Event: Rethinking Prosperity - Experiments in Local Economics
Venue: Centre for Sustainable Living, Bridge 5 Mill, Manchester M4 7HR
Date: Thursday 14th November 2013
Organisers: Centre for Local Economic Strategies, Centre for Research on Socio-Cultural Change (CRESC), Equality NW, MERCi, Steady State Manchester

What can local authorities and other local organisations do for their local economies?  One option is to experiment with new ways of working. In a special one-day workshop, "Rethinking Prosperity: Experiments in Local Economics", fourteen stakeholders from local authorities and locally-minded organisations spoke about the case for small-scale experiments, the London Borough of Enfield’s experiment in foundational economics, public sector procurement for local economies, urban food systems and the creation of a low carbon economy in Greater Manchester (GM). 

The Case for Small-Scale Experiments

Julie Froud, Professor of Financial Innovation at University of Manchester, got the event started by making the case for small-scale experiments.  Small-scale experiments, she says, have a track record of improving communities and improving lives.  For her, the challenge is to “scale them up” and make them “more mainstream”: less exceptional. 
Small-scale experiments also challenge mainstream practices.  As Karel Williams, Director of Centre for Research on Socio-Cultural Change (CRESC) explains: "although small scale experiments won’t change the world, they can change the way we think about the economy and our role in it".  Why is this important?  Firstly, he says, the problem with the economy is distribution not growth.  Many regions, localities and groups have been left behind by 30 years of neo-liberal economics and the problem has been getting worse since 2007.  Secondly, industrial policy in disadvantaged areas should focus on what’s left of their economies – the mundane everyday businesses of goods and services, such as food retail and energy supplies that make up what he calls “the foundational economy”.  Thirdly, local authorities need to challenge the extractive practices of retail banks, supermarkets, energy companies, rail companies and others in the  foundational economy so that local economies and local supply-chains work for the benefit of local people.

Enfield: A Small-Scale Experiment

The London Borough of Enfield is a live experiment in small-scale local economics and an illustration of what can be done.  Enfield is one of many localities in the UK that has struggled to compete in an increasingly competitive international economy.  The unemployment rate in many of its constituencies is around 20%, significantly more than the national average, and the problem is particularly acute in East Enfield, its former industrial heartland.  When Labour took control of the borough in 2010, Councillor Alan Sitkin says they had two choices: fall into line with "the ambient discourse of light touch, economic interventionism"  and repeat the mistakes of the past or get some intellectual firepower, challenge the discourse and do things differently.  They called on Williams and his team at CRESC, who did some research and came back with 18 suggestions, 12 of which were adoptable. 

Enfield went with the easiest option first; to develop a new relationship with big business in the foundational economy.  The big six utility companies seemed to be the best place to start, given concerns about fuel poverty, sustainability and an existing investment in decent homes.  So they called them in and, in Sitkin’s words, "read them the riot act": employ companies from Enfield to do work in Enfield or be named and shamed and possibly cut out of local procurement spend.  British Gas said “go on then” and an agreement was reached.

Two years later, what have they learnt?  Sitkin says there are two main lessons, one external and the other internal.  First, local businesses need support if they are to participate in the local economy.  In Enfield many of the local businesses weren't ready, so the council worked with local colleges and banks to build the supply-chain and secure necessary finance . Secondly, people within local authorities need to work together to support the local economy.  In Enfield, this meant breaking down barriers between departments and empowering council officials with a sense of entrepreneurship.  None of this is easy; as Sitkin explains, "some people take to it, others don't".

The next step for Enfield is to work on their medium and long-term ambitions, using local assets to address local issues.  They plan to set up an energy company around a local waste incinerator, build and manage houses in their own name and develop a local agri-business. For Neil Rousell, Enfield’s Head of Regeneration, this is about taking control of the local economy and generating income to cover future service needs.

"Although small scale experiments won’t change the world, they can change the way we think about the economy and our role in it".

Enfield isn't a unique experiment in small-scale local economics.  Faced with a failing economic model and a fall in public sector funding, Preston City Council rethought its priorities, shifting from a traditional focus on business, people and skills to one that emphasises community, place and governance.  It’s an approach that focuses on fairness: promoting the living wage, co-operatives, a new credit union, community engagement and a neighbourhood plan for its inner city and collaborating with a number of other public sector bodies, including the county council, colleges, the local university and local housing associations, on the development of a shared vision and actions that could help them make better use of their limited resources.  Times might be difficult, says Derek Whyte, Assistant Director of Economic Regeneration, but there's still a role for "sensible local intervention".

Public Sector Procurement for Local Economies

Public sector procurement is part of the story in Enfield, Preston and elsewhere. This is not surprising.  Despite cuts in public sector funding,  local authorities are still big spenders and, as such, they still have the power to shape their local economies - what they do, how, for whom and where.  So what can they do?  According to Justin Bentham (Salford City Council) and Matthew Jackson (Centre for Local Economic Strategies), there are a number of ways that local authorities can use procurement to localise their economy:

• Create a value framework that links procurement to wider corporate priorities
• Support the development of a whole place approach that goes beyond individual service delivery to overall outcomes for the area
• Engage with communities especially the voluntary sector in designing and co-producing services
• Link other departments, e.g. economic development, with the procurement team
• Create networks of suppliers who understand the priorities and are willing and able to deliver desired outcomes
• Add social clauses and other conditions to contracts so that suppliers are obliged to, for example, create apprenticeships for local people
• Understand local business bases - what they offer and their capacity to engage in the procurement process
• Simplify Pre-Qualification Questionnaires (PQQ) and Invitations to Tender (ITT) so that sub-contractors and smaller businesses can win work with the local authority or the main contractors; and
• Gather evidence to help understand where money is being spent and its impact on place.

Local Food

The process of producing, distributing and consuming food is one of the mundane activities with which local authorities and other locally-minded bodies are experimenting as part of a general movement to rethink and redo the economy.  The reasons are many and varied; social and environmental as well as economic, embracing concerns about public health, food poverty, community bonding, climate change and a range of other issues.

Colin Cox of Manchester City Council has been studying the relationship between food and public health and believes that the food system needs to change.  The narrow view, he says, is that if we eat better then we'll live longer and healthier lives - and be less of a drain on the public purse.  But this view puts the onus on the individual to behave differently.  A broader view is that the existing food system is failing and is unsustainable - economically, socially and environmentally.  What we need to do is rethink our relationship with food and create an urban food cycle, in which food is produced, processed, consumed and disposed of within urban areas.  This he explains is the view taken by Manchester City Council's Food and Health Strategy, which he co-authored, and which informs the Food Futures Programme, of which he is a Director. 

Cox’s broad perspective on the food system is generally shared by Vincent Walsh, founder of the Biospheric Foundation and Director of the Biospheric Project, an experimental urban farm located in and around a three-storey, former warehouse in Blackfriars, Salford.  Walsh agrees that we need to rethink our relationship with food, but says that the problem is one of resilience, not sustainability. Natural food systems are, he says, complex, and if we want to create resilient food systems we need to work with that complexity, not against it, by developing  complex biospheric models, by positioning those models economically and socially and, moreover, by re-thinking our cities, so that they also work with complexity not against it.

Another problem with the current food system is the degree of market power enjoyed by the big four supermarkets.  According to Andrew Bowman, a Research Associate at CRESC, Tesco, Sainsbury’s, ASDA and Morrisons account for about 10% of total household spend in the UK and control key sectors of the economy, including agriculture and, less obviously, the manufacture of machinery for meat processing and other activities.  This, he says, has been bad for local economies and bad for the economy in general – “they’ve wrecked their supply-chains”.  In his view, they could do things differently for the benefit of local economics and their supply-chains and still be better off.  Citing Northern Europe and Morrisons, he explains that supermarkets can make money out of a supply-chain that is vertically integrated, rather than fragmented and benefit many other parties.  Suppliers would be able to plan for the long-term, invest in technology and use their capacity to the full,  employees would receive higher wages, consumers would benefit from price cuts and, by exercising greater control over the external effects of their supply-chain, the supermarkets could create positive external benefits for the wider economy, society and environment.

Creating a Low Carbon Economy: A Large-Scale Experiment in Local Economics 

Building a local economy around food, energy or any other business is partly a question of local governance.  As Del Goddard and his Enfield colleagues argue, it requires a commitment by local authorities to the local economy, which in turn requires political will and support, including joined-up strategies.  It applies to city districts, such as Enfield, and to city-regions, such as Greater Manchester.

Joined-up practices are an integral feature of the GM Low Carbon Hub, the Association of Greater Manchester Authorities’ (AGMA) attempt to turn GM into a low carbon economy.  As Mark Atherton, Director of Environment at AGMA, explains, the Hub is bringing people together from the private sector, public sector and third sector, including the universities of GM, to develop business plans and investment frameworks for low carbon projects and programmes and to develop suitable policies, using their knowledge of the locality and their capabilities to add value to national programmes and support, such as the Green Investment Bank and the Green Deal. 

Unlike the experiment in Enfield, GM's Low Carbon Hub is less focussed on the foundational economy and more on the development of competitive goods and services.  As Atherton explains, the Hub is partly about creating markets and supply-chains for things like building technologies and partly about developing goods and services that are internationally competitive.  It’s an understandable position to take, given the varied nature of the GM economy.

Closing Remarks

Experiments in local economics are many and varied.  Some, like the Biospheric Project, are hyper-local experiments in urban food production, some are small-scale, local district experiments in foundational economics and others, like the GM Low Carbon Hub are city-regional experiments in low carbon economics.  Some of them address distributional issues, some focus attention on the structure of the economy, some seek wholesale transformation in the way the economy works, and some aim to do all of these and more.  Some of them benefit communities now, while others have the potential to do so.  Yet, despite their differences, all of them ask questions about the UK economy – what it does, how, for whom – about our own role in it and about what can be done to change it.  In this regard, the contrast between Enfield’s experiment in foundational economics and GM’s experiment of low carbon economics is particularly challenging.  While the Enfield experiment takes a stand against the effects of neo-liberal economics, the latter is considerably more pragmatic, playing the game to some extent, while attempting to support alternative approaches.  The question is, can one do both? 

Find out more:

Centre for Local Economic Strategies

Centre for Research on Socio-Cultural Change

Equality NW

MERCi

Steady State Manchester

"Turn Up the Volume" is a learning log of debates and events around Greater Manchester. It forms part of the Greater Manchester Local Interaction Platform’s aspiration to raise the visibility of alternative forms of sustainable urbanism, see Turn Up the Volume.