John McDonnell announces formation of Community Wealth Unit

Shadow chancellor John McDonnell said Labour would work with the Co-operative Party and trade unions and think tanks to promote co-ops and mutuals

The Labour Party is setting up a Community Wealth Building Unit to support co-operatives and mutuals as a means of driving local economic growth.

Speaking at an event in Preston, shadow chancellor John McDonnell said Labour would work with the Co-operative Party and trade unions and think tanks to implement the community wealth building model across the UK.

Over the last couple of years, Preston City Council has been pioneering the community wealth building model in the UK.

Inspired by the Cleveland Model in the USA, the Labour & Co-operative City Council of Preston has worked with local anchor institutions such as universities and hospitals, as well as through its own procurement practices, to ensure a greater share of the money it spends stays in the local economy. The council has also supported the growth of Preston worker-owned co-operatives and helped open a credit union to compete with payday loan companies.

Read more: Co-op model as a vehicle of transformation in local government

The approach has resulted in six large public bodies committing to buying local goods and services. These spent £38m in Preston in 2013; by 2017 the number had increased to £111m, despite a reduction in the council’s budget. Overall, more than £200m returned to the local economy and supported 1,600 jobs.

Since 2016 the Co-operative Party has been working with the Preston council to explore how this model could be used by other communities across the UK. In April 2017 the Party published the report Six Steps to Build Community Wealth, which sets out a practical guide that Labour & Co-operative councils can use to implement these principles.

The new Community Wealth Building Unit will work with Labour councils to learn the lessons from Preston and provide support and advice to local councils.

“The next Labour government will end austerity and properly fund local authorities, instead of cutting back and passing the buck like the Conservatives are doing. But we cannot afford to wait until we are in power nationally,” said the shadow chancellor in his speech.

“There are many creative solutions being used already, like in Preston, and we need to spread this inspiring work around other Labour councils now, so we can bring services back in house, stimulate the economy and provide decent jobs, extend ownership and control, and strengthen local democracy.

“By working together to share these principles where Labour is already in power locally, we can sow the seeds of a country that works for the many, not the few.”

Commenting on the announcement, Co-operative Party general secretary, Claire McCarthy, said: “The inspiring work of innovative councils such as Preston is proof that we don’t need to wait for Whitehall to begin building an alternative based on our values.

“The Co-operative Party has been delighted to work with the Labour Party, both locally and nationally over the past 18 months to develop the community wealth model. Today’s announcement of the formation of a Community Wealth Building Unit is an exciting next step, and we look forward to playing our party in building stronger, fairer communities across the country”.

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