In August, UK Prime Minister Theresa May declared that the revenues produced by hydraulic fracturing (“fracking”) should be invested in the communities in which the industry is based, possibly as cash payments to households. Many environmental groups oppose this shale gas dividend, which they see as a bribe to allow fracking. Basic Income UK has also released a critical statement, below.
The British government has announced plans to create a Shale Wealth Fund, which would be funded a portion of tax revenues (up to 10%) from shale gas. The funds would then be used for the benefit of communities that host sites where shale gas is obtained by fracking.
According to the consultation report (dated August 8), the Shale Wealth Fund could generate up to £1 billion in funds during its lifetime, which would be paid out to communities during the course of 25 years (which, according to the report, is the approximate lifetime of a fracking site; p. 7).
The report specifies that the communities which are local to shale developments “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” (p. 7). The national government suggests multiple possibilities, including infrastructure, local skills-training programs, “investment in the local natural environment”, and “funding for community groups and the development of community assets, such as libraries, or sports facilities” (p. 11).
Notably, the report also raises the suggestion of direct cash payments to residents:
We are also interested to hear whether an appropriate use of the Shale Wealth Fund would be to allow residents of communities to benefit by directly allocating funding to households. There will clearly be a trade-off for communities in either choosing to benefit from SWF 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 (p. 12).
The latter proposal was added by Prime Minister May in August. She was quoted as explaining, “It’s about making sure people personally benefit from economic decisions that are taken – not just councils – and putting them back in control over their lives.”
Since the announcement, some have accused May of “bribing” individuals to allow fracking.
For example, The Guardian quotes MP Barry Gardiner, the Shadow Secretary of State for Energy and Climate Change, as saying, “Appealing to people’s higher nature, Theresa May gives a £10,000-plus bribe if you live near a frack site. If you live near a wind farm, nothing … The asymmetry is amazing.” And Greenpeace scientist Doug Parr:
You can’t put a price on the quality of the air you breathe, the water you drink, and the beauty of our countryside. If Theresa May wants to show the UK is open for business, she should reverse the policies that have harmed our vibrant clean-energy sector and back the technologies that can supply cheap, homegrown energy for decades to come.
Basic Income UK has released the following statement on the proposal:
This proposal to pay local people a small share of the money from fracking operations in their area shows how desperate the UK government is to divide and silence the strong opposition shown by almost all UK communities where fracking has been proposed.
Given that the fall in oil and gas prices has made fracking unprofitable in many areas of the US, it is uncertain whether in the UK, local people will see any money from a tax on fracking profits. The payments (if they materialise at all) will vary from area to area depending on how many households live there, and how much tax is raised on each individual fracking operation. This idea comes as part of a package of local investment proposals about which the government has opened a consultation.
This is not really about ‘sharing the wealth’ from fracking. In Alaska it was recognised that a share of the oil wealth should go to everyone in the state as a common resource whether people live near the wells or not. Here the proposals are area-specific, and could bring complications around the question of who qualifies. Another way this is different is that the proposal here is to pay households, and not individuals. It is unclear from the consultation papers whether there would be regular, ongoing payments or one lump sum, and how transparent the government will be about taxes raised in any given area.
The environmental costs seen where fracking has already happened: earthquakes, degradation of land around fracking operations and most especially contamination of groundwater, will be much higher and longer-lasting than the benefit of any amount of money people might get. This proposal shows the strength of the opposition to fracking, and is not an endorsement of the principle of basic income.
Basic Income should be paid to each individual as a share of the general wealth of the society we all contribute to, whether in a job or not. A basic income for everyone would really ‘put people back in control of their lives’. Here people are asked to chose between a short-term financial windfall and long term environmental security. Many of the areas affected are desperate for income and investment, but fracking could badly affect their environment and wellbeing long after operations have ceased, and any payments have stopped. It would be far better if the government helped people set up renewable energy coops around wind farms and solar energy installations.
References
Shale Wealth Fund: Consultation
Daniel Boffey, “Local People to Get Cash Payments from Fracking”, The Guardian; August 6, 2016.
Chris Mason, “Households could get fracking payments under government plans”, BBC; August 7, 2016.
Rowena Mason, “Trying to bribe public to accept fracking won’t work, say campaigners”, The Guardian; August 7, 2016.
Photo CC BY-NC-ND 2.0 Victoria Buchan-Dyer
Article reviewed by Barb Jacobson
Thanks to Kate’s supporters on Patreon
