Co-operatives and Mutuality

Luciana Berger Excerpts

Thursday 30th June 2011 Westminster Hall

[Tracey Crouch]

I agree with the Minister. If I may continue with my speech, rather than getting into how many members we have in each political party—

[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

I just wanted to clarify, for Hansard and for the debate, that there is a distinction between those Labour MPs who are Labour and Co-operative Members of Parliament and those who are members of the Co-operative party, but may not be Labour and Co-operative MPs.

[Tracey Crouch]

I am grateful for that clarification. The hon. Lady may be interested to learn that members of the Conservative Co-operative Movement have been considering whether, perhaps at the next general election, we may do something radical and stand as Conservative, Unionist and Co-operative candidates. That is under active consideration.

--- Later in debate ---

[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

I am pleased to have the chance to speak in this important debate. I congratulate my hon. Friends the Members for West Bromwich West (Mr Bailey) and for Islwyn (Chris Evans) on securing it.

I declare an interest: along with many other Labour and Co-operative Members of Parliament, I am proud to be part of a movement motivated not purely by the pursuit of profit but by values of openness, social responsibility and solidarity. As well as being founded on strong principles, in practice co-ops and mutuals can be more efficient and are a positive force in local communities. The co-operative model also makes sense economically. As right hon. and hon. Members in all parts of this Chamber have alluded to, last year the co-operative economy throughout the UK stood at 12.9 million members, who were part of almost 5,000 co-operative businesses, with a turnover of £33.5 billion, contributing 237,800 jobs to the national economy. In the north-west region, where my constituency is located, 416 co-operatives turn over £2.2 billion and employ 20,350 people. As a proud member of the Lodge Lane credit union, I see the many benefits of co-operatives in my own constituency.

As well as highlighting the successes of co-ops nationally, I want to focus my remarks this afternoon on how the co-operative model is thriving in the energy market. Up and down the country, communities have come together to find new ways of generating renewable energy. Co-operatives have pioneered renewable energy in the UK, whether large ones such as the Co-operative Group powering its stores with renewable energy or innovative businesses such as Powys-based Dulas developing green technologies.

The co-operative model is providing communities with the means to invest in, own and benefit from new wind farm developments. Nine community co-operatives currently own wind farms in the UK, providing a great model of community power. Baywind, for example, is a wind co-operative in Cumbria which has successfully carried out two share offers since it was founded in 1996 and has more than 1,300 members. Westmill wind farm in Oxfordshire is entirely owned by about 2,500 members, largely drawn from the local community, who between them have invested £4.4 million. Nationally, wind farm co-operatives alone have 6,700 members and turn over £2.5 million.

Until recently, energy co-ops have benefited from a supportive central Government. Recent Government decisions, however, have resulted in support for community-based energy co-operatives being withdrawn, risking their success. The Government’s decision to cut the feed-in tariff subsidy for projects that generate more than 50 kW will mean that many community co-op solar projects on hospitals, schools and community buildings are now no longer commercially viable. Alongside that, it was announced in the 2011 Budget that renewable energy schemes eligible for the feed-in tariff would no longer qualify for tax relief under the enterprise investment scheme, harming at least 20 communities planning a community share launch soon—the business model is entirely based on securing the feed-in tariff and the enterprise investment scheme. Small schemes with less than £0.5 million of capital costs will struggle to be viable.

Community ownership is a wholly different approach from purely commercial operations and brings additional benefits such as increased community engagement and education on low-carbon issues, but it does not often generate the same level of revenue to pay the interest on investors’ capital during the early years of development. In that situation, the enterprise investment scheme offers a breathing space for community initiatives not to pay interest while the enterprise is established, allowing them to grow. It is regrettable that moves to boost equity investment in small enterprises will damage the smallest of those enterprises and many co-operatives and mutuals.

As well as removing support for existing co-operatives, the Government have rejected Labour plans to encourage the establishment of new energy co-operatives. We recently concluded the Energy Bill’s Committee stage, and many hon. Members are familiar with its provisions. The main Government proposal in the Bill is to establish a pay-as-you-save energy-efficiency scheme called the green deal, a programme first piloted under the previous Labour Government. Under the green deal, homeowners and tenants will be able to borrow money to make energy-efficient improvements to their homes, such as insulation, with no up-front costs. The improvements will be paid for in instalments from the money saved on utility bills.

The new marketplace that the scheme will create offers huge potential for co-operatives and mutuals to become green deal providers, installing energy efficiency measures. Labour’s vision of the green deal marketplace is one in which small businesses, co-operatives, mutuals and social enterprises are able to compete equally alongside the big energy companies and supermarkets that want to take part in the scheme. For that reason, on behalf of the Opposition, I tabled amendments to the Energy Bill in Committee which would have guaranteed fair access to the marketplace for co-ops and reduced the administration costs that they would have had to pay in order to take part in the scheme. I hope there is broad agreement on both sides of the House that co-ops and mutuals that want to benefit our communities and focus resources on vulnerable people and households in fuel poverty should not be excluded from the green deal marketplace.

Reduced admin fees and fair access to the market would not only lessen the financial start-up costs for those organisations, but would act as an indicator to them that they have an important part to play in the green deal. Surely the idea of helping co-operatives and mutual societies to flourish, instead of the market being dominated by a few big companies, is very much in the spirit of the big society? Unfortunately, the Government did not think so, and voted down those amendments. That did not stop the Minister of State, Department of Energy and Climate Change, the hon. Member for Bexhill and Battle (Gregory Barker), using warm words about co-operatives, but what good are words when they are not followed up by actions?

I thought that the Government recognised the value of employee-led models. During a speech in November 2010, the Minister for the Cabinet Office and Paymaster General, said:

“The evidence increasingly shows that they reduce absenteeism, improve performance management, encourage innovation, and increase productivity.”

Will the Minister take the concerns that I have raised back to his ministerial colleagues in the responsible Departments, and press them to look again at their decisions, so that instead of punishing co-ops and mutuals, we build on them and drive the energy co-operative sector forward?

The threat of climate change is the greatest threat to our planet, and it is only through co-operation that we will be able to take urgent global action to fight it. Renewable energy co-operation to tackle climate change and to reduce household fuel bills at a time when they are increasing is just one example of how co-operatives can benefit our society. This debate has highlighted how much co-operatives can benefit our society, and it is timely at the start of co-operatives fortnight. From banking and finance to renewable energy and environmental protection, co-operatives are making a difference. I thank my hon. Friends for securing this debate, and I thank you, Mr Amess, for your stewardship.