108: Community benefit funds: how can we enhance their impact?
What is good practice for setting up and operating community benefit funds? And how do we make sure communities really do properly benefit from renewable energy (and other) projects?
In this episode, Fraser gets the low-down from Matt and Jen on a new framework from the Strathclyde Institute for Sustainable Communities that explores exactly these questions.
The framework is called "Guiding Principles and Actions for Enhancing Community Benefits from Community Benefit Funds".
Links:
Download the framework itself - Guiding Principles and Actions for Enhancing Community Benefits from Community Benefit Funds.
Some past Local Zero episodes on connecting themes:
Episode 93 – Community benefit funds – what does success look like?
Transcript
Jen: Hello, and welcome to Local Zero. I'm Jen Roberts.
Matt: And I'm Matt Hannon.
Fraser: And I'm Fraser Stewart.
Matt: And in this episode, we're digging into community benefit funds, off the back of a recent publication authored by yours truly, along with Jen and several of our colleagues at the Strathclyde Institute for Sustainable Communities and Foundation Scotland.
Jen: We published a framework titled “Guiding Principles and Actions for Enhancing Community Benefits from Community Benefit Funds”. It was a lot of work and we are really delighted to have it out in the world.
Matt: And Fraser will be interrogating us about the framework a little later, in his best Paxman style.
Fraser: Absolutely. Matt, you will live to regret this.
Matt: A quick reminder to follow Local Zero on LinkedIn to stay up-to-date with all our news and to share your feedback and suggestions with us. Just search for Local Zero podcast.
Jen: And wherever you listen, remember to subscribe so you never miss an episode.
Fraser: So, today's episode is all about community benefit funds. Now, dedicated listeners will know that we've discussed this in previous episodes, most recently, episode 93: Community Benefit Funds – What Does Success Look Like? And also episode 46 – please do go back and have a listen, but we are refocused, we’re, we’re reexamining community benefit funds and there's, there's good reason for doing so. Matt and Jen you've, you've published a very exciting new framework to help guide community benefit funds. Can you tell us a bit more about it?
Matt: We can. Yep. So early April, just before our Easter break, we frantically pushed out a publication, which was titled “Guiding Principles and Actions for Enhancing Community Benefits from Community Benefit Funds”. What is this about? Well in short, it's about exploring what good practice – or more simply, what good looks like – in terms of establishing, uh, and operating community benefit funds.
Um, and mostly, or certainly traditionally, these have been applied to renewable energy projects, not leased on-shore wind and hydro electricity in Scotland. Um, but they're becoming much more commonly applied to other types of projects. But Fraser, I hear you cry “what on earth is a community benefit fund?” And for the uninitiated, of course you should go and listen to our episode 93 that you've just referenced, but happy to tackle that, because it can mean different things to different people.
Um, so community benefits is often used, shorthand as just money, right? Money that is provided to communities within a particular proximity to a project, but a community benefit fund, if we can maybe break it down a little bit further, is, is, is really a, a voluntary fund that a project developer or owner donates into, and it's based on a pre-agreed package of community benefits.
Now these can take the form of money, these can be annual payments, typically aligned and proportional to the size of the renewable energy project, if that's what it's for. But also they can take in-kind form. So that could be a share of the ownership, for instance.
Jen: I think it's probably worth adding in here, as well – so we, we published these guiding principles and actions and we did fiddle around with the name of the, the report to, to make the, the framework distinct from previous publications.
'Cause actually there is already the Scottish Government's Good Practice Principles or the GPP’s, to those working in the, in the field. They were first published over a decade ago, but were then re-updated, or otherwise updated, um, in 2019, um, and alongside the Community Benefit Toolkit published by Local Energy Scotland in, in 2019 as well.
But those resources are brilliant. They offer really great guidance on how to you know, best structure and govern CBFs to generate community benefit. But from our work on a slightly, you know, related but different project, we could see that that, six years on from those publications, there was a real wealth of experience that wasn't necessarily captured by those resources.
So we really just saw the opportunity to review and update the best practice guidance that built on empirical evidence of what works on the ground from a range of different stakeholder perspectives. What we actually didn't quite know at the time when, when applying for funding to do this work, was that Scottish Government were planning on updating their own Good Practice Principles.
Um, but that's great because it felt like we were really on the front foot in terms of submitting evidence to that consultation, because we’d come up with these externally ratified guiding principles and actions, um, which I would say rather than frantically and wildly we published – Matt, we strategically and very calmly published ahead of the Easter break.
Matt: Of course, yes, methodically, I like to say. Yeah, no so, you know, the consultation comes out and so we're in, in a position, uh, hopefully to influence policy through this report. But I don't know I mean, Fraser, I know through Regen, you know, you've got a big focus on community benefits and this really is a watch word I think at the moment. I before we go into the, the bones of the meat of the report, it's worth setting the scene here.
Why, for example, is Scottish Government so interested in, uh, updating these good practice principles? Why is UK Government developing its own guidance around benefits, community benefits from transmission networks? And I think, you know, it's about setting the scene around the, the landscape around this.
So the emphasis is on not only what could net zero do for me in the future – i.e. hopefully avoid catastrophic anthropogenic climate change – but what can it do for me today and tomorrow? So in that sort of short-term perspective. And that's set against this broader context of, well, there's gonna be a lot more change at the hands of net zero.
If you just take some of the government's plans from Clean Power 2030, the Clean Power Plan, the plans there, the kind of targets that they're throwing out there, within the next five years, is to double onshore wind, double solar, double offshore. And with all of that, you're gonna have a lot more transmission and you're gonna have a lot more battery storage.
There's, there's a lot that's gonna get built. And I think the landscape – particularly rural, but also urban – is going to change. Now, in my view, it’s, we have to roll this infrastructure out. We have to promote low-carbon electrification if we are going to realise those carbon budgets and to meet our net zero targets.
But I think it is a political reality that not only politicians but also industrialists and all of us are having to face, it's how do we create and then redistribute benefits from this infrastructure? And community benefit funds right now are one, not the only, but one of the big games in town around doing this.
Fraser: Mm-hmm. I think that's very, very important context, um, which sort of subverts the next question, which is exactly that: why now? Why is it so important in this context of, of clean power, when so much – and you know, this is largely of the government's own doing – so much of their agenda just now is “we will deliver a clean power system and you will feel the benefit of that, whether on your bills, whether in your, in your community”.
So that point, that community benefits, it's arguably the quickest way to realise that, to, to deliver that, at least in the, in the short term, it's all these things are, are coming down the line. So it, it sounds like it was somewhat serendipitous, in terms of when you got the funding, the consultations that are, that are all underway.
Was the framework itself that you've been working on, was this shaped – as the, as the work that you did progressed, as the research you conducted, progressed – was it shaped by this political context?
Matt: Well, I guess the origin of any piece of research is a really interesting one, and sometimes it, it can just be a chat that you have, you know, serendipitously over a coffee or you bump into somebody at a conference or it's a tweet – or not a tweet anymore, whatever you call it, a toot or a blood or, I dunno what they are – um, something somebody just spits out on the internet somewhere. But I, I certainly noticed, and Jen and I have started to dig into the data, I let Jen speak to some of the, the, the numbers in a moment.
But you know, this, this progression, these trends in terms of community benefit funds, they're just really gaining momentum. It's not just the total payments per year, it's the the new, the additional community benefit packages that are coming online. It's the per megawatt price that's being paid, and it's also the breadth, the variety of projects that are coming under this CBF umbrella. So for me, it's always about seeing what the current issue is and where that trend is going. This was always a big one on the horizon.
Jen: I will answer your question in a moment Fraser, but I think also it's maybe our listeners might be interested to hear about the kind of journey behind a, a piece of work like this, or behind a funding proposal, in that these ideas, these conversations that we're having, discussions that first started many years ago, for myself, probably back in 2013 when I was working on citizens juries on onshore wind farm development in Scotland. Um, it was very fascinating to me even working in communities that, that had a community benefit fund associated with onshore wind.
First of all, that the jurors were really grappling with the idea of why is it just onshore wind that has these sorts of guidelines for how much money should go to towards a community? But also they were having questions around, you know – I didn't, there were people in that community who had no idea about these community benefit funds. So there was an issue there on who really knows about them, who really gets to access them?
Matt: And who governs them.
Jen: Yeah. Well, yeah. So we, we can, we can dig into that, um, for sure. 'Cause actually the, the complexities of these arrangements has been really quite astonishing um, for, for Matt and myself and the research team to really learn about. And I, I think also it stems from some previous work which we’ve flagged in carbon offsetting and, and nature-based solutions and community benefits that could be realised from those.
So there was a project probably four or five years ago, maybe four years ago, Matt, um, around that. And so actually there's a bit of a, there's a slow growing, and then there’s something happens and there's an opportunity to coalesce and you go for it. And in this case, there's probably two or three different projects that were, were part of this realisation that actually we can do something here to contribute.
And to, some of that was the research findings and the outputs from those projects. And some of it was the fact that, actually, we've now seen statements around community benefit funds. So monies are most tangible, easiest in a way thing to deliver to local communities relating to not just onshore renewables and offshore renewables, but also, um, as we mentioned, nature-based solutions and also transmission infrastructure.
So there's been really interesting questions around how you do those sorts of community benefits for these different sorts of infrastructures. And a really great way to answer that question is to say, well, how do you do it really well for the existing sorts of projects that we have in Scotland? If I may, I thought I'd just also share a bit about the, the size of the prize here. We ha-, are seeing significant sums of money being invested into Scottish communities or communities in Scotland.
In 2024, I think we had £30.7 million of community benefit packages paid to communities in Scotland via these community benefit fund agreements across, I think, nearly 300 projects. So this is, this is already, I wanna say big business, except it's not business, right? It's already big. And like Matt’s, uh, touched on, we’re seeing, um, this kind of growing further down the line.
Matt: And we're gonna get into what we're suggesting in a minute, but I think one thing we haven't emphasised is this money, these £30 million per annum, and this is going to grow dramatically. I mean, nobody's actually put their finger on a sum yet, but anecdotally, I'm talking, you know, people are suggesting it, in the know, suggesting it could double, triple, we could even be looking at hundreds of millions of pounds in the not too distant, right?
The importance of this is growing. But these monies are meant to be governed by communities for communities. Yes, there are strings attached and that depends on the community benefit agreement that underpins it with, with the developer and the community. But it is meant to be governed, money governed for the community by the community, and distributed for community purposes.
So it's not communities bidding into a pot managed by local government or regional government, national government. It's not communities bidding into a pot managed by, uh, you know, a network company or energy supplier. Although the monies are actually gonna come from many of the project developer owners. It’s communities bidding into community pots. And that's where I think this is a, really quite different from other forms of redistribution of value amongst communities that, that we're maybe more familiar with.
Fraser: I think that's a nice, a nice segue Matt in terms of, in terms of what community benefit funds should do or, or do in practice. I guess what is, what is your framework about? It's very, it very much gets into these principles, right? The governance, the, the distribution. So, so tell us a bit more for clarity, what's actually an in the framework that you've published?
Matt: So, Fraser, it’s a good question. As I said, in short, it's about outlining what good practice looks like in terms of creating and redistributing benefits from projects, particularly low-carbon projects. But it could actually apply to anything, this framework, um – that could be railway or airport or, or, or a naval port. And this has been built from the perspective of the communities and practitioners who are directly involved in managing the community benefit fund.
So these are the communities and the intermediaries and the community councillors who have their hands on establishing and managing these CBFs. So we present four guiding principles, and to enact these, we have presented 13 associated actions. Uh, and each of these actions are mapped against the four core stages of the CBF lifecycle. So that's the initiate phase, the design phase, the operate phase, and the evaluate phase. And then in, in effect, that then comes back in a sort of cycle.
You can come back from the evaluate phase into any of the other earlier phases. So the final point to say is we flag the value of these principles and actions in the report. We also identify any potential barriers to taking these actions, and a whole host of proposed solutions to overcome these. So that's really with an emphasis on what government, policy makers, what industry, what communities can do, and other intermediaries to support that. And finally, we also flag existing good practice guidance that is already out there – and there's plenty of it.
Fraser: I'm interested in this principle side of it because I think this is, this is something that we maybe don't wrestle with enough. We think a lot about, or, or certainly some of the previous research thinks a lot about what's the right number per megawatt, what is the, the right amount of community benefit? But I think these, these principles, it's certainly something that I, I found really interesting. So, Jen, what are the the core principles for, for community benefit funds?
Jen: Yeah, so there are four guiding principles. I won't go through each action, but I can outline the principles. First, principle A is that the CBF needs to be grounded in a long-term, flexible funding strategy that reflects a community's context and priorities. Principle B is that the community benefit fund should be transparent, accountable, representative, and professional.
Principle C is that the CBF should be targeted to support community wealth building. And then D is that the CBF should be evaluated against its community impact. So those are the four. If I went through the 13 actions, I'd be here forever and I'd, I'd stumble all over all my words, I'm sure.
Um, but those are four, um, overarching principles and actually I think, I think it's probably worth adding that academics are very good at pointing out flaws and problems and evaluating and critiquing. We're not so good at proposing solutions – sort of just saying “this is how we think it should be done".
This is also a sort of a step away from what I would say the academic comfort zone is in that this is a, a – we are going out there and just putting out there, "this is from what we found, how we think CBFs should be done to ensure really, um, maximal benefit to the community”. So it's, we're doing something a bit different here as well.
Fraser: Worth, worth adding to that, I suppose, Jen, that you didn't just pluck it out of thin air, the principles and actions – there was engagement, great engagement with relevant people. Not, not least Foundation Scotland, but I know a lot of others were involved in it as well. But I, I, I'm interested, I know you said you didn't want to talk about all the actions, but a couple of those, I'm really interested to dig into. Community wealth building you know from the last episode – we're gonna come back to that for sure.
But the, the first principle I think is a really interesting one. This is sort of the strategic ambitions of communities. Who decides what those ambitions are? How do you set those and how do you lay those as the foundation to then receive and administer benefit funds that support them?
Matt: How long have you got Fraser? Um…
Fraser: I, I'm here all day.
Matt: So I think what was interesting is going through this, and I should say that this kind of sister report a publication to, this is a case study of Foundation Scotland, who one of the authors on this. But I guess in many respects, these guiding principles and actions fell out of, of a case study we're doing, uh, of them and, and the work, the process that they take to support communities to deliver these CBFs.
And what was obvious is, you know, as part of their process and more generally in the sector, you can't establish a benefit fund and identify a set of priorities without asking the question, you know, of a community: “what do you want and why?” And that isn't just today, but you know, these projects, these, if you take an on onshore wind farm, it can last 20, 25 years, and that's without it being repowered.
It could then be – and we're seeing this happening a lot and I know you'll be very familiar with this – but then you know, these turbines can be replaced for even bigger turbines and extend another 20, 25 years. You're asking kind of almost a sort of generational question, of what would you like your community to be in a few decades time?
And so there's a whole host of planning, uh, out there. I think the one that kept on coming up time and time again in the Scottish context was community action plans. But you also have local area plans, local place plans. There’s a myriad of different planning tools. These are led often by different actors.
Some are the communities in the driving seat, others the local authority maybe is in the driving seat. They do talk to each other a little bit, and it's something that we're trying to demystify at the moment. Jen and I are working hard at trying to understand all these different plans and how they segue into one another or don't.
But crucially, you can't do a CBF well – I think that's what our, our evidence is pointing at – you can't do it well unless you ask that question, and then you bring some evidence to bear against that plan. So that plan is critical. The CBF is simply a tool to help deliver that vision and execute that plan.
Jen: But it's worth noting that the plan isn't always there.
Matt: Yes.
Jen: So I think the reason why we have it as a principle A is because we were hearing from practitioners and communities that the plans don't always exist. And they may not be up to date. And so a really key step is to have that plan because what, without it, what happens is you'll have a CBF where the spend is happening against kind of, you know, we're not criticising the projects that they, that the fund is going towards.
It's just there isn't a strategic vision that this fund is then, or the spend is going to support. So there isn't a kind of, a collective direction of travel. Um, so there are plenty of communities which don't have those local, long-term visions for their place. Um, at least they don't have it articulated in the form of, uh, of a plan. There might be elements of that plan. So there was discussion in, and we, we put in some of these actions as well, around how to ensure that you have a plan, even prior to a CBF being drawn up.
Matt: It's also about having a long-term and flexible approach to this. So we acknowledge that things change, right? It's not just the community that will evolve over time. And I, I talk about these timescales: 20, 30, 40, 50 years. A lot can change. Um, but also the context around that community. So we might be talking about, if we're looking at renewables, it might be like we're about to go into a period of change where there's gonna be a much bigger pressure on these communities to host new infrastructure.
Much more so than we've, we've experienced thus far, I would say. Um, but also maybe a host of other different types of projects. And then you've got other broader sort of macro pressures, whether it be, you know, socioeconomic trends, whether it's cost of living or, and what have you. So, those change the priorities. It changes the opportunities, but also the challenges facing a community, and the CBF needs to be reflective of that and and responsive to those.
Fraser: Terrible answers, slippery political answers, but that's okay. The audience will be used to it by now. So if we're thinking about setting a long-term vision for a community against which funding can be, can be allocated, how do you do that in a way that isn't just dominated by very active community voices in a way that is genuinely sort of, at the very least open and accessible to different parts of the community?
The, the critique goes – unfairly, I would argue – but the critique often goes, you know, community benefit funds, even community energy: it's you use the money, you fix the church roof, community councillors decide how it gets spent, and that's kind of the end of it. It sounds like you see a much more transformational role for community benefit funding, but I imagine it's contingent on getting more views in, more democratic governance of how those are spent. So the question – a very long way of saying: how do you ensure that the governance process, the decision making is open, accessible, reflective of – air quotes – community need?
Jen: I think one of the very, very first steps is about the capacity within that community. Um, and this isn't to critique the structures that are already within the community, but it is to say part of the uh, actions that we lay out is also understanding, um, how to support a community to have that capacity, whether it's time or staff or the capability in terms of experience or knowledge, to undertake such a, an exercise in long, like future visioning for their community.
And the, the capacity piece and the capability piece is also about who is in that room to set that vision. Um, and the kind of functionality and rep-, I'm always cautious to say representativeness when we're talking about potentially quite small communities, um, but really about the breadth of voices within that decision making, and when we are talking about long-term planning, we also need to think about the intergenerational aspect here. So which voices are we bringing into that space?
We don't dig into that in very specific detail in the overarching kind of principles, uh, guiding principles and actions. Um, but we do, you can you can see it's sometimes in the barriers to actions and the potential solutions, you'll see this quite a lot about this empowering, supporting capacity supporting capability, and a key aspect of that is bringing in diversity of voices and participatory approaches.
Matt: Maybe sounds like quite an exclusive point, but these are, these are really difficult things to establish and govern. You know, there's big sums of money. This has to be done methodically and it, there has to be, you know, a sense of, uh, you know, fiscal responsibility associated with this. And it, and it has to also be done sensitively. So, you know, it's seen as legitimate. It, there's a whole lot of soft and hard skills that are needed to do this.
It might be in that community there's plenty of capability, but a lack of capacity. So it might be that people simply don't have the time or the energy or whatever it might be, that there may be a whole host of other responsibilities. Flip, reverse that. Okay. You could actually have a tremendous amount of capacity within a given community, but maybe a lack of some of the, the hard and soft skills to, to be able to do this.
Now, this is where I think some of the intermediaries step in. Co-author Rachel Searle, of the report – member of Foundation Scotland – they're kind of essentially as an intermediary, set up to help communities – and crucially developers, project developers – to, to formulate these CBFs and to establish an agreement between both parties and to help basically backfill many of the, of, of these shortcomings in terms of capability and capacity to get this thing off, up off the ground, and to manage it over the long term.
So, you can't, I think, and going back to your original question, how do you get us a more representative representation, uh, in terms of the governance of these? Well, you need to make sure the capacity and capability is there, and there are people there willing to help. Having said that, the final point I think we do make clear here is that you do, and Jen alluded to it, you do need mechanisms in place to make sure this is inclusive.
So if somebody does step forward and says “I want to help. I have, uh, I have something to offer”. Um, uh, or even if it's as simple as feedback on this, you know, it's maybe not necessarily grabbing the thing and running with it, but actually just saying, “you know, I have some feedback to share about how this is being managed and how the money's being spent”, that there are channels and platforms available.
And we, we particularly make the point about marginalised and vulnerable groups. We also make the point about the youth, because they, that was something that came out time and time again from the workshops was the youth are often, um, underrepresented on, on some of these, these decision-making panels.
Jen: And actually these points that we're talking about are mostly relating to principle B. Like, it's only really from understanding communities past and current, can you then look into the future. Um, so without that kind of background knowledge of the community's challenges, priorities, values, cultural history, heritage, then we won't also then know, for example, if you then do a community mapping exercise as part of the actions in relating to principle B, how would you know what's needed for community makeup to be in some way, representative? So these, these principles are distinct. The actions are distinct, but they do connect onto each other.
Fraser: We wouldn't necessarily work through all the principles individually, but there's a point in principle B, which I think is really interesting, and there's really interesting content around it. And it's this point around accountability. So we have developers, ah, sort of delivering community benefits from their operations.
You have the community benefit fund, governance structure, organisation receiving that. Then you have a bit of a, in an ideal world, a, a nice, inclusive democratic decision making structure. Who is accountable to who and for what within this community benefit funding framework?
Matt: Oh, okay. Um, well, maybe if I, I try and tackle that initially. I think part of the accountability that became clear is that it's important to, for the communities to know – and not just communities, other interested parties, but particularly communities – to know where and how the money's been spent.
And so part of that accountability is making transparent how those monies have been spent. We have a community benefits register in Scotland, hosted by Local Energy Scotland. Um, Jen and I, uh, for our sins are digging through some of the data there. She pointed out earlier there's about 300 projects on there.
Apparently that's not all of them. There's, there's certainly m more uh, projects out there that aren't covered, and actually the data around that is relatively thin on the ground in terms of, well, particularly how that money's been spent. It tells you roughly how much money's going into these things if you do a few basic equations, but not how that money has been spent.
You then, to get that kind of information, you have to go to the developers will often run reports where they basically say, “look, this is all the money we pay into these CBFs and this is where it goes”. So they do a kind of a bird's eye view of, uh, kind of crunching the data and then throw a number of case study vignettes where you then hear from community X about project Y and the benefits Z.
You can't have accountability without data. Right? Evidence calls people to account. Ultimately, it is it is the community responsible for governing the fund who must be held to account. So the decisions, it's not always the case – sometimes these communities can delegate the decision making to a third party, but more often than not, we find that it is a community making the decisions.
And so then they need to rationalise those decisions and provide a record of those. And if those are contested through feedback and what have you, they can stand up and say, “well, we awarded these monies to these projects for these reasons”. So, you know, in a simple way, community is accountable to the community, in most instances.
Jen: There's definitely a role for innovation here around reducing the burden. Um, so smart ways of doing this to reduce the burden on the community to, to reduce the burden on the intermediaries. To make this easy. To make this a standard.
Matt: Yeah.
Jen: So that we have this data, and so you can see who's on the decision making board, so you can see, so you can – that, that currently is very hidden and it was a very fascinating part of the work, uh, that we've been doing also with Foundation Scotland, but with the broader stakeholders as well, is, is really quite a lot of this know-how, is word of mouth, it's held in people's experience.
And that's really, really valuable. I'm not in any way, you know, making that any less valuable. That's really, really important. Um, but there is an element here of, of this needs to be, to be accountable this needs to be documented, this needs to be evidence transparently. And at the moment it's, it's really not very transparent. So we, I'd say that really gets to the heart of your question is, is, is about the transparency. When you talk about accountability, we're talking about transparency here.
Matt: But, but where, where there is transparency – and again, I, I, I I guess I'm flagging Foundation Scotland again because we're so close to the work that they've been doing – but they will often be commissioned by communities to provide review reports where they will then say – and they're not the only show in town in this regard, and, uh, review reports will be generated by other funds and, and parties – but they might produce a report that looks back at the last three years and says, “right, what did we spend the money on and what did that do?" And then that, in an ideal world, that then feeds into, well, what do we do next?
You know, what did it work? Not only what was the outcome, but did the process to the outcome, did that journey towards that end game and that end result work, and then that cycle I talked about before, these four steps, that evaluation piece then feeds back into, right, can we do this better? Can we do this CBF better for our community?
Jen: I should say to the listeners, we have worked on these, we've iterated these so many times. So, to the point that we really, we couldn't see the wood for the trees, uh, even though we kept our clearest vision, but actually even just discussing them now. This is the, the point of these sorts of frameworks: they're kind of a living document.
Fraser: I guess the, the lessons you, you stressed earlier in the conversation, both of you, Jen and Matt stressed, that this isn't just about – necessarily – just about onshore offshore renewables, which naturally is a big focus and, we'll, we'll, we'll come back to, we have a few more questions on that, but there are lessons here for all different kinds of infrastructure and, and one of the the big topics for community benefit right now is transmission infrastructure: pylons, substations, big overhead lines. UK Government in particular, made an announcement not too long ago that they were going to send annual payments directly to people who lived within 500 meters of new transmission lines.
Uh, which, you know, we'll, we'll maybe get into how we actually feel about that in a bit, but I want to know to what extent you think the principles that you've developed here, the actions you've developed here, can be translated onto something like transmission. Can it inform the current debate around this?
Jen: The principles and actions are kind of predicated on the idea that there is actually a revenue, like a, there's a profit making from the company, and the idea is you're sharing – the company, the developer or the owner, the asset owner – is sharing some of that profit with the local community. And we can, we won't touch that, that hornets nest of who is the local community?
Fraser: Define it, Jen. Define it.
Jen: I'll not be put in a box. Um, yeah, but I think that that's the thing is that it's a, it's a revenue making. And so the, the question is when you have infrastructure that is maybe not revenue making, how many of our, our principles and actions are are translatable?
Matt: Yeah. And I, I, I think I haven't fully formed an answer on this, but it definitely is keeping me awake at night. So I think, let me have a pop. I think where I think transmission is different. You've got a transmission line – and you, you mentioned one earlier Fraser we'll maybe hear a little bit more about that, but in your neck of the woods.
Uh, but these things can be hundreds and hundreds of miles long. And so how many communities are, are impacted and, and does that, does the number of communities, just the sheer complexity of bringing in communities that are, you know, this long string that's sort of laced across the whole of Scotland or Wales or England, how do you reconcile that?
Because I guess one way of doing that is cutting the fund up into lots of smaller funds. Right? And you have these sub-funds and this is definitely something that that happens. Uh, but it's just adding another layer of bureaucracy and complexity, which has got to be managed somewhere.
Fraser: But I think in principle, there's a more practical reality that sits alongside this, and that is the transmission networks themselves are working with communities to deliver community benefit funds from new infrastructure, right? They see this as something that's worth pursuing. Some of the networks, um, SSEN have a big social and economic legacy programme where they're working with communities to support house building in areas where, you know, housing is, housing is short.
I live in the northeast of Scotland. I'm, I'm on one of the, the Tealing-Kintore line. I'm part of the, I get letters about the engagements and stuff, uh, fairly regularly. And the fastest growing Facebook group on our sort of local Forfar online community is “Stop the Pylons”, and it's growing rapidly.
There are, some days, dozens of, of new members joining it – people getting really, really head up about this idea, in a way that community benefit – I say community benefit payments – bill payer payments simply isn't gonna, gonna deal with. It, it comes off as a bit of a bribe. And it might work for some people, you know, some people maybe just want to see cheaper bills 'cause infrastructure's going up.
It's a very quick, direct link that you can make between these two things happening. But broadly speaking, some of that opposition runs a lot deeper, around a lack or problematic engagement, in some cases. It, it spawns from people feeling like a transition is happening to them. They have very little say over it and their local environment, which is objectively being affected by it.
Some people just get pissed off at the idea of anything being built and that’s – they will always exist; that's fine. But the growing sort of resentment to it, I worry about. I'd say all this to, I guess pull it back to the Community Benefit Fund theme, is: my feeling has always been that if you have something more communal, whether that's a benefit fund, as in a communal community benefit fund, or some stake in ownership, which is a different conversation for transmission, but we can come back to it on renewables, you do something that's a bit more meaningful, a bit more collaborative, and that hands off some of the power over the transition to other people. That feels more meaningful to me, but I'm interested to hear how these things played out through your engagements.
Matt: As you say, it's not just the benefit, however you want to frame that, but actually – and part of, well, one of those benefits is, is the agency and the control. I think there's something here as well – and it goes back to your point earlier about community wealth building and that my worry that the, the discussion at the moment from, or at least the, um, preferred line of solution from UK Government is payments to, to bill payers – is that this doesn't lend itself to community wealth building.
I, I talked about, you know, it's, it's going into bill payers’ pockets and not to the communities. But if a community benefit fund managed properly should be investing in community wealth building, what does this mean? Well, it means a number of things, but one of them is about plural ownership of the economy, and that's about disaggregating or, or, or diluting that concentration of ownership from the few to the many.
And also for communities, it's about investing in a community-owned asset that generates revenue for the community that is controlled by the community. So in an ideal world, that CBF invests in something that, when that CBF, that wind farm, stops existing, let's say we go forward a hundred, 200 years time, there's, there's something else there that's owned by the community.
It's left that legacy. Um, and I just think it can lead you to a totally different place, depending on which route – it's kind of, you know, the real crossroads here.
Jen: I think we're already seeing evidence of that, Matt, as well, in that we're not just looking a hundred or 200 years or, you know, even across the design life of a wind farm; we are seeing that the communities that have access to community benefit fund packages have a sort of capital.
They have, they have a community benefit fund that they're able to, um – it becomes like a positive feedback into what they can then access and the kind of, the mobilisation of that community. Um, so I think there's that, there's that angle already being evidenced across, um, across – and we, we've been really, we are, listeners, we're really curious to, to look at where these payments have been made and the localities that have say a development trust organisation.
You know, within the, because 'cause I think from the, the, the evidence that we've been gathering, it looks like that what you then could have is communities that have community benefit funds then on a sort of an equal footing with communities that don't have access to those funds, 'cause they don't have those resource nearby or they haven't been developed.
Um, I also wanted to add in here that simply having a community benefit fund doesn't in any way make the community necessarily want that project any more. And I think this is where it's really important to think about the changing practices. Like, we've got 20 years of, of practice, or just over that, in Scotland, around community benefit funds and how they get, um, designed and governed, evaluated has really changed in that time.
And the, there is that real emphasis on the need to update and allow for flexible funding, otherwise that that fund isn't being governed in a way that then reflects the current times, and also the value of that fund isn't increasing with inflation, for example. So there are, there are really important things there, but I think it's worth just flagging that a payment in itself – I remember some earlier work done by a colleague or collaborator, Claire Haggett over at Edinburgh University, where the payments weren't in any way particularly well received. Actually, what the communities were expressing was that they would rather be heard: they’d rather have a better process than have payments.
Now, that work was done a while ago. I think it's really interesting thinking about how the payments are now governed, managed, and decided upon, evidenced. Um, but it's not to say that a community benefit fund in any way necessarily makes a project more desirable. What there could be is then tangible investment, community wealth building.
It goes with that agenda. But I think it, I mean for the listeners that are super, super interested, then we can point you back to the episode, um, that we, we flagged at the beginning, but there are ring fences around what communities can spend this money on.
Matt: So just three and a half percent of, of the projects – I think it was 10 out of 283, um, provided…
Jen: In the registry. In the registry.
Matt: In the registry, quite right.
Jen: Not all the projects.
Matt: Provided some form of shared ownership as one of the in-kind benefits. Now, so this is a whole ‘nother area that we need to get into, because shared ownership is something that Labour Government has pushing strongly on. It's been something that Scottish and Welsh Governments have have pushed strongly on.
There seems to be some strong alignment around this, but if I remember correctly Fraser, this is something that you've dug into in the past, and what we didn't uncover in this publication, but I think we need to in the next phase of research, is what's stopping this? Why are developers not offering this? But it's possible that communities aren't requesting this. So what's going on?
Jen: Fraser, what's your hot take?
Fraser: My hot take presumably, you mean my correct take?
Jen: Absolutely.
Fraser: The, the take on this is that shared ownership, and now this is con-, we have conversations with developers very often as well as communities, as well as government, about shared ownership specifically, and it's something that everyone kind of accepts, will happen to, to some degree going forward, needs to happen to some degree and is objectively a good thing, right?
Coming from your place of community wealth building, coming from the amount of benefit on offer through a shared ownership arrangement, not just economically, but also the involvement in owning and governing a renewable project, or being part of that. The benefit that then has to community in terms of project management skills, in terms of navigating funding and, and different issues around this is, can be quite, uh, substantial.
The blocker to it just now is that there's, as we hear it at least, is that there's not an awful lot of clarity around the process. Because it's not been demonstrated in an awful lot of cases in the UK, developers are sceptical. They, they're not sure how to approach it, how to go about it, what it actually means in practice.
For communities, it's largely, it's largely the same thing, right? If you think you need to have capacity to engage in the governance of a community benefit fund where the developer just says, “here's a bunch of cash. You guys decide how to spend it". The capacity that you need in a community to negotiate what can be quite complex legal agreements with developers to take ownership of what can be quite complex and expensive project, that's a, that's a procedural challenge that we hear all, all the time
The other side of it is that for communities themself, it's finance. It's how do they raise sort of low enough or no interest finance to be able to, to take an ownership stake on a consistent basis? It's a bit too low, usually, a shared ownership project, particularly for wind, but increasingly for bigger solar projects. The number that they need to do it is too high for grant funding, too low for commercial lenders to, to pay attention to it. This is where we see GB Energy slotting in. But before you come back to me, Matt you try and slip outta this question, I want to flip it straight back to you.
You mentioned community wealth building as being a core principle of this, which as you rightly outline, is the increasing local democratisation of wealth and assets. Why, in that case, are we bothering with community benefits? Why are we not emphasising the need for shared ownership in this case?
Matt: I, I think in, in, in all honesty, many of the issues that you've raised were probably, uh, echoed during those, those workshops. Um, I, I think some of the hesitancy is probably also, I'm not saying this came out at the workshops, but h-, having thought about this long and hard and spoken to various people about this, if a community owns a project or a share of a project, they, they may also still establish a CBF. It isn't just private developers. You, you can have a community-owned project that establishes a community benefit fund.
So in effect, what you would have there is you'd have a community where the community shareholders or however that project is divvied up, and the, the legal vehicle that's been established for that, um, there will be a number of shareholders who will capture the dividends of that, but a share of that revenue may be reserved for a community benefit fund.
So what would happen, it doesn't dispense by providing shared ownership. It doesn't dispense with that administrative burden, oftentimes, of establishing a CBF. So what you end up having is going through all that hassle and pain of shared ownership, and then you are still left with the management of the CBF, so I can imagine that is a headache.
And before I hand over, I also just wanna flag that we've spent an entire episode on shared ownership previously, uh, episode 102, Shared Ownership of Clean Energy Projects: what, how, and why? Two people who are very closely engaged in, in this space, uh, who talk through many of the issues that you've just flagged there as well, Fraser.
Jen: I think the final thing is, is related to that point, um, is one of the actions that we outlined, um, that maps – it's action four – that maps against principle A, um, was that we really emphasised that a CBF should appoint a, a legally incorporated organisation to be responsible for governing and administering those, those funds.
Um, I won't go into all the details of that, but essentially an incorporated organisation allows to basically unlock a lot more opportunities and therefore kind of affects the functionality. But as you can imagine, when you start having complicated words like that, and, uh, it, it is also another level of governance, another level of energy required and capacity within the community.
So we were very careful about thinking about each of these actions and what they, if we are gonna recommend this as a best practice, what does this really mean? You know, or as a guide, a guiding principle, what does this really mean for the community? We don't want to be overburdening the whole sector, including the community members themselves.
But yeah, if we think about community benefit fund or community, uh, co-ownership, then what you've got is just that additional level of, um, upskilling and up-capacity-ing, and then potentially like a, a doub-, a doubling of efforts. So it's not a critique, it's just a hesitation to say, this may not be appropriate in all communities and these guiding principles and actions are designed to be that, that they can become appropriate for all communities. But you can have kind of level up from each of those. Um, which I think co-ownership was, was absolutely on the cards.
Fraser: So we, we have had a bit of a tour of some of the different potential applications of community benefit funds, different technologies, different discussions. One thing that is becoming more apparent, and that we hear about from areas that naturally lend themselves to having lots of wind farms because they're very windy, or increasingly with offshore wind, is that communities are expected to manage quite, often quite big funds sometimes that they simply can't get out the door on an annual basis, right?
So thinking about these bigger funds that are coming down the line, these concentrations of funds where one community might have, have multiple or a region might have multiple. How do you scale? Can these principles scale with the size of, of community benefit funds, in your view, as we start to think about things like offshore wind?
Jen: I think I, if I may start, and then I'm sure Matt will want to jump in. Um, that's a great question. I think that it comes back to the principle A around being kind of grounded in that long-term funding strategy that reflects a community's context and priorities.
Now, there are fantastic examples of different community groups coming together to have a strategic, um, way of spending their collective or in, their individual community benefit funds. So there are really great examples across Scotland of this coming together. Um, so I think in an effect, that kind of regionalising of – that’s, I've just created a whole new word, but I, I think it makes sense.
Matt: It’s good word.
Jen: A regionalising of these community benefit funds is already happening for communities to come together to realise a thing that they want, that this maybe goes beyond their community boundaries.
Matt: Yeah. So I guess we're going full circle. We're kind of going back to the origins of this piece of work, and I remember being at an event, I dunno, two, potentially three years ago, where we were hearing some of the cutting edge solutions around spending these, uh, CBFs.
And part of it was what Jen was saying about sort of scaling this up at a sort of high geographical level, um, and it was, it kind of came out of a frustration that they couldn't get the money out the door and there was a – I'm gonna misquote them potentially – um, they said, there's only so many times you can buy a new uniform for the local band.
And, you know, was that kind of investment. You could flip that, you could use a new strip for the football club, whatever it is. But what they were looking at doing was connecting five, 10 pots of money that are kind of within a, you know, within a similar, um, or within a relatively close geographical area, and saying, look, if we connect these together, can we unlock something else?
Can we unlock a more strategic type of investment and something that we sorely need? Now what I would say here is one of the things we came up against is that these types of funds are not meant to be targeted at areas of statutory spend for local authorities. So a big no-no for most of these funds is you can't be spending in areas that the local council are responsible for now, that might be schools, it might be roads, it might be waste collection – the kind of the bread and butter of the councils.
Even though we know the backdrop is that councils are getting hammered in terms of, you know, uh, funding and, and grant cuts. It has to be a non-statutory. So that is kind of, I think, one of the issues that might need to be resolved going forward, about how we balance that and reconcile areas that really desperately need reinvestment in these areas, but this growing pot of money can't touch those.
But generally speaking, where, where we seem to have seen quite a lot of support is that some of the funds for non-statutory spend should be reserved at the local level. But actually, if you were to sacrifice a certain share of that to contribute regionally, and all the other local CBF's did that, and you've got a regional pot, you get the best of both worlds.
Fraser: And as you say, some, some good examples of that happening, right? My mind is, is drawn to 9CC, the Nine Communities Coalition Group in Cumnock and Doon Valley who, who do exactly this, that regional strategic fund, but each, each community within that has their own allocation as well.
Uh, that has been a terrible, just maddening, conversation, overall. I think nobody has learned anything useful. The report is terrible. Don't bother reading it. Uh, no: the report was very, very good. I, I hope it's been a useful conversation. I guess the, the closing question is, well, what next for this framework, for this work? How do you want to see it used and implemented going forward?
Jen: We want to see the guiding principles and actions getting used, however they get used, and we want to see them getting, getting tested and, and fed back. You know, we are looking to, for them to maybe influence or inform the government's, um, Scottish Government's new, updated Good Practice Principles.
We responded to the consultation that they had that closed last month. Um, we also know that they're preparing guidance on community benefits from transition networks as well. So we want the, the outputs, this framework, to be uptaken by others. They don't need to reference it, they can just take it. It's for, for people to use.
Matt: Yeah. Yeah. And I think it's obviously, uh, important that it's not only used by policy makers, but by industry, communities and other third-sector intermediaries. So it's written, the audience – and we make this explicit that, right up front – the audience is not just policy makers. It, it's that whole spectrum.
I think finally, I'd like it to be used in a way that stimulates other research and other debate. So we've already talked about a whole host of issues that I think are a warrant further discussion. Um, I, I think there's a couple that I think really need discussing. We, we already talked about transmission, but how these principles could be applied to other types of projects, natural capital, you know, these are biodiversity, carbon credit type projects where there's, you know, carbon mitigation, uh, or, or, or, or avoidance. There's, there's a whole, there's a whole lot there. Um, how, how applicable is it to that? And I think the final thing in the context of a just transition, and I know Fraser this is very close to your heart.
We, we started to play with these GPAs and throw them against a justice framework. Um, and we've done whole episodes on this, but whether it's distributional justice, the distribution of the sort of pains and gains of these, these types of projects, or, uh, just take another one, procedural justice in terms of who has kind of, you know, who holds the cards in terms of decision making?
How do these support that just transition? If you were to look at these CBF's and ask the question, using these GPAs, if you, if you follow these GPAs, what does it do in terms of accelerating a just transition? So if anybody's interested in that, just commission Jen and I to do a big piece of work over the next five years and we'll hopefully have an answer for you.
Jen: Yeah. No, no project, no outcome ever just closes off a question. What it does is opens up new questions. That's what keeps us employed, I suppose. Um, but we've got, we've got ideas for the next steps to the research and practice, but I won’t spend, it’d be another entire episode on that. I also want to sort of say that it sort of celebrates the wealth of practice, um, and expertise and learning across the practitioner and community landscape here in Scotland that can be extended far beyond the borders. You know? So I think the report, not just, it’s maybe more about the purpose, but, um, it just elevates those voices and those experiences.
And I have to say, it comes back to a, a previous point as well, that communities are very, very willing to share their practice, their experience, not, not moaning, but to say how they did stuff, how they made things work, um, and so across the whole community benefit fund I'm gonna use the word “landscape" again, there's been real kind of desire to see things done better, to learn from those experiences.
And actually, I remember being on holiday, I was on Westray in one of the islands in Orkney, and sending a photograph to, to Matt when I got signal or power or something. I was able to send a photograph of Westray. Westray has, I think, the first community-owned wind turbine in Scotland, which was owned by the Westray Renewable Energy Limited, so a wholly owned subsidiary of the Westray Development Trust, and any of the income that came from that turbine went to the trust. So I was there in this community centrre learning a bit about this just by chance.
But what the – the most recent fund decision to spend those, those funds was to help those out in fuel poverty. So, to take money off bills. So that's an example of how a community benefit fund from community co-ownership can do exactly what the transmission infrastructure people are talking about – taking some money off the bill payer, uh, sorry take not, they always take money from the bill payer, but I mean, reducing how much money they take from the bill payer. But this is an example of how the Westray Development Trust was spending money by helping to reduce the bills for the people within their community from their own, um, owned assets. So there's a little closing piece there of how these, these can work in practice.
Fraser: Excellent. Well, on that positive note, I think it is, uh, mercifully, thankfully, time to wrap up this horrid conversation. Um, you will never get back…
Jen: I’m getting very hungry.
Fraser: You will never be back on Local Zero. Back to uh, academic obscurity you go. Thank you very much.
Matt: Where we belong.
Jen: Back under my rock.
Matt: Well, thank you Fraser.
Fraser: That was a great episodes. A great episode guys. No thanks to myself, but thank you for the insights. We look forward to seeing what you do with it next.
Jen: Thanks for reading it, Fraser.
Matt: Yeah, and thanks for the grilling. And thank you, uh, to the listener for listening to this episode of Local Zero. If you enjoyed it, we'd be really grateful if you could help us spread the word. Hit the “share” button and tell someone else about the podcast.
Fraser: Yep. And if you're on Spotify, you can comment directly on this episode with your thoughts and questions. And if you're on Apple Podcasts, we'd love it if you could leave us a review. It really, really does help other people to find us.
Jen: And if there's something you think that we should be covering on Local Zero, then let us know at localzeropod@gmail.com, or send us a message over on LinkedIn. Just search for Local Zero podcast. And we'd really love to hear from you and your suggestions.
Matt: Until then, see you next time. Bye bye.
Fraser: Bye. Bye bye.
Jen: Bye.