Building wealth from within

By Tom Lloyd Goodwin | 10 August 2021

Over the course of the last decade, community wealth-building has blossomed from being a marginal sport, into a widely-adopted corrective to an economic model that has left too many people worse off, enriched the already wealthy few and propelled us further down the road to ecological disaster.

But, while many people have heard about community wealth-building through its association with the much-fêted Preston model, the wider provenance and history of the movement is less well known.

Community wealth-building is an intentional reorganisation of the economy – and particularly local economies – to ensure communities have more ownership over the wealth that is being generated in their areas. It is about how we use the levers of the local state to change the nature of ownership within the economy so that there are more small-to-medium-size enterprises, more social enterprises, more co-operatives and more community businesses.

Tracing the origins of community wealth-building through the thinking and doing work of the Centre for Local Economic Strategies (CLES) over the last 13 years, the intention is to provide insights that will help fellow travellers to deepen their understanding of community wealth-building and inspire the uninitiated to take their first steps.

In the beginning

At CLES, we have been working on progressive local economic strategies since the day we were established, in 1986. However, our interest in community wealth-building in the UK traces its heritage to the early noughties, and our increasing awareness at that time, that traditional approaches to economic development were failing.

We could see that decades of attempts to encourage the presence of big corporates in local economies (as well as inward investment from overseas) rarely resulted in an increase in wealth and opportunity for the people in those places who needed them most.

This led us to thinking: were we looking outward when we should have been looking inwards? Was there a way we could use the levers of the local state to encourage local economies to develop from within and do so in a way that was inclusive rather than exclusive?

It was these questions that underpinned the work we began with Manchester City Council in 2008.

With an annual spend of some £900m at that time, the council wanted to understand how this spending could be utilised for greater social, economic and environmental impact within the local economy.

Over the last ten years, we have helped the council translate this ambition into greater support for local enterprise and employment opportunities for Manchester residents.

The early adoption of an ethical procurement policy, a unique social value weighting of 20% in the tender process and a focus on supplier engagement in areas of deprivation has put Manchester City Council at the forefront of progressive procurement practice.

However, while working with the council, we were also starting to think about other large public sector organisations and the role they could potentially play through their spending.

We started to develop this line of thought and – inspired by the work of US-based think-tank The Democracy Collaborative – we began to articulate the different ways in which large public institutions (often called ‘anchor institutions’) could adopt progressive practices to create fairer economies in their place.

The Democracy Collaborative focused on harnessing the public expenditure of anchor institutions into a single co-ordinated strategy to support locally rooted businesses such as co-operatives. But we soon realised there are other aspects that could be harnessed: the employment practices these anchors deploy; the land and assets they hold; the financial power they wield through pensions and other investments. Taken together, for CLES, these pillars make up the fundamental building blocks of community wealth-building.

By the time we got to Preston...

It was the culmination of this thinking and doing we were able to deploy when we started to work with Preston City Council in 2011. While our initial work in the city focused on shifting spending across the key local anchor institutions towards local and socially responsible suppliers, Preston has now broadened its community wealth-building focus.

Taking its cue from the pillars of community wealth-building outlined earlier, the council is now supporting a range of activities. From co-operative development and payment of the Living Wage to the progressive use of pension funds, as well as land, property and other key assets, the city has pledged a deep commitment to community wealth-building principles and practice.

There can be no doubt that Preston has undergone a deep transformation, with the community wealth-building approach playing a critical role in improving the city’s deprivation figures and quality of life.

In 2018 it was dubbed ‘the Preston model’. Yet behind the headlines is the reality that there is no single ‘model’ for how community wealth-building is delivered in a place.

Over the last few years, we have seen an explosion of places doing community wealth-building in different ways. The movement is growing significantly and is now finding utility in a myriad of different contexts across a global footprint – from Torbay to the Western Isles, New York City and Bendigo, Australia. All of these places are delivering on an intent to address wealth extraction and give communities a genuine stake in their economy, although specific operating contexts vary significantly.

The moment we’re in

The UK is an obvious case in point, with community wealth-building advancing rapidly in some areas compared with others.

In Scotland, following on from CLES’s work in North Ayrshire, and subsequently five other locations, sponsored by the Scottish Government, we are now seeing the rapid implementation of community wealth- building practice.

This work is bolstered by a strong and conducive national policy framework, where community wealth-building is now central to the Government’s wellbeing economy aspirations and features in the Scottish Programme for Government.

Most recently, the appointment of a new minister for community wealth opens up the possibility of community wealth-building legislation.

In England, however, things are progressing more slowly. Here community wealth-building is particularly hampered by the proliferation of an economic model prescribed by the Treasury and Whitehall, as well as a narrowly focused local economic development practice, which continues to prop-up extractive, fossil fuelled economic growth.

Consequently, driving forward change in an English context remains challenging. A shift in UK Government policy for England, in line with Scotland, would be the ideal accelerator for community wealth-building, but this is unlikely anytime soon.

Nevertheless, we are seeing activity continuing to progress and mature here. In Newham, community wealth-building has become the cornerstone of that London borough’s economic strategy. In Wigan, Lewes and the Wirral, it has become the driver of COVID-19 recovery and reform

The clarion call

While it is tempting to read the policy landscape in England as bleak for community wealth-building, as the examples here make clear, chinks of light appear when we consider the small, incremental changes that can be made at the local level. In order to turn the dial to create progressive economic, social and ecological outcomes we have to start somewhere.

To support the growing movement, CLES’s national Community Wealth Building Centre of Excellence (CfX) provides a number of resources to develop and accelerate the adoption of community wealth-building practice in the UK.

If you are inspired by what you read here, and want to take further action, visit our website .You will find further information on training and events, practical resources and tools, as well as the latest research and news from across the UK and beyond.

Tom Lloyd Goodwin is associate director – policy at the Centre for Local Economic Strategies (CLES)

@CLESthinkdo

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