Community wealth building in Scotland

This post originally appeared on the website of Scotland’s Centre for Regional Inclusive Growth.

Inclusive economic growth is a key aspiration for Scotland, as set out in the country’s Economic Strategy. Scotland aims to grow a sustainable and successful economy whilst tackling inequalities. To realise these aspirations, the fast-moving community wealth building movement offers a practical, common sense local place approach.

The community wealth building approach starts with a strong focus on wealth. We know that Scotland is a relatively wealthy country, however wealth here has grown much faster than income. This disparity has disproportionately benefitted older people. Those born in the second half of the 1970s have a third less wealth than those born in the first five years. Furthermore, wealth distribution is geographically and socially uneven, with the top 10% owning a staggering 200 times more wealth than the bottom 10% (a median wealth of £1.3m compared to £6,000). Indeed, the wealthiest 10% own 43% of all wealth in Scotland, with the least wealthy 40% only owning 5%[i].

In Scotland, community wealth building is prompted by these wealth disparities and framed by inclusive economy aspirations and the ‘place principle’[ii] developed by the Scottish Government and the Convention of Scottish Local Authorities.

“community wealth building represents a deep focus on the development of inclusion before and during economic activity”

Community wealth building should not be seen merely as economic development or regeneration as we know it coupled to social justice narratives. Instead, the approach seeks to hotwire issues of community wealth into the functioning of the Scottish economy. Building on accepted ideas of inclusion via the redistribution of economic growth ‘after the fact’ of its creation, community wealth building represents a deep focus on the development of inclusion before and during economic activity. It does this by ensuring that the economy and production of wealth is brought significantly closer to our everyday lives, our communities and our neighbourhoods.

At the heart of community wealth building sits five principles. Some of these seek to harness the power, wealth and economic clout of large commercial, public and social sector organisations such as businesses, universities and local authorities with a significant economic and social stake in a place. These anchor institutions can exert their sizable influence to impact upon economic, social, and environmental priorities, generating community benefits and wealth.

The five principles:

• Plural ownership of the economy is about deepening the relationship between the production of wealth and those who benefit from it. As such there is a focus on developing co-operatives and locally owned or socially minded enterprises within the economy. These by their very nature are more locally generative, as economic activity is more rooted and relational to place.
• Making financial power work for local places by increasing flows of investment within local economies. For example, local authority pension funds are encouraged to redirect investment from global markets to local schemes and community owned banks and credit unions are supported to grow.
• Fair employment and just labour markets is about working within large anchor institutions and their human resource departments to encourage them to pay the living wage, adopt inclusive employment practices, recruit from lower income areas, build secure progression routes for workers and ensure stable employment contracts and reliable hours.
• Progressive procurement of goods and services is about developing a dense supply chain of local enterprises, SMEs, employee-owned businesses, social enterprises, co-operatives and other forms of socially rooted business, which can provide goods and services to the large local anchor institutions. This is a means through which greater social and environmental benefits can be harnessed through local economic multipliers which increase wealth retention within the local economy.
• Socially productive use of land and property is about ensuring that equitable forms of ownership, management and development of local assets are developed. In community wealth building the function and ownership of these assets is deepened to ensure that any financial gain is harnessed by local people and communities.

“today there are dozens of localities across the UK and Europe who are developing community wealth building approaches”

These practical principles of community wealth building are already present to some degree in Scotland. The difference now is in the deepening of intent and action around them. We already know this works to great effect. The so-called Preston model has been held up as a ‘poster child’ of community wealth building and the Centre for Local Economic Strategies (CLES) has been working in Preston since 2012. The unrolling of a community wealth building approach has seen a significant improvement in local jobs, and the development of co-operatives within the economy. Community wealth building success in Preston has gained significant plaudits – it is now recognised as one of the most improved localities within the UK. But Preston is not alone – it is worth noting that today there are dozens of localities across the UK and Europe who are developing community wealth building approaches. This includes the city regions of Liverpool and North of the Tyne. It also includes the London boroughs of Islington, Newham and Lewisham, who are deepening their progressive procurement practices, their support for local enterprises and markets and looking at tackling speculative land and property ownership. In the North East, Gateshead Council have a longstanding process of insourcing and municipal enterprises and are seeking to advance and deepen procurement work. In Merseyside, the Wirral are looking at working with Preston to advance a community bank and have an emerging plan to advance the plurality of their economy. Salford, through their inclusive economy approach, are looking at employing the full suite of community wealth building activities.

In Scotland, North Ayrshire Council is developing a community wealth building approach and this has been augmented by the Ayrshire Growth Deal which has supported the councils of Ayrshire with a £3m community wealth building fund. Recent analysis and action work by North Ayrshire Council, supported by CLES, has heralded the start of a programme of work, which seeks to influence not only the anchor institutions of North Ayrshire, but also the wider Ayrshire Growth Deal.

“there is a hunger in Ayrshire and across Scotland to embrace this agenda and make a step change in the economic and social fortunes for all”

This is an exciting movement and moment, with recent workshops involving CLES, Scotland’s Centre for Regional Inclusive Growth and Economic Development Association Scotland (EDAS) testament to significant interest from local authorities across the country. The work in Ayrshire is an important test bed, and there is much work to do. What is clear, however, is that there is a hunger in Ayrshire and across Scotland to embrace this agenda and make a step change in the economic and social fortunes for all. There is no doubt that the national policy frame of inclusive economic growth, the place principle and the collective will across the public, social and commercial anchor institutions and sectors in Scotland creates a fertile territory. Therefore, we can expect the community wealth building movement to successfully develop and grow.

[i] Bell, T and D’Arcy, C (2018) The £1 trillion pie: how wealth is shared across Scotland. Resolution Foundation

[ii] The place principle asks that all partners responsible for providing services and looking after assets in a place work and plan together to support inclusive and sustainable economic growth and create more successful places.