Government response to Shale oil and gas business rate retention consultation published
2nd February, 2015
The Government has announced that councils will be able to retain 100% of business rates from defined shale oil and gas sites.
The move follows consultation over the proposals designed to encourage local authorities to consider applications for exploration from shale oil and gas developers.
What was the reaction to the plans?
During the consultation, objections were raised suggesting that the proposed change would be incompatible with an impartial planning system.
More general concerns regarding shale oil and gas developments such as the deterrence of tourists and the reduction of house prices as a result of operations were also raised.
However the Government, in its response, has stated that it believes the concerns and objections to be misplaced, citing measures in place to counteract the effects of operations and a robust planning system with wide safeguards to prevent ulterior motives from creeping into the decision-making process.
What is the legal framework underpinning the plans?
The draft regulations which define the sites in question, the Non-Domestic Rating (Shale Oil and Gas and Miscellaneous Amendments) Regulations 2015, have also been published.
The draft regulations define two forms of site with relevant business rate retention, class A and class B, as defined below:
Class A – Properties utilised for the boring or attaining of shale oil or gas by hydraulic fracturing (or ‘fracking’). Councils will retain 100% of the business rate revenues in relation to these properties.
Class B – Properties where only part of the property is utilised for the boring or attaining of shale oil or gas by hydraulic fracturing. Councils will retain 100% of the business rates attributable to the part of the property utilised for the extraction activities.
Please click here for a summary of the responses and the Government response.
Please click here for the draft regulations.
What happens next?
The proposals are an attempt by the Government to encourage local authorities to approve applications for shale oil and gas extraction.
Whilst the changes offer a clear incentive, local opposition to ‘fracking’ operations has remained high at various locations, something which councils are likely to bear in mind when considering applications.
How can Ward Hadaway help?
For further information on the issues raised by this update, please get in touch.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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