Community wealth building should be at the heart of recovery plans as local economies try to rebuild after the pandemic.

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That’s the view of the Centre for Local Economic Strategies (CLES), a think tank whose team has spent a decade helping councils design economies that value people and place over extraction of profit. Experts warn many of the areas which will be worst hit by the post-coronavirus downturn are in the north – with economic output expected to halve in Pendle and drop 45 per cent in Rossendale and South Ribble in the second quarter. The Centre for Progressive Policy figures predict Blackpool will suffer a 26 per cent decline in gross value added.

“Stark relief”

Frances Jones, associate director of Manchester- based CLES, said: “We’re all speculating about scale of impact at present but it’s clear that what’s happening at the moment will structurally change the nature of local and national economies and the global economy. “We believe the pandemic has thrown into stark relief the economic issues which have been clear to a lot of people for many years. There’s quite a strong consensus that we mustn’t simply go back to how the economy was in January 2020.”

Over recent years CLES has worked with local authorities including Preston, Salford and Wigan. The so called Preston model has seen the city council, county council, hospital and university take part in a procurement initiative that aims to maximise the money spent locally. Salford has started building social housing, increased care workers’ pay and worked to get marginalised residents online. Wigan has overhauled its social care sector.

Emerging after 2008 financial crash, community wealth building stands in direct opposition to the prevailing neoliberal model – in which economies are based around extraction of profit for shareholders. At its heart the approach recognises that the financial, physical and social assets of institutions and people can be harnessed for community benefit.

Progressive local authorities focus on the so-called foundational economy – activities that provide essential goods and services for everyday life. These include infrastructure, utilities, food processing, retail, health and education. Local anchor institutions are central to the approach, in which the purchasing power of large organisations, such as universities or hospitals, plays a key role in supporting the local supply chain. Procuring from nearby suppliers as much as possible benefits areas by providing employment, developing workforce skills and boosting the sustainability of business.

It is thought that up to 15 per cent of the UK population already live in an area where the local authority is pursing some aspect of community wealth building – a figure that CLES hopes will increase following the pandemic. Over recent weeks its sessions have been attended by senior figures at around 20 local authorities, as well as other political figures.

Model of inequality

Jones said: “There are lots of examples of great work over the past 10 years. They have been operating at the margins of a model which creates the inequality and insecurity that we’ve seen thrown into stark relief by the pandemic. Now that needs to be front and centre of the economic recovery.”

In the short term, councils must identify parts of the local market that are most valuable to their place and help them weather the storm of lockdown and its aftermath. Lancaster City Council linked with local suppliers that had lost their markets almost overnight and used them to set up its food distribution scheme for residents who are self-isolating.

Wigan has distributed £18,000 so far to grassroots organisations, which are able to reach vulnerable residents more effectively. One of those, Ince-based community transport group Driven, was awarded almost £5,000. As well as covering some overheads while the organisation is unable to operate as normal, the money will help it deliver food parcels in the Hindley area. The group is also receiving referrals from the council’s welfare helpline, meaning it can support people to attend medical appointments, or even pick up their click and collect food orders.

Salford is drawing on the local voluntary sector via the Spirit of Salford network – for which over 700 people have signed up as volunteers. The group can organise food deliveries and pet walking for people self-isolating, as well as help such as housing and benefits advice. “This is interesting, as many councils haven’t really seen their citizens as collaborators for a long time,” said Jones. “That willingness to be interventionist, the willingness to break free of the bureaucracy and the new relationship being forged with citizens – if these features can characterise the recovery we’ll be in a completely different place to where we were six months ago.”

Once the immediate public health crisis abates and government support tapers off, however, there will be a fragile moment where many companies will find it difficult to survive. At that point some will collapse while others could be snapped up by investors and asset-stripped. “Then there’s a really interesting question about rebuild – namely, how do you not just rebuild the economy but fundamentally reform it after a crisis?” said Jones. “For community wealth building that’s about how do you increase the share of companies owned by their workers, or firms which generate the kind of local economic and social benefits that you don’t see in the parts of the economy dominated by the big multinationals?

“During the rescue phase, local government suddenly became more comfortable being more interventionist and ignoring the normal rules of the market. This is really promising but they need to be transferred into the way we do the rebuilding because in many places, the council, hospital and university or college are now going to become the economic lifeblood of many places. The kinds of decisions they make, therefore, in terms of what they buy, who they employ, what they do with their assets, buildings and land, are going to become really defining questions for a generation.”