Cuadrilla Resources has pledged to be “a good neighbour” and pay a “community benefit” of £100,000 for each exploration wellhead where fracking takes place in Lancashire.
The announcement comes after David Cameron said councils which give the green-light to hydraulic fracturing projects will be allowed to keep millions of pounds in tax revenue.
The Prime Minister said local authorities in England will receive 100 per cent of the business rates collected from shale gas schemes - rather than the usual 50 per cent.
But environmentalists accused ministers of trying to “bribe” local authorities into accepting fracking, which uses high-pressure liquid to fracture rock and extract the gas in it.
The controversial process has raised concerns over inappropriate development and disturbance in rural areas, minor earthquakes and water pollution.
Cuadrilla said the Community Foundation for Lancashire will run a pilot scheme managing community benefit funds at upcoming Cuadrilla shale gas exploration sites.
A community benefit of £100,000 will be paid by Cuadrilla for each exploration wellhead where hydraulic fracturing takes place.
The payment will be made into the community fund as drilling operations begin on each well it intends to hydraulically fracture, and the foundation will run a consultation into how residents and community groups would like the money to be spent.
Francis Egan, Cuadrilla’s chief executive, said: “We are committed to being a good neighbour and it will be for local people to decide for themselves - with the help of the Community Foundation for Lancashire - how this money will be spent.”
The pilot is part of a scheme announced by the industry’s representative body, the United Kingdom Onshore Operators Group (UKOOG) and the UK Community Foundation.
Since 2003, the Community Foundation has distributed £9m to more than 1,900 community groups, charities and social businesses across Lancashire, working with donors, funders and philanthropists.
Cathy Elliott, chief executive of the independent charity, said: “Work on any fund will commence after the full planning and regulatory approval process has been completed and all necessary approvals have been given.
“We will work with and for local communities in a robust, effective and fully transparent process, supporting local people to define local priorities, including the appointment of a community panel to decide how the money will be spent. We will ensure that funds are effectively managed to deliver the greatest possible social benefit.”
The Government claims exploitation of shale gas will mean more jobs and opportunities for people and economic security for the UK.
Preston North and Wyre MP Ben Wallace, who has campaigned for a greater proportion of the revenue from shale gas to be kept in Lancashire, welcomed the £100,000 community benefit scheme, but branded the Government’s business rates offer as “crumbs”.
He said: “There is potentially £266bn of extractable gas in the Bowland Shale and it is only right that Lancashire gets to keep a sizeable proportion of the profits.
“The Government will eventually take 62 per cent tax on a gas pad, which could amount to billions. Many of us feel that the Treasury should take a little less and the county get a little more.
“Today’s announcement of giving back £850,000 pounds of business rates is welcome because it shows the treasury accepts that shale gas revenues can be hypothecated. But the money on offer is crumbs compared to what they will take.”
Cuadrilla has a permanent site at Elswick, near Preston, which was hydraulically fractured in 1993.
It has carried out exploratory test drilling at four temporary sites near Preston, including Banks, Singleton, Weeton and Westby.
The company began drilling at Preese Hall in Weeton in 2010, but said no further work would take place after two earthquake tremors in 2011. It has also decided not to progress at its Anna’s Road site in Westby.
Testing and analysis continues at its Grange Hill site in Singleton and at Becconsall near Banks.
Cuadrilla also acquired temporary planning permission for a Kirkham site in 2010, but there are currently no plans to undertake exploration at the site.