Neil McInroy, Centre for Local Economic Strategies(CLES)
Inclusive economic growth is a key aspiration and is set out in Scotland’s Economic Strategy. Scotland aims to grow a sustainable and successful economy whilst tackling inequalities. To realise these aspirations, the fast moving Community Wealth Building (CWB) movement offers a practical, common sense local place approach.
The CWB approach starts with a strong focus on wealth. We know that Scotland is a relatively wealthy country, however wealth has grown much faster than incomes. Those born in the second half of the 1970’s have one third less wealth than those born in the first 5 years. Furthermore, wealth distribution is geographically and socially uneven, with the top 10% owning 200 times more wealth than the bottom 10% (median wealth of £1.3M compared to £6k). Indeed, the wealthiest 10% own 43% of all wealth in Scotland, with the least wealthy 40% only owning 5%1Bell, T and D’Arcy, C (2018) The £1 trillion pie: how wealth is shared across Scotland. Resolution Foundation.
In Scotland, CWB is prompted by these wealth disparities and framed by inclusive economy aspirations and the ‘place principle’2The place principle asks that all partners responsible for providing services and looking after assets in a place work and plan together to support inclusive and sustainable economic growth and create more successful places adopted by the Scottish Government and COSLA.
CWB should not be seen merely as economic development or regeneration as we know it coupled to social justice narratives. Instead, CWB seeks to hotwire issues of community wealth into the functioning of the Scottish Economy. Developing accepted ideas of inclusion via the redistribution of economic growth ‘after the fact’ of its creation, CWB is a deep focus on how we develop inclusion not just after growth but ‘before and during’ economic activity. It does this by ensuring that the economy and production of wealth is brought significantly closer to our everyday lives, our communities, and our neighbourhoods.
At the heart of CWB are five principles. Some of these principles seek to harness the power, wealth, and economic clout of major anchor institutions. Large commercial, public, and social sector organisations such as large local businesses, universities, and local authorities have a significant economic and social stake in a place. As such, anchors can exert sizable influence to impact upon economic, social, and environmental priorities, generating community benefits and wealth. The 5 principles are:
• Plural ownership of the economy is about deepening the relationship between the production of wealth and those who benefit from it. As such there is a focus on developing cooperatives and locally owned or socially minded enterprises within the economy. These by their very nature are more locally generative, as economic activity is more rooted and relational to place.
• Making financial power work for local places by increasing flows of investment within local economies. For example, local authority pension funds are encouraged to redirect investment from global markets to local schemes and community owned banks and credit unions are supported to grow.
• Fair employment and just labour markets is about working within large anchor institutions and their human resource departments to encourage them to pay the living wage, adopt inclusive employment practices, recruit from lower income areas, build secure progression routes for workers, and ensure stable employment contracts and reliable hours.
• Progressive procurement of goods and services is about developing a dense local supply chain of local enterprises, SMEs, employee owned businesses, social enterprises, cooperatives, and other forms of social ownership, who can provide goods and services to the large local anchor organisations. This is a means through which greater social and environmental benefits can be gained and through local economic multipliers which increase wealth retention within the local economy.
• Socially productive use of land and property is about ensuring that equitable forms of ownership, management and development of local assets are developed. In CWB the function and ownership of these assets is deepened to ensure any financial gain from these assets is harnessed by local people and communities.
These practical principles of CWB are already present to some degree already in Scotland. The difference now is in the deepening of intent and action around them. We already know this works to great effect. The so-called Preston ‘model’ has been held up as a ‘poster child’ of CWB and the Centre for Local Economic Strategies (CLES) has been working in Preston since 2012. The unrolling of a CWB approach has seen a significant improvement in local jobs, and the development of cooperatives within the economy. The CWB success in Preston has gained significant plaudits – it is now recognised as one of the most improved localities within the UK. But it is not working alone – it is worth noting that today there are dozens of localities across the UK and Europe who are developing CWB. This includes City regions of Liverpool and North of the Tyne. It also includes the London Boroughs of Islington, Newham, and Lewisham, who are deepening their progressive procurement practices, their support for local enterprises and markets and looking at tackling speculative land and property ownership. In the North East, Gateshead Council have a longstanding process of insourcing and municipal enterprises and are seeking to advance and deepen procurement work. In Merseyside, the Wirral are looking at working with Preston to advance a community bank and have an emerging plan to advance the plurality of their economy. Salford, through their inclusive economy approach, are looking at employing the full suite of CWB activities.
In Scotland, North Ayrshire council is developing a CWB approach and this has been augmented by the Ayrshire Growth Deal which has provided a £3M CWB fund for the Regional Economic Partnership to co-design an Ayrshire-wide approach with the Scottish Government. Recent analysis and action work by North Ayrshire Council, helped by CLES has heralded the start a programme of work, which seeks to influence not only the anchor organisations of North Ayrshire, but also the wider Ayrshire Growth Deal.
This is an exciting movement and moment, with recent workshops involving CLES, SCRIG, and Economic Development Association Scotland (EDAS) testament to significant interest from local authorities across Scotland. The work in Ayrshire is an important test bed, and there is much work to do. What is clear, however, is that there is a hunger in Ayrshire and across Scotland to embrace this agenda and make a step change in the economic and social fortunes for all. There is no doubt that the national policy frame of inclusive economic growth, the place principle and the collective will across the public, social, and commercial anchors and sectors in Scotland creates a fertile territory. Therefore, we can expect the CWB movement to successfully develop and grow.