Shale Wealth Fund

Debate between Lord Evans of Rainow and Caroline Flint

Monday 21st November 2016 Commons Chamber

[Caroline Flint (Don Valley) (Lab)]

Thank you for granting me this debate, Mr Speaker. I begin by welcoming the Government’s recent consultation on their shale wealth fund, to which I want to draw attention. It is only right that this House should have an open, constructive debate about this new Government-created fund and how it might be used most effectively. This may be the first debate about the new fund, but I hope it is not the last. Perhaps the Minister will confirm in her response whether the Treasury will be publishing submissions to the consultation. The fund is a new concept and exchanging the information and ideas that were submitted can only be good for policy making, so if the Minister is able to, I encourage her to make them available online.

I should perhaps say what this debate is not about. I have not secured this chance to bring the Minister to the House to debate the whys and wherefores of fracking. My views are well known from my time as Labour’s shadow Energy Secretary in the previous Parliament. With appropriate environmental regulations in place, shale gas has a role to play in the UK’s energy mix. It could assist the UK’s transition to renewables, replacing coal with gas, reducing dependency on imported gas, some of which is fracked, and reducing the UK’s carbon emissions. The Government could have gone further on the regulation, but that is for another day.

If shale gas exploration is proceeding, communities should have a fund for their use. Communities in my constituency of Don Valley have tolerated quarrying, but they have benefited from such funds, too. The fracking industry has agreed two forms of community benefit: a one-off payment of £100,000 per well; and a share of revenue from each well—currently set at 1%. Each should give communities dedicated funds for the lifetime of the project. In addition, local authorities will be able to keep 100% of the business rates that they collect from shale gas sites, which is the case with renewable developments.

This evening I want to advance the conversation about the best way of spending the revenues that the Government receive in the form of nationally determined taxes, levies and duties. Specifically, I want to discuss the proposal for an initial 10% of tax revenues to be deposited in a shale wealth fund—a sovereign wealth fund by any other name. The fund should be ring fenced for a clear purpose, such as improving the UK’s energy efficiency, using the proceeds from a fossil fuel to reduce our future dependence on those same energy sources.

[Graham Evans (Weaver Vale) (Con)]

I pay tribute to the work that the right hon. Lady did in the House over her many years as a Minister. Weaver Vale is affected by shale gas exploration. Does she agree that the most affected communities should benefit from the shale gas wealth fund?

[Caroline Flint]

I do agree. Whether shale gas or nuclear, when it comes to developments in energy we should recognise the enormous contribution communities make towards our future energy security. Such communities should be seen as guardians of the country’s interests, and they should receive support from some of the good things that could happen to them as a result of such developments.

As I said, it would be helpful if we could ring fence the fund, but I am aware that it is not an immediate win. We are some years from receiving significant taxable profits on shale. However, I cannot help but look at our neighbours in Norway and think how different things might have been had we also protected our North sea oil and gas revenue. This fund will never equate to the scale of such revenue, which has never been less than £2 billion a year since the 1970s and reached over £12 billion in one year during the past decade. Successive Governments poured that revenue into the general taxation pot and simply use it to fund general public spending. By contrast, Norway created a sovereign wealth fund that is now so significant that the income it generates for the nation outstrips the revenue from oil production, but it also has some interesting rules.