Business rate boost for shale gas developments
The government has announced that local councils will be able to keep 100% of the business rates they collect from shale gas developments given the green light.
Government figures suggest this could be worth up to £1.7m per site, per annum.
The local community is set to benefit too, anything up to £10m could be made available if shale gas is eventually discovered.
Prime minister David Cameron said shale represents a huge economic opportunity for the UK and this is why the government is “going all out for shale”.
According to the Institute of Directors, investment could reach £3.7bn a year and support 74,000 jobs in the oil, gas, construction, engineering and chemicals sectors.
James Sproule, chief economist at the Institute of Directors, said: "The IoD recommended last year that the government allow local authorities to keep 100% of the business rates from shale sites, so we very much welcome this as another encouraging step in the right direction. It's vital that local communities see the benefits of new industry in their area, and this announcement sits alongside existing plans to support communities connected with the development of shale gas.”
The announcement came as French firm Total said it will be investing £30m in a Lincolnshire drilling project – believed to be the first major energy company to buy a share in UK fracking.
Sproule added: "Investment from Total is a vote of long-term confidence in the UK shale industry, and is a welcome sign that the government is creating the conditions necessary to maximise the potential benefits of a new domestic energy source. The wider benefits are clear; shale gas development could create tens of thousands of jobs, reduce imports, generate significant tax revenue and support a resurgence in British manufacturing. In short, shale gas could be a new North Sea for Britain."
The industry is expected to 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.
Centrica last year announced an investment of up to £160m in shale gas projects in the Bowland shale while 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.