FEATURE
By Dr Carol Power, Lecturer, Cork University Business School and Centre for Co-operative Studies, UCC
Community Wealth Building as an alternative economic development model Sometimes innovative development strategies can be born out of adversity. One such example is the socalled ‘Preston model’ of Community Wealth Building (CWB) in the UK, which has been hailed as an exemplar for other cities and towns. Ten years ago, the city of Preston, located in Lancashire in the northwest of England, was one of the most deprived local authority areas in the UK. The demise of its traditional industries in the second half of the 20th century led to rising poverty and inequality. These problems were exacerbated by the recession and public sector austerity that followed the global financial crisis of 2008, and the collapse of a muchanticipated €700 million urban regeneration project in 2011. Without any prospects of inward investment, the city authorities were forced to explore alternative strategies to address Preston’s problems. Drawing on learnings from successful development experiments in the US and Europe, Preston developed a CWB strategy, which has ultimately
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created a more resilient, inclusive and sustainable local economy. CWB is a place-based approach to development that originated in Cleveland, Ohio in 2005 and has since been adopted by other cities and towns. One of the key pillars of CWB is to harness the spending power of ‘anchor institutions’ to recirculate money within the local economy through local procurement. Anchor institutions include public sector organisations, such as local authorities, universities, hospitals and other public services, and also businesses that are deeply embedded locally and have a strong loyalty to place. An analysis of anchor institution spending in Preston in 2013 found that, of the £750m spent, only 5% of the spend was retained in Preston, and just 39% was spent in the wider Lancashire area. This suggested significant untapped business opportunities that could boost Preston’s economic development. Achieving increases in local procurement spending involves building the capabilities of existing
local companies to supply anchor organisations. Additionally, it requires the development of new local enterprises to meet supply needs where local capacity does not exist. This links to another key pillar of CWB, which is to increase local ownership and control in the economy through more diverse ownership models, such as worker-owned cooperatives. Preston drew inspiration from Mondragon, a federation of co-operatives that emerged in Spain’s Basque country in 1956 and today is one of the largest business groups in Spain. A Co-operative Development Network was set up in Preston to promote understanding of the cooperative as organisational model for new enterprises and to support cooperative development. CWB offers many benefits for local economies. Since 2013, Preston’s CWB strategy has contributed to growth in economic activity, reduction in unemployment, the creation of stable jobs that pay a decent wage, and an increase in enterprise startups. Between 2013/14 and 2016/17,
