Community Wealth Building: Frances Northrop of the New Economics Foundation

Dave Darby explores the ‘Preston Model’ and Community Wealth Building in an interview with Frances Northrop of the New Economics Foundation.

This is part of a series of interviews with people who are building the new economy, and today I’m talking with Frances Northrop of the New Economics Foundation, who is working on Community Wealth Building / New Municipalism. It’s big in Preston – so much so that it’s known as ‘the Preston Model’.

Hi Frances. First what is it called – new municipalism or the Preston Model.

Yes we’re calling it new municipalism (even though it’s hard to say those two words together). I think that people we are working with would say that the Preston Model is part of it but it’s not the entirety of it, because the Preston Model only goes so far – the local authority is in the lead there, and genuine new municipalism would be more about participation of people and citizens.

So first of all tell us what the Preston Model is.

Basically a local authority seeing their role as being ‘municipal’ – i.e. being there for their citizens rather than to serve big business or corporations; and as custodians of public money. So how they spend that money really matters. They would see themselves as an anchor institution that can reorient the local economy so that it benefits local people before people from outside – so a very different model from the extractive economy. It started about 12 years ago, when there was supposed to be a redevelopment of Preston town centre, which was intended to save the local economy. All that was needed was some shops and some restaurants. The redevelopment fell through, so the City Council started to look at how they might do things differently and use their own resources to kick-start a different kind of economy. It started through procurement – i.e. how could they procure from local small firms – but also to look at where the gaps were, and maybe to start cooperatives. The model actually came from the US. it started in Cleveland, Ohio and it’s known as the Evergreen Co-ops over there, where anchor institutions started to work in the same way.

So did someone from Preston go over to Cleveland?

Somebody from Cleveland came over to Preston. Ted, the president of what’s known now as the Democracy Collaborative, came over and spoke with the then leader of the council, and to a group of Labour councillors, about how they’d used the model there. So effectively, what they did in Cleveland was to set up co-ops to run the laundry for the hospital, and to grow food for the hospital and for schools.

So if they can’t procure something from a local company because the local company just isn’t there, the council will set up a co-op to do it? Is that right?

Yeah. That’s the intention. What happened in Preston was that they became the convenor of the anchor institutions, so they also started to work with the police and the hospital and the university, to help them look at how they could all repurpose their spend. But there are still services that aren’t provided in Preston now, so they’re starting to look into how they might set up co-operatively-owned companies to do it.

So will they train people in how to set up a co-op?

Yes.

That’s fantastic. And so what’s the difference between the Preston Model and the wider idea of new municipalism?

That’s not the only thing they do. It’s not just about procurement – it’s also about improving infrastructure. They’re regenerating the market and the bus station, and things like that. And it’s also about becoming a model employer – a living wage employer, that kind of thing. But the conversation is also around what’s happening in Barcelona, which came much more from the grassroots. People were elected into the city council from what was the 15-M movement – the people who were taking to the streets and meeting in the squares to campaign against enforced repossessions of houses after the crash. So that was much more about local people getting together in assemblies, and making policies through that kind of approach; and also repurposing the city council so that it behaves in a municipalist kind of way.

How are the New Economics Foundation involved? What do you do?

For a long time, NEF have talked about the appropriate role of the state. My role there is to talk about local economies, but that’s not an exclusive thing. We don’t think that everything can be delivered locally. There’s always a role for central state, and there’s a danger of fragmentation of governance. But it’s really important that areas can be self-determining in a way that they feel is appropriate to them, and the central state should act as a protector of those interests, and have fiscal policies that supports local areas. So, because that’s always been our position, then new municipalism is a really important way to talk about how those local economies manifest – otherwise they could just become a subset of the national economy, like this idea of the ‘Northern Powerhouse’ – the same old idea of attracting outside investment, building big, sweeping away the ‘old’, then everything gets gentrified, and there’s less space for more creative networks of smaller businesses and enterprises, and local activity generally.

Is the national government supportive of the Preston model?

I think we can safely say that they’re not. It’s funny because I think there is a type of conservatism that is very supportive of this kind of initiative.

There doesn’t seem to be any reason they shouldn’t be supportive.

No, but they see it as socialist – it’s being labelled ‘Corbynomics’, so they see it as interfering in the market. So you see a lot of people talking about protectionism – as a bad thing – and how in the end the market, if left alone, will regulate itself and work well for people.

But if you think about how national governments don’t collect taxes properly from multinational corporations. If you have a Starbucks next to an independent, local coffee shop, the independent coffee shop will be paying its full share of tax, and Starbucks won’t. And national governments don’t seem at all concerned about that – even though that’s not at all a free market. It’s skewed in favour of the corporate sector. Plus national governments give corporations lots of advantages – it’s like corporate welfare. You would have thought that to redress the balance a bit, to give small, local businesses a bit of a leg-up, that should still be seen as a free market – i.e. it’s not central planning or state ownership, it’s just levelling the playing field.

Absolutely. That’s exactly what we would argue. And the economy is really stacked against small businesses, social enterprises and co-ops, because access to land and buildings is really difficult in the places they might be needed. We’ve done some really interesting work with the East End Trades Guild in Hackney and Tower Hamlets. They organise local small businesses to have an effective voice. Rents are insane in that part of London, and it means that fewer and fewer small, independent businesses can exist in those places, so you don’t get a mixed economy, and local people don’t have what they need on their doorstep.

What ambitions do you have? Are there other local authorities adopting this model? I heard that Dumfries and Galloway are supporting small businesses in the same way; Birmingham are supporting affordable housing; Nottingham and Bristol are setting up community energy schemes. Is there anything else going on?

There’s a lot going on. It’s really interesting. A lot of London boroughs are looking at this idea of community wealth building, and we’re doing some work with Dudley council. Local councils have had their income and their services cut so much that they’ve been feeling that there’s nothing they can do. They feel totally powerless, under the cosh, and everybody is angry with them because they can’t provide the services they need to provide. So it’s a pretty dark time for councils. If you imagine that you’re a commissioner of social care services, and you know that you can’t protect the most vulnerable people in your borough, but that’s what your role is, and why you do your job – you want to look after children in care, and older people, vulnerable adults etc. I can’t imagine the pressure that puts you under, when you know you can’t actually provide those services. What community wealth building does is – and I saw this when I went to a recent meeting in Dudley – when you bring people together, who are responsible for procurement and commissioning for the local authority, and for other anchor institutions in that place, and you tell them that they have got money – it’s just how they spend it that matters. Also, working with local people to think about how you make that money go further, because local businesses generate more social and community benefit than big corporations (because the money they get stays in the community). We’re effectively coming alongside and saying ‘it’s okay, let’s do it this way, and it can inspire people to realise that they can do something.

I’m actually from Dudley, and my nephew, for example, would love to get involved in this kind of thing. What can individuals do to get involved?

That’s where the Preston model of community wealth building is really important, because you need to repurpose organisations. But I think it’s equally important to have the Barcelona-type model (which is evolving all the time), where the heart of it is about participation and democracy. At the moment, people feel that they can’t get involved in things, or there’s no way in, and the economy is not for them. So it’s about how to create a situation where people are involved again, in decision-making, to be together, to talk more. So there’s lots of conversations going on about citizens’ assemblies, participatory budgeting etc. But what I find really interesting is that I think we’re seeing a movement of people who are looking at how they might get elected, or to canvas for people who might get elected into local councils, so that they can start to do things differently. Having places where people can get together and talk about those things is really important. On Saturday, the World Transformed ran an event in Bristol. The World Transformed runs alongside the Labour Party conference, and was started by Momentum. They pull people into conversations about all kinds of different issues – they have a programme of discussions over 2 days. Increasingly, people are creating spaces to have more of these conversations. That might lead to people being elected at all levels, down to parish councils, and I think that’s very important, because they are the existing structures that we have.

Here’s to Dudley becoming the next Barcelona then.

That would be good, wouldn’t it? I think there’s something about the culture of Spain, and being able to be outside in the sunshine that aids and abets that a lot. I think our version is probably a lot of church and village halls.

What are the biggest obstacles, do you think? I heard that Amazon are approaching councils, particularly in Yorkshire, and offering to fulfil all their procurement cheaper than anyone else. Have you heard about that, and what other barriers are there?

I didn’t know that, but it doesn’t surprise me. Procurement and commissioning have been privatised and corporatised for quite a long time. Most councils go with big players like Capita and, until recently, Carillion, and so that is a massive barrier. And also you have, effectively, a hostile nation state that, when they’re giving money out through various city deals and devolution deals, they are saying that they won’t give money unless they adopt their model, which is outdated and based on tech and large-scale, like bringing an Amazon fulfilment centre to boost the local economy. But what I see now is a movement of people talking to councils about how they can do procurement differently. It’s giving procurement professionals in councils the confidence to network together and to see that they can do things differently, and have a much better local economy, that doesn’t disregard a huge swathe of their population and only reward shareholders somewhere else. And even the people who do get the jobs – there was a recent report about an Amazon fulfilment centre near Rugeley, that’s about a quarter of a mile long – hideous, no windows, and a long list of workers who required emergency services because of the way they have to work there. It’s really disgusting. Not only are they sucking money out by not paying taxes, but expecting local councils to put in infrastructure, they also put a strain on the state every day, because people who work for them need public services.

Yes, they just suck wealth out of communities to pay shareholders somewhere else. They’re just a drain on communities everywhere.

Yes, they suck hope and life, as well as money out – wealth in its broadest sense. It’s dreadful.

So don’t use Amazon, kids!

That’s right!

So is the Preston model coming to any other places I don’t know about?

A lot of the London boroughs – I mentioned Hackney, and there’s also Islington, and we’ve had an enquiry from Newham and Haringey. A lot of them are realising that it’s a way for them to use their power in a good way.

Any Tory councils?

No, it does tend to be Labour councils, like Preston, and it does allow the Labour party to articulate what a national economy might look like, partly at least, by using the same principles. But because it’s been labelled as Corbynomics, Tory councils don’t really want to be associated with it.

Yes, I’ve got a bit of a ‘thing’ about labelling – if you label something socialist, then instantly you have half the population against you right from the start. And I don’t see why conservatives should be against this. It’s about strengthening local economies and small businesses. It’s not about a centrally-planned national economy. Maybe we don’t need to label things in this way.

No, I totally agree. It is really tricky. I went to Barcelona recently, and talked with people within the city council about what they’re trying to do, and what they’re doing is incredible, but there’s only so far they can go, because of the hostile nation-state. The Spanish government don’t want what they’re doing, and push back on them all the time. This is a debate that rages, but without a sympathetic national government, it will be very hard for this to scale.

I don’t get why anyone of any political persuasion would prefer multinational corporations over small, local businesses. I’ve had conversations with our local Tory parliamentary candidate. I like him actually – he seems like a trustworthy guy, and he says that he’d like to see a Tooting High Street full of small, independent businesses, rather than corporate branches. If we can get more conservatives to think like that – great. I don’t think this battle between left and right is very productive. I don’t see why conservatives would oppose small businesses.

It’s true.

Are you optimistic about new municipalism and the Preston model spreading?

I am. I think that most people are really ground down by the situation we’re in, and that’s leaving aside the conversation about leaving the EU, because it’s obscuring the conversation about austerity, and what that’s meant for this country. We are on our knees as a nation, and it’s been so attritional that there’s never been a strong movement against it. So you’ve got people over here fighting for libraries, and you’ve got people over here fighting for disabled people, and you’ve got people over here campaigning against hospital closures, and because of that, there’s been no real push-back against austerity, and we’re in a situation now where councils can’t provide the services that we need. That’s not the kind of society I want to live in. I pay my tax so that people (including me) can expect to be looked after if they need to be. It’s a collective responsibility.

I think you know about this, but we’re building a mutual credit system for the UK – a moneyless trading system. Wealth stays in the community, because there’s nothing to be sucked out. We have a website now – opencredit.network. Could you see a council like Preston adopting mutual credit as a way of trading in their local area, and encouraging the small businesses and co-ops in their area to trade with each other using mutual credit – to give it a try?

I think we’re a long way from that. When you get down to procurement and the systems people use, it’s quite a leap to start talking about how you procure locally, and also think about social value and environmental value. Risk is a massive issue – which is why giant companies (who are ironically, hugely risky) cone along and tell councils that they can manage their risk for them. That’s what Amazon will be saying to those procurement officers. So by asking procurement officers to purchase from a range of small businesses, you’re asking them to take a risk with public money, and so that conversation is only just gaining traction now. So if you then jumped to mutual credit as well, I think that would be very scary.

Yes, we’ve got a long way to go as well, but it’s a conversation I’d like to see happen at some point. It would be great to see local councils with mutual credit accounts. So – how can people keep up to date with what you’re up to, and what’s happening in Preston and elsewhere?

We’ve just pulled together a network of people who are interested in new municipalism – people involved in advocacy for it, researching it, and people who are actually doing the stuff. We had a meeting in Sheffield, and we’re talking about how we develop communications around it – events and participatory activity, so that we can spread the word much more about the idea. It’s beginning to enter the mainstream, but it feels like a good time to really amplify that.

So is there a place that people can go to keep up to speed?

Not yet. We’re just establishing something. I’ll let you know.

Highlights

1. Preston City Council started to look at how they might do things differently and use their own resources to kick-start a different kind of economy. It started through procurement – i.e. how could they procure from local small firms – but also, where there were gaps in the local economy, to start cooperatives.
2. The concept of the ‘Northern Powerhouse’ is the same old idea of attracting outside investment, building big, sweeping away the ‘old’, then everything gets gentrified, and there’s less space for more creative networks of smaller businesses and enterprises, and local activity generally.
3. Most councils go with big players like Capita and until recently Carillion, and so that is a massive barrier.