Read about how community wealth building could be the key to creating a fairer West Midlands.
Founded in 1900 by George Cadbury, the Bournville Village Trust was created to transform the living standards of working-class communities in the Birmingham area. A philanthropic forerunner to council housing, the Trust started with just 313 homes and the goal of ‘alleviating the evils of modern, more cramped living conditions’. These low-rent ‘ten-shilling’ homes served workers at the Cadbury’s factory and other families on low incomes in the area alike; today, the housing association operates 8000 homes, with the mission of ‘creating and sustaining communities where people can thrive’. The Trust is a testament to what pioneering actors in the West Midlands can do to share the prosperity of our strong regional economy, so that it benefits working people. More importantly, it’s a lesson for us as socialists seeking to make our communities fairer, more equitable places.
The need for such radical change in the West Midlands is not new - the 2017 State of the Nation report found that the region had the worst unemployment rate in the country - but it’s required now more than ever if we are to recover from the fallout of the pandemic and Brexit. The challenge will be no small feat: EY reports that, when measured by Gross Value Added (GVA), the region’s economy will not recover to even 2019 levels before 2023. The good news is that we don’t have to wait for philanthropic chocolatiers to take action (not least Cadbury’s, which is now an American-owned business); nor is Westminster the sole vehicle for change either. Today, we have devolution and public service procurement frameworks that give more power to local authorities than ever before. Today, we have an army of community activists tackling the social injustices exacerbated by the challenges of 2020. Today, we have resilient local co-operatives and other businesses rebuilding the economies of the communities they operate in. Our mission as socialists is to utilise the opportunities of today, to create the fairer West Midlands we want to see.
A strategy for utilising these opportunities in the right way can be found in the community wealth building approach. This approach involves not just the rebuilding of our local economies, but also the reconceptualization of how they operate: it concerns place-based strategies to empower local communities to create and retain wealth locally. Three key evidenced-based strategies can be identified for local government to consider: one, adding social value as a precondition to public procurement contracts; two, collaborating with major actors, or ‘anchor’ institutions, in a local area to support the local economy; three, supporting co-operatives and other community enterprises. I will explore these in turn.
From bin collections to school meals, local authorities spend hundreds of millions of pounds every year on procuring goods and services. Too often, procurement contracts are offered to companies purely on a value for money basis. This is usually measured in terms of how cheap a bid to provide a service or sell something is. Such a narrow framework inevitably favours businesses that are able to cut costs at all costs. This means that those that are awarded contracts are often large companies, that are not usually based in the area, and in some cases, tax avoiders. Changing procurement frameworks so they factor social value alongside cost-effectiveness is not only ethical, but also more economically logical too: this is because it actually pays to support smaller, locally-based firms. Research from the Centre For Local Economic Strategies found that for every £1 a local authority spends on a small firm, 49p was re-spent in the local economy; in contrast, a large firm would only re-spend 31p. More money circulating locally means communities retain a greater amount of wealth. This not only has the benefit of driving up living standards in a local area, but it also helps to make local economies more resilient when facing challenging economic periods.
Progressive procurement is not just a matter for local authorities, however. Other local institutions, be they in the public sector (such as NHS Trusts) or outside it (universities) can all do more to obtain goods and services from local providers. Local government has a critical role to play in making this happen, as councils and combined authorities have a core position in communities. They have the power to bring together big local players, or ‘anchor institutions’, to consider how they can all contribute to benefiting the local community they serve. The quintessential example of this is Preston City Council, which revolutionised its own procurement processes and encouraged other local actors to do the same. As a result, anchor institutions have recirculated over £200 million into the local economy. The rewards have been outstanding: in 2018, just six years after the council began its journey of community wealth building, Preston earned the title of the ‘Most Improved City in the UK’.
Beyond anchor institutions, it’s still important that local communities are building and retaining wealth as much as possible. Co-operatives and social enterprises can help to democratise local economies, and thus share prosperity more equally. While councils and combined authorities may struggle to provide financial assistance, simply establishing ethical business networks can help to empower new starters and share best practice. The rewards of helping grow such businesses are well worth the effort: Co-operatives UK found that, between 2013-18, start-up co-ops had a 34% greater rate of survival than private companies. Such resilience is worth pursuing.
Specific policies aside, the fundamental quality of community wealth building is that its inherently bottom-up nature ensures it is a flexible process. As socialists, we should champion it as a concept and work to adapt it to the specific needs of our communities. By doing this, all parts of the West Midlands can recover from the tough economic times we find ourselves in faster, and become the fairer places we want them to be sooner.