To fix our broken energy market, we need Help to Supply

The government should do more to help communities, local authorities and businesses not only produce but supply their own power.

The Help to Buy scheme has so far attracted 6,000 applicants in just two months, and has already enabled nearly 750 people to climb onto the property ladder: another step towards encouraging a "property-owning democracy" and securing assets for individuals and families. Great. But there is a much more radical shift waiting to happen in the energy retail market, and a far greater opportunity to facilitate widespread ownership, not only among individuals, but communities and businesses too. We have heard so much about the need to encourage diversity and competition beyond the "big six", yet seen little by way of policies to put this into action.

In fact, we’ve seen the reverse taking place. The reduction in the Energy Company Obligation (ECO) levy will aid to bring down costs, but only for the larger energy companies, giving them an even greater advantage in winning over customers. And according to a recent report, the 20 month price freeze advocated by Ed Miliband will see smaller utilities lose out. We desperately need policies that will not seek to disadvantage start-ups and smaller players within this sector. The party manifestos - if they are serious about tackling high energy bills – must include measures that encourage innovation, competition and widespread ownership, not stifle it.

Markets overseas show that an entirely different picture can be painted. Germany has 1,100 electricity suppliers, and the average household has a choice of around 72 of these. The four major energy companies operating in Germany (E.ON, RWE, EnBW and Vattenfall) take up 43.8 per cent of the retail market. Most other suppliers are owned by the municipality or the community, and the rate of "bottom-up" ownership of such services and assets is growing. At the end of 2012, 190 communities had been successful in bidding to run – yes, own and run – their local distribution grid (at least nine of these are co-operatives) and 70 municipal utilities had been founded.

This is not renationalisation or even remunicipalisation, but a move toward a much more constructive, locally-governed infrastructure in which communities ensure transparency, efficiency and good competition. Many of these emerging community-owned suppliers, such as Feldheim Energie and EWS Schönau, are not only offering cheaper tariffs than their competitors, but are seeking and fuelling the prosperity of their locality. In contrast, the UK has 30 licensed suppliers and the largest six take up 98 per cent of this market. No community has yet set themselves up as a competitor.

True, we cannot lift the infamous successes of Germany’s market and immediately apply them to the UK, and neither for this reason can we directly duplicate policies from overseas. But what we can do is not do nothing: we need a strong policy infrastructure, backed by government, that will catalyse new start-ups and new competition.

The Community Energy Strategy, published today, recognises that many of the UK’s communities, local authorities and businesses have an ambition to not only produce, but supply their own power. Ofgem’s "Licence Lite", which was introduced five years ago to make this possible, has so far seen only one application progress. The GLA, the largest governing authority in the UK, has the facility, scope and financial backing to take advantage of this scheme, but many institutions and civic groups don’t. The London Authority’s application is still pending final approval, so we are unsure as to whether even this will be successful.

What we need is a "Help to Supply" scheme. Government, working with the Department for Energy and Climate Change and Ofgem, should set up a series of pilots to work with a range of partners – communities, generators, local authorities, supermarkets, business hubs, Local Enterprise Partnerships – to help them establish a licensed supply company. Along the way, risks, costs and barriers should be noted and policies – perhaps even an alternative to Licence Lite – should be implemented as a result of this learning. This way, we may move from the paltry 30 suppliers we currently have to doubling or trebling this number in the next couple of years, and perhaps even more as the momentum builds.

Our ambitions are right, but our policies are wrong. If we are to take rising bills, competition and transparency seriously, we simply cannot let this opportunity pass us by.

Caroline Julian (@carolinejulian) is Head of Research at ResPublica and undertook a Winston Churchill Memorial Trust travel fellowship to Germany last year to explore the ownership structures of local distribution grids and utilities. The report based on this trip will be published through ResPublica this year.

Lightbulbs on display in an electrical retailer in Soho in London. Photograph: Getty Images.

Caroline Julian is Deputy Director, Head of Policy and Strategy at the thinktank ResPublica.

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Labour trying to outdo Ukip on border control is the sure path to defeat

Only Diane Abbott has come out fighting for free movement. 

There is no point trying to deny it. Paul Nuttall’s election as Ukip leader is dangerous for Labour. Yes, Nuttall may not be a credible voice for working-class people – he ran as a Tory councillor in 2002 and has said that “the very existence of the NHS stifles competition”. Yes, he may be leader of a party which has (for now) haemorrhaged donors and supporters. But what Nuttall’s election represents is the coming of age for a form of right-wing populism which is pointed directly at Labour’s base. Along with the likes of Ukip's major donor Arron Banks, Nuttall will open up a second front against Labour – focused on blaming migrants for falling wages and crumbling services.

In the face of this danger, and the burning need to create a narrative of its own about the neglect of the communities it represents, Labour’s main response has been confusion. Barely a week has gone by without a major Labour figure repeating the touchstone myths on which Ukip has built its working class roots. Speaking on the Andrew Marr Show, Emily Thornberry openly backed the idea that migration has dragged down wages. “Do I think that at the moment too many people come into this country? Yes I do”, she said.

Another response has been to look for policies that transcend the debate altogether, while giving a nod to the perceived “concerns” that voters harbour about immigration. When Clive Lewis spoke to the Guardian some weeks ago, he also repeated the idea that free movement “hasn’t worked for many of the people in this country, where they’ve been undercut” and coupled this with compulsory trade union membership for those coming to Britain to work – a closed shop for migrant workers.

It is unsurprising that MPs on the right of the party – many of whom had much to say about the benefits of migration during the EU referendum – have retreated into support for immigration controls. This kind of triangulation and retreat – the opposite of the insurgent leftwing populism that Labour needs to win elections – is the hallmark of Labour’s establishment politics. Those who want to stand and fight on the issue should be concerned that, for now, only Diane Abbott has come out fighting for continued free movement.

At the moment, Labour is chasing the narrative on immigration – and that has to stop. The process that is shifting the debate on migration is Brexit, the British franchise of a global nationalist resurgence that is sweeping the far right to power across the western world. Attempt to negotiate a compromise on migration in the face of that wave, or try to claim it as an “opportunity”, and there is simply no limit to how far Labour will be pushed. What is needed is an ideological counter-attack, which tells a different story about why living standards have deteriorated and offers real solutions.

The reason why wages have stagnated and in recent decades is not immigration. Among the very few studies which find that migration has caused a fall in wages, most conclude that the fall is marginal. The Bank of England’s study, cited by Boris Johnson in the heat of the EU referendum campaign, put the average figure at 0.3 per cent for every ten percentage point rise in migrants in a given sector of work. That rises to 1.8 per cent in some areas.

Median earnings fell by 10.4 per cent between 2007 and 2015, and by 2021 are forecast to be lower in real terms than they were in 2008. For many communities, that fall in wages comes on top of the destruction of industry; the defeat of the trade union movement; the fire sale of Britain’s social housing stock; and years of gruelling Tory austerity. Nuttall’s Ukip will argue that economic and social insecurity are the result of uncontrolled immigration. To give an inch to that claim is to abandon reality.

Labour cannot win against Ukip by playing around with new and innovative border controls – it has to put forward a vision for a radically different kind of society. Under Jeremy Corbyn, Labour is closer than it ever has been to the kind of radical social and economic platform that it will need to regain power - £500bn of investment, building a million new homes a year, raising minimum wage and reinstating proper collective bargaining and trade union rights. What it needs now is clarity – a message about who to blame and what to do, which can cut through the dust kicked up by the Brexit vote.