David Cameron’s announcements on local authority and community incentives for permitting ‘fracking’ for shale gas in their local area have unsurprisingly divided opinion. Those in favour cite energy security, jobs and growth, while those against view the policy as a bribe to tempt struggling councils to gloss over serious environmental impacts. Beyond the actual fracking issue, however, examining these battle lines themselves tells you a fair bit about the state of public debate and decision making in this country – and the news isn’t great.
The principle that should be at the heart of this debate is about the necessity of weighing up all the costs and benefits in order to reach a rational decision. Clearly, this requires accurate evidence – in this case on subjects such as how much shale gas there may be in the UK, how much of it can be extracted, how cheap it is to extract, what are the local and global environmental consequences of extracting it, and what impact it would genuinely have on prices given the UK’s participation in European-wide and indeed global energy markets. But evidence alone is not enough: someone needs to weigh it up. Good policy requires institutions that have both the analytical capacity and the autonomy to process this evidence, interpret it in relation to the local context, use this to assess the benefits and costs of action and make a decision.
The debate shows how far we are from this being the case. If you accept the broad principle that costs and benefits relating to intangible aspects of the natural world and society can be weighted and compared – which is a worthwhile and interesting debate in itself – there is nothing inherently wrong with a financial incentive for councils or communities; it simply becomes one of the benefits which need to be weighed against the costs. It’s also not particularly radical. Most European countries have a far more decentralised taxation system than ours: something like retention of business rates by the local authority would be hard to take seriously as an incentive in Germany. Meanwhile, the principle of paying landowners compensation for the negative externalities of development is by no means new.
By getting stuck on this point, though, the debate limits itself: one person’s despicable ‘bribe’ that will inevitably skew the debate is another person’s ‘not good enough‘ (LGA) or ‘crumbs from the Treasury table‘ which has no chance of nudging decisions in the right direction. This doesn’t particularly move us on. A much more fruitful argument, which sadly I’ve seen more ‘below the line’ than above it, is ‘why fracking – why not renewables?’
Arguably there are already subsidies for renewables – though they tend to accrue to those producing it rather than local authorities and communities – and a similar, siloed debate on community funds related to onshore wind in particular has been in play fairly recently. But leaving aside again the specifics of the energy debate, this is getting us closer to the heart of the matter. Why reward a particular action or output – in this case fracking – when what we really need to incentivise, as a society, is action of whatever kind to ensure that our energy needs are met? Why give councils increased leverage, and by extension greater decision-making responsibility, over one part of the energy mix and not others? Boringly but importantly, for example, one of the biggest things councils can do in the short term to ensure energy needs are met is probably energy demand reduction through behavioural change and physical improvements such as insulation. Again, this is nowhere in this debate, partly because it’s boring, and partly because the story is ‘councils bribed to allow fracking’ and not ‘how can councils best help ensure our energy needs are met?’
This idea can and should be taken further. The RSPB, for example, commented, ‘Rather than being rewarded for protecting the natural environment, councils are getting their bonuses for letting fracking take place’. Must it be either / or and one size fits all? If both are important national objectives, we should be aiming to translate this into setting out the parameters within which empowered councils and communities can weigh up competing priorities, make choices and deal with the consequences. Taking a simple example, given that reducing carbon emissions is a national priority, the use of a carbon pricing mechanism as part of the incentive mix would seem appropriate. There are significant technical challenges (some of which have already been worked through) to setting a carbon price, figuring out the right way to set that against the fracking ‘bribe’ in a way that is meaningful for local authorities, etc. but the real question is whether there is the political will to allow a meaningful local debate which will inevitably play itself out in different ways in different places. Similarly, there are technical challenges around designing a compensation system that works for individuals and communities – I have been considering recently whether online crowdsourcing type platforms might provide some inspiration by allowing people to interact to set a price – but the real question is whether there is the political will to contextualise a practice currently viewed as ‘bribery’ as being a necessary and respectable part of a rational, fair broader decision-making system.
MP Barbara Keeley, whose constituency has seen anti-fracking protests, raises the point that the proposal on business rates ‘muddies the water to give councils two contradictory roles. One is a protective role, to check companies have safeguards. On the other hand, you have a cash strapped authority that’s lost £100m off its budget, like ours, that gets offered this cash incentive in business rates. The public involved in this, who live near the site, how can they trust the local council will make the right decision on this?’
It absolutely makes sense to highlight this tension and the conflicts of interest to which it could lead. But there’s no future in pretending that we can retreat into a simpler world where our institutions don’t have to take on these kinds of contradictory roles and competing priorities: with the need to find savings continuing, councils are experiencing this every day, and communities need to understand the realities of it. Rather than seeking to remove the ‘bribe’ and retreat to a mythical golden age of simplicity, we should be considering whether our councils and civil society institutions have the freedom, capacity and incentives to deal with the complex reality.
Edit: found this very interesting post after writing mine – it goes into a lot more detail on the arguments around who the beneficiaries of incentives are, whether incentives work, etc. and will probably be a refreshing read after the highfalutin’ rant above