MPs push for higher fracking returns for councils

Lancashire MPs have remained largely unimpressed by David Cameron's announcement that local councils which allow fracking will be able to keep all of the business rates they receive instead of the standard 50 per cent.

The controversial practice has divided opinion, with some saying it is the answer to the UK's energy problems and opponents saying the environmental cost is too high.

Now, in a bid to encourage councils to green-light fracking sites, the government has pledged to allow councils to keep millions in tax revenue, arguing that it will also create tens of thousands of jobs and lower the country's energy bills.

It has also been promised that companies will give £100,000 to communities for each test drilling - and a further one per cent of the revenues if shale gas is discovered.

The prime minister estimated that the moves could raise more than £2m per council per year, and more than £10m from each well over the course of its life.

However, local MPs have argued that the amount falls short of what councils should receive in order for the practice to properly benefit the local economy.

Lib Dem MP for Burnley Gordon Birtwistle, Conservative MP for Wyre and Preston North, Ben Wallace, Labour MP for Blackburn Jack Straw, Lancaster and Fleetwood Conservative MP Eric Ollerenshaw, Conservative MP for Rossendale and Darwen Jake Berry, Conservative MP for Bury North David Nuttall MP and Labour MP for Hyndburn Graham Jones have together written a letter asking for a 10 per cent share in profits instead.

Addressing the government, the letter said: "We welcome the initial steps towards giving communities a share of some of the proceeds of fracking but this doesn't go nearly far enough. We also are pleased that by offering a rebate in business rates the Treasury has recognised the link between the communities and gas revenues in a hypothecated way.

"Many of us will become champions of the industry, but without some significant retention of the revenues, and therefore the benefits of Shale Gas exploration we would find it difficult to support further development in Lancashire."

Adding that the amount councils could eventually get would be "crumbs", Ben Wallace MP told the Blackpool Gazette: “The problem with the business rates scheme is it’s subject to the Government changing its mind or there being a change of government. If this does go ahead we in Lancashire should get a proper share and it shouldn’t disappear to the Treasury. What we want is a sizeable amount for the region.

“There is potentially £266bn of extractable gas in the Bowland Shale and it is only right Lancashire gets to keep a sizeable proportion of the profits. The government will eventually take 62 per cent tax on a gas pad which could amount to billions. Many of us feel the treasury should take a little less and the county get a little more."

Cuadrilla, the company undertaking fracking in the region, will partner up with the Coummnuity Foundation of Lancashire to appropriate the funds generated.

Cuadrilla chief executive Francis Egan said: “The Foundation is an excellent partner with a strong track record of working with communities to help identify appropriate causes and means of disseminating these community funds. “We are committed to being a good neighbour and it will be for local people to decide for themselves – with the help of the Community Foundation for Lancashire – how this money will be spent.”