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Community wealth building saved Preston council from budget cuts – others should follow suit

The i 03/08/2021 Kuba.Shand-Baptiste

It’s no secret that after eleven years of austerity, local government has been dealt an almost fatal blow. It wasn’t looking good for the sector before the pandemic. A year into it, things are even more dire. 

According to a recent BBC investigation, the pandemic has already left councils with a financial black hole of £3 billion. The vast majority of councils expect to cut spending next year with at least 25 councils on the brink of bankruptcy

The current trajectory suggests austerity is far from over. Since 2010, the government has cut grants to councils from £32.2 billion to £4.5 billion. Local councils, already battered and bruised by a decade of ruthless cuts, have now been plunged into a new crisis.

While the picture for local government is, no doubt, gloomy, the ambitious community wealth-building approach adopted by an increasing number of councils is reason to stay optimistic.

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Instead of continuing to allow money to leak out of the local economy, a number of councils have sought to give those who create local wealth control over it, as opposed to distant shareholders. It’s an ambitious programme that has seen money redirected back into the local communities that generate it.

Community wealth building goes beyond council budgets though. It’s about re-setting the whole economy. When the budgets of local “anchor” institutions like local hospitals, universities and local businesses are factored in, councils can influence local spending to the tune of billions.

Through a progressive procurement strategy, they can encourage these local anchor institutions to use community suppliers where possible. These businesses are more likely to support local employment and have a greater propensity to retain wealth and surplus in specific regions.

In 2013, Preston Council conducted a spend analysis of local anchor institutions and found that of £750 million spent, only five per cent was spent in Preston, a significant leakage out of the local economy. Following this discovery, Preston Council sought to return economic power to its people and institutions through various initiatives such as the development of a community bank, investing pensions in locally developed student housing and the development of a cooperative sector which gave local people a stake in economic production.

Planning permission for big developments was conditional on the basis that developers would demonstrate a clear commitment to investing in skills and training for local people and the council also pushed for major institutions to commit to paying the living wage to all workers. In 2018, Preston was named “most-improved city” in the UK thanks to its effective strategy.

Meanwhile, neighbouring Salford, through a capital programme of borrowing to invest, has embarked on a programme of local authority-led investment which has drastically improved the fortunes of the area. Where most councils have closed libraries and reduced hours, Salford has retained all 16 of its libraries and opened seven new ones in the last few years. Salford has witnessed above average rates of economic growth and a local jobs boom. Between 2015 and 2019, there was a seven per cent increase in Salford’s employment rate – the highest rate of growth in the Greater Manchester region. Against a backdrop of cuts from the national government, this investment has been a vital lifeline for the local community.

Interest in community wealth building is surging. Around three dozen councils in England are now adopting some form of it and the Scottish government is exploring rolling it out as a national programme following the ground-breaking work of North Ayrshire Council, which saw the council launch an innovative £3m community fund dedicated to local priorities.

These councils are taking back control and demonstrating the power of local government in improving people’s lives. It’s by no means an easy feat. We know that the pandemic has caused difficulties, but it has also demonstrated the power of bottom-up community-led solutions. From the local takeaways who stepped in to feed hungry children when the Government refused to extend free school meals during the holiday period, to the millions who volunteered for mutual aid groups to support those self-isolating, this pandemic has shone a light on the values of kindness and collectivism that exist within our neighbourhoods. The key to economic transformation relies on local government embodying these values wholeheartedly. 


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