Could Preston provide a new economic model for Britain’s cities?

Preston bus station. Image: Getty.

Could a blueprint for a self-sufficient local economy worked out by a Lancashire council struggling with poverty and austerity signpost the future for municipalities across England and Wales?

Preston City Council’s work towards developing an economic ecosystem rooted in co-operative principles informed elements of the programme on which Labour fought June’s general election. It’s also at the heart of a major new report, seeking to establish a philosophy to guide the party’s economic policy at local and national level.

The foundations of the Preston Model were laid in 2013, as the Labour-run council cast around for ideas to rebuild the economy of a city ranked in the bottom 20 per cent of the deprivation index, and facing the near-halving of its central government grant from £30m to £18m.

The council looked across the Atlantic to find a possible way forward. It found it in the example of Cleveland, a rust-belt city that has pioneered initiatives to consolidate and widen the circulation of wealth within its economic orbit.

Cleveland’s ’community wealth building’ project emphasises the role large institutions rooted in a municipality such as hospitals, airports, colleges, housing associations – and local authorities themselves – can play as ‘anchors’ around which regional economic ecosystems can stabilise and grow.

By allocating more of their spend budgets to local suppliers and producers, recruiting from the workforce on their doorsteps and incubating local businesses and community organisations, the anchors can keep wealth flowing in municipal economies.

The Cleveland philosophy overlaps with the Foundational Economy concept developed by Manchester University’s Centre for Research on Socio-Cultural Change (CRESC), which underlines the often overlooked importance of the ‘everyday’ economy. This is the backbone of the regional infrastructures that employ a third of the workforce in England and Wales, and encompasses sectors such as care, health, education, retail, hospitality and food processing.

The council worked with the Democracy Collaborative, a US consultancy closely associated with Cleveland’s reconstruction, and British think-tank the Centre for Local Economic Strategies (CLES) to identify anchors capable of bootstrapping Preston’s economy.

It found that, of the £1.2bn spent annually by major city institutions – including the city and county councils, the university, the constabulary, the hospital and the housing association – only a fraction went to Preston businesses and organisations.

The council worked with its partners to encourage the anchors they identified to reconfigure their spending patterns. A £600,000 printing contract tendered by the constabulary was kept in Preston, and the £1.6m council food budget was broken into lots and awarded to farmers in the region. Since 2013 the council has spent an additional £4m locally, up from 14 per ecnt of its budget in 2012 to 28% in 2016.

As the project has gathered momentum, Preston has established a social value framework to inform all aspects of the local procurement cycle, as well as a city wide credit union as part of a financial inclusion strategy.

Councillor Matthew Brown – Preston’s cabinet Member for  social justice and inclusion policy – says the council is working towards building a tightly integrated ecosystem of co-operative enterprises around the city’s anchor institutions. In this, it is following the example of Cleveland’s Evergreen Co-operatives network and Spain’s Mondragon federation:

“We’re trying to promote public ownership at a local level. So there’s the idea of establishing a community bank. There’s the idea of promoting credit unions and community development funds. There’s the possibility of using the council’s pension fund for investment in the local economy. We’re looking at establishing municipal energy partnerships. And there are possibilities around creating co-ops where there are gaps in the supply chain – we’re working with the university on that now.”

Preston’s move towards self-sufficiency has helped the city achieve the second biggest shift in its multiple deprivation index ranking between 2010 and 2015. It also beat Manchester and Liverpool to win recognition in the 2016 Good Growth for Cities index as the best city in north-west England in which to live and work, according to criteria including jobs, income, work-life balance, transport, the environment and the house-price-to-earnings ratio. Brown said:

“You can see it all comes together to form quite a powerful post-capitalist framework. This is very challenging to the economics we’ve had over the last 40 years, and it’s that cultural issue which is probably the biggest thing we need to break down.”

The council’s efforts to feel its way towards a robust co-operative economic framework have been the subject of studies by the CLES and the Co-operative Party, and soon gained the attention of the Labour leadership after Jeremy Corbyn was elected on a mandate to explore ideas for new economic models.

Shadow Chancellor John McDonnell chose Preston to deliver a major speech on the cooperative economy in early 2016, in which he declared an aspiration to extend principles of “decentralised ownership and democratised wealth” across regional economies and the wider national economy.


“I know John is very keen on how we can work together in future,” said Brown. “There are plans to roll out this kind of model nationwide, to get as many local authorities and senior councillors involved in it as possible.”

Elements of the Preston Model could be discerned in the party’s 2017 manifesto commitments to introduce new procurement requirements for national and local government suppliers, and to double the size of the co-operative sector by making funding available through national and regional investment banks and granting employees the ‘right of buyer of first refusal’ if the company they work for comes up for sale.

What’s more, Preston’s example is central to a new Labour report – Alternative Models of Ownership, to which Brown contributed – that explores possibilities for extending co-operative forms of economic organisation across the British economy, at the levels of the individual firm, municipalities and state owned enterprises.

The report foregrounds Preston as primary case study for “the development of ownership models which circulate wealth rather than extract it”. It proposes that anchor institutions might be identified across all English and Welsh cities, and where necessary created, through the relocation of national institutions – such as OFSTED or the lottery – outside the capital.

The report follows Preston’s example in proposing an employment charter obliging employers to consider local workforces when recruiting, and a procurement law requiring public bodies to support local suppliers. It also suggests that Preston’s exploration of the potential of community energy schemes and co-operatives might be rolled out nationally by giving councils a share of receipts from environmental taxes such as the Climate Change Levy.

And there are proposals for community wealth building zones that extend the enterprise zone principle to create spaces for the flourishing of place based co-ops, community and voluntary sector groups.

“The whole idea is to put more democracy into the local economy and also to create wealth and make sure it’s captured by the local community. I think that’s what’s caught the imagination,” says Brown. “I just feel that we’re at the beginning of creating a movement that, if we can get it right, could be quite transformative.”

In today’s febrile political climate, with another election possible as Theresa May’s government seeks to negotiate Brexit with the most fragile of Parliamentary advantages – and with Labour ahead in the polls – Brown’s thesis may be tested sooner rather than later.

 
 
 
 

The Tory manifesto promises to both increase AND decrease the rate of housebuilding

Housing secretary Robert Jenrick. Image: Getty.

In his 2014 Mansion House speech, the then-chancellor George Osborne expressed with uncharacteristic honesty the motives at the heart of how the Conservatives see British housing politics: “The British people want our homes to go up in value, but also remain affordable; and we want more homes built, just not next to us.”

Five years later these contradictions remain unreconciled and present in their manifesto, which contains two different and contradictory – but clearly extensively targeted and focus-grouped – sets of policies.

The Conservatives have two housing targets. The first is to make significant progress to hitting “our target of 300,000 houses built a year by the mid-2020s”. The second is their aim to build “at least a million new homes” during the next parliament, which implies a target of 200,000 homes a year. This is not only 100,000 lower than their initial target but also lower than the current rate of housebuilding: 213,660 new homes a year. They have therefore implied at separate points in the same manifesto that they intend to simultaneously increase and decrease the rate of housebuilding.  

There are similar conflicts in their approach to planning. They intend to make the “planning system simpler” while simultaneously aiming to introduce community-led design standards for development and planning obligations to provide infrastructure for the local community.

None of this is unsurprising, The Tories don’t seem to know if they want to build more houses or not – so of course they don’t know whether they wish to make it easier or harder to do so.  

Politicians like obfuscation on housing policy to placate NIMBY voters. Take for example prospective Conservative MP and ‘environmentalist’ Zac Goldsmith’s crusade to save treasured local car parks. The manifesto can equally be accused of pandering to NIMBY instincts, protecting their shire voters from all housing, including ones they might actually need or want, by promising to protect the greenbelt.  

Instead, Conservatives intend to foist development on Labour-leaning inner-city communities and prioritising brownfield development and “urban regeneration”. This requires massive, infeasible increases in proposed density on brownfield sites – and research by Shelter has shown there are simply not enough brownfield sites in cities like London. Consequently, it is not clear how such a policy can co-exist with giving these inner-city communities rights on local design. Perhaps they intend to square that circle through wholesale adoption of YIMBY proposals to let residents on each street opt to pick a design code and the right to turn their two-storey semi-detached suburban houses into a more walkable, prettier street of five-storey terraces or mansion blocks. If so, they have not spelt that out. 

Many complain of NIMBYism at a local level and its toxic effects on housing affordability. But NIMBYism at the national level – central government desire to restrict housebuilding to make house prices rise – is the unspoken elephant in the room. After all, 63 per cent of UK voters are homeowners and price rises caused by a housing shortage are hardly unpopular with them. 


There is anecdotal evidence that protecting or inflating the value of homeowners’ assets is central to Conservative strategy. When George Osborne was criticised for the inflation his help to buy policy caused within the housing market, he allegedly told the Cabinet: “Hopefully we will get a little housing boom, and everyone will be happy as property values go up”. More recently Luke Barratt of Inside Housing noted that most Conservatives he spoke to at the 2018 party conference were scared “they’d be punished by their traditional voters if the values of their homes were to fall”. He was told by a Conservative activist at the conference that, “If you build too many houses, you get a Labour government”.

But the senior figures in the Conservative Party are painfully aware that the continuing housing shortage presents major long-term problems for the Party. As the manifesto itself acknowledges: “For the UK to unleash its potential, young people need the security of knowing that homeownership is within their reach.” Perpetual increases in house prices are incompatible with this goal. The problem has greatly contributed to the Conservatives’ severe unpopularity with a younger generation priced out of decent accommodation. 

Equally, there is increasing evidence that ‘gains’ from rising house prices are disproportionately concentrated in the south of England.  The differences in housing costs between regions greatly reduce labour mobility, suppressing wage growth in the north and midlands, which in turn leads to greater regional inequality. The policy of coddling southern homeowners at the expense of the economic well-being of other regions is a major long-term stumbling block to Conservative desires to make inroads into the ‘red wall’ of Leave-voting labour seats outside the south.

Before dealing with the issue of where housing should go, you must decide whether you want to build enough housing to reduce the housing crisis. On this issue, the Conservative response is, “Perhaps”. In contrast, even though they may not know where to put the necessary housing, the Labour Party at least has a desire in the abstract to deal with the crisis, even if the will to fix it, in reality, remains to be seen. 

Ultimately the Conservative Party seems to want to pay lip service to the housing crisis without stopping the ever-upward march of prices, underpinned by a needless shortage. Osborne’s dilemma – that the will of much of his party’s voter base clashes with the need to provide adequate housing – remains at the heart of Conservative housing policy. The Conservatives continue to hesitate, which is of little comfort to those who suffer because of a needless and immoral housing shortage.

Sam Watling is the director of Brighton Yimby, a group which aims to solve Brighton’s housing crisis while maintaining the character of the Sussex countryside.