How plans to pay residents to back schemes could affect planners

Plans to make direct payments to households in areas affected by fracking have been mooted by Prime Minister Theresa May, but it is far from clear whether residents will be swayed by the proposed financial incentive.

Fracking: plan to hand householders direct payments
Fracking: plan to hand householders direct payments

In the days before she became Prime Minister, Theresa May began trailing a vision to create a more pro-development climate in England that would share the benefits of new housing and infrastructure schemes "not just with local authorities, but with local people themselves". This week, more details of the new Prime Minister's vision for planning began to emerge.

A statement issued by the Prime Minister's office said that May had personally intervened in consultation plans for the creation of a Shale Wealth Fund (SWF) that is intended to give up to £1 billion of the tax revenues from fracking activities back to the areas hosting the work. "The consultation has been changed by the new Prime Minister to include the option of money being paid directly to local residents in host areas," it said.

The Prime Minister has also indicated that the approach could be rolled out more widely. "The government will also be looking at whether this approach to the SWF can be a model for other community benefit schemes," the Prime Minister's office said. It added that ministers are looking at extending the same principle to the Community Infrastructure Levy (CIL).

The consultation on the SWF asks whether a "relatively small per-household payment" may be preferable to investment in an asset that benefits the wider community. Elsewhere, it proposes that payments from the fund should "trickle up", meaning that only part of the payments will be allocated locally. Regional projects - such as elements of former chancellor George Osborne's "Northern Powerhouse" vision - could also be in line for subsequent cash injections.

The proposals have proved controversial, with some environmental campaigners suggesting that the plan amounts to the bribery of residents. And it is also far from clear that householders will be swayed by the lure of cash rewards.

Proposals for a £3.5 million pilot scheme to pay residents to support new development near their homes were previously worked up under the coalition government, only to be quietly dropped. The government at the time attributed the decision to "extensive attitudes research", but it subsequently emerged that there had been only three bids to take part in the pilot. The British Social Attitudes Survey data had indicated such payments would make no difference to most people's feelings, and could actually antagonise a significant proportion of householders.

Duncan Field, head of planning at law firm Norton Rose Fulbright, said that it is "only reasonable" for the government to look at how the SWF could best reward communities and wider regions for hosting extraction. "It is possible that the option of direct payments to households might influence local perception of shale gas development," he said.

"But it seems to me that the motivation for this is less about reducing opposition to shale gas development and more about ensuring that the economic benefit is shared. No doubt the SWF will be a consideration for local planning authorities at the consenting stage, in the same way that the New Homes Bonus is for residential development, but it is unlikely to have more or less weight just because household payments are a possibility."

However, Claire Dutch, a partner at law firm Hogan Lovells, said that direct-to-householder payments that are connected to planning approvals are likely to provide "classic grounds" for new judicial reviews. "At the moment, the law says that, if a developer wants to pay some money to the community, this can only be used to mitigate the effect of their specific development. Otherwise it is considered a bung," she said. "If this is to work, local authorities will have to be very careful."

Michael Wilks, planning projects manager at Suffolk County Council and the Planning Officers Society's infrastructure specialist, said that the government needed to be clearer about the extent to which the SWF could be taken into account when planning decisions are being made. But he did not accept that infrastructure funding for large schemes would be significantly affected by directing cash to residents. "It might readjust the balance of funding sources, so that bodies acting at a more strategic level - local enterprise partnerships and combined authorities, for example - have greater funding at their disposal where shale gas is present," he said.

Tom Curtin, chief executive of stakeholder engagement consultancy Curtin & Co, said that it is clear that many communities are currently not the prime beneficiaries of some planning obligation payments made in respect of new development that directly affects them. However, he said he is concerned that a new tier of compensation payments would inevitably detract from the funding available for new infrastructure in relation to new housing development.

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