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.

 
 
 
 

What Citymapper’s business plan tells us about the future of Smart Cities

Some buses. Image: David Howard/Wikimedia Commons.

In late September, transport planning app Citymapper announced that it had accumulated £22m in losses, nearly doubling its total loss since the start of 2019. 

Like Uber and Lyft, Citymapper survives on investment funding rounds, hoping to stay around long enough to secure a monopoly. Since the start of 2019, the firm’s main tool for establishing that monopoly has been the “Citymapper Pass”, an attempt to undercut Transport for London’s Oyster Card. 

The Pass was teased early in the year and then rolled out in the spring, promising unlimited travel in zones 1-2 for £31 a week – cheaper than the TfL rate of £35.10. In effect, that means Citymapper itself is paying the difference for users to ride in zones 1-2. The firm is basically subsidising its customers’ travel on TfL in the hopes of getting people hooked on its app. 

So what's the company’s gameplan? After a painful, two-year long attempt at a joint minibus and taxi service – known variously as Smartbus, SmartRide, and Ride – Citymapper killed off its plans at a bus fleet in July. Instead of brick and mortar, it’s taken a gamble on their mobile mapping service with Pass. It operates as a subscription-based prepaid mobile wallet, which is used in the app (or as a contactless card) and operates as a financial service through MasterCard. Crucially, the service offers fully integrated, unlimited travel, which gives the company vital information about how people are actually moving and travelling in the city.

“What Citymapper is doing is offering a door-to-door view of commuter journeys,” says King’s College London lecturer Jonathan Reades, who researches smart cities and the Oyster card. 

TfL can only glean so much data from your taps in and out, a fact which has been frustrating for smart city researchers studying transit data, as well as companies trying to make use of that data. “Neither Uber nor TfL know what you do once you leave their system. But Citymapper does, because it’s not tied to any one system and – because of geolocation and your search – it knows your real origin and destination.” 

In other words, linking ticketing directly with a mapping service means the company can get data not only about where riders hop on and off the tube, but also how they're planning their route, whether they follow that plan, and what their final destination is. The app is paying to discount users’ fares in order to gain more data.

Door-to-door destinations gives a lot more detailed information about a rider’s profile as well: “Citymapper can see that you’re also looking at high-profile restaurant as destinations, live in an address on a swanky street in Hammersmith, and regularly travel to the City.” Citymapper can gain insights into what kind of people are travelling, where they hang out, and how they cluster in transit systems. 

And on top of finding out data about how users move in a city, Citymapper is also gaining financial data about users through ticketing, which reflects a wider trend of tech companies entering into the financial services market – like Apple’s recent foray into the credit card business with Apple Card. Citymapper is willing to take a massive hit because the data related to how people actually travel, and how they spend their money, can do a lot more for them than help the company run a minibus service: by financialising its mapping service, it’s getting actual ticketing data that Google Maps doesn’t have, while simultaneously helping to build a routing platform that users never really have to leave


The integrated transit app, complete with ticket data, lets Citymapper get a sense of flows and transit corridors. As the Guardian points out, this gives Citymapper a lot of leverage to negotiate with smaller transit providers – scooter services, for example – who want to partner with it down the line. 

“You can start to look at ‘up-sell’ and ‘cross-sell’ opportunities,” explain Reades. “If they see that a particular journey or modal mix is attractive then they are in a position to act on that with their various mobility offerings or to sell that knowledge to others. 

“They might sell locational insights to retailers or network operators,” he goes on. “If you put a scooter bay here then we think that will be well-used since our data indicates X; or if you put a store here then you’ll be capturing more of that desirable scooter demographic.” With the rise of electric rideables, Citymapper can position itself as a platform operator that holds the key to user data – acting a lot like TfL, but for startup scooter companies and car-sharing companies.

The app’s origins tell us a lot about the direction of its monetisation strategy. Originally conceived as “Busmapper”, the app used publicly available transit data as the base for its own datasets, privileging transit data over Google Maps’ focus on walking and driving.  From there it was able to hone in on user data and extract that information to build a more efficient picture of the transit system. By collecting more data, it has better grounds for selling that for urban planning purposes, whether to government or elsewhere.

This kind of data-centred planning is what makes smart cities possible. It’s only become appealing to civic governments, Reades explains, since civic government has become more constrained by funding. “The reason its gaining traction with policy-makers is because the constraints of austerity mean that they’re trying to do more with less. They use data to measure more efficient services.”  

The question now is whether Citymapper’s plan to lure riders away from the Oyster card will be successful in the long term. Consolidated routing and ticketing data is likely only the first step. It may be too early to tell how it will affect public agencies like TfL – but right now Citymapper is establishing itself as a ticketing service - gaining valuable urban data, financialising its app, and running up those losses in the process.

When approached for comment, Citymapper claimed that Pass is not losing money but that it is a “growth startup which is developing its revenue streams”. The company stated that they have never sold data, but “regularly engage with transport authorities around the world to help improve open data and their systems”

Josh Gabert-Doyon tweets as @JoshGD.