by Melania Parzonka
Like the majority of Northern England, Preston has suffered from years of austerity and cuts on local funding from the central government. But after years of raging poverty and unemployment, the small industrial city is turning a corner: in 2018, Preston was named the UK’s Most Improved City and has consistently ranked high on the list of best cities to live and work in, according to PWC.
In a revolutionary attempt to bring the local economy back on its feet, Preston councillors turned to “community wealth building.” At its core, community wealth building is about collective ownership of the economy, which returns social and political power to local communities.
The “Preston model” took inspiration from similar initiatives that have seen success in Mondragon, Spain and Cleveland, Ohio. The 60 years strong Mondragon Cooperative Corporation is Spain’s sixth largest company, generating a turnover of €6 billion—yet the difference in salary ratio between the highest and lowest paid worker doesn’t exceed 1:9. In Cleveland, America’s poorest big city, the Democracy Collaborative fought for the local non-profit sector to localise their procurement and anchor their supply chains with a network of local worker co-ops called the Evergreen Cooperatives, creating thousands of jobs and increasing wages for the most precarious workers.
In Preston, the process began by encouraging local “anchor institutions” (such as the council, the police, and universities) to prioritise local spending and introduce a living wage that reflects the true costs of living in the city. The procurement processes for public institutions have been revisited to facilitate the participation of local businesses over big conglomerates who offer inadequate services and low wages to the community. The city is also experimenting with cooperatives and collective models of ownership, including opening a public-owned cinema.
I had a chance to interview Councillor Matthew Brown, leader of the Preston City Council and one of the people behind Preston’s successful implementation of community wealth building. Brown has been a member of the council since 2002 and its leader for the past three years. He also works for the Democracy Collaborative as a senior fellow to promote community wealth building. And just recently, he co-authored a book called Paint Your Town Red—a new guide to revolutionising local economies.
Note: This interview has been lightly edited for brevity and clarity.
MP: Could you start off with a bit about Preston’s history and its economic situation? What role did deindustrialisation play?
MB: Traditionally, Preston was a very working-class, Catholic town with a population of 141,000. After the Second World War, there was lots of prosperity in the northwest of England, including Preston. There were quite well-paid jobs through the 50s, 60s, 70s, and 80s—to a degree through a very supportive state. The local government had much more power and did a lot more in terms of running buses, providing housing, and a number of other things to support the economy.
And since the late 70s, we’ve had a national economic model of Thatcherism, which obviously saw a complete shift. So lots of privatisation, outsourcing of services, lots of land sold off, a very speculative national economic backdrop….Things did improve between 1997 and 2010, but there wasn’t really a challenge to that free market philosophy that I’d like to see. There were improvements, but it wasn’t the transformation which could have happened with a Labour government.
Probably since the late 80s onwards, Preston has traditionally been a very deprived community. That can be also said about lots of other areas in Lancashire—some are actually worse, to be honest. Increases in child poverty, many challenges that we have to face with inequality that weren’t there before, the loss of well-paid jobs, the loss of social housing.
And then, crucially, the economic crash of 2007-2008 caused problems. There were conversations that began in the late 90s about a big regeneration project for our city. It would involve large developers that we would work in partnership with, and the development would be worth over a billion pounds in today’s money. That would have regenerated lots of the city center, through retail and other things. But when the economic crash of 2007-2008 arrived, that idea was abandoned. And then after that, we had austerity.
The Preston model, as I highlight in Paint Your Town Red—a lot of it came from the reality that we’re left with pretty much nothing. With nothing, you’ve got to do things in your own way. The traditional ways of doing things, asking for money from the government (which was being cut back) or getting big business to come into the community—but they didn’t want to come into the community. You know, you’re basically left with nothing. So that’s where community wealth building came from.
MP: How did you begin implementing these changes and bringing wealth back into the community? How did you start a conversation with local institutions to anchor spending locally?
MB: I used to draft the manifestos. Before the Labour group got back into power 10 years ago, I was looking at the alternative economies of Emilia-Romagna, Mondragon, thinking, “Wow, these are quite inspirational economic alternatives to capitalism, getting different forms of common ownership with your local economy.” And I thought, “I would love to begin to do that within Preston.”
So we had a manifesto commitment, especially to look at worker cooperatives and how we could expand that. I was in the cabinet in 2011, there were six of us there—all men back then, but that’s improved a lot, and rightfully so.
We started by becoming a living wage employer in 2012. So we paid our all staff, our agency staff, as far as we could legally through contracts, at least £9.50 per hour. Then I started working with other institutions, trying to say “Well, this is a good idea. Would you fancy doing it as well?” That’s how we worked to persuade other big institutions to do that.
And then we came upon the Cleveland model and Evergreen Cooperatives. In 2012, Ted Howard, the architect of the Cleveland model, came over to visit. And we thought, “Well, we want to do this.” So we started working with the Center for Local Economic Strategies (CLES) in 2013.
Luckily, back then, the County Council along with the City Council were all Labour-led. So we started off with six institutions, and we worked with CLES to make sure a lot more was spent in the local economy. It was very successful.
And that success was linked to the failure of the neoliberal approach to economic development—in the sense that if that regeneration scheme had taken place, then lots of public land would have been semi-privatised, and it’s probably likely that a lot of the local companies delivering a lot of the work now wouldn’t have had the opportunity to do that. It’s because these major development companies often bring their own construction vehicles in. So local companies have very little opportunity to deliver work.
So we’ve got the institutions involved in the local purchasing, paying a living wage, and looking at all the social value outcomes as well. Then we did other things, like reestablishing a credit union, the public pension fund we are part of chose to invest in the local economy. But now we’re getting to the quite exciting parts of looking to democratise the economy—and that’s establishing a Community Bank within the region, a one-member-one-vote mutual cooperative, building a very large city center development in local public ownership.
And we’re expanding worker ownership. So we’ve got four new worker cooperatives but we want a lot more. We’ve done a little insourcing in the council, we’ve established some food purchasing cooperatives through an association called Cooperation Town. And then we’re looking into a community land trust too. Altogether, you see how Preston has quite a democratic local economy. Now, a lot of it has happened, but a lot of it’s in the process of happening. Still a lot of it needs to be brought to scale. But I think there’s lots of hope in the sense that if everything goes together the way we want it to, then potentially it’s going to be quite transformative.
MP: What I found interesting while reading the book was that you included local entrepreneurs and companies in the procurement process for public institutions. But it hasn’t always been the case—historically, what was the motivation to award contracts to multinational corporations?
MB: I think there’s been a culture of doing that for so long. I don’t think people think that much about it, it’s just been done. The problem is that we’re now finding that it’s not even particularly efficient—like it was with Carillian, and Capita and others. Not only is it inefficient, but you also lose democratic control.
But obviously, there’s often lots of pressure to save money because budgets are being cut. So if a company comes in and is all shiny suits, and they say “we can save your council £10 million over five years,” it’s an attractive thing, isn’t it? Because you think, “well, I can then spend that on something else.”
But they’ll generally save money by cutting costs in terms of quality of service, and crucially, the treatment of the employees. So on the surface, the low cost can be attractive, but in the long term, it will cost you—because there’s actually less local jobs, and because they want to extract wealth to the owners of the corporation, the investors, and the shareholders. If people are getting paid less in the community, then there’s less money to spend in the local economy.
It’s a very false idea that outsourcing or privatising can actually lead to better services. There’s no evidence it does. So we’re bringing stuff back in-house now. Councils don’t build things at scale anymore, so you’ve got to buy in construction services. And again, it’s best that you buy it from a local firm or even a cooperative. Or do you use a large corporation that tends to not use local supply chains very well, often tends to employ people from outside the community, and might even not pay the amount of tax that the law intends?
Fighting against that culture—it’s a challenge, isn’t it? But it’s one a number of areas are waking up to, now, to be honest.
MP: You mentioned that Preston was the first accredited local authority in Northern England to pay a national living wage. Could you tell me more about the project and its origins?
MB: The national living wage was a very interesting idea. It came from a campaign about 15-20 years ago in London. You had a particular dynamic there—for example, in the Canary Wharf where all the traders are trading, that they’d be often earning six or seven figure salaries. And then in the evening, you have cleaners come in that are on the minimum wage. They were often coming from the BAME community, or they were often immigrants. They would be forced to do two or three jobs, to have enough money to look after children and cover housing costs.
The London Living Wage campaign came from grassroots organisations. There was a coalition of trade unions, churches, mosques, voluntary sector, refugee organisations, and others saying, “Well, this just seems really unfair and a little grotesque.” There are these two worlds in London, of people who are doing extremely well, and those marginalised at the bottom end of society. And they were working—and claiming benefits, working. And they just couldn’t afford to feed their families easily.
It was around 2008-9 when London employers started getting London Living Wage accreditations. And then, because of the cost of living difference, it was decided there’s got to be a living wage figure for inside London and outside London.
So we were the first employer—not the first Council, the first employer—to do it outside London I think. And we’ve promoted it voluntarily before then, we have had conversations about what we thought the rate should be. And I think at the time it was £7 per hour—but that was way above the national minimum wage, which I think was £5.21 or something.
So yeah, that’s how it happened—it was very exciting to be a part of that movement. We did it first, then, because we’ve got lots of local anchor institutions in Preston, and they also chose to support it: private businesses and voluntary sector organisations as well.
MP: In 2018, Preston rose in the rankings in terms of quality of life and actually surpassed London. How did the changes you implemented affect the citizens of Preston?
MB: We’re not particularly large as a council—there’s a two-tiered local government in Lancashire, and we’re just one tier of it. And so we’ve really got to try and influence others a lot around what happened around Preston, different policies being applied at different times and often in partnership with other institutions. First, we became a living wage employer—and then the County Council did, so did the police and the largest housing association, and one of the further education colleges, and universities are doing it now….So it’s happening with the council and other institutions at different times. Nobody’s necessarily that aware of the change that is taking place—which is a bit frustrating.
With the procurement work, we’ve made sure that we’ve got more local companies delivering projects, we get local people employed on projects, as do our partner organisations. And again, that is successful. But again, it’s happening on different projects in different parts of Preston. So for example, the NHS bought surgical masks from a company in Preston—it was motivated by community wealth building. That led to 90 new jobs during the pandemic.
What we need to do is communicate this a bit better—because these things are happening and delivering tangible outcomes on the ground—but I’m not sure everyone is aware of it. I think the strongest thing we have is that there’s quite a sense of civic pride—because we’ve moved away from this big global developer-led approach.
The city is being regenerated in public ownership, collectively, through public endeavor. And obviously, a part of that is participatory in the sense that local companies have been a lot more successful, and local people are getting to work in those jobs. That is where I think people notice it the most.
Before the pandemic, our employment rate was the best it has been in 15 years, since figures were recorded on the Office for National Statistics website. But we’ve really taken a hit with the pandemic, because we’ve been in restrictions longer and deeper than most of the UK [because of the regional tier system being introduced only later on in the pandemic, Northern England ended up being under lockdown the longest in the whole country]. So the unemployment went back to the average for the UK, I think—we were put back a year or two, sadly.
The next part is trying to look at democratisation: it’s having the bank of the street, having more worker co-ops into the community, building the cinema in public ownership…looking at the other policies around food purchasing, looking at community district energy….We should have a community land trust, the council is looking at how we can potentially deliver social housing again—which is something that hasn’t been done for decades!
We’re trying to build that economic culture, infrastructure—but it takes time, it doesn’t happen overnight. We made a good start but we really want to transform the local economy.
MP: There was a lot of working-class culture surrounding British industry that was destroyed under Thatcherism. Do you think community wealth building is going to bring back a sense of pride and identity?
MB: Yes, this is a really important point. A lot of it is gone—the strength that working-class communities had decades ago is not there anymore. The Conservatives have, in my opinion, purposefully restricted money and choices available to local government.
So Labour, where it is in control, if it wants to have more radical policies, it’s very restricted in what it can or cannot do. What the Tories will do is blame the Labour councils for not delivering change saying, “Oh, you’ve had a Labour Council for 10 or 20 years, look at your community, let’s give someone else a chance.” So the Conservative government has been very clever with their strategy—they appeal to division, in a sense: let’s blame the EU, let’s blame migration, etc.
However, it does offer an opportunity, but you’ve got to be very creative and open to the idea—trade unions and Labour councils as well. One of the things I’m most excited about is the taxi cooperative. We’ve got self-employed taxi drivers, many of them from the South Asian community. They’ve organised into a worker cooperative business through an app, and they want to compete with Uber.
These gig economy companies are coming into the community—not an awful lot, but these trends affect us eventually. I think there’s between 8 and 15 in the coop we’ve just incubated, but that potentially could grow to over 100, if it’s successful. But then having a regional cooperative bank that can lend to local people, local businesses, and cooperatives and work with credit unions and others to fight financial exclusion.
The council is doing a lot more in terms of commercial development. Like the cinema we’re building—it will have commercial operators, but ultimately, the asset will be owned by us, and we’ll have the leases and a say over what happens. And crucially, when you get to the construction and development phase, making sure you’re building it to the highest levels of environmental standards—there’s that democracy in the sense that the Labour Council will make sure it is done as well as it can be.
So we want to put democracy that was taken away from communities and use new methods through community wealth building to bring it back. In many ways, I just think you’ve got to consider establishing your own institutions to do these things. Because we’re that centralised in the UK, so restricted in powers about what we can and cannot do….Setting up things like companies and supporting cooperatives and alternative banks, as councils, is the only way that you can get around it. Potentially things can be quite big, if you actually put all of this together—that is quite exciting.
And now Merseyside, under Steve Rotherham, the Metro Mayor of the Liverpool City Region—they are looking at land and assets. So let’s say that the council has like 4000-5000 pieces of land and assets or properties, how can we bring that into community wealth building? Do we sell it to the highest bidder to an extractive commercial developer? Or could we actually have a community land trust there, or can we build social housing? Could we have social businesses there?
Insourcing is a big part of community wealth building—not so much for Preston, because we’ve not outsourced an awful lot. But if you go to the London Borough of Islington, you can see that they’ve brought back, I think, £320 million worth of services, over a 11-12 year period. And that has been 1000 employees, who now receive the London Living Wage. So that’s management of council houses, cleaning, HR—much of it has previously been outsourced under the precedent Lib Dem administration (or lots of it was). They are now bringing it back into the council, the local public sector.
Rokhsanna Fiaz, Mayor of London’s Borough of Newham, one of the most deprived communities in the whole country—what they’re doing is that council is actively purchasing empty properties, and private sector properties as well, to bring it as a part of social housing. One of the reasons why child poverty is so high is the cost of rent with private landlords. So they are intervening by buying property from the private sector and bringing it back into the public sector.
It’s a bit different in Preston, because our council is quite small, and we haven’t done an awful lot of outsourcing traditionally, and most of our land is with us—we’re doing it differently and focusing a lot more on the cooperative aspect. Others are getting the council to do a lot more—where there’s been the contracts which have gone out to the private sector, when they shouldn’t have. So it’s interesting how it’s being brought to scale in many places.
MP: Speaking of scale, do you envision similar changes, in terms of procurement and returning power to the community, being implemented on a national level?
MB: There is a degree of it, in the sense that the NHS long-term plan does talk about the NHS as an anchor institution—that’s been done under the Conservative government. The stuff that John McDonnell was looking at supporting when he was the Shadow Chancellor, having community wealth building zones—there would be support from the government to establish worker cooperatives, set up municipal energy companies, insourcing, etc.
But the less transformative aspects of it, the more commonsense stuff in the sense that,—you know, this is a big institution, it’s got a big economic role, as well as providing health or education or being a council or a civil service—and look at how that could benefit your local economy and try to lift people up a bit. With the Conservatives, I think they do little bits of it. But the whole community wealth building movement is actually trying to really challenge the entrenched inequalities and the ownership of the wealth in the community.
MP: How do you think local economies across the country are going to be affected by Brexit?
MB: It’s hard to tell at the moment, because we have managed to put a lot of money into our economies because of the COVID crisis. So there’s been an unprecedented case of public money going into our local economies, presumably protecting us from the immediate effects of Brexit. But it is a worry, especially in terms of food and exports.
We’re told that we have a deal of some sort—but how it is going to turn out in the long run, I don’t know. I mean, there’s a danger with Brexit. In terms of the community wealth building policies and procurement policies, it’s got the opportunity to really ensure that through public purchasing you can actually make big improvements to people’s lives and communities—that’s because the European regulations, which did hold us back a little bit, aren’t there anymore. But I don’t think this government will go that way—I think it’s probably more likely that the likes of the NHS end up being provided by American corporations and other corporations. So yeah, it is a huge risk factor, to be honest—but I think it’s a bit too early to look at the impact of it.
MP: How can individuals get involved with their local council? How would you encourage people to become more active within their communities?
MB: I think people should consider standing for the local council. For people who strongly support community welfare, why don’t you become a member of the Labour Party? Even if you don’t stand for the local council, there’s lots of stuff that can be done—you can lobby your councillor to support community wealth building. In terms of supporting the cooperative economy, we’re working with academics, with local trade unions and community groups—you can get involved that way.
It’s about wanting to try and change the system because you are fed up with the inequalities. Now’s the time to try to do something different. And I think potentially starting this locally is something we can do. You know, I’ve looked at the regions of Europe, which have inspired me a lot: Mondragon in the Basque Country, or Emilia-Romagna in Italy—they’ve created a network of worker owned cooperatives that really have huge community support. And that is what I’m trying to do here. And, obviously you need someone like myself, a local politician to make those arguments—but we also need the community.
Melania Parzonka is the co-founder and web editor of INTERZINE.
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Categories: Europe & Russia