I lived in a northern Canadian town in the 1990s when the mayor brought in the ‘big box’ stores, and downtown merchants who had been the ones to support local sports clubs and community activities experienced a big hit in their revenues. People pointed out that the big box revenues went out of the community, but for at least some people, lower prices were more important.
I thought about this when I read about the “Preston model” which has helped rebuild the economy of that Lancashire city since 2011, when a huge proposed mall fell through. So Preston decided to turn instead to its public sector and encourage them to spend their money and create jobs locally. It was a strategy much like one adopted in Cleveland, Ohio, in the USA.
The Preston mall was going to cost $700 million and be built by two of the UK’s largest developers – until the banking crash brought investment to a halt and eventually, led one of the huge anchor stores to pull out. The mall no longer made economic sense, and so in 2011, the Preston council pulled the plug – and dramatically changed its investment strategy.
“It keeps its money as close to home as possible so that, amid historically drastic cuts, the amount spent locally has gone up,” said the Guardian. “Where other authorities privatize, Preston grows its own businesses. It even creates worker-owned co-operatives.’
Investing in its people and businesses and its city, instead of searching for external investment, worked so well that many other cities began to make pilgrimages to find out how they’d done it, and people began to refer to the “Preston model.”
“But what’s most remarkable is how somewhere so beaten-up – with its streets a mix of empty shops and rough sleepers, and having the highest suicide rate in England – got itself off the floor,” said the Guardian. “How a council that only a few years back hugged multinational Lendlease now espouses localism. How a place that has been on the wrong end of the past 40 years mustered the confidence to strike out on its own.”
The city had been in the bottom 20% of deprived areas and life expectancy for its poorest citizens was just 66 years. But between 2010 and 2015, Preston had the second-best improvement on the Multiple Deprivation Index. And in 2016, it was named the best city in the North West to live and work in.
So much of what Preston has been doing seems to be such common sense that it is hard now to realize what a revolution radical localism was when it was introduced.
While public bodies employed thousands of people and spent hundreds of millions, research showed that in 2013, only about five per cent of that money stayed in Preston, even though for every pound spent with a small or a medium-sized firm, 63 pence was re-spent locally.
So Preston persuaded six of the public bodies – its anchor institutions like schools, hospitals and police – to spend as much of their £1.2 billion each year locally wherever possible. That wasn’t how procurement was normally done, but it made a lot of sense. They didn’t have to spend extra cash or pass new laws – they just had to work together more effectively with the money that they were already spending.
(The six anchors are University of Central Lancashire, Community Gateway Housing Association, Preston’s College, Cardinal Newman College, Lancashire Constabulary, Lancashire County Council, and NHS Lancashire.)
In 2012, Preston City Council became the first accredited Living Wage employer in the north of England, guaranteeing its employees a minimum £8.45 an hour. A new credit union was created and had over 500 members as of 2017. The Lancashire County Pension Fund invested £100 million in student accommodation, office space and a hotel. And the council teamed up with an energy supplier to offer cheaper deals than the major energy companies.
One of the most fascinating things about Preston’s reinvention of itself is realizing that there are many more models of ownership than just owning shares in a company. Workers cooperatives are another form that works well, and is becoming much more popular. And in Germany, 1,500 small banks cover 70% of banking, while in the UK the five big banks get 90% of the business.
“If there is anything we are trying to protect ourselves against, it’s shareholders,” says Martyn Rawlinson, the councillor in charge of finance. “Those people who live hundreds, thousands of miles away and just extract value from our community.”
But radical localization went against decades of local disinvestment. There weren’t large numbers of businesses to apply for each new contract. Some contracts were too big for smaller businesses. So Preston, and its public bodies, had to change their approach.
Sometimes it meant asking bidders to explain in detail how they would employ local people, provide training, and partner with other local businesses. Other times it meant breaking up large tenders into smaller pieces.
In 2015, when Lancashire county council put school meals out to tender, it broke the request into smaller units – tenders to provide yogurt, sandwich fillings, eggs, cheese, milk, and so on. One contract was split into nine different lots. Local suppliers using Lancashire farmers won every contract and put an estimated £2m into the county’s economy.
In 2013, the six local public bodies spent £38m in Preston and £292m in all of Lancashire. By 2017, they were spending £111m in Preston and £486m throughout the county – even as their budgets shrank from £750m to £616m. So they went from five per cent of their budgets spent locally in 2013, to 18% in 2017. That meant an extra £75 million spent in the city.
For some, it meant a change in their focus. For example, Community Gateway, which manages 6,500 homes around Preston, now does its repair and grass cutting in-house, instead of outsourcing it.
The council allocated £1.6million of its food budget to be spent locally, which benefited farmers, and a local builder, Conlon Construction, won the £2.6million contract to build a new market hall as well as one to regenerate the bus station, allowing it to take on five extra staff and three apprentices, with more jobs being created for subcontractors.
It is, says the US-based Democracy Collaborative, “a remarkable community wealth building program, which aimed to ensure that the large amounts of money leaking out of the local economy were instead invested in local businesses and, in particular, cooperatives.”
It’s a framework for integrating community, cooperative, and public assets into a mutually supporting system of local economic prosperity, says the Collaborative.
“The attraction of wealth is important but of more importance is understanding and harnessing existing wealth for the benefit of local economies and communities,” says Neil McInroy, chief executive of the Centre for Local Economic Strategies, which did much of the research for Preston. “That is exactly what we have done in Preston through our anchor institution work.”
Preston “is creating a resilient and inclusive economy for the benefit of the local area and its people,” says the city council. “The model does this by taking a collaborative approach to building locally controlled economies, which put communities first. It does this by reducing the amount of wealth flowing out of the local economy, so that it can be shared more widely and recirculated for the benefit of local residents and businesses.”
“Recent spending analysis found the procurement from institutions in Preston retained in the city was £112m, £74m more than 2012/13,” the council says. “In addition, since the start of the project, an additional 4,000 employees in Preston are now receiving the Real Living Wage. Community Wealth Building ensures that the benefits of local growth are shared across local communities and used to support investment in productive economic activities.”
It is an approach that offers hope in many other places, too. “As we emerge from COVID-19, the richest 1% of US residents—totaling just 1.3 million households—now hold more wealth than the bottom 90%,” says a recent report from the Democracy Collaborative. “This is not a coincidence. It is the result of an economic system working as it was designed to: concentrating the vast wealth of our nation in the hands of a few at the very top.”
“Transformational change is not only possible in this moment. It is demanded. We must fundamentally rebuild our economy from the bottom up—connecting together community-based solutions, and scaling them with supportive policies and frameworks.”
“Decades from now, this will either be remembered as the moment tens of millions of Americans fell behind for good and we cemented an economy for oligarchs and the ultra-wealthy—or the moment we radically reinvented our economy, finally recognized the suffering of too many people, and built a truly just and sustainable future, where everyone has a genuine stake in the economy and the wealth we produce collectively.”
In 2011 Preston hit rock bottom. Then it took back control. The Guardian, Jan. 31, 2018
The Preston model: An overview. Democracy Collaborative, Jul. 7, 2020
How one city is beating Tory austerity with ‘radicalism on a shoestring’. The Mirror, Nov. 4, 2017
Community Wealth Building in action. Preston City Council
A new era for community wealth building. Democracy Collaborative, Jun. 20, 2022