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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Changing local economies to work for people who feel excluded

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A link has been received to a Guardian report about the ‘Preston model’ – for background information see Clifford Singer’s interesting article on the Next System Project’s website.

Councillor Matthew Brown, Preston city council cabinet member for social justice, inclusion and community engagement, devised this model. 12 of the city’s key employers were helped to reorganise their supply chains and identify where they could buy goods and services locally, stopping 61% of their procurement budget being spent outside the Lancashire economy. The employers included ‘anchor institutions’ such as:

  • the county constabulary,
  • a public sector housing association,
  • colleges
  • and hospitals

Since 2011, Lancashire council’s central government grant had been reduced from £30m to £18m, leading to cuts in everything from community engagement to parks and the leisure centre. “The intention was to devolve cuts and blame it on us,” Brown says. “But you can become more self-sufficient.”

The Public Services (Social Value) Act 2013 now allows public bodies in England to take into account the social, environmental and economic impact of their commissioning. A key step was to redirect lucrative contracts, such as printing services for the police and food for council buildings, towards local business and the city council doubled its procurement spending with Preston companies from 14% in 2012-13 to 28% in 2014-15.

Brown and his colleagues want to build a city where workers are in control of wealth, improving people’s sense of citizenship. “We’ve got the public pension fund to invest in student housing, we’re looking at setting up a local bank to give business loans and for the local authority to become an energy provider,” he says. “You put all that together and you can see how we are developing the infrastructure for a new economy.”

The model was inspired by cooperatively run communities in Cleveland, Ohio and the world’s largest co-operative group, Mondragón, in the Basque region of Spain, and has been cited in speeches by the shadow chancellor John McDonnell and other councils, including Birmingham, Rochdale and Sheffield have taken an interest in the initiative.

Matthew Brown has worked with the Centre for Local Economic Strategies, a Manchester-based think tank with considerable experience of working collaboratively with local authorities and other institutions to boost local economies.

CLES is  working in Birmingham with Localise West Midlands because for many years LWM has made the case for more inclusive, ‘locally grown’ economies – see its ground-breaking report, Mainstreaming Community Economic Development. The focus is on those ‘anchor institutions’ which have a major impact on the city.  As part of a separate initiative, LWM is working with the New Economics Foundation, CLES and New Start. They have brought together a group of local practitioners from the region which has suggested a focus on health and social care. Read on here.

Brown believes that as a result of the financial crisis and its aftermath people are ready to hear a radically different way of thinking about politics and that Corbyn can win a Labour party victory in 2020. Until then, Preston is backing the northern powerhouse initiative to secure devolution, allowing it to build what Brown believes are the foundations of a new economy away from the City and Westminster.

“The days of getting huge inward investments are over, so the sensible way is looking at how you can do that through your local area to make something new,” he says. “This is it.”

 

 

 

Post-Brexit we need to build an economy for the many

‘Home-grown solutions’

neil mcinroyYesterday, Ann (West Midlands New Economics Group) sent a link to an article by Neil McInroy (right), chief executive of the Centre for Local Economic Strategies. CLES focusses on economic development and regeneration, ‘promoting and implementing new progressive economic activities which create positive environmental, health and social outcomes’.

It was recently published in the New Start magazine under the title given and a few highlights are offered here:

“Framed by austerity, the economic reality behind many voters choosing Brexit was a future of little promise – insecure jobs, insecure public provision, insecure futures. As a result, many leave voters felt that they had little or nothing to lose. On the back of an economic recession eight years ago, insecurity and a social recession has been built . . .

“Maybe the game is up now? Brexit may now consume the energies of Whitehall and the treasury. The rhetoric and promise of more devolution from Whitehall may at best slow, if not stop. We can hope for more and deeper devolution, but I suspect this is a forlorn hope. More importantly, there is a pressing task in reducing the existing pain and hardship and addressing deteriorating community relations and cohesion.

“In this, the local economic development community, local politicians and potential Metro mayoral candidates have a responsibility. They must strive to protect and build progressive economic and social policy. They must look toward home-grown solutions, and radical innovations across public, social and commercial sectors. They must adopt a pro-social approach to local economic development. This is less about treasury-backed local agglomeration policies, boomgoggling promises and trickle down. This is about stimulating local demand, social investment, addressing city-wide inequalities and the economics of social cohesion. Progressive local solutions are out there. We need to be bold in accelerating them.

“I would hope the newly-formed commission on inclusive growth . . . (will) use its influence to broaden its narrow growth-within-austerity remit, and explore how to build a truly democratic, inclusive and resilient economy within fairly-funded public services.

“The Brexit vote was in part prompted by a sense that people felt abandoned by the economy, and the state. This has created a new local economic and political reality, and with it come great dangers. As such we must avoid deepening the social recession and accelerating the divides between the haves and the have-nots. It is imperative that we now build an economy for the many and not just the few”.

Read the whole article here: http://newstartmag.co.uk/your-blogs/post-brexit-need-economy-many/

Sheffield and Balsall Heath: the real march of the makers

julian dobson2The observations of Julian Dobson (Living With Rats blogspot @juliandobson), strike a welcome and hopeful chord after reading the dismal question: “Will Chancellor Osborne cripple the ‘makers’?”

A search revealed JD’s substantial localist credentials – as director of Urban Pollinators, which helps to make sense of regeneration and the editorial director of New Start, the national magazine for regeneration practitioners. He is on the editorial board of the journal Local Economy and writes think tanks and publications such as the Joseph Rowntree Foundation, the Centre for Local Economic Strategies and Res Publica. He is helping to create Our Society, a social action network, and Revive Our Town Centres, a network for people involved in rethinking local high streets.

george osborne 2 smallerChancellor George Osborne closed his 2011 Budget speech by eloquently setting out his aspiration for “a Britain carried aloft by the march of the makers”. But recently he caused consternation by closing down the Business Growth Service, including the Manufacturing Advisory Service and the Growth Accelerator programme.

Julian observes that if there’s going to be a march of the makers, it is more likely to take the form of developments such as Portland Works in Sheffield, a stone’s throw from Sheffield United’s Bramall Lane ground, a development born of “a local determination to see Portland Works kept in use as a place for making”.

He relates that a community trust was formed when the previous owner wanted to cash in and convert the premises into flats: more than 500 people bought into a community share issue, reflecting the groundswell of support both for the works’ heritage and the trust’s vision of the future”.

portland works

Portland Works currently has 32 tenants with a wide spread of interest, including a knife maker, engraver, forge operator, several artists, a rug maker, a window maker, a distiller, bike-makers, woodturners, musicians and jewellers.

Though both are beset by the difficulties of maintaining an old building, a similar pattern can be seen in Birmingham (below, rear view) at The Old Print Works in Balsall Heath – first mentioned on this site in 2013 – where ‘makers’ work in low-cost spaces.

old print worksFollowing his account, Julian Dobson concludes:

“If there’s going to be a march of the makers, it is more likely to look like this than the kind of projects favoured by central government and its placemen in local enterprise partnerships, obsessed with projects that rejoice in titles like Catapult and Accelerator.

“It is likely to be a much slower march than the periodic stampedes of real estate and financial services speculators, too. But it has the potential to last far longer and to create more useful stuff in the process.

“And while there’s no doubt that the makers of Portland Works are having to rough it far more than government ministers and their acolytes might be used to, I’d hazard a guess that their work is both more creative and more fulfilling”.

Preston: building a new local economics

new start logoNew Start magazine, which champions urban regeneration that is inclusive, sustainable and socially just, has reported on the work of CLES (Centre for Local Economic Strategies) with Preston City Council. Innovative Quinton councillor John Clancy, who has been to Preston to meet councillors there at a CLES conference, has already tweeted the New Start article.

CLES is exploring how anchor institutions based in the city can bring benefits for the local economy and community.

Anchor institutions are those that – once established – tend not to move location, anchoring the local economy. They may be not-for-personal profit social enterprises, co-operatives, employee-owned and run companies,  or simply local firms with a determined loyalty to their community and workforce ‘family’ (some 2nd generation) – like Professional Polishing in 2007, which refused a highly profitable offshoring opportunity for this reason – resigning from BCC because of their promotion of these policies – and has gone from strength to strength.

cles logoThe starting point was ‘procurement spend’ – seeking to create a collective vision across institutions for undertaking procurement in a way which benefits the local economy. The supply chains of each of the anchor institutions (worth £750m pa) were analysed by CLES in order to identify particular sectors where there are gaps in expenditure in the local economy and where there is scope to influence that ‘spend’ in the future.

There were two broad objectives:

  • to analyse the extent to which anchor institutions already spend with suppliers based in the Preston and Lancashire economies and whether there is potential to repatriate some of that spend;
  • to identify whether there are any particular services used by anchor institutions which would lend themselves to future delivery by local worker-led co-operatives.

Analysing the procurement spend of six anchor institutions with their top 300 suppliers – some £750m – the research found that only 5% of their collective spend was with Preston organisations and 39% was spent with organisations based in Lancashire. £488m was effectively leaking out of Lancashire each year.

Preston skyline
Preston skyline

The findings of the supply chain analysis have prompted anchor institutions to ensure procurement spending reaps greater local economic and community reward. Local organisation Community Gateway, for instance, now asks suppliers to show the local economic multiplier effect of the delivery of its capital and maintenance projects.

Preston Council has identified local organisations in those sectors which could bid for and deliver those services in the future.

Lancashire Council has reframed its procurement practices so that there is greater emphasis on economic and social value.

Postscript: other initiatives

  • Living Wage – Preston City Council has been a Living Wage employer since 2009. It seeks to ensure other organisations across the public, commercial and social economies pay their own employees. The principle of the activity links to community wealth in that it seeks to provide a fair level of pay for Preston residents and also ensure the circulation of income within the local economy.
  • Move your Money – Preston City Council has become part of the Move your Money campaign. This seeks to encourage communities to bank in a more ethical way. The Council has also helped establish a new credit union (‘Guildmoney).

• Guild co-operative network – the council and its Social Forum supports worker led co-operatives and encourages other anchor institutions to utilise local co-operatives, most of which are engaged in front line provision.

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Should R. Vijayaraghavan’s proposals be implemented here?

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In the Financial Times he writes:

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“India needs a government that views its youthful population (more than 50% under 25) as a strength and not just as more mouths to feed!

“It needs to craft an original economic policy suitable for its labour-rich economy and not merely adapt the western model more suitable for capital-rich countries.

“It needs to educate and empower more of its population to adopt a self-employment strategy in trade and services, rather than hoping for “jobs” to follow foreign investment.

“It needs to defang the petty bureaucracy that hobbles its people. It needs a different set of tools to do all that. Just a new broom won’t do”.

 

Ed: A new set of tools may be acquired from several quarters, including Localise West Midlands, the Centre for Local Economic Strategies (CLES) and the Schumacher Center for a New Economics.

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Exploring the systems by which we organise our livelihoods

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In this Barrow Cadbury Trust blog, the co-ordinator of Localise West Midlands gives feedback on the opportunity to research the assumption at the heart of Localise West Midlands’ mission offered by the Trust.

The assumption is: “. . .that in a more localised economy, more people have a stake, which redistributes economic power and resilience, reducing disconnection and inequality . . . in need of exploration in the face of growing inequality and economic failure”. She continues:

“There are plentiful ideas around what we have been calling community economic development: social inclusion as CSR, community-led job creation, co-ops and social enterprises, local procurement initiatives. To many economic development practitioners these are very nice projects that go into a little box labelled “voluntary sector” and have little to do with the real economy, which is about big sites, tax breaks for multinational corporations – “prostituting ourselves for inward investment” as the Centre for Local Economic Strategies‘ Neil McInroy colourfully puts it.

“Our project, Mainstreaming Community Economic Development, is an attempt to take localised economies out of this little box. Firstly, to see the social potential not only of voluntary sector initiatives with social objectives, but also of private sector activity that is locally controlled and based, where the community’s participation is as owners, investors, purchasers and networkers . . . ”.

To read the whole article go to the Barrow Cadbury Trust blog