Not waiting for Whitehall: Councils are re-shaping local economies right now – Co-operative Party

Local and regional leaders do not have to wait for more powers to be handed out from Whitehall. They can take action and begin to rebalance our economy right away.

Over the past 40 years, economic and political power has become increasingly concentrated in the capital, creating an unequal country where opportunities and wealth are increasing stacked in the favour of those living and working within the M25.

This inequality has had adverse effects on the economy of the UK beyond the South East.

Starting back in 2011, Preston looked for a way of regenerating its local economy. Inspired by visits from Professor Ted Howard from the University of Maryland, Preston sought to emulate the success Cleveland had experienced by driving wealth creation locally.

Proponents of this model argue that the dominant approach to economic development has not delivered for urban areas.

The Cleveland model builds partnerships between local public institutions and co-operative enterprises to form a system that creates and retains wealth locally and spreads the benefits of economic development to all citizens.

This strategy had created 5,000 jobs from Cleveland’s hospital network alone when they increased spending to over 80% locally, so the potential benefits had been demonstrated.

Led by cabinet member Cllr Matthew Brown, Preston drew in expertise from Centre for Local Economic Strategies (CLES), Co-operatives UK and the University of Central Lancashire (UCLAN) to look at how they can collaboratively bring the Cleveland experience to the UK.

The approach focused on three areas anchor institutions such as hospitals, government and schools; developing worker co-operatives and supporting the community and not-for-profit sector.

Anchor institutions

Every town and city has public institutions that spend money when procuring goods and services. In Preston the council, university and hospital looked at what they collectively spent in the area and found only 5% of their collective spend of £750m was spent in Preston itself.

Through a working group which looks at changing their procurement and purchasing power, this ‘sticky capital’ could be used to assist the local economy instead. As Cllr Brown says: ‘A lot of this wealth is not being spent within the local economy. It is leaking out of the local economy’.

The approach was piloted with a local housing firm, who had an ambitious £1.8m project underway. By making conscious decisions about where they source services and products (for example using a solicitor in Preston instead of Manchester) they managed to get £1.1m of the total £1.8m spent into the local Preston economy.

However, they’re aren’t always local firms available, which is why the second string of development sits alongside this.

Developing co-operatives

By their nature, co-operatives keep the wealth they create in the local area. However, when looking for local procurement options, co-operatives and mutuals aren’t always available.

Responding to this, the Labour-run council has established the Guild Co-operative Network, bringing together co-operators and those hoping to establish new co-operatives as a place for mutual support and advice.

Every two or three months, members get together to promote their co-operative or receive one-to-one business advice. This has led to the creation of new co-operatives, for example a new co-operative offering psychology services locally has been formed.

Supporting the community

The final strand is about ensuring a strong community element in the town and supporting citizens; the council is committed to the Living Wage, provides jobs training and last year launched the Preston Fairness Charter to ensure the city is more prosperous for everyone.

The council helped launched Guild Money last year, which brought into Preston a neighbouring credit union. It is open to those that work and live in Preston, with again the focus that cash from the union would stay within the local economy.

What has been key to its success so far?

The partnership approach between institutions has been key in allowing them to speak as one voice in changing the dialogue and approach to the local economy.

Having evolved ‘The Cleveland Model’ to their local circumstances the city is now talking about ‘The Preston Model’. The whole system approach building on their traditions as a Guild City for over 800 years, enables co-operation to be embedded at all levels to strengthen the local economy.

Preston shows the way forward for regions and cities across the UK. It demonstrates political leaders can do more with the wealth that exists already in their area, reinvesting what is already there and reducing leakage.

It shows our local and regional leaders do not have to wait for more powers to be handed out from Whitehall. They can take action and begin to rebalance our economy right away.

A version of this article first appeared in the Municipal Journal