Saturday, 15 February 2014

Green Deal Disaster Sinks Energy Saving Co-op

When in 2010 Chris Huhne then Minister for Energy and Climate Change, launched the Green Deal he said, As well as being good for the environment;
“The Green Deal also represents a significant opportunity for businesses. Retailers, tradespeople, energy companies and investors will have access to a huge and growing market, with implications for jobs and skills across the supply chain – and across the country, with no regional bias.
We predict that the supply chain could support 100,000 jobs within five years, spread across the United Kingdom. By making our homes and businesses more energy efficient, we can cut our carbon emissions and make real progress toward our 2050 emissions reduction target.”
Now hindsight is 20/20 so the ambition to take just a small part of a promised £10 billion market enough to support a dozen people in a specialist co-operative business did not seem an excessive aim. I even bought some shares in it so I can understand why people invested. But no one realised just how big a disaster the Green Deal would turn out to be.
From the beginning of the coalition it was a key policy. They said the Green Deal is the Government’s “flagship piece of legislation, which will deliver energy efficiency to homes and buildings across the land”.  It is expected to result in net business costs of an estimated £1.3 billion a year (ultimately reclaimed through everyone’s energy bills) and around £14 billion of private sector investment over the next decade.
This fanfare drew many firms to seek out the necessary accreditation to be Green Deal assessors. By the end of November last year there were 314 firms engaging 2,855 individual assessors. So a small industry was being created to deliver this green deal. The problem however is not the green part it is the deal part. Frankly it is not a very good deal.
The whole process is incredibly convoluted which puts your energy bills up for a saving that is too little over too long a period.
Whilst by the end of November 101,851 green deal assessments had been lodged and there were 1,478 green deal plans in progress but only 458 had been completed.  Not exactly a revolution. Hundreds of firms and thousands of advisers had been sent on a wild goose chase. At the end of last November there were six times as many green deal assessors as there were satisfied customers.
This brings me back to the Energy Saving Co-operative. I am sure this was the right idea. There is a low level of trust in this area which thanks to this botched green deal is now even lower. I am sure householders would have had more confidence in a co-operative business than a purely profit seeking enterprise. But there is simply not enough business and the Co-op is being voluntarily would up.
No business can survive without customers. Even if they had bagged all the 458 who completed the Green Deal it would not have had enough to sustain them let alone 300 businesses. Now there are double grazing providers, loft and cavity wall insulators, new boiler fitters and numerous other trades people wondering where their next job is going to come from. Rather than creating thousands of jobs this disastrous debt laden policy is destroying jobs.
Chris Huhne launched the policy at the Liberal Democrats Spring Conference in 2010, "The Green Deal will be a revolution. The first scheme of its kind in the developed world. The most ambitious energy-saving plan ever put forward. A once-and-for-all refit that will make every home in Britain ready for a low-carbon future."
This will now just be added to that long list of Liberal Democrat broken promises. Huhne was later to be led off in disgrace and imprisoned for lying about speeding it is a pity that charge could not be extended for lying about other things.
My suspicion is that this scheme was sunk by the Treasury who have no interest in helping people to spend less money. It is no secret that George Osborne has been manoeuvring to undermine the Government’s green agenda as weak as it is.
The real tragedy then is not for the staff and directors of the energy saving co-op, one of whom Chris Herries will now lose her place on the Board of Co-ops UK, sad as that is or that investors who will lose their money. All business investment is risk capital. The real tragedy is that the country really does needs an effective Green Deal. We really do need to reduce energy costs, keep people warm and to refocus our energy industry towards conservation and renewable generation. That is where the future jobs will be and that possible future is what the government have turned their backs on.

We are all Rogues and Vagabonds

The Tories and their Liberal Democrat allies have been accused of wanting to turn life in Britain back to Victorian times. They seem to want to get us to know our place, to respect those with wealth and to be upstanding for the Queen and the Union Jack.

Victorian life is well known to us mainly through the novels of Charles Dickens. In 1824 Dickens was working for six shillings a week in Warrens Blacking factory labelling pots of bootblack and the whole of that six shillings went to cover his board and lodging. His father had been arrested for a debt of £40 and was sentenced to serve in Marshalsea Prison. On weekends Charles would visit the family in prison.

In 1824 too London was besieged by soldiers returning from the Napoleonic Wars to no homes and no jobs (it was ever thus). The government responded with the Vagrancy Act which in effect made it an offence to sleep on the streets or to beg.

This week three young men, Paul May, Jason Chan and William James, all residents of a squat in north London, where charged under the 1824 Vagrancy Act. Their crime was of a profoundly Dickensian nature, we all know how obsessed many of Dickens’s characters where with food, how Pip stole food for Maqwitch or how Oliver Twist wanted more.

Their crime is they stole food from a skip at the rear of an Iceland store. According to reports they stole mushrooms, tomatoes, cheese and Mr Kipling cakes.

Under the Act Persons committing certain offences where to be deemed as rogues and vagabonds some parts of the original act have been subsumed in newer legislation but some of it remains on the statute book.

They are charged under this part of the Act “every person being found in or upon any dwelling house, warehouse, coach-house, stable, or outhouse, or in any inclosed yard, garden, or area, for any unlawful purpose.”

They face three months in prison. Where presumably they will at least be fed.

I understand that the police have returned the mushrooms, tomatoes, cheese and Mr Kipling Cakes now very well past their sell by dates to Iceland. Presumably they will put them back into the skip. They can then be collected with 890,000 tonnes of food waste collected by the London boroughs each year and added to the 1.6 million tonnes of food waste thrown out by stores across the UK.

What sort of world have we created where everyday trucks make rounds of the streets of London and take their cargo either to be incinerated or shipped up the Thames on barges to have it dumped in the sea or into landfill. In North London just 23 % is recycled. Landfill sites already cover 109 square miles of our country and an extra 16 million tonnes of rubbish is being added each year.

And we prosecute three lads for nicking some out of date mushrooms!

Of course the apologists for capitalism tell us it may not be that fair but it is efficient. The free flow of market forces ensures nay it guarantees the most efficient allocation of the factors of production. Well this demonstrates that it is neither fair nor efficient.

What is fair about the need for foodbanks? And what kind of efficiency has farmers across the globe overworking their land depleting the soil and over using chemical inputs to produce food we then put into landfill whilst people go hungry?

Sometimes it is good to be reminded of why you are a socialist and of why the trade union struggle for a fair deal at work, the co-operators struggle for pure food at fair prices and the political struggle for working class representation are all part of the same fight.

It reminds me of the words of that great Wobblie Fred Thompson. In his memoir Fellow Worker he explains why he is both engaged in his union and in the Socialist Party. He says, “perhaps my attitude towards the IWW and the Socialist Party would be clearer if I added that if there were a food co-op store nearby, I would feel I should buy there; if there were a daily labor paper here, that I should subscribe to it even if I quarrelled with the editor; if there were labor cultural institutions in which I could participate and I had the time I would do that too.”   

The editor and I may quarrel from time to time but that does not distract us from the bigger fight to maintain that daily voice for a better world.

Remember the Vagrancy Act in 1824 did not work it paved the way for the Poor Law Amendment Act of 1834 which led to huge expansion of the workhouse system. It meant that instead of outdoor relief, on the basis it was unsustainable (have we not heard that one before too), the destitute had to enter the workhouse.

The National Trust has a workhouse at Southwell in Nottinghamshire, coincidentally built in 1824. Visitors think they are looking into the past but if we do not get this dreadful government off our country’s back it just might be their vision of the future.

The Co-op Bank Disaster who is to Blame?

The Co-op Bank Disaster who is to Blame!

Clearly something has gone seriously wrong at the Co-operative Bank but the latest twist in this saga has created far more heat than light. The public pillorying of Paul Flowers, for the Tabloids love it is the perfect story, a Vicar, sex, class A-drugs and rent boys. And that is before the banking connection. Clearly the Tories have enjoyed this big time. The Co-op movement’s historic connection to the Labour Party has made this a great opportunity to attack both the democratic nature of the Co-op and its role as the banker to Labour.

Firstly the Co-op Bank has never been a co-operative. It began life as the Loan and Deposit Department of the Co-operative Wholesale Society back in 1872 and ninety-nine years later it became a plc and a wholly owned subsidiary of the Co-operative Group.

Furthermore the Directors of the Bank have never been elected. They have always been appointed by the main board of the Co-op Group and to overcome any skills gaps they have included a significant number of  what are independent non-executive directors drawn from the financial services and banking industry.

In short Paul Flowers may have been chair of the Bank Board but he was not running the show. Indeed the board had a minority of elected members. To quote the annual report for 2012, “Of the 11 Non-Executive Directors four are elected members of the Co-operative Group Board, two are Co-operative Group Executives and five are independent and recruited for their specific financial services experience and expertise.”

All the key roles on the operational sub-committees of the board where taken by banking professionals of some standing. 

In the 2012 annual report you will see that the Chair of the Risk Committee which had responsibility for “the management and control of all significant risks, including technical, operational, business model and external risks”, was Merlyn Lowther.  Her name maybe familiar indeed you may have her signature in your wallet. As chief cashier of the Bank of England her signature was on our bank notes for four years. She joined the Bank of England Economics Division in 1975 and had worked her way up to chief cashier by 1993.

Then there is the Exposures Committee, responsible for sanctioning “large counter party transactions, manage large exposure positions and consider risk management of exposures”. This was chaired by Peter Harvey who had been the chief executive of UK Business Banking at Barclays PLC as part of long career at Barclays.

There is also William Hewitt former Group Finance Director of the RAC who was chair of the Audit Committee.  Then there are the external auditors KPMG. The Bank was given a clean audit including a review of their corporate governance statements by Andrew Walker an Audit and Transactions Services partner in KPMG’s Financial Services practice.  He specialises in the retail financial services sector, in particular building societies, credit cards and consumer finance.

Andrew has worked extensively on IFRS (For those who don’t know these are International Financial Reporting Standards) for most of his audit clients and has detailed experience and insight of application of standards in complex, subjective areas such as impairment, fair value and hedging.  He has acted as the expert on a major claim in connection with credit card and internet systems.  He has also led reviews in connection with OFT investigations in the banking and consumer finance sectors.

Oh and don’t forget the advisers who facilitated the merger with Britannia said to be Tim Webb of J.P. Morgan Cazenove. According to their website Tim is an exceptional banker. He represents “the stability of our management team and the depth of talent that allows us to maintain consistent service to clients year after year”.

It must be clear to everyone now that that deal was the mutual equivalent of Lloyds and HBOS.  The Co-op Bank was a prudently run fairly boring bank indeed there had been a time when the board consisted was solely of elected members who were completely risk averse.

Britannia it now appears believed there would never be a recession and the housing market and the commercial property market would ever stall and was loaded with all sorts of toxic debts. Now we all know the consequences of that lethal cocktail.

The other board members included Neville Richardson the former CEO of that Building Society. Then there was Peter Marks the Co-op Group CEO determined to grow the business by acquisition at apparently any price the stage is set for a total disaster.

Far be it from me to try and defend Paul Flowers. His performance at the select committee was not brilliant but he was not the worst performer by any measure. However hs apparently dissolute private life style has provided the tabloids with a great story and Cameron and Osborne a stick to beat the Labour Party with. But the collapse of the Co-op Bank is not the fault of the elected members of the Group Board or of the four elected members on the Bank Board.

It was the professional bankers and financial advisers that that cooked up the deals that bought the bank low. The Co-op Bank is in the brown sticky stuff because it was a Bank not because it was a Co-operative.