NEF has been mapping the range of responses to austerity made by local organisations in response to spending cuts to welfare and local public services. This research highlighted the potential benefits of re-thinking how local economic strategies could be developed by local authorities in a way that encourages spending and wealth generation within the local community, and benefits local people.
Back in March we brought together a small group of thinkers and practitioners who have been working to cultivate prosperity, economic democracy and resilience in the economic infrastructure of their local towns or areas. We met in Manchester to share ideas and discuss these approaches.
Securing sustainable, long term, local supply chain commitments from British Gas (who won a large council retrofitting contract on this basis)
Developing a council-owned heat and power company – the Lee Valley Heat Network
Testing out radical new approaches to solving the housing crisis in the borough
Directly employing residents who are furthest away from the labour market in Council jobs
Developing a new strategy to maximise the positive impact for Enfield residents and businesses from the opportunities presented by the development of the ‘London-Stansted corridor’
They are trying to do precisely what the market is failing to do by making use of the different relationship between investment capital and revenue return for the Council, compared to that of most businesses.
Example 2: Preston council
Preston has a community wealth building initiative, developed to boost growth in the local economy. By making more efficient use of the local purchasing power of large local institutions, more investment can be channelled directly into local suppliers and businesses, strengthening the small and medium scale of the local economy.
A core part of the programme is a commitment to the principle of co-operatively owned local enterprise. Co-operatives are businesses that are owned and run by their employees. Preston is developing a programme to support local start-up co-ops to tender for future local contracts, focusing particularly on gaps in the local economy, including catering, building, cleaning and maintenance.
Labour and capital
Both these approaches show that helping residents to benefit from economic growth does not simply consist of generating jobs and incomes. Enfield and Preston are both looking at how wealth – in the form of capital raised from rent, physical assets (like community centres), and long term profits from businesses – is generated, owned, and distributed locally.
Whether creating a council-owned heat and power company from which profits plug straight back into public spending, or shifting government contracts to co-operatively-owned businesses – the aim here is to structurally shift how wealth is produced locally, and where that wealth then grows and is distributed.
A new vision
This work is not just about developing a new approach to the role local authorities play in developing local economies; it actually demonstrates a political re-imagining of the role of place-based, municipal state institutions.
There is a clear understanding among local policy makers and practitioners that recent developments aren’t simply a desperate attempt to lessen the impact of the cuts through re-thinking services (as crucial as that may be in the short term). Nor does it simply demonstrate resistance to the implementation of austerity, as much as that was also held up as an important role for local government. In fact, austerity policies are seen as constituting a catalyst, a final nail in the coffin of the status quo – where local authorities are perceived as meddling, inefficient, parochial bureaucracies which get in the way of market driven growth.
Preston and Enfield are leading examples of how councils can fundamentally re-construct their role. They can do this through prefiguring and demonstrating, in the face of current policies and public opinion, what proactive, interventionist, visionary, redistributive, innovative and dynamic leadership can look like.