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Community shares: casting the net wider

Community share schemes can be a quick way to get projects off the ground. For one corner of Cumbria it’s delivering broadband super-fast, as Daniel Heery explains

Local engineers laying fibre optic cable in Alston, Cumbria.

It’s hard to believe how quickly we have come to rely on broadband – a service that even ten years ago was just something for the geeks.

Cut off broadband and you soon see the effects – teenagers pale with Facebook deprivation, mums bereft of online shopping, dads unable to update their fantasy football and gran unable to catch up on iPlayer.

Some 70% of the population now have broadband at home, but for around 10% of the population, the service is slow and unreliable. As BT and Virgin roll out super-fast broadband – the problem is about to get much bigger as the digital divide becomes a digital chasm for the 10% of population left in the internet slow lane.

The most innovative solution to this problem is not coming from new government legislation or Ofcom, but a piece of Victorian legislation dating from mid-19th century. This allows for withdrawable share capital, which is unique to co-operative and community benefit societies, and was the building block of the co-operative movement.

By 1935 there were over 1,000 local retail co-operative societies in the UK, with over 7.5m members who had collectively invested more than £135m in share capital, the equivalent of over £7bn at today’s prices. As retail co-ops consolidated, investments by members dwindled and in 2002, it was viewed as an outdated legal form by the government.

Community share schemes made possible by this legislation offer social enterprises the ability to raise money from the public towards local projects. The village of Heskett Newmarket in Cumbria was one of the first to run a community share offer to buy first the brewery and then the village pub. These have now spawned a whole range of community share offers covering everything from renewable energy, community shops and fibre optic broadband.

In our case we recognised that super-fast broadband was not going to come to our community in Alston Moor, Cumbria without some local action. Cybermoor started in 2002, delivering first generation broadband and has continued to upgrade and invest in our network.

However, the most future-proof solution – fibre optic cables to all the homes – is expensive in the most sparsely populated parish in England. The technology is well established, used widely across the world, the challenge is raising the finance to lay the cables. Could we follow the success of pubs and village shops and use community shares to raise the necessary finance to install the equipment?

We were fortunate to be part of the Cabinet Office sponsored Community Shares Programme – this offered practical advice on how to set up a scheme and we could learn from other projects which were going through similar experiences. Some community share offers go from idea to completion in a matter of weeks. Our business plan and offer document took about two years to complete because:

1. Life gets in the way – running the business and focusing on the existing customers meant that we had to find time around that to develop the share offer

2. We wanted to offer best value by trying to find the piece of the broadband value chain which would offer investors the best return for the lowest risk

3. Of external factors – the government decision to invest £500m in broadband meant that we had to make sure our plans complemented theirs, otherwise investors may be put off. Likewise, understanding investment plans for private operators like BT (as the most sparsely populated parish in the country, we were not near the top of anyone else’s list for fibre broadband)

4. We listened to the community – holding focus groups, talking to local people and publishing plans on our website meant we had lots of feedback to assimilate.

We launched the share offer in February this year with a target of £50-100k to match against the £300k we had already secured from the Rural Development Programme for England. It was promoted via social media, leaflets to all homes and coverage in the local press.

So what can be concluded from our share offer? Firstly, community share offers can work best on tangible services and assets – like village shops and pubs which are threatened with closure. People can understand the business model and they recognise the hole they leave in their community.

Secondly, encouraging people to invest in something for the future, like a fibre optic broadband network is more challenging, especially where the business case is more complex.

Thirdly, keeping momentum going is a challenge – we have been laying fibre optic cable since 2009, incrementally learning how to develop local skills and connecting new areas to the network.

We have raised £30,000 from a mixture of people in the community and outside. Many have contributed £100 and some people to pay in instalments (using funding from the Key Fund to bridge the gap). The share offer was extended to 30 June and another offer later in the year will be EIS compliant.

There are a number of exciting developments over the next few weeks: the ducts linking Samuel Kings School, the town hall server room and Skellgillside will have fibre blown through them; our active equipment which will light the fibre will be installed and commissioned; customers in the area around Skellgillside and the top of the town will be start to be connected to our fibre broadband service; and future phases are being planned and we will be rolling the cables out to three more areas over the next six months.

Exciting times ahead – made possible by the power of community shares…

Where to get support

The Co-op enterprise Hub can support the establishment of a new co-op and advise on a share offer. Alston Moor also had support from Dave Hollings.

The community shares website has a wealth of information following the Cabinet Office / DCLG sponsored Community Shares Programme. As one of the pilots, Alston Moor was supported by Jim Brown in developing the share offer.

Co-operative and Community Finance has launched a new initiative to underwrite share offers, carrying out due diligence and building confidence in a community. It can offer a mix of loans and equity.

Cybermoor delivered a community shares event at the end of March – with case studies on four share offers in Cumbria. Watch videos of the speakers and download the presentations.

Key Fund can invest in equity and make loans to social enterprises – it provided Cybermoor with equity to cover a scheme where people on low incomes could spread their investment over time.

Daniel Heery
Daniel Heery is project manager for Cybermoor Networks.

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