Partner Article

Fracking – the gift that keeps giving?

Tax has featured consistently high in the news agenda throughout 2013. Everything from multinational corporations to local cricket clubs; mansion tax to real time information. And a whole lot else.

Three recent government announcements seem set to keep tax at the top of the agenda well into the New Year.

First, in the Autumn Statement and the draft Finance Bill, the government has recognised that fracking will not bring to the UK the huge benefits which the USA is enjoying. Tax relief will be required to encourage the investment which some argue is necessary to stave off the UK’s impending energy crisis. The shape of that tax relief has now been set out.

With the tax code clearer, on 17th December the energy minister announced that 100,000 km2 of land will be opened up for both fracking and for conventional oil and gas exploration – subject of course to the grant of licences and other regulatory requirements. Fracking uses huge volumes of water: the Financial Times estimated that fracking companies could consume nearly one fifth of the water currently supplied to energy, water and waste industries each year.

Which leads us neatly to the third announcement. On the same day as the energy minister’s statement, the Department for Environment, Food and Rural Affairs announced a review of water abstraction rules which could tighten how much water farmers can abstract to irrigate their crops.

One can only ask whether this is the most Machiavellian example of joined-up government thinking which we have seen for a long time, or whether the two policy announcements are completely disjointed.

Tax on its own often makes quite a good story. Tax and fracking look like an unmissable combination.

And so on that note, have a fracking great Christmas; we’ll see you all in 2014!

This was posted in Bdaily's Members' News section by George Bull .