I completely agree with my hon. Friend. In fact, protecting the integrity of the co-operative model is one of the issues that I have with this Bill.
Returning to my opening remarks about the strength of green investments, I have made the case in the past that such investments should lead the way in helping us to recover from this pandemic. There is no point in building back to what we had before. Studies have shown the strength and resilience of these sorts of investments following from times of crisis and uncertainty, such as after the 2008 financial crisis.
The Bill outlines that the capital gained from green bonds is to be invested in a way that can maintain and enhance a biodiverse natural environment with healthy functioning ecosystems that support social, economic and ecological resilience. This entails the invested capital being centred around the green economy and climate action, including in new and emerging technologies, renewable energy, transport, housing and waste management. I remind the House that those are areas of considerable Government attention and investment in recent spending rounds, contrary to some of the opinions that we have heard today from those on the Opposition Benches. There are too many achievements to list today, but I am going to name a few relevant examples.
We have reduced emissions faster than any other G7 nation, while also leading the G7 countries in economic growth and providing £3 billion for contracts to help develop less established renewable technologies by 2022 to 2023. We have put funding into hydrogen fuel research and established the Hydrogen Advisory Council. The Chancellor recently announced a £2 billion green homes grant, which is going live this month, to support the retrofitting of houses across the country, benefiting communities and reducing fuel poverty. For electric vehicle markets, a round of private capital was raised in 2018, backed by the Treasury, bringing the private sector on board and directing significant and meaningful investment to the electric vehicle supply chain. Many of these plans will bring the added bonus of generating sustainable, high-quality jobs for the green economy. Our landmark reforms in agriculture, the first of their kind in 30 years, will promote sustainable and productive livelihoods for UK farmers.
Data show that co-operatives do great work in many areas of the country. The Government are doing a lot to remedy geographical imbalances in our economy, and I join them in supporting the UK-wide levelling up agenda. Although we seek to support the continued growth of co-operatives, we should remain mindful of the core and foundation principles by which co-operatives operate. I acknowledge the intention of the Bill to protect the mutual status of co-operatives while allowing access to new routes of capital, with environmental parameters as to how that capital is used; however, the autonomy and democracy contained within a co-operative is one of its core strengths and appeals, and I feel that much more detail is required to explain how, in practice, many of the Bill’s ideals will function without undermining those values. To me, there remain questions of compatibility between the ability of members to vote and the demands of investors parting with their money.
First, I believe that co-operatives would need to state in the clearest of terms how they intend to use the capital to attract the right mission-minded investors in the first place. That is especially important when considering that the Government have already increased the capital limit that can be raised from members from £20,000 to £100,000, as several hon. Members mentioned earlier. If we are talking about an ambition to attract investments greater than £100,000, investors will almost certainly demand a high level of detail in advance. In practice, it could be difficult for co-operatives to reach a democratic consensus on that detail. I worry that the uncertainty might be off-putting for some types of investors, and indeed the amount of money that the Bill intends to attract.
I also wonder about the autonomy of a co-operative after receiving such substantial levels of investment. One reason for the £100,000 limit on individual membership capital is so that no single member can command undue influence as a result of their financial contribution. I think it is naive to believe that investors will have no demands or will not lobby the membership to vote in certain directions, and would be satisfied paying into a co-operative—even a community benefit society—that they were otherwise not previously a member of, even with the other benefits that membership brings. That last point is especially true when shareholders only entitlement is, to quote the Bill,
“the general level of compensation” otherwise afforded to members.
I also fail to see how investors will be enticed by the ability to redeem their shares for only the nominal value of the investment, as set out in the Bill. If individual retail investors or existing co-operative members seek to buy green shares, there is the potential that the risk of the instruments could be underestimated or understated. It appears from the Bill that there is no ability to withdraw their capital, counter to the usual way membership capital is treated in a co-operative.
That sort of risk, even generated from a well-intended scheme, resonates strongly with me because in Nottinghamshire we have recently had a huge eye-opener to how schemes set up with the greatest of intentions can go horribly wrong if the right risk management and governance is not put in place. I am referring to the, now failed, Robin Hood Energy company, which was set up by Nottingham City Council as a not-for-profit company to deliver affordable energy in a sustainable way to people living in fuel poverty.
That is a highly commendable aim, but the company’s structure meant that it did not have to pay dividends to shareholders, and it could use its savings to universally reduce the cost of energy to its customers. It promised average annual savings of £237— all very good aims, but throughout its operation the firm was reported to have admitted that the scheme did not provide value for money, and that dozens of cheaper tariffs existed elsewhere in the private sector.