Back Yard Back Handers

The idea, set out in the prime minister’s announcement  in relation to the Shale Wealth Fund, of the planning system encompassing direct payouts to households affected by shale oil and gas proposals, is an eye-opener on various levels – particularly given the suggestions that this will not stop at shale.

I set out below some reasons why I believe it is a wrong move and/or will not work. 
However, the proposals don’t come entirely out of the blue. 
There has been a community engagement charter since June 2013 in relation to oil and gas from unconventional reservoirs  It includes commitments from the industry to:
“Provide benefits to local communities at the exploration/appraisal stage of £100,000 per well site where hydraulic fracturing takes place;

Provide a share of proceeds at production stage of 1% of revenues, allocated approximately 2/3rd to the local community and 1/3rd at the county level
Community benefit packages like this are not new. There is also a non-statutory process in relation to on-shore wind. Community Benefits From On Shore Wind Developments  published by DECC (as it then was) in October 2014, describes a voluntary protocol agreed by the on shore wind industry. It commits developers of onshore wind projects above 5 MW in England to provide a community benefit package to the value of at least £5000 per MW of installed capacity per year, index-linked for the operational lifetime of the project. There are equivalent schemes in Wales and Scotland. The guidance stresses that payments should not be taken into account by decision-makers in determining applications. There is much focus on identifying appropriate community bodies and working through how benefits can most be effectively used by the community, with no suggestion of the monies being able to be shared out for personal gain. 
With fracking, the potential move to individual payouts was flagged in January 2014. As part of announcements that local authorities would in 100% of business rates from fracking,  it was announced that the industry would further consult about its community benefits packages, “with options including direct cash payments to people living near the site, plus the setting up of local funds directly managed by local communities”. 
For an industry paralysed by opposition to its proposals for exploratory wells, let alone extraction, this is presumably a fairly desperate attempt to turn the tide of local opinion. But the implications of such a scheme would go way beyond energy policy. Again, extending such ideas to housing is not new. Then deputy prime minister Nick Clegg was reported in August 2013 as promoting the idea of payments for those affected by garden city proposals.
These are seven obvious concerns:
1. It won’t reduce the opposition
Objections are not necessarily limited to the immediate environs of the project. People have strongly held concerns about (in the case of fracking) the potential effects of shale oil and gas extraction on the environment and on climate change more generally. Those non-local objectors will not be “bought off” by any direct payment. 
Nor will local objectors, whose concerns are, it is to be assumed, strongly held and not necessarily swayed by cash. Indeed a December 2014 research report on public engagement with shale gas and oil commissioned by the previous Government would appear to support that view.  Chapter 5 addresses mixed reactions to community benefits packages: 
“The financial aspect of the package was met with discomfort for many, because it was seen to monetise the risk taken on by the community, and was thus seen as a bribe by some. The fact that money was offered was also seen to indicate the activity was extremely high risk and dangerous, as participants were unaware of money being exchanged in other situations. “

2. Contamination of the planning process

Regulation 122(2) of the CIL Regulations 2010 provides that
“A planning obligation may only constitute a reason for granting planning permission for the development if the obligation is—

(a)necessary to make the development acceptable in planning terms;

(b)directly related to the development; and

(c)fairly and reasonably related in scale and kind to the development.”

It is of course a fundamental principle of the UK planning system that planning permissions cannot be bought or sold. However, let’s face it, our system is already influenced by financial considerations. For example:

– the Localism Act 2011 amended section 70 of the Town and Country Planning Act 1990 so as to require decision-makers to take into account in their decisions “any local finance considerations, so far as material to the application”

– local authorities are rewarded by Government for allowing homes to be built, by way of the new homes bonus and the business rates system increasingly encourages authorities that go for growth. 
– a proportion of CIL receipts is payable to parish councils, with little restriction in practice on what the monies can be spent on.
There is nothing necessarily wrong in my view with these interventions. Monies are directed to democratic bodies acting in the public interest. But we should be planning for the long term, for future generations rather than those who happen currently to live beside a major proposal. 
3. This is not about compensation for impacts
The VOA reported in August 2014   that there is no evidence that shale oil and gas exploration will affect house prices. I assume their view has not changed. 
The compulsory purchase compensation system provides protection for those whose land interests are taken or where, even if no land is taken, there is reduction in land value due to the physical effects arising from the operation of development projects. The common law of nuisance provides additional protections. 
4. It will be complicated
Who draws the boundary lines that determine who qualifies? What distinctions are there between home owners and tenants? Will there be minimum residency requirements? What about second home owners? What about clawback if people move out of the area within a short period of time, having accepted the payment? How will it be treated for tax purposes? All in all a lot of detail to be resolved and even the. There will inevitably be those who feel that they have been unfairly excluded. 
5. Slippery slope
Why not every form of development? This legitimises dialogue on planning being about how much should be paid to individuals affected, not what is in the public interest.
6. Dissipation of funds
The on-shore wind protocol contains good examples of how community benefits can deliver worthwhile projects, in the public interest. This opportunity is wholly lost with individual payouts.  

7. Whatever happened to localism?

The most depressing aspect of the announcement is that it appears to be a recognition or hunch that, for all the promotion of, initially, the Big Society, from 2010 and then neighbourhood planning, with the structures created by the Localism Act 2011, what drives behaviour is not community but me, myself, I. In order to persuade us each to allow development to proceed, apparently monies have to change hands, directed not to our parish council or other community group but directly into our bank accounts. 
Tell me if I have this wrong…

Simon Ricketts 8.8.16
Personal views, et cetera
 

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