Enabling community economic development

Thoughts from LWM for the Inclusive Economy group of the Social Inclusion Process

1. Interim findings from Mainstreaming CED literature review on links between social inclusion & CED/localisation approaches

–          Small businesses have a greater ‘local multiplier effect’ on local communities, increasing the community’s prosperity directly, as well as creating comparatively high nos of jobs.

–          There is greater political participation and volunteering in more economically diverse places as well as a more balanced economic life and higher civic welfare.

–          While individual small businesses come and go there is a stability to a strong small-business ecosystem which provides resilience against the massive shocks of inward investor loss.

–          Economic development including subsidies, infrastructure and regulation tend to be geared around inward investment & MNCs. A recent London study found that collective incentives for inward investment added up to more than the benefits the company brought when it relocated.

–          Look at informal business and societal networks in identifying how to create a successful and inclusive local economy rather than viewing small businesses in isolation. These networks can work to exacerbate social exclusion, but equally can often mitigate it.

–          Access to finance is a barrier particularly for small business in deprived areas. People on low incomes can’t get bank loans, but their collectively significant savings with those same banks are invested in wealthy areas with perceived lower risk.

2. Useful links and case studies

RESO: Features as a case study in Social economy? Solidarity economy? Exploring the implications of conceptual nuance for acting in a volatile world: Mike Lewis & Dan Swinney – a Balta publication. Also RESO’s website http://www.resomtl.com/en/home.aspx

Community Economic Development (CED) is an alternative to conventional economic development. Its central tenet is that problems facing communities—unemployment, poverty, job loss, environmental degradation and loss of community control—need to be addressed in a holistic and participatory way. See http://en.wikipedia.org/wiki/Community_economic_development

Plugging the Leaks http://www.pluggingtheleaks.org/

Processes for identifying how money – regeneration money and local spend – leaves a deprived area through external consultants, contractors and investors and how those leaks can be plugged by means of identifying new enterprises and services needed. Plugging the Leaks is an adaptable, open-source, community-led process that can be employed through neighbourhood forums, other residents’ groups, and can be used in conjunction with the neighbourhood planning process.

US Plugging the Leaks calculators (from Balle) http://www.livingeconomies.org/leakage_calculators – used by US Chambers of Commerce

Community reinvestment

“In Chicago, people living in poor neighbourhoods could not get consumer loans or housing mortgages. Activists undertook research that clearly showed that poor people had savings, in fact, several tens of millions in savings in the neighbourhoods studied. However, they could not get loans from the banks they deposited with and their capital was channelled into better-off areas with less risk. Once unmasked, the resulting political lobby led to Congress enacting the Community Reinvestment Act. It required banks to demonstrate significant reinvestment in the communities their deposits came from” -Balta report.

Self-help housing schemes: http://self-help-housing.org/ Crisis report: http://s.coop/putz

Public procurement

Consortium approach used in Italy which permits local SMEs and social enterprises to overcome minimum turnover requirements etc in order to bid for major contracts while retaining local identities and maximising local benefits http://www.buildup.eu/blog/23848

Buy for Good scheme currently being set up in Birmingham: a non-profit organisation which awards contracts that “have a positive impact on the local economy by:

  • Creating jobs and training opportunities in target communities,
  • Reducing Co2 and the effects of climate change
  • Minimising environmental impacts
  • Supporting the Third Sector
  • Stimulating Innovation
  • Creating funding streams that are re-invested locally”

For more information: Neil Hopkins, Procurement, Birmingham City Council.

Enterprise & social enterprise

Bizzfizz http://www.bizfizz.org.uk/ another nef programme operating enterprise training using similar thinking to build local economies and social capital.

The ELSIE model in Leeds is also good as a low-cost enterprise training model, though less about the wider economy and more about direct help http://s.coop/puu0

Jericho: http://www.jcp.org.uk

Fairness Commissions

Islington Fairness Commission http://s.coop/puty (.pdf report)

York Fairness Commission http://www.yorkfairnesscommission.org.uk/

LWM Mainstreaming Community Economic Development project – April 2012 to January 2013

Barrow Cadbury funded research project investigating how CED and localisation approaches can contribute to social and economic inclusion, income equality and diversity and local distinctiveness and how beneficial approaches can be mainstreamed.

– Literature review; Case studies (Sandwell Food Economy project; Heart of England Fine Foods, Birmingham Wholesale Markets; Birmingham Energy Savers; Castle Vale, Atwood Green, ThinkWalsall); Workshop; Reporting & dissemination http://localisewestmidlands.org.uk/mainstreaming_ced/

3. Suggestions for the Inclusive Economy group of Birmingham’s Social Inclusion Process

–           Training and skills activity targeted at Birmingham-specific needs and small/local enterprise.

–          Find ways the city can use Plugging the Leaks analysis tools in community or economic development processes to maximise local economic benefit AND provide accessible local services.

–          Using area regeneration, schemes like BES & procurement to rebuild the local economy; ideally not through single centralised private supplier subcontracting to local organisations. Good practice: Italian consortium model enables smaller organisations to overcome minimum turnover specifications by bidding collectively; Birmingham’s embryonic Buy For Good initiative conducts awards contracts to get local outcomes.

–          Think about how to remove economic barriers to inclusion as well as promoting inclusion: learn from economics-related recommendations of Fairness Commissions e.g. Islington, York (e.g. co-operatives and Living Wage campaigns).

–          Community reinvestment such as Aston Reinvestment Trust to overcome access to finance for enterprise in poor communities.

–          Consider “self-help housing schemes:” jobs and training in renovating empty homes. Tackles homelessness, targeted training, job creation, area improvement. Grants & advice available.

–          Engage with the LEP and/or Chamber of Commerce on some of these issues and on their original bid promise to “SME-proof all decisions”.

–          Replicate RESO in Birmingham to deliver wholesale community economic development – a CEP to work with the LEP? Founded on socio-economic goals (like RESO and Chicago examples) – using ‘economic growth’ as a proxy for ‘economic inclusion’ does not work.