Community wealth-building: a North East revolution

Newcastle Civic Centre
Newcastle Civic Centre Photo from wikimedia commons

Imagine a local council policy that aims to reverse the North East’s economic malaise, that directs money and jobs to the people most in need. It’s already here, the town hall revolution is happening in Labour councils across the North East, from Newcastle to Stockton. 

Community wealth-building is a toolkit of measures to help councils make the most of their money.

If the town hall buys local, insources and pays the Real Living Wage (£1 an hour above the Living Wage), more money circulates in the local economy. In turn, companies with council business are encouraged to sub-contract locally and have apprenticeships and fair employment policies. Low wage earners with extra money to spend will boost the retail sector. Then there’s support for cooperatives and small business and the transfer of council assets like libraries to community groups. 

The impact is amplified by ’anchor institutions’,  partner organisations who also agree to buy and hire locally. They include the NHS, universities, fire authorities, police and private firms. 

The model was the brainchild of the US Democracy Collaborative, who developed cooperatives to supply semi-public bodies in Cleveland, Ohio. It was adopted by Preston’s Labour council who were looking for an alternative to the £700 million Tithebarn regeneration. The retail project  had collapsed after John Lewis pulled out in the wake of the 2008 global financial crash.

Paint your town red book cover

The city is now an accredited Real Living Wage employer. Their procurement policy emphasises buying local. 

Preston is expanding cooperatives in partnership with the Spanish Mondragon cooperative. 

The council’s anchor institutions are in education, housing, police and health. The local government pension fund invested £100 million in student flats, a hotel and office space.

The list goes on. The Preston Model has been followed by councils throughout Britain. 

The Centre for Local Economic Strategies (CLES) helps local authorities install community wealth-building programmes. They have a couple of dozen projects on the go at the moment, David Burch, their Senior Research Officer, tells me after he hops off his Manchester tram.

David runs down the towns that CLES has assisted: they are spread across England. A new client is the Scottish government, which has its own Community Wealth Building Minister and is preparing a Community Wealth Building Act. Not far behind are Wales and Northern Ireland.

“The Preston Model is not a model as such”, says David. “Different areas have different priorities.”

Jamie Driscoll, Mayor of North of Tyne Combined Authority (NTCA) is away from his shiny new office in the Lumen Building. He takes our zoom call from home in his shirtsleeves next to his packed bookshelves.

Mayor Driscoll is the region’s most vocal champion of community wealth-building and his plans when he entered office in 2019 were ambitious. But when I ask about progress he stiffens:

“When I became Mayor I inherited three staff. We had the global pandemic and we set up from scratch.” 

Man plans, God laughs, as the saying goes. 

Nevertheless, he has already achieved much of his programme.  He helped to attract BritishVolt’s car battery gigafactory with 3,000 jobs. The Authority is a Real Living Wage employer. Over 45 companies have signed up to its Good Work Business Pledge that promises fair pay and conditions.

A lot is still in the pipeline. With a government Brownfield Housing Grant the NTCA will use local workers on the Real Living Wage to build social housing. The anchor institutions are a work in progress and Driscoll hopes to bring in the local NHS to his mission.

The mayor is not alone. Two of his constituency councils, Newcastle and North Tyneside, have community wealth-building programmes or something similar, as have Gateshead, South Tyneside, Sunderland and Stockton.

Darlington and County Durham both had policies in operation before the councils changed hands in 2019 and 2021 respectively. Then there’s Hartlepool’s Labour Group with all of the plans but none of the power yet.

In Middlesbrough, former Labour mayoral contender Mick Thompson is aiming to get community wealth-building into local Labour’s next manifesto.

While all the councils more or less follow the basic Preston blueprint, each has a different style to suit their particular needs. They have laundry lists of policies: here are  a few examples.

Newcastle’s programme is driven by their social value commitment. Social value is public sector spending that is of benefit to the community. 

“Using the money we spend but getting more back for it,” explains Cllr Joyce McCarty, Cabinet Member for Inclusive Economy.  

The city set up an independent Fairness Commission, adopted the Socio-Economic Duty and joined the Community Wealth Fund Alliance which aims to deploy dormant assets for left-behind areas.

Sunderland’s Deputy Leader, Cllr Paul Stewart,  tells me they are different from other councils which are concentrated on economic development:

“We don’t ignore the social aspect of community wealth-building.” 

There’s an emphasis on the poorest communities and struggling families. Community Development Officers, part-funded with EU money, were brought in to set up friends’ groups .

Sunderland’s flagship development is the Elemore regeneration, a former colliery site that is being developed into an eco park, garden and heritage centre. Involved in the project is Bishopwearmouth Cooperative CIC which helps people with mental health and learning disabilities gain access to work. 

Cllr Bob Cook, Leader of  Stockton Council, says: 

“We have a couple of capital investments – the hotel and leisure centre. We make sure people working on them are local. And procurement..as many Stockton companies as possible.”

The cladding subcontractor for the Ingleby Barwick leisure centre has won more business with the main contractor.

North Tyneside now invites quotes of up to £10,000, a rise from the previous £5,000, making it easier for small local companies to win business. Stockton has gone one better, raising their bid threshold to £162,000.

In these cash-strapped times, are the policies affordable? 

Says Newcastle’s Cllr McCarty:

“We haven’t costed it. This is the direction we want to travel in.”

The Real Living Wage in the care sector costs the city some £8 million a year.

“With the Living Wage we know we’re doing the right thing irrespective of costs.”

David Burch comments:

“There are lots of different things we can do. Some are smaller fixes and some don’t cost money – it’s a culture change.”

Stockton’s Cllr Cooksaid:

“Last Wednesday I was out at a company called Wave, they supply water to local authorities. They came to do a volunteer day at Ingleby Barwick. We’re trying to get the social value into the community.”

Cllr McCarty mentions a Newcastle company that is contracted to fit bathrooms. They have offered to target young carers and looked-after children to bring them into employment. 

But in Darlington, Cllr Stephen Harker, Leader of the minority Labour Group, says:

“In latter years because of austerity we struggled to fund it.”

Despite the recent dent in the North East’s Red Wall, its supporters insist that the Preston model can win over voters. Preston Labour’s 30 council seats ensure a safe majority.

But it seems that few voters in the North East are aware of this complex formula for local prosperity. A Rosetta Stone has yet to be found that can translate Councilese into plain English. Community wealth-building is rarely mentioned in local election manifestos.  On doorsteps where talk in recent years has been dominated by Brexit and Corbyn, the message is reduced to “jobs and money”.

“You don’t try to explain economics when you’re talking to people on the doorstep”, says Mayor Driscoll. “You try to explain everyday life. “

Further south in Tees Valley it’s hard to compete with the Tories’ golden straws of 18,000 new Freeport jobs, waved before drowning men. 

In the last few years, the Labour Party has lost control of Darlington, Hartlepool, Redcar, Middlesbrough and County Durham. 

In Stockton, Labour runs a council with No Overall Control, which means every decision must be approved by some of the opposition.

There’s no support from Labour HQ, where the policy has fallen victim to the party’s factional warfare. As Shadow Chancellor, John McDonnell set up a Community Wealth Building Unit, now mothballed. Joe Guinan, Vice President of the policy’s creator, the Democracy Collaborative, was the Unit’s volunteer secretary. He explains, a mid-Atlantic accent with a hint of Leeds,

“After the 2019 election we decided to pause to see what the direction of the  new Labour leadership would be and we’ve seen no reason to resume. I think Starmer has mentioned Preston once.”

No-one at Labour Party HQ was available for comment.

In our zoom, Joe relaxes on his sofa as the Washington DC sun streams through the  window. He’s not bothered, his organisation has enough to do.  He mentions working with CLES,  New York City, the US unions, Australia, New Zealand.  

Nor does Labour have a monopoly on the policy. There’s the SNP,  Plaid Cymru, the Greens. There’s some LibDem support too.

Meanwhile central government continues to hack away at its grants to the North East. Stockton, says Cllr Cook, has faced £73 million in cuts over the past 10 years. 

Cllr Jonathan Brash, Deputy Leader of Hartlepool’s minority Labour Group comments:

“In Hartlepool the government  grant has been cut by 63 per cent since 2013/14.  [The ruling coalition] are putting up council tax by £12 million a year at the same time as having to cut £7 million of services. Council tax is 9 per cent of Hartlepool’s average salary. In Kensington it’s 2 per cent. And they’re getting nothing back”  

There’s the deprivation. In Newcastle, 40 per cent of Universal Credit claimants are in work, says Cllr McCarty. 

In Sunderland, a quarter of the workforce is jobless and a quarter of the town’s children are growing up in poverty.

In Stockton, says Cllr Cook, there’s a 21 year gap in male life expectancy between the richest and poorest wards. The most deprived wards are among the 10 per cent poorest in the country

Can community wealth- building eliminate  such poverty in the face of cuts, Covid and Universal Credit?

Let’s hope so. Because as someone once said,  “There is no alternative”.

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