China Bets Big On 'Iron Bird' Of The Skies

By Mark Stone, China Correspondent in Shanghai

In a vast hanger on the outskirts of Shanghai, the banging of hammers and screeching of drills indicates a company in a hurry.

Sky News has been granted exclusive access to the headquarters of Comac - China's answer to Airbus and Boeing. The vast campus forms the heart of China's attempt to take on the aviation giants.

Comac was only founded five years ago and yet it has already produced one passenger jet and, within a decade, it hopes to be selling planes to western airlines including Ryanair and British Airways.

Jack Lee, a Comac executive, says: "This is a really exciting event for China. This is the first time in China's history that we have manufactured (passenger) aircraft by Chinese people.

"It's a challenge ahead of us. We already laid out our plan. The schedule is tight. We must fight for this schedule and fight for this milestone."

Mr Lee and I are sitting in the cockpit of a full-size model of the C919, Comac's equivalent to the workhorses of the skies, Boeing's 737 and Airbus' A320. This is the plane which Comac hopes will launch its global success.

The 'iron bird' test platform fuselage simulator at the Comac hanger

Mr Lee is Chinese by birth, but has spent most of his life living and working in the United States. His expertise from his previous career at General Electric and Raytheon are vital to the success of Comac.

The company is learning from mistakes and design failures made over decades by Boeing and Airbus in an attempt to get itself ahead.

"The advantage is that we have already learnt something from previous successful experiences or failures," says Mr Lee. "Lots of people here come from overseas and they bring lots of knowledge and talent.

"Also, there's lots of workers here and they work very hard."

The company is owned by the Chinese state who are as keen as Mr Lee that it is a success. The government recently pumped $3bn into the company and it has promised even more.

Taking on Boeing and Airbus is as much a project of national pride as it is a business necessity.

For China, taking on Boeing and Airbus is a project of national pride

"There are a few reasons," adds Mr Lee. "The first is that there are tremendous market needs. In the future we need more and more airlines and aircraft to serve our people.

"Also, we like to use aircraft industry as our sign to improve - because the aircraft industry is very complex - so the aircraft industry brings the whole Chinese industry to a higher level."

The C919 is the key to their success. The company initially gave itself six years to design, build and sell the C919. It should have been in our skies in 2014.

That deadline has now been pushed to the right a little. Staff have been asked to work longer hours to ensure it will be in the sky by 2015.

To the untrained eye, the C919 looks almost identical to the Airbus A320. It has the same wingspan and is almost the same length.

The new passenger jet will seat 190 passengers

Many of the components are the same too. The difference is that the C919 was designed and put together entirely in China by Chinese hands.

It seats 190 passengers, and if the real thing is anything like the replica we are in, the cabin will have a modern, airy feel. It feels a bit like a smaller version of Boeing's Dreamliner.

That's no surprise either, because Comac has learnt lots from the troubled Dreamliner project. They have cherry-picked all that worked and avoided the aspects which did not.

On the ground outside the replica C919 is the evidence this plane is essentially an outsourced airliner even if it is designed and built in China.

The massive wooden crates containing airline parts have been shipped from Europe and America. One has come from Miami, another from Germany.

The jet's engine interface control unit is likely to be made by a UK firm

The C919's power-supply system is made by America's UTC Aerospace; the on-board entertainment will be provided by Thales of France and the Engine Interface Control Unit will probably be made by a UK company called Meggitt.

Mr Lee is keen to talk about safety. It is, he says, natural that people will have concerns about Chinese-made passenger jets. After all, historically at least, China's record on safety and quality is not great.

"These will be as safe as any other aircraft in the sky - Boeing or Airbus," he insists, repeating himself. "The safety level is the same as other aircraft that fly in the sky. So very safe."

It is true that in order to fly, Comac will need to get approval from the US Federal Aviation Administration and the Chinese equivalent, the CAAC.

If the C919 passes those tests, then there is only one other obstacle in the way of success for Comac.

Even without American Federal Aviation approval, Comac can still sell its planes in the massive domestic market. The state-run Chinese airlines will probably be pushed to buy a Chinese-made plane.

Many of the C919's components are similar to those used by Airbus

But in order to succeed with the C919 abroad, Comac must make it cheaper and more efficient than the Boeing and Airbus equivalents. Mr Lee believes it will be, which is why there are already 400 orders for the C919.

There is no published price for the C919 yet, but speculation suggests it will be about $75m, which is $10m less than a B737 or an A320.

That has pricked the ears of one savvy Airline boss from Ireland - Ryanair CEO Michael O'Leary. At the 2011 Paris Airshow, Mr O'Leary signed a cooperation deal with Comac. He hopes the company will build him a bespoke passenger jet which will increase his profits.

Aviation rules stipulate that airlines must provide one flight attendant for every 50 passengers. So a plane with 200 passengers on board must have at least four flight attendants.

However, a plane with just 199 seats in it can legally have three flight attendants on board. Ryanair is reportedly interested in Comac's willingness to build a 199 seater jet.

Ryanair boss Michael O'Leary has signed a co-operation deal with Comac

On safety and passengers' willingness to fly on a jet made in China, Mr O'Leary is unconcerned, pointing out in a recent interview that 99% of his customers have no idea what model or make of plane they are travelling in.

Airbus has already shown its commitment to and belief in China. In 2009 it opened an assembly plant in the northern Chinese city of Tianjin. Chinese-constructed versions of its A320 have been rolling off the production line ever since.

The manager of the plant, German executive Andreas Ockel, gave Sky News an exclusive look inside the plant. He explained that China's aviation industry is now so huge, it is vital for Airbus to have a physical footprint here.

And on safety, he insists, the planes are identical, wherever they are put together.

"When you build an aircraft, safety is about what is designed into the process and into the aircraft itself," Mr Ockel says.

"What we have here is a process that's exactly the same as we have in Europe. You will not be able to differentiate a plane that comes out of here from any plane that comes out of Hamburg or Toulouse."

Back at the Comac plant, Mr Lee hints at just how far China has come in such a short time.

"I can't imagine," he says. "So few years, such tremendous changes, I couldn't have imagined it. And of course the next 30 years? Who knows!?"

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Ken Clarke In China On NHS Export Mission

By Mark Stone, China Correspondent

The UK's trade envoy Ken Clarke is on a week-long trip to China in an effort to 'export' elements of the NHS to the world's second largest economy.

Mr Clarke, a former health secretary, has brought a 50-strong delegation of health professionals with him for the trip which will "promote the UK's world-beating healthcare sector companies to the Chinese market".

Thirty-eight British health companies, universities and training hospitals are represented on the mission which will visit Beijing, Tianjin, Nanjing, Zhejiang and Shanghai.

Healthcare is one of Britain's strongest sectors, says Mr Clarke

"I am very happy to be leading another delegation of excellent British companies to China, which will build on the progress made by the Prime Minister when he visited in November," Mr Clarke said.

"The British healthcare system is the best in the world, and there will be important export opportunities as China invests huge sums of money in its healthcare system over the years ahead."

China's health sector has been identified by the British Government as a "high value opportunity".

The trip was scheduled to take place up to a year ago but was postponed, perhaps because of political disagreements between the UK and China following the meeting between David Cameron and the Dalai Lama in May 2012.

The delegation, which includes representatives from Sheffield Hallam University, Nottingham University and Swansea University as well as BUPA, Sinophi Healthcare and various NHS trusts, is the largest-ever British health and social care mission to China.

They will be introduced to potential Chinese buyers. The aim, according to the Government, is to build relationships and establish the links needed to unlock trade opportunities between the two countries.

"Healthcare and life sciences are among the strongest sectors of the British economy and our standards are held in high regard overseas," Mr Clarke said.

"As a country, we must play to our strengths if we are to continue to build a healthy, modern economy, and there can be no doubt that exports in this area will play an important part.

"From building a hospital to training the staff to building the IT and management systems, the UK has the expertise that China needs as it builds a healthcare system that is projected to be spending a trillion dollars every year by 2020."

Mr Clarke will also meet the Chinese Health Minister Li Bin in Beijing. The two men are to host a joint conference on dementia in the Chinese capital.

Only a fraction of those with dementia in China are treated

With the largest population in the world, it is no surprise that the country has the largest dementia population too.

According to figures published by the British Embassy in Beijing, there were 9.19 million people with dementia in China in 2010 compared with 3.68 million in 1990.

Ninety-three percent of dementia cases in Chinese people aged 60 and over are undetected. Only a fraction receive medical treatment.

The management of hospitals is also an area of opportunity. The UK's Sinophi Healthcare has already signed contracts for hospital management and investment worth £120m.

"The big opportunity over the next decade is to work with China's state/pubic hospital system: 90% of China's 21,000+ hospitals and 95% of the beds," Simon MacKinnon , the chairman of Sinophi Healthcare told Sky News.

Exchange programmes between UK and Chinese health firms are also planned to aid education, training and knowledge.

According to figures issued by the organisers of Mr Clarke's visit, Chinese health spending has grown from 1% of GDP in 2002 to 5.15% today presenting a massive opportunity for the UK.

An organisation called Healthcare UK, an agency of the UK Government, has been set up to promote UK health expertise abroad.

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HomeServe Faces £34.5m 'Mis-selling' Fine

The emergency maintenance firm HomeServe has been told it faces a £34.5m fine amid a regulator's inquiry into alleged mis-selling and poor complaints handling.

The penalty - set to be imposed by the Financial Conduct Authority (FCA) following an 18-month investigation - is significantly higher than the company had expected and is believed to be a record figure for such a firm in the retail financial market.

HomeServe, which sells insurance for and fixes homeowners' boilers and burst pipes, had previously set aside £6m but confirmed on Monday a further provision of £30m to cover the costs of the fine.

On receipt of the FCA's Draft Warning Notice, the company said it was now engaging in discussions with the regulator to finalise the Notice.

HomeServe said the proposed penalty of £34.5m assumed an early settlement discount of 30% and it would not comment further until the talks were completed, which could take months.

The company temporarily suspended telephone sales and launched a costly review into its marketing and training processes in October 2011 when it was accused of mis-selling policies to customers.

In April last year, HomeServe was fined £750,000 by Ofcom for breaching rules on silent and abandoned calls and the following month, the-then regulator the Financial Services Authority which was later replaced by the FCA, placed it under investigation.

It is unclear how many policies are affected by the FCA inquiry and whether anyone would be entitled to compensation.

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Sports Direct Nets 5% Stake In Debenhams

The sportswear empire of Newcastle United owner Mike Ashley has bought a 4.6% stake in Debenhams - the stuggling department store chain.

Sports Direct International said the stock market purchase of 56.8 million shares, worth around £46m, was made without the prior knowledge of the Debenhams board but it hoped the pair could work together to improve its performance.

Debenhams had a troubled Christmas period.

Its chief financial officer quit the retailer just two days after it issued a New Year's Eve profits warning.

Mike Ashley's business empire is worth billions

Simon Herrick had already been under pressure after asking suppliers for a discount on goods just eight days before Christmas Day in what was seen at the time as a 'Santa tax' - a move Debenhams insisted was not an attempt to boost fragile festive trading.

Its sales grew by just 0.1% on a like for like basis over its Christmas trading period but its share price rose by more than 5% in early trading in the wake of the investment - a move Debenhams said it was "open-minded" about.

Sports Direct has a history of buying strategic stakes in other retailers, most recently JJB Sports, and is the current owner of a near 12% holding in rival JD Sports Fashion.

It said today: "Sports Direct wishes to explore options at an operational level to work together with Debenhams to create value in the interests of both Sports Direct's and Debenhams' shareholders.

"This acquisition of shares has taken place without the prior knowledge of the Debenhams board of directors, but Sports Direct has communicated to Debenhams' board its desire to work together and its intention to be a supportive shareholder."

Debenhams has 240 stores in 29 countries. It said: "Debenhams notes that Sports Direct intends to be a supportive shareholder and that it wishes to explore options at an operational level to work together.

"Debenhams is open-minded with regard to exploring operational opportunities to improve its performance, alongside its own existing and planned initiatives, in order to create value for all Debenhams shareholders."

As well as 409 stores in the UK, Sports Direct has a portfolio of 28 internationally recognised sports, fashion and lifestyle brands including Dunlop, Slazenger, Everlast, Lonsdale and Karrimor.

Mr Ashley set up the business on leaving school in 1982 and was the sole owner until a stock market listing in March 2007 which netted him £929m.

The company joined the FTSE 100 last year as its value soared.

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Childcare Costs 'Stop Parents Going To Work'

The spiralling cost of childcare is preventing parents from returning to work, with one in four saying they would like a job but cannot afford it, according to a study.

The cost of childcare has increased by 19% in the last year and the average hourly rate for hiring a nanny is now £9.80.

One in four unemployed parents say they would like to work but the cost of childcare was too high, according to childcare search website Findababysitter.

This increases to two out of five of 18 to 24-year-olds.

Half of the 1,000 parents questioned for the study said the Government was not doing enough to support families.

The website's chief executive, Tom Harrow, accused politicians of a "lack of understanding" and said he had met MPs to discuss Government policies a number of times.

He said: "They still think the local nursery is the only option."

The average hourly rate for a nanny was now £9.80, an increase from £8.10 last year and after-school nannies were charging £10 an hour.

The average hourly rate for a nanny is now nearly £10

The most unaffordable cities for childcare were Birmingham, Bristol, Oxford, London and Leeds.

Anand Shukla, chief executive of the Daycare Trust, said: "Finding affordable, flexible and high quality childcare is still - and will remain - one of the biggest challenges faced by families."

Sharon Greene, Unison's women's officer, said: "It is a sad fact that in 2014 women still face too many barriers in the workplace.

"The high cost of childcare is pricing many women out of their jobs, forcing them to give up work which puts family finances under massive pressure."

She added: "If the country is to recover from the economic downturn the Government needs to listen to working parents and take account of the needs of the modern workplace.

"That means providing funding for more affordable, flexible and quality childcare."

The coalition Government scrapped universal child benefit but last year announced that parents earning less than £150,000 would be entitled to claim £1,200 per child to help with childcare costs.

Free early education for three and four year olds has been increased from 12.5 hours to 15 hours a week.

A Department for Education spokesperson said: "Recent figures show childcare costs are stabilising after more than a decade of constantly rising prices.

"A survey for the National Day Nurseries Association found that 58% of nurseries are freezing their fees."

The shadow minister for childcare and children said Labour would introduce measures to help parents with before and after-school care and would extend free childcare for three and four-year-olds from 15 to 25 hours.

Lucy Powell, shadow minister for childcare and children, said: "Families facing a cost-of-living crisis are being failed by David Cameron, who is offering no help with the rising cost of childcare for hard-pressed mums and dads.

"Soaring childcare costs are a drag on our economy and lock parents who want to get back to work out of the jobs market."

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Volkswagen To Invest $7bn In North America

Volkswagen has announced it plans to make a sport utility vehicle for the North American market and will invest $7bn (£4.25bn) in the region as it looks to increase sales.

Europe's largest car manufacturer is aiming to sell one million Volkswagen and Audi vehicles a year in the US by 2018.

The company said the move was a sign of renewed commitment to the market after a sales decline by its core VW brand, which continues to achieve low US quality scores.

Chief executive Martin Winterkorn, speaking on the eve of the North American Auto Show in Detroit, said: "The Volkswagen brand is and remains at the heart of our product strategy here."

The $7bn will be spent over five years as part of investment plans announced by the company, based in Wolfsburg, Germany.

VW said the new seven-seater SUV would be launched in 2016.

Volkswagen's Phaeton sedan, the brand's luxury model, will also return to the US market in the same year, Mr Winterkorn said.

In 2013, Volkswagen Group - which also owns Porsche, Bugatti, Lamborghini, Skoda and Seat - sold 600,000 cars in North America.

But the company last month ousted US chief Jonathan Browning and replaced him with after-sales specialist Michael Horn after the VW brand's sales fell 7%.

The carmaker must improve "the speed at which we bring new models to the market and innovation to the market", Mr Horn said on Sunday.

"We have already been improving."

As part of a product offensive, Audi also plans to launch the A3 compact and Q3 compact sports utility in North America this year.

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Payday Loans: Default Fees 'May Be Illegal'

Some payday lenders may be imposing illegally high penalties on borrowers who default on their loans.

That is the conclusion of an investigation by Which? that found fees of up to £30 - a level the consumer group claimed was disproportionately high.

Which? accused lenders of "exploiting" borrowers, saying they risked tipping people into a debt spiral.

The warning was made at a time when consumers are most likely to be facing financial pressure.

Traditionally, January is a tough month, with many struggling to pay for Christmas and deal with a six-week gap between pay days.

Which? looked at the default fees charged by 17 lenders and found that Wonga, one of Britain's most high-profile payday firms, topped the table by charging customers £30.

Ten of the firms had default fees of £20 or more while four charged £25 and above.

In the consumer group's legal opinion, excessive default fees are unlawful under the Unfair Terms in Consumer Contracts Regulations 1999, which state that it is unfair for lenders to charge a disproportionately high fee if borrowers fall behind.

Wonga insisted its one-off £30 fee for late repayments reflected "the additional costs we incur in collecting these loans".

It added that the sum had been independently assessed by a business advisory service.

Its statement said: "As with all our costs, we are completely transparent about our default fee and it's clear to customers when they apply for a loan, and at least three further times before their repayment date.

"On the rare occasions where people can't repay, we always encourage them to get in touch with us so we can do everything we can to agree an affordable repayment plan, including freezing interest and charges."

But Which? claimed payday lenders were using excessive penalty fees to reduce their headline rates and lead customers to underestimate the true cost of a loan.

The Financial Conduct Authority takes over regulation of the payday lending market from April.

It said it was already considering default fees as part of its work on capping the total cost of credit.

The regulator had previously announced plans to crack down on the market and the Competition Commission is due to produce a separate report on the industry later this year.

Russell Hamblin-Boone, chief executive of the Consumer Finance Association, which represents short-term lenders, said its members are committed to helping struggling borrowers rather than immediately imposing default fees.

He said: "Of course, they can only do this when a customer informs them of their inability to pay due to their financial difficulty, so, although it can be hard to talk about it, the best thing customers can do is contact their lender as soon as possible to discuss their situation."

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Lidl To Remove Sweets From Checkouts

By Poppy Trowbridge, Consumer Affairs Correspondent

I understand that Lidl will announce plans to remove all chocolate and sweets from the checkout queues in their supermarkets later this week.

The move is likely to be welcomed by consumer groups and parents alike, in the face of growing concerns about childhood obesity on the rise in the UK.

According to Sky sources, the discount retailer has been in consultation with customers for several months and the move is in response to preferences expressed by shoppers.

Parents face 'pester power' at the till while waiting with their children to pay for groceries.

Today, the National Obesity Forum said the UK is in danger of surpassing predictions of a 2007 report which estimated that 50% of the nation would be obese by 2050.

Lidl's action will likely increase the pressure on other supermarkets to take more definitive action.

All of the major supermarkets have committed to removing artificial 'trans fats' from their products.

But according to a Which? report published in December 2012, while Sainsburys and Tesco have banned sweets from supermarket checkouts, the policy does not apply to their smaller convenience stores.

Asda, Iceland and Morrisons all aim to 'limit' the sale of sugary treats near checkouts, but do not impose a blank ban like the one Lidl is proposing.

Waitrose does not have any policy in place on sweets at the checkout.

Last year, Lidl UK increased the number of 'healthy tills' in stores nationwide to 1,200.

The tills replaced 'treat' items such as chocolate with products of a higher nutritional value such as multivitamin juice and fresh fruit, as part of a healthy initiative to promote fresh fruit and vegetables to customers.

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£4bn UK-Owned Construction Group Eyes Float

By Mark Kleinman, City Editor

The race to join the glut of companies considering share listings on the London market is to be joined by a British-owned provider of temporary accommodation.

Sky News understands that Algeco Scotsman, which is owned by the private equity firm TDR Capital, is at the early stages of preparing for an initial public offering (IPO).

Algeco, which is headquartered in Baltimore, Maryland, is among the world's biggest players in modular construction. It is unlikely to make its bow on the stock market until next year but has begun work with accountancy firms to get its books in shape ahead of a listing, insiders said on Monday.

When it does float on the stock market, Algeco would become one of the largest UK-based companies to do so since the boom in debt-fuelled buyouts began a decade ago.

Algeco's equity is worth roughly £1.6bn while it has about £2.5bn of debt, according to bankers.

The company, which operates in 21 European countries as well as having a major presence in the Middle East and the US, has yet to appoint investment banks to work on the float but is expected to do so later this year.

Last week, Algeco announced the appointment of Stephen Bishop as its new chief financial officer, replacing Thomas Kloster, a move that one source said was part of the planning for an IPO being undertaken by the company.

The temporary accommodation provider is typical of the kinds of companies built through the financial firepower of private equity houses such as TDR

The firm acquired a controlling stake in Algeco SA in 2004. and then embarked on a takeover spree, including in 2005, when it bought the UK-based Elliott Group. Two years later it acquired Wraith in Britain as well as a string of international competitors including Williams Scotsman.

TDR declined to comment on Monday.

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Fracking: Cameron Offers Councils Drill Money

David Cameron has announced £1.7m for councils which agree to drill for shale gas sparking angry protests from campaigners who say it amounts to little more than bribery.

David Cameron said the Government was "going all out for shale" as he announced local authorities that allow drilling will receive 100% of the business rates collected from the scheme - double the current 50%.

Whitehall officials estimate that could be worth £1.7m extra a year for each site a council agrees.

The announcement sparked angry scenes at a fracking site in Barton Moss, near Salford, Manchester, where protesters confronted lorries entering the plant, then handcuffed themselves to the vehicles.

Anti-fracking protester Theo Simon on top of a lorry at the site

Six people - three men and three women - were arrested on suspicion of either obstructing the highway or obstructing police.

About a hundred people have been living in tents and caravans at the spot near the M62 where IGas has been given permission to carry out exploratory drilling.  Most are local but others have travelled from various parts of the UK to join in.

The business rates money will be in addition to a promise last year that shale exploration firms will also pay out £100,000 when a test well is fracked and 1% of revenues, a deal which could in total be worth up to £10m.

However, campaigners dismissed the business rates payout as bribe money and said it was not enough in the face of the vast profits that stand to be made by the energy firms and the damage that would be caused to local areas.

The protest was against an exploratory drilling site known as Barton Moss

Mr Cameron's announcement comes as the French energy giant Total has announced it will invest millions with a 40% interest in two shale gas exploration licences in the UK.

Mr Cameron said: "A key part of our long-term economic plan to secure Britain's future is to back businesses with better infrastructure.

"That's why we're going all out for shale. It will mean more jobs and opportunities for people, and economic security for our country."

On a visit to Gainsborough, Lincolnshire, in the area Total will be looking to develop shale gas wells, the Prime Minister added: "We have the strongest environmental controls in this country. Nothing would go ahead if there were environmental dangers. I think people can be reassured by that.

Protesters handcuff themselves to a lorry at Barton Moss

"But I actually believe it's when these wells go ahead, when people start to see the benefit, when people see there aren't environmental concerns, they will see that it is quite right that this is part of our long-term economic plan."

Jackie Anderson, a teacher who lives within a mile of an exploratory drilling site at Barton Moss near Salford, was on Sunday protesting about the effects of fracking on the community.

She told Sky News: "For the local residents it's got no benefit whatsoever. More and more the businesses and the councils are going to benefit because the incentives are going to them and we're getting none of the benefits at all."

A Local Government Association spokesman said: "Given the significant tax breaks being proposed to drive forward the development of shale gas and the impact drilling will have on local communities, these areas should not be short-changed by fracking schemes.

Areas of the UK affected by fracking

"One per cent of gross revenues distributed locally is not good enough; returns should be more in line with payments across the rest of the world and be set at 10%."

Hydraulic fracturing, commonly known as fracking, is a process that involves drilling thousands of feet down into the earth to create a narrow well. Water and chemicals are then pumped in at high pressure to create fractures in the rock. Gas then flows from the cracks and is captured.

Fears have been raised over fracking

Vanessa Vine, who founded the British Anti-Fracking Action Network, said: "Concerns of local residents range from everything from heavy traffic through villages, damage to the roads, right up to triggering of earthquakes and permanent, potentially permanent contamination of the groundwater, of the aquifer, of drinking water."

The Government estimates the industry could attract £3.7bn a year in investment and support 74,000 jobs.

Last year, a study by the British Geological Survey suggested there could be enough shale gas in the north of England to supply Britain for 40 years.

It is thought there may be as much as 1,300 trillion cubic feet at the Bowland site in Lancashire alone.

Energy minister Michael Fallon said he expected between 20 and 40 wells to be drilled over the next couple of years.

He told Sky News: "We know now that we are sitting on top of hundreds of millions more cubic feet of this gas than we originally thought. What's so important now is to encourage companies to go down there and find out whether we can get it out as a new, home-grown source of energy.  

"That is extremely important for every local community and what we are doing today is saying it is for that local people, who have some of the hassle when they are getting it out, when they are exploring for it, that they should be able to retain all of the benefits."

Vanessa Vine, founder of the British Anti-Fracking Action Network

Lawrence Carter, from Greenpeace, said: "This is a naked attempt by the government to bribe hard-pressed councils into accepting fracking in their area.

"Cameron is effectively telling councils to ignore the risks and threat of large-scale industrialisation in exchange for cold hard cash."

Shadow energy minister Tom Greatrex said: "Gas will remain an important part of our energy mix in the future, and if shale gas can replace our rapidly depleting North Sea reserves it could help improve our energy security.

"It is right that any communities that host nationally significant energy infrastructure are able to share in its rewards.

"But the Government must get its priorities right. Only by fully addressing legitimate environmental and safety concerns about fracking with robust regulation and comprehensive monitoring, will people have confidence that the exploration and possible extraction of shale gas is a safe and reliable source that can contribute to the UK's energy mix."

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