Anchoring community wealth

Preston’s skyline: Carl Ji, a Chinese student, at the University of Central Lancashire

Austerity has been devolved to local councils and, perversely, areas with higher levels of poverty have been hit hardest, councils have on average faced 40% cuts in their budgets.

In the face of adversity councils such as Preston have responded by bringing together anchor institutions and working with them to drive through a local programme of economic transformation. The government’s Commission for Employment and Skills defines an ‘anchor institution’ as “one that, alongside its main function, plays a significant and recognised role in a locality by making a strategic contribution to the local economy” and ‘tending’ to be non-profit.

By changing their procurement policies, these anchor institutions were able to drive up spending locally protecting businesses and jobs. They are looking at the council pension fund to see if its investment can support local businesses keeping the money circulating in their town.

A study by the Centre for Local Economic Strategies found that six of the anchor institutions in the area are now spending 18% of their budget in Preston, up from 5% in 2013. So an extra £75 million a year is being spent within the city, with the top 300 local suppliers creating an extra 800 jobs last year alone. And others are watching: Manchester city council has now increased its local spend from 44% of its budget to 70%; Lowestoft and Salford are also interested.

Last year this blog reported that Birmingham City Council was to work with Centre for Local Economic Strategies, with funding from the Barrow Cadbury Trust and support from Localise West Midlands, to see how anchor institutions in the non-profit and private sectors, including Birmingham University, Pioneer Housing and the QE hospital, could use their spending power to increase economic opportunities for Birmingham’s communities, businesses and citizens. Read more on the council website here.

In a separate project, Localise West Midlands has been working with the Midland Metropolitan Hospital (under construction, artist’s impression) which will be the closest adult hospital to the centre of Birmingham. The Sandwell & West Birmingham NHS Trust and LWM are partners in Urban Innovative Actions supporting the development of the local economy. The Trust hopes to spend 2% of the new hospital’s annual budget with local suppliers, adding £5-8m to the local economy. It will provide locally sourced meals and the builder has a target of 70% local employment, aiming to source 80% of construction materials locally.

Alice Thomson in The Times pointed out that making a legal requirement that councils buy and hire goods and services locally is banned by EU law at the moment, so it should be noted that the Preston project operates on a voluntary basis.

She commented: “The government should take the idea and encourage it, particularly in hollowed-out market towns where out of town shopping centres have crushed their sense of identity” adding “But (procurement policies) could also be used for more high-profile programmes such as the rebuilding of Big Ben, where the steel has had to come from Brazil, Germany and the United Arab Emirates, or the V&A which showcases Britain’s greatest designs but where the tiles for the new forecourt came from Holland”.

 

 

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Should QE now be used for the common good – extending and adapting the work of Birmingham Energy Savers?

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Quantitative Easing currently benefits the non-bank financial sector, commercial banks and the Treasury

HansardUnder QE, Hansard evidence informs us, the Bank of England’s Asset Purchase Facility purchase of just under £375bn of government bonds from the non-bank financial sector has led to a lowering of long term interest rates. The non-bank financial sector and commercial banks now hold more liquid assets in the form of interest-bearing reserves.

The consequent reduction of borrowing costs for the government means that debt issued or re-financed since 2009 has been substantially cheaper, saving some £50bn in immediate funding costs.

But QE could be used directly for the common good: MP Caroline Lucas:

Caroline Lucas 3“There is huge, and as yet untapped, potential in renewable energy, energy and resource-use efficiency and the transformation of our transport system that would create high-quality jobs across the country and reduce the UK’s overall ecological impact.

“If we are serious about staying below 2C warming, as we have legal obligations to do, then to invest in a destructive Dash for Gas when there is a Green New Deal on the table borders on criminal negligence by my parliamentary colleagues.”

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GND logo

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This is the National Plan advocated by the Green New Deal Group: Larry Elliott of the Guardian, Tony Juniper, formerly FOE’s director, Jeremy Leggett of Solarcentury, Richard Murphy Tax Justice Network, Ann Pettifor of NEF and Debtonation, Charles Secrett, currently working with ELF, Triodos Bank and London’s Development Agency and Wildlife Trust, MP Caroline Lucas, Andrew Simms director of NEF, and the convenor Colin Hines, LWM co-founder and Co-Director of Finance for the Future.

Birmingham Energy Savers

birmingham energy saversEarly beneficiaries of Birmingham Energy Savers’ (BES) activities gave testimony of the positive impact the innovative scheme is having on their lives at its official launch event at The Council House in February.

It was attended by local people helped out of long-term unemployment, residents that are now enjoying warmer homes plus lower energy bills joined representatives of Birmingham City Council, who originated the scheme, and its delivery partner Carillion Services.

If such schemes could be more widely implemented and adapted for use all over the country, welcome social, economic and environmental benefits would be offered to most people – but minimal ‘rich pickings’ for the few.


STOP PRESS

In similar vein, Fran, Ben, Andrew, Mira and rest of the team at Positive Money urge:

“Get the Bank of England to create new money instead. This new money would be granted to the government, who would spend it into the real economy where it can create jobs and support businesses”.

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Birmingham’s wholesale markets – a partnership of inclusive local enterprise

It is vital to Birmingham’s independent food supply chains that Birmingham wholesale markets remain at their central site, neighbouring the retail markets, and being central for their diversity of customers and employees.

Despite a much-publicised Council recommendation to stop investigating solutions for the markets remaining on their current site, there is still a hope of this happening – an opportunity those of us who really care about widespread economic wellbeing in Birmingham need to seize with all hands.

There is an option to redevelop the current site keeping the wholesale markets, with new and exciting food-focused uses around them. This is the option Birmingham needs and that any self-respecting local enterprise body for the city would recommend.  On Monday, Birmingham’s Cabinet will decide whether to continue investigating this option. All it commits them to is keeping the door open for discussion.

Here at Localise West Midlands, as part of our Mainstreaming CED research, we studied the Birmingham Wholesale markets as good practice in community-scale economic activity. Below is what we learned about the impacts of the markets for inclusive economic success and enterprise.

To some, this will read as irrelevant to the big boys’ game of real economic development. They are wrong. The Mainstreaming CED findings are clear that economies built on local ownership and control and on smaller businesses are more successful in traditional economic terms as well as better in for all those woolly, irrelevant social concepts like quality of life. Far too much conventional economic analysis fails to recognise the collective benefit of local enterprise.

The wholesale markets and an inclusive economy

Birmingham Wholesale Markets are the largest integrated markets in the UK, comprising fruit and vegetable, fish, meat and poultry, dairy and flower sections. They are sited in central Birmingham, next to the city’s retail markets and have an aggregate turnover of £275 million, with 73 trading operations (all but two of which are locally owned) and employing 1,100 people. It is estimated by BWFPA that 15,000 jobs in the region are dependent on the markets.

ourbirmingham.orgSupply and Demand Chains

The markets also occupy a very significant place in Birmingham’s food supply chains: 95% of independent food businesses in the city – close to 5,000 independent food businesses – do some business there: an extraordinary market share.  The customer base also goes far beyond Birmingham into surrounding counties and even into mid-Wales.  The wholesale markets serve some ‘top end’ establishments such as Purnell’s as well as the affordable end, and also limited supermarket trade.

Whilst (as you’d expect) BWFPA has no official local sourcing policy, some members serve Bretts, the company that serves the city schools’ fruit and vegetable contract, for which the council has local sourcing and CO2 policies.  Figures are not available from BWFPA for the markets’ local sourcing but much of the horticultural produce is sourced from the region, including the Vale of Evesham and Staffordshire; but also from Europe and further afield.  Meat is mostly locally sourced, although also from Wales and Scotland too depending on seasonal availability and market value.  Again this points to a significant market role for produce that does not go through the multiples’ supply chains.

Social and Economic Inclusion

In addition to strengthening Birmingham’s local food supply chains, the wholesale markets also contribute to social and economic inclusion. This is partly in the sense that through the neighbouring retail markets they provide cheap high quality foods for the local community. Overheads and thus prices are low at the Bull Ring, making it a major contributor to healthy food access and social inclusion in the city centre. The markets also contribute in terms of  economic and social/ethnic diversity is very wide in the markets’ customer base, including always the latest wave of immigrants. Currently for example the customer base at George Perry is 80% Asian. Immigrants using the markets include Iraqis and Afghanis who will use the markets for small-scale street trading such as buying a box of apples and selling them on the street. A vast number of the city’s culturally specialist food shops source their produce at the wholesale markets, some of these communities then mix and socialise at the markets alongside the  long hours they work. So a social cohesion role emerges as well as a practical food distribution role that it is hard to imagine functioning if the Wholesale Markets weren’t there.

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Employment, skills and recruitment

The Wholesale Markets also contribute heavily to employment, providing a major local source of recruitment especially from areas of high unemployment, resulting in a constant churn of new people.  They offer an effective opportunity for people who haven’t done well at school or those from “less socially acceptable” backgrounds: in comparison with many training programmes they provide ‘real’ manual work with a degree of security, flexibility and mutual respect; 99% of these positions are salaried and there tends to be mutual flexibility over hours depending on company and employee needs.  “It’s a rough and ready environment with politically incorrect banter but people just get on with it and each other, and there’s a sense of honour amongst entrepreneurs.”

Business: innovation, resilience, community

The Markets also offer a key source of innovation and resilience within the community. History has shown that the market is always capable of evolving and adapting, for example, innovation in IT to facilitate trade with international partners. The BWFPA committee is highly representative of small businesses, feeding their opinions into the council. Unsurprisingly, the wider community has been very supportive of the markets remaining where they are during BWFPA’s campaign, with strong support for the Bull Ring Markets and shops in addition to the signing of a petition of well over 20,000 signatures in support of the markets remaining on their current site. This is the largest petition ever delivered to Birmingham’s electoral officers.

The support of Birmingham City Council is essential if the markets are to continue supporting the local community. The council needs to recognise the fact that composite markets work well because they function as a ‘one stop shop’ – businesses will use them for all their produce needs and so are likely to buy a higher proportion from these local supply chains.  Community leaders also value the integrated markets, saying a move would split up whole communities. A central site is also crucial to this.

Moving the markets out of the city would change how the markets’ finances work, as rents and service charges would rise and require capital outlay. Some of their current efficiency and little need for borrowing would be lost.

Attempt to relocate or move the markets would be disastrous to the local community especially in terms of social and economic inclusion and local food supply chains. The Council might propose mitigation measures such as providing collective goods transport from the out-of-centre site for the retail markets and other customers, but realistically, how long would revenue funding for this last and how practical would it be? The proposal by BWFPA for a smaller and more streamlined wholesale function within a mixed use development and still bordering the vital retail markets would maintain, and enhance, the ability of the wholesale markets to benefit the local community and strengthen its local economy. This would support medium and long term economic success and yet still bring short-term financial benefits for a cash-strapped local authority.

The proposal for keeping the Wholesale Markets where they belong, in the city centre at the heart of a food-related new development, really is a win-win situation and if Birmingham City Council failed to take advantage of this, the economic and social consequences would be severe.

Jamie Stone and Karen Leach

Solving fuel poverty – an update

 

Chart 4.3 in a 2011 DECC report showed that the West Midlands had highest rate of fuel poverty with around 26% of households requiring to spend more than 10% of their income on fuel to maintain an adequate level of warmth. A Chamberlain Forum article confirms that this position has been maintained, with a slight percentage decrease.

 Department for Energy and Climate Change’s 2011 report

LWM’s ‘all time’ top individual post was in the website’s Activities section. Solving fuel poverty: opportunities from Green Deal and localisation was published in December two years ago and, because of the interest shown, Phil Beardmore sent the following update about action on fuel poverty:

Although there has been some limited progress in tackling fuel poverty in the last twelve months, this has been largely wiped out by the rising cost of fuel and the reduction in incomes for the poorest people.  A welcome development has been the availability of ECO (Energy Company Obligation) funding at up to 100% for vulnerable households – those low-income households with children, and/or frail, elderly, disabled members.

Although a brokerage system is being developed by DECC which will give new players such as the Energy Saving Coop access to ECO for local schemes, by and large ECO is controlled by the Big Six and it is likely that they will continue to cherry-pick where and when it is spent.

One of the factors affecting cherry-picking is the ease, or otherwise, with which it is possible to get planning permission for external solid wall insulation.  We note that whereas there has been widespread delivery of this measure in Wolverhampton and Stoke, including on more attractive pre-1919 properties in areas such as All Saints in Wolverhampton, it has been patchy in Birmingham.  While there has been widespread use of external wall insulation on less attractive inter-war properties in areas such as Bordesley Green and Northfield, it has proved more difficult to get planning permission in areas such as Handsworth and Sparkbrook, where there are more attractive facades like the one on my house.  We know of one insulation scheme which has under-delivered due to uncertainties over the length of time to get planning permission, if it is granted at all.  It seems that Planning Officers and utility companies have both dug in over their respective positions.

There are two sides to every story and this is no exception.  Some utility companies have made no secret of the fact that they prefer to invest in energy saving measures in cities and countries that colloborate with them; local authority officers understandably point to the statutory constraints under which they operate.  Birmingham City Council has expressed a very general support for sustainable development in the Birmingham Development Plan.  This now needs to turn into action, moving away from the current presumption that ambitious carbon reduction targets will reduce property values and undermine economic growth in the city, a view that is a legacy of some sections of the previous administration.  This means working with the energy efficiency industry, rather than against it, to deliver solutions to issues such as solid wall insulation and solar panels that enable us to have buildings fit for the 21st century while conserving our built heritage.

The Green Commission, of which I am a member, faces an urgent task in holding senior officers to account in implementing Sir Albert Bore’s expressed wish for Birmingham to be one of the greenest cities in the world.  No longer can Birmingham issue declarations and strategies which are ignored at Director level, making it impossible to implement them.

It seems that Birmingham Energy Savers will be largely focussed on ECO funding, along with short-lived early adopter cash from DECC, for the near future, and that this will lead to significant energy efficiency improvements for many thousands of the poorest homes in Birmingham.

Carillion Energy Services, who have won the Birmingham Energy Savers contract, are also being true to their word so far in enabling local small businesses and the third sector to be part of its delivery.  In this respect, we can cautiously say that Birmingham Energy Savers is showing great promise so far.

What isn’t clear is the degree to which Green Deal – i.e. where measures that cannot be grant-funded are paid for through a pay-as-you-save approach – will take off in Birmingham or elsewhere, and it may be that the current DECC consultation on Electricity Demand Reduction contains proposals which will work better than Green Deal, for the better-off at least, and ultimately succeed it.

Meanwhile the Energy Saving Coop and community development financial institutions such as the Robert Owen Community Bank seem to be most advanced in finding fair and ethical alternatives.

Tackling fuel poverty isn’t just about energy efficiency measures – it is now more than a decade since LWM associate Pat Conaty in a report for NEF/OFGEM pointed out that fuel poverty had multiple causes and needed multiple solutions – energy saving measures; energy advice; income maximisation; bill payment facilities – a Factor Four approach.  There is a will to implement this approach but the funding streams don’t work together.  ECO will fund measures but not currently advice (although we are assured by DECC that it could); people can fund income maximisation measures through the Warm Homes, Healthy Communities fund but this is discretionary and time-limited; collective energy switching schemes will be launched in a number of locations early in the New Year, and some, but not all of these, will be tailored to the fuel poor as I advocated some months ago.

There are many wilful, determined individuals out there, in the private sector and the public sector as well as the third sector, trying to make a difference to fuel poverty.  These initiatives help a great many people but when the Chancellor announces in the Autumn Statement that we are going to become more reliant on ever more expensive and dangerous fossil fuels, then the cost of energy is going to rise more drastically, and energy efficiency will become even more important than ever.