Community Wealth Building as an alternative economic development model

By Dr Carol Power, Lecturer, Cork University Business School and Centre for Co-operative Studies, UCC

Sometimes innovative development strategies can be born out of adversity. One such example is the socalled ‘Preston model’ of Community Wealth Building (CWB) in the UK, which has been hailed as an exemplar for other cities and towns.

Ten years ago, the city of Preston, located in Lancashire in the northwest of England, was one of the most deprived local authority areas in the UK. The demise of its traditional industries in the second half of the 20th century led to rising poverty and inequality. These problems were exacerbated by the recession and public sector austerity that followed the global financial crisis of 2008, and the collapse of a muchanticipated €700 million urban regeneration project in 2011. Without any prospects of inward investment, the city authorities were forced to explore alternative strategies to address Preston’s problems. Drawing on learnings from successful development experiments in the US and Europe, Preston developed a CWB strategy, which has ultimately created a more resilient, inclusive and sustainable local economy. CWB is a place-based approach to development that originated in Cleveland, Ohio in 2005 and has since been adopted by other cities and towns. One of the key pillars of

CWB is to harness the spending power of ‘anchor institutions’ to recirculate money within the local economy through local procurement. Anchor institutions include public sector organisations, such as local authorities, universities, hospitals and other public services, and also businesses that are deeply embedded locally and have a strong loyalty to place. An analysis of anchor institution spending in Preston in 2013 found that, of the £750m spent, only 5% of the spend was retained in Preston, and just 39% was spent in the wider Lancashire area. This suggested significant untapped business opportunities that could boost Preston’s economic development.

Achieving increases in local procurement spending involves building the capabilities of existing local companies to supply anchor organisations. Additionally, it requires the development of new local enterprises to meet supply needs where local capacity does not exist. This links to another key pillar of CWB, which is to increase local ownership and control in the economy through more diverse ownership models, such as worker-owned cooperatives. Preston drew inspiration from Mondragon, a federation of co-operatives that emerged in Spain’s Basque country in 1956 and today is one of the largest business groups in Spain. A Co-operative Development Network was set up in Preston to promote understanding of the cooperative as organisational model for new enterprises and to support cooperative development.

CWB offers many benefits for local economies. Since 2013, Preston’s CWB strategy has contributed to growth in economic activity, reduction in unemployment, the creation of stable jobs that pay a decent wage, and an increase in enterprise startups. Between 2013/14 and 2016/17, anchor institutions increased their local procurement spend by £74m in Preston and by £200m within the wider Lancashire area.

Local procurement can also support anchor institutions to meet their social and environmental objectives. Organisations can reduce their carbon footprint by reducing the transportation distance of goods. By creating stable, well-paid local employment, they can create social value in the community. Furthermore, spatial proximity can help to foster closer client-supplier relationships and innovation partnerships for more complex services.

So, could Irish cities and towns pursue similar strategies? At a webinar held during UCC’s Community Week, Dr Julian Manley, who is one of the key drivers of the initiative in Preston, emphasised that CWB is a placebased strategy and, as such, the individuality of different places needs to be considered. The ‘Preston model’ does not provide a transferable template that can be used elsewhere to replicate the strategy. Nonetheless, it can offer some valuable insights and lessons on some of the key ingredients for success.

Leadership and specialist supports are essential components of the strategy. In Preston, the City Council and the University of Central Lancashire (UCLan) partnered to explore the potential of CWB for Preston and support the development of the strategy. Achieving the ambition to increase local spend by anchor institutions involved supporting and enabling procurement and finance officers to recognise the social value of local procurement and to understand how to preference local suppliers while ensuring compliance with public procurement regulations. Officers were supported to work together to identify procurement requirements and opportunities, and to share knowledge about local supply chains. There was also a need to build evidence and create a vision for change to secure political and community support for the strategy. This included raising awareness of the benefits of the co-operative as a model that promotes widespread business ownership and economic participation.

There is no doubt that CWB could be adapted and applied to an Irish context. It could, for example, play a significant role in helping to counterbalance the unsustainable over-concentration of economic activity in Dublin and distribute jobs and associated socio-economic benefits more widely across other Irish cities and towns.