Energy

Britain’s energy system is not working for consumers. When wholesale prices rise the Big Six energy companies are quick to increase consumer bills, but when prices drop consumer bills remain high. Over 4 million UK households live in fuel poverty and the UK ranks above European averages for electricity prices.

The market is broken, thanks to a combination of a lack of competition resulting in market dominance by a small number of large vertically integrated companies; unsustainable and short-term decision-making by big business; and a housing stock that ranks among the least energy efficient in Europe.

Community energy

The growth of community energy schemes has ably demonstrated communities’ eagerness to be part of an energy transformation in the UK. Brixton Energy, for example, is a community energy project installing solar panels on social housing in one of the most deprived neighbourhoods in the UK. The investment in infrastructure comes from a community share offer, meaning local residents are investing in, and benefiting from the success of, the technology.

Consumer, local government, community and employee ownership models have been shown to offer behavioural benefits, as people who are more involved think about their energy use. They also offer economic benefits, with returns remaining in the locality to be reinvested in energy efficiency or for other social impact. Ensuring that the benefits of local energy generation remain in the locality is fundamentally important to many local economies in the UK – it has been shown, for example, that for somewhere like Cornwall the value of energy services leaving the county dwarfs the income received from tourism.

The government should recognise the benefits of local, community or employee ownership models in the energy sector and support their growth and development, including reinstating Feed-in-Tariffs, Social Investment Tax Relief and the Enterprise Investment Scheme for this sector. Direct supply of community owned renewable energy to local consumers – currently hugely challenging for small-scale and community-owned schemes – should be piloted, with a view to make this mainstream by 2020. Other interventions to support this sector could include the development of rules surrounding grid access and recognition of community ownership within planning guidelines.

Energy efficiency

The best route to limiting, or managing, energy costs in the long term is to reduce the need for energy in the first instance. The cheapest unit of energy is the one not used. The Co-operative Party sees energy efficiency as a top national infrastructure priority, which deserves a long-term revenue stream and appropriate incentives for homes and businesses to retrofit their buildings.

We want to see individuals, communities and the co-operative sector able to have tangible impact on improving energy efficiency and reducing bills. Similar to the incentives that the renewable energy Feed-in Tariff and Renewable Heat Incentive created for the installation of low carbon generation, we suggest a Feed-in Tariff for energy efficiency could be developed to incentivise domestic and business consumers to retrofit homes and businesses and replace inefficient appliances. We also believe that the Energy Company Obligation should be reformed to put a community based approach at the heart of the drive to tackle energy efficiency.

Break up the ‘Big Six’

It is not enough to simply increase the number of players in the market when the market continues to be skewed in favour of a small number of large, dominant businesses.

Tougher regulation is needed for the large vertically integrated energy companies. Supply and generation in these companies need to be ringfenced to ensure that the right incentives are in place for suppliers to seek the best prices for their customers.

Wholesale energy markets

A lack of transparency and liquidity in the wholesale market makes it impossible to see if the price rises passed onto consumers are fair.

In order for the new entrants, in particular the community and co-operative energy sector, to be able to succeed in democratising the energy market and providing genuine value for customers, the Co-operative Party stresses the need for greater transparency at every level of operation. Transparent wholesale markets and an open exchange similar to the Nord Pool would improve liquidity, ensure transparent prices and create a level playing field for new market entrants.

Housing

Demand for homes is far outstripping supply and we are building fewer than half the homes we need. Struggling families are being squeezed by house prices beyond their means, rising rents, housing benefit cuts and the Conservative Government’s failed economic strategy.

Britain needs a new approach to tackle this crisis of housing supply and affordability. Co-operatives can play a role in helping to increase the supply of affordable housing, while also creating employment opportunities in the construction industry and stimulating economic growth.

In Westminster and Whitehall, policy has stood still for the last seven years and has failed to recognise the sector’s potential. Around 10% of Europeans live in housing co-operatives – compared to 0.6% in the UK. This shows the potential contribution housing co-operatives can make, but concerted action is needed to enable this to happen.

There should be commitment to develop a co-operative housing strategy which ensures that a significant proportion of new social and private rental and owner occupied homes built are developed through co-operative housing approaches.

Proper recognition of co-operative housing models and tenure

In order for co-operative housing to be more easily defended, as well as to reduce unintended consequences, a new legal definition of ‘Community-led Housing’ must be established. Recognition in law would ensure the housebuilding industry, professionals and financial services are better placed to facilitate and promote co-operative house building. New co-operative housing tenure must be introduced in law to enable more straightforward legal navigation by new schemes and improved legal understanding.

The UK government needs to follow the best practice shown by the Welsh Government, who lifted the ban on fully mutual co-operatives granting of assured tenancies and gave greater powers to lenders to fully mutual co-operatives in the Housing (Wales) Act 2014. This has created a better environment for housing co-operatives to exist and allows them to develop more robustly and independently, while creating certainty, assurance, protection and security for tenants.

Access to finance

Co-operative house building should be better supported through a review of the ability of existing schemes to borrow against assets to invest in new schemes. The government should also work with the co-operative movement to develop a financial intermediary to raise and manage institutional investment in new co-operative and mutual housing developments.

Expansion of existing housing co-operatives

The Homes and Communities Agency should work with existing housing co-operatives that would be interested in using their assets to develop new homes. This has the potential to enable the growth of housing co-operatives particularly on smaller sites that are currently not being developed quickly enough.

Land use

The government should establish a new national presumption in favour of change of land use being granted where land value uplift is to be captured for the benefit of the community. This will be an incentive to free-up more land for co-operative and community-owned housing development.

Community Land Trusts

The role of Community Land Trusts (CLTs) is crucial. They work in both rural and urban areas, and are a flexible tool to meet a variety of community needs. They not only offer a number of options for rent and low cost home ownership, but can also provide a mechanism for generating an income stream for reinvestment by the community. In areas where a rising population, economic investment and limited stocks of affordable homes threaten to exclude local people from the areas in which they live and work, CLTs are able to ensure a supply of affordable housing through the control of housing costs and resale prices.

Private rented sector reform

Rogue landlords and estate agent fees for lettings continue to disadvantage those seeking rented accommodation. There should be a ban on unfair estate agent fees and work developed to create a landlords’ co-operative that helps manage and market properties outside of the private sector.

Student housing

With the housing market and student finance broken, students across the UK are doing away with landlords and setting up their own student housing co-operatives. This model of student housing provides an alternative that should be expanded across the UK.

Stock transfer

The government should ensure that where local authorities hold ballots on stock transfer, residents have the option to vote for community-led stock transfers. These put residents at the heart of the management of their homes. Tenants, as members, have the right to stand for election to the board, vote in elections, and attend the AGM, as well as earning a ‘dividend’ for paying rent and service charges on time.

For example, in 2009 Merthyr Tydfil County Borough Council transferred 4,300 homes in a large scale voluntary transfer, and at the end of 2015 they handed over their golden share and their seats on the Board to a new mutual organisation. Merthyr Valleys Homes is one of five housing mutuals in Wales and, along with Rochdale Boroughwide Housing, became the second housing association in the UK to be owned by both employees and tenants. All 185 employees and everyone over 16 living in the homes is eligible to be a member. With an income of over £30m, the association is an important player in both the local economy and community in its own right.

Tenant Management Organisations

The Co-operative Party recognises the importance of tenants and leaseholders having a real stake and voice in their housing. Tenants should be actively supported to exercise their ‘Right to Manage’ by forming Tenant Management Organisations (TMOs) to take over the management of the council-owned housing in their neighbourhood.

Many TMOs are constituted as co-operatives and evidence shows they provide an enhanced service and deliver real added social value – this should be encouraged.

In addition, the ‘Right to Manage’ and the ‘Right to Transfer’ should be extended to Housing Association tenants to give them legal opportunities to manage housing services co-operatively.

Break the stranglehold of the big banks

In the UK, just five banks hold 85% of all current accounts. They’re all shareholder owned and run for private profit, combining their personal banking services with the riskier investment banking activities where they make the bulk of their profits.

Meanwhile, as the big banks profit, the UK is seeing spiralling levels of personal debt and a steep decline in personal savings. 1.7 million people don’t have access to banking of any kind, and 40% of households have less than £100 in savings.

There is no market in greater need of reform than financial services. The Co-operative Party believes we need a more diverse sector, to ensure a stable, resilient and inclusive financial system that serves us rather than the other way around.

Strengthen credit unions

Credit Unions provide affordable and accessible banking for everybody, whether they are excluded from other parts of the financial system or are simply looking for a fairer deal.

The government should support the growth of the credit union movement, aiming to treble the number of members so that it hits 3 million by 2020. This can be started by ensuring that all public-sector employers establish payroll deduction facilities for credit unions. A credit union payroll deduction system should be a requirement for private organisations tendering for public contracts.

Innovative local authorities like Haringey and Glasgow have begun working in partnership with credit unions to open credit union accounts for children as part of a focus on financial education and promoting saving. National Government should follow their lead in order to offer a credit union account for every child, opened in their first year at primary school.

Regulatory changes, such as reforming the way capital rules for credit unions are set up, would further enable the sector to grow, and legislative reform of the Credit Unions Act is required to enable credit unions to deliver a full range of services to members.

The government should also consider targeted investment in the credit union movement – not ongoing revenue support which, while valuable for the duration, doesn’t create sustainable growth, but capital investment in projects such as online and mobile banking platforms, improving the digital capacity of the sector, and technology to enable backroom efficiencies.

A new generation and expansion of building societies

Building societies have a uniquely trusted position among British high street banks, and a track record of lending throughout the financial crisis. Building societies and other financial mutuals have be shown to have taken fewer risks with their savers’ money and been more resilient in the downturn, because they exist to provide a service for their members rather than to create wealth for external shareholders.

The banking levy disproportionally hits the ability of building societies to lend and punishes them for the misdeeds of the PLC banking sector. As such, Building Societies should be excluded from this levy.

Much of the legislation governing building societies and other financial mutuals is antiquated and in urgent need of reform. The government should modernise the Friendly Societies Act, which hasn’t been reviewed since 1992.

A better regulatory environment needs to be developed – one that facilitates the expansion of existing building societies as well as urgently reviewing the hurdles currently put down by government and regulators that have effectively meant no new building societies can be created.

Failed banks like RBS should also be turned into mutuals, like a building society, to conserve the strength and credibility of one of Britain’s major global financial players while injecting competition and diversity into the banking sector.

Regulatory proportionality

Banking operates within a blunt regulatory framework that puts credit unions, building societies and other innovative banking models on the back foot.

In an effort to increase competition in the financial sector, fintech start-ups have been given a degree of regulatory flexibility to enable them to innovate and grow. The same flexibility and support should be extended to proven models of banking, like credit unions, and the wider co-operative banking sector to enable them to continue to grow and provide the competition desperately needed in Britain’s broken financial market.

Duty to serve

Every adult, household and business should have access to at least a basic package of fair and affordable finance tools, including a basic transactional bank account; a savings scheme; access to credit; physical access to branch banking facilities; insurance; and independent money management advice. The government should legislate to introduce a new ‘duty to serve’ that would force UK banks to demonstrate that they are serving individuals and SMEs from all backgrounds.

Financial institutions could also look to form a partnership with Community Development Finance Institutions operating in their region and commit to supporting and promoting their activities whenever possible.

Improving competition

A genuinely competitive banking system will require widening fair access to the UK payments system, which is how financial transactions are processed.

The market review conducted by the UK’s Payment Systems Regulator in 2016 found a lack of effective competition in Britain’s payment infrastructure. In order to enable genuine competition in the current accounts market, the government should commit to working with this regulator to make appropriate reforms.

Financial inclusion

1.7 million people don’t have access to banking – our financial services must not be just for the rich. The government urgently needs to put financial education on the curriculum for primary schools, and take concrete steps to tackle the high cost of credit. The Co-operative Party believes that new strengthened duties on regulators to promote financial inclusions are also required. Outside of regulation and legislation the co-operative movement has some of the answers, for example organisations like ‘Fair For You’ should be the norm rather than Brighthouse.

Payday lenders

The government should impose a levy on payday lenders, which would be used to build the capacity of credit unions and other providers as a means of providing affordable alternatives. Part of this money should be used to offer £20 deposits into a credit union account for every child, opened in their first year at primary school.

Public utilities in the public interest

Public utilities – our gas, electricity, water and telecoms networks – provide essential services to homes and businesses across the country. However, privatisation has meant that significant proportions of people’s bills end up as shareholder profits rather than being reinvested into modernising Britain’s ageing infrastructure.

Decision-making on utility infrastructure and services are too distant from the communities they serve. Co-operative approaches ensure that profits are reinvested, and give communities and customers control over the infrastructure they rely on.

The most high profile example of privately owned infrastructure returning to social ownership can be seen in the creation of Glas Cymru (Welsh Water). It was brought into customer ownership through raising £1.9 billion on the bond markets, the largest ever single bond issue that was not guaranteed by government. Glas Cymru is a single purpose company formed to own, finance and manage Welsh Water. It is a ‘company limited by guarantee’ and fits into the broader family of mutually owned businesses. Because it has no shareholders, any financial surpluses are retained for the benefit of Welsh Water’s customers.

Mutualise public utilities

In utility markets characterised by monopolistic structures, the government should pursue opportunities to enable the conversion of utility monopolies to mutual organisations owned and controlled by their stakeholders. Changing the way they are owned would ensure that their interests are aligned with those of their members rather than being in competition with them.

Telecoms

Openreach is part of BT and is responsible for the infrastructure behind Britain’s broadband. It lays and maintains cables for BT, but also the majority of its rivals, including Sky, TalkTalk and Vodafone. As a monopolistic owner of telecoms infrastructure, Openreach gives BT an unfair market position as a supplier of phone and broadband services.

The government should explore separating telecoms infrastructure from the supply of services and the creation of a new ‘Welsh Water’ style mutual to take over the national phone and broadband infrastructure.

Future infrastructure

At a time when public sector borrowing remains high and the investment approach of institutional funds remains relentlessly short term, the government should explore the creation of new mutual organisations to build our future infrastructure.

Because they are owned by their members, rather than shareholders, mutual organisations have the capacity to finance investment over the life of the asset and potentially do so at a significantly lower cost than infrastructure investment funds.

BBC

The BBC is the largest broadcasting corporation in the world and a pillar of Britain’s cultural life. Yet with huge sums of money spent annually on services, the public deserve to have more of a say in the package of programmes and services that are delivered. For the BBC to become truly accountable, all television licence holders should be given real say in how the BBC Trust is run.

Transport

Transport is central to the UK’s economic and social success. It requires constant investment and renewal at significant cost to both taxpayers and passengers. In order for us to meet the challenges of the future, Britain needs an environmentally sustainable, integrated transport system that is affordable for both the travelling public and the taxpayer.

The government should radically change the way passengers and employees are involved in decision-making within the transport system. Co-operative models provide significant opportunities to involve passengers and employees in a way which will significantly improve and develop transport systems, from local community services to major rail operations.

Network Rail

Network Rail should play a greater role in contracting routes, co-ordinating services and skills in the industry, overseeing stations, fares and ticketing, and ensuring customer satisfaction across the network. It should also be given some responsibility for tackling the monopoly market for rail rolling stock by taking on the development of a long-term plan for the procurement and leasing of new rolling stock.

However, for this to work, Network Rail must become more accountable to passengers and the public. It should be structured as a mutual so that all of its members can have a voice. As a genuine mutual it would be able to give rights to all stakeholders and guarantee that the organisation acts in their interests, creating a genuine two-way dialogue between Network Rail’s management, its passengers, and the public and ensuring that the future of the rail network proceeds on the basis of mutual trust and transparency.

Train operators

Across the majority of the network there is little or no competition, and the private sector is taking only a small percentage of the risk involved in running and investing in infrastructure. The recent performance of the East Coast Mainline by Directly Operated Rail has shown that a not-for-profit operation can compete favourably with the private sector on service, price and money returned to the government.

The government should legislate to enable not-for-profit operators, run in adherence to co-operative principles, to be established on the railway. This would see a multi-stakeholder model representing employees, relevant communities and, critically, passengers, being run in an innovative public sector model.

The government must also do more to support co-operatives aiming to deliver rail services outside of the current franchising system such as Go-op. This co-operative brings local communities together in order to deliver their own rail service where there currently is none. A new government must look again at the system of track access charges in order to do more to support such co-operative endeavour.

People’s buses

The government should empower combined authorities with the same powers as Transport for London. This would enable them to improve integration, ticketing and service levels.

These new powers should come with the encouragement for co-operative, mutual and not-for-profit bus companies to become the preferred providers for routes up and down the country. Hackney Transport, the successful mutual operator with routes in London and Yorkshire shows that this is possible, and improves services as all profits are reinvested in vehicles and routes.

Communities would also benefit from an extension to the Localism Act 2011 to enable bus routes to be deemed assets of community value.

Ports

There are currently over 100 Trust Ports around the country, including relatively small ports such as Cowes, Dart or Tynemouth as well as some of the larger, more established ports like Port of Tyne, Dover, London and Belfast. The governance of these publicly owned and privately managed ports should be opened up to ensure community involvement on the boards and a community dividend from profits.

Sport

Sports clubs are often regarded as community assets, yet too often they are owned either by private individuals seeking to promote their own interests or controlled by well meaning, but distant, committees.

The fans who support our nation’s professional sports clubs are not just supporters, they are the heart and soul of their clubs and the fundamental reason that they exist. The Co-operative Party advocates for sports to be accessible to all, controlled in the interests of those who participate in its enjoyment.

Fans on boards

Sports clubs aren’t simply businesses, and the government must ensure that independent (or supporter) directors are on the board of all professional football clubs to protect the interests of their principal stakeholder – the supporters – as well as in the interests of the wider community they serve.

Community-owned sports clubs

Consideration must be given to create favourable tax incentives to community investment in supporter trust and community run sports clubs. A new status in tax law would support the growth of community owned sports clubs, achieved by extending the benefits of the Community Amateur Sports Clubs scheme.

Supporters Direct

Supporters Direct, the umbrella group for supporters’ trusts in England, Wales and Scotland, campaigns for reforms that ensure that supporters have a formal role in the ownership and governance of their football clubs. To fund the important work that they do in this sector, there should be a levy on Premier League transfer fees.

Protect football clubs

The government should establish an independent, adequately resourced regulatory body under the auspices of the Football Association tasked with both setting and monitoring off-field regulation to protect English football clubs.

When clubs are bought and sold, supporters’ trusts should be guaranteed the option to buy up to 10 per cent of the shares of a club at the point of transfer of ownership. The government should also legislate to protect club names and club colours from change without the approval of a legally constituted supporters’ trust.