George Osborne is taking the ‘global race’ to a new level today. The Chancellor is not just allowing Britain to enter the fracking revolution by unveiling a shale gas allowance, he’s also offering the most generous tax breaks in the world for the exploitation. The allowance will mean shale production income will be taxed at 30 per cent rather than 62 per cent. Osborne’s own MPs should be delighted that the government is keen to support an industry that could keep energy bills down and create thousands of jobs.
But Peter Lilley – who wrote in the Spectator recently about the need to get a move on with fracking – yesterday sounded a note of caution about whether the incentives were really necessary. He told a Westminster Hall debate yesterday that he didn’t think tax breaks were really needed. He said:
‘On the basis of my knowledge of the oil and gas industry, I think that they are probably unnecessary, and we should not give away unnecessary tax breaks; although if they are necessary, that would be fair enough.’
Perhaps more important than whether or not industry will jump to action now (as that seems a given) is whether the planning incentives for communities to accept fracking in their area are strong enough (it’s worth reading David Blackburn’s piece in this week’s magazine on the effect the threat of fracking is having on one West Sussex village).
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