The UK is the fifth most unequal country in the world, according to the OECD. Financial wealth is held by a small minority, 44% of the UK’s wealth owned by just 10% of the population, five times the total wealth held by the poorest half. More than a fifth of the population live on incomes below the poverty line despite the majority of these households being in work.
At a local level, this means that the wealth generated by workers, local people, communities, local enterprise and business in our towns and cities does not flow back to them, but instead is extracted by distant shareholders as profits and dividends.
Data from OECD in 2017 identified that the UK was the only developed economy where wages has fallen in real terms while the economy grew. Over the last 30 years we have seen the severing of the links between wages and economic growth, which has fuelled further this inequality and led to a hollowing out of local economies.
Rebuilding the connection between the people and the places that create wealth and those who benefit from it is at the heart of community wealth building. We know that locally owned or socially minded enterprises are more likely to employ, buy and invest locally. This means that rather than extracting wealth they contribute to local economic development. For this reason, community wealth building seeks to promote locally owned and socially minded enterprises.
To further strengthen the link, community wealth building promotes various models of enterprise ownership. These include public sector insourcing, municipal enterprises, worker ownership, co-operatives, community ownership and local private ownership. These models enable wealth created by users, workers and local communities to be held by them, rather than flowing out as profits to shareholders.