Thursday 28 February saw the launch of the ‘Community Business and Anchor Institutions’ report from the ‘think and do tank’ the Centre for Local Economic Strategies (CLES), supported by the Charitable Trust Power to Change.
The report adds to CLES’ proven track-record in building community wealth through anchor institutions. This approach encourages key organisations within local communities – such as councils, hospitals, or universities – to invest in the local area, with local authorities giving priority weighting during procurement to organisations that can add social value. Social value is a catch-all term to describe the difference an organisation can make to the community within which they’re working. This method of changing struggling neighbourhoods into thriving local places is long-recognised in the US but is relatively new to the UK.
The next few years should see much more discussion of anchor institutions and community wealth building. Shadow Chancellor John McDonnell has often referred to Preston, where CLES helped the local council in a hugely successful community wealth building programme, as a paradigmatic example of how his locally-oriented economic programme could work in Government. The possibility of a major transfer of wealth building from local experimentation to wholescale national programme is a distinct possibility, especially after the setting up of Labour’s Community Wealth Building Unit in 2018.
CLES’ research released on Thursday focuses on the relationship between community businesses and anchor institutions. Community businesses are a variation on a charity or social enterprise but accountable to a local community. There are 7,800 such businesses in the UK, with a total market income of £1.05bn each year. At the launch, Matthew Todd, senior researcher at CLES, explained how CLES’ anchor institution model is based on the idea that the economy often isn’t working for places that fall outside the city-centre growth model. The UK is the only developed economy where wages are falling in real terms despite economic growth. Along with a productivity crisis and extreme regional disparities not only in income but in life chances, the anchor institution model is being touted by many on the left as an answer to regional disparities caused by, and not solvable through, a failing economic model.
The research looks at the situation in Bristol, Liverpool, and Ipswich and how successful these local authorities are in building links with community businesses in their area. Liverpool, a prime example of both the benefits of this approach and its limitations, has created 18,500 jobs through the social economy, with nearly 700 organisations working within it.
The primary issue facing community business is comparatively weak communications strategies. If community business is to thrive, more investment of time and resources must go into evaluating and demonstrating the impact on local communities, in terms of both social value and financial investment.
The research also concludes that anchor institutions must similarly re-focus their support to cater for community business, perhaps employing community-based business advisors to build ‘inclusive entrepreneurship’ within local areas. Finally, the report recommends that local and national policymakers incorporate community business and social value into strategic-level conversations, and that communities themselves (most likely through determined groups and individuals) should spearhead efforts to build up community wealth.
In conclusion, the impact of community wealth building on devolution is clear, with many suggesting that the model of inward investment offers an example for local areas to follow, building up a sense of commitment to place which is essential to leveraging more powers from central government. In Labour-held areas, this approach is already having an impact and incorporating social value into the procurement process is proving popular in nearly all wings of the Party. Whether this will last if translated into actionable Government policy is another matter, but for now reports like this provide an effective blueprint for councils, anchor institutions, and community businesses themselves to follow.