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Birmingham Council’s policy of ‘Local Wealth Building’ through new municipal services and local procurement



Speaking to Labour Councillors in Nottingham on 3 February 2018, Jeremy Corbyn said ‘Labour councils are taking measures to bring services back in-house and reject costly PFI-style models and to show the efficiency and resourcefulness of local government. …With amazing creativity in the toughest of times, we are seeing the first shoots of the renaissance of local government for the many, not the few—the rebirth of municipal socialism.

‘A Rebirth of Municipal Socialism’ is the heading of one section of ‘Building a Better Birmingham: Labour’s Local Manifesto 2018-2022’, published for this year’s May Council elections. This is what it says:

  • We will re-state the case for the municipal provision of services in Birmingham, heralding a new age of municipal socialism.
  • That means a renewed focus on municipal housing…
  • We will explore ways to re-establish municipal education in this city…
  • We will establish a municipal energy company to tackle the evils of fuel poverty and rip-off tariffs for those least able to afford them.
  • Similarly we will establish a municipal water company.
  • And the Labour council in Birmingham will lead by example, calling time on the misplaced notion that the private sector always trumps the public sector by adopting a policy of in-house preferred for all contracts….
  • We will work more closely with other anchor institutions in Birmingham to keep wealth in the local economy. Following the successful Preston-model we will work with the Centre for Local Economic Strategies to encourage partners to spend more, recruit more and invest more in Birmingham and its people
  • We will work with partners to keep wealth and jobs in the city, building a Birmingham economy for the people of Birmingham.

There are two sets of strategies here.

One is for the Council to set up municipal companies to supply cheaper energy and water. The other is the use of the power of procurement – the purchasing of goods and services by the Council and other local ‘anchor’ institutions (big local public sector organisations such as hospitals, universities and colleges) – to keep money and jobs in the city by using local suppliers.

These ‘Local Wealth Building’ (LWB) policies have been pioneered in the UK by Preston City Council and are being adopted by a growing number of Labour local authorities.   Local Wealth Building (LWB) is one strand of a global movement focused on what cities can do as a response and alternative to neoliberalism.

At a conference on LWB in Preston on 8 February 2018 John McDonnell announced Labour’s new Community Wealth Building Unit. It aims to bring together councillors, unions and independent experts to support councillors to municipalise public services and use procurement contracts to support local jobs. McDonnell said the Community Wealth Building Unit will build on the experience of Preston City Council, which had returned almost £200m to the local economy, supporting more than 1,600 jobs, by using the city’s institutions and local government contracts to keep money in the local economy.

He said: ”The next Labour government will end austerity and properly fund local authorities, instead of cutting back and passing the buck like the Conservatives are doing. But we cannot afford to wait until we are in power nationally”.

There are many creative solutions being used already, like in Preston, and we need to spread this inspiring work around other Labour councils now, so we can bring services back in house, stimulate the economy and provide decent jobs, extend ownership and control, and strengthen local democracy.

By working together to share these principles where Labour is already in power locally, we can sow the seeds of a country that works for the many, not the few.

Part 1 of this article deals with the municipal provision of services.

Part 2 examines the strategy of LWB through the use of local procurement.

The full text with references may be read here.

Richard Hatcher: 30 September 2018

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