Incentives, bribes, fracking and housing

The prospect of local communities gaining an estimated ‘£10 million per wellhead’ if they approve plans for fracking in their area got me thinking about the role that incentives (or bribes) can or should play in countering opposition to controversial development.

As far as fracking goes, local authorities will be able to keep all of the business rates they collect from shale gas schemes rather than having to give half back to central government. The government estimates that the concession could be worth up to £1.7 million a year for each fracking site approved.

On top of that, energy companies have pledged to give local communities £100,000 for test drilling and a further 1 per cent of revenues if shale is discovered. The double payment seems calculated to forestall opposition to an industry that could potentially affect every county in England except Cornwall but which ministers believe is vital to the future of the economy.

However, that seems not to be enough for many councils and MPs and an all-party group in the North West is demanding that the Treasury give up a share of its tax revenue so that even more of the profits go local.

I’m interested here not so much in the pros and cons of fracking (and I do live in Cornwall) as in the wider relevance of these sort of incentives.

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