How energy co-operatives could help keep bills down

Isn't it time we got more for our money?

Centrica, owners of British Gas, one of Britain’s biggest energy companies, has once again posted very good profits - made out of our individual energy needs. Isn't it time we got more for our money? That we had a stronger stake in how our energy gets generated, who benefits and where the profit goes? In the US a very different and far more diverse energy market exists. At its heart are energy co-operatives. 

Indeed, there are 42 million American citizens - the equivalent of two-thirds of the British population - who are members of energy co-operatives getting their energy needs met not from one of the Big Six energy firms that dominate the UK energy market but rather from ordinary people pooling their buying power to get a better deal. Even given the size of the US the co-operative energy movement serves 12 per cent of US energy consumers, far exceeding the reach of the UK’s small energy co-operative sector. 

Could things change in the UK? With concern growing about how our future energy needs will be met and increasing recognition that co-operating consumers could get a better deal for themselves and their communities, there is growing interest in how the government could map out a different, more decentralised and inevitably more sustainable energy market. 

The last Labour government saw and encouraged the growth of the social enterprise movement and the beginnings of a new community energy model providing mainly wind energy but some solar energy too. Baywind Energy Co-operative in the Lake District was the first to raise the required finance for turbines through community shares but a number of others have followed and more are planned. 

But if energy co-operatives and social enterprises are to be able to offer a real challenge to the traditional energy firms embraced by the Coalition, a far stronger set of signals from the Government will be required. 

One of the key lessons from the US is the need for a strong "champion" of consumer-led energy co-operatives and social enterprises to provide dedicated support, expertise and advice. In the US it is the National Rural Energy Co-operative Association, in the UK a new similar body would be needed to help local people prepare, finance and run community energy schemes. Such a body would help to galvanise interest in new forms of community ownership of energy generation. 

In the 1980s, a TV advertising blitz featuring a "Tell Sid" message drove home the opportunity to buy shares in newly privatised energy companies. We need a new share ownership drive in the energy industry – community shares giving people a real stake in the generation and distribution of the energy they use. Because the lesson we’ve learnt since the 1980s has been that individual shareholders on their own don’t have enough power to really make the Boards of the big energy companies sit up and take notice of local needs. 

Where the community owns a stake or 100% of the energy that is being generated power and influence is spread more widely across the membership.  Crucially too, the benefits of the energy generated are spread across the membership, helping to keep more of the money the energy generates in the local community rather than ‘lost’ in large profits or high executive pay, often to companies based far away from where the original energy was generated. 

In the UK, community-scale energy schemes are slowly expanding. Although they tend to be based in rural areas Brixton Energy with its solar panels initiative is an encouraging exception. To help drive a more rapid expansion of community-owned energy the government needs to be bolder in the incentives it creates within the energy market. 

Every time a new source of energy – a new power station, a new wind farm or hydro scheme is established the big energy companies have to secure a licence and/or establish a company to raise the finance to drive the scheme. The government could insist through incentives built into legislation that a right is created for local people to invest in the new energy "companies" (subsidiaries in the main of the Big Six). After all why shouldn’t local people, whose ever rising energy bills will have to pay for this investment not have the opportunity of a more direct financial benefit too from the energy being generated in their neighbourhood. 

I understand the power of markets and the benefits of strong competition, but we need to ensure those benefits and power are used for the general good rather than the self interest of a few. Co-operatives offer the possibility of a new "shared capitalism"; ensuring more benefit from the efficiencies and opportunities markets, properly regulated; can create. Energy co-operatives have a far larger reach outside the UK. Isn’t it time there were more opportunities for a new generation of innovative energy co-operatives to emerge here too?

Gareth Thomas is the Labour and Co-op MP for Harrow West and the chair of The Co-op Party

The sun sets behind the chimneys at Didcot Power Station. Photograph: Getty Images
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In your 30s? You missed out on £26,000 and you're not even protesting

The 1980s kids seem resigned to their fate - for now. 

Imagine you’re in your thirties, and you’re renting in a shared house, on roughly the same pay you earned five years ago. Now imagine you have a friend, also in their thirties. This friend owns their own home, gets pay rises every year and has a more generous pension to beat. In fact, they are twice as rich as you. 

When you try to talk about how worried you are about your financial situation, the friend shrugs and says: “I was in that situation too.”

Un-friend, right? But this is, in fact, reality. A study from the Institute for Fiscal Studies found that Brits in their early thirties have a median wealth of £27,000. But ten years ago, a thirty something had £53,000. In other words, that unbearable friend is just someone exactly the same as you, who is now in their forties. 

Not only do Brits born in the early 1980s have half the wealth they would have had if they were born in the 1970s, but they are the first generation to be in this position since World War II.  According to the IFS study, each cohort has got progressively richer. But then, just as the 1980s kids were reaching adulthood, a couple of things happened at once.

House prices raced ahead of wages. Employers made pensions less generous. And, at the crucial point that the 1980s kids were finding their feet in the jobs market, the recession struck. The 1980s kids didn’t manage to buy homes in time to take advantage of low mortgage rates. Instead, they are stuck paying increasing amounts of rent. 

If the wealth distribution between someone in their 30s and someone in their 40s is stark, this is only the starting point in intergenerational inequality. The IFS expects pensioners’ incomes to race ahead of workers in the coming decade. 

So why, given this unprecedented reversal in fortunes, are Brits in their early thirties not marching in the streets? Why are they not burning tyres outside the Treasury while shouting: “Give us out £26k back?” 

The obvious fact that no one is going to be protesting their granny’s good fortune aside, it seems one reason for the 1980s kids’ resignation is they are still in denial. One thirty something wrote to The Staggers that the idea of being able to buy a house had become too abstract to worry about. Instead:

“You just try and get through this month and then worry about next month, which is probably self-defeating, but I think it's quite tough to get in the mindset that you're going to put something by so maybe in 10 years you can buy a shoebox a two-hour train ride from where you actually want to be.”

Another reflected that “people keep saying ‘something will turn up’”.

The Staggers turned to our resident thirty something, Yo Zushi, for his thoughts. He agreed with the IFS analysis that the recession mattered:

"We were spoiled by an artificially inflated balloon of cheap credit and growing up was something you did… later. Then the crash came in 2007-2008, and it became something we couldn’t afford to do. 

I would have got round to becoming comfortably off, I tell myself, had I been given another ten years of amoral capitalist boom to do so. Many of those who were born in the early 1970s drifted along, took a nap and woke up in possession of a house, all mod cons and a decent-paying job. But we slightly younger Gen X-ers followed in their slipstream and somehow fell off the edge. Oh well. "

Will the inertia of the1980s kids last? Perhaps – but Zushi sees in the support for Jeremy Corbyn, a swell of feeling at last. “Our lack of access to the life we were promised in our teens has woken many of us up to why things suck. That’s a good thing. 

“And now we have Corbyn to help sort it all out. That’s not meant sarcastically – I really think he’ll do it.”