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

The Co-op Party has set out six steps to building community wealth, based on the Cleveland Model in the USA

Co-ops can be at the forefront of a local government revolution, according to new research.

Last month the Co-operative Party launched a Pamphlet on Community Wealth Building, which sets out six steps to building community wealth. The publication is aimed at Labour/Co-op councillors across the UK looking to reorganise local economies.

Featuring examples from cities like Preston and Manchester, the pamphlet highlights how councils can pioneer a new approach to economic regeneration by changing their procurement policies.

Preston’s community wealth building model has its roots in the Cleveland Model promoted by the Democracy Collaborative in the USA. The approach is focused on getting anchor institutions such as universities, councils or hospitals to support local businesses, including co-operatives through procurement. Where gaps are identified the councils can support communities to set up new worker owned co-operatives to provide the services needed.

Preston City Council started adopting this method in 2013 as a response to cuts affecting its budget. The council has worked with the Centre for Local Economic Strategies, identifying 12 local institutions rooted in the city, such as the councils, the hospital, the university, and the police. Together they revised their procurement strategies and so far £10 million of public contracts have been awarded in Preston and the surrounding areas.

In addition, the council is working in partnership with the University of Central Lancashire to expand the local co-operative economy through Preston’s Co-operative Network, aimed at supporting new and existing co-operatives to grow and bid for contracts from anchor institutions.

Related: Co-op Congress hears how assets can help reimagine communities

To tackle financial exclusion, the council offered space in the Town Hall to re-establish Guild Money, a credit union with 500 members and provide funding to Lancashire Community Finance to enable it to provide affordable credit. It is also exploring the possibility of setting up a Lancashire Community Bank to lend to small businesses, co-operatives and individuals.

Similarly, in 2012, Glasgow City Council made a commitment to develop it as a co-operative city, establishing a Co-operative Development Unit to deliver the agenda.

Cleveland, Ohio, has supplied a new co-op model for communities

The pamphlet suggests what practical steps Labour/Co-op councillors can take to promote community wealth building. These include embedding community wealth building into councils’ economic strategy setting out the region’s ten-year vision and appointing a cabinet lead or deputy mayor for co-operatives and community wealth.

The guide warns that the community wealth building approach must be properly resourced, with buy-in from senior officers and sufficient staff across the local authority tasked with its delivery.

The pamphlet suggests setting up a local network for anchor institutions, including via existing structures such as Local Enterprise Partnerships. Councils are also advised to commission a study on the existing impact of anchor institutions to understand where the interventions would have the greatest impact.

In Leeds over 70 large anchor institutions collectively employ 200,000 people and control budgets of £11bn. A study commissioned by Leeds City Council, the Leeds City Region and the Joseph Rowntree Foundation found that for every £1 spent by the anchor institutions of goods and services, nearly 50p was going back to the local economy. As part of the study, the three organisations worked with 12 anchor institutions over a nine-month period to understand their procurement practices better.

With the passing of the Social Value Act in 2012, councils have to consider to economic, social and environmental well-being when making judgements on tenders for goods and services. However, the Co-operative Party’s pamphlet suggests more can be done to ensure public money is spent locally. It argues that Anchors should commit to promoting local economic growth and to use local small and medium sized businesses, community sector, third sector, social enterprise and co-operatives as much as possible.

According to the pamphlet, larger procurement could also be broken into smaller lots where possible, to enable and encourage local SME, third sector, co-operative and social enterprise participation.

In terms of supporting co-ops and local social enterprises to start up, grow and bid for contracts, the Co-op Party’s research calls a ‘marketplace’, such as a portal, so that co-operatives, social enterprises and SMEs can easily see available opportunities, and anchors and larger businesses understand the local market and can more easily obtain quotes from them.

Other practical steps suggested include establishing a co-operative commission to explore options for expanding the co-operative sector, provide business advise and support tailored to the needs of co-ops and create a co-operative investment fund using patient capital from anchors.

Creating a strong local economy also depends on tackling unfair practices. In this respect, the pamphlet recommends supporting credit unions to tackle financial exclusion, helping renewable energy co-operatives start up to address fuel poverty and backing community land trusts and co-operative housing so that residents can develop their own secure, affordable housing.

Commenting on the pamphlet, the Co-operative Party’s policy officer and councillor in Lambeth, Anna Birley, said: “The Co-operative Party is looking forward to working with many more councils and local representatives to roll out this approach in every region.”