Community Wealth Building is about using existing local wealth and redirecting the public spending of ‘anchor institutions’, rather than incentivising what economists call ‘inward investment’. What is the historical background to this approach to Community Economic Development?
Well, I’ll talk about Preston first in particular. What is quite telling is how our story fits into the global context. It is now the 10th anniversary of the Financial Crisis and the global recession that followed. In Preston, before I started at the council, we had an inward investment scheme in partnership with two of the biggest developers within the global economy. The idea was to regenerate a deprived part of the city centre, investing roughly £700m. Then in 2008 we had the economic crash, roughly 10 years after we started the project, and the main anchor store, John Lewis, decided to pull-out. So we needed to explore other options and start again.
For me, this is quite significant. It seems to fit in very well with the fact we have a dysfunctional financial system, which caused recession and austerity. So we realised that you need to start with what you have– existing wealth. One approach we’re exploring is community banking – a not-for-profit bank that can lend to small business, and those who have difficult accessing loans. While it’s about redirecting public money, which already exists, it is also about creating new wealth. You also find that the more you buy locally, and invest locally, you tend to get a good return to the city council. If there’s more businesses, more people are paying taxes, for instance.
Do you think post-industrial cities, such as Cleveland, Ohio, much like Preston, are good places for Community Wealth Building approaches?
I do. Cleveland has experienced more economic hardship than Preston, though we still have significant challenges. The disinvestment that has occurred in Cleveland can also occur across areas like Preston. Large corporations are more interested in the large cities like central London and central Manchester,and for places like Preston, a small city in the North West of England, it can often be difficult to attract such investment.
The other side of the coin is that if you are successful in attracting inward investment, it can be at the expense of independent businesses. You might attract a new supermarket, but the supermarket will only source a small percentage of their products from the local economy, whereas outdoor markets are independent and source locally. So, superficially, attracting a new supermarket may look like a good deal for the local economy, but this is not always the case.
The biggest challenge is cultural, though. The assumption that large corporations bring wealth is difficult to disrupt – it’s the neoliberal consensus of the last 40 years. There are alternatives, and those alternatives are very successful. The Community Wealth Building is about encouraging the democratisation of the economy. Procurement is very important for public institutions, and the Centre for Local Economic Strategies are currently analysing the latest figures of how much public spending we’ve collaboratively repatriated to local suppliers. It’s also about encouraging credit unions, co-operative enterprise, public institutions paying and promoting the Living Wage, municipal energy, pension funds, local banking, and independent businesses. If you bring all this together and you get the local public sector involved, you’re basically creating your own ecosystem, which is going to be extremely resilient and create a lot of equality. The only thing is that it is a very hard slog, and things change slowly. We started this four years ago and we do feel we are making significant progress, though, especially improvements in our index of deprivation and the figures of those receiving the living wage, particularly women.
These approaches are not always that obvious, though. You have to start by identifying existing local wealth and redirecting it, and also find new ways of organising the local economy.
Are more traditional parts of the labour movement receptive to the Community Wealth Building approach?
Yes. Trade unions, such as Unite, are very open to the approach as they are seeing the economy and employment practices change. Traditionally, you would apply for a job, have an interview, and if you were successful, you would get a contract of employment. Now with platform technologies, you can work for Deliveroo, but you’re not applying in the traditional way, instead you are registering online.
A lot of our procurement strategy is about the Living Wage, eliminating zero-hour contracts, and ensuring that local workers are employed as part of any development projects. So I do believe there is synergy between the unions, co-operatives, and Community Wealth Building strategies. They could be working together more, but we are actively having these conversations.
Your procurement strategy at Preston council, which includes the spend of a large network of public institutions, and is informed by your own social value framework, prioritises local businesses, and worked-owned businesses. How has this impacted the local economy and the co-operative sector over the last few years?
We’ve worked with the Centre for Local Economic Strategies (CLES), who have been a fantastic partner, and we will find out the latest figures of how much public money we’ve retained within Lancashire.
Initially, we started this journey by visiting the head of local anchor institutions, of which around 10 are part of our network. We had to get high level agreements from the CEO or leader of the organisation, and then with CLES we encouraged cultural change around procurement practice. This is about creating an environment where we communicate the procurement opportunities to local businesses. It is about breaking large contracts into smaller contracts, making it easier for smaller businesses to bid. At Preston City Council we have a social value policy, and even the university and colleges are informed by social value within their strategy. There is no formal agreement across the network of anchors but there is a strong collaborative approach.
The really interesting development is not just tracing where the money is being spent, but the gaps where we are looking to create new worker co-operatives. One example is the Open Food Network who are looking to bid for contracts for the hospital, colleges and schools in Lancashire. This will potentially create new jobs. We’re also exploring how we work with Co-Tech, a network of technology co-operatives, and how they could bid for IT services within the university. This would include new jobs for graduates. And then there is the renewable energy movement. This sector is interested in installing renewable energy schemes on the buildings of the local anchor institutions. So there is a lot of activity beneath the surface, and it shows the strength of how this movement is developing.
It’s exciting that you can use the power of the local public sector to democratise the economy, and simultaneously expand the co-operative sector. Though we need to finalise the figures, it now looks like the collective procurement spend repatriated within Preston is now tens of millions of pounds. This is construction, food, printing, legal services. A family owned construction company, for example, can have 40 suppliers.
How do you prioritise the kind of businesses you work with?
Part of the social value framework is about supporting local businesses to retain money in the local economy. This is explicit. There are also commitments to reducing the local environmental footprint, so obviously if products are being shipped in from abroad, or outside of the region, local companies are more likely to win a contract as it is better for the environment.
You mention there are some gaps in the services?
It’s slightly frustrating. When I started I was really excited about how much of our annual procurement spend - £750m collectively - could be redirected to co-operative businesses. I was telling the co-operative sector that this could be transformative, but we experienced a slow response. Networks like Co-tech, though, are really interested in working with us and will be visiting in the next few weeks to see how they can engage in this approach. The Open Food Network are interested, and local artists are interested in setting up worker co-operatives. For the local anchors institutions, they are are interested in how this approach can reduce deprivation.
We also have a new credit union, a new co-operative development network, constituted as a co-operative, and we’ve got educational psychologists who have formed a co-operative, as well as a few employee-owned businesses. Once we get the community bank launched, we could really start to build a culture where things are changing quite radically, and where we have more of a say over our economic destinies.
We waited all of these years for big inward investment, and now we’re doing it by supporting local wealth building.