With the local elections coming up in May, I started thinking about what I’d like to see from the local politicians vying for my vote. I’ve been reading a lot recently and taking a bit of stick from friends and family for being a bit of a ‘champagne socialist’.
Last weekend I woke up and decided that it’s time to realise what being a socialist means for me. In short, it is no longer good enough to sit here, bearded, reading about how to change the world, with a coffee and vinyl records on in the background (what a stereotype!).
So here is a letter I have written. I have shared this my local councillor Henry Batchelor and a few others via email. I’m sharing it here too, just in case the same could apply where you are, and this trickle up approach could trickle out to your area.
This was inspired by my recent reading of Ed Miliband’s book Go Big, and I’ve borrowed his examples. I cannot recommend the book highly enough if you feel a bit down about the state of it all at the moment.
Also important to note, I am no expert on this. I’m not an economist or a student or a local politician (although I did work in local government a few years ago…). This is coming from a gut feeling of ‘this could work’. Have a read.
CWB: the basic principle
The basic principle of Community Wealth Building (CWB) is that money made in the area, should be spent in the area at a corporate and public spending level.
This is done through selective, localised procurement practices; starting with the council.
It can take the form of using smaller local businesses to deliver council contracts, setting up council work initiatives for direct employment or working to embed the concepts of CWB across all businesses. For example, incentivising other businesses in the area to do the same and building pride in supporting each other through the difficult financial times we are currently facing.
Preston – a CWB case study
CWB is shown to be a huge benefit to areas where it has been embedded. Following the failure of outside investment after the 2008 global financial crisis, the planned bus station refurbishment in Preston looked dead in the water. However, Preston City Council, found that a change in council policy and in partnership with local businesses, local money could be used to go ahead with the now award-winning restoration. Furthermore, as a result of this policy Preston was named the most improved city in the UK by PwC in 2018. This was made possible by a council initiative towards CWB.
Working with the Centre for Local Economic Strategies, the council found that of the £750m spent by the council on goods and services, only £1 in £20 was spent within Preston itself and only £8 in £20 in the county. The council identified 12 ‘anchor’ public sector institutions to work with – large local employers with long term links to the area – hospitals, universities, football clubs etc.
Working with smaller businesses sounds risky, but put yourself in the shoes of the small local cleaning companies who are approached to provide the cleaning contracts for council properties: this is game-changing for them. They invest, they grow but they aren’t spending that money on outsourcing it – they hire locally. The money isn’t going to shareholders or hedge funds, but back into the local economy. Their employees get a boost and a stable job. Their local suppliers get a boost too.
SMEs are better at local investment
A Federation of Small Businesses study found that small and medium-sized enterprises generate an additional benefit of 63 percent for local economies compared to 40 percent for larger firms. Every £1 spent on a small firm by the local authority could be worth 23p more.
And of course this spreads.
With the new links to local businesses as suppliers, the council is able to start promoting things like higher living wages for their employees. Higher wages means more stability and a better service for the council contract.
However the investment in local companies goes beyond procurement. Greater Manchester’s pension fund diverted £50m to invest in local small businesses. Grab your calculators: £50m spent on small businesses is worth how much to the local economy?
By keeping the money within the local economy it encourages local companies to grow, pay their staff more, stay in the area, spend and generate income which eventually ends up back in the council’s coffers – or at the very least, reduces the reliance of the public on the council relief funds. I would urge councils to consider strongly the benefits of addressing some of these issues and reassessing the procurement practices and corporate investments.
Trickle-down economics of the past has been shown not to work. Trickle-up does.