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.

 
 
 
 

These charts show quite how few British cities have seen wages rise over the last decade

Mmm, money. Image: Getty.

The latest instalment of our series, in which we use the Centre for Cities’ data tools to crunch some of the numbers on Britain’s cities. 

Why, one may wonder, is everyone in Britain so angry? In 2016, against the advice of experts and the confident expectations of almost everybody, a slim majority of Britons voted to leave the European Union, in a move widely interpreted as a sign of quite how miffed the voters had become.

Ten months later, Theresa May called an election in the hope of capitalising on this anger, apparently forgetting that she was now Prime Minister so people were probably angry with her too, and promptly lost her majority. Despite the apparent return of two party politics after several decades’ absence, there’s an overwhelming sense abroad that most British voters don’t think very much of any of them.

The stream of books and columns purporting to explain this anger has been flowing for some time, and doesn’t soon seem likely to stop. But there are times, when trawling through the Centre for Cities’ economic data, that I’ve wondered if the explanation might actually be rather straightforward.

Below is a chart showing how average real wages – that is, those adjusted for inflation; their actual value, rather than their number – changed in Britain’s biggest cities the decade to 2017. This is a period that covered the financial crash and austerity, so you’d expect the results to not be brilliant.

Nonetheless, it’s still quite staggering to realise quite how tough on the wallet this last decade has been. Of the 63 cities shown, just 15 – less than a quarter – have seen real wages rise in the last 10 years. Just as many have seen wages fall by more than 6 per cent. In three, the fall is over 15. (The national average in this time, incidentally, was a fall of 2.8 per cent.)

Click to expand.

What’s more, the numbers shown on this chart don’t really match the patterns of economic geography I’ve grown to know and love. Those where wages have risen include Belfast, Glasgow and the three north eastern cities of Newcastle, Sunderland and Middlesbrough: not places one associates with booms. At the other end of the scale, in several cities I tend to think of as prosperous – Edinburgh, Warrington, London – wages have still not returned to where they stood in 2007.

All this seemed so weird that I wondered whether it might be a function of starting in 2007 – so I looked at the same data from several other starting points. By and large, though, this pattern still holds.

Start the clock earlier, and you’ll find that in slightly more than half of British cities (35 out of 63), wages are still lower than they were in 2004. The national average since then: a fall of 1.9 per cent.

Click to expand.

Or start in 2010, the year the Conservatives returned to power and embarked upon austerity. Since then, real wages have fallen by an average of 1.3 per cent. In 40 out of 63 cities, they were lower in 2017 than they’d been in 2010.

Click to expand.

At risk of undermining my own narrative, things have got better recently. This is the same chart, for the period from 2015 to 2017. Suddenly, things are much sunnier: the national average is a rise of 6.2 per cent, and there are only nine cities where wages haven’t risen.

Click to expand.

So perhaps things are getting better – or at least, perhaps they were. Whether that will continue after Brexit – a move every economist on earth except Patrick Minford believes will hamper the British economy’s growth potential – remains to be seen.


These are only averages, of course: in some cities, they may be influenced by big shifts in specific professions (the fall in pay in London’s financial sector, for example). And a significant minority of the population doesn’t live in any of these cities.

Nonetheless: the reasons why, by 2016, so many voters were so angry with their political leaders suddenly seem rather obvious.

Jonn Elledge is the editor of CityMetric. He is on Twitter as @jonnelledge and on Facebook as JonnElledgeWrites

Want more of this stuff? Follow CityMetric on Twitter or Facebook