Community Wealth Building

In November 2022, alongside Cllr Alasdair Ibbotson (Penyffordd), I was invited to attend an event organised by the Communication Workers' Union and Preston Labour on Community Wealth Building in local government - commonly known as the Preston Model. Crucially, the event wasn’t to try to sell why it’s a good idea, but to share information and tactics about how to achieve it. Speakers included Matthew Brown; the leader of Preston City Council, Paul Dennett; the Mayor of Salford, Joe Cullinane; former leader of North Ayrshire council, MPs such as Ian Byrne, Olivia Blake, Ian Lavery, Rebecca Long-Bailey and Beth Winter, Hannah Blythyn from the Senedd, Richard Leonard; the former leader of Scottish Labour and a number of community members, from co-operatives, trade unions and beyond, who have participated in developing the model.

Community Wealth Building means trying to stop money being sucked out of our communities. Preston City Council has been putting Community Wealth Building into practice for a decade now as a way to tackle what they describe as the ‘extraction’ of wealth from their local area. They have a Cabinet Member whose portfolio is dedicated to rolling out Community Wealth Building. The results are inspiring. 

Preston City Council have insourced services back into the local authority and worked collaboratively with local anchor institutions in helping them do the same. There are now seven new worker-owned businesses in the city and a credit union with 600 members. A regional co-operative bank will lend and invest up to £1 billion in the region in a bid to tackle national banks such as Barclays who do the opposite by extracting money from local areas and using that money to fund climate-wrecking. The Council is in the process of developing a £45 million publicly owned cinema and leisure complex for the city centre.

In Flintshire, our economy is heavily centred around a few large employers, and the profit from the labour of the thousands of Flintshire workers doesn’t go to them or stay in our area; instead it is sucked out and paid to shareholders hundreds of miles away. This also makes our local economy vulnerable - closure of one of these sites can kill off everything, as we saw historically with the loss of major employers, for example Shotton Steel.

Equally, when workers in our area have earned wages, they are often spent with large companies who again suck profit out of Flintshire to pay distant shareholders. A very small part of Flintshire’s economy is actually owned by the people of Flintshire - this is what community wealth building aims to change.

Ownership is part of the picture, but to really work in the interests of local people, the economy needs to be democratically controlled by local people too. Having the head office of a major supermarket chain in Flintshire doesn’t give ordinary working people a bigger say in how it’s run. 

The answer to this is smaller businesses run as worker owned co-ops, and larger businesses taken into public ownership and run by workers. In all cases, including where public ownership is not a viable option, trade union rights and organisations need to be expanded. The question is how we get to that point.

A number of Labour councils, notably Preston, Salford and North Ayrshire, have taken significant steps along that road. In Wales, the Welsh Government has adopted the idea of community wealth building and the language of it; later in November, the Senedd will progress a bill to grant the Government more powers in procurement to advance community wealth building. Having a supportive national Government makes the ground more fertile for Welsh councils than English ones in many respects, but on the other hand the Welsh Government’s approach is markedly more timid than the English and Scottish councils that have developed this in the UK; and this timidity does have the potential to put a limit on how far this can be taken in Wales. Labour councils need to have constructive discussions with the Welsh Government to ensure that the rhetoric is matched by reality.

Flintshire is already taking a number of steps towards community wealth building, such as by extending democratic control of council services through creation of worker owned cooperatives such as Aura. Cllr Johnson has highlighted several times in reports the steps being taken to keep procurement spend as local as possible. Through insourcing, retention of assets and establishment of local authority care provision, we are protecting locally run and controlled services where otherwise day to day control of these would be London based and the profits siphoned off, in the case of private care homes, often to tax havens. We are building new council homes to provide decent places to live and usurping private landlords from the market.

We could go further. Many local authority pension funds are taking much more proactive steps to invest in local worker co-operatives and unionised businesses than Clwyd Pension Fund is. This form of finance, which generates strong returns for local government pensioners and at the same time builds the real local economy and strengthens it against decisions by multinationals to move away, is crucial to community wealth building. Large commercial banks work on the basis of extracting from a place, not investing in strengthening it, and anything that challenges that model is seen as a threat rather than an opportunity. 

We could go a lot further in prioritising ethical procurement than we are currently in Flintshire. We have an obligation to get the best value from procurement, but that doesn’t necessarily mean the cheapest. The council, and other major public sector bodies like BCUHB, are “anchor institutions” that can use their own significant power in the local economy - through the wages they pay, their procurement spend and their control over use of public assets. By defining trade union recognition, co-operative models and retaining wealth in our area as a public good, we can build the strength of these non-extractive businesses in Flintshire. While there is a small financial cost to the council in doing so, the returns to our area in economic growth far outstrip this and experience in other Labour councils shows that this far exceeds the return on investment from traditional regeneration models.

We can provide more in depth support to groups of workers wanting either to found new co-ops or who want to take over an existing business. At the moment Flintshire’s business support team is focussed on promoting businesses that run on a traditional model where a single owner extracts the profit and all the support is geared around that traditional ‘entrepreneur’ model that hasn’t strengthened our communities. Directing educational, technical and financial support towards democratically controlled businesses where protection of employment is specified as a primary aim of the business will serve our communities better than helping business owners make money while workers earn low wages and are dumped at the first sign of trouble.

The council can use its powers to set licensing policies to help community rooted businesses against multinational monopoly suppliers. We can use strategic control over bus subsidies to build, even before municipal bus companies are reallowed by the Welsh Government’s delayed reregulation bill, co-operative bus companies that are democratically owned. We can use our power as a unitary authority to coordinate community councils who are willing to invest to set up such a company, which will then be able to offer services to their villages. We can support consumer facing co-operatives and community businesses through a scheme of employee benefits for council staff, for example discounted tickets at Theatr Clwyd for Flintshire employees in return for the financial support the council provides, which will in turn drive up audience sizes and increase the viability of the theatre. Such a programme could be extended to a raft of community businesses, and with other employers encouraged to take part, thus creating a strong incentive for workers to spend their wages in the real local economy rather than in the extractive economy. We can extend council ownership of renewable energy projects in Flintshire, rather than letting the private sector take the lead - with profits going back to local services rather than vast solar farms selling overpriced electricity to residents and the profits heading to tax havens.

None of the above are new, none of them require major capital expenditure, none of them are especially radical. They are inspiring, and they are a continuation of the path that Flintshire has taken some early steps down.

All the speakers who had been involved in delivering community wealth building from the local government side had faced difficulties in persuading senior officers of the council’s ability to carry them out. In effect, the advice was ‘keep going until they say yes’. If we’re going to achieve in Flintshire what has been done in Preston - and more - then we are going to have to be willing and able to face down resistance to changing the status quo of what the council does. 

Overall the event was a real inspiration and a real glimmer of hope of how we can use our powers as a council to make things better at a time when everything feels like it’s getting worse and all we can do is try desperately to hold back the tide. The main takeaway was that if we play the game of vested interests, we lose and our residents lose. The only way to beat poverty and reverse the downward spiral of austerity is to rip up the rules and build an economy that works for people and keeps money locally. While a Labour Government will help, we can’t afford to wait for them and more importantly, they can’t do it for us - this cannot be achieved from Westminster or Cardiff Bay even with the best government imaginable. We hold the power in Flintshire - and we can make a difference.

We came away keen to build on the work already done in Flintshire, and keen to share the lessons from it.