Wealth building for our local economic recovery
This article was originally published by LGiU
Economic recovery from Covid-19 looks set to be a long and painful process. Beset by business failure, huge levels of unemployment and social hardship, it will take government action on a scale unprecedented in modern times to safeguard the wellbeing of millions and drive the transformation required to build back better.
The public health crisis has seen an amazing response from communities, with energy and imagination that comes from solidarity, empathy and a genuine belief in the power of working together. This power needs to be harnessed, however. With the main economic crisis unfolding at pace, we now have private equity firms waiting in the wings to snap-up distressed business assets and take an even greater ownership stake in our economy. The stakes are high and to prevent us from falling into an “Amazon recovery”, where big businesses and corporate behemoths are the only winners, we must seek to animate the power of the community within the commercial economy.
Across the UK, a movement is growing of local leaders who are committed to leaving behind the failed model of trickle-down economics and who are focused on embracing progressive reform through community wealth building.
“community wealth building aims to retain as much wealth as possible in the economy – making it stick”
Emerging in the 2010s, community wealth building is a model of local economic development which tackles head on the challenges of building a long lasting and resilient economy. The approach is predicated on harnessing the power of local communities, with local agencies and institutions, to support local economies. As opposed to wealth being extracted by distant shareholders and owners, community wealth building aims to retain as much wealth as possible in the economy – making it stick.
At its core is a focus on locally productive forms of business. These “generative” businesses, such as employee owned firms, community business and social enterprise are firms in which wealth is both created and shared broadly between owners, workers and consumers, ultimately increasing local multipliers as wealth flows through to people and places.
“we call for the repurposing of existing business growth hubs and business support services to become new ‘community wealth hubs’”
Building on a community wealth building approach, we have recently published Own the Future – a guide for new local economies, which sets out how this approach can and must be mobilised to build genuinely inclusive local economies in the wake of the Covid-19 pandemic. Crucially, we call for the repurposing of existing business growth hubs and business support services to become new “community wealth hubs”. These would provide an eco-system of financial, technical and social support. Here then, community energy would be channelled into the growth of employee ownership and new community-owned businesses to deliver goods and services hitherto delivered by extractive players in the private sector.
In harnessing community power to build back better, there is also a vital role for effective community engagement strategies to ensure diversity and inclusivity in rebuilding local economies.
“if ever there was a time to harness the power and energy in our communities to repurpose our economy, that time is now”
CLES is currently working with a number of local authorities to deliver recommendations as to how such strategies can be improved. An emerging theme from our recent work involves the crucial and evolving role that councillors must play in rebuilding trust, strengthening relationships with marginalised groups and creating more direct lines between people and power. Our work is also uncovering the important contribution of wider anchor institutions to the community engagement agenda. In Birmingham, Aston University Business School has secured funding from the European Regional Development Fund to support diverse and minority-owned businesses to enter the supply chains of major contractors/organisations with a view to building a more inclusive local economy. If ever there was a time to harness the power and energy in our communities to repurpose our economy, that time is now. Communities must be empowered to take the economy on as we rescue, recover and reform in the wake of Covid-19.