For nearly nine months a stalker has plagued Community Energy. While many new community groups are either planning fundraising or actually installing new renewables, the Financial Conduct Authority has been shadowing the sector, threatening two radical shake ups: one of which creates unnecessary uncertainty, the other of which would kill community energy stone dead.
Both are unwelcome. And yet it has been the former – the re-organisation of ‘bona-fide coops’ into ‘community benefit societies’ – that has garnered most of the attention. You can read about it and its implications here and here. I’d also encourage you to sign the 38 degrees petition on this here – signatures are most welcome and you’ll be joining the impressive 15,000 people that have already done so.
Yet this debate has focussed attention away from an idea that would – if implemented – have much more profound effects. This is a new FCA suggestion that investors in energy coops should invest for ‘philanthropic’ reasons ‘with very little expectation’ of a financial return.
As the head of an organisation that looks after nearly £700,000 of (mostly Brightoners’) investments in local renewables, I can say with confidence that our organisation would not exist were our members asked to donate their money to our organisation as an act of philanthropy.
Coops UK has this to say: “The FCA is limiting the commercial viability of co-ops, by proposing a low and arbitrary cap on the financial returns that are shared with members of co-operative and community benefit societies when the business succeeds. The FCA asserts that community benefit societies must be “charitable and philanthropic” bodies in which people invest “with little hope of return”, while co-operative societies should not pay returns higher than those in “savings accounts”, or innovate in how they raise capital.”
While I’m sure many of our members would be very pleased were they to have enough assets to donate hundreds of thousands of pounds to worthy organisations, the reality is that the charitable or philanthropic donation of the scale required to fund renewable energy would exclusively the preserve of the super-rich. Instead, most of our members earn less than £30,000 a year. Why is it wrong that they these relatively low-earners want a reasonable return on their investments – as well as putting their cash towards something they believe in?
Put another way, it might be that the FCA wants local renewables to resemble a charity. But that is not the point of a co-operative, which exists because people want several types of return: social, environmental and financial.
In practice the FCA’s policy approach threatens to deter vital member investment in everything from pubs and sports clubs to consumer co-ops and renewable energy schemes.
In 2013 the community energy sector was worth £18m. This tiny sector now faces ‘regulator creep’ as the FCA seeks to impose its will into new areas. It should be local people who decide what they want to see in their communities – not an arbitrary distant – and unelected – authority.
Brighton Energy Coop