WHAT are we waiting for? Britain desperately needs a cheap and dependable source of energy to ensure the lights don’t go off and yet the government still isn’t allowing firms to start exploiting a massive, untapped resource buried deep under the north of England.
I am referring, of course, to shale gas, which has already revolutionised energy production and prices in the US and which could have an effect on Britain as transformative as North Sea oil and gas, the discovery of which boosted the economy from the late 1960s but the effects of which are now starting to wane.
The news that IGas, an energy firm, now believes that there could be anything from 15.1 trillion cubic feet to 172.3 trillion cubic feet of shale gas under the 300 square miles of land across Cheshire for which it has a licence to explore is hugely significant. Of course, it is unclear how much of this will actually be usable, assuming that it all materialises, but nevertheless the size of the potential find is monumental and is twenty times larger than previous estimates.
The UK only consumes around three trillion cubic feet a year. Just three years ago, scientists thought that Britain’s reserves were a mere five trillion cubic feet; the actual figure is likely to be at least a hundred times more than this, and possibly even several hundred times greater. Cuadrilla, another energy firm, believes that its own licence area contains another 200 trillion cubic feet near Blackpool; the Bowland shale deposit in the north west of England alone could contain 500 trillion cubic feet. Even if only a fifth is usable, the UK’s entire gas needs could be met for over three decades.
Of course, fracking – the process by which shale gas is extracted – can be dangerous. It needs to be handled properly, with drastic safety measures. But shale is the only way to go. Rather than obsessing with its outdated and useless decarbonisation agenda, the coalition finally needs to prove that Britain is once again open for business, and prioritise a dash for shale. Anything less would confirm to the rest of the world that we are truly a lost cause of a nation.
RICH HIT HARDEST BY RECESSION
DOWNTURNS usually hurt the rich more than the poor, and this one has been no different. The Institute for Fiscal Studies estimates that the bottom 10 per cent of households will have suffered a 3.4 per cent real term fall in incomes between 2007–08 and 2015–16, compared to a 5.4 per cent drop for median earners and 5.5 per cent for the highest-earning 10 per cent. Most of the falls in real incomes associated with the recession have now happened for middle and higher income groups. But much of the pain for lower income groups is taking place now or is still to come, because these groups are the most affected by cuts to benefits and tax credits. Remarkably – but again, not surprisingly for those who are used to the distributional impacts of recessions – income inequality in 2016-17 will end up slightly lower than it was in 2007-08.
Of course, these measures only look at income, and only by decile (so miss out much narrower income groups, such as the top or bottom 1 per cent). Asset prices are the real driver of household wealth, and the behaviour of house prices – up again in central London, down severely in some other parts of the UK – will have shifted relative wealth far more than any of this. But the one genuinely shocking fact is that the UK will have suffered a lost decade when it comes to earnings growth – and that truly is unprecedented and deeply depressing.
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