How local government can make a real difference to the economy

Mike Phipps reviews Paint your town red: How Preston Took Back Control and Your Town Can Too, by Matthew Brown and Rhian E. Jones, published by Repeater Books.

Community wealth-building takes many forms. Long before Preston, there was Chiapas, where “over almost three decades, the Zapatista movement has designed autonomous government and collective social arrangements, including schools and clinics, funded through earnings from cooperatives and land collectives.”

Or take the Mondragón model, created 50 years ago in the Basque country, when a vocational school opened to help unemployed young people to acquire business skills. Mondragón is now Spain’s sixth largest company. It employs more than 100,000 people globally in 250 individual cooperatives, in which the salary ratio between the lowest and highest paid worker is 1:9. This compares to 1:129 for the average FTSE 100 company.

Likewise Cleveland, Ohio, a depressed rustbelt city which worked with large locally based bodies – anchor institutions – “to localise a proportion of their procurement in support of a network of purposely created worker co-ops, the Evergreen Cooperatives, which could fulfil supply chains at these large institutions.” This strategy created 5,000 jobs from the city’s hospital network alone.

The aim is to stop ‘leakage’ – the extraction of wealth from the local economy and to create recirculatory local ‘multipliers’. This is especially relevant to housing, where corporate property developers extract profits from gentrification projects which fail totally to meet local needs.

As Shadow Chancellor, John McDonnell helped establish Labour’s Community Wealth-building Unit to promote this model. One current advantage is that these ideas do not require a favourable national government.

What’s interesting about the Preston model is that it goes beyond progressive procurement to embrace community banking, the local investment of public pension funds and the encouragement of worker-owed cooperatives. Preston City Council has also been able to persuade its anchor institutions to adopt ethical behaviours, including paying a living wage and recruiting a more diverse workforce.

In the past five years, the Council and partners have almost tripled their spending in the local economy, resulting in the creation of new jobs and higher wages.

While the Preston model is not a one-size-fits-all solution, its key features can be rolled out elsewhere, as is already happening. The great strength of this book is its ‘how to’ sections, making it a useful handbook for activists.

Regional governments and city councils are taking this road to different degrees. First task: identify your anchor institutions – they could be hospitals, universities or football clubs.

This isn’t the first book about how local councils can do things within the constraints of tight centrally imposed budgetary controls. But unlike Reinventing government and the web of public-private partnerships it spawned, this model has the capacity to integrate real socialist principles into its praxis.


Mike Phipps is editor of the Iraq Occupation Focus e-newsletter, available at book For the Many: Preparing Labour for Power was published by OR Books in 2018.

Subscribe to the blog for email notifications of new posts