Who’d Kill the Co-ops?

There’s a storm brewing, and it’s a good one. In a not-so-subtle pincer movement the Treasury and the FCA (Financial Conduct Authority) are trying to squeeze Britain’s community energy co-operatives out of existence. There isn’t a lot of logic in what’s going on, but there’s an awful lot of venom.

It began in the Chancellor’s Autumn Statement, with the announcement of tax changes in the treatment of a whole raft of social enterprise schemes. Technically, the Chancellor proposed to wind up the tax relief on one scheme – the Enterprise Investment Scheme (EIS) – and replace it with another – the Social Investment Tax Relief (SITR).

You could have put this down to one of those boring, technical twiddles that are of little interest… except that community energy co-ops, eligible for EIS, are to be excluded from SITR.

In a letter justifying this, Treasury Minister, David Gauke MP said

“Whilst co-operatives do not qualify for SITR, co-operatives which fulfil a social purpose and fulfil certain other conditions can convert to a community benefit society by free application to the Financial Conduct Authority.”

Over at the FCA, they were finessing this a little differently. The FCA view seems to be that co-ops should be philanthropic organisations, offering nominal interest rates to savers and with little interest in becoming profitable. More than that, it is clear that the FCA does not like Co-ops, full stop.

The FCA may be offering free conversion from a Co-op to a BenCom but they are making it clear that no reversion to a co-op will ever be entertained. Just to push the message home, the FCA have started to de-register some of Britain’s existing community energy co-ops and refusing to register any of the new ones.

It turns out that someone in the FCA does not particularly like Co-ops, has no time for the internationally recognised definition of a cooperative society, and wants to re-write the rules himself. This just happens to play well with those in Westminster who carry a visceral dislike for the whole notion of cooperative ownership.

Of course it doesn’t fit with the part of the Coalition Agreement that pledged

“We will encourage community-owned renewable energy schemes, where local people benefit from the power produced”.

But then the Treasury was never keen on this anyway. The right of communities to benefit from the energy they generate may be commonplace elsewhere in Europe, but it is anathema in the UK.

Britain has a rigged energy market, dominated by the Big 6, subservient to power stations, and determined to prevent Britain’s consumers from becoming ‘pro-sumers’ in tomorrow’s energy markets that will become infinitely more than a one-way street from power station to plug.

It isn’t that community energy ‘rights’ start to sound like common ownership as much as them getting in the way of all the Fracking, nuclear and capacity payments nonsense that the Coalition has built its ludicrous energy policies around.

Gauke’s letter continued its ‘lets dump the Co-ops’ line with the priceless observation that

“I understand that there are current regulatory restrictions in the energy market precluding organisations which generate energy from selling that energy to their own members. This results in cooperative societies being unable to show the necessary member participation in their FCA registration.”

Brilliant! It is the government that writes(rigs) Britain’s energy market rules. They are the ones who have made ‘local supply’ illegal in the UK. Then it blames co-ops for failing to do what they are banned from doing.

If there’s a problem, it isn’t with the co-ops. Change the bloody rules.

There are loads of ways the Treasury could have strengthened the role of co-ops – if strengthening were the issue. The Government could have insisted on an asset lock as a precondition of tax allowances, allowed energy co-ops to sell to their own members, or set a ceiling on interest rates. Of course the Treasury would never dream of doing this to its friends in the City, but Co-ops present a different threat.

The bigger picture

Ever since the last Labour government introduced Feed-in-Tariffs (FITs) for renewable energy

Alan Simpson

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