Shale Gas (Lancashire)

Dan Byles Excerpts

Tuesday 16th July 2013 Westminster Hall

[Mr Gordon Marsden (Blackpool South) (Lab)]

I will take you at your word, Mr Benton, and, as it is customary to say, it is a great pleasure and delight to serve under your chairmanship. It is also a great pleasure and delight to follow the hon. Member for Fylde (Mark Menzies), who is my constituency neighbour and who placed the arguments and his position with his usual sense and robustness. I will do my best to follow him.

The hon. Gentleman said what ought to be the theme of this afternoon’s discussion: the regulations must be robust and to the highest environmental standards. He rightly passed a warning shot—if I may put it that way—across the Minister’s bows about the use of language, and I shall return to that later in my contribution. The focus needs to be on “robust”, not on “streamlining”, and I entirely concur with what the hon. Member for Fylde said.

I also agree with what the hon. Gentleman told the Blackpool Gazette—that he would be

“inflexible on the point that there must be a gold standard of regulation reached before any potential move to the extraction phase.”

That is a position with which I wholeheartedly associate myself.

My hon. Friend the Member for Rutherglen and Hamilton West (Tom Greatrex), who speaks for the Opposition, also holds that position. He will speak for himself shortly, but in an article for PoliticsHome, when the survey by the British Geological Survey was published, he warned about too much hype:

“For many who are against renewables, shale is the silver bullet. For some who advocate green technologies, the extraction of unconventional gas is catastrophic for the environment. While it may help generate lurid headlines, an absolutist position does little to ensure a realistic assessment of the role shale and other unconventional gas could play in our energy mix.”

That is an important position to set out.

Coverage in the national media has become extensive, not least since so many people outside Blackpool and the Fylde were alerted to the matter by the famous occasion of the earthquakes, to which reference has already been made. I think that I am speaking for all hon. Members in the Chamber who represent constituencies in or near the Fylde when I say that there is a wide variety of views, ranging from absolutism at both ends to scepticism on either side of the frame. Those views were picked up well in a recent article in The Observer by Robin McKie, a distinguished science editor there for many years, who has dealt with the issues in a solid way.

The balance must be struck between the prospectuses of the companies concerned, which will necessarily be expansive, and the realities of the science on the ground and of the amount of gas that is actually extractable. The amount is a key issue, because, as the hon. Member for Southport (John Pugh) rightly identified, that might affect any arguments or discussions about the amount of money available at a future stage. It is therefore incumbent on the Government to get the balance right. At the end of the day, they will set the regulations—I concur with the hon. Member for Fylde that what DECC has done has been proportionate and measured—but I caution the Minister to continue in that line, not least in the context of the Chancellor’s remarks, because the Treasury’s position to date has been far too gung-ho in cheerleading for the industry.

The hon. Gentleman talked about unwarranted criticism of the Minister for wearing two hats, with his ministerial responsibilities for energy and for business. I am worried not so much about two hats as about the possibility of three—the third one appearing if the Minister were to follow his Treasury colleagues and become simply a cheerleader for the fracking industry. It is important that he remembers his quasi-judicial role as we take forward sensitive decisions. Language, whether emanating from him or from his civil servants, is particularly important.

Community benefit is the frame in which this afternoon’s debate is taking place, but which communities and where? There are communities of interest, reasonably so, in the development and the possible production of jobs, but also in the residents of the area and—not to be sneezed at—in the visitor and tourism industry. When we discuss the benefits or where the jobs will come from, we must look not only at what Cuadrilla or British Gas, which has now joined the enterprise, say about the numbers of jobs that might or might not be created—there can be lots of arguments about that—but at the impact on existing jobs, particularly in tourism, and on green issues. The number of jobs and the effects that those jobs will have on the local area from a positive point of view need to be balanced against the potential—that is all I say at the moment—for things to develop in such a way that tourism, the environment and the continued enjoyment of the Fylde area by residents are jeopardised.

I therefore move on to geographical communities, as well as communities of interest. Blackpool has not thus far been the site of any drilling experiences, but it was Blackpool that got the earthquake. In Blackpool, we were able to provide the definitive answer to the often-asked question, “Did the earth move for you?”, because it certainly did, and in some measure. Seriously, if such things are to have an effect on the reputation, image and attraction of Blackpool, then Blackpool must also be included as a potentially benefiting community, as well as the other areas of the Fylde.

I have mentioned the potential adverse consequences on seaside and rural tourism, and they should not be treated lightly. More independent assessments of the amount of work and jobs that might be created would be welcome. For my part, I so far remain fairly sceptical about some of the numbers produced by Cuadrilla, as I remain sceptical about some of its estimates for the amount of extractable gas available.

[Dan Byles (North Warwickshire) (Con)]

I am not sure whether the hon. Gentleman has seen the Institute of Directors report, which was published about six or eight weeks ago, but it was interesting. It modelled what a pad might look like, how many jobs might be involved in the supply chain and so on. If he has not had a chance to look at that, it is worth doing so, because it is a substantial piece of work.

[Mr Marsden]

I thank the hon. Gentleman for his intervention. As a former member of the Select Committee who believes in evidence-driven policy, I will look at the Institute of Directors report, as I will look at many of the other bits and pieces that come before us. We can have as many reports as we like, but at the end of the day the issue will remain one of judgment and proportion. What I am urging on the Minister and the Department and what I think largely echoes what the hon. Member for Fylde said is that they should proceed with caution. The precautionary principle should apply. I make no complaint against some of the people who propose the change because they want their business to succeed, but in the famous words of Mandy Rice-Davies after the Profumo affair, they would say that, wouldn’t they? Some people in other business areas will look at it through their end of the telescope, but it is not our job as Members of Parliament to look at it through their end of the telescope. Our job is to look at the effect on our constituents.

With that in mind, I strongly urge that we proceed with caution on the precautionary principle and probe laser-like into what the benefits will be and how broad they will be, and perhaps even to look at the impact on rural and seaside tourism, which are and should be interlinked. Our primary concern as Members of Parliament in the area must be for our residents’ well-being and environment. The Fylde is not like Arkansas or other areas of the United States that are relatively large and sparsely populated. The concern, whether justified or not, about contamination of the water table and other negative effects experienced in the United States would be much more profound and pronounced in the UK.

This morning, I went to Tate Britain for a quick peek at the wonderful exhibition of Lowry’s paintings of industrial Britain. He had the ability to summon up a terrible beauty from the destruction and marred landscape of the industrial revolution. We should take care in our House and in our deliberations not to be overborne by hype or business prospectuses. I would not want to see some of that terrible beauty visited on the Fylde in the 21st century.

[Dan Byles (North Warwickshire) (Con)]

I congratulate my hon. Friend the Member for Fylde (Mark Menzies) on securing this debate on this important topic. I am not a Lancashire MP, but I stand here as a member of the Select Committee on Energy and Climate Change, which has looked at the issue in some detail, and as chair of the all-party group on unconventional oil and gas.

I have worked on this issue in some detail and discussed it at great length with a wide variety of stakeholders throughout industry and beyond. There is great consensus on the community benefit and we have reached the stage where no one is disputing or discussing whether we should have a community benefit scheme; we are simply discussing the detail. There are various reasons why an effective scheme is important and it may be best summed up in a phrase that many hon. Members have heard before: the industry requires a social licence to operate. A community that hosts shale gas resources and could see shale gas development take place is entitled to ask two legitimate questions: is it safe, and how will our community benefit from the process? It is incumbent on the Government and industry to answer both those questions

Today’s debate is not about safety, except that, echoing hon. Members who have spoken, we must take this forward with the highest environmental standards, in keeping with the gold standard that we already apply to oil and gas regulation in the UK. Today’s debate is about the benefit to people and communities in Lancashire. It is their gas; it is not Cuadrilla’s gas or Centrica’s gas, and it is certainly not the Government’s gas, although the law may imply that it is. I am not a socialist, but as far as I am concerned, it belongs to the people of Lancashire, and it is important and absolutely right when developing a domestic UK shale industry that the local communities who will host that industry and new development should benefit from their own natural resources.

Loosely speaking, two benefits can accrue from a large-scale infrastructure project. One is the natural or organic benefit: the jobs, supply chain and activity from the very process of the investment and flow from the activity without intervention from the Government. The other, which is what we are principally talking about today, is the artificial cash benefit that can be put in place by the industry through voluntary agreements or by the Government to ensure that some of the profit and revenue stream from the industry are shared locally.

I want both forms of benefit to accrue to the people of Lancashire. On the first point, it is essential that the maximum benefit in jobs and investment accrue as locally as possible to the operation of the shale gas pads. Employing local people and developing a local supply chain is fundamental to making the industry part of the community instead of it being an outside industry that comes in and does things to the community.

In Aberdeen and the surrounding region, for example, the offshore oil and gas industry supports 137,000 direct, indirect and induced jobs. We may not see quite the same number of jobs in Lancashire, much as we would all love to, but the highly detailed report by the Institute of Directors estimated that there is potential for up to 74,000 direct and indirect jobs nationwide from developing UK shale gas. Not all the jobs will be in Lancashire, but many will, and it is important that when the industry and particularly the supply chain go forward with their plans, they do their best to maximise the number of jobs that stay locally within the region.

On the artificial cash benefits, the proposals currently under discussion have been alluded to: £100,000 per exploratory well and eventually 1% of revenue from the development phase going to the local community. Over the lifetime of a shale gas pad, that could amount to a considerable sum, and I agree with those who have already noted that we should remain flexible about community benefits to ensure that, as the industry’s profitability becomes better known and we have more information, we can ensure that the benefits remain at a suitable level.

I share my hon. Friend’s concern about one fundamental and important question. How does one define the community? Most of our present discussions about community benefits boil down to the question, who is the community? The judgment call on exactly who should receive a direct benefit is often spoken of in terms of municipal level—parish, district or county—but it is important to note that people do not necessarily mean the parish council, the district council or the county council. They use those words as shorthand for the municipal level to which the community benefit should go.

If the community is defined too narrowly, it may create division rather than consensus, and I have seen that in my constituency. When campaigning in Curdworth as a young parliamentary candidate not that many years ago, I asked what the village’s main issue was and someone said, “Them on that side of the village got compensated for the Birmingham northern relief road and we over here, one road over, weren’t.” The compensation package had caused division in the village because the definition of who should benefit was too narrow.

However, if the definition is too wide, there are two concerns. One is simply that if the benefit is diluted too much, it may not provide a genuine benefit. Another danger is the message sent about the impact of the industry. If someone living 10, 15 or 20 miles from a shale gas pad is told that they will receive a community benefit to compensate them for having it in the area, are we not pandering to a myth, because someone 15 or 20 miles away may not notice that it is there? The evidence is that there will probably be no impact more than a few miles away from a shale gas pad.

[Graham Stringer (Blackley and Broughton) (Lab)]

There is an interesting historical point behind the name of this debate: what is Lancashire?

[Dan Byles]

Tell us.

[Graham Stringer]

For the purposes of this debate, I think Salford can be Lancashire and that there will be immediate benefits there.

Does the hon. Gentleman agree that apart from immediate local benefits, there will be general benefits for the whole country if the exploitation of shale gas is successful because the real impact will be a lowering of energy prices?

--- Later in debate ---

[Dan Byles]

I absolutely agree that it is important not to forget that Lancashire is part of the wider UK economy and that there are potentially significant benefits to not only Lancashire, but the whole UK economy. The jury is still out on how much shale gas might bring energy prices down, but it is certainly true that it might help to prevent them from rising as much as they might have done, which is, in effect, the same thing.

The majority of the members of a community who will be impacted by such development will be affected not by the actual activity of drilling for gas, but by the wider construction activity. In that respect, shale gas development is no different from any other infrastructure development. More people will probably be affected by things such as truck movements than by the activity of drilling for the gas.

When the Energy and Climate Change Committee visited Hinkley to discuss the Hinkley Point C power station, we had a long discussion with local parish councils about their concerns. I was struck by the fact that not one mentioned the fact that a nuclear reactor was going to be parked at the side of their town as a concern. They were concerned about truck movements, dust, noise, vibration and, interestingly, which pubs the itinerant work force were most likely to drink in.

When we look at the wider community benefit, and at how wide we go, therefore, it is important that we do not give the impression that somebody who lives five, 10 or 15 miles away from a shale pad requires compensating because of some activity that takes place there.

Others wish to speak, so I will say no more, other than that there is widespread agreement over the principle we are talking about. I do not think anybody here disagrees with the broad thrust of what community benefit will look like. We are now down to the definitions. What amount are we talking about? How should we levy it? Which community will benefit? Later, there will also be the practicalities of how moneys will be disbursed and to whom. We are in a good place, given that we are discussing the mechanisms involved in getting these things right, rather than whether we should do them. There is wide consensus that we should do them, and I think that is right.