Co-operative and Community Benefit Societies (Environmentally Sustainable Investment) Bill

Debate between Sarah Jones and Anthony Mangnall

2nd reading & 2nd reading: House of Commons
Friday 11th September 2020 Commons Chamber

[Sarah Jones (Croydon Central) (Lab)]

I am delighted to speak in this debate, and I congratulate my hon. Friend the Member for Cardiff North (Anna McMorrin) on her important work on the Bill. As someone who is half-Welsh, I was particularly interested to hear the history of the co-op movement in Wales. That was something I did not know a lot about, so I thank her for her contribution.

The green shares Bill would bring about key legislative changes, which I believe would enhance the contribution of co-operative and community benefit societies, to use investment to generate sustainable and inclusive economic development. We must all do our bit to tackle climate change. Every Member in this place will have visited schools, where our young people push us every day to do more and to be more ambitious on tackling climate change. To achieve that change, there must be provision for green investment and finance, as my hon. Friend says, from the bottom up in our communities.

My right hon. Friend the Member for Doncaster North (Edward Miliband) said yesterday:

“The government’s warm words on climate change desperately need to be matched by deeds worthy of the scale of the challenge we’re facing. We urgently need to transform how we power our homes, move around, and use our land. We also need to ensure that it is a just transition, in which no community is left behind, and we all enjoy the benefits of changing our economy and society for the better.”

We on the Labour Benches are clear that the UK needs a green new deal to kickstart a green recovery from coronavirus.

The UK’s co-ops have a key role to play here, and they have a successful history. They are owned and controlled by 13.7 million members, the equivalent of more than a fifth of our population. As has already been mentioned, they also remain significant employers, with 233,000 people earning their livelihoods directly through co-ops. Co-operatives are resilient; almost three out of four co-op start-ups—72%—still flourish after the difficult first five years of existence. In stark contrast, more than half of all new companies—57%—go to the wall before they reach that milestone.

The co-operative movement has always focused on localism and looking at how to achieve wider societal benefit, and that goes hand in hand with the wider principles of sustainable development and environmental sustainability. We must ensure that the laws are in place for our communities to effect change and create secure green jobs and growth.

The Committee on Climate Change has underlined the importance of creating the conditions for an attractive environment for green investment to achieve net zero greenhouse gas emissions. Its 2019 report stated:

“Government success in providing clear and stable mechanisms that attract sufficient volumes of low-cost capital will be key to the overall success in reaching a net-zero”

greenhouse gas target. The committee found that the UK was “well-placed to lead” internationally

“on developing products to finance low-carbon investment”.

This green shares Bill is a rare opportunity to give co-operative and community benefit societies a first-class legal framework. It includes positive changes to society law that would significantly enhance those corporate forms as tools to build the more sustainable and inclusive economy we urgently need.

As my hon. Friend the Member for Cardiff North mentioned, the Bill would make important changes to allow co-operatives and community benefit societies to gain powers to raise finance by issuing shares. That new finance would have to be invested in environmentally sustainable projects. The Bill seeks to introduce safeguards to prevent any share issue from leading to a co-op’s conversion into a commercial company. It also specifies arrangements about the distribution of capital in the event of winding up, again to protect the mutual purpose.

Ethstat Ethical Stationery in Croydon is a co-operative, run by the people who work for it and owned by the people who use it. It is a brilliant organisation, which is locally based and works at the cutting edge of sustainability. Its profits go to projects that help some of Croydon’s most vulnerable people. All its projects sit alongside its core work of protecting the environment.

Such businesses are the cornerstones of the UK’s social economy and have huge potential to deliver sustainable and inclusive economic development. Across south London, organisations such as South East London Community Energy and Repowering are playing a key role. We can go further and look to other parts of the country. For example, Plymouth has more than 30 energy co-ops, which are providing sustainable energy and local employment and using their surplus to generate community good.

The Bill would provide much-needed finance to help in our housing sector, where we know there are huge issues with our homes and, for example, retrofitting. Our homes are some of the most inefficient and therefore the most expensive to heat in Europe.

[Anthony Mangnall]

Surely, the hon. Lady will therefore recognise what the Government announced this year, which was the £2 billion to retrofit homes to make them more environmentally friendly. I listened to the points she made at the beginning, when she was somewhat critical of the Government’s approach. We are forward-leaning in what we are trying to do in making sure that we can make all homes more environmentally friendly.

[Sarah Jones]

I thank the hon. Gentleman for putting it gently and saying I was somewhat critical of the Government’s approach; I would go slightly further and suggest that we need to look at actions rather than words. In the past 10 years, under Conservative Governments, Labour’s zero carbon homes scheme and many of the other schemes we had in place to retrofit our homes were entirely wiped out. Actions speak louder than words, and we must consider the amount of funding we need to retrofit the homes and deal with the scale of the problem. I give him the point that many of our homes are old and we have a particular problem in this country, but we have to invest in retrofitting. The £50 million for the social housing sector that was announced by the Government will cover only the very worst performing housing stock, as Inside Housing and any of the experts will tell us. We need substantially more investment, whether in our schools, homes or hospitals, to try to get to a point where our buildings are working for us in a carbon neutral way. We are nowhere near that point.

[Anthony Mangnall]

Surely, the benefit would then come from having a centralised system where we could invest from a UK Government point of view, rather than on an individual basis. If it is done through a co-operative measure, as the hon. Lady is suggesting, we will have an inadequate method whereby the distribution of retrofitted houses across the country is not even.

[Sarah Jones]

The solution is to enable a thousand flowers to bloom. We want local organisations to be able to provide solutions, as well as the Government, who, at the moment, are woefully lacking in their climate action. We need both those things to happen, and the Bill is one part of that solution.

Many societies have clear purposes relating to environmental sustainability, including community energy schemes, e-car sharing co-ops, low-impact farming co-ops and low-impact community-led housing. Just to return to the housing issue, let me say that I was lucky enough to visit Berlin when I was shadow Housing Minister to see the quantity and very different nature of housing there. It is difficult to make comparisons, because there are large cultural differences between Germany and the UK. The English system is more centralised, top-down and market-orientated, with a lightly regulated private rented sector, whereas Germany has a federal system that supports local autonomy. It also has a much more public-facing housing policy, and it is much more rules-based. As we know, in Germany there is a preference for renting, but there is a huge quantity of housing co-ops there, particularly in the big cities. I believe that in the UK 0.5% of our homes are co-operative-owned, whereas the figure in Germany is about 10%. We can look to increase the number of our co-ops and of empowered residents who have more control over what happens in the buildings in which they live.

It is vital that we unlock green finance for our co-ops to invest in long-term sustainable projects, and this Bill would be an important step to help communities and investors to create a more sustainable living environment. Primary legislation is much-needed to provide societies with the legal tools that would enable co-operatives to thrive. As my hon. Friend the Member for Cardiff North said in her excellent speech, covid is a significant fork in the road when it comes to tackling climate change. I urge Members across the House to support the Bill, so that it can be discussed further and amended in Committee, and to empower our local communities to take action and save our climate.