The referendum on whether or not the UK should leave the European Union takes place on 23 June. We asked a range of representatives from the co-op movement about how they think co-operatives would be affected by a Brexit. In this article, we hear from the energy and mutual sectors, as well as a co-operative legal expert.
The view from: the energy sector
Emma Bridge, chief executive of Community Energy England
My personal feeling is that it will be better for community energy if we stay in the European Union.
Many groups are looking to EU funding to help them to test new models and we have long looked to Europe for good examples of how to do community energy.
The UK has no long-term, sustainable vision or policy for energy and is not, in practice, supportive of renewable energy
as can be evidenced by the last 12 months of policy making. Even regarding energy efficiency there is no long-term support in place.
CEE has just joined REScoop, the European federation of renewable energy co-ops. We think we are stronger if we join together and there are opportunities to influence the new EU Renewable Energy Directive.
But EU directives had also caused the community energy sector some problems and there are some cons from association with the EU, such as complicated EU State Aid rules, which take a very long time to make, and minimum import prices of solar panels.
The view from: mutuals
Peter Hunt, chief executive, Mutuo
In an increasingly interdependent world, it does not make sense to walk away from the ability to co-operate with our nearest European neighbours.
The standards for regulating financial services, for instance will still be made at a European level, so we need to ensure we are part of the decision making process.
As an international business, Mutuo understands the real benefits of sharing knowledge with our EU colleagues. In the last six months we have operated in seven different EU countries; the shared business rules of the EU mean that we can trade with co-operatives and mutuals in any one of 28 different countries. Leaving will destroy the opportunity to co-operate.
Mutual insurers in the UK grew rapidly in the industrial revolution to serve local communities and trades, and they continue to work as part of those communities today.
The members of our mutuals all live in the UK, and mutuals employ all their staff here, pay their taxes here, and invest their assets predominantly in companies, government gilts and property in the UK. Regardless of the result in the June referendum, with a focus solely on serving UK consumers, mutual insurers are unlikely to change a business model that has enabled them to grow more rapidly in recent years than the British insurance industry as a whole.
AFM research shows people trust mutuals more than plcs, so during any uncertainty in the aftermath of the referendum mutuals could see a greater surge in business activity.
If there is a decision to leave the EU, the most apparent impact on most mutuals will be the effect on the wider economy; for example how it affects the investment climate, interest rates and general prosperity.
Regulation is another key issue: in recent years the majority of insurance regulation has emanated from Europe, particularly via Solvency 2, and this has coincided with a time of closer scrutiny and much higher compliance costs.
Much of the UK rulebook will need to be rewritten, though as the UK regulators have actively embraced European rules, and as issues such as consumer protection and effective stewardship are now universally accepted, it is unclear if the tone of regulation would change significantly.
More generally, the nature of mutuality is about people coming together to create shared solutions to common problems, and we expect to continue working with and learning from the experiences of other mutuals, both in the UK and abroad, whatever happens.
The view from: a co-operative legal expert
Ian Snaith, consultant solicitor at DWF LLP
The effects of Brexit on co-operatives as such are tiny.
The EU’s 2004 statement recommending that member states encourage co-operative development would no longer apply here and UK co-ops couldn’t use the European Co-operative Society. That’s a limited effect because the Commission statement is not law and no European Co-operative Societies have been registered in the UK.
The wider consequences of Brexit depend on the trade deals negotiated afterwards. UK trade with the whole world would be affected. Trade terms with the EU, the US, China and all other countries would change unpredictably.
UK businesses would lose the automatic right to recruit workers from other EU countries, set up business there, and sell goods and services there.
Tariffs on UK exports might rise and obstacles be put in place. If a base in the UK no longer guaranteed access to the whole EU market the UK would not be as attractive to firms from outside the EU, such as Japanese car makers.
Eurosceptics argue against the “regulatory burden” imposed by the EU. Workers’ rights to holiday pay, paid maternity and paternity leave, some anti-discrimination laws, and protection for agency workers all stem from EU Law. The “working time” directive limits working hours to an average of 48 hours a week unless the worker agrees to opt out to work longer hours.
All that would all disappear unless a UK government was willing to retain or improve them. Is that likely after a right wing victory on Brexit against those “regulatory burdens”? British farmers would also lose billions in EU subsidies unless the UK government stumped up. The biggest problem if the referendum resulted in a vote for Brexit would be uncertainty about the future.
Sterling and the markets would be unstable. Government resources would be tied up for at least five years in the nightmare task of trying to unravel 40 years of legal and economic integration with new trade deals.
Would government do much else in that time?
- You can find all of our Brexit and co-ops coverage here.
In this article
- Association of Financial Mutuals
- Business models
- Community Energy England
- consultant solicitor
- DWF LLP
- Emma Bridge
- energy efficiency
- energy sector
- European Union
- Financial services
- Ian Snaith
- insurance industry
- Martin Shaw
- Peter Hunt
- Renewable energy
- The Co-operative Group
- UK Government
- United Kingdom
- United Kingdom
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