Why local councils should become energy suppliers

Freeing local authorities to compete in the energy market would reduce prices, attract green industry and create jobs.

Since Ed Milliband unveiled his plan at the Labour Party conference to freeze energy bills until 2017, the price of energy has rarely been out of the news. The problem with the narrow debate around the size of household bills is that it fails to address the issue of diversifying energy generation. The key to lower prices is, ultimately, a more competitive market. Local government has its roots in energy generation – modern Birmingham was built on the revenue from the local gasworks. It’s time we got councils back into the energy game.

The benefits of a new generation of local authority energy provision will not just be felt in terms of greater competition and lower bills. Councils can sell energy to raise money to pay for public services and, if this is positioned smartly, spur green economic development, creating a new generation of good jobs in the sustainability sector. The low carbon economy already accounts for 8% of GDP. With support from councils, it could grow significantly.

Some councils are already using green energy capture to cut their own fuel bills locally. Birmingham, Islington and Woking are all experimenting with energy generation and redistribution. Islington’s Bunhill Energy Centre, for instance, captures wasted heat to provide cheaper energy to estates in the local area – but these initiative tend to be on the periphery of activity. Scaling this up, generating energy on a much larger scale and linking it to local economic growth strategies could completely transform how we control and use energy at a very local level.

Local authorities have a huge role in economic development. If councils were freed up to compete in the energy market on a local basis, to generate and provide energy, this could attract green industry, create jobs and, crucially, underpin communities with green infrastructure. Local authorities are best placed to shape local markets and skills to align to the green energy agenda.

Generating and recycling energy at a local level would also have a huge benefit to local people in a way that the Big Six just can’t achieve. Local authorities would be able to provide cheaper energy directly to their residents, which should take advantage of local resources in the process. Communities would also become much more directly involved in the energy market by working with local authorities through energy co-operatives for instance, to capture and recycle energy to use themselves and sell back to councils for cheaper redistribution locally. Giving this power directly to communities would both incentivise behaviour change locally whilst helping to reduce the cost of living.

Some will question why councils should return to energy. Why not instead partner with energy suppliers and set up joint ventures to distribute cheaper energy? The problem is that attracting this sort of investment is a real challenge. Local authorities have the financial muscle to invest in this sort of infrastructure development that could accelerate projects quickly, whilst linking it to economic growth strategies.

But the real answer to this question lies with community ownership of resources, which would transform how councils and residents interact with the energy market. Given the current direction of energy bills and how powerless people feel to control it, recycling and generating energy using local resources will become more, not less important, in addressing this problem. Behavioural change will only come alongside ownership of these resources and local authorities, as guardians of localities, are ideally placed to lead this.

Laura Wilkes is Head of Policy and Research at the New Local Government Network

A photo illustration of the filament inside a lightbulb on October 17, 2013 in London. Photograph: Getty Images.

Laura Wilkes is Head of Policy and Research at the New Local Government Network

Photo: Getty
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Forget planning for no deal. The government isn't really planning for Brexit at all

The British government is simply not in a position to handle life after the EU.

No deal is better than a bad deal? That phrase has essentially vanished from Theresa May’s lips since the loss of her parliamentary majority in June, but it lives on in the minds of her boosters in the commentariat and the most committed parts of the Brexit press. In fact, they have a new meme: criticising the civil service and ministers who backed a Remain vote for “not preparing” for a no deal Brexit.

Leaving without a deal would mean, among other things, dropping out of the Open Skies agreement which allows British aeroplanes to fly to the United States and European Union. It would lead very quickly to food shortages and also mean that radioactive isotopes, used among other things for cancer treatment, wouldn’t be able to cross into the UK anymore. “Planning for no deal” actually means “making a deal”.  (Where the Brexit elite may have a point is that the consequences of no deal are sufficiently disruptive on both sides that the British government shouldn’t  worry too much about the two-year time frame set out in Article 50, as both sides have too big an incentive to always agree to extra time. I don’t think this is likely for political reasons but there is a good economic case for it.)

For the most part, you can’t really plan for no deal. There are however some things the government could prepare for. They could, for instance, start hiring additional staff for customs checks and investing in a bigger IT system to be able to handle the increased volume of work that would need to take place at the British border. It would need to begin issuing compulsory purchases to build new customs posts at ports, particularly along the 300-mile stretch of the Irish border – where Northern Ireland, outside the European Union, would immediately have a hard border with the Republic of Ireland, which would remain inside the bloc. But as Newsnight’s Christopher Cook details, the government is doing none of these things.

Now, in a way, you might say that this is a good decision on the government’s part. Frankly, these measures would only be about as useful as doing your seatbelt up before driving off the Grand Canyon. Buying up land and properties along the Irish border has the potential to cause political headaches that neither the British nor Irish governments need. However, as Cook notes, much of the government’s negotiating strategy seems to be based around convincing the EU27 that the United Kingdom might actually walk away without a deal, so not making even these inadequate plans makes a mockery of their own strategy. 

But the frothing about preparing for “no deal” ignores a far bigger problem: the government isn’t really preparing for any deal, and certainly not the one envisaged in May’s Lancaster House speech, where she set out the terms of Britain’s Brexit negotiations, or in her letter to the EU27 triggering Article 50. Just to reiterate: the government’s proposal is that the United Kingdom will leave both the single market and the customs union. Its regulations will no longer be set or enforced by the European Court of Justice or related bodies.

That means that, when Britain leaves the EU, it will need, at a minimum: to beef up the number of staff, the quality of its computer systems and the amount of physical space given over to customs checks and other assorted border work. It will need to hire its own food and standards inspectors to travel the globe checking the quality of products exported to the United Kingdom. It will need to increase the size of its own regulatory bodies.

The Foreign Office is doing some good and important work on preparing Britain’s re-entry into the World Trade Organisation as a nation with its own set of tariffs. But across the government, the level of preparation is simply not where it should be.

And all that’s assuming that May gets exactly what she wants. It’s not that the government isn’t preparing for no deal, or isn’t preparing for a bad deal. It can’t even be said to be preparing for what it believes is a great deal. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.