Resources for the metropolises of the 21st century

Our Chief Executive, Sarah Longlands, spoke last month at La Metròpoli Pròspera, organized by the Metropolitan Strategic Plan of Barcelona. Following her appearance she spoke to Mariona Sanz for Critic.

This article is translated from the original Catalan.

Sarah Longlands is a researcher and Chief Executive of the UK Centre for Local Economic Strategies (CLES). Longlands was a speaker at La Metròpoli Pròspera, where she reflected on how resources can be distributed in the metropolises of the 21st century. We talk to her about it and also look at the impact of the latest crises (financial, Covid-19, Brexit) and how to foster growth that leads to greater social justice.

The aim of the CLES is to promote a “progressive” economy for people, planet and place. But what exactly is the progressive economy?

It is the creation of a generative economy – that is, an economy for people, with decent wages and fair working conditions. It tries to ensure that people can have a good life and good public services.

Your focus is on “ community wealth building” . Can you give the example of a successful project in the UK based on this strategy?

We have been developing this approach for over 10 years. We started in Manchester, when the City Council asked us for help because they spent a lot of money on local economic promotion, but these efforts failed to help the most disadvantaged. We worked on public tenders to ensure that they were truly open and available to local businesses and communities. We also promoted job offers to reach the most disadvantaged people, because before these people did not even know of the existence of these jobs or felt that they could not get these jobs.

Also, you work with what you call “anchor institutions”. What does this concept mean?

In Preston, a case that is often referred to as the example of building community wealth, we intervened after an investor who had been engaged to build a large shopping centre in the middle of the city stepped back, just before the financial crisis. The authorities realised the consequences of dealing with foreign-owned companies that have all the bargaining power and that are essentially wealth-extracting forces. So we decided to identify the “anchor institutions”, which are the organizations that will never leave the city, such as the university, the City Council or public health, to make better use of the resources they already had. A more recent example is that of Birmingham, where there was a real desire to generate wealth locally. There we also distinguished seven “anchor institutions,” which can have a real influence on the economy, and even more so if they combine forces.

What example could you give of combining forces for the benefit of the community?

This network in Birmingham has been key during the Covid-19 pandemic, as while many people were losing their jobs in hospitality and aviation, hospitals and the health system had plenty of places to cover. Jobs have shifted from one sector to another, and thanks to coordination it has been possible to offer new jobs to many people who had lost their jobs.

What is the impact of Brexit on local UK economies, also considering that it has coincided with the pandemic?

As has climate change, because in the UK we are having a lot of problems with floods! I find it difficult to generalise, but the biggest impact of Brexit has been uncertainty. No one knew what was going on with Brexit, and people still don’t know what’s going on. This is very evident in Northern Ireland, where I am from. Aside from the real problems evident on supermarket shelves, there are political tensions that are resurrecting the social unrest of the years of civil conflict.

But across the UK there is uncertainty and the impact depends on the sectors; it is quite unbalanced. Some areas are under great pressure due to staff shortages, such as logistics or construction. These are sectors that continue to grow and that feel the pressure to hire staff. We have over a million job vacancies!

Equally, economic inequalities continue to widen. And I think Covid-19 has clearly exposed the weaknesses of the model based on economic growth. The UK is one of the most unequal countries in Western Europe. In the north of England, any metric shows that people are much more likely to have lower incomes, grow up in poverty, get sick or even die younger.

What a combination to expose the shortcomings of the model based on economic growth: inequality, financial crisis, Brexit, pandemic, climate change…

And we didn’t mention austerity! Funding from UK local authorities has dried up completely in the last 10 years and local governments have had to manage the impact of Brexit and Covid-19 on a highly centralized system. There is already a lot of tension and fatigue, but now a lot of help related to the pandemic will be over, and I fear it will be even worse.

That is why wealth creation is so important to the community. Better not to have to wait for the central government to come up with ideas or initiatives. We need to think: what we can do with what we already have? How do we strengthen our economy in a way that will help us protect and support people in a time of great uncertainty? In Greater Manchester we have mayors like Andy Burnham who understand this and are trying to decentralize decisions towards the territory.

What specific aspects need to be worked on so that local economies are at the service of the people?

There are five pillars that local authorities can consider. The first, which we have already discussed, would be the procurement and acquisition of goods and services, ensuring that local companies can bid to act as service providers.

The second would be to ensure that funding flows, which are usually quite extractive, really work for the local population. For example, we are very interested in the idea of regional banks in the UK. We have a very centralized banking structure and we would like to see more regional local finance structures as well as mutuals and credit unions.

Third, the employment strategy of local authorities must be fair, provide a decent wage and healthy working conditions. This is one of the issues we have worked on with the NHS in Birmingham. You can’t care for and help sick people while you stress and make the workers themselves sick.

The fourth pillar has to do with properties and land in public hands. In the UK the public sector has a lot of land. Therefore, it is necessary to ensure that communities receive the maximum social value from how that land is used.

And finally, a plurality of business ownership needs to be promoted. There are currently too many organisations in the hands of companies that have nothing to do with the place they’re supposedly serving. How do we change this so that most of the economy is owned by people who live in the place and the money goes back to the communities that live there?

This last point is also very relevant here, with foreign investment funds disrupting the real estate market. Is it David’s fight against Goliath?

It is a necessary struggle, but we must also promote local capacity, so that people are able to think that their joint strength is accumulating enormous economic strength. The public sector is one of the most powerful tools we have to reclaim local economies and make them work for the people. And we own the public sector, because it’s our tax revenue.

In my country, where most local government spending comes from the central government, austerity has forced local authorities to try to find new ways to generate money. There is a lot to do, for example, in the field of health and social care.

Economic growth does not necessarily imply more well-being for people .

Indeed, there is no such thing as an economy without people. We cannot focus only on economic growth. For people to have greater well-being, we must intervene in the economy, focus on employment and spending. We need to look at existing wealth and encourage people to work collaboratively to maximize the social value that can be gained from it.

In Europe it has been criticized that European Next Generation EU funds have gone mostly to large companies and multinationals. What do you think?

We unfortunately no longer have European Union funding. But when the UK had it, this issue has always been debated. The key is how these aid schemes are designed. It is necessary to identify where this money has gone, what type of company and why. This information is public and is an issue that should be analysed, as it is the responsibility of the European Union to make money available for local and community business development.

It’s not about throwing money at people or communities, it’s about understanding that money is an economic engine in itself. You have to see them as a flow. The public sector not only provides services; you can also set up the market.

You also talked about climate change. How can we promote that economic growth does not have a negative impact on the environment? Is it even possible?

So far we have tended to run the economy in the UK, as in many other places, focusing on economic growth. If the economy grows, everything will be fine. And in the last decade we have realised that this approach is very bad for climate change. But the threat of climate change is a big problem that also includes some areas of opportunity. In the north of England we have some of the most inefficient buildings in all of Europe, probably in the world. So why not think about how to become a modern equipment centre using eco-friendly technology?

The steel, glass or copper industries are very carbon intensive, but very important to our economy. Then, we could do like Sweden, and produce, for example, green steel. Another feature of the UK is that it is very rural and we have a lot of natural resources, so we work on ecosystems and their management. Mitigating climate change will help create jobs. Current challenges need to be connected with new business and job opportunities. This is a big role that authorities can play.