What austerity-stricken local councils can learn from Preston’s community wealth building model – Byline Times


Amid coronavirus crisis, local investment model has taken on added importance, Taj Ali reports

This pandemic has undoubtedly inflicted severe damage on the UK economy. In turn, many local councils, battered and bruised by a decade of central government cuts, are struggling to cope.

Since 2010, the government has cut grants to councils from £ 32.2bn to £ 4.5bn as part of a national austerity program and, in the absence of centralized support, a new approach is necessary.

Many councils today find themselves in a situation similar to Preston, in the north-west of England, in the aftermath of the 2008 financial crisis. Amid cuts to public services and mass unemployment, Preston Council launched an attempt to transform the local economy into one in which locally generated wealth was controlled by those who produced it, not distant shareholders.

The council therefore embarked on an ambitious program that reduced the amount of money leaked out of the economy and instead invested in local businesses and, in particular, worker-owned cooperatives.

Working in conjunction with the city’s major “anchor” institutions – such as the university and hospital – Preston Council maximized the local economic and social benefits from its spending on goods and services. Planning permission for large developments was conditional on developers being able to demonstrate a clear commitment to invest in the skills and training of local people.

Along with the city’s main institutions, the council began to develop a community bank, developed a significant cooperative sector, and invested pensions in locally developed student accommodation.

“A big part of building community wealth is looking at what we already have,” says Matthew Brown, Labor group leader at the Preston Council. “So these are our big institutions such as universities, hospitals, colleges, housing providers and others. We try to make sure that they really work collectively with the council for the benefit of the local economy. “

The board adopted a procurement strategy whereby large institutions would seek to use local suppliers where possible. These firms were more likely to support local employment and had a greater propensity to retain wealth locally.

Brown points out how the council has taken other measures as well, such as encouraging as many businesses as possible to become living wage employers. For him, a central aspect of community wealth creation is trying to democratize the local economy.

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“We are creating a regional cooperative bank in Preston, with partners in the North West region in places like Liverpool and Wirral,” says Brown.

He believes Preston’s adoption of a community wealth creation model has made the board more resilient in the face of the COVID-19 pandemic.

“Just over a quarter of the masks worn in Preston hospitals were purchased by a local company and that created 90 jobs,” he said. Byline Times. “Above all, our employment rate before the outbreak of the pandemic was the best in decades. We have therefore arrived at an employment rate of around 83%. “

Yet for Brown, the mission and the process are far from over. “I think it’s really important to remember that it takes years – the real radical transformation we’re looking for in terms of a lot more worker co-ops, having our own bank and potentially even generating energy. ourselves as a board with partners, ”he says. .

“We are building a large cinema and the development of leisure will be the local public property. It happens in the next two or three years. “

Reset local economies

Neil McInroy, CEO of the Center for Local Economic Strategies, worked closely with the Preston Council to establish a model for community wealth creation. He wants it to be deployed in the rest of the country.

For McInroy, the most important aspect of community wealth creation is economic democracy.

“It’s about getting more people to have a real stake in economic production,” he says. “I am talking about cooperatives, mutual societies, community interest companies, etc.

McInroy believes councils need to look beyond their own budgets when it comes to investing in their area – in a bid to reset the entire local economy.

“Council budgets are important, but think about the budget for economic activity in your whole town or city,” he said. Byline Times. “The council budget becomes insignificant when you factor in the NHS budget, the police budget and the local university budget which together can be worth billions.”

According to McInroy, the importance of these anchor institutions in stimulating local economic growth cannot be overstated. Public sector organizations such as universities and hospitals are allies in ensuring that wealth is directed to as many people as possible.

“Let’s take a local university,” he says. “It’s buying a lot more office furniture, classroom furniture and so on than the board will. Its catering budget is much larger than that of the council. So the council budget is important and obviously they can’t do as much community wealth building as they would like because of the cuts, but because of these other organizations they can.

And, as austerity still plagues councils across the country, McInroy has seen a resurgence of appetite for new models. There are around three dozen regions involved in community wealth building programs across England, he says, with Scotland rolling out as a national program.

“Again this morning, I spoke with people from the Republic of Ireland about community wealth creation,” he says. “It’s global.”

Amid cuts to public services and the usual neglect of central authorities, Preston’s people-centered approach is one that many boards can learn from – now more than ever.

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