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Community Wealth Building – Greater Manchester and the Preston Model

Last month GMPA Director Graham Whitham wrote about the consequences of a failing economic model and how Greater Manchester can build an alternative local economy that addresses these challenges. We invited Councillor Matthew Brown to respond based on his work in Preston.

Communities in Greater Manchester and across the country must ask some quite challenging questions if we are serious about tackling inequality, with the last decade seeing the exacerbation of a systemic crisis rooted in the dysfunctional nature of corporate capitalism.

Matthew Borwn: Community Wealth Building article for GM Poverty Action

Matthew Brown

The global economic downturn which struck ten years ago saw billions of pounds of public money bail out a financial system under little form of regulation and democratic control.  Despite this injection of public wealth banks lend little to local businesses and large corporations often sit on wealth rather than invest to create jobs and growth.  As a result austerity continues to bite and inequality and insecurity continues to grow.

In this context it is not unfair to conclude the system is broke, as GMPA has recently argued, and new and radical solutions are needed to fix it.  The interest shown in what has become known as ‘The Preston Model’ or Community Wealth Building offers part of this solution by building more democratic and self sufficient local economies.  It is a strategy employing many levers to create and retain wealth in place and tackle inequality from the grassroots upwards.

In Greater Manchester, ‘anchor institutions’ such as councils, universities, hospitals and housing associations spend billions every year on goods and services as part of their everyday business.  Much more of this wealth sitting in communities already could be redirected to local suppliers, expand social outcomes like the real Living Wage and the number of democratic enterprises like cooperatives.  I know that the Centre for Local Economic Strategies (CLES) and the University of Manchester, through the Inclusive Growth Analysis Unit (IGAU), have already instigated a meeting earlier in the year with many anchors, and plans are afoot to explore how an anchor approach could be progressed. Furthermore, CLES are working with Oldham Council and partners on an anchor approach, and that is an excellent basis for scaling up the approach across GM, assisted by Oldham Leader Cllr Jean Stretton’s role, as GM lead on equality, fairness and cohesion.

In Preston, we have collaborated with CLES and around 10 local public sector organisations since 2013 to instigate a cultural shift that has seen a £200m investment dividend across Lancashire by the local public sector, more than triple goods and services bought from suppliers in Preston and double from Lancashire.  The amount of GVA added we calculate has supported 1500 jobs in Preston and increased the number of people receiving the real Living Wage.  We see there are significant gaps in the local supply chain and are working with our university and others to potentially fill some of these with worker led cooperatives to inject more democracy into the local economy.

Manchester City Council very successfully pioneered a similar strategy from 2007 onwards with CLES to increase their own spend in the Manchester economy from 51% to 73%.  If this was scaled up to persuade the vast majority of the local public sector in Greater Manchester to support local suppliers, expand the social economy and social value outcomes it could be transformative.

Local and public banking and energy democracy are other essential tools to tackle inequality and democratise local economies.  The extractive nature of many large banks needs to be challenged by promoting alternatives which also instil a sense of civic pride.

Preston City Council is currently exploring opportunities to establish the Lancashire Community Bank based upon the successful German Sparkassen model which ensures Germany possesses the most vibrant SME base in Europe.  Preston has also joined with another local authority to launch a not for profit local alternative to the Big 6 energy companies called Red Rose Fairerpower offering fairer, more accountable energy to Lancastrians.

Local investment by public sector pension funds, credit unions, living wage policies, municipal enterprise and employee ownership are other ideas which build new economies from the grassroots upwards creating social movements which genuinely ‘take back control’ by promoting local ownership.   The Greater Manchester Combined Authority and Mayor Andy Burnham are aware of the anchor approach and are ideally placed to bring such initiatives together in a coordinated way with many of these ideas already growing within the city region.

Despite best intentions local government has often been seen as a little too managerial when it should be transformative.  The severity of the system problem we face is arguably contributing to outcomes like the decision to leave the European Union out of a sense of misplaced anger despite the EU contributing much to our region.  That debate aside we have little choice but to seek new solutions to protect our communities.  To do this we must be brave and radical.  When the problems remain big the solutions to tackle them must be big also.  Let the movement grow in GM!

Councillor Matthew Brown is Cabinet Member for Social Justice, Inclusion & Policy on Preston City Council. You can read more about the Preston Model in context here.