Efforts at community wealth building – designed to boost local economies through targeted local authority procurement – should include the spread of the co-op model into the private sector, a group of local authorities has been told.
Neil McInroy, chief executive of the Centre for Local Economic Strategies, the thinktank which helped Preston Council and its partner organisations devise its community wealth building strategy, was leading a workshop at the Co-op Councils Innovation Network conference in Rochdale last week.
“Community wealth building is political economy with intent,” he said. “And the co-op movement is very much about building co-ops and co-op attitudes.”
Looking at the process as “a direct response to austerity”, he said the co-op movement “needs to up its ante” and “move more into the political economy space”.
Mr McInroy was speaking to the network as part of series of presentations by CLES on community wealth building, with sessions at the Conservative, Labour, Lib Dem, Green and Co-op Party conferences.
He set out five principles for community wealth building: fair employment and just labour markets; progressive procurement of good and services; plural ownership of the economy; socially just use of land and property; and making financial power work for local places.
He said the idea was important because “the fundamental feature of all economies is wealth. Who has it, where does it go, how do we get the people’s hands on it? There is more wealth than we’ve ever had in the world but it’s in fewer hands. We have a wealth crisis.”
At the root of this, he argued, is a disconnect between current rates of growth and the wealth shared with the people. “There is an amazing amount of wealth in Manchester city centre. Does the wealth go to [Manchester district] Moston? No, it goes to the Cayman Islands. One in four children in London is in poverty – in one of the richest cities in the world.”
He said some members of the CCIN “may see yourself as municipal socialists”, but argued that community wealth building instead represents a “new municipalism”.
“Yes, there’s elements of state control and insourcing; but it is also about passing control to communities so they can own the means of production. And that’s where co-ops come in.
“It’s not not just about distributing money through wages, it’s money through direct ownership. And co-ops fit in well under this new municipalism – whereas municipal socialism would do everything in house.”
But he pointed to the danger of co-ops being seen as a means of “back-door outsourcing” of public services provided by councils, warning: “There is too much focus on co-ops in the public sector; the real prize is to have co-ops operating in the commercial economy.”
And he warned that CCIN’s brochure, which outlines a series of projects by member councils, contained “far too many case studies which are just about the public sector … and there are too few about retail or manufacturing”.
The other danger is in co-ops being seen as a “cheaper alternative”, he said. “It has to be better … in terms of wages, zero carbon. We should set criteria and if they don’t meet them, they should go away.”
The result, with good quality co-op jobs provided by co-ops hired under local authority procurement in secors such as construction, would be a “mixed model … lodged in UK and European socialist traditions and the postwar social contract”.
Mr McInroy said Barcelona in Spain offered a good example of ways to “create the architecture that promotes the growth of co-ops”.
He said this points to economic development that is not just about business growth, entrepreneurialism and tech – it is also about social enterprises, co-ops and mutuals, “which we know, by their nature, retain wealth”.
But when he challenged UK authorities to create an equivalent in the UK, working at local level, Cllr Chris Penberthy, from Plymouth Council, said his authority had been following this path for several years, and has been involved in the creation of a third of its area’s co-ops.
Mr McInroy replied: “We need to do it at scale across the country … we need to amplify at scale and learn from authorities like Plymouth.
“The Business Growth Hub in the north west doesn’t work enough towards plural ownership funds; we need these hubs to flex and bend towards co-ops.”
To that end, local authorities should leverage assets, he said. This could mean better use of publicly owned land – instead of selling it to developers, so that it “disappears into ether of the global economy”, it should be “held as part of the commons”. Or it could mean investing pension funds locally to catalyse wealth building.
“I think automation and AI means there will be fewer jobs,” he added. “So how do we help people get wealth? They have to own the means of production – and that’s where co-ops come in.”
He added that there is “nothing universally beneficial about co-ops” in themselves and it is important to stop third parties from squeezing wages and standards.
“We need to move away from co-operativising public services, and go towards co-operativising the commercial economy.”
This means “bending existing business growth hubs to support co-op development”, he said, and bringing in anchor institutions like the NHS to build co-operation into supply chains.
This idea is already being put into practice in Scotland. Mr McInroy highlighted the Ayrshire Growth Deal, where the government has committed £3m to community wealth building. And in English authorities such as Preston, community wealth building has “involved many hearts and minds”.
There are now moves to take adopt these ideas elsewhere, he said, with the authorities in Islington, north London, “taking a municipalist stance” against the “speculation and rentierism” in the property market, and Wirral, where CLES is helping the council look at the possible uses for the 1,900 assets it owns.