Summit 2020: A more economically democratic recovery
New year, new economy! As we adjust to the bright lights of 2021 the CLES team are looking forward and exploring the prospect of local economic reform as we commence the long journey to Covid-19 recovery. In this spirit we’re sharing write ups of our policy breakout sessions from November’s Community Wealth Building Summit. In the last of this blog series Rachel Bentley considers how the economy can be more broadly held through plural ownership models.
Even before Covid-19, the UK was already one of the most unequal countries in the world in terms of both income and wealth. This trajectory of inequality has been worsening for decades and the pandemic has now both revealed and exacerbated these inequalities. As we face an era of business failure and unemployment that will be compounded by Brexit, what role can plural ownership play in fostering a more economically democratic recovery?
“enable wealth created by communities to be held by them, rather than flowing outwards”
Plural ownership of the economy is one of the five pillars of community wealth building. This pillar seeks to promote locally owned and socially minded enterprises. It encourages more diverse models of enterprise ownership that enable wealth created by communities to be held by them, rather than flowing outwards into the pockets of distant shareholders.
The CLES Summit brought together Deb Oxley OBE, CEO of the Employee Ownership Association (EOA), Cllr Joe Cullinane, Leader of North Ayrshire Council and Miriam Brett, Director of Research and Advocacy at Commonwealth to discuss what levers can be pulled to ensure a more plural and democratic ownership of our local economies.
“the EOA defines plural ownership as one where all employees are offered a stake and a say”
Deb outlined the role that plural ownership models can play in creating sticky local wealth. As many employee-owned businesses and cooperatives were once family businesses, they often have strong and long-standing ties to local areas. They recruit and procure locally and are complementary to community wealth building in their core. She stressed that the EOA defines plural ownership as one where all employees are offered a stake and a say in the business. These combined forces address some of the power imbalance inherent in many traditional businesses. Deb noted that, despite SMEs employing more people than publicly listed companies in the UK, awareness of the diversity of ownership models is not well-understood. In this, she argued that councils have a vital role to play in signposting entrepreneurs and workers to organisations like the EOA and Cooperatives UK.
“plural ownership is […] fundamental to building a more generative economy from the bottom up”
Cllr Cullinane noted that plural ownership is the common thread running through North Ayrshire’s 55-point community wealth building action plan because it is, in their view, fundamental to building a more generative economy from the bottom up. He went on to discuss the role of the Council in not just promoting community wealth building through local procurement spend but redirecting this to businesses with plural ownership models. He also addressed how the council is looking to insource vital services like home based social care, as well as looking at bring vacant and derelict land back into productive use through developing land for private sale but retaining profits within the community.
Miriam introduced Commonwealth’s recently published joint report with The Democracy Collaborative, Democratic by Design. She explained how the pandemic has revealed and compounded the brittle condition of local economies and argued that there is no evidence that this will be resolved without a complete rethink of the system that must be forged from the ground up and rooted in new values of economic justice. She also elaborated on the danger of a return to the idea of the Big Society – the community plugging gaps in what should be delivered by a well-funded local state.
“employee-owned businesses can be a differentiator when it comes to attracting younger employees”
There was wide agreement amongst the speakers on the scale of the change needed, with Deb noting how plural ownership businesses represent a very small section of the UK’s economy when compared with similar nations. She noted that employee-owned businesses can be a differentiator when it comes to attracting younger employees. Each speaker discussed the need for diverse funding models like social wealth funds, national investment banks and mutual credit networks that could provide long-term patient financing to bring about the change needed.
“community wealth building principles can apply anywhere but need to be tailored to the distinct characteristics of the area”
Session participants asked a range of questions, including how to make concepts such as pluralising the economy more relatable and less academic. Others raised the question of whether community wealth building can work in all places particularly those where the economy is overheating, leading to the displacement or exclusion of local people from economic growth. Cllr Cullinane provided the example of North Ayrshire where the challenges faced on the island of Arran around exclusion from land ownership are distinct from those in the mainland towns. He emphasised that community wealth building principles can apply anywhere but need to be tailored to the distinct characteristics of the area.
In closing, moderator Isaac Stanley summed up a stimulating and engaging session by reiterating that democratising the economy is not an end in itself, but ties into a whole movement of establishing a truly democratic society. Tinkering around the edges of the system will not be sufficient to bring about the wholesale change needed.