Wealth for all: an activist local government

Re-municipalisation? Not the catchiest term, but across Europe and the UK, local government is on the rise. Instead of succumbing to the inevitability of decline and being the last line in mopping up social pain, more people within local government are stepping in – making the economy work better for all.

For many years, economic growth hitched to public sector reform has been the mantra.  For some areas it is working, but growth is often meagre or fails to trickle down, and reform is often eroded by demand. The promise of a ‘devolution revolution’ turned into an evolution and is now largely stalled. Inclusive growth has opened doors to a questioning look at economic growth policy but it’s more geared toward national policy. Indeed, warm words around ‘unlocking the potential of growth’ offers nothing particularly new to what many local authorities have been doing for years in terms of adopting living wage policies, working with local business and local labour markets. However, alone this is no enough.

However, change is happening. Many more in local government are seeking to step in and enable – instead of stepping back and letting the market take its course. Local government are helping to facilitate:

• A new type of economy – in which wealth is not extracted by external investors but more broadly held for the many.
• A new society – in which social justice is not a dreamy anachronism, but a realisable ambition.
• A new local government – in which public services are an investment not a cost.

At the vanguard of this movement in the UK is Preston.  For nearly 5 years, the Centre for Local Economic Strategies (CLES) has been working with Preston City Council and 6 other Preston based public sector anchors on local wealth building. This work includes a range of activity which seeks to ensure more local business and local communities have a bigger share and stake in the local economy. The work includes an energy supply partnership, plans for a community bank, opportunities for local investment in the local government pension fund and the development of a cooperative network. However, the main part of the CLES work is the ‘repatriation’ of spend power (through procurement) of the 7 anchor institutions within the city – to ensure more local suppliers get a greater share of the combined spend of nearly £800million.

It has been a great success. Across the institutions, 18% of all procurement spend is now with Preston based organisations, an increase from 5% in 2012/13. This percentage increase has come in times of cutbacks in total procurement spend; nonetheless, the 18% figure reflects an increase in spending in the Preston economy of some £70million. Spend in Lancashire has increased from 39% to 79%, an increase of some £200million in monetary terms. There have also been associated reductions in unemployment, deprivation and other social and environmental benefits.

For those that think this is some form of local protectionism, think again. This is not about rigging markets (though arguably they are already rigged in favour of external investors and big local suppliers). This is about about building capacity and opportunity for some local suppliers, so that they can enter the market and potentially grow. Furthermore, the jobs dividend of 1500 people are a saving to the national public purse (through reduction in welfare benefits) and offer an indirect  reduction in public service demand.

National government could do much more to accelerate this work, including developing a new national and socially responsible procurement strategy post-Brexit.  But even if national government does not, there is much we can be getting on with anyway.  As such, similar work is now happening in Oldham and Birmingham – and no doubt many other local authorities will be considering the potential in their own areas.

This is the beginning of a local government movement.  A movement in which passivity and acquiesce to an extractive economy is being replaced by an activism and refusal to accept second best.