A municipal energy firm offers a snapshot of Labour’s Britain
JEREMY CORBYN usually grants selfies rather than asking for them. But the Labour leader reversed normal roles when he saw a stand for Robin Hood Energy, a not-for-profit energy company run by Nottingham’s city council, at a Labour Party conference. “He made a beeline straight for us and said, ‘Can I get a photograph?’” recalls Simon Rhodes, head of marketing at the municipal utility. Mr Corbyn’s fanboy moment is easy to explain: under a Labour government, companies like Robin Hood Energy would be rolled out across Britain.
In a sweltering office block off Maid Marian Way in central Nottingham, about 180 staff at Robin Hood Energy have unintentionally provided a Petri dish for Labour’s energy policy. The idea for the company dates back to 2011, when Mr Corbyn was still a happily obscure backbencher. Councillors in Nottingham were trying to tackle fuel poverty in the city. Bureaucrats came back with plans for a price-comparison website. Instead, the Labour council demanded the full-fat option: its own gas and electricity company. After four years of planning and an £11m ($15m) loan from the council, it launched in 2015.
Now the company has over 100,000 customers. Only one in ten is in Nottingham. The rest live in areas where other councils offer their own locally branded version of Robin Hood Energy’s services, in exchange for commission. (Local brands include Liverpool Leccy and Angelic Energy in Islington.) At the last election, Labour pledged to have at least one such company competing in every region.
Such municipal entrepreneurialism is not risk-free. Robin Hood Energy’s initial losses were steep, with the company losing £8m in 2016-17 (it expects to break even this year). Granting big loans to council-owned companies while public services suffer swingeing cuts is politically treacherous. Such a scheme would struggle to be justified now, says Steve Battlemuch, the councillor who chairs the company’s board. Other councils may find it harder than Nottingham, which has a history of municipalism. Unlike most councils, Nottingham still owns its bus services. And with 52 of 55 seats on the council held by Labour, there was little prospect of the party being turfed out and the company shut down by a new administration.
To its critics, Robin Hood Energy solves a problem that does not exist. In 2011 Britain had 14 energy suppliers. Now it has nearly 70. Many are de facto non-profits, points out Peter Atherton of Cornwall Insight, an energy consultancy. These companies sell energy at close to cost price, in hope of rapidly gaining customers before hawking themselves to a bigger player. Several therefore offer cheaper tariffs than Robin Hood Energy, though it compares favourably with most firms. For those customers willing to change suppliers, the market already works well.
In the long term, Labour’s plans go beyond introducing municipal rivals to private suppliers. Eventually, the party would allow municipal companies to control their local power grid. The doyen of Labour’s energy policy is not Clement Attlee, the prime minister who nationalised Britain’s fractured array of public and private energy suppliers. Its origins owe more to Joseph Chamberlain, the 19th-century Liberal politician and forefather of municipalism, says Laurie Laybourn-Langton of IPPR, a think-tank.
Short-term factors may intrude before then. Energy markets have been benign since Robin Hood Energy’s launch, points out Mr Laybourn-Langton. If wholesale energy prices go up, so will household bills. Robin Hood Energy’s halo may be dimmed. Yet some customers may prove less price-sensitive than others. And whatever happens, one Robin Hood Energy customer may prove reluctant to move. His name? Jeremy Corbyn.