposed Shale Wealth Fund. The government will commit up to 10% of shale gas tax revenues to the fund, which it states will deliver, over a 25 year period, up to £1 billion (based on internal Treasury calculations) of investment in local communities hosting shale gas developments, throughout the north of England and other shale-producing regions.
We still await the detail on how the Shale Wealth Fund will be managed, and how the money will be allocated and may then be spent for the benefit of "local communities".
Whether the benefits anticipated by the Treasury from the proposed fund will be enough to encourage members on local planning committees, and their electorates, to welcome shale development remains to be seen. Tax revenues will only flow from commercially productive wells; no benefits under the proposed wealth fund will come through from exploratory stage shale development.
The Government is now clearly putting in place the final part of a carrot and stick approach to shale gas development.
On the one hand it is saying to local mineral authorities that if they grant shale gas development, their communities will be promised a share in the tax receipts to accrue from shale gas development hosted in their administrative area. That benefit will sit alongside the employment and supply chain benefits, and will be additional to any standard planning obligations required to offset the impact of that development. On the other hand (and as reported in our August bulletin), it is also saying to local mineral authorities who fail to determine an application for shale gas development in 16 weeks, that it will use the new fast track planning system to itself force through the determination of shale development.
Cuadrilla is now appealing the refusal by Lancashire County Council to grant the company planning permission for its exploratory well sites at Preston New Road and Roseacre Wood in Lancashire. DCLG has announced the Secretary for Communities and Local Government is to recover the decision on the appeals for his own determination. Meanwhile, Igas has recently submitted an application for two exploratory drilling wells at a site in Mission, Nottinghamshire. The determination of Nottinghamshire County Council is awaited.
Whilst moratoriums on shale exploration remain in place in the devolved Welsh and Scottish nations, the Government's latest announcement in the Autumn Statement, and its latest statement of intent in relation to the determination of appeals, each underscore the Government's determination to see through a commercially viable shale gas industry in England which is attractive to investors, and helps fire up its wider aspirations for the Northern Powerhouse.