Wealth-building for our local economic recovery

By Frances Jones | 17 June 2020

As we begin to emerge from the COVID-19 lockdown, calls for local government to lead the economic recovery are getting louder. Key among these voices are local politicians who have stewarded their places through the last two months. Many are convinced of the imperative to build back better, committed to leaving behind the failed models of trickle-down economics and ready not just to recover, but to embrace progressive reform with ideas such as community wealth-building.

For these local leaders, this unfolding crisis has brought home what they already knew – that the economic model we have followed in recent decades has failed and will fail further if not amended. Far from delivering the promise of prosperity for all, it has left too many less secure and worse off, enriched the already wealthy few and propelled us further down the road to ecological disaster.

Thoughts and action now turn to the deep economic and social challenges ahead and how we create an enduring recovery and deep reform. It is against this backdrop that the Centre for Local Economic Strategies (CLES) will publish Recovery to reform: a roadmap for rebuilding just local economies.

We know that a recovery which attempts to merely build back a semblance of what we had will fail, burdened by global slowdown, lack of demand and a huge shift in consumption patterns. The ongoing climate emergency and this crisis have both exposed deep-rooted failings and we now demand a new type of economy.

In response, over the last two months, CLES has built a broad network of local government leaders, from all countries and regions of the UK. This group is committed to seizing the current moment to accelerate action to reform their local economies for the better.

Local government must be the pre-eminent player in a democratic reform of our economies. People must be at the heart of this, working with local government to counteract the gathering storms of what will be a generation-defining recession. Our blueprint for this challenge stands upon a decade of thinking and practice work under the umbrella of community wealth-building. Now is the moment to mobilise this work and take it into the mainstream.

Community wealth-building focuses on five core themes: land, property and assets; finance; widening ownership of the economy; workforce and labour markets; and procurement. In Recovery to reform, we propose practical solutions under each, adaptable to all levels and geographies of local government:

Land, property and assets: Local government must lead a co-ordinated approach to place management where local land and property are regarded as wealth creators and an asset base from which communities – not global investors – benefit. This involves:

  • Enforcing strong, stretching social value targets so infrastructure spending maximises local jobs and contributes to carbon reduction.
  • Enabling more diverse local and community ownership of land and property, restricting rental extraction.
  • Sustaining the natural environment and protecting open spaces and commons resources.

Finance: Central Government has channelled vast sums into supporting businesses and employees. However, very little of this has been directed to reforming local economies and growing community wealth. Councils and other anchors have key financial roles as we move forward:

  • Leveraging the investments of local government and anchor institutions as powerful drivers of change in the ownership and behaviour of locally based businesses. From pension fund investments in local green infrastructure to the establishment of local state holding companies, investment must be a driver of local economic reform.
  • Utilising capital and financial standing to support the survival and growth of businesses and sectors which contribute positively to the economic fortunes of local people, through facilitating mutual credit networks and establishing local state holding companies.

Widening ownership of the economy: For too long, business support has prioritised the interests of large corporations, with inward investment and economic development strategies positioned accordingly. The present crisis highlights the importance of resetting the dial and putting businesses that serve the community first. We propose practical strategies for business support to expand the market share of locally rooted companies which contribute significant economic and social benefit.

Workforce and labour markets: Unemployment is set to rise to levels unseen in our lifetimes. We need a comprehensive set of jobs schemes including transition schemes to support workers to move into carbon neutral sectors, bringing forward planned spending on housing maintenance, public realm and active travel to grow the local workforce and generate secure jobs for local people.

Procurement: In the coming recession, every pound spent by councils and anchor organisations will have a direct impact on the livelihoods of local people – in some local economies, this spend may even become the primary source of liquidity and demand. Progressive procurement practices need to be scaled-up as part of recovery programmes. Social value needs to be advanced at all stages of the commissioning and procurement process. Insourcing needs to be considered further and practitioners need to consider the possibility of supply chain localisation.

The approaches we set out are not a menu of options for piecemeal action, but a toolbox to equip those intent on driving meaningful and wholesale local economic reform. Many are already answering that call. CLES is working with local authorities from the Wirral to North Ayrshire, Wales to Birmingham on the practical application of these proposals to the COVID-19 recovery.

Frances Jones is associate director of CLES, the Centre for Local Economic Strategies

Recovery to reform: a roadmap for rebuilding just economies will be published on 6 July at www.cles.org.uk

Building community wealth in the food sector

Core issues

The COVID-19 pandemic demonstrated the importance of the those goods and services needed for everyday life, such as food. It has highlighted the lack of resilience in the UK food system, which is overly reliant on imported food, fossil fuels and large corporations.

Alternatives

We need re-localised food systems which increase the capacity for local food production, processing and distribution with dense local supply chains that support existing and future local businesses within the social economy.

Practical steps

  • Land, property and assets: Land is made available for food production and community supported agriculture; repurpose redundant commercial space to support new social businesses, urban agriculture producing fresh produce for local consumption – lowering transport emissions, reducing food waste and improving water and energy efficiency.
  • Finance: Mutual credit networks are established, linking the local food sector with other businesses, increasing the density of local supply chains and creating resilience.
  • Widening ownership of the economy: Business support hubs are repurposed to provide targeted, bespoke support and advice to co-operative food sector businesses. Business hubs and new social businesses are supported by asset transfers or low-cost access to under-utilised anchor-owned premises.
  • Workforce and labour markets: Job transition schemes and intermediate labour market approaches support the unemployed, particularly young people, to gain employment in the burgeoning local food sectors.
  • Procurement: The percentage of local catering businesses engaged by the public sector is increased, with a co-ordinated approach to food and food service procurement across local anchor institutions acting as a source of stable demand for local businesses.

Building community wealth in the retail sector

Core issues

The retail sector has undergone considerable shifts in recent decades – changing consumer behaviour and the rising dominance of multinationals and online platforms have substantially increased the amount of spend flowing out of local economies. For a sector already under pressure, the restrictions that have come with the COVID-19 pandemic could be catastrophic and private equity is waiting in the wings to capitalise on business failures.

Alternatives

Many small businesses have become central to their local communities, playing a valuable role in community mutual aid efforts. With the right support, we foresee an increased share of small, independent companies, owned by their workers and generating local economic and social benefits.

Practical steps

  • Land, property and assets: The local authority purchases commercial retail property vulnerable to asset stripping investors and uses this investment to help kick-start new, community-led businesses.
  • Finance: Mutual credit networks are established to support local retailers to continue to trade; public sector pension investments support the development of local, neighbourhood-based retail hubs.
  • Widening ownership of the economy: Voluntary, community and social enterprise organisations supported to provide foundational services and goods; a co-operative development fund supports the buy-out and conversion to worker-owned co-operatives of retail business at points of transition.
  • Workforce and labour markets: ‘Gig economy’ delivery workers are supported to come together in a new, local co-operative venture providing localised distribution services for independent retailers.
  • Procurement: Local anchor institutions co-ordinate procurement activity to increase their local spend, providing a demand that increases the viability of community businesses in the commercial sector.
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