These are the notes from Walton CLP member Tim Jeeves’ contribution to the Grassroots Politics and Alternatives political education event that was organised in May 2018.
- Labour’s Alternative Models of Ownership report
- Community Wealth Building Day in Preston, Feb 2018
- Local Government Day at Devonshire House, Feb 2018
Key Quotes / Comments
“Cities are vital engines of political change, they’re not just economic engines.”
Prof. Jonathan Davies, Centre for Urban Research on Austerity, De Montfort Uni
The grassroots is where innovation is to be found. Nye Bevan based the NHS on a model that was developed by the Tredegar Workmen’s Medical Aid Society, a locally run health scheme which gave coverage to nearly all of the town’s residents through the 1920s and 30s.
Ted Howard, founder of the Democracy Collective in Cleveland
It’s important to develop a social procurement guide, so that when the council is procuring goods and services, social, environmental, racial / disability / gender justice is factored in alongside cost.
Prof. Jonathan Davies
“Preston has become a pilgrimage for London folk.”
What is the Preston Model?
In 2011, amidst the reverberations of the 2008 crash, John Lewis pulled out of a key regeneration scheme in Preston. Left in the lurch, the city undertook a number of radical, and somewhat experimental, actions in response:
- Anchor strategy review – Anchor institutions are significant contributors to the local economy. They are organisation such as the police, schools, unions, etc. that have a large stake in their local area because, due to the nature of their activities, they cannot easily relocate. In Preston, these institutions had a combined spend of nearly £1 billion / year, so the decision was taken to try to increase the share of this spend going to local suppliers (reducing the money that left the area – typically into the pockets of shareholders elsewhere).
- Lancashire Constabulary now requires quotes from local organisations on procurement opportunities between £10,000 and £50,000.
- Lancashire County Council has revisited its commissioning and procurement strategies and has broken contracts into lots to support smaller organisations that might want to bid. e.g. rather than bidding just on supplying school dinners (a massive undertaking for a local company), a supplier can now look to win a contract for just the yoghurts, or the bread, etc.
- Utilising the local government pension fund – the money invested in the pension fund has been used to support a £100 million investment and build student accommodation.
- Supporting cooperatives and employee owned businesses – through the creation of the Preston Cooperative Development Network (Presco) with UCLAN and others. The long-term plan for this is to create cooperative infrastructure as is found with Mondragon in Spain (75,000 people employed by 257 companies).
- Reviewing local engagement with finance:
- by establishing the Lancashire Community Bank and continuing to support local credit unions and community finance initiatives.
- working with trade unions such as Unite and PCS to promote credit unions.
- Becoming a local energy supplier – Preston partnered with Cheshire East Council to supply Ovo Energy.
- Working with the local Chamber of Commerce to encourage retiring business owners to sell their companies to their employees
- When, due to austerity, the council has had to transfer loss-making assets to maintain existing services they have prioritised giving them to organisations in line with their values: eg. leisure centres were sold to a worker owned business in London.
In terms of how spending has changed in the area:
- In 2012/13 – 5% of total anchor spend by 6 anchor institutions was in Preston.
In 2016/17 – 18.2%.
- In 2012/13 – 39% of total anchor spend by 6 anchor institutions was in Lancashire.
In 2016/17 – 79.2%.
It’s still very early days, so any conclusions need to be qualified, but so far, the following impact has been identified:
- A significant reduction in the number of jobs paid less than the real living wage by the local authority. From 2016 to 2017 the following shifts have been identified:
In Lancashire: 120,000 to 112,000 (1.4% reduction)
In Preston: 19,000 to 15,000 (4% reduction)
- In 2017, Preston went from 143 to 130 in the social mobility index (out of 324 local authority areas).
- In 2015, Preston moved out of the bottom 20% most deprived areas.
- In 2016, Preston was in the Top 50 of UK local authorities for job density.
- In 2015/16, 5% increase in Gross Value Added (GVA), equivalent to £1,157 per capita.
As Jade Morgan, Preston Councillor, said “It is possible to flourish in hard times”.
Of course, austerity has had a massive impact on what councils can do, and this needs to be fought on every level; we need more money coming in to our councils, particularly in the north which has been hardest hit by national cuts. But it’s also about the models that we adopt to spend that money, we need to remove the capitalist in our heads, and Preston is pioneering the way in which we do this.
Other speakers at the launch of Labour’s Community Wealth Unit included:
Mika Minio-Paluello, Labour Energy Forum – Talking about Energy
Mika talked about the importance of utilising the commons for energy production, be that wind, solar or tidal.
She also shared the quite shocking statistic that over 51.2% of UK offshore wind is publicly owned, but only 0.07% is owned by UK public entities (the rest is owned by overseas national and local governments).
In terms of good practice, Mika drew attention to:
- In 2015, Stadtwerke München (Munich’s city utility) was the 4th largest installer of new offshore wind farms across Europe.
- Hackney council are supporting a local community group to install PV solar panels on the roofs of an estate; they’ve also guaranteed to buy a proportion of the energy generated.
- In Nottingham, the council are bulk buying large numbers of photovoltaic cells (solar panels) to sell on to local community groups at more affordable rates.
She also emphasised the need for public / co-operative and public / public partnerships (where two municipalities partner up) in order to fund these new sources of power.
Pension funds can be utilised to the same ends – more and more councils are divesting from fossil fuels, which are a risky investment, they don’t have a future. It makes both financial and environmental sense to put the money into something that is safe and sustainable in the long-term.
Catherine Howard, Share Action – Talking about Finance
Catherine also emphasised the need for us to be taking back control of our pension schemes more broadly. There should be worker representation on pension boards, but she also advised us all to go to pension meetings – savers have the right to challenge where their money goes.
Marianne Sensier, Manchester University – Talking about Community Banks
In 1950, 60% of bank lending was to industry.
In 2010, 15% went to industry.
In the same period, lending to financial companies has risen from 10% to 38%.
Banks are disappearing off our high streets. Credit Unions are a valuable alternative, but additional support can be provided by regional banks. Preston is working towards setting one up, and Warrington Council has a 33% stake in a bank that lends primarily to Small to Medium Enterprises in the area.
We should also be exploring the possibility of a green investment bank – to help fund the installation of solar panels, to retrofit insulation to homes, and to tackle fuel poverty.
Alternative Models of Ownership Report
This report, commissioned by the Labour party, considers alternative modes of ownership at both the small, mid and national scales, and is inspirational in what it proposes.
In case you’re someone who doesn’t love reading reports, selected highlights are below:
In the next decade, we are not likely to be a ‘post-human economy’. We may, however, be at peak-human in terms of the central role of human labour within the production process.
Research has shown that there is no productivity disadvantage to co-ops, which raises the question as to why are they not more common:
- Usually this is understood as related to the fact that worker owned firms struggle to attract finance; capital providers (either capital markets or banks) won’t fund what they can’t control. Another reason to call for the formation of state / municipal banks.
- When a worker cooperative or worker owned firm is under financial stress, the pressure to issue stock, or sell to a capitalist firm with greater access to long term finance, is high. And when this happens, the cooperative structure will nearly always be lost.
- The plywood worker cooperatives of the US Pacific Northwest are some of the best-researched worker cooperatives in the world and show this.
Cooperatives can be supported if the right legal framework is put in place. This will obviously often be outside of the remit of councils, but is still worth considering:
- As in France, Italian law around cooperatives requires that a certain proportion of annual profit is put into an indivisible reserve (currently 30%) and in the event of the cooperative being privatised, this reserve cannot be accessed by members or investors. Instead, it must be donated to a federation or another cooperative.
- The cooperative sector in Italy also enjoys tax advantages, preferential access to public contracts, job creation loans, and access to the financial expertise of banks and research institutions.
- To assist the setting up of worker cooperatives, a possible UK version of the Italian Marcora Law, which provides funds for worker buyouts, could also be examined.
There used to be more support for cooperatives in the past, re-establishing previous government support seems vital:
- Labour’s 1976 Industrial Common Ownership Act – provided the legal definition of common ownership; £100,000 in seed funding to the Industrial Common Ownership Movement (which would be worth £500,000 today); and £250,000 to the Industrial Common Ownership Loan Fund (worth £2,005,580 today).
These aren’t huge sums but are still significant.
- 1978 Cooperative Development Agency Act – promoted grants to Cooperative Development Agencies. There were 60 of these, giving local support and supported by local authorities, that could provide start up assistance. In 1984 the funding for the national Cooperative Development Agency was increased to £3 million (£6,750,000 today).
This kind of support is essential – there is often the risk of burnout by staff within co-ops, they need support.
On developing other strategies
The report also proposed the following tactics as a means to encourage the development of new ways of organising at the municipal level:
Work with CLES – Centre for Local Economic Strategies:
- This ‘Think and Do Tank’ were key in developing the work in Preston that led to the Preston Model, and before that they also undertook significant activity in Manchester.
- As their website describes them – ‘the community wealth building activities of CLES are looking to maximise the fruits of the economy, creating a context for greater economic and social inclusion.’
Support existing activity:
- There is a new movement of social innovation, with a growth in local currencies, local banks, community shares and community energy schemes
- Living Wage activities
- Advancing the ‘Foundational Economy’ – an economy that prioritises health, care, education, housing, utilities and food supply
- The development of ownership models which circulate wealth rather than extract it – cooperatives, mutual, CiC’s etc
- Work around the collaborative economy and the circular economy – use smart technologies to herald a new open source collaborative economy, where peer to peer activities take economic wealth production away from the few within a vertical hierarchy, to many within horizontal systems
- Work stimulating the growth and social responsibility of business. This would include the advancement of employee involvement in the boardroom, and the adoption of voracious corporate social responsibility activity.
Support community business and community projects, such as:
- Buying groups – a group of consumers who, by ordering food in bulk, direct from farmers or suppliers, buy good quality food at a more affordable price.
- Community owned shops – a shop owned and, typically, also run by a local community
- Community supported agriculture – partnerships between grower and consumer
- Development Trusts – a community-owned and led organisation, which develops community assets and community enterprise
- Farmers’ Markets
- Social Enterprises – a business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners. (The report notes that there is some controversy around government definitions of social enterprise though, like ‘Free Trade’ and ‘the Living Wage’, it is worth being slightly cautious when encountering the term).
There is already a lot of good work being done in Liverpool:
The Leccy – Liverpool Energy Community Company
Have a good ethos – they prioritise helping people get off pre-payment meters, and offer cheap rates. They are run as a shell for Robin Hood Energy ‘a not-for-profit energy supplier wholly owned by Nottingham City Council’.
Perhaps this could be built on though? Is a more equal partnership with somewhere possible? Or could we even set up our own not-for-profit municipal supply in Liverpool?
Liverpool’s Landlord Licensing Scheme
We are the only local authority in the country that demands that all its landlords are licensed. Again, this is a step in the right direction, but perhaps could be pushed further – tenants could be supported through the creation of tenants’ unions (which differ significantly from Tenant’s Associations).
These are internationally recognised models of cooperative ownership and urban community land trusts. Homebaked’s vision for a social high street is slowly transforming the streets of Everton that were devastated by the failed Housing Market Renewal Scheme (not the emphasis on renewing the housing ‘market’!)
There are also a host of other organisations doing incredible work in Walton, too many to list here (though there is a list here!)
Looking to the future, automation and technology is both an opportunity and a threat.
We have a choice between things like:
1) a municipally owned ‘Uber’ style fleet of autonomous cars, that operates at affordable rates whilst raising money for the council, or
2) Uber, whose business model sees it run at a loss in order to kill the competition, and create a monopoly that extracts local wealth to California.
Change is happening fast, too fast to predict. Fundamentally though, whatever path the council takes, what they do has got to be about speaking with experts. These might be experts in alternative energy or they might be experts in community banking. Most of all though they need to engage with the expertise of those that live in the community. These experts know what it is that their community needs.