David Boyle is co-director of the New Weather Institute
and the author of a range of books including Broke: How to
Survive the Middle Class Crisis, The Tyranny of Numbers and
Authenticity. He was the government’s independent reviewer
for the Barriers to Choice Review in 2012/13 for the
Treasury and the Cabinet Office.
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PROSPERITY PARADE
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PROSPERITY
PARADEEIGHT STORIES FROM
THE FRONTLINES OF
LOCAL ECONOMIC RECOVERY
David Boyle
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First edition published in paperback in Great Britain in 2016
The New Weather Institute
http://www.newweather.org
The moral right of David Boyle to be identified as the author of this work has been
asserted in accordance with the Copyright, Designs and Patents Acts of 1988.
Some rights reserved. No part of this publication may be reproduced, stored in a
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or photocopying, recording, or otherwise for commercial purposes without
the prior permission of the publisher.This book is Licensed under a Creative
Commons Attribution-Non Commercial-Share Alike 3.0 Unported License.
Every effort has been made to trace or contact all copyright holders.The publishers
will be pleased to make good any omissions or rectify any mistakes brought to
their attention at the earliest opportunity. No responsibility can be accepted by the
publisher for action taken as a result of information contained in this publication.
A CIP catalogue record for this book is available from the British Library.
Print ISBN: 978-0-9926919-7-4
Epub ISBN: 978-0-9926919-8-1
The New Weather Institute supports The Forest Stewardship Council
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Contents
Foreword ix
Executive summary xi
Introduction 1
Glossary of ideas 7
Bristol 13
Wessex 35
Totnes 57
Manchester 77
Digbeth 97
Bath 115
Preston 135
Sandwell 153
Epilogue 173
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ix
Foreword
By Baroness Janke, former leader,
Bristol City Council
I am delighted to introduce these eight stories because we
stand now on the very boundary of a whole new age of local
self-determination.There are a range of new initiatives,
being laboriously negotiated, between central and local
government.They cover the devolution of budgets, control
over public services and a number of other functions. What
they don’t yet cover is how our towns, cities and districts will
claw back the power to earn the money they need.
But while the national politicians struggle to change their
assumptions – that economic power is somehow given by
the Treasury to grateful communities – there is a new
generation of entrepreneurs emerging who are beginning to
take the initiative themselves. In the fields of local food,
local energy generation, local banking, local money systems
and local procurement, they are innovative, effective people,
who have chosen to devote their considerable energy to
creating the space where enterprise can thrive.
It is a powerful idea that, within any area with people,
space and imagination, it is possible for people to earn a
living and achieve basic needs without waiting for
government support or corporate largesse.That remains just
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FOREWORD
x
beyond the horizon, and when it arrives, it will change the
balance of power between central and local completely.The
people described in this fascinating book are at the front
line of that endeavour.
I hope you enjoy it as much as I have.
Barbara Janke
House of Lords
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xi
Executive summary
Human stories and anecdotes are the stock in
trade of politicians, the currency they use in
their everyday lives as parliamentarians and
public speakers. There is some evidence that
they tend to take decisions based partly on the
personal stories they hear. So to make
progress, any new idea or practical approach
has to produce a cascade of stories that
demonstrate their purpose and success.
Perhaps more than most, the emerging
movement of resilient economies is held back
by the lack of stories circulating around central
and local government or policy-making circles.
Prosperity Parade includes eight stories about the new
entrepreneurial spirit, where people are finding ways of
kickstarting their local economic engines, often in very poor
areas, and by doing so increasing their independence from
central and local government.These stories are all about
individuals or groups of individuals, wrestling with new
ideas in practice – in food, money, banking, energy – and
bringing them to life. Prosperity Parade seeks to recount the
stories of their implementation to people in civil society and
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EXECUTIVE SUMMARY
xii
public life, with the aim of disseminating the ideas across
sectors and, ultimately, to policy makers.
These stories demonstrate that local economic
regeneration is not about some kind of local protectionism,
but about bringing entrepreneurial skills to bear to make
things happen, to increase local activity, using the raw
materials that are to hand: people, their ideas and their
needs. It is about small business, seen sometimes through a
slightly different lens. It is about dreaming of what is
possible and making it so.
The eight stories are:
1. The Bristol Pound, probably the most successful of the
UK complementary currencies. Its central purpose is to
make the connection between local money and local
business explicit; redesigning money so that it flows
around the local economy more effectively.The Bristol
Pound now partners with a trusted financial institution
and has won the backing of Bristol’s mayor.
2. The Wessex ReinvestmentTrust exists as the organising
mechanism for a range of successful, and sometimes
experimental, support institutions for housing and
enterprise.That implies the main lesson: the need for
flexibility. Situations change, ideas that work in some
places may not work quite the same elsewhere, so new
institutions need to be able to change.The Wessex
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EXECUTIVE SUMMARY
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Reinvestment Trust’s success implies that any upsurge in
local enterprise requires the support of a range of different
support institutions, especially for raising finance.
3. Totnes is one of the few places in the UK to have been
able to experiment with planning a new enterprising
approach to the local economy.They learned, for
example, that enterprising start-ups may not need capital
as much as they need advice, support and a range of
other elements which are actually widely available.
Totnes is also an example of the importance of finding
out where money is flowing around the local economy.
4. The Kindling Trust underpins an energetic and
ambitious series of endeavours and institutions slowly
shifting the Manchester food economy.They are a lesson
in tackling a seriously complex problem, when you have
to intervene at all levels at once – and a reminder that
food and its development and production is absolutely
central to any kind of revival of local enterprise.
5. The Digbeth Social Enterprise Quarter is an example
of the importance of being aware of what assets you have
locally, what small enterprises exist and how much they
can do business with each other. It is also a reminder of
the importance of having some kind of business support
institution at the heart of ventures like this.
6. Bath & West Community Energy is one of the success
stories of localising energy. It implies that keeping some
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EXECUTIVE SUMMARY
xiv
of the benefits circulating locally from the energy we use
may be an element in supporting local economies, but
this may only work if the government gives it the kind
of stable regulatory and support guarantees the industry
needs.
7. Preston City Council is one of the few local authorities
to investigate where the money they spend goes, and to
look at the implications for the resilience of the local
economy. It is also a lesson in the importance of getting
other public sector players on board.
8. The Right Care, Right Here partnership has thought
more about the future shape of public services than
almost any other organisation. Their story implies that
innovation doesn’t emerge from strategy, but from
experiment and the right processes – and this is
paradoxically the best way of creating efficiencies – by
allowing public services to work more closely on shared
and agreed objectives. There is also a lesson about using
local procurement to revitalise local economies: not the
big technical items or the small bulk items, but those
in between.
Whilst the techniques deployed are all different – from local
currencies to local banking, from social enterprise to
community land trusts – entrepreneurs making a difference
in their home towns without external investment or public
funding is the common thread. Whether it is people, ideas
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EXECUTIVE SUMMARY
xv
or, even space, these enterprises transform the assets
available into some kind of wealth.The stories also have the
following in common:
1. There is no existing classification for the politics at
work in these projects.There are people here of all
political persuasions, but you would be hard pressed –
except when they are local councillors – to identify
them by their political creed, because they all embrace
a new kind of enterprise. Almost without exception,
what makes these local heroes tick is not ideology; it
is practical optimism.
2. Those involved see money differently: they believe it
needs to flow around a local economy. There are no
bottom lines in these stories as conventional
regeneration suggests that there should be.Their
concern is not how much money is going into a city
economy, but what happens to it when it gets there –
how many times it changes hands before it flows away
again, how deep into society it reaches, how many
businesses it supports.
3. These entrepreneurs understand the importance of
shaping local institutions to make regeneration
easier. Nearly all the pioneers involved have found
themselves advising other places which want to follow
in their footsteps, then shaping the networks and
support that can enable change elsewhere.
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EXECUTIVE SUMMARY
xvi
4. They highlight the need for more flexibility than
conventional regeneration targets allow for. This is
an intuitive approach,going with local enthusiasm,
experimenting – encouraging experiment – and being
flexible enough to change direction when the need arises.
5. The need to partner with the mainstream. It can be
uncomfortable working closely with mainstream
institutions that may, or may not, appreciate new
methods and objectives. But the alternative is a kind
of powerless ghetto.
Understanding what is required to speed up this small
economic revolution emerging below the radar is key to
future success.There are three areas for immediate attention:
1. Policy-makers, local and national, must be better
informed about the importance of local
regeneration. A lack of awareness results in a
tendency to discount the benefits.There are also cities
where no other solution seems likely. We propose that
the government can achieve success by:
a. Setting up a joint team at the Treasury or Cabinet
Office between ultra local economic practitioners
and civil servants, along the lines of the
community energy team at the Department of
Energy and Climate Change (DECC), with the
responsibility for intelligence gathering and
identifying obstacles, and making proposals about
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EXECUTIVE SUMMARY
xvii
how they might be eased. A scaled version also
needs to be created in every city and district.
b. Linking this team up with a university business
department with an expertise in the area, to take
the lead in gathering local economic data –
currently almost entirely missing. Every city must
know where the local spending power is flowing
and where it is not – and where it could be more
effectively channelled.
c. Tracking the balance of national wealth investing
in SMEs compared to multinationals, maintaining
awareness that at least half of our national wealth
comes from the former and that our economy is
unbalanced and inefficient if it fails to invest in
local wealth-creators.The same knowledge needs
to be available at local and regional level.
2. Local entrepreneurs need local institutions that can
support them. Policy-makers can release capacity
through bespoke regulation which enables local
enterprise and community entrepreneurs. We propose
government:
a. Sets up a mechanism to review how well Local
Economic Partnership (LEP) strategies maximise
the local economic benefits of all local spending in
disadvantaged areas. A successful review will
include representation from people who
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EXECUTIVE SUMMARY
xviii
understand the needs of smaller companies, locally
owned companies and companies who have
demonstrated a commitment to the local area
through their supply chains and employment
practices.
b. Promotes fair competition by ending the use of
preferred supply lists and minimum size
thresholds for public sector contracts and by
making sure contracts are smaller and last for
longer, giving local organisations a chance to bid.
3. Local entrepreneurs need more accessible credit.
Policy-makers have not yet got to grips with the
implications of the withdrawal of mainstream
banking from the SME market. Government can
improve enterprise and local prosperity by:
a. Mandating banking regulators to deliver the
conditions for a diverse banking system which
relies on the knowledge and profits of city or
regional economies.This would be a key shift in
policy and is instrumental in delivering the change
urgently needed to release suppressed local
economic capacity.
b. Holding the reins for a dialogue with the banks
about their own potential role in funding and
shaping an effective local lending infrastructure.
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EXECUTIVE SUMMARY
xix
c. Using the British Business Bank to create a
Community Finance Loan (CFL) facility of £100
million, to be deployed by at low interest by credit
unions, Community Development Financial
Institutions (CDFIs) to lend on to SMEs, social
enterprises and individual consumers denied access
to mainstream credit and finance services, along
the lines pioneered by the German bank KfW.
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1
Introduction
The story of this book starts at the end of
2012, when I was working at the Treasury on
an independent review of public services. As I
walked down the corridor one day, the Chief
Secretary took me aside and asked me if I had
written anything about how neighbourhoods
could regenerate themselves, using their own
resources.
As a fellow of the New Economics Foundation (NEF), I
had written reams, but I wasn’t convinced that offering
articles would clearly make the case that local economies
ought to be a primary – perhaps the primary focus of
regeneration initiatives. Instead I offered to gather a group
of ultra-local practitioners, from local banking experts to
local energy and procurement experts.Together, we met him
very early one morning shortly afterwards and so began a
dialogue with Treasury officials with our group representing
what we saw as an emerging, local resilience sector.
In part, our purpose was to help the Treasury understand
the needs of this new ultra-local economics sector and
vice-versa. With the help of the Friends Provident
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INTRODUCTION
2
Foundation the New Weather Institute published a book,
People Powered Prosperity: ultra local approaches to making
poorer places wealthier, which attempted to communicate the
assumptions of each side to the other.
This exercise quickly revealed three areas for further
consideration: first, the disparate group of practitioners were
talking about the very same vision and bundle of ideas.
Secondly, many of the systems designed to support
economic regeneration are designed for big players and big
areas, and struggle to work locally. And thirdly, despite the
Chief Secretary’s personal interest, there was very little
understanding among Treasury officials about what was
possible and why it might be desirable. It also became
apparent that there is a lack of understanding around the
important shifts happening on the ground. Despite the talk
of devo-max and the local agreements being forged by cities
to devolve power, the economic dialogue remains one of
supplication to Whitehall.
Even so, the dialogue continued, but suffered because
officials found it hard to break out of their mindset which
regards these initiatives as interesting but, ultimately,
unimportant (and too small to measure).
The truth is that human stories and anecdotes are the
stock in trade of politicians, the currency they use in their
everyday lives as parliamentarians and public speakers – and
there is some evidence that they tend to take decisions based
on the personal stories they hear. So to make progress, any
new idea or practical new approach must generate a cascade
of stories that demonstrate their purpose and success. We
therefore came to believe that what frustrates the emerging
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INTRODUCTION
3
movement of resilient economies is the lack of stories
circulating around central and local government or policymaking
circles.
Prosperity Parade provides the anecdotal evidence that can
inspire and we are enormously grateful to the Barrow
Cadbury Trust for making this work possible. It includes
eight stories about the new entrepreneurial spirit, finding
ways of kickstarting their local economic engines, often in
very poor areas, and by doing so increasing independence
from central and local government.The stories are all about
individuals or groups of individuals, wrestling with new
ideas in practice – in food, money, banking, energy – and
making them happen.This document seeks to retell the
stories of their implementation to people in civil society and
public life, with the aim of disseminating the ideas across
sectors and ultimately to policy makers.
Above all, these stories emphasise the potential for very local
economics – they bring alive the idea that small + small +
small + small = big.We could have included a whole range of
different people – Pam Warhurst and Incredible Edible
Todmorden, Stephen Frankel and the Wadebridge Renewable
Energy Network, Nick Weir and friends and Stroud’s food
and energy revival, Alan Sitkin and Enfield’s ‘foundational
economics’revolution,Wendy Ellyatt and Connect
Cheltenham, David Graham and the Lyvennet Community
Trust – and many more besides. The real issue may be what
might happen if we got them all together? Could they
transform every sector in an inter-connected way, step-by-step,
community by community, across the UK?
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INTRODUCTION
4
Because, if they could, and if we can spread their
entrepreneurial and inspirational skills much more widely –
perhaps even teach them as core elements of secondary
school education – the prize is worth winning. If towns and
cities can find ways of regenerating a workable economy
using existing resources, then the balance of power will shift
from central to local all over the world.
On its own, though, it may not be enough. We will still
need outside investment, private or public, to make sure
economies are able to develop at speed. But if city leaders
can embrace this ultra-local approach, it could change
everything – rather than expecting them to wait patiently,
passively and obediently for the Chinese or Whitehall or
some new factory to wing its way towards them.
There are other routes to regeneration as well. And these
eight stories are designed to bring these new pathways to
life. I hope they will be absorbed by politicians, central and
local: everyone is searching for new economic techniques in
a chilly world. But I also hope these stories inspire anyone
with an interest in the future of their neighbourhood. So
that, to coin a phrase by John Kennedy, they will ask not just
– what can their town do for them – but what they can do
for their town.These stories demonstrate that the source of
wealth is your own street and the people who live there.
Hence the title of this book: it is a parade of routes to
prosperity, but it is also a claim that any street in the land
can be Prosperity Parade.
Each of these stories includes a short briefing on the
main lessons, for innovators and for policy-makers.There is
also a glossary of the big ideas and each story emphasises
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INTRODUCTION
5
one of the big ideas in practice in this energetic field of local
enterprise: social enterprise, local currencies, local credit,
local energy, local procurement. But what the UK still lacks
is an experiment that tries to do all at once in the same
place. Watch this space.
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7
Glossary
Anchor institution. A business or organisation which
attracts shoppers or spreads spending locally. In the
Evergreen project in Cleveland it has the specific
meaning of a big public sector institution that can
rebuild the local economy just through its own spending
power. See Chapters VII and VIII.
City Deals. The agreements between local authorities and
central government to devolve powers and
responsibilities to achieve specific objectives.
See Chapter VII.
Clone towns. A campaign by the New Economics
Foundation (NEF), starting in 2003, which looked at the
way so many high streets in the UK were becoming
homogenous – and pointing out the economic dangers of
monoculture. See Chapter III.
Community banks. Banks set up for the benefit of small,
local enterprise. Specifically in Brazil, these are
institutions backed by the central bank which specialises
in lending to women entrepreneurs in two parallel
currencies. See Chapter V.
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GLOSSARY
8
Community business. See social enterprises.
Community Development Finance Institutions
(CDFIs). Financial institutions with a particular
expertise in lending to local businesses, social enterprises
or making local housing loans. See Chapter II. See www.
responsiblefinance.org.uk
Community Interest Company (CICs) or a non-profit,
public interest company, regulated as a business.
Community Land Trusts (CLTs). CLTs split the
ownership of the buildings from the land underneath
and put the land in trust, owned by the people who own
or rent the buildings above. It keeps housing affordable
in periods of rapidly rising land and property prices and
gives those who live there the chance to profit from the
success of the area. Can be adapted to other uses,
including workshops, factories or other buildings. See
Chapter II. www.communitylandtrusts.org.uk
Community Rights. A number of rights for community
groups and institutions, including the right to buy and
the right to build, provided under the Localism Act
2012, which bypass normal procedures. See Chapter III.
Community Share Issues.When people invest in a local
enterprise or energy venture. See Chapters II and VI. www.
communityshares.org.uk
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GLOSSARY
9
Community Supported Agriculture (CSAs). A system
which allows farms to raise money by providing
subscriptions to supporters, for which they are given
regular produce. See Chapters III and IV. www.
communitysupportedagriculture.org.uk
Complementary currencies. Money which is issued locally
or by a national institution, but which is denominated
other than in national fiat currency values – usually
designed to flow particularly to local businesses and to
encourage the efficiency with which local economies use
local people and resources. See Chapter I. www.
communitycurrenciesinaction.eu
Credit Union. A deposit-taking, small-scale banking
institution that recycles deposits as low cost loans. See
Chapters I and VII. www.abcul.org
Demurrage money. See negative interest rates.
Development Trusts. Institutions which own local assets
and use the profits from their exploitation for the good
of the local community. See Chapter III. www.locality.
org.uk
Evergreen. See Anchor Institution. See www.community-
wealth.org
Feed-in Tariffs. Known to the world as FITs, the basic
price that the government guarantees for new or
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GLOSSARY
10
experimental energy production and which can provide a
basis for local energy investment. See Chapter VI.
LM3. A method of estimating the economic impact of
different spending options by tracking money spent
through three exchanges. See Plugging the Leaks. www.
lm3online.com
Mutual credit systems. A kind of barter or complementary
currency which creates money or credit when any
member goes into debt to another, always balancing
credits and debts. LETS was the best known. See Chapter
I. www.openmoney.org
Negative interest rate currencies. A kind of local currency
pioneered in the 1930s, and known in the USA as
‘stamp scrip’, which loses value when you hoard it. See
Chapter I.
Plugging the Leaks. A book published by the New
Economics Foundation (NEF) in 1999, borrowing ideas
originating from the Rocky Mountain Institute,
explaining that local economies require money to
re-circulate locally if they are going to be successful, and
imagining local economies like leaky buckets. See
Chapters III, VII and VIII. www.neweconomics.org
Reinvestment. The process whereby money put into local
banks by people and local enterprises is reinvested to
provide support for new enterprise. See Chapter II.
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GLOSSARY
11
Social enterprises. Businesses set up for local, community
benefit, where profits are recycled into employment or
other benefits. See Chapter V. www.socialenterprise.org.uk
Social firms. Businesses designed to provide
employment to people who might not otherwise find a
place in the market economy, especially disabled
people. See Chapter V.
Social Value Act. The legislation which allows public sector
organisations to contract with companies which may not
be the cheapest, but for other broader community,
economic or environmental reasons. See Chapter VII.
Time banks. Infrastructure that allows service users to
provide mutual support by earning and then spending
time. See Chapter VIII. See www.timebanking.org and
www.justaddspice.org
Transition Towns. A movement founded by Rob Hopkins
dedicated to the idea that many small actions may be
more effective in preparing communities for the impacts
of climate change. See Chapter III and VI. www.
transitionnetwork.org
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13
I The joys of printing money
Bristol
Lessons: The Bristol Pound is probably the
most successful of the UK complementary
currencies. Its central purpose is to raise
awareness of the importance of local money
flowing around local businesses, and to
redesign that money so that it flows more
effectively. Lessons include:
· Financial innovations mean partnering
with trusted financial institutions – and
with senior local government people,
whose backing is vital.
· Simplicity: complex ideas require simple
purposes and systems if people are
going to understand and embrace them.
· Financial regulation can bear more
heavily on small-scale innovations versus
large ones – and this needs reversing if
we want to enable more financial
innovation to take place.
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THE JOYS OF PRINTING MONEY
14
If you go up the ancient steps of the Old Lady of
Threadneedle Street and into the Bank of England, it is a bit
like passing into a half-remembered, parallel world: you are
greeted by a number of tall doormen in pink tail coats; there
are tellers like at any other bank, but as you remembered
them from the 1930s – if you were alive then – and the long
marble corridors heading off into the interior, echo to the
footsteps of Governors long gone by: John Houblon,
Montagu Norman, Eddie George.
They are vigilant, these quiet spoken, clever people who
live in this ancient crumbling edifice, and extremely careful
with financial innovations and especially, it does have to be
said, about those which come from left field, from outside
the banking system or the City of London.
So when Mark Burton, Ciaran Mundy and their
colleagues were ushered down the marble corridors, just
months before they were planning to launch a whole new
currency for Bristol, they might have been a little nervous.
They were, after all, about to launch a financial institution
which would soon have £700,000 circulating through it.
They were not exactly thinking small. When you start new
currencies, you can expect attention from the regulators, but
they had written to the Financial Services Authority setting
out their plans six months before – and had received no
reply.They might reasonably have felt that they were home
and dry.
The Bank of England is notoriously dark.They don’t waste
money on fancy lighting and their meeting rooms are small and
dank,but the door swung open and there was the reception
committee visible through the gloom – representatives of the
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THE JOYS OF PRINTING MONEY
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bank regulators,the FCA and HM Treasury,together with
their legal representatives.
Ironically, the sudden attention from the regulators came,
not in response to their letter – who answers letters these
days? – but as a direct result of a highly successful art
competition to design the new notes for the Bristol Pound.
Among hundreds of entries was a polite invitation from the
Bank of England to come in and discuss the regulatory
implications.The irony, for an initiative designed to boost
home-grown business, was not lost on Burton and his crew.
The regulators failed to respond to a direct request, but got
nervous when artists became involved. It wasn’t, by a
country mile, the only peculiarity.
**
The story of how Mark, Ciaran, Chris, Stephen and James
reassured the regulators and went on to launch the most
successful complementary currency in the UK goes back to
the mid-noughties, when Mark first discovered the strange
nether world of new kinds of money, an abstruse and
secretive discipline, ignored by economists and economic
historians alike.
Mark had just moved his growing family from their
home in Tamworth, where he had been doing some light
property development, to Dartington in South Devon. He
had become more interested in politics after the Iraq War
debacle in 2003, but his outlook changed when he read E. F.
Schumacher’s classic Small is Beautiful. With a sudden
realisation that he had to make a positive contribution
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himself, and hungry for solutions, he plunged into studying
holistic science at Schumacher College. But it was when he
met Richard Douthwaite there, the author and former
economic advisor to the government of Montserrat, that the
whole idea of new kinds of money gripped him.
It isn’t exactly a new idea. There were rival banknotes in
circulation in the UK until the 1840s and, in the USA
until the 1860s, but both were denominated in pounds or
dollars. What if you changed the rules, or linked their
value to something else – local produce, local energy, local
food? What if you made the interest rates negative rather
than positive?
This was the idea that emerged in 1913 when the
Argentinian trader Silvio Gesell put forward the idea that
money, in its natural state, ought to ‘rust’ – to decay, just like
the stuff it is used to buy. Otherwise the incentives are all
for hoarding rather than spending, and it is only when
money is spent that it has its beneficial effects. Gesell
suggested a new kind of money that lost value when it
wasn’t spent, a so-called negative interest or ‘demurrage’
currency. Nobody tried it.
It was only two decades later, when the Great Depression
hit both sides of the Atlantic and cash was in desperately
short supply, especially in 1933 when a quarter of the banks
in the USA closed their doors, that a brief and largely
undocumented movement followed, backed by the
economist Irving Fisher. It was called ‘stamp scrip’ and it
reached a crescendo in the small ski-ing town of Wörgl in
Austria, where the local mayor launched his own currency
which lost value at the rate of one per cent a month – it
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THE JOYS OF PRINTING MONEY
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‘rusted’, in other words. Within a year, there were nearly
5,000 communities across the USA with their own stamp
scrip – Tenino in Washington state even had wooden coins.
It kept people alive, connecting local resources with local
need and spare capacity, when ‘real’ cash was in very short
supply.
Since then, whenever conventional money has teetered a
little, some kind of substitute emerges: LETS in Canada in
the 1980s, Ithaca Hours in upstate New York in the 1990s,
Club de Truque in debt-ridden Argentina in the 2000s and
the Volos systems in Greece today.This was the hidden
history that Douthwaite introduced Mark to, and he was
hooked.
Mark is quietly spoken and self-effacing. After university,
he followed his father into engineering, but with little idea
of what he really wanted to do. Many of the most
interesting economic sceptics have been engineers and Mark
was no exception: once he found economics interesting, he
couldn’t see how the system could just keep growing.
In fact, it had been his engineering lecturer who had first
recommended Small is Beautiful. It just took him more than
a decade to read it, but that may have been a good thing,
says Mark now. “I definitely wasn’t ready to read it at the
time. But when I did read it, it totally changed me and I
thought – this guy was writing 35 years ago: how come
nothing has been done since then, and things are still
getting worse?”
In fact, below the radar and outside the mainstream, there
has been a great deal of new thinking going on – and Mark
was exposed to it at Schumacher College.The element that
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THE JOYS OF PRINTING MONEY
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Douthwaite told him about which really seized his
imagination was the interest-free JAK bank in Sweden. He
wrote a dissertation on it and tried to start a pilot in the UK.
It so happened that, at the same time, the story of
complementary currencies was also taking a new twist. In
Great Barrington, Massachusetts, an ambitious new local
currency was starting to take off. Designed by the Berkshires
based radical carpenter and visionary Bob Swann and his
partner Susan Witt, the currency was known as Berkshares.
In its first phase, you could buy it at a discount with dollars
from a range of participating banks and it could be used in
local shops.The idea was to keep local spending power local.
Berkshares was launched to huge publicity in 2006.
Soon there were 370 businesses in Berkshire County
using the currency, including seven local bank branches
which issued it. Within eight years over $5 million in
Berkshares had been issued into the local economy,
working largely as discount notes to encourage spending
with local businesses and on local resources. The idea was
greeted with delight by a media in love with the idea of a
community creating its own money. But it was a drop in
the ocean compared to some of the problems associated
with mainstream money – its tendency to stick to the
ultra-rich and its inflationary interest, which meant that it
all had to be paid back to the banks plus a little. Even so,
it was inevitable that the new Transition movement in the
UK would try something similar and, sure enough, the
Totnes pound launched in 2007.
Mark was living nearby by then and got involved in its
organisation, “I thought it was a great idea,” but his
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THE JOYS OF PRINTING MONEY
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enthusiasm was measured with pragmatism: “but I also
thought it would struggle to grow into anything really
significant in Totnes, because of the town’s small size. It
was getting huge attention, but it was too small to be a
significant economic tool.”
The Lewes and Brixton pounds followed, meanwhile
Mark was thinking about how an alternative currency could
achieve traction on a much bigger scale, like a region or a
city? His solution was to address the problem from
academia, to research the process of setting up a regional
currency. In October 2009, he enrolled at Liverpool
University under the academic supervision of local
currencies expert, Peter North.
It was preparing for his life as an academic researcher
that first took him to Bristol. Josh Ryan-Collins from the
New Economics Foundation, one of the organisers of the
Brixton pound, called to ask if he was interested in a project
to look at the potential for a Bristol Pound. Mark said yes,
with little idea of how much the idea would come to
dominate his life.
**
The initial idea for a Bristol Pound had actually came from
Chris Sunderland, a social activist from Bristol, a former
priest and founder of the citizen engagement charity Agora,
where he’d been busy campaigning for people to leave cars
at home on Tuesdays.Transition Bristol had organised an
event after the financial crisis which asked the question:
how can we make the Bristol economy more resilient? One
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THE JOYS OF PRINTING MONEY
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of the organisers was Ciaran Mundy, a trained ecologist who
had been selling mobile phones and helping to run
Transition Town Bristol, while launching a charity called
One World Wildlife – the Bristol pound was launched by
people juggling multiple roles. At the event, Chris suggested
to Ciaran that Bristol should have its own currency – the
Bristol Pound. Ciaran agreed and they contacted Josh who
passed the query onto Mark.
The pieces began to come together. Mark, Chris and
Ciaran finally met in the first of many meetings at the café
in the Watershed in Bristol, on the waterfront. Neither
Chris nor Ciaran had experience of local currencies and they
were keen to find out: as a result, Mark spent the summer
writing a series of papers on different currency models.
The first design may, arguably, have been trying too
hard to do everything – and was consequently too
complicated. First there was a sterling-backed currency,
like Berkshares and the Brixton pound, linked to a
business-to-business model, based on mutual credit “We
thought that, to have any impact on making a cultural
difference, we wanted it to be really visible to the public,”
says Mark; “Mutual credit systems haven’t been visible for
some time, but the Totnes Pound had become a real
talking point. That’s one of the reasons why we wanted to
link the two schemes together.”
The trio had by now become a quartet. Stephen Clarke
was a solicitor who’d had a similar idea, “We met every
couple of weeks to talk about what we needed to do next
and who we needed to talk to,” says Mark. Soon they had
started a number of conversations with the council and
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some interested businesses. But the message was pretty clear,
pretty quickly – it was too complicated.
“Inventing new kinds of money is quite a weird idea for a
lot of people, even if they get it at all, and I think, in Bristol,
quite a lot of people actually did generally get it,” says Mark,
“But having two schemes interacting and using two
different units of account was too much to take on board. It
didn’t take long for us to simplify the plan.”
The council and businesses understood and favoured the
Totnes Pound model, exchangeable for sterling, over the
mutual credit element and saw it as less risky. So the
decision was taken by the group to drop the mutual credit
part of the scheme. Mark was a little disappointed, partly
because it was his model – but also because Richard
Douthwaite had always said that just substituting a local
currency for sterling would struggle to make much
difference. But Mark accepted that he couldn’t impose his
model on others, “I wasn’t from Bristol and I was setting
myself up as a researcher, so it was for the others, from
Bristol, to decide what they wanted to do,” he says. “I saw
myself as an advisor, not the decision maker, I was willing
to put some knowledge and my time and effort into the
mix, but in those days I chose to remove myself a little
when it came to taking decisions.” Besides the simple
model, it was a start and you had to start somewhere.
Ciaran also wanted a mutual credit element.They agreed
they would come back to the idea later.There were still two
and a half years to go before the launch.They raised a very
small amount of money (£5,000) for a feasibility study and
found, as Ciaran said, that it was “a no-brainer” – “Lots of
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businesses were up for it. We did an absolutely massive
amount of work for £5,000.”
As long as the basic idea was simple, it hardly mattered at
all if the internal technology was complex. And they were
keen to link up with the Brixton Pound team, in a NEF and
Transition Network project to implement an electronic
version which could be spent like the African M-Pesa bank,
using a mobile phone.The Tudor Trust agreed to provide
the money. It is said that it’s hard to raise money these days
unless your idea is innovative, but the opposite is also true: if
your idea is too innovative, raising money can be extremely
difficult. But Chris managed to raise enough money for a
feasibility study.
Most of all, they needed to partner with a local financial
institution, both for the credibility of the new Bristol Pound
and for the professionalism of the operation – not to
mention the security of the system.They were all new to
financial services, after all.
**
One month gave way to another and another. Some of the
conversations were slow and arduous.Two went a little
better: they won the support of the council leader, now the
Liberal Democrat peer, Barbara Janke, which opened doors.
Crucially, they managed to excite the enthusiasm of the
chief executive of Bristol Credit Union, James Berry.
“I thought as we went into the meeting, ‘if he gets it, it is
going to be a really big thing for us’,” says Mark. “We could
have gone to the other big Bristol financial institution,
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Triodos Bank, but the credit union was the obvious partner
as it’s all about local people and re-circulating local money.
And I soon realised that, rather than the four of us trying to
persuade James, the meeting had turned into the five of us
discussing it together. I came out of the meeting really
pleased that it might actually happen. It was a big piece of
the puzzle in place.”
This also happened to coincide with a breakthrough for
Mark personally.Through his Liverpool supervisor, he was
offered a place at Bristol University to turn his research into
a funded Ph.D. It would take three years. It was, as he said
in his downbeat way, “quite handy”.
By 2011, the pace of progress was beginning to speed
up. The target was to launch the Bristol pound to coincide
with the second birthday of the Brixton pound in
September. But, in the event, there any number of delays.
The credit union movement was waiting patiently for the
government to act on their promise to let them accept
corporate members, and the legislation kept on being put
back. The e-money development took longer than expected
too. “It was only at the beginning of 2012, when we
decided we were going to launch that May that we really
started gearing up,” says Mark. The notes had to be
designed, businesses had to be reassured and signed up,
and all the processes had to be worked out – how were
they going to manage the notes across the city. It all had to
be tested.
“It was a fantastic process.We never had any fallings out.
We just all got on well, and we all carried on doing the tasks
and there was never really much pressure – we just got on with
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it, and it progressed slowly but smoothly. But suddenly, with
the deadline looming, there was a load to do, and getting new
people in, and younger people in, made a huge difference.”
They were being given support by Forum for the Future’s
intern scheme and people like Sarah Forrester-Wilson,
among others, made what Mark calls “a huge contribution”.
So did Mike Lloyd Jones, now the currency’s manager, who
Mark met at a showing of the documentary film The
Economics of Happiness. Graham Woodruff came to sign-up
his web hosting business, and ended up as technical director,
“If it wasn’t for them, we’d probably still just be meeting
every couple of weeks,” says Mark now.
The real problem was reaching sufficient scale to attract
enough people.“It wasn’t clear to me how we could scale up
fast enough,”says Ciaran now.“You can’t gear up gradually.
You had to start at scale and for a long time I wasn’t sure that
was possible – especially when we were all volunteers.”But
now, the interest was clearly building. Soon, more than 100
firms had signed up, including a family bakery, the Tobacco
Factory Theatre, the Ferry Company, dozens of small cafes
– even Thatcher’s Cider was planning to accept Bristol pounds.
The Bristol Pound designer had created a logo and the
basic template for the note, but it was the competition to
design the notes that really raised the profile of the idea of
a new kind of money just for Bristol.There were more than
300 entries – more than half of them from schoolchildren –
and the news went on the front page of the BBC website.
“It gave the impression that we had already launched the
currency, rather than just launching an art competition,”
says Mark.
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The judges came from all the main sectors of the Bristol
community and took over the atrium balcony in the Colston
Hall, Bristol’s huge concert venue.The response from the
regulators followed.
**
The letter from the Bank of England, provoked by the art
show, caused the next delay of five months – from May to
September. Chris, Mark, Steve, Ciaran and James Berry
from the credit union filed a little nervously into the Bank
of England for the meeting. “It felt like we were going into
a court of inquiry, but it was exciting, we didn’t know what
was going to happen,” says Mark.
As it turned out, the Bank of England department
most concerned with complementary currencies –
partly because of the experience in Totnes, Lewes and
Brixton – was the department responsible for bank
notes. They wanted to make sure the Bristol Pound
wasn’t going to claim their notes were official bank
notes. They wanted to make sure they were secure and
suggested putting an expiry date on them (the Federal
Reserve recently suggested the same thing to Air Miles,
aware that there were then $3 trillion outstanding,
enough to bankrupt the industry if they were all spent
at once).
The following year, the Bank produced a supportive
policy note on local currencies, explaining that they may be
effective in supporting disadvantaged economies. It included
this statement:
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“If non-local goods are cheaper because market prices do
not fully factor in the additional costs that they impose on
society over locally produced goods – for instance, higher
carbon emissions as a result of increased transportation
– then local currencies may improve welfare.”
There were other issues to cover. Would the Bristol pound
be covered by the Financial Services Compensation
Scheme? Yes, because credit union deposits are covered in
the same way as bank accounts. Would they need a licence
under the European E-money Directive? No, because the
Bristol Credit Union was already a licensed deposit taker.
The problem came with the lawyers from the FSA and
they became a real thorn in the side of the project over the
months that followed.The main sticking point was that the
team planned to levy an exchange fee on people who wanted
to change their Bristol Pounds back into cash, as a small
disincentive.The regulators believed this contradicted the
basic principle in credit union legislation that there should
be no barrier to withdrawing money. James disagreed and
believed their opinion could be challenged, but in the end it
would have taken too much time and money. Nor could they
launch while the issue was still in dispute.They had to bow
to the inevitable.
They had more success with the city council, “We were
aware that the public would quickly judge a local currency as
to whether or not it would ever be significant in the life of
the city,” wrote Chris Sunderland later. “If they thought it
would just be a gimmick, they wouldn’t participate and
would just wait for it to melt away.” But imagine if people
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could pay their business rates in Bristol pounds – wouldn’t
that mean people could take it seriously?
“At first they were hesitant,” wrote Chris. “How could
they realistically change all their accounting systems for this
thing that was likely to fail? Pressing on with the detail, we
found a way that the public could pay their business rates in
Bristol Pounds without causing a headache for the council.
And so the deal was done. If they had Bristol Pounds and
found them difficult to spend with other member
businesses, then they could always pay their business rates.”
The countdown to launch was now under way and the
notes were being printed, which pretty much exhausted
their spare cash.The BBC has a major base in Bristol and
they were preparing for significant coverage – there is
something thrillingly alchemical when the people of a place
create their own money, even if it is backed pound for pound
by old-fashioned currency.
“As we drew closer to the launch day, our office got
noticeably quieter and more intense,” wrote Chris. “A trial
of the text payment system was under way. Exchange
points were being developed across the city. The individuals
and traders were signing up to the system. And it all had
to be ready.”
Finally, the grand unveiling happened on 19 September
2012, at midday Bristol time – which, as everyone in Bristol
knows, is seven minutes behind London.The city council
provided space in the Corn Exchange, which meant that the
old ‘nails’ – the metal tables outside which were used in
centuries gone by to make deals over commodities in the
docks – could be used for the very first trade using Bristol
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pounds.The Lord Mayor used a Bristol pound note to buy
some locally made bread, “There was a media scrum,” says
Mark, “It was ridiculous. It all went a bit crazy, but it was
very exciting.”
The covered market next door, at the end of St Nicholas
Street – the street where the great explorer John Cabot had
once lived – usually shut at 5pm, but there was a special
celebratory opening at night, with bands and dancing and
circus performers.The Bristol pound had arrived with a
splash. So much so, that their stock of money at the Corn
Exchange began to run low. At one point, Mark and James
had to go out to the inner city suburb of Stokes Croft,
where the credit union was based, to bring in great sacks of
Bristol pound notes to keep the party going.
But the critical moment which gave the whole project a
real momentum came shortly afterwards.The first mayoral
election for Bristol was under way, and the arrival of the
Bristol pound was loud enough to become an issue in the
campaign. Mark and his colleagues had already been to see
the local architect George Ferguson, who they thought
would be interested because of his links with so many local
businesses.
At a hustings meeting after the launch, all the mayoral
candidates said they would support the idea of a local
currency for Bristol. But Ferguson hit on a pledge that
would trump the others – he promised to take his entire
mayoral salary in it if elected. At £51,000 that was no small
commitment of faith (it is now more).
It was also now dawning on Ciaran that it was going
to be a success, “I started to realise it might work when
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we heard back from the first few people who had used
it,” he says. “A lot of those who had used Bristol pounds
told us they were having more conversations with people
in their community, that they felt more connected to
Bristol as their home. It felt more important than the
exact circulation or the velocity of the currency – using it
was directly helping with an individual sense of well
being by helping create stronger community feelings.
After that, strategic target after strategic target rolled in,
business rates, bus fares, energy suppliers, council tax
even getting the train to London could be done using
Bristol pounds, but none of this would matter nearly as
much if it didn’t bring with it that sense for all involved
that they were helping not just themselves but the city
as a whole.”
Now the system works by people exchanging their
sterling for paper Bristol pounds – in single, five, ten and
twenty denominations – or by opening a Bristol pound
account at Bristol Credit Union.The currency can then be
spent in participating businesses, or between businesses, in
return for goods or services.
Ciaran explained to the BBC what it meant: “If you
know, when you spend money – whatever form it is in – the
impact that it is going to have because you know the people
that you are spending it with, and you know the people that
they are going to be spending it with, you are aware of the
circumstances of the economy that surrounds you; it is a
more transparent economy.”
The ambition in Bristol, he said, was to alter the financial
system very slightly so that it works in favour of local
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business: “Over the course of time you end up with some
kind of fair and ecologically minded economy . . . and a
more localised economy.”
**
By 2014, the Bristol pound was two years old and there
was £500,000 worth in circulation. The days when Mark,
Ciaran, Chris, Steve and the others could just sit in the
cafe at the Watershed and decide things had gone for
good. As an organisation with ten employees there had
been a lot of growing up to do. And one major issue
remained: the costs of running the system needed to come
from somewhere.
Ordinary cash doesn’t need a marketing budget
because the huge costs of handling coins and notes falls
mainly on the retailers. That wasn’t an option open to the
Bristol pound. As always, it was hard to raise money for a
project that was already successful. Like so many other
critical interventions, when they prove themselves, the
funding tends to dry up. But the Bristol Pound has been
successful in securing grants to innovate around the
edges. The Bristol Pound Community Interest Company
has since launched. Run by Chris, it’s a project to
encourage local food buying co-ops, cutting costs by
collective ordering. It was partly a response to the
criticisms that the Bristol pound has been a vast middle
class project to look after their own. The Bristol Pound
CIC project is known as the Real Economy and it
involves pop-up markets and support for new local
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31
enterprises, inspired by the buying groups in Italy, like
the Gruppidi Aquisto Soledale network.
And the mutual credit idea is back on the table with
plans to launch a business-to-business scheme early in 2016.
This has been funded by the European Commission and
involves partners across Europe and a new version of the
electronics payment software used by the Bristol Pound,
called Cyclos and developed by their Dutch partner, STRO.
They are also organising more formally to respond to the
requests for advice and support which now pour in from all
over the world, “We got some funding from Innovate UK
and have formed the Guild of Independent Currencies
(GIC) as a forum for everybody to work together and share
ideas,” says Mark, “unfortunately we didn’t get the further
funding that would have really helped to get all the new
local currency projects off the ground. We were pretty
gutted about that.” Even so, the Exeter pound has now
launched (September 2015) and there are similar
innovations emerging all the time. But somehow,
somewhere, the money to pay the basic costs of the Bristol
Pound system needs to be found from the revenue, rather
than relying on grants.That solution is still some way off.
“I think all of us would say it was the best thing we’d ever
been involved with,” says Mark. “There was a lot of
uncertainty, but it was very exciting and it has had really
positive impacts – but it’s only still at the beginning of
having the impact that it could do.”
The Bristol pound remains one of the most ambitious
projects of its kind in the world.There are others which are
innovative in different ways, from the community banks in
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Brazil to the SoNantes project in France, all focused in
different ways on supporting local enterprise. But the crucial
research that demonstrates tangible economic change is still
not there – though there has been some research in Bristol,
looking at the links between mobile phone payments and
social and community connectivity.
Sriram Subramanian, Professor of Human-Computer
Interaction in the Bristol Interaction and Graphics (BIG)
group, said: “TXT2PAY [the name of Bristol Pound phone
payments] may not be the most fluid or robust mobile
phone payment, yet our findings show it supports people in
making connections to other people, to their communities,
to the places they move through, to their environment and
to what they spend.These interactions could have significant
implications for the design of future payment systems.”
Researchers found that regular users were using Bristol
pounds for just over 14 per cent of their weekly spending
and were keen to use more independent shops – the main
impact so far of the currency is to direct more money locally.
Nearly 85 per cent use it for eating out, 66 per cent for
groceries and 64 per cent for travel.
“It’s working. It’s still small, but it is working,” said
Michael Lloyd Jones, now in charge of day to day
management of the currency. “In a population of 420,000,
there are only about a thousand people using it regularly, but
it is a tool they are using increasingly for business-tobusiness.
If you accept Bristol pounds, it attracts people. You
can get new suppliers through Bristol pounds and it means
there is more money going through the credit union and less
through the big banks.”
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It is particularly well used in the fast-growing south west
local food economy.The other growth area is paying council
tax bills with Bristol pounds – as much as £50,000 was paid
in this way in the first few months. And more money is
going into green energy through a new scheme run by Good
Energy.
“People do tend to ask why haven’t we changed the world
yet,” says Mark, “The answer is that it takes time. We have
created a huge amount of awareness, which is valuable, and
people are spending more in local businesses, so there is an
economic impact – it just isn’t significant yet in terms of
business survival. But it does reinforce people’s commitment
to shopping locally. It creates stronger links between people
in their communities; it builds relationships between local
businesses, which is a key element of resilience.The Bristol
Pound reaches out in many ways and its impact can grow
and grow.”
None of the UK local currencies offer loans yet, as they
do in Nantes, and that could be the game changer, because
they can be offered at little or no rates of interest. But there
are details that need working out, because the credit union is
constrained by law to lending only in one particular, and
rather traditional way.
Currently the main purpose of the Bristol pound is to use
the resources in Bristol more effectively, by boosting local
enterprise. Its main resource is people’s pride in their own
city, and that goes a long way. It remains to be seen whether
the huge potential of this kind of idea – semi-detached from
the global money system – can really shift a big city
economy. But if it doesn’t, it won’t be for want of trying by
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Ciaran, Mark, Chris, Steve and their colleagues. Steve
Clarke is now a Green city councillor, which is also a sign
perhaps that the great gulf between the economic radicals
and the local authorities is beginning to heal.
Mark’s verdict on the lessons is very similar to other
people in this book.There is no step-by-step instruction
manual, “We just carry on towards the horizon and hope we
don’t fall off a cliff,” he says. “My approach really is to do
what I think is right, to move in the right direction and see
where it gets you. If it works, it works. If it doesn’t – well,
you try something else.”
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35
II Why don’t we start a bank?
Wessex
Lessons. The Wessex Reinvestment Trust
now exists as the organising mechanism for
a range of successful, and sometimes
experimental, support institutions for housing
and enterprise. In itself, that implies the first
lesson:
· Flexibility: situations change, ideas that
work in some places may not work quite
the same elsewhere, so new institutions
need to be able to change.
· Public sector nudge targets can have the
most catastrophic and unpredictable
side-effects locally.
· Any upsurge in local enterprise requires
the support of a range of different
support institutions, especially for raising
finance.
One of the peculiar elements of most of the stories in this
book is the roundabout way the entrepreneurs achieved their
objectives.They start by planning hydro power and end up
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WHY DON’T WE START A BANK?
36
providing solar power.They start by opening a technical
centre and end up cooking organic food for schools.Tim
Crabtree, and his colleagues from the nether world between
Dorset, Devon and Somerset, once known as the AngloSaxon
kingdom of Wessex, started out by wanting to
provide kids with healthy food. So how come they decided
to start a bank?
And then once they had launched the Wessex
Reinvestment Trust, the snakes and ladders continued.
What started as an operation to provide the new food
economy with credit, ended up somewhere completely
different again.The story involves a range of different
people, so it has multiple starting points. Let’s start, for the
sake of argument, on the Dorset coast, in the small but
resurgent town of Bridport.
Dorset is an unusual place. It was consistently the
fastest growing county in the UK through the eighties and
nineties, so perhaps it isn’t surprising that it now has one
of the highest levels of self-employment anywhere in the
country. There is also an energy about the area, partly
because of the independent-minded people, like Tim
Crabtree, who have chosen to live there in the last twenty
to thirty years.
In fact,Tim was brought up in Dorset, but he moved
back when he graduated from university. Like many others
of his generation, he cut his teeth with charities and pressure
groups in London, moved on to start social enterprises in
Bristol, and then took his expertise home with him to start a
family.Tim studied politics and then went to study in Japan,
teaching English to earn money.
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He tells a story about how he shifted from ‘issues’ to
something more practical after an encounter when he was
volunteering at a city farm. “That first afternoon I was put in
a work group with people with learning difficulties and I
was paired up with this guy and I didn’t know what do,” he
says. “And he kindly, quietly disguised his contempt that I
was a thirty-year-old man and I didn’t know how to sow
seeds or really do anything at all.”
The entrepreneurial revolution in Dorset has, until
recently, been happening under the radar of official
economic development officials, who have tended to dismiss
these new enterprises as ‘lifestyle businesses’. It is true that
many of them have no interest in growing huge.They have
been created in order to sustain a living or to put right some
local problem. But the Local Enterprise Partnership (LEP)
has now woken up to the potential of food and drink
businesses in this predominantly agricultural economy.
Perhaps this is not so surprising, given that food and
drink has underpinned the success of some of the Dorset
local enterprises that have managed to grow, such as Baby
Organix and Olives Et Al.
In Bristol,Tim had helped run a social enterprise support
agency as well as running his own business training in
shiatsu, and starting a local aikido club. But when he joined
the team at Dorset Community Action, it was soon clear
that food was the great untapped opportunity.
The original problem was that his employer had grants to
give away to community enterprises, but no community
enterprises to fund.To help rectify this situation,Tim
helped set up the West Dorset Food and Land Trust in
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WHY DON’T WE START A BANK?
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1996. It proved to be a key moment.The trust also had a
trading subsidiary called West Dorset Food Links.Their
task was to start farmers markets and direct marketing or
online schemes to provide outlets for the new businesses
making local or organic food.
Tim’s own foray into running a food business started
with a phone call from a local primary school in 2003.
Dorset County Council had responded to the deregulation
of school food standards in 1981 by closing all the school
kitchens.The result had been an influx of junk food.This
particular school had taken the heroic step of banning
sweets and encouraging children to bring in fruit instead.
The result had been problematic.The children used to take
one bite out of their apples and pears at break time and then
throw the rest away in disgust.The bins were full of rotting
fruit. Something had to be done.
Tim set up a small enterprise sourcing local fruit and
organising volunteers to cut it up and arrange it on plates,
and selling the bits in school for 10p each.The project
worked.The children liked their choice of fruit and soon
other schools were clamouring to take part. Fruit platters
were soon being despatched to schools all over the area.
Parents wanted to set up stalls outside the school gates.
What followed was a clear example of why government
procurement is so often disastrous for local business, which
is the main theme of this story.The government launched its
own free fruit scheme. Contracts to provide fruit to schools
were organised on a regional basis.Tim tried to win the
local contracts for schools, but the county council refused to
let them bid and the school fruit enterprise went rapidly out
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WHY DON’T WE START A BANK?
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of business.The result was that the children were soon
eating fruit from Bulgaria and Spain. “It was a great example
about how top down decisions and contracts actually
destroyed a really innovative business,” he says now.They
were determined not to make the same mistake again.
It so happened, even in those days before Jamie Oliver’s
school food documentaries, that the food in Dorset schools
was real cause for concern. Since the kitchens had been
closed, the contract to provide free school meals had gone to
Initial Rentokil – originally purveyors of pest control – who
packed meals into individual yellow bags in a kitchen in
London and trucked them down overnight.The yellow bags
were stigmatising for children, who were increasingly
refusing their free school meals, and – as take-up of free
school meals was even then the basis of local authority
grants to the schools – they were getting worried.
Here Tim’s Centre for Local Food in Bridport came in
useful once again.They began providing soup lunches for
one school and it was successful enough to attract another.
Another enterprise was emerging, and then there was a
stroke of luck. Political fall-out from Jamie Oliver’s TV
campaign meant that all schools suddenly had to offer a hot
meal.
But Dorset County Council were busy laying the
groundwork for another error of judgement and it wasn’t
long before they had signed a contract for frozen ready
meals with a company in Nottingham.These were trucked
220 miles every day, reheated in hub kitchens –
or in microwaves on site – before being served up to
unsuspecting children.This time Tim’s team was not going
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WHY DON’T WE START A BANK?
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to be battered into submission.They held a meeting of
eight local head teachers and they agreed to launch a
partnership between them to opt out of the county council
contract.
The team suddenly needed a much larger kitchen and,
within a very short space of time, they had raised £250,000
and recruited staff, “We built up slowly and six months later
we had two hub kitchens, in Bridport and Blandford Forum,
24 schools and a turnover of £500,000 a year. And we had
begun doing lunch clubs and day centres too,” he said. “And
all from serving cut up bits of fruit to children.” Soon they
were producing 200,000 hot lunches a year.
Then there was a string of new organisations and
acronyms. First, the Dorset Food Initiatives Partnership,
creating vegetable gardens in schools alongside other
projects.The Centre for Local Food had begun in 2003, and
had kitchen and office space for use by start ups. It was the
first of its kind in the UK and aimed to bridge the gap
between business space and training space for people to
learn to cook.
The Food and Land Trust carried out one of those
surveys of local food under the ‘Eat the View’ scheme
pioneered by the Countryside Agency in 2004, and found
the emerging new food businesses had difficulties getting
into the new food shops.This led to the next ambition – a
distribution system.
The number of food businesses grew slowly.The Food
and Land Trust started farmers markets in Bridport and
Poundbury. Soon there were 70 local businesses trading
there. Within a few years, Dorset Food Links had started
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WHY DON’T WE START A BANK?
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twelve markets across the county. But something was still
holding them back.
**
Tim and his colleagues had been thinking, especially after he
had linked up with Paul Sander-Jackson, a social
entrepreneur who had launched the pioneering Somerset
Food Links. If they really wanted to tackle the food economy,
they would have to look a bit wider than food.“We needed
to work out why people didn’t want to eat better food, and
therefore why farmers were not really supplying it. We
needed institutions whose task it was to help you and to
understand the market – and there just weren’t any”.
The stage was set for a momentous decision.They would
start a bank.
When he worked in London,Tim had read a number of
books by Paul Ekins, a green economist. Ekins tested out a
different kind of economics based on new concepts of the
capital you might need to make things happen. Rather than
the usual three (land, labour and manufactured capital,
machines and so on), Ekins asserted there were actually five:
environmental, human, social, manufactured and financial
capital. Remembering what he had read years earlier,Tim
began to apply that to the food system and the need for
more healthy, locally produced food. “We knew the food
system had a negative impact,” he says. “We realised we
needed to think of it in a more economic way – we needed
to get people demanding different food.That meant we also
needed to have them producing different food.”
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WHY DON’T WE START A BANK?
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That was a bit of a Catch-22. You can’t get people
demanding different kinds of food unless it is somehow
available. On the other hand, you won’t get people
producing it unless there is some kind of demand for it.
How do you square the circle?
The BSE crisis had torn through the beef herds and
then the foot and mouth crisis had hit farmers all over
again, and the sheep and lamb flocks too. Suddenly, people
were demanding healthier, traceable locally produced
food – the kind of food you can only buy direct from the
producer at a farmers’ market. Demand for organic food
soared, but 70 per cent of overall demand was being
serviced through imports – there simply weren’t enough
UK producers.
Tim and his colleagues realised that to increase local
supply, you needed to improve all five of Paul Ekins’
different capitals at once.There would need to be better
social capital – so Tim was already starting farmers’ markets.
There would need to be better human capital – so Tim was
supporting the training at the local agricultural college, just
as he was setting up the Centre for Local Food.
But there was a gap. What about financial capital? The
big banks had few enough local branches in rural Dorset
and the local managers with specialist knowledge had
mainly gone. They needed a financial institution that
would be on their side, which understood the market. So
the germ of the idea for the Wessex Reinvestment Trust
was born.
**
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WHY DON’T WE START A BANK?
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The network of linked co-operative companies in
Mondragon in the Basque region of Spain influenced their
thinking. Mondragon’s founder was a Catholic priest, José
Maria Arizmendiarrieta, who had responded to high
unemployment in the 1950s by setting up a technical
college. He then encouraged five graduates to set up a
cooperative – ULGOR – so that they could create better
conditions of work for themselves. At the heart of
Mondragon was an innovative financial mechanism, the
internal capital account (ICA), which is a way of “reclaiming
finance”.1
New worker members had to deposit the
equivalent of €13,000 in today’s money into this ICA, and
they would then receive a proportion of any profits until the
time they left the company. Mondragon co-operatives also
hold the assets of the company in a trusteeship legal
structure, so that they can never be sold to external investors.
But Arizmendiarrieta realised that if the growing
network of co-operatives – five at that time – was to expand
further, they would need to find more capital, over and
above the funds invested by new workers or reinvested from
profits. He therefore proposed the creation of a bank (1959)
– the Caja Laboral – which would create a local
‘reinvestment’ mechanism. With the slogan “savings not
suitcases”, the Caja Laboral sought to highlight the key
issue: if local people didn’t reinvest in the co-operatives,
young people would leave the area.This bank has
underpinned the expansion of Mondragon, which now
employs 85,000 people in around 100 co-ops.
**
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What did the word mean? ‘Reinvestment’isn’t in the
everyday parlance of economists, or even bankers, but it came
to mean something in the USA when it was used as part of
the title for a set of laws, passed under Jimmy Carter, starting
with the Community Reinvestment Act (CRA) in 1977.
The CRA was originally designed to prevent insurance
companies and banks from ‘red-lining’ whole districts on the
basis of race. But its main effect has been to funnel money
from the banks, which found they were unable to lend it
effectively in poor neighbourhoods, to new institutions
which did know how to lend it.They were called CDFIs or
Community Development Financial Institutions.There are
now 60 of these in the UK too.
‘Reinvestment’ in the UK now means something slightly
different again. It means the way that money used to work
when banks had some kind of local commitment. You would
put your earnings in the bank and they would be used to
reinvest partly in local enterprise.These days, with no local
commitment, it tends just to drain out of the area again.
What Tim and Paul and their colleagues needed was an
institution to make this ‘reinvestment’ possible in Wessex.
Then they could funnel it into the new food businesses, for
vans or equipment or working capital. And they would put
their earnings in the bank and it would be reinvested again.
And again. A virtuous circle – or that was the theory.
The so-called CRA, the American legislation, was the
first of three elements in this story to be borrowed from
North America.The second was Pat Conaty.
Pat is a walking encyclopaedia of the way mutual
techniques work in other countries, and the author of a report
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WHY DON’T WE START A BANK?
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published in 1996 by NEF called Homeopathic Finance –
urging, as the title suggests, a financial infrastructure that
could deal better with very small or micro institutions.
Pat met with Tim and Paul and explained how CDFIs
spread risk in the USA: half their lending goes on housing
improvement loans, which are extremely safe, and half goes
to local business start-ups, which are not.Taken together,
they balance each other successfully. Why should they not
do the same in Wessex? In fact, they realised, it was the very
breadth of their new institution that would make it
workable – tackling rural housing and access to finance at
the same time.The plan had progressed from food.To be
effective, they believed, you needed to tackle the lot.
Around the same time, Tim and Paul had been to a
conference on rural debt in the Dorset market town of
Sherborne. Bob Paterson from Salford University was
delivering a tailored workshop on access to land for
farming and housing. Bob’s proposal was that you need a
financial institution to gather resources from local people –
or the government if they were willing – which is used for
buying land or building homes. But Bob had added a
thrilling twist: this new bank could also act as a
Community Land Trust or CLT.
**
Community Land Trusts were the third idea borrowed from
the USA.They were the brainchild of the radical economics
thinker, pioneer and carpenter Bob Swann, an associate of
Fritz Schumacher, author of Small is Beautiful (see Chapter I).
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The first CLT started in the 1970s in inner city Boston.
The underlying idea was that a CLT would allow developers
to split the ownership of homes from the ownership of the
land beneath.The net result would be that homes could
change hands at around half the price, while the land was
held in trust by the community. CLTs have spread
nationwide in the US and the potential benefits are now
exciting people across UK.
However, one of the lessons of borrowing ideas from the
USA (or elsewhere) is that, in translation, the fit isn’t quite
as perfect as it first seemed – serious adaptation is usually
required.This was certainly true of CLTs.The Wessex
Reinvestment Trust had to avoid legislation like Right to
Buy or some of the laws designed to give rights against
those of freeholders. CLTs often took years, if not decades,
to get off the ground – as every regulation had to be
painstakingly rethought. But Bob Paterson’s idea seemed to
hold water: why not make the new Reinvestment Trust
simultaneously also able to act like a CLT? “Why don’t we
create an institution that can do both lending and land
trusts?” they said to themselves.
By this time the fledgling Wessex Reinvestment Trust
had grown to a team of four.Tim, Paul, Bob and Pat
persuaded the Countryside Agency, the Housing
Corporation, Lloyds-TSB and Bob’s Salford University unit,
Community Finance Solutions, to give them the money to
write a feasibility study. It was published in 2002.
“It was really ambitious,” says Tim now. “I guess the last
thirteen years have been a kind of working through of some
of those ideas contained in that report, and some of them
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worked and some have been – well, not a complete disaster,
but they didn’t work out as we planned.”
**
Thirteen years on from both the report and the launch of
the Wessex Reinvestment Trust, the trust itself has gone
from frenetic activity to calm semi-retirement. Currently
WRT is the holding company for four very different
organisations which do the various things that the original
feasibility study set out. Most of those changes happened as
a result of what the government decided from 2002 to
2006 – and some were a classic case of unintended
consequences.
The first of the four is Wessex Resolutions.This is a
community interest company (CIC), which was set up to
meet a shift in welfare regulations for local authorities. For
decades, councils had been giving out home improvement
grants but the government told them to stop in 2002 – and
give loans instead.
The problem for local authorities is that they had no track
record in lending money. So Tim, Paul and colleagues set up
Wessex Home Improvement Lending Ltd (WHIL) to lend
money across twenty councils for home improvement,
usually to bring homes up to a basic standard through the
installation of kitchens, bathrooms and insulation.They have
lent £8 million so far and provided the resources to bring
private homes up to the Decent Homes Standard.
Although home improvement had been part of Pat
Conaty’s original idea, Wessex Reinvestment Trust couldn’t
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do it directly because they needed to ring-fence the public
money.The result was a new company, WHIL (now called
Wessex Resolutions).That part of the whole Wessex group
works and continues to work.The difficulty came with the
business loans.
Because the home loans had been split out into Wessex
Resolutions, the design which Pat Conaty had originally set
out no longer provided a balance of risks. So the Wessex
Reinvestment Society, a community benefit society
(formerly called an Industrial and Provident Society), was
created to separate out the business lending.
Once again, it was government involvement which
provided the opportunity – but also the complications. In
2004, ministers launched the Phoenix Fund, designed to
support the new CDFIs in the UK. Wessex Reinvestment
Society bid for half a million to lend out and they were
successful.Their lending pot was secured, but there was also
a snag – and it was a big one, though it might have seemed
small in Whitehall. But it wasn’t small at all.The strings
attached included a rule which said that the money could
only be lent to businesses which had actually been turned
down by the big banks. “This was actually a complete
disaster,” says Tim.
Nor were they allowed to sit on the money and wait for
the right lending opportunity to come up.They had to shell
out willy-nilly. But the government rules also included an
incentive. If you lent the money quickly and got it back, then
you could keep it to lend out again. How could anyone resist?
But the classic Whitehall combination of carrots and
sticks created peculiar side-effects: “We ended up recruiting
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lending officers with a traditional banking background, and
they were put in the weird position of lending money to
businesses they would never have lent to when they were
working in banking,” says Tim. “We ended up with a lot of
bad loans, chasing very marginal businesses, and supporting
them to succeed so that they could start repaying the loan.”
After four years or so, they realised it was costing them
more to chase the bad debts than they were getting back in
interest. Serious action was required. Paul had recently
returned to Dorset from a job at the New Economics
Foundation. He started his directorship of the Wessex
Reinvestment Society at a difficult moment and his first task
was to cut the overhead through redundancies. “It was a very
trying time,” says Tim and “Some people lost heart.”
As for the loans, they handed over the ones that remained
to the Guildford-based Fredericks Foundation, a CDFI
specialist.
**
Ten years on from the launch of Wessex Reinvestment Trust
– started with the idea of providing loan finance to all the
new food businesses – and suddenly WRT weren’t in the
business of business loans any more. Wessex Resolutions
was ticking over nicely, but Wessex Reinvestment Society
wasn’t doing nearly so well.There was still one inescapable
fact though: the problem for start-ups remained.
Tim and Paul, and their wider group of directors,
questioned whether their earlier analysis of the basic
problem had been flawed. Perhaps business start-ups didn’t
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really need loans at all. Perhaps what they were really
looking for was some kind of equity finance – they needed
investors or shareholders.This insight led to the third part of
the original group, now called Wessex Community Assets.
The team realised this was a problem they could tackle.
They persuaded the Esmée Fairbairn Foundation and the
Friends Provident Foundation to help them investigate
feasibility and they quickly discovered that Industrial and
Provident Societies are exempt from the financial promotion
regulations.This provided something of an opportunity, but
a complicated one.They would help new projects raise share
capital from their future customers and the community
around them. It was complicated because it was one of those
occasions when the regulators were keen to help.That meant
they had to work with the Financial Services Authority and
the HM Revenue & Customs to see how a community
benefit society could work, in line with the same rules as
everyone else.
The result was a set of model rules which community
benefit societies could use to raise share capital, and which
would enable them to work with the Enterprise Investment
Scheme. And all the other paperwork too. It proved a
popular idea almost straight away. It meant that community
share issues, for about £200,000 on average, can take place
without the need for extremely expensive lawyers and
advisor fees.
“Some have been successful, some less so,” says Tim.
“One of the most successful community share issues we
organised was for a social enterprise doing eco-housing.
Sadly, they raised the money immediately before the
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housing crash and the housing they built turned out to be
worth less than the shares – but that kind of problem can
happen with any share issue”.The real success is that it led
to a whole explosion of community share offers. Suddenly
everyone is launching community share offers. Wimbledon
Football Club was sold to the fans in that way. Hastings
Pier was sold to its users.The government even funds a
support structure: the Community Shares Unit, run by
Co-operatives UK. In 2008, eight organisations registered
their intention to use the community shares model; by 2012,
more than a hundred offered community share issues,
including a new football club in Manchester, the village
shop in Cold Norton, and Bath and West Community
Energy.
One such development going through Wessex
Community Assets was The Real Food Store in Exeter, a city
which had been criticised as a ‘clone town’in a controversial
2010 NEF report.The Real Food Store’s founders wanted to
finance the shop using share capital to engage its potential
customers.Their share issue raised the £150,000 they needed
and volunteers helped with decorating the shop on a low
budget – so both time and money were invested by the
community the shop is set up to serve.
By 2012, Wessex Community Assets had registered thirty
share issues and, between them, they had raised £3.2
million.To date (2015) they have managed about a hundred
share issues – and one of those was the Wessex Community
Land Trust Project.
**
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Creating a Community Land Trust to split the ownership of
the buildings from the land they sat on had always been
high on Tim, Paul, Bob and the team’s agenda. In 2007 they
persuaded the Carnegie and Tudor trusts to fund just such
an initiative.
In those days, CLTs were in their infancy in this country
and it was a matter of learning as they went along.The first
CLTs Wessex Community Land Trust launched were in
Buckland Newton in Dorset and High Bickington in
Devon. High Bickington took more than a decade. Once
those houses were warm and lived in, the Wessex team
decided the time was right to roll out more widely across
their area.The first phase of twelve projects started in 2010
and has now produced 123 homes.The next phase of twelve
projects is operational now.
Each CLT begins with a partnership with a housing
association. The CLT (the community) buys the land –
usually on the edges of villages and market towns – with
resources from the housing association, and then they
lease it back to them in return for a small ground rent.
The housing association then builds and manages the
housing with the trust taking responsibility for the
allocations and planning. The housing association brings
its management and development experience; the trust
brings the commitment and knowledge of the people
who will own the land underneath their homes – the
tenants or the buyers.
“Before our projects, this process usually took years, if not
decades,” says Tim. “Now we can build much faster. Our
project in Norton-sub-Hamden only took a couple of years.”
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Now Tim and the team are looking at ways of adapting
the same trust idea to deliver other types of community land
trusts – from extending a housing development to taking
over the village shop or pub, or starting a community farm
or renewable energy project.The model rules are flexible
enough – they just have to find people to do it. But the
direction of travel is usually the same, says Tim: “We can
still provide support to these organisations, but actually
where we have ended up is helping them develop the
capacity to raise that money themselves.”
**
That is one of the lessons of the labyrinthine journey of the
Wessex Reinvestment Trust, which started out trying to
provide credit and ended up helping people find their own.
There is some kind of symbolic modern pattern there too.
The most valuable lesson Tim’s keen to share is the
importance of having a range of skilled people on their
various boards.Two former Lloyds Bank executives who had
taken early retirement, Anthony Salt and Brian Ridley,
“have stuck with us for the last fifteen years,”Tims says.
“Brian is chair of three of the organisations and Anthony is
company secretary for all but one.They provide expertise,
but also, crucially, the links between the various parts of the
organisation. Paul and I have a practitioner background, but
Anthony and Brian are banking professionals and they have
given this non-executive role an important grounding to the
organisation – they helped evolve the structures and they
connected them up.”
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Of course, there have been lots of other key people
involved over the years, but the only one of the linked
organisations to have retained a loyal group of staff has
been Wessex Resolutions, the organisation offering the
home improvement loans. “The other organisations have
been experimental or developmental,” says Tim. “It made it
hard to keep a core staff because the funding tends to come
and go.”
So they decided never to employ staff again in their
experimental operations.They have since introduced another
company in the Wessex Reinvestment empire called
Middlemarch Associates.
Middlemarch is a co-op owned by self-employed
associates who work for any of the Wessex companies when
they are needed. Between them, they now have considerable
experience of how the interlocking organisations work best.
Wessex Reinvestment – an umbrella term – has been
ploughing a lonely but important pioneering furrow, from
showing how start-ups can raise their own share capital, to
linking housing associations up with community land
trusts to get affordable housing built (mainly for rent),
ultimately the organisation has proved highly effective as
an ongoing vehicle for local economic experiment. And if
they haven’t quite cracked the first problem they were
looking to solve: start-up loans for local businesses, it
hasn’t been for want of trying.
“We were probably too ambitious at the start, and
probably the design wasn’t right,” says Tim now. “It was
almost over-designed, it was quite complicated. I think I
learned that you need a better balance between the design
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process and organic development. In hindsight, Wessex has
gone through fifteen years of changing, closing and opening.
And I think that if you got everyone who had been involved
in a room together now, we would find we all still got on.”
Partly as a result of their pioneering work, there are
community land trusts emerging all over the country and
there are new organisations selling start-up shares to their
neighbours everywhere.That is quite a success story.
Go to Bridport now, where this tale began – and where
Tim still lives – and you will find a bustling town centre
with market stalls, tea shops and butchers, delicatessens and
bakers.There is an energy there and it is instantly
recognisable as Bridport; it isn’t a clone town. Other
organisations have pioneered some of what Wessex
Reinvestment achieved – the Aston Reinvestment Trust in
Birmingham or the London Rebuilding Society – all
providing new ways of lending to support those whole
emerging swathes of the economy where the banks find it
hard to lend.
“The community shares model has unlocked a new
financial mechanism which has become very widespread,”
says Tim. “And the Community Land Trust model is now
self-financing, because the housing associations pay a fee for
every house that gets developed. I don’t know whether our
CLT work will survive the extension of right to buy, and the
other ways in which the government seems to be trying to
undermine affordable housing, but being self-financing is
very satisfying.”
There have been other lessons too. “We shouldn’t have
taken the money to lend from the government,” says Tim.
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“Maybe we employed people to follow the rules. Maybe we
could have been more creative and got that money into
more secure assets – even though the government was
saying we couldn’t do that. Maybe we could have been a bit
more clever – but that was the nature of the businesses we
wanted to invest in.”
That’s the trouble with pioneering economics in practice.
If it was easy, everyone would do it.
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57
III Where does the money go?
Totnes
Lessons. Totnes is one of the few places in
the UK to have been able to experiment
with planning an enterprising new approach
to the local economy with most of the
town’s key institutions. They learned, for
example:
· Listen. There are unexpected assumptions
and divisions about the economic future
of any local area and it makes sense to
listen very widely to what people have to
say, even if they are reluctant to say it
to start with.
· Everyone has something to offer.
Enterprising start-ups may not need
capital as much as they need advice,
support and a range of other elements
which are usually widely available.
· Find out where the money is currently
flowing around the local economy. At
least you won’t then be flying blind
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When you manage to bring together everyone whose
responsibility it is to nurture your local economy, and
squeeze them into one room, that is sometimes an
achievement in itself.
The skills and knowledge you need to drag the economy
of a town up by its bootstraps have long since been forgotten.
Joseph Chamberlain reinvented Birmingham in the 1870s,
and used its assets as the basis for an economic revival, and
the great Victorian cities followed suit. But not these days.
These days, local economic ambition has been selectively
bred out of the local government gene pool and HM
Treasury has gathered to itself all the strings to pull and the
levers to push, and it isn’t really considered polite or sane to
talk about what the council might do to revive the economy
of the town. In some places, it is considered downright flaky.
So when Fiona Ward and Frances Northrop invited the
main organisations concerned with economics and business
in Totnes to come to a meeting back in 2011, the real bonus
was that they turned up at all. In a place like Totnes, of
course, people probably know each other anyway – but it
was still no small achievement to get the chamber of
commerce, the town council, the district council, the local
colleges and trusts, all together in the same room to talk
about economics.
In a previous life, Fiona had been a long-serving
management consultant in London, but became fed up with
it. “I had had enough of consulting,” she says now. “I found
myself constantly questioning what I was doing, who I was
making money for and whether it was worthwhile.” She
went to Australia to study environmental sustainability and
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moved to Totnes in 2006, immediately before the global
economic meltdown hit the town.
The last big employer closed in Totnes not long
afterwards, and – when that happens – it can be a personal
tragedy as well as an economic one: especially for the people
who knew it best, who may have worked there their entire
lives, and their parents before them.That was the situation
when the Dairy Crest milk processing plant shut down.
There had been a bacon factory, a timber yard, a boat yard
and, one by one, they had all shut their doors.The processing
plant was the last to go. It had been open day and night, 365
days a year. Many of the husbands and wives in the town
had met their partners there or in the social club attached.
The loss was devastating.
And it raised a question. In a place like Totnes what can
you do to claw back some control over your local economy –
or do you just have to accept what global upheaval delivers
to your town’s door? You might not be able to avoid
financial downturns altogether, but can you do anything to
make a positive difference?
Finding an answer to this question was a roller-coaster
ride for Fiona Ward, Frances Northrop and the wider
community team from Transition Town Totnes. It meant
challenging the assumptions of local authorities and
corporate lawyers alike – but it looks set to mean a major
re-invention of the economy of a market town. It might
even bring hope to towns and cities a good deal more
desperate than leafy, trendy Totnes.
**
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The idea for a Transition Town occurred to the (then)
permaculture teacher, Rob Hopkins, whilst living in Ireland.
It followed on from his work on the ‘Kinsale Energy
Descent Action Plan’, a comprehensive attempt to envisage
how, in practice, the local economy might adapt to climate
change, based on his very practical vision that the best way
forward was to get on and do something. His idea took
shape and root in Totnes partly because he moved there in
2005 and partly because, well,Totnes is Totnes. It is a
slightly anarchic place, packed with independent thinkers,
alternative and, also, surprisingly traditional. And those two
sides of the equation don’t always see eye to eye, as they were
about to discover.
In practice,Transition Towns took up the challenge that
had been left by the Local Agenda 21 movement in the
1990s. People were certainly prepared to spend time
working on a sustainable, low carbon future, but it was
frustrating when all you could do was advise the local
authority and join in with them in an ecstasy of group
hand-wringing over the lack of power to act.
Within a year the idea of Transition Towns had become a
global movement, with hundreds of examples around the
world, figuring it out as they went along. Nearly a decade
later,Totnes remains at the cutting edge of the Transition
movement, a place that is full of contradictions and
potential tensions – the divisions between wealthy incomers
and poorer natives can also be pretty ferocious.
Since taking up the post in 2011, former Transition Town
Totnes manager Frances Northrop had been at the eye of
the storm, campaigning against chain coffee stores at the
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same time as developing the ideas underpinning a new kind
of Totnes economy. Frances is from Bradford originally, a
city which badly needs a little re-thinking, and – thanks to
her very strategic ability to listen to people – some of these
contradictions are turning out to be healthier than expected.
Frances found a big welcome when she arrived. “I’ve never
worked anywhere where people have been so kind,” she says
now. “There was such a spirit of generosity, people being
generous with their time and ideas and resources – I’d never
been anywhere quite like it before. It felt like a really
supportive movement.”
What Rob Hopkins had started offered a glimmer of
hope that something could be done after all, and – in
alliance with the local authority – maybe quite a lot could be
done. But it would be done in their own way, not tied up in
Key Performance Indicators or the processes which local
government relies on, but by following a process, going with
their energy and just seeing what was possible. It would be
entrepreneurial in spirit – a stark contrast with the
bureaucratic order of the day.
**
The banking crash had already happened by then and with
the fallout came some openness to new ideas. In 2011, the
new director of the Science Museum had praised Transition
as one of the most important scientific initiatives in the
world. Over that period Transition people had also been
influenced by a series of reports by the New Economics
Foundation think-tank in London under the collective title
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‘Clone Towns’ – ostensibly a critique of the way that every
high street in the UK was beginning to look exactly the
same, but actually an attempt to launch a debate about how
money flows around the economy of a town like Totnes.
Mainstream economics is not much exercised by
questions like that. Money is money, they say, and it all adds
up to the same amount at the end. But the Clone Town
campaigners argued that it mattered very much: it could
flow straight out of the town again because there was
nowhere to spend it, bypassing the local population, or it
could carry on circulating from local business to local
business, creating jobs and prosperity.
Maybe it wouldn’t matter in the national accounts, but it
would matter very much to the people who lived somewhere
that their local economy had the lifeblood of exchange
flowing through it.The Clone Town campaigners argued
that big supermarkets tended to hoover up local spending
and send it elsewhere. On the other hand, local shops and
suppliers kept the money circulating locally.
So when, the same year that the Science Museum
director praised Transition, and Frances arrived to take up
the job of Transition Town Totnes manager, this was the
way she tended to view the problem and the potential
solution – more enterprise, more local choices, and (if at all
possible) fewer big chains.
It was the aversion to chains – the ubiquitous ‘clones’ –
which bought the key issues in to sharp relief.The problem
wasn’t unique to the UK. In the USA the issue became
focused on the struggle between local coffee shops versus
national coffee chains. Louisville, Kentucky, emblazoned
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every locally brewed coffee cup with the slogan ‘Keep
Louisville Weird’ – which might not have been understood
in quite the way it was intended in Totnes.
So when Costa Coffee announced, at the height of the
recession, that it was setting up shop on Totnes high street it
became a symbolic moment of reckoning.The Transition
Town people were in direct opposition and Frances found
herself at the heart of a campaign that was trying to
communicate a difficult message – that not all local
investment has the effect we want and not all shops have the
same economic impact.
The local campaign against Costa Coffee was highly
effective. Transition Town Totnes mocked up a
Trainspotting-style poster with local owners of threatened
coffee shops posing for the pictures. It involved the new
local Conservative MP, Dr Sarah Wollaston, who publicly
urged Costa Coffee’s chief executive to come to Totnes
and talk. And to everyone’s surprise, he did. Not only did
he come but he also realised that Costa Coffee was not
right for Totnes. Costa Coffee pulled out and the
campaign was won.
Within a couple of hours of the announcement, the
backlash had started.There would have been twelve jobs for
local youngsters.The Transition Town Totnes members were
cast as middle class incomers and accused of driving out
perfectly good investment which the locals needed. What
right had they to say what was and wasn’t needed in the
town? “The Costa campaign was really painful,” says Frances
now. “I realised I hadn’t been listening properly to what was
being said in the background.There was a time when it
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became quite difficult and I felt hideously guilty. What place
of privilege was I coming from that I had the power to do
that? It would have undermined the resilience of the local
coffee shops, that was the rationale behind it, but still . . .”
Yet the chasm that suddenly opened up as a result of the
success of the Costa campaign also had a positive effect. It
made Frances and her colleagues think more clearly and
energetically about how the local economy might provide the
jobs that people needed.“I think what it revealed was the
need to do more listening,”says Frances.“What do people
really need? They need more jobs, so we needed to provide
those things.They needed something they had some
ownership over – so that people didn’t feel that the town
where they had been for four generations was being annexed.”
She and her colleagues began thinking afresh about how
to start more businesses – not just supporting new ones, but
building on the great economic strength of Totnes and its
surrounding area: the small business sector. “There have
never really been massive businesses down here that sort of
pitch up and employ everybody,” she says and, in Totnes, the
last of these closed when the milk processing plant was shut
down in 2008.
When Frances talks about what happened next, it is
important to bear in mind how radical this idea was. If they
think about economics at all, most local authorities believe
they are pretty powerless in the face of international forces –
they can maybe attract a multinational if they can subsidise
their site in some way. Otherwise, the role of local economic
development has been reduced to begging for the funds to
build a new bypass.
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But there is a more progressive – some would say
heretical – approach to rebuilding the local economy that
derives from energy economists. From Rob Hopkins’ ‘energy
descent path’to the Rocky Mountain Institute in Colorado,
this approach imagines that concentrating on the flow of
money, and the exchange between small businesses, might
have an impact. It is an approach that doesn’t require extra
money, but it does require ways to keep the money circulating
locally, which means new enterprises. But to date it has barely
been tried and tested on either side of the Atlantic.
This theory, known in more radical, speculative circles as
‘plugging the leaks’, imagines that the local economy is a
bucket full of water, with money leaking out in the form of
imports or payments to big suppliers or utilities. Supported
by some evidence from the USA, this theory suggests that
the difference between richer places and poorer places isn’t
simply the amount of money going into the local economy –
it is how these places keep the money from leaking out again.
The challenge that Transition Town Totnes set themselves
was to figure out how they could make this work in practice.
It would clearly mean finding out where the money was
flowing now – as if Totnes was a nation. It would mean
finding out where the potential was: where were the
unused assets, where were the under-used skills, what
capacity remained dormant or under used within the
town? How could they foster more entrepreneurial spirit,
use local resources more effectively and increase economic
capacity locally?
**
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The weeds were now beginning to grow over the huge milk
processing plant site next to the station, but how to move
forward in a positive way? Fiona, Frances and their
colleagues began by inviting the people involved in shaping
the local economy together for a morning and asking them
the key question: ‘What is the local economy for?’
As we saw earlier, just getting them all together in a room
was an achievement in itself – and they came: South Hams
District Council, the town council, the Dartington Trust,
Schumacher College and the local technical college.They
met in an under-used council property in the high street
known as The Mansion, “Although people were from
different kinds of perspectives, there was a lot of consensus
that the mainstream approach to the local economy wasn’t
really working somewhere like this,” says Frances. “There
was a widespread fear that Totnes would just become a
dormitory town. Young people couldn’t stay put if they
wanted to because rental housing was really expensive and
scarce, and they certainly couldn’t buy anywhere.The average
house price is ten times the average local salary.”
The idea was to make this group into some kind of
advisory team to create an economic blueprint. “They were
going to act like community-based management
consultants,” says Fiona. “It seemed to me that if attitudes to
local economic ideas were going to be shifted, you had to
come up with a plan to do so, and you had to be credible.
You had to come to come up with plans that stood some
chance of being accepted by them.”
What was surprising about the meeting at the
Mansion was that everyone agreed immediately, without
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clashes of worldview, that the purpose of the local
economy was the well-being of everyone in the
community, whether or not they happened to be
economically active themselves. That was the next
surprise. The other was that the then chief executive of
South Hams District Council came along.
He was enthusiastic about the process and bought into
the basic idea. Fiona observed him closely and detected
what she thought was a “quizzical” look. “He could
obviously see what we were trying to do, and could see how
it was relevant, but I think the quizzical expression was
about him wondering how he was going to embed these
ideas in council strategy and action.”
The group also gave the go-ahead for economic research
leading to a blueprint for developing the local economy.
The success of the meeting reinforced their collective gut
feeling that they had to bring people together if there was
ever going to be a coherent response to these problems.
“We’re not elected or anything like that, so it’s important
that we get buy-in from people if we’re going to achieve
anything,” says Frances. “There are all these organisations
with a remit to address these needs, and they have
resources, so it felt like we needed to bring them all
together – and when you get lots of people together, you
get better ideas.”
Out of that meeting emerged the beginning of an
agreement, at least about objectives – and a determination to
move on and get local entrepreneurs together too.
But how were they going to achieve it without resources?
How would they get the business incubator organisation
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running and staff it? They asked the county council and the
Local Enterprise Partnership but, for them, it all seemed
too small-scale. But then, Frances, Fiona and colleagues
were sceptical about the idea that successful projects needed
to be big.They wanted some kind of incubator that
demonstrated what could be done with local relationships
and trust.
“In this spirit, we approached the district council who
had an empty office building who agreed to lease it to us on
a peppercorn rent,” wrote Fiona later. “So with this great
start and a far smaller budget than any social incubator fund,
only about £500, and lots of goodwill, we gathered together
some of the local businesses and asked them if they would
be interested to be part of this adventure and if so, what they
could offer in return and the response was joyous.” Soon
they had a printer, furniture, fruit, handmade shelves, ideas
and offers for training. “Of course we need some money;
even Good Energy don’t take apples as payment, but people
are happy to give that too as the sharing makes it
affordable.”
The result was the Totnes REconomy Centre and a
realisation that – even without plenty of money behind
you – you can still make progress. As a result, the first
Totnes Entrepreneurs Forum went ahead in 2012.The idea
was to bring people with business ideas together with people
who might invest in them, Dragon’s Den-style – and anyone
else around who had interesting ideas about how they might
do business.
**
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The invitations went out, lunch was included and by the
time people had begun to gather for the proceedings to
begin at 9am, the room at the Civic Hall was packed.
Jonathan Dawson, from nearby Schumacher College, gave a
talk. UnLtd, the social enterprise funder, was there. So was
the local Sharpham Trust, and the new crowdfunder
Buzzbnk. So was a local start-up called Fungi Futures.Then
there was an open space session, with people pinning needs,
wants and offers on the wall.
Four recent start-ups pitched for support – the local
credit union, a new local brewery, a new idea for self-build
housing aimed at people who couldn’t build themselves, and
a company offering wild hen nights in the woods. All four
took off as a result but it was also clear that they had not
needed investment as much as they had needed something a
bit more intangible: a bit of advice, a supportive mentor and
local enthusiasm.This remains the case for similar events in
the years that have followed.
Aware that there was still a local rift to be healed, Frances
had been working almost relentlessly, making herself
available to anyone who wanted to talk, getting up early for
endless breakfast meetings, listening, listening “until I had
figured out what we needed to do.” By the end of this period
of frenetic activity, Frances was exhausted, had developed a
nervous tick and had to go away to recuperate on holiday.
But the point had been proved.The resources were there
already, at least to some extent.
There have now been four annual Entrepreneurs Forums
in Totnes, and they have generated a wealth enthusiasm
every time – and as much success: Fungi Futures has also
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been a huge success, creating mushroom farms on urban
sites using coffee grounds. But after the first event, Frances
suggested that – instead of having the investor dragons on
stage – they should make everyone in the audience a
dragon.They could be community investors, prepared to
offer some of the more intangible support that the new
enterprises needed, alongside the investment.They have run
it along those lines for the last three years, and the events
have raised over £100,000 in investment, but have also
leveraged the more intangible investment too – anything
from home-cooked meals to looking after the children
during working hours. “Anyone can support the local
economy after all,” says Frances.
Between Forums, every other month, there are business
network meetings at the REconomy Centre. At the same
time,Transition Town Totnes was launching its ambitious
project to map the local economy. Again, you can’t overemphasise
how unusual this idea was: there is virtually no
data about local money flows because the Treasury regards
the national economy as indivisible – and mainstream
policy suggests that the best way of regenerating a rundown
neighbourhood is to encourage the enterprising people to
leave. So there are virtually no protocols, few techniques
and very little precedent for mapping a local economy in
the UK.
Fiona led the work on this and the Totnes & District Local
Economic Blueprint was published the following year. It
began by setting out the painful closures, “Over the years
Totnes has had its fair share of such experiences,” said the
report, “including the closure of the bacon factory, the
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timber yard, the milk processing plant and most recently the
art college. However, there is another economy alive here,
one that gives it some true resilience: a large web of
independent, often family owned, small businesses, 71 per
cent of which have less than ten employees.”
The broad outlines of the report weren’t that surprising –
there was scope to regenerate the local economy by
maximising the generation of renewable energy, retrofitting
insulation into local homes and by making a more effective
health and social care economy – but it was the projected
figures which revealed the local regeneration potential.There
was £30 million a year being spent on food in the Totnes
area, by a population of around 34,000 people, and £24
million of that left the local economy through two small
supermarkets – Morrisons and the Co-op.This meant that,
compared with some places, the Totnes local food economy
was pretty strong. But imagine if just ten per cent of the
money spent in the supermarkets, which leaked out of the
local economy, could be spent on Totnes businesses – that
would be an extra £2.4 million coursing through the veins of
the Totnes economy.
“Most of that £6 million gap is in a single supermarket
which stocks no local food at all even though it is in the
middle of some of the most productive land in the country,”
says Fiona.
Most of Fiona’s research came from analysing published
information online, but some of it was still what she called
“quite breath-taking”. Especially, perhaps, the details about
the inadequacy of some local housing – the cold and damp –
and associated health risks.
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The Blueprint report also indicated what could be done.
Again, it wasn’t clear where the resources would come from,
but it was clear they needed some kind of street market,
which could feed local retailers testing out ideas for the high
street. But where? And where would they get the investment,
let alone the space, for the workspace they would need to
underpin a genuinely energetic local economy?
“It was clear to us that we really needed some kind of
access to local land and buildings,” says Frances. “But it was
difficult in Totnes because most of the high street is owned
by investment companies and a lot of land around town is
owned either by the Dartington Trust or by the Duke of
Somerset. “Maintaining land values was the way these two
landowners paid their way, but that was also having a
knock-on effect – corroding the economic resilience of the
town whenever they sold land to developers, who would
then build little box homes which nobody local could afford.
The planners were too weak now to be able to provide the
workspace that was needed, even if they had wanted to.
“What started as an economic strategy for the town
became more a question of how we could become our
own development agency,” says Frances. It was this kind
of strategic thinking which fed into what became the
Atmos Project on the site of the old dairy plant by the
railway station.
**
The REconomy blueprint process was also carried out in
Brixton and Herefordshire, to understand how it might
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work in very different neighbourhoods.The materials have
been translated into Italian and similar processes are going
on there. Fiona has moved on to hammering out a better
way of delivering health and social care locally, in an alliance
of 70 local groups called Caring Town Totnes. Frances has
moved on to co-ordinate the Atmos project, the ambitious
plan to show that a community led development can turn an
old, redundant site into the beating heart of the local
economy.
The parallel case to Atmos was the sale to local people of
the prime Coin Street site on London’s South Bank in 1985,
buying it from the Greater London Council – the very day
it was wound up by Margaret Thatcher – for less than a
nominal pound (it is now worth more than £3 billion).
The Coin Street project has been a huge success and one
of the most successful examples of what used to be called
‘development trusts’ – locally controlled organisations which
would take ownership of some tangible local asset and use it
to create wealth for local people.The model had been set out
by the North Kensington Amenity Trust (now the Westway
Trust), which in 1971 became the owner of all those
different bits and pieces of land that nobody wanted around
the site of the Westway flyover on the A40 – technically
called SLOAP (Space Left Over After Planning).
Using those assets, NKAT paved the way for community
development which used their own resources and developed
local skills. Coin Street did the same. Maybe Totnes could
too. And as it turned out, the old Dairy Crest site by the
station was a good news story. A third of the site was sold
immediately to the Totnes community for £1.The
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agreement for this and the rest was finally signed on 1
October 2014, giving the new local trust the space to raise
the development money they need.This story continues.
What the Totnes experience demonstrates, along with so
many of the other things that have happened there in recent
years, is that there is imagination and entrepreneurial energy
at the heart of the town – and maybe every town – which
can be unleashed to great effect if support, space and
investment can be made available.The new team at
Transition Town Totnes are already doing an audit of
buildings in the high street to see if they can find a couple
of shop spaces, and so it goes on – step by step: a pioneering
economic experiment to see if it is possible to revitalise a
local economy from the bottom up.
It is only the beginning, but the various local authorities
are now supportive, and – looking back – Frances feels that
the encounters with officials or mainstream professionals
have been important too. “In our world, we tend to spend
time with people who agree with us, so meeting people who
don’t agree – who don’t see the same magic as you do – is
quite good for you,” she says. “If they don’t get it you have to
say to yourself – ‘well, this is what we’re dealing with’ and
you have to re-group and find a way to make the case to
them. Because it’s important that they understand.”
As a result of what they have achieved so far,Totnes has
become a testbed for combining a range of local economic
ideas – tried and successful elsewhere – now brought
together in one place.They range from enterprise coaching,
like the successful BizFizz coaching projects, to `plugging
the leaky bucket’ with new businesses. And at the same time,
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working hard to support the growing band of new
enterprises – Fungi Futures, for example, is now using a
disused office block in Exeter to grow their crops.
Transition Town Totnes’ major contribution so far has
been the REconomy Blueprint and the Entrepreneurs
Forum, which has also now spread way beyond Devon. Both
imply a different way of doing economic development – not
building marinas or luxury flats in the hope that a little of
the benefit might trickle down – but having a look round
for what is working. In all their economic projects in Totnes,
the lesson is the same, says Frances: “Build on what you’ve
got already and maximise it.”
Funnily enough, this means there isn’t a one-size-fits-all
blueprint. Each place will have to go about their experiment
in a way that fits their circumstances, aware of their own
distinctive strengths and weaknesses –building the
institutions and processes that can make things happen. “It
isn’t really about what it will look like in 2025, or KPIs (key
performance indicators) or blueprints. It’s about following
the process and following the energy,” Frances says.
Totnes isn’t listed on any of the official indices of
deprivation.They are not having government or European
money thrown at them, and probably never will. In
paradoxical ways, that gives them some advantages. Frances
inevitably wonders whether anything similar might be
possible in her native, desperate city of Bradford. “You
could imagine a coherent response like this that came from
the grassroots,” she says, “but my friends there are hugely
frustrated by the inability of the city council not to try and
do everything.”
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But even in Totnes, the group’s motives were questioned,
“The people who lived here were quite suspicious of
Transition Town Totnes,” she says. “People were afraid they
were being judged if they weren’t using bikes, or shopped at
Morrison’s – and they weren’t altogether wrong. But when
we talked more broadly about local self-determination and
ownership, there’s not so much to argue about, and people
can see that.They know Transition Town isn’t a replacement
for the state, but that some things are much better delivered
locally – and that there are also still things that the local
authority must retain responsibility for.”
The REconomy idea has already travelled to Brixton,
where there is a project to work out what innovations are
needed locally. Can they adapt the idea of Community
Supported Agriculture (see Chapter IV),where locals buy
into the local farmers’ crops, providing them with the money
needed to grow the food in return for regular produce.
Could community supported production, or community
supported enterprises, be a way to tap into the
entrepreneurial energy that exists in our communities?
Those involved are keen to explain that Totnes isn’t unique.
It is true that it tends to get dismissed by policy-makers
simply because it isn’t quite like other places, but it may be
that there are lessons there about entrepreneurial energy that
could make a difference anywhere.Watch this space.
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77
IV Growing a new kind of
economy
Manchester
Lessons. The Kindling Trust underpins an
immensely energetic and ambitious series of
endeavours and institutions which are slowly
shifting the Manchester food economy. Due to
their sheer drive, understanding them can be a
tiring business, but they have important
lessons for other, related ventures:
· To tackle a seriously complex problem,
you have to intervene at all levels at
once – otherwise it stays complex.
· Food and its development and production
is absolutely central to any kind of
revival of local enterprise.
· The involvement of the public sector in
food procurement can have a huge impact
on the local economy, for good or ill.
In the final decade of the last century, a youth movement
erupted across Europe below the radar of conventional
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politics. It had its own music, its own fashion and its own
heroes – Swampy was its poster child, gracing the front
pages of all the colour supplements for months – and it was
enormously effective. Across the continent, Earth First and
the other anti-motorway protest groups stopped the
European trunk roads building programme in its tracks with
a combination of direct action, determination and some
strategy. It has never really restarted.
Helen, Chris, Cath and Jane were amongst the small
groups of protesters from colleges across Manchester–– they
criss-crossed the nation from direct action camp to direct
action camp, whenever they had time to join in. It was a
tough life, from Twyford Down to the Newbury bypass, to
the north of Scotland, but it was certainly effective. Not that
they were central to the struggle, but they identified strongly
with the protesters and supported the action on the ground
when they could.
The challenge was always thrown at them, as it usually is
at people who feel very strongly that certain developments
will have a profoundly negative impact, that they could be a
little more positive. I know what you’re against, they would
say – but what are you for? Can you create as well as
disrupt? That is a reasonable question, but for Helen
Woodcock, Chris Walsh and their friends it didn’t apply.
Because of all the entrepreneurs one might meet in the
average lifetime, there can’t be many who are as
entrepreneurial, as strategic, as hard-working and as
ambitious as they have been.
Twenty years after being released from temporary police
custody for their proximity to a road protest in Scotland,
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Helen, Chris and colleagues have hammered out a strategy
designed to turn the food economy of Manchester upside
down and inside out, and have made huge strides towards
achieving it. And in the meantime, they have created an
engine that puts work on the land, produces crops in and
around the city, has built a customer base and – in the
meantime – oh, yes, they bought an old five-storey silk mill
and employed and trained local unemployed lads to
eco-refurbish it.
The wider body of new institutions they have set up and
nurtured, latterly through the Kindling Trust in Manchester,
has made all this possible. Willing this new sustainable and
organic food economy into existence has taken every ounce
of energy and imagination they possess.
“I did that thing as a student of thinking that the world
was rubbish – and then having experience of people saying –
yes, it’s awful, but you can do something about it,” says
Helen now. So she emerged two decades ago with a degree
in applied community development – the only course she
could get on after messing up her A levels – plus a lot of
determination and a criminal record, thanks to a spot of
bother about the new M77 being driven through the Pollok
Country Park in Scotland, involving the so-called ‘Pollok
Free State’. But what really interested her was growing food.
She had been doing a little bit of growing with a local
secondary school, with a group of pupils excluded from
design and technology, and missed a lesson thanks to her
arrest. “I explained it to the children afterwards and they
couldn’t believe I was choosing to be there,” she said. “Their
friends got arrested for other reasons.They kept asking me:
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what’s the alternative? We realised it would be really great to
have a positive example in Manchester of the new world we
were talking about.”
This was the new world of food. Being interested, as so
many of the generation that became politically aware in the
1990s are, in growing things as a radical response to food
poverty and monopoly, Helen became determined to take
Manchester’s food economy by the scruff of the neck. It
seemed ridiculous to her, then and now, that farmers were in
food poverty, yet consumers pay supermarkets to supply
wasted food, going out of date, to poor people. And the
poorest people had no access to fresh food either. Something
needed a bit of re-thinking.
This was the idea she nurtured, but her friends
wanted to start by launching a resource centre. This
became the Manchester Environment Resource Centre
known as MERCi, still going strong two decades later.
Then there was a plan to take over something bigger,
and the four of them – and a wider group of allies –
raised the money to buy an old silk mill in the rundown
neighbourhood of Ancoats, the industrial suburb
immortalised by L. S. Lowry. Bridge 5 Mill had been a
lads’ club and was then a warehouse for children’s
furniture. It was filled to the brim with cots and high
chairs, the owner agreed to wait for them to raise the
money and soon the Mill was a centre for sustainable
living, plus offices and conference space.
Finally it was time to think about her project.There was a
kind of tacit agreement between Helen and Chris that,
having set up MERCi, they would then collaborate on food.
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“He probably regrets that now,” she says. “I think we only
thought it would take a couple of years.”
At this point, ten years after they had first launched
MERCi, Helen departed for Guatemala for a year with
Peace Brigades International. She came back in 2006,
inspired by what she had seen – the participative approach
in action and the central importance of the land.
**
The bundle of endeavours and new institutions that
emerged from MERCi began quite small. But there was a
problem.They were increasingly aware of how little they
knew about growing, compared to what they needed to
know. “There was still this little group of the four of us,” says
Helen. “We realised we had all grown up in cities. We didn’t
know very much about rural issues. We thought: if we go
into a rural area, they’re all going to laugh their heads off.”
As a solution, Helen went back to university – doing a
distance learning course in organic farming at the Scottish
Agricultural College in Aberdeen, on top of all her other
activities. At the same time, Chris had been setting up a
composting business called Fairfield Materials Management.
In fact, although they may not have known quite as much
as they might have liked about food production, Chris and
Helen and colleagues were actually building up an
impressive record at something equally important.They
really knew how to start businesses and institutions and they
found they could earn money as freelance business advisors
for new social enterprises.The personnel were changing –
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Matt, Emily, Alison and Anna all joined in, and later Debs,
who came from another organisation that would turn out to
have a vital role to play: the Manchester-based organic
wholesale grocers, Unicorn.
Chris and Helen were advising other social enterprises,
Matt was running a thriving social enterprise and between
them they were using the proceeds from all this to do their
real work – which was launching the Kindling Trust and
re-organising the Manchester Way of Food.They were
paying themselves, when they were paying themselves at all,
at the minimum wage (as they still do).
Helen is fabulously optimistic, but even she occasionally
has down periods. At one stage – towards the end of her
time setting up MERCi on no money at all – she realised
she was waking up every morning in tears. “This really good
friend of mine asked me to imagine, if things had been
different, what I would have done with my life,” she says,
“And I said I would probably want to grow veg and
basically I described my life, but without owning a massive
building and worrying about everybody.The truth is that,
when you believe in it and want to live like that, then what
else would you do, except deal with the challenges? But it is
knackering sometimes.”
Now, once again, it was tough and something had to
give. “It became clear that we needed a bit of funding,”
says Helen. “There was just too much to do, and on top of
everything else, I was doing an MSc. We just couldn’t fit it
all in.” The first money they raised, and the first
production by the Kindling Trust, was for a seasonal food
calendar.
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It may sound rather as if Helen and colleagues were
starry-eyed idealists. In some ways they were, but what has
made them so unusual is that they combined that idealism
with a degree of hard-headed pragmatism which allowed
them to see some of the blockages clearly and
unemotionally. Helen’s MSc took her on a short placement
with a commercial organic grower who had only just begun
to make enough to pay herself the minimum wage. Helen
subjected her crops to intricate analysis and found that only
one of them was actually making a profit.
The more work she did, locally and on organic growing
elsewhere, the more the problems were becoming obvious.
The same or similar stories could be told for many of the
similar small-scale commercial growers. Even in and around
Manchester, where there was at least the south Manchester
Unicorn Grocery co-op to be a customer, the situation was
seriously creaking. “We got to know other local organic
growers, and they were saying it was really hard to find a
market in Manchester,” she said. “There were organic cafés
and restaurants saying that they sourced locally, but often it
could just mean they were buying from the local wholesale
market and it could have come from, well, anywhere.”
It was a ludicrous situation.The local growers couldn’t
find a proper market, but there was a market there
potentially – and yet the restaurants were saying they
couldn’t source the stuff. It was at least something that the
Kindling team could work with.
So the next institution they set up was designed to find
out how they could join up the dots. Feeding Manchester
set out to research the buyers – and potential buyers – and
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find out why they weren’t buying more, and research the
growers, activists and food campaigners too – and find out
what challenges they were facing. What were the obstacles
to bringing these different sides together? In 2009, Kindling
Trust was two years old, and Feeding Manchester brought
representatives of all sides together in the same room at
Bridge 5 Mill, to hammer out the problems and come up
with solutions. It was so successful that the Kindling team
were prevailed upon to agree to hold three similar events a
year, just to check on progress.They have been doing so ever
since and the objective is always the same – and it isn’t
unambitious: it is to design and build a new food economy
for the Manchester region.
Their next institution emerged out of this meeting.This
was the Greater Manchester Land Army. One of the
problems that the organic growers face – as do small farmers
the world over – is that the moment when their crops are
ready for harvesting is also the moment their cashflow
finally runs dry, just when they need to pay out for the
labour of digging. Very labour intensive jobs can make the
price of a crop unaffordable: if you get a season when
raspberries are all ready at once, paying reasonable wages to
come and harvest it would price them off the shelves.
Again, this was a matter of identifying the problem and
plugging it with a resource that they also turned out to
have – a growing number of people who wanted to get
involved in the land and who wanted, maybe, to be growers
themselves. So the Land Army is an army of volunteers,
comprised of people who want a taster of life on the land.
They get deployed when the harvest needs bringing in, or
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when other jobs need doing that growers just don’t have
time for, but can’t afford to pay people to do.
All these new institutions called for a lot of discussion:
they had defined ‘local’ as meaning within 30 miles, but it
was already clear that this made no sense.There were only a
handful of organic growers within 30 miles – the radius
would have to extend to 50 miles and then a bit further still.
But these were details.The important element was that
growers and buyers were beginning to understand each
others needs and to work a bit better together – maybe
buyers would even be prepared to pay a fairer price. And
growers would always be aware, of course, that – if the price
got a little too high – buyers would go elsewhere.
Their third institution emerged from all this debate and
partly also in response to Helen’s dissertation on all the
different examples of food systems around the world – what
worked and what didn’t. And as they talked to the growers
and buyers, other issues began to emerge. It transpired that
year that most of the small local growers had planted kale
the previous season. It happened to coincide, as well, with a
period when the price of kale was suppressed. “Everyone
was saying: this is totally insane,” says Helen. “There must be
a way of co-ordinating better.”
There was a better way.They created Manchester Veg
People, a co-op owned and managed by the growers, the
buyers and the workers. Its task is to expand the customer
base for locally grown organic food, not just into restaurants
and cafés, but also into the public sector too.
The new organisation was a response to growing as a
“massively risky business”, as Helen puts it. In a nutshell,
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there is little understanding between the two sides, and none
at all from the mainstream food system, which carries all the
power and none of the flexibility.The amount that the small
growers get paid is unreasonably low. Worse, the growers put
in exhausting, back-breaking work for almost nothing, and
yet they find it extremely hard to expand because they have
little or no access to capital and they can’t get hold of
enough land.
**
It is worth pausing here and wondering why, given the
constraints, food – and organic food in particular – has
become such a pillar of new thinking about economic
revival. It may be that, despite these huge constraints,
small food producers are pushing at an open door. People
want fresh, authentic, local food. They want it for its
health benefits and for the sheer delight of eating it.
And they are prepared to pay a little extra for it – if it is
good enough. Not everyone, of course, but enough of a
growing minority to fund a niche – and a niche which
looks set to grow.
That may not make much of a difference to the economy
in the early stages, but when a range of new food businesses
have been established – feeding off each other in more ways
than one – there will be more money circulating locally,
more skills being deployed, more of a sense of local identity
and more delight taken in eating good food, as places like
Ludlow,Todmorden and Bridport (see Chapter II) have
discovered.
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The big issue – as Helen, Chris and their colleagues
discovered – is that there needs to be institutions that can
help those businesses develop, whether they are financially,
logistically or administratively focused.There needs to be
space or bakeries or slaughterhouses under co-operative or
local control, there needs to be new ways of paying for
things.The development of the first Community Supported
Agriculture (CSA) projects in the USA blazed a trail that is
beginning to catch on here as well (see Chapter II).
CSAs, like the first one, developed in 1997at Indian Line
Farm outside Great Barrington (Massachusetts), by Robyn
van En and all those who came after her, began to solve the
basic financial difficulty of small farmers – that they need
their finance up front: so people subscribe to vegetables
rather than just buying them.
CSAs are effective in rural areas, but what about a city? In
an urban area, the obstacles are even greater.This is where
Manchester Veg People came in. It would plan crops
co-operatively. It would set fair prices, rather than depending
on world markets. It would support members to grow, sell
and buy the stuff and support the various small growers to
farm more effectively. And, crucially, it would negotiate
prices that were low enough to sustain the market, but high
enough to make production possible in the first place.
This was relatively straightforward if you were only selling
to Greater Manchester’s high end restaurants, but if you
wanted to break into the public sector – and poor people
have the right to fresh healthy food as well – then the prices
couldn’t just go up. It also had to be affordable for the public
sector to adopt it for their sourcing requirements.
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Helen’s first pilot in a school dated back to the very
beginning of the Kindling Trust in 2007, where they
provided soup every day, but the variety was too small and
the local authority didn’t accept their recommendations to
expand.
“It is very hard to work with the public sector,” says
Helen. “They’re lovely, but it takes so long.” Even so, they
have stuck with this problem and have now linked up with a
secondary school in Stockport along with the University of
Manchester halls of residence (one of the first members of
Manchester Veg People). So there is progress. And they now
have the Manchester Fire Brigade within their sights too.
**
Helen and colleagues have always tried to work on all fronts
simultaneously, not because they wanted to take it on, but
because the problems they were trying to solve demanded
this approach. Soon enough another obstacle rose to the
fore: they needed more trained growers.There were
increasing numbers of people coming forward who wanted
to grow food commercially, but almost no land – certainly
no way of starting off small and finding out if it was the
right path to be on.
The Kindling Team set up an intensive course to meet the
demand, starting with how you build the soil and carrying
on with how you deal with pests.They roped in people they
knew to run it. Salad growers ran some days and Jenny
Griggs of Climate Friendly Food ran a four-day intensive
introductory course, twice a year.
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But even the intensive course wasn’t really enough.
How would the new growers get on the land at the end of
it? How would they buy tools or machinery? How could
they get some kind of ongoing mentoring? Kirstin, who
was working with Kindling at the time, told Helen and
Chris about a model which has started in Canada called
FarmStart. It is an ambitious five-year programme which
starts people off with an acre, then provides them with
mentoring and support with machinery until they are
managing about five acres. As always, they asked around
their networks, and Manchester Veg People’s organic egg
supplier Abbey Lays Farm was prepared to rent them
some land.
By Autumn the following year, the programme had
begun with its first few students.They managed to get a
donation to buy an old shipping container to put the
equipment and other detritus of agricultural life in but
otherwise were teaching the course in what was left of their
spare time, with no funding.
The course is now in its third year, but it wasn’t until its
second year that they realised it was impossible to manage
without someone to run it.They succeeded in getting
funding from the Prince’s Countryside Fund and the A
Team Foundation, and they employed a part-time
co-ordinator. Now the co-ordinator is full-time and they
have a second site, this time in Stockport.They also have
twelve FarmStarters.
“Some of the FarmStarters drop out and that’s totally
fine,” says Helen. “It’s as much a success as carrying on. You
don’t want people to invest or borrow money and then find
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they hate it. I’ve seen growers do that. FarmStart helps them
know what it’s like before they go into it. Why on earth
would you go into organic farming as a young person, and
spend ten years doing 70 hour weeks and still not be able to
pay yourself properly – you have to really want to.That’s
why we want a Kindling Farm so that it doesn’t have to be
like that.”
That’s the level of ambition at work here: their own
Kindling farm.
**
The Kindling Trust today is innovative, imaginative – and
overstretched, but believing that there is an opportunity to
manage all their projects in such a way that they begin to
overlap and feed off each other.They now have:
· Feeding Manchester, a series of events looking at
strategic ways to increase access to sustainable food in
Greater Manchester.
· The Feeding Manchester website, where anyone who
loves food and wants to eat sustainably can find
information about buying, growing, cooking, eating
and loving local fresh produce.
· Forgotten Fields, a collection of projects across
Greater Manchester celebrating and learning from
the region’s food heritage (this project has now
finished).
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· The Greater Manchester Land Army, the collection
of volunteers who support local organic growers and
farmers, and get a taste of commercial organic food
production.
· Manchester Veg People, the co-operative of local
organic farmers producing food for Greater
Manchester, the buyers they supply and the co-op
worker team.
· Sustainable Fayre, the project to increase ‘low-carbon’
food in Greater Manchester via school meals.
· Veg Box People – a veg box scheme supplying fresh
local organic veg to Manchester residents, and linking
them to the producers and other Kindling projects.
· FarmStart Manchester, the UK’s first organic
incubator farm, aiming to grow to growers to feed
Greater Manchester.
· The Commercial Organic Horticulture Training
project, courses run by local growers, aimed at those
wanting to move into a career in horticulture.
“The idea is that it is all sort of linked in,” says Helen.
“Ideally, schools start buying through FarmStart; they come
and visit and get people to understand how we need to
change the way we produce food. It is all connected.Then
there is the veg box scheme we are running through our
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GROWING A NEW KIND OF ECONOMY
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relationship with the university, which is still being funded
but the number of customers is increasing, amazingly
Manchester Veg People’s sales were up 35 per cent last year.”
I asked Helen what their main problem was, and she was
pretty clear – it was rabbits. It is easy in these circumstances
to get overwhelmed by the details of each project, since
they are now working flat out on a whole series of projects
which might take the careers of ten or twenty lesser
mortals. But Helen tries to keep the ultimate objective
always in mind.
“We need to move towards what we always wanted to
do,” she says, “which was to get as much land as we possibly
could, keep it in trust for sustainable production, and to
show that on a large scale – and totally realistically – you
can supply a city the size of Manchester. Not with all its
food, but working in a sustainable and co-operative way,
with much better food. And we have got money beginning
to flow around our food economy. You can see it already –
we have our growers saying their sales have increased so
much that they can invest in new packaging shed, or a new
site. We need more land, but it’s a beginning.The strategy is
still to take a small but complete section from producers to
people eating it, and then try and get it right, and – if it
works – you can scale it up. Our model is by no means
perfect, but it is starting to work.”
It looks economically sustainable, but is the driving force
sustainable? It is an important question, because
entrepreneurs need to protect themselves and nobody could
work as hard as Helen, Chris and their colleagues for any
sustained period of time.
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“My hair has gone grey very quickly in past few years,”
she says. “But it’s still very exciting, and we are now paying
ourselves the minimum wage, and we pay everyone else £8
an hour.” Pay is a difficult issue because, although food
producers deserve to be paid properly, they are up against a
food production system in the mainstream that pays people
scandalously little, and often produces staples at a loss.
“We didn’t want to find that we couldn’t replicate what
we were doing,” says Helen. “But, at the same time, we don’t
want to pay ridiculously low salaries.The issue is how you
support other people to take part in producing food without
making it too expensive.”
For the people behind the Kindling Trust, the irony is
that they went into sustainable food production and have to
spend most of their time behind the computer, managing
things. So, on top of everything else, Helen, Chris and
Corrina Low (the Land Army co-ordinator) are so aware of
the gaps in their horticulture knowledge that they are now
students on their own FarmStart programme.
“People are not going to be able to shift into being
growers without starting off while they are working
somewhere else,” says Helen. “So we don’t just need to know
how to do it, we’ve got to show how we can do it on top of
another job. People on the course have got to be able to do it
and to generate an income from something else; we need to
show we can do it without collapsing. Everyone knows that
growers earn the minimum wage if they’re lucky. We don’t
want to get used to living off big wages on grants, and then
find it’s impossible to survive on the minimum wage again
once we become commercial growers ourselves.”
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They set up MERCi and Bridge 5 Mill when they were
on the dole. Both of those are now independent, though the
Mill still needs funding. Now they are at least paying
themselves something, but are only too aware that they are
still scratching the surface. As Chris told New Start, the
amount of local veg it produces is still ‘minuscule’.To really
gear up the sustainable food economy, they need to forge
close partnerships with public sector organisations and build
links with local primary schools, for example.Then they can
put into effect plans to provide good quality local organic
food for the same price as the school’s less healthy menu –
without cutting corners on the amount farmers are paid.
“If you cut meat consumption by a third and use only
seasonal vegetables, you can make all the ingredients
organic,” he said. “When we scale up we can provide that
good food to them at the same price.”That is how they now
supply the University of Manchester and it is the basis of
their pilot with the secondary school.
**
Cornwall was the first hospital to experiment with putting
high quality local food on the menu, in an experiment
managed by the New Economics Foundation. When the
Royal Cornwall Hospital at Treliske in Truro bought local
ice cream, instead of the stuff trucked in at great
environmental expense, they found that although it was
more expensive, when it was put out for patients it tended to
be eaten – because it didn’t melt so fast waiting on people’s
plates.They were also sourcing fish all the way from
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Scarborough. So the question is – why can’t the public
sector source reasonably priced food locally, and – if they
do – can this be used to raise the levels of people’s
prosperity? Or are there reasons why they are stuck with
commissioning big, distant companies?
“We think it’s a model that can make food production a
sustainable livelihood for people, sustainably and
ecologically,” says Helen. “It can give access to fresh food to
much wider groups of people – including people who are
really struggling to pay the bills.That’s why we are now
going through the public sector. Because we have to make it
accessible to everyone.”
As always, Helen is excited at the first sign of a public
sector thaw. “Yesterday, I did my first tasting at a secondary
school in Stockport, and I was really excited about it,” she
says. “We are working on the menus to get lot more veg in,
and we are linking with Manchester Veg People, working
hard to see how we can do it without putting prices up.”
She had been taken aback by the enthusiasm the
teenagers had shown for vegetables. One little girl had said:
“Today, we have discovered a treat; it was lovely.”
“It is amazing that we are working with two schools and
are being approached by the Fire Brigade,” says Helen.
“Farming, teaching and putting out fires are just
fundamental careers – so it would be great to link those up
through food and fairness, everyone deserves to eat well and
to have that choice and that access to food.”
The progress is tangible.They are supplying food to the
Manchester University halls of residence.They have 50 or so
customers using their veg box scheme, plus all the children
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eating veg in their school dinners – over a thousand of them
in the Stockport school they are now working with.
Although Helen’s natural set point for optimism is high, the
task remains daunting. Building a virtuous economic circle
by growing both supply and demand, and to do so in some
kind of tandem, is no mean feat. Helen believes they have
one major advantage.
“The mainstream model of food production doesn’t work.
It holds on, but there is no reason why it does so except for
the fact that it exists,” she says. “Everyone I talk to says that
our model sounds like a better idea.The problem is just how,
logistically, you get from here to where we want to get to.”
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97
V Imagining the world
differently
Digbeth
Lessons. The Digbeth Social Enterprise Quarter
is a phenomenon. It isn’t clear why so many
social enterprises have started up in such close
proximity to each other, though there are
possible reasons suggested here. Other lessons
include:
· The importance of being aware of what
assets you have locally, what small
enterprises exist and how much business
they can do with each other – local
connectedness creates a strong
foundation for trust which can be built
upon.
· Having some kind of business support
and mentoring institution to support
ventures like this is key.
· If food is a vital ingredient in the revival
of local enterprise, then who is doing
your cleaning, your printing and your
marketing, for example?
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The late Anita Roddick, founder of the Body Shop, used to
say that what made entrepreneurs different wasn’t that they
were hungrier, more clever or more ruthless than anyone
else – just that they could, as she put it, “imagine the world
differently”. It is a difficult area for economics: how do you
encourage more of them? Better pay? Better training? Or
more imagination, more creativity in schools?
Actually, there isn’t nearly enough debate about this.
Conventional economics suggests that a small tweaking
in the potential rewards for start-ups would encourage
more punters. The various business coaching schemes that
emerged in disadvantaged areas in the first decade of the
century, suggested that you needed to address the real
barriers – lack of childcare, lack of confidence. Either
way, the government’s favoured method – ubiquitous
training in writing business plans –seemed to be missing
the point.
So after the coalition government was elected, it wasn’t
quite as surprising as it at first appeared that one of their
first acts – in their overall efforts to cut government
spending – was to wind up the target-driven Business Link
network. It wasn’t exactly mourned, but funding to deliver
Business Link had allowed a number of much more
innovative enterprise services to keep going. Soon after
2010, government training support for business start-ups
stopped completely.
It hit some corners of the social enterprise support sector
quite badly, but spare a further thought – especially for
those voluntary organisations in Birmingham. A slow burn
major financial crisis had come to a head there a decade
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ago. A series of landmark rulings determined that the city
owed back pay to thousands of underpaid cooks, cleaners,
dinner ladies and care workers, funding for almost
everything dried up overnight. One of those organisations
which lost business training funding was iSE, the Initiative
for Social Entrepreneurs, based in the rundown inner city
area of Digbeth.
Digbeth was, and is, an unusual district, one of the first
parts of Birmingham to be settled, with a seventh century
market next to the River Rea. It is highly diverse culturally, a
wide expanse of red brick former industrial buildings, many
of them crumbling or overgrown, yet close enough to the
city centre and the new skyline of Birmingham to walk in
for lunch.
Perhaps it was this proximity to the city centre, or the
sheer diversity of the place and the space coupled with low
rents. Perhaps it was also the existence of iSE, based in
Digbeth since 2000, which has made such a difference.
Whatever it was, Digbeth has become one of the biggest
and most diverse concentrations of social enterprises
anywhere in the UK, with more than 70 of them – from
food (ChangeKitchen) to healthcare (Health Exchange) –
trading with and supporting each other for their mutual
benefit. People are beating a path to Digbeth to see for
themselves, and from all over Europe,
How did the Digbeth Social Enterprise Sector emerge
from a series of cancelled grants and a local financial crisis?
The answer lies in iSE.
**
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It all began in 1998, when Sarah Crawley and her colleagues
first launched a European Commission development
project, two years later iSE was created to manage it.
Sarah had arrived in Birmingham as a student at Aston
University. As a young graduate, she cut her teeth in
community education, going door-to-door in the city, asking
people if there was any learning they needed to do. It
convinced her, as much as anything else, of the regenerating
power of self-help. “Using the power of people to address
social issues is something that is in my blood,” she says now.
“You wouldn’t do this otherwise. You wouldn’t get it.”
Working for Birmingham City Council, in the economic
development department, she was given responsibility for
meeting equalities targets and especially the challenge of
providing some kind of access to employment for disabled
people.This has never been exactly easy and, it was when she
was looking for potential solutions from elsewhere in
Europe that she discovered ‘Social Firms’.
This was the title given to the class of business set up in
various places around Europe to offer employment to
disabled people. ‘Social firms’ was how they were described
at the time, but a wider category of innovative businesses,
which had been emerging since the 1980s – originally in
Glasgow –were taking the same approach: business as a
means of tackling disadvantage and deprivation.The first
social enterprise was perhaps the first co-op in Rochdale, in
the 1840s. In recent times, John Pearce and Strathclyde
Community Business, based in the outlying estates of
Glasgow, Easterhouse or Crownhill, started the social
enterprise ball rolling.
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At a time when it simply wasn’t attractive for businesses
to set up in some of these most impoverished inner city
places, there were still needs which could be met as the basis
for a business that might employ local people. Whether it
was for food or laundry or something more fundamental,
business opportunities did exist – not to make a profit – but
to provide local people with an income.
In this first wave, in 1978, the first social enterprise was a
community laundry and the movement spread out from
there.This was the history that inspired Sarah, and – aware
that social firms were not operating very widely in the UK,
the original European bid was designed to share
continental experience and start laying the foundations in
and around Digbeth.
A recent clear-out in her office uncovered some of the
materials they produced in those early years, a cassette tape
with the slogan ‘Team iSE’, which showed that they had
begun to think about how to market their services to people
who might already be thinking of starting some kind of
venture. With this kind of material, Sarah ran the European
project from the council, successfully applied for a second
round of funding, helped set up iSE and then left to become
a consultant.
It was five years later, in 2005, that the then chief
executive of iSE left and Sarah was asked to take over. She
enjoyed the challenge. “It does change people’s lives,” she
says. “I found that we could have a greater impact working
with other organisations than you can on your own, you can
help make organisations stronger and better. Also I like the
intellectual challenge – because it’s hard.”
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As anyone with direct experience knows, this kind of
intermediate support organisation is hard to run. You have
to stitch together core costs from a multitude of small
grants. You have batteries of competing and often
conflicting targets, deliverables, indicators and guidelines.
Funders don’t leave you alone and they only like innovation
in certain, rather narrow – and measurable – circumstances.
Social businesses are also harder to run for other reasons,
says Sarah. “We employ people who might not otherwise
get work and at the same time we have to deliver effective
contracts – and help businesses that are already out there.” It
isn’t about competition. You have to be collaborative and
work with the material around you. You have to keep your
eye on the main objective, but still be flexible enough to
grasp opportunities when they arise.
Sarah knew how to do this – and iSE thrived. “We’re not
bad at what we do,” she says. “Trying to understand how to
support social enterprises gives me enormous pleasure”. In
this case, lack of money brought innovation. After 2010
Sarah and her organisation faced the imminent loss of their
training contracts.There was some urgent thinking to do.
**
A quarter of a century since the first UK social enterprises
emerged around Glasgow, the social enterprise sector has
developed enormously. Not-for-profit companies of various
kinds, from mutuals to ordinary community interest
companies, increasingly became recognised in law. As much
as £4 billion in public services were being delivered by social
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enterprises, just in health and social care, but the statistics
didn’t show current reality because of the variety of ways in
which social enterprises were being defined.
Then, in 2010, when the central government training
money dried up, and the city council faced its own
difficulties, Sarah and colleagues began to think about how
they might maintain their support service for social
enterprises. Local government was also beginning to think
differently about the services they could provide and the
enterprises around iSE were also suddenly having to
diversify as well. It was time to think outside the box.
Sarah observed the critical mass of social enterprises
nearby and understood what would make the difference,
“We needed to find different ways of providing support,”
she says now of her `light bulb moment’. “How do people
get inspired to start social enterprises? The answer is: being
with other social entrepreneurs. It costs too much to bring
them all together, but we have got quite a lot round here, so
we could walk to them.”
But it was nearly too late. Mulling over the idea of a
social enterprise ‘zone’ for Digbeth, Sarah saw something on
the internet about developing the same idea in Walsall. It
was one of those moments, like Darwin discovering he was
about to be pipped to the post by Alfred Russel Wallace. “I
had just begun to talk about these things in my head and
realised that nobody knew it,” she says. “So when I read this
I thought I’ve just got to get on with this.”
She asked a member of staff who had a bit of spare time
if they could draw a map. And there before them, the
skeleton of what was to become the Digbeth Social
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Enterprise Quarter became visible.There were as many as
27 social enterprises within a few streets of each other.They
put it online and rigged up flashing lights for each one and
realised that it might be possible to run study tours, or at
least walks, around a complete cross section of the social
enterprise sector.
The first few walks they organised for free, as a way of
demonstrating what was possible. In practice, they have
stayed free ever since, but then promoting Digbeth as
Social Enterprise Core Source is key to their purpose. The
early years of the decade saw a flurry of interest in
innovation – with the old ways suddenly unaffordable,
everyone was searching for new solutions: students,
administrators and would-be social entrepreneurs alike,
came on the tours in large numbers. Local authority
officers and NHS administrators started coming along for
the same reasons – the NHS was also being re-organised
at the same time.
“The very first walk was very engaged.” says Sarah, “We
did the work beforehand to make sure people were OK to
have visitors. We were very wary of wasting people’s time,
but they found the enterprises were only too pleased to
show people what they were doing.They could promote
themselves. We could suggest that they do business with
these people.”
Then the politicians started to show an interest.The
communities minister Nick Hurd went on one of the walks.
So did Birmingham’s council leader Sir Albert Bore. Local
councillors and officials from the Cabinet Office started
coming too. Soon the Social Enterprise Quarter was firmly
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on the map and iSE were running walking tours every
other month.
**
One of the corners of the world where social enterprise has
been instrumental in solving otherwise intractable problems
is in Quebec’s health and social care sector. As is so often
the case, the emergence of alternatives – of social
enterprises – has been in response to economic catastrophe,
in this case in the run-up to their independence referendum
of 1995: manufacturing industry was closing, the economy
was restructuring and the ubiquitous economic
centralisation was bypassing peripheral areas everywhere,
and all these issues were taking their toll.
But Quebec took a radically different approach to its
problems, adopting a set of ideas and practices the French
call economie solidaire, to create the lending institutions that
can build up a co-operative network of small businesses;
encourage small-scale enterprise and use some of the lessons
of development economics, rather than traditional economic
policy.The watershed was a summit meeting of the different
sectors held in 1996, which led to the creation of a series of
institutions designed to provide the finance in hard-to-reach
neighbourhoods, and a collection of co-op networks known
as the Chantier de l’economie sociale, which has driven the
development of co-operative enterprise ever since.
One of the major problems for social enterprises is that
conventional banks find it very hard to assess their creditworthiness,
but Quebec’s trade unions had laid the
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foundations for success in this respect fifteen years
previously.Taking a more pro-active stance, the unions set
up a series of revolving investment funds with the sole focus
of developing the co-operative enterprise sector.
This bold shift in approach delivered results: within five
years Quebec’s ‘social economy’ included over 7,800
enterprises. Part of what made Quebec’s ultra-local
economics policies successful was the concentration on two
kinds of co-ops in particular: small-scale care co-ops which
could provide sustainable jobs and low-cost social care, and
childcare co-ops (nearly a thousand of those had been
launched by 2002) to provide low cost nursery schooling. By
2008, the social care co-ops employed over 8,000 people,
and the childcare co-ops over 40,000 people.
In the UK, while iSE was developing in Digbeth, the
sector was changing as well.Thanks partly to the emergence
of new national funders and lenders, from UnLtd to Big
Society Capital, instead of just meeting two needs – an
economic need for a basic business and the need for local
employment – social enterprises were now at the forefront of
competition in public services.Thanks to targets and other
central government constraints, mainstream services had
become less effective and social enterprises found themselves
wrestling with big questions: how can we scale up social care,
and other solutions, and change people’s lives for the better?
How can we use the savings these new enterprises provide to
public spending – and how can we afford to invest to make
those savings possible in the first place?
Social enterprises could make things happen, often for
less cost, in a way that mainstream business couldn’t.The
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different approach to profit changed the dynamics and
Digbeth, especially when it came to health and social care
businesses, or housing ex-offenders, or other tough
questions which neither public nor private sectors found
easy to manage, had some of the answers ready.
The emergence of up to 35 new social enterprises a year
in the Digbeth Social Enterprise quarter raised some other
questions too. Could their scarce income, carved out of an
uneasy mixture of public contracts and other business
ventures, be made to go further, given that there were lots of
them – in fact, could they could trade with each other? And
how might that trading propel their innovative
momentum – and could it also deliver savings for the public
purse as well?
“As we were doing the walks, I thought: what else could
we do in a cost-effective way to grow the sector,” says Sarah.
“We had a network of people in Digbeth – could we bring
them together to see if they could do business together?”
As usual, iSE had to cobble together the resources to
have a go. A tiny lottery grant of £10,000 was used to pilot
the idea of bringing together as many of the local social
enterprises as possible.The aim was simple: to help them get
to know each other and their businesses. Once a month they
could talk about Digbeth issues – and trading with each
other might naturally follow.
Sarah runs these meetings over breakfast in iSE’s training
room. “So many people turned up at the first meeting,” she
says now. “I know it’s successful because they keep coming
and they report getting value from it.” Birmingham’s council
leader Albert Bore was also impressed by what he saw and
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could see the potential for tackling some of Digbeth’s issues
in an entrepreneurial way. He formed a group based at the
council and oversaw the development of a five-year plan for
the Digbeth social enterprise sector.
Interest in the idea of encouraging social enterprises on a
geographical basis was also growing. Social Enterprise UK
won funding from the Spanish bank Santander for
grassroots initiatives to grow social enterprises.They
organised local markets and marketing events and then they
did the research.They found that the organisations most
involved in the Digbeth Quarter were reporting between
one and fifteen per cent of their turnover coming from other
local social enterprises. By then there were 50 social
enterprises in the Quarter, representing a combined
turnover of between £15m and £20m.
It isn’t exactly a perpetual motion machine, but the
success of the Digbeth Quarter shows how the potential
foundations for a permanent and resilient shift are being
laid – as long as they don’t just earn money from neighbours.
**
When London’s souvenir shops looked closely at where
their souvenirs came from, they found that less than two per
cent were actually made in London. Most of them came
from China. When the souvenirs have so little sense of
place – so little authenticity – it does make rather a mockery
of the whole thing.
It was the same in Birmingham, but here Digbeth’s social
enterprises were able to do something about it.Two
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businesses rose to the challenge – Shelanu and Textiles by St
Anne’s – one designed the fabric and the other uses it to make
the products which are on sale in the shop at the Birmingham
Museum and Gallery. As we’ve learned, other Digbeth social
enterprises trade with each other too, for venues, food and
event organising. Some have diversified as a result: Citizen
Coaching was originally set up to provide psychological
support, but has built a whole new IT business to support
local social enterprises and beyond. Sarah has been helping
other cities tiptoe in the same direction.“I’ve just done one
tour of another city, and asked them about the sector buying
from the sector,”she says.“I always asked whether they
employed other social enterprises to do their cleaning, or
printing or marketing, and they always said – no, but we’d like
to.Well, we’ve been doing that for five years now.”
That work carries on, especially now that HS2 will be
ploughing its way through Digbeth. Will the contractors
need sandwiches, meeting space, high visibility jackets?
Local enterprises supply all of those – and the building is
going to be on site for seven years at least.
Of course, old-fashioned economists will complain that
this is just re-arranging the geography of profits, rather than
genuinely earning more money.This is at least partly true –
but social enterprises have other effects which are relevant
to national budgets: they concentrate resources, solve
problems and allow people to get by economically in return
for tackling problems in a way that conventional welfare has
failed to do. In that respect, concentrating social enterprises
is a market solution to social issues – and doing so can also
save public money.
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Whether the scale of the public purse cost savings are
enough remains to be seen. We will have to wait until there
are comparable social enterprise quarters in most of the
disadvantaged areas of the country. We will have to wait
until this kind of innovation is being brought to bear on the
same scale, for example, as Quebec. But there are some
indications, mainly anecdotal, that concentrating small
business locally increases the trust they need to thrive
locally. Good business at national level might depend on
communications and logistics, but good business locally
depends on relationships. Ultimately both depend on the
human element – trust – but how this relates locally and
nationally is little understood and worthy of more
consideration.
“There is such a thing as the Digbeth pound,” says Sarah,
and she isn’t referring to a local currency (see Chapter I).
She means maximising the way local business uses the
money passing through the local economy (see Chapter III).
“Anyone spending money here means more jobs for people
in the area. It means we can support people with local jobs,
where they start doing work experience and – if it works
out – they can get taken on. In an area of high disadvantage,
that’s important.”
If Digbeth’s experience is anything to go by, it is also
important for the environment. The streets have a litter
problem and a bad reputation at night, but many of the
local social enterprises have made efforts to clear up and
improve the look of the area around their buildings with
a knock on impact of improving safety. This is a
continuing challenge.
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Like the Custard Factory, the former Bird’s Custard
manufacturing plant, which has become a venue for creative
businesses. Or Citizen Coaching, where they are now able
to offer a completely free service to people, in six languages,
six days a week, with no waiting list. Citizen Coaching
founder Martin Hogg is a Digbeth Quarter enthusiast: “For
the last ten years, we have been working with other social
enterprises in Digbeth, to the extent that more than fifteen
per cent of our income comes from them. We have
volunteered our time to help with the Quarter – and it has
been well worth it.”
And so the Social Enterprise Quarter grows, not as a big
project managed by the public sector, or even as private
sector investment, but in an incremental and somewhat
opportunistic way. “We don’t get any money from it,” says
Sarah. “We do it because we believe in it, though we have
had some sponsorship for signage and two or three social
enterprises have donated money too.This is our social cause
and it’s the proof of the pudding.”
Some people have worked voluntarily to help the project
take shape. Occasionally some people have needed to be
paid, but Sarah is aware that they haven’t grown as fast as
they could have if they’d had more resources, “but we haven’t
had enough time, because we have been busy running the
business here. It has been hard to find the time, and when
we have put a lot of staff time into it, it has been a bit scary.”
Their own business only has eight staff, so it is hard to
shift them off their day jobs to really run with the Quarter.
Encouraged by Social Enterprise UK, iSE has run a ‘city
drive’ running seventeen events in Digbeth over five days to
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raise awareness of the Digbeth Quarter, with walks around
the local businesses every day. “That’s when it got hard,” says
Sarah, “But the positive bit was that we had tremendous
support from the sector.”
The great advantage of not having grant money to run a
project is that there are few of the usual barriers, “There’s
nobody to say you can’t do this – so we’ve just done it.”
“What we are seeing here is the ‘repurposing’ of
Digbeth,” said Albert Bore, Birmingham’s council leader, at
the formal launch of the Quarter in 2013. “The old factories
and warehouses of Birmingham’s oldest industrial area given
a new lease of life by social and cultural entrepreneurs
committed to social change and social
inclusion. Birmingham City Council is wholeheartedly
committed to buying goods and services which deliver social
value and to working in partnership with the city’s social
enterprise sector. I hope that, like me, you will want to do
business with these young entrepreneurs and activists,
helping to tackle deprivation and inequality, improve life
chances and make Birmingham a better city in which to live
and work.”
**
One of the most ambitious support systems for
entrepreneurs in the world is the community bank
network, currently being rolled out in Brazil by their
central bank. Most of their clients are now women. There
is an emerging idea that the social enterprise structure
suits women in particular, and especially in disadvantaged
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areas where it may not be money, but confidence that’s the
key to unlocking potential. Digbeth is leaning in the same
direction, iSE is aware that most of their start-up clients
are now women.
There is also a distinct shift of emphasis in Digbeth
towards health start-ups, aware that the social enterprise
structure may be better at providing human-scale, humane
services at a more affordable cost. A recent ‘health event’
they put on included a speed-dating session where twelve
social entrepreneurs spent two hours working their way
around the room, explaining to students how to set up and
grow social enterprises.
The sector is developing fast in Digbeth. One of their
members, the textiles social enterprise, St Anne’s, has just
made it in to the John Lewis supply chain. Other social
enterprise sectors are beginning to emerge in Cornwall,
Portsmouth and Oxford – and even the tiny Cumbrian
village of Alston Moor. Sarah is supporting a new network
in the north of Birmingham, in Erdington, and is about to
find out whether their recipe can be grown anywhere, or
whether it is somehow unique to Digbeth.
That is an important question. Why has the first social
enterprise quarter in the country emerged in Digbeth, rather
than somewhere else? Is it because of the low cost space?
The proximity to the city centre? Or is it that the
Birmingham Voluntary Service Council was always based
there? Is it because of the good bus links or the fact that you
can walk from there to the Bull Ring at lunchtime?
Whatever the reasons, the effect is clearly accelerating.Their
membership has grown year on year for the last three years.
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“As time moved on, we’ve all had to hone our approaches,
and we now support social enterprises in whatever way we
can, across the board,” says Sarah. “The funding for this kind
of initiative has also changed hugely. We’ve never really had
local authority funding, so we’ve had to survive on our
ability to trade. Nobody gives me the money to do what
we’re doing – we have to earn it. We have to really think
about relationships and quality.”
Social enterprises don’t have to make relationships the
driving factor.There are now huge social enterprises, like
Welsh Water or Divine Chocolate, but they tend to have a
more human face, perhaps because they are measuring their
success more broadly than large, conventional companies
do – and their local links are important to them. Since social
enterprises began to emerge in the 1980s, that has been a
feature of their success.
The role social enterprises are playing in the national
economy is also growing every year, accounting now for a
combined turnover of £24 billion.The experience in
Digbeth clearly demonstrates that these businesses can play
a key role in economic regeneration, and especially perhaps
when they start to cluster together.
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115
VI Banking on the roof
Bath
Lessons. Bath & West Community Energy
(BWCE) are one of the success stories of
localising energy, and it appears that keeping
some of the benefits of local energy use
circulating locally might be a key factor in
supporting local economies. Through BWCE,
we also learned:
· Community energy businesses, like the
micro-improvement of the UK housing
stock through DIY, can have a huge
impact – but only if the government
gives it the kind of stable regulatory and
support guarantees it needs, rather than
constantly changing these at short notice.
· It makes economic sense for policymakers
to encourage people to get
involved in the generation and saving of
their own energy, and this will have a
local economic impact.
· People welcome the opportunity to invest
in this kind of venture – not everyone
perhaps, but enough to make a difference.
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Can you see if you are making a difference to the local
economy? Personally, I mean? Not just generally by doing
your job and spending money in the local shops?
Whenever he cycles round the area of Bath where he
lives, Peter Capener can. “I go past them and say to myself –
yes, I helped put those solar panels on that roof and it is
really nice to think that, in a small way, I have helped
change the world around me.”
Watching the roofs glinting with solar panels across the
neighbourhood affords an undeniably satisfying sense of
achievement to those involved. Generating energy from
the sun, making people better off because they have
replaced expensive fossil fuels with a new technology – and
all by redistributing the government’s guaranteed prices
towards people and communities, rather than towards big
energy utilities.
And therein lies the controversy: there is some debate – a
little rarified and rather academic perhaps – about those
guaranteed prices which are designed to encourage the
development of unconventional power sources, known since
2010 as Feed-in Tariffs or FITs. Do they make the nation
better off by bringing new, clean decentralised technology to
market more quickly than would otherwise be the case? Or
is this just the redirection of government money – the
prevailing Treasury view, regardless of the fact that it is
actually generated from a levy on electricity bill payers?
Where the two world views collide: the question of
reducing national spending versus the question of how to
devolve economic power and build a rational response to
threats such as climate change, sparks can occasionally fly.
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The obvious answer is that these two aims needn’t be
mutually exclusive; sooner or later one might lead to the
other. Particularly as government clearly has few qualms
about subsidising other technologies, including nuclear
power and fossil fuels.
Now the majority of the FITs are being withdrawn from
most renewable energy schemes, and earlier than perhaps
they ought to have been, the argument is coming to a head.
This comes at the same time that the Enterprise Investment
Scheme tax relief, which is supposed to encourage
investment in riskier ventures, has been removed from
small-scale community energy schemes – and they will now
have to stand on their own two feet.
“Nobody wants subsidies,” says Peter. “In fact, we are
getting close to not needing them. We only needed a few
more years before some technologies, like solar PV for
example can compete on equal terms.”
The question of whether the fledging UK solar industry
can survive such a sudden withdrawal of support remains to
be seen. In any case, the fate of the UK solar industry is
beyond the scope of this book: it is relevant to local
economics only if renewable energy can be used to redirect
local resources to meet its own needs – to keep money
flowing locally, wherever it is, rather than the profits being
extracted by a distant supplier.
There is the heart of the argument – whose money is it
in the first place? Is it really money that belongs with the
utility in return for its investment? Or is it money that
ought really to belong to the community because they
shaped the demand and paid for it through their
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electricity bills? Or is it both, and if so, how could we shift
the balance?
The emerging crisis in renewables implies that
actually it belongs, at least for the time being, to the
government. If solar carries on growing after the
earthquake, as it is in most parts of the world, providing
economic and energy independence to households and
communities, then it may have a major role to play in
keeping local resources local.
**
Two places in the UK have taken a lead and made enormous
progress in understanding the local economic implications
of this idea.The first is Wadebridge in Cornwall, where the
Wadebridge Renewable Energy Network (WREN) is on
track to supply a third of the town’s energy needs by 2020.
The other is Bath.
And Bath’s response to this energy challenge emerged
out of a broad network of individuals who were committed
to new kinds of sustainable technology. Peter Capener, for
example, started working at the Urban Centre for
Appropriate Technology (UCAT) in the mid 1980s, part
of the famous CAT empire which grew out of an old
disused quarry at Machynlleth in the 1970s. UCAT was
based in Bedminster in Bristol, where it developed into the
Bristol Energy Centre and then the Centre for Sustainable
Energy, which is still busy popularising the idea of
renewable technology, alongside work on energy efficiency
and fuel poverty.
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Peter served as chief executive from 1994 to 2001, when
he left the Centre to become a freelance consultant, so that
he could balance his work in community energy with being
a primary carer for his partner.
In those early days, community energy meant a windmill
you put on your roof or a passive solar installation to heat
your hot water. It was symbolic and made you feel better, but
it didn’t make an enormous contribution. It was also an
international hippy symbol – none the worse for that, but
windmills didn’t look exactly mainstream, even when
Baywind established the first community-owned wind
turbines in the 1990s.
What was mainstream was the emphasis on saving
energy, which tended to be financed by grants, but as the
latest photovoltaic cells emerged on the market, all this
began to change. Australian outbackers, California internet
millionaires, Spanish executives, all began to clamour to
generate their own power. They liked the independence
and they were just as likely to be on the right as on the left.
As 1999 turned into 2000, communities were getting
involved too – building their own wind farms or solar
arrays – but it was complicated because none of the
funding, investment or regulatory systems were designed
to support them.
On the other hand, as opposition to wind farms on the
horizon began to rise, the experience in Scandinavia – and
elsewhere – revealed that if people felt they ‘owned’ the local
infrastructure in some way, they were more likely to be
supportive. If they could invest in it and earn something
from it, then so much the better.
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But there was a reason why this was not a satisfactory
period for Peter. He found himself working, supporting,
puzzling over and advising these projects across the South
West – and that meant a great deal of travelling. “They
tended to be in lots of different parts of the region,” he says,
“but not in my backyard.”
Then the FIT was introduced with cross-party support in
2010 and, suddenly, it became possible to build a sound
business case for a renewable energy project that was
relatively small and which re-circulated the financial benefits
locally. “The whole social enterprise side of renewable energy
took off,” he says (see Chapter V).
Transition Town Bath began to talk about how they
might develop renewable energy projects themselves, “rather
than letting commercial companies come in and run away
with all the profits”. In fact, the genesis of BWCE came
from a series of conversations at Transition meetings in
Widcombe in Bath, in the top room of the Ram.The
meetings were to create a whole new kind of organisation –
one that would, paradoxically, see Peter travelling extensively
once again.
“We were trying to work out how we could create and
incentivise a greater connection between local people and
local projects,” says Peter. “There was a bit of a backlash
against renewables, especially wind, and there was some
local opposition. We realised we might be able to offer a
community return, as well as an individual return, to create a
strong connection that way.”
Here was the idea.Through a social enterprise they
would manage projects in the local area and organise their
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own – they would provide profits to the local investors, as
well as putting money into a community fund. If people
could see the economic benefits of local renewables projects,
and, crucially, if they had a tangible stake in the outcome,
they might feel a sense of not just achievement – but also
positive connection with the project and renewable energy
more widely.
About the same time, Peter and his colleagues had an
idea for a hydro-power scheme on the River Avon, that
meanders through Bath. But like wind, hydro schemes are
complicated to get through the various planning and
regulatory hurdles. Now, five years on, BWCE have raised
over £10 million and, with their community partners, have
installed enough solar PV to supply the equivalent annual
electricity demand from around 1,500 average homes. But
they have still only just managed to get to the point of
financing their original hydro project.
So after joining forces with Transition Corsham, which
was thinking along similar lines, BWCE launched in
those heady days excitement, when the FIT was generous
and suddenly everything seemed possible. BWCE now
covers Bath and the surrounding area, stretching into
West Wiltshire, South Gloucestershire and the Mendips
in Somerset.
“There are a huge number of individual communities in
that area,” says Peter. “Our initial challenge was balancing
the need to remain local enough to keep our community
links, but large enough to build some kind of critical mass.
Because we wanted to do enough projects to create a viable
community business, so that people were actually being paid
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for their time. It wouldn’t just be a niche activity, but
something sound and substantial which could respond to
the demands of a highly commercial market. We couldn’t do
it on a purely voluntary or half-hearted basis, though lots of
voluntary time was required – and still is. We needed the
skill sets to engage with Ofgem and the big energy
suppliers – and that was really a totally different world.”
Like any social enterprise, BWCE needed commercial
skills to thrive and these arrived in the shape of Jeff Kenna
from Corsham. “He brought a commercial understanding
with him that I didn’t have,” says Peter. “I have a
reasonable technical understanding but more on the
people and community side, but Jeff is an engineer with a
Ph.d in solar photovoltaics and he had set up many
commercial initiatives, raising significant levels of
commercial finance in the process.”
But first they needed to raise the money for their own
inaugural projects from local investors.There had been
community share offers before, of course – the first one
described was in 2008 (see Chapter II), but they were still
an inherently new idea.They also needed a considerable
sum: £400,000.
Would it be possible to raise that much from the local
area, even in well-heeled Bath? All they could do was try.
The energy in the whole venture accelerated in the final days
before the deadline. In the final hours, people were calling at
the home of one of Peter’s colleagues – their first registered
office – and thrusting cheques into his hands.
It was a strange feeling, but they were clearly onto a
winner.The final tally was £750,000 – they had raised three
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quarters of a million pounds. It meant not only that there
was a willing constituency out there prepared to risk their
money on renewable energy, but that the BWCE team had
gained the community’s trust.
**
The success of the first share offer allowed them to launch a
series of projects which have since:
· Raised over £10 million through seven community
share offers.
· Installed 6MW of solar technology, sufficient to
supply the equivalent annual electricity demand from
1,500 homes – and are set to install almost the same
amount again shortly.
· Set up a co-operation agreement with Bath and
North East Somerset Council (BANES).
· Paid members seven per cent interest on their
investment in each of the last four years and have now
re-cycled £65,000 of profits back into local
communities to grant aid local carbon reduction and
fuel poverty projects
Their success also increased the pressure on them.
Suddenly, BWCE was in demand among other social
enterprise start-ups who wanted to build renewable, but
also wanted advice or guidance. A clear choice was
opening up – between sticking to their original
geographical remit or creating a systematic support
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mechanism. There appeared to be gaps in the market for
both, and if not them – who?
The temptation was too strong.They developed a business
model that involved working under contract for other
communities, arranging the upfront investment, developing
the new site and then managing the asset in return for a
fixed fee.
Initially, there was a 1.8MW solar project south of Bristol
and there was a 1MW development for the Wiltshire
Wildlife Trust where their members put up the money. Part
of the enthusiasm of the Trust came from the biodiversity
benefits of taking land out of intensive agriculture and
supporting the recreation of hay meadows and habitats,
handing it over to nature – and the solar panels.
By now, Jeff was the managing director and Peter the
chair. It is hardly surprising that there were occasionally
creative tensions between them. “But that is also the reason
why it worked,” Peter says. “There have been times when
community and commercial demands haven’t totally aligned,
but it has been a necessary discussion and we came up with
the compromises we needed to make things work better
than if we had pursued just one of the two approaches.”
But the biggest challenges were always about time.There
were always obscure government deadlines to meet.
“We were always trying to do things too quickly,” says
Peter. “We were always trying to be proactive and be our
own bellwether. Even when the government was being
positive, there were constant changes in regulation. We were
always running faster than we could comfortably manage.
There were bound to be mistakes occasionally.”
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Most of their mistakes were around communications
with members and investors. Once they had the money in,
they needed to set up the back office systems to keep in
touch in a transparent, professional way, to pay them their
dividends and to handle their reasonable demands for news.
People had responded with enthusiasm, so of course they
wanted to know about progress.
“We could have done better,” says Peter. “People were
very understanding, but it wasn’t as slick as it should have
been. Because we were running hard, constantly in start-up
mode, never being able to consolidate and not putting
enough time into communicating as well as we might.
Sometimes, when things got really tight, people might say:
‘What’s happening on that project’ – and it would have
been nice to know, wouldn’t it.”
Part of the reason for the constant speed was that they
were operating in a new industry, on the margins of the old
and under a constantly shifting regulatory environment.To
make everything stack up financially, they had to structure
every share issue in a different way. “We could never really
rely on knowing what was going to happen,” he says, “That
was our biggest headache.”
But there were no major mistakes.The closest they came
to serious difficulties was in 2014, building a 2.3MW solar
farm on a twelve-acre site south west of Bath, against yet
another government deadline, when they inadvertently
allowed the contractor on site before all the planning
conditions had been completely met.
“We were hauled over the coals: it was an error and we
lost some credibility as a result,” says Peter.
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But the other reason they were always struggling with the
pace is that, actually, Peter and Jeff had a runaway success on
their hands.
**
BWCE was emerging as a split organisation, using their
expertise to support community groups in other parts of the
country – and then raising money to organise their own
developments on their own patch. By 2015, it became clear
that something would have to give.They were running two
parallel business models, one that depended on raising the
money for investment in the construction of the projects
and one that depended on raising money from different
sources for the far riskier project development. And all the
time, the list of communities that wanted BWCE to help
them set up their first renewable project – from wind and
solar to hydro – was growing, taking their focus away from
developing projects on their own patch.
After lengthy deliberation, they finally decided to split
the organisation into two, Mongoose Energy launched in
April 2015, and now has the former Energy Secretary Ed
Davey as chair. Mongoose is a whole new way of doing
energy, but its link to people-powered economics doesn’t
come from it being a local enterprise – because it isn’t any
more, it derives from putting that capability into the hands
of local communities.
Its task is to support new local community energy
businesses, that will majority own and control Mongoose.
There are now more than 5,000 community energy
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companies across the UK. It is designed to do all the
development work, deal with the planners, organise the
technical assistance, lease the site, carry out the technical
and environmental assessments, essentially take the risk
until the project is financed, so the community energy
enterprise doesn’t have to.
It requires the skills they developed through BWCE,
but it will also mean taking risks – which is why
Mongoose needs deeper pockets than BWCE. “That
costs money and you haven’t got the bottom line if
something goes wrong,” says Peter. “A significant number
of the projects you are developing are bound not to come
to fruition.”
When the team started their first solar PV projects, they
dealt with the risk by finding people to work with who were
happy to take part of the risk themselves.They were paid on
a day rate and were prepared, if the project failed – over
planning or finance or one of the many other hurdles – not
to be paid. “But most community enterprises can’t access
that kind of resource,” says Peter.
Mongoose Energy is big enough to shoulder this risk,
“We have built up the core expertise we need for operations
and development,” says Peter. “The development fees we
earned had to pay us – and for the schemes that failed – but
we needed a big enough pipeline of projects to scale up from
there. We needed to get to institutional financiers to help us
set up a facility to do the due diligence and make sure the
projects meet the various criteria.”
In the end, it is all about the cost of borrowing money,
even in periods of low interest rates. Capital intensive
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projects mean that there is always a limit to how much you
can raise from the public. If you get the kind of scale and
track record you need, you might be able to borrow at as
little as two per cent above RPI, but community
organisations without a track record (and unable to
aggregate projects and so work at scale) would have to pay
more to take projects through the due diligence process and
pay higher interest rates accordingly.
That is why Mongoose now has access to a borrowing
facility of up to £50 million, resulting in much easier access
to the borrowing which communities need to go ahead.
**
But will it survive? Solar remains controversial among the
old-fashioned big grid advocates, but it is expanding all over
the world.The technology is almost as cheap now, and in
some cases cheaper, than fossil fuels – and the possibilities
are growing too: roads which generate power, windows
which generate power, roof tiles which generate power. It’s
all happening.
But, as we know, it isn’t clear whether it is happening
yet in the UK. The threatened withdrawal of any kind of
government support for smaller scale renewables – and
earlier than the growing industry had hoped – has caused a
shock to the system. Many renewable companies are
struggling, partly due to the speed in implementing the
changes which were themselves announced with barely any
warning. First threatening to slash the FIT by nearly 90
per cent, and – with a month’s notice – ending the
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Enterprise Investment Scheme tax relief (EIS) for
community energy investments, on the grounds that they
are no longer risky.
“Take away EIS and FIT and the core business model for
new generation begins to fall apart, unless we can find other
ways of generating value at a local level” says Peter. “Maybe
the market will eventually rebalance and installers will offer
services at lower cost, but there will be a hiatus. In a few
months, the government has effectively unravelled what we
have been building for the past five years, and done it just
like that.”
He snaps his fingers to show not just the speed of the
volte face, but the capriciousness of government
involvement.
But there are still opportunities for local supply. Peter
points to the possibilities for a local generating plant in the
next few years, especially now energy storage technology is
just coming online. It means local renewable projects will be
able to shift their supply from peak generation times to peak
demand when it costs the most. It will be possible to
organise long-term purchase agreements better and for
homeowners to earn more for their electricity.
“It would be possible then to make significant income,”
says Peter. “If it is generated locally then that additional
value can be retained locally.”
“It is quite possible that the renewable sector could
generate new income schemes that could compensate for
the loss of the subsidy – but not by January 2016. It all
depends how quickly we can bring forward the local supply
to fill the gap.”
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The dream for Peter and his colleagues is to build a new
model of energy generation that won’t exactly be off-grid,
but which will offer greater local management of energy
supply and demand, potentially reducing transmission and
distribution costs and encouraging demand management
and reduction. It will mean supplying local homes directly
with the power they need.
Of course there will still be a grid, but it means that local
supply organisations will be able to muscle in.They won’t
have to sell to some amorphous and anonymous entity in
the national grid, who will then sell the energy on to the
locals next door.Technically, electricity will flow through the
grid as it does now, but contractually it could be possible to
establish more localised control, and ultimately more value
and profit will stay in the local area.
Mongoose Energy has already secured a supply licence to
make this a reality and is already planning its April 2016
launch. “We are hoping to create a local tariff built around
local generation and offering community control of the
supply company with prices competitive with the Big Six,”
says Peter. “Then more of the community’s money comes
back to them, and we can hedge electricity sales over longer
periods, and also – because the community enterprise is part
owner – the profits get divided locally too.”
That is a radically new and emerging energy supply
model.The current relationship between utilities and
communities is based on a transactional – and ultimately
extractive – relationship.The utilities take people’s money,
provide them with energy and then extract the profits.The
new model generates the energy locally, employs people to
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deliver it and the profits go back to local communities where
the investors have a real stake in the whole process.
By recycling profits back into local communities and so
providing a community return as well as an individual return
to investors, community energy is not just for the wealthy
who can afford to invest.
**
With the creation of Mongoose Energy, BWCE can once
again focus on its core business of organising the local area’s
own electricity needs. But are BWCE underpinning the
local economy? Are people wealthier as a result? Peter says
they are, and he gives the following reasons:
First, they have a social enterprise that is paying people to
meet local needs.
Second, they are recycling revenues back into the local
economy by paying members interest in return for their
original investment. Previously, these profits would have
been going to offshore shareholders.
Third, they are putting profits into a community fund.
The revenue for BWCE this year is expected to be
£480,000. None of that money would have stayed local
previously, but now just over half of it does – about a quarter
of a million pounds. And in 2015 £50,000 of that went to
the community fund, where it will support Age UK Bath to
run fuel poverty reduction projects. Many further projects
will receive support through an open grant process,
including putting energy efficient lighting into community
buildings and supporting local food projects.
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The most important part of the story of BWCE is that it
has been a huge success – and the financial success is
indivisible from the community success. “I’m a shareholder,”
people said with excitement when they heard what I was
writing about.
Peter, Jeff and their team have discovered that people will
respond with enthusiasm and money to this kind of social
business opportunity.
When they carried out a member survey recently, they
asked whether being a member had encouraged people
to think a bit more about climate change issues – to talk
to friends about carbon reduction or community energy,
or to do more about reducing their own carbon footprint.
To their surprise and pleasure, the results showed that 70
per cent of members had talked more to friends and
family and up to half had taken more action to reduce
their own carbon emissions as a result of being a
member of BWCE.
“Even taking into account that people can be
optimistic when it comes to answering those kind of
questions, I was gobsmacked,” says Peter. “It was
reassuring and inspiring. My initial hope starting off in
community energy was that it would create a stronger
link between individuals and local projects, which might
build greater awareness about where they got their
energy from, and greater thought about how energy was
used. It seems that this didn’t turn out to be a totally
unfounded prospect.”
**
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Now that Jeff has moved over to help run Mongoose
Energy, Peter is taking more of a leadership role at BWCE
and – when I met him – it was business as usual: racing the
clock to beat the various government deadlines, and working
out how his ventures would survive the sudden loss of
government guaranteed prices.
Mongoose Energy, BWCE and so many other ventures
are hurtling into pioneer territory, which is, by its very
nature, unchartered. Over the last few years, they have
proved that this way of doing business has a future – and
works economically too.
And guess what, the original motivation for BWCE – the
scheme for a hydro-power scheme on the River Avon – has
just raised the finance it needs and planning is under way
for starting construction in the spring 2016.The story
continues.
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135
VII Following the money
Preston
Lessons. Preston City Council is one of the
few local authorities which have thoroughly
investigated where the money they spend
goes, and who are really looking at the
implications for the resilience of the local
economy. Lessons so far include:
· Thinking about how you might inspire
the enthusiastic support of local authority
chief officers and their pension funds.
· It makes sense to know where your
procurement spending goes.
· There is a clear distinction between local
protectionism, which can raise prices and
lower quality, and its opposite:
encouraging local enterprise to increase
choice and raise quality.
Look at any city or neighbourhood and you will find
batteries of statistics: the exact breakdown of the population,
their voting records and crime figures. You can even
discover, thanks to our rather reluctant big banks,
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information about where they are lending their money –
down to postal district level. You can find employment
statistics and property prices, and draw graphs to show the
fluctuations.
You can find out all about the local economic network,
the people and the companies involved, but you won’t find
out how much money there is in one town or city versus
another – the blood that flows around the local economy
might as well be invisible. There have been academic
attempts to map the money flows in smaller areas, but
there hasn’t been any systematic research done in earnest,
so to speak.2
The trouble with this great gap in our knowledge is that,
because we don’t see the money, we forget it’s there –
making its impact felt, increasing prosperity. City
administrations imagine that it doesn’t matter where it
flows, that it just emerges in some peculiar alchemical
way – as government grants or outside investment. As if it
was a total that needed to be added up, rather than a flow
that needed to be observed and nurtured.
Most local authorities have carried on regardless, aware
that their chances of attracting grants or investment are
shrinking, but not putting much thought into what might
be done instead. But a few pioneering local leaders have
been thinking about it a little more deeply.They do have a
responsibility to nurture the local economy after all – so
where are the levers? And how can the leaders know which
levers to pull if the results remain invisible, if they aren’t
measured – at least as far as the money is concerned? It’s a
bit like managing a football team by ignoring what happens
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on the pitch and focusing simply on the score. I couldn’t
possibly comment.
One city that has been trying to discover and use that
knowledge, aware that – despite local poverty, there is a
great deal of money in the system somewhere – is
Preston City Council. Labour councillor and cabinet
member, Matthew Brown, now representing social
justice in the council’s Labour run administration, has
championed this approach.
It hasn’t been easy for him, at least in the early days. We
have a political system which traditionally frowns on anyone
with new economic ideas; even in the dull silence that
followed the banking crash in 2008 – and the bankruptcy of
the local credit union too – there wasn’t much openness to
anything new that might shift the mainstream from its old
shibboleths: tax competition between places, going cap in
hand to the Chinese, selling their souls for a new factory or
waiting hopefully for the next European hand-out. It isn’t
really surprising that people like Matthew have been asking
questions about what alternatives might look like.
**
Matthew grew up in Leyland in Lancashire and came to
Preston as a student. He had been interested in politics since
he heard Tony Benn speaking as a teenager, but his energy
was taken up by his job at HM Revenue & Customs and as
a union rep, and it wasn’t until he was 29 that he began
taking a more practical approach. He stood for election in
Tulketh ward and won.
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It was 2002. Large amounts of regeneration money were
pouring into the cities, especially the poorer areas.There
were people, even then, who were sceptical about whether
the old regeneration approach, involving major rebuilding,
was really capable of changing people’s lives – or whether it
was actually just shifting them around a bit. For Matthew
this question was thrown into sharp relief when the banking
system rocked on its heels.
He found himself searching for workable alternatives
and he looked around the world to find out where people
had a little more control over their economic lives. He
heard about Mondragon in Spain (see Chapter II), the
Emilia-Romagna region of Italy and its small co-operative
workshops which have taken over so much of the work for
the big car factories, and which keeps the wealth local –
where it is needed. He worried away at the problems, kept
asking sceptical questions, and began to suggest a new
way forwards.
The pioneering path didn’t turn out to be easy. Pressing
for a whole new agenda in any political party is going to be
tough. And, initially Matthew’s colleagues found the ideas
he was promoting frightening.They were used to the old
ways.The word ‘bonkers’ was used on many occasions.
But not now. Now Preston’s administration is firmly
committed to finding ways of using the wealth flowing
around the local economy a little more effectively. Not
instead of outside investment, of course, that would be
peculiar – but enough to make sure that Preston could be a
little less dependent on Whitehall’s money and the
instructions that go with it.
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“If I had the choice again, politics might not have been
something I wanted to be part of,”says Matthew now.“There
does tend to be back-stabbing and the people are not always
the ones I would choose to socialise with, but you have to be
involved if you want to change your community for the better.”
Against the backdrop of popular New Labour thinking,
Matthew’s imaginative questioning was vilified as
extremism. He was branded a maverick – one who could be
accommodated – but only up to a point. He says this isn’t
accurate. “My views have always been creative,” he says. “It
isn’t about the state controlling everything. I just believe the
mainstream capitalist system will evolve into something
different in the next twenty or thirty years – and it’s doing
so already. People seemed to be conditioned to believe it was
all about big business, inward investment and that kind of
agenda, rather than doing something genuinely alternative.”
Then in 2011, Matthew’s colleagues won a majority on
Preston Council. He found himself in the cabinet and with
enough influence to make his ideas happen. “In particular, I
wanted to try to look at certain alternatives that had
emerged in Spain and Italy at the time,” he said. “That was
most notably Mondragon in the Basque region of Spain,
also Emilia-Romagna in Italy.That’s what was the
inspiration.That was what we started investigating when our
administration took control a few years back.”
Not long after Matthew and his colleagues won their
majority, social entrepreneur Ted Howard came over from
Cleveland, Ohio, to outline the Evergreen approach.
**
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Ted Howard is the social entrepreneur who launched
Evergreen (see Chapter VIII), the ambitious programme
which learnt from Mondragon co-ops, and plans to plant a
whole lot more – in the middle of the so-called Rust
Belt – to supply services to the hospital and university, the
last outposts of Cleveland’s once thriving economy still
standing. Evergreen is an attempt to revitalise the local
economy, making it a little less dependent, by using what the
Americans call ‘anchor institutions’.
It’s certainly a success story in Cleveland. Small
co-operatives, employing local people now deliver laundry,
energy and catering services for the local hospital and the
university.The hospital construction programme managed to
create 5,000 jobs over five years, many of them in new
co-ops who won local contracts.
Matthew went to hear Ted Howard speak, “What
impressed me was how there was a great deal of wealth in
communities already,” said Matthew. “In banks and credit
unions, in the endowments of universities, in housing
associations, there is money – but is it being spent in local
communities?”
Here is the issue.The number of people in Preston who
are economically active has been dropping. So has average
gross weekly pay.There are huge differences in life
expectancy from one side of the city to the other (66
compared to 80). Preston City Council has faced 50 per cent
grant cuts since 2010 and it’s only survived austerity
through skilful and imaginative work. It was one of the top
ten worst hit councils in the UK. Yet, paradoxically, if you
count the amount of money that pours through the
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economy – it isn’t an impoverished place. And there are
people there, of course, and many of them are imaginative
and energetic.
Nobody is suggesting putting up trade barriers – that
would increase prices and lower quality, as everyone with
half an idea of economics knows – but doesn’t it make sense
to use some of that money locally, so that the burden on
local public services isn’t quite so heavy? Doesn’t it make
sense to see how much of Cleveland’s Evergreen approach
could be made to work there?
But Preston could hardly do it alone.The money that
flowed through the public sector also lodged briefly with a
range of other local institutions, who could – if they thought
about things a little differently – help keep some of that
money circulating locally a little longer. Wasn’t it their duty
as councillors to make sure local resources were used as
effectively as possible?
In fact, there had been some work done on similar ideas
in the UK – and some time before Cleveland too. Bernie
Ward, Julie Lewis, Justin Sachs and their colleagues at the
New Economics Foundation developed an approach a
decade or more ago, which they called ‘Plugging the Leaks’
(see Chapter III). It asked people to imagine that money
was like water flowing into a bucket, representing the local
economy.The central idea was that the number of times
money circulates in an area is just as important as the
amount of money flowing into it.
Looking at where the money is flowing shows that some
places may have the same amount of money coming in, but
in one of them it gets spent in the supermarket and then it
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leaves the area straight away. In another place, the income
gets passed on from local business to local business, over and
over again.The Plugging the Leaks theory borrows from the
Keynesian idea of a ‘multiplier’, but applies that locally
rather than nationally. It is the same money, but every time
it changes hands, it creates local wealth. It isn’t the total
amount of money that is important here. It is the diverse
ecosystem of businesses, and maybe even the diversity of
people that matters, because that’s what can keep money
circulating locally.
The original Plugging the Leaks research in Cornwall
back in 1998 showed that every £10 spent with an organic
vegetable box scheme was worth £25 to the local area,
compared with just £14 when the same amount was spent in
a supermarket.3
A similar study in a Chicago
neighbourhood showed that a dollar spent at a local
restaurant yielded a 25 per cent greater economic multiplier
effect than a dollar spent at a chain restaurant.4
Plugging the Leaks introduced a whole set of new images
to local economics, notably the leaky bucket. Preston has
made particular use of drawings of an umbrella over the
town, showing how the money invested can pour off
elsewhere.This is not just a different way of looking at
regeneration. It’s a different way of looking at money,
and – if it is helpful – then the implications could be
profound. It means that sustainable economic success
requires a diverse range of locally-owned businesses which
trade with each other. Outside investment is important, but
only when it supports that local business – not when it
corrodes it by taking local spending away from the area.
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Justin Sachs’ study in Northumberland in 2005 confirmed
that they could make their regeneration budget go much
further if they thought about where the money the council
was spending was going.5
But that was a long way from making this work in
practice. Matthew linked up with Matthew Jackson from
CLES (the Centre for Economic Strategies), and they
involved Preston’s assistant chief executive Derek Whyte.
All three of them began by listing the potential anchor
institutions in the area. Then, one by one, they went to
see them.
The response from the cash-strapped chief executives was
unexpectedly positive and now the group meets in Preston
every three months to review progress.The list now includes
Lancashire County Council, Lancashire Constabulary, the
housing association Community Gateway, Preston College,
Cardinal Newman College – and, more recently, the
University of Central Lancashire.
The team from CLES started by asking all six for a
breakdown of their procurement spending for 2012-13 and
specifically for details of their top three suppliers. “What we
wanted to do with that information was understand the
extent to which those organisations spend within the
Preston economy,” Matthew Jackson told the REconomy
website later, “and the extent to which they spend within the
wider Lancashire economy.”
They also looked closely at what Manchester City
Council had managed to do by itself. CLES is based in
Manchester and they had been working to see how the city’s
annual £900 million procurement spending impacted on its
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local economy.They found about £60 million was already
being spent in deprived wards – but what happened to the
money then? CLES tried to find out.6
But Preston’s project initially involved six institutions and
was far more complex and ambitious.Their total spending
on procurement amounted to £750 million a year (other
institutions in Preston and Lancashire have since become
engaged raising that total spend to over £1 billion).The idea
was to do two things:
· Analyse how much anchor institutions (like hospitals,
universities and other large local institutions) already
spent with suppliers based in the Preston and
Lancashire economies and whether there was
potential to bring some of that spending home.
· Identify whether there were any particular services
used by anchor institutions which would lend
themselves to delivery by local co-operatives.
Their research was illuminating. Approximately five per cent
of the money spent with their top 300 suppliers was flowing
back through Preston, with 39 per cent flowing through
Lancashire.There was a gap of £488 million that was, as
they put it, “effectively leaking out of Lancashire each year”.
It was one of those moments when you can bring
influence to bear. Perhaps in other years, if the two
Matthews and Derek Whyte had done their rounds of chief
executives, they wouldn’t have been heard. But this time,
they had an effect.The institutions were aware that their
costs would be heavier – especially if they were public
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services – if too much of their contract money was going out
of area. At the very least, they wanted to know where their
money was going in the first instance – and then where it
was flowing to next.
The housing association, Community Gateway, now asks
suppliers to show the local economic multiplier effect of the
delivery of its capital and maintenance projects, using LM3
to estimate where money goes through an economy for three
exchanges. It is imprecise but it is pretty much the only
technique so far for working it out.The procurement officers
were encouraged to use the new Social Value Act if they
were in any doubt – and of course there was doubt at first.
“I never thought I’d get myself involved in going to
procurement meetings,” says Matthew Brown. “They didn’t
seem particularly exciting, but it was important.They did
need convincing. I realised that cultures develop in
organisations, so when someone comes along and suggests
doing it differently, then of course you get resistance. It
wasn’t strong resistance, just that it had been done the other
way for so long.”
And when the procurement officers said it couldn’t be
done, he pointed to Manchester. He could equally well have
pointed to other local authorities that have wrestled with
getting more contracts to use spare capacity in their local
economy – like Northumberland or Stockport. Or
anywhere elsewhere they have developed the basic toolkit –
cutting contracts into more manageable units, seeking out
potential local suppliers and helping them understand the
process better, helping them with the pre-procurement
forms and sign-up.
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All these initiatives increase the number of potential
bidders, which also increases the choice. It was another
thing altogether to look for ways of privileging local bidders
(as you may now do under the Social Value Act in some
circumstances). Matthew argued that it involved seeing
investment in a new way.
“Most councils tend to bend over backwards to get
inward investment in chain stores, but it isn’t always
beneficial,” he says. “A big supermarket might seem to bring
money in, but then the public sector has to subsidise the
wages because they’re so low, independent businesses go out
of the area and the whole area can be poorer – because
independent businesses tend to keep wealth local.”
**
These ideas are controversial.The Treasury, in particular,
regards them as a kind of protectionism – a sort of local
Berlin Wall that keeps out quality and innovation. Of
course, it could be like that. You can see why there is an
official fear of second-rate local businesses driving out
first-rate ones because they are local.That would be a recipe
for higher costs.
But equally, it makes no sense to remain ignorant of
where the money is going. Conversely it makes little sense
to avoid using the people whose lives you are charged with
supporting to deliver contracts if they carry them out at
least as well as outside contractors.There is also an
unresolved argument here about economies of scale and
how soon they are overtaken by diseconomies of scale.
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Either way, it makes sense to use some of the wealth that is
being kept in trust for the city – instead of remaining
hopelessly passive, waiting for some kind of central
government bail-out.
Perhaps that is why Matthew’s initiative has managed to
gain so much traction – and why his colleagues on the
council began to be curious about what sort of economic
levers were still in their hands.
They started with the living wage: Preston was the first
accredited living wage employer in the north of England.
Then there was the Preston, South Ribble and Lancashire
City Deal designed to stimulate housing and jobs, building
15,000 new homes, a third of them ‘affordable’ (an
affordable housing requirement in planning was one of the
first significant policies Matthew got through the council
ten years ago). But the real breakthrough, part of the City
Deal, was to make sure their own pension money was doing
some of the heavy lifting.The Lancashire Pension Fund has
now agreed to invest up to £100 million in the City Deal
area.They are now investing in student housing in Preston,
and putting more money into building a new indoor market
under the impressively historic Preston market canopy.They
also put money into Birley House, a co-operative space for
local artists who, as Matthew says, would otherwise have
taken their regenerative potential to Liverpool or
Manchester.
There are new businesses.The new local food co-op
provides boxes of salad, fruit or vegetables at less than half
the price of most supermarkets.The People Power Collective
Energy Switching scheme helped hundreds of people swap
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tariff with an average saving of £250 a year.The Lancashire
Fairness Commission, where Matthew was a member, is also
investigating plans for a local currency (see Chapter I) and a
local bank (see Chapter II).The previously bankrupted local
credit union has just relaunched too.
There does also seem to be progress in shifting where the
money goes.The county council has moved a contract for
fresh food produce to a Preston company.That’s another £2
million flowing through the Preston economy.The
Lancashire police have brought a printing contract nearer
home as well. In the end of the first year of the new policy,
the amount of Preston Council’s procurement flowing
through the local economy went up from 14 to 17 per cent.
The difficult part is filling the gaps. If there aren’t
potential local suppliers to take on the contracts – and there
weren’t in Cleveland – can the council nurture new co-ops,
owned and managed by locals? This is tough. Local
authorities haven’t covered themselves in glory starting new
businesses before – and certainly not new co-ops. Matthew
points out that there are thousands of people in Preston who
want work, plus networks of work clubs and advice centres.
But how do you forge these into potentially successful
businesses?
The council may also need to align more closely with
what people actually want, says Derek Whyte. “We spent a
long time in the early millennium planning neighbourhood
regeneration money or European funds, concentrating on
Labour market analyses – but I think we have found that
what the community really wants is better access to health
or better, cheaper food. We’re also keen that what we are
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doing shouldn’t be all smoke and mirrors. We need to be
able to show a track record in the community, so that people
aren’t just touched by the work we’re doing, but see their
lives actually change for the better.”
That is the challenge and it’s an important one. All this
economic effort in recent decades – people have got to be
able to see the difference at a personal level.There are tools
which can make the local economy work a bit more
effectively – which can make cities like Preston a bit less
dependent on events and hand-outs. But they need to be
developed the hard way, by trial and error, and it is tough to
be the pioneer, as Matthew knows. Can they also create
5,000 new jobs just by shifting the procurement budgets a
little? No, because sometimes you have to shape the
enterprises that can do the work, and that is even more of a
challenge.
So far, the co-ops which have emerged from the agenda
known as Creating a Good Local Economy have been
professional ones – educational psychologists, a transport
consultancy and all those artists. Real success in this area
will result in a wider range of service businesses set up to
take on more weighty council contracts.
“That’s the kind of agenda we’re looking at,” says
Matthew, “and – if you put all that together – we are trying
to localise the wealth quite dramatically, but there’s a huge
cultural shift required. In the end, the council was behind it
because Manchester City Council increased their local
procurement from 52 to nearly 70 per cent.They were
behind it because they knew it would yield results.The more
challenging part is linking it to the other measures which
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may be something a senior procurement officer isn’t going to
get. It is obvious sometimes when you meet them – you can
see them thinking ‘What’s this about?’”
It helps that Matthew has managed to win the
enthusiastic support of chief officers – partly because
Preston is getting recognition as a result of the path they are
forging. “Yes, we have done a bit of arguing about it,
through the different angles and about its wider viability,”
says Derek Whyte, assistant chief executive. “We do have a
wider social justice agenda. It’s been a matter of going
through it, issue by issue, and deciding to start with these
and then leaving the others until later. It has been a less
difficult sell than I had anticipated.”
Perhaps that’s because Preston has a clear local identity.
Perhaps it’s because, like so many other places, it no longer
made sense in the current economic climate to ignore the
fact that the council, the pension fund, and other
institutions could use their money differently. Perhaps it’s
because councils like Enfield, Blackburn and Islington have
been beating a path to their door.
“What do we do in local economies beyond the big
cities?” Derek Whyte and CLES director Neil McInroy
asked an academic conference in Manchester. “Continue
within the economic agenda – inward investment, combined
authority and so on – but also re-position and reset local
places in relation to global economic forces. Create networks
of local economic activity that are more independent and
self-sustaining. Start thinking about reorganising policies
which build a grounded economy in the areas which are not
as exposed to competition.”
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Preston has become one of the very few places in the
UK which is trying to shape some new economic levers
systematically – not just with local banks or any of the
other solutions, but by using all these new tools together.
That is difficult and ambitious but inevitable – given the
financial pressure local authorities are now under. The
need to get under the bonnet and see where the oil is
flowing, to use a motoring analogy, is urgent. Only then
will local authorities be able to determine whether
money might flow in ways that benefit their population
a little more.
“We are putting them all together to shift to a more
democratic economy,” says Matthew. “We have had success
in that we now have a living wage culture and a credit union
and an affordable housing culture.The question now is how
can we take a step forward and change the way we are doing
things more fundamentally. Because we need to do that
otherwise we will get another economic recession.”
**
Using public sector procurement to rebuild the fine mesh of
a local economy remains a controversial business. But it does
have a long history: over millennia cities have developed by
replacing imports. And it is happening even now. One of the
world’s leading economic geographers, Paul Krugman, put it
like this:
“Although we talk a lot these days about globalisation, about
a world grown small, when you look at the economies of
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modern cities what you see is a process of localisation: a
steadily rising share of the work force produces services that
are sold only within that same metropolitan area.”7
Preston’s systematic experiment has become a fascinating lab
for our local economic futures.
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VIII A whole new kind of
Cadbury
Sandwell
Lessons. The Right Care, Right Here partnership
has thought more about the future shape of
public services than almost any other
organisation. Their lessons so far are extensive,
their achievements too many to list, but in
summary:
· Innovation doesn’t emerge from strategy,
(and KPIs can actively throttle it) but
from experiment and the right processes
and this is paradoxically the best way of
creating efficiencies – by allowing public
services to work more closely on shared
and agreed objectives.
· It makes no sense to have the trademark
NHS staff shortages in the middle of an
area of high youth unemployment, when
you could just train young people up.
· There is a middle category of
procurement – not the big technical items
or the small bulk items, but those in
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between – which can be used to
revitalise local economies.
Chocolate maker George Cadbury had a vision of how a
company could have a beneficial ripple effect on the lives of
their employees, their families and neighbours. Just before
the end of the Victorian age, he and his brother Richard
bought fourteen and a half acres of land between the villages
of Stirchley, King’s Norton and Selly Oak, four miles
outside Birmingham. It became known as the model
community of Bourneville.
The first chocolate factory there included a kitchen for
cooking lessons for staff, dressing rooms to change out of
wet clothes, a cricket field and a small dining room. But
then Bourneville was more than just a factory; it was
intended also to be a pinnacle of enlightenment, a statement
of what business could and should be, a treatise on
manufacturing and social change. It was also a living
embodiment of what George and Richard believed their
duties were as employers. Not just a factory, but an
educational establishment.
Bourneville began to reflect their concern about
homelessness, testing out a range of new kinds of social
housing, low interest mortgages and new designs for clusters
of homes, with gardens and fruit trees behind each cluster at
the back of each set of homes.There was a gym, a drawing
studio, a laboratory, a library and a music room.There were
Bourneville pageants, carpentry classes, choral singing, male
voice choirs, operas, folk dancing, and the Bourneville works
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music festival.The poet John Drinkwater wrote special
masques. It was a cultured place, a new design for living
which drew from the powerful alternative culture of the
1920s – a mixture of fresh air and Englishness. By the
1930s, the infant mortality of residents of Bourneville had
dropped to two thirds of the neighbouring city of
Birmingham.
But by then, the Cadbury brothers were dead and the
whole vision seemed patronising to some people.The writer
J. B. Priestley, in his 1936 book English Journey, wondered
whether the ideal might not be high-minded paternalism.
Might it not be better, he asked, to treat staff “not as
favoured employees but as citizens, freeman and women”.
Cadbury’s remains, part of the US conglomerate Kraft, and
the model village is a museum. But, seven or so decades after
Priestley’s book, great swathes of industrial Birmingham lie
derelict and overgrown, and the whole idea of Bourneville
seems once again like a bright dream of the future.
This isn’t so much about corporate responsibility, though
that provides an interesting lesson too. It is about
efficiency – if your chocolate factory can also tackle
homelessness, education and health, then local money,
public or private, can go a bit further. Or can it? That was
the question which one local regeneration official found
himself asking. And the Bourneville story is so well-known,
as part of Birmingham’s history, that Conrad Parke found
that other parts of the public sector were asking it too.
Specifically, they were asking it around plans for the longawaited
plans to replace Birmingham City Hospital, in the
disadvantaged west of the city.
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If you were to build a new hospital, for example, how
might you embed it so much in the community that its
economic ripples benefited everyone who lived there? Or, to
put it another way: isn’t it a waste of public resources just to
do one task at a time – what if you built a new school and,
instead of peering myopically at its league table position,
thought about how to reach out and improve the economy
so that its pupils could get jobs? What if you realised that
joblessness or alcoholism were stretching your NHS
resources too far, and you were able to reach out upstream of
the current to prevent some of the causes, as well as tackling
the symptoms?
A century after the start of Bourneville, at the turn of a new
century, huge lumps of public money were suddenly pouring
into inner city Birmingham – before stopping abruptly with
the banking crisis – and this kind of question was being posed
once again. Especially in the west of Birmingham and in
Sandwell, where they were making early moves towards
building a new replacement for Birmingham City Hospital,
sited on the border between the two authorities.
Conrad was among them. He had been in Birmingham
since his student days, starting as an engineer in a car
plant – but found, as he put it, that he wasn’t as good at it as
he might have liked. So he had drifted into youth work and
from there to social work and then social policy and
regeneration, taking part in the alphabet soup of
regeneration acronyms around the huge New Deal for
Communities scheme.
Then, from 2006, he worked for the regional development
agency. “The New Deal for Communities experience meant
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that I got to know some of the individual, outlying estates
really well,” he says. “And it convinced me that there was a
huge value in under-used public assets on these estates.
There was huge value to be found if you could co-ordinate
between public sector agencies, and there were so many
missed opportunities.”
It was the Cadbury question all over again. If you could
coordinate between agencies a bit better, so that spending
began to have double or triple effects – couldn’t you actually
regenerate more effectively, and less expensively? “The
problem is that schools didn’t seem to see their role also as
health providers, and health providers didn’t see their role as
also encouraging employment,” he says. “I came away
convinced that, if we could get all these agencies to see their
role as promoting quality of life, then it could release a lot of
value; it could have a bigger impact without additional
resources or funding.”
It so happened that, after 2010, the regional development
agency was winding up and Conrad was seconded to an
innovative project, based around the plans for the new
Birmingham City Hospital, and those managers were asking
exactly those same questions.
**
The new Midland Metropolitan Hospital will be open in
2018.The 3,300 permanent jobs it will bring won’t be new
ones, because they are replacing jobs in the old building
with another 2,600 working out of other locations in the
community, but it is still a huge undertaking – with
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enormous symbolic value too. Built on the border between
Birmingham and Sandwell, on brownfield land in the
neighbourhoods of Smethwick and Ladywood – two of the
most disadvantaged in the country – it is also hugely diverse:
a landing spot for new migrants. Recent studies show that
no one ethnic group accounts for more than a fifth of the
local population.
Since the plans were unveiled, city officials have been
wondering whether they might unleash some of the same
spirit as Bourneville. Yes, the private sector has more
flexibility to be philanthropic, but the basic idea might be
the same – asking whether the spending on health might be
used in such a way that it also impacts on some of the causes
of ill-health. Hospitals are huge spenders, after all.The
Midland Met will cost £353m to build and around £20m to
pay for its maintenance – where will that money go next?
Could it drive changes in jobs, housing or the environment?
Could it have a positive impact on the torrent of ill-health
that the NHS seeks to treat day in day out in the west of
Birmingham?
To help answer these questions, a partnership has already
been created: Right Care, Right Here is an alliance between
the four local NHS partners (the Care Commission Group,
the hospital and the community and mental health trusts),
the city and borough councils (Birmingham and Sandwell).
The agenda is, paradoxically, to move healthcare out of
secondary care, out of the hospital, and as far as possible
back to people’s homes and neighbourhoods.
This is hardly a new idea, but it is an ambitious one.
NHS innovators have been advocating the shift for some
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time – and Sandwell has been experimenting in practice
longer than most. Among the local experiments have been
the Time2Trade time bank – a support system where
people earn time for helping local people and can then
spend time when they need help themselves. It included an
innovative link with a local fresh fruit and vegetables
scheme, where the former Primary Care Trust turned
people’s time earnings into cash so they could buy fresh
fruit and veg.
Right Care, Right Here has a credo, which its members
sign up to:
“All partners will be prepared to consider changes in systems,
control over services, assets or workforce, income and
expenditure flows, where there is a wider benefit for the local
health and social care economy . . .”
Not only was this aim ambitious, it was also – as it turns
out – extremely difficult to achieve. It required resources for
community capacity building and prevention, with no
guarantee that it would reduce the necessary spending in
other areas any time soon.The NHS would have to carry on
doing all the stuff they used to do, with specialist medicine
and hospital beds – and may always have to – there were
and are no guarantees.
Despite their achievements so far, including new
community health outposts built deep in the local
neighbourhood, Right Care, Right Here was acutely aware
their overall objectives remained, for the time being, out of
reach. Programme director Les Williams approached
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Conrad and he was seconded to their team, initially for six
months, and he has been there ever since.
**
He began by getting, as he puts it, “massively over-excited”.
He set up a working group to partner with a whole range of
local organisations to achieve the various objectives.
Together they wrote a grand strategy and, over the next few
months, he realised his mistake.
“Sandwell was full of strategies,” he says. “Nobody wanted
another set of responsibilities on top of their job
descriptions, and it became clear that it wasn’t going
anywhere. It didn’t help that at the time everyone was
obsessed with budget cuts.”
Instead, he replaced the strategic people on his
regeneration working group with more operational
people, and found ways of encouraging partner
organisations to launch a range of initiatives to find out
what might work. “I’m still hugely convinced that this is
about processes and not blueprints,” he says. “If you work
the process, the outcomes will follow, but – if you focus
too much on outcomes – you’ll fail. You go down a dead
end. You’re better off trying twenty things to find out the
one what works.”
That credo is repeated by all the pioneers in this book, in
different ways.The trouble is, as Conrad recognises, it brings
with it a culture clash with the government: they are
spending public money and they want to know details of
precisely what the results will be – yet, paradoxically, if you
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can give them that information, the chances are that you
won’t succeed.
The regeneration working group has six broad
objectives. They want to find ways of increasing the
number of people employed at the hospital who live within
a mile – it is currently only a tenth. They want half the
workforce to work or cycle to work. They want to promote
healthier eating and promote the third sector. They also
want more locals in employment and they want to make
sure the money spent on the hospital is also supporting the
local economy.
There are projects being launched all the time that could
work towards meeting these objectives. One GP practice is
linking up with the voluntary sector to treat the needs of the
most prolific users of A&E.The NHS isn’t very good at
prescribing lunch or gardening clubs for loneliness, for
example, but this will help them do so.Then there is
Learning Works, the award-winning apprenticeship scheme
linked to Birmingham City Hospital, which is training up
local people.
Learning Works is the brainchild of Jim Pollitt, the
hospital’s associate director of learning and development. He
used a building on the local estate, donated by the council,
as an access point to organise apprenticeships with the
hospital, “It makes no sense to have the trademark NHS
staff shortages in the middle of an area of high youth
unemployment, when you could just train them up” he says.
He now has more than sixty under-nineteens working an
apprenticeship and the hospital employs seventy more as
permanent staff.
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“It helps us to influence and guide people into their
chosen career,” Jim Pollitt, said in a recent interview. “But
also to make sure these people are training with appropriate
ethics, ethos and the values that reflect our organisation, and
we know we are getting people with the right attitudes and
behaviour that satisfy our employment needs.” He is now
working on a project to provide accommodation and
employment to homeless youngsters, and to do so – like so
much of Right Care Right Here’s work, at no extra cost to
the NHS.
But in some ways, the most ambitious of all these
objectives – and by far the toughest – is the idea of using
NHS procurement budgets to support the others, so that
spending has a dual or triple effect, and by making sure that
the supply chains take in the local area.That is seriously
radical: it could have an enormous effect if it works, but it
requires overturning a raft of assumptions that used to be
shared in public procurement circles. And there lies the
challenge.
**
Cleveland was the American city worst hit by the sub-prime
mortgage crisis. There are two major economic players still
active there and they are both in the public sector: the
university and the hospital.To put the hospital to better
economic use, the Evergreen project has borrowed an idea
from one of the great success stories of co-operative
business, in Mondragon in Spain.The Mondragon story
dates back to just after the Second World War, when the
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local Catholic priest founded the first worker’s co-op to
employ local people and meet local needs (see Chapters II
and VII).
The Evergreen Project is doing this in much the same
way in Cleveland, but clustered around and dependent on
the hospital, starting with a sustainable laundry business
(see Chapter VII).The second project is a renewable energy
company, starting with installations on the hospital roof.
Both are new co-operatives that employ local people and
redirect the spending power of the local hospital to launch
them and underpin them. It requires money but it is money
that is already being spent – it isn’t about raising more; it is
about altering where it flows to.
Conventional thinking suggests that money will trickle
down from the successful to eventually employ the
unsuccessful – especially if they leave their communities on
foot, or on their bikes to find work. We know of course
that trickle down doesn’t work, and have known for
decades, just as we know that, in practice, the most
disadvantaged people don’t leave. But what do we do
instead? Cleveland’s Evergreen approach is one example
which has spawned a range of copycat ventures in the
USA. Of course it makes a difference to the hospital too if
more of their catchment area are in paid employment. It
means they are likely to be healthier, for one thing. There
may be downsides, of course: contracts may be more
expensive – but the research hasn’t been done to tell us
whether the extra costs outweigh the savings.
Also, the rustbelt of the Midwest is as different from the
West Midlands inner cities as it is possible to be when it
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comes to administration.They do things differently there.
Procurement officials have different duties and less flexibility
in the UK. Broaching the subject with them hasn’t been easy
and it has been taking up Conrad’s time for nearly five years.
He describes the experience as “exhausting, frustrating,
stimulating and exciting”.
His first formal meeting with NHS procurement officers
did not bode well.Their staffing was too small, they didn’t
have the luxury for this kind of detail, it wasn’t their
responsibility to re-direct spending to solve other problems.
It was a kind of brick wall.
His strategy to get round it was to begin by asking the
advice of the Centre for Local Economic Strategies
(CLES), based in Manchester (see Chapter VII). It was, he
said, a “shameless shock and awe tactic”. CLES looked
closely at the total spending by the three hospitals in the
local area and found that, of the £150m a year, only about 15
per cent of the big contracts (over £100,000), were going
back into the local Birmingham and Sandwell economies.
The CLES study was published in 2013 and, by then,
things were beginning to change.The Localism Act, and
before that the Social Value Act, had opened a chink of
possibility which might allow more innovative approaches
to – as Labour’s Peter Shore put it a generation ago “bend
the main programmes”. By then the two local authorities
were keen and so was Toby Lewis, the new hospital trust
chief executive.The hospital’s head of finance also managed
to change attitudes.
Looked at more closely, there are three kinds of spending
where hospitals reach for their chequebooks:
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· Category A is technical stuff, like scanners, X-ray
machines and specialist equipment, which is clearly
not going to go anywhere except to the specialist
companies that make them. Nobody wants to be
plugged into a locally made heart monitor.
· Category C is the stuff that needs to be bought in
bulk to make reasonable efficiency savings, and which
arrives in every hospital every morning in huge
lorries – everything from tissues to surgical gloves.
But there is a middle tier, Category B, which the research
identified could, beneficially, be spent locally.This spend is
mainly on services, from IT and cleaning to catering and
maintenance. Here was the opportunity where some shift
might be possible – and CLES was busy looking at the
various lines on the accounts to come up with a baseline
figure. At that time, only 1.9 per cent of the spending they
looked at over a nine-month period was making it back to
Sandwell (another 14 per cent was going into
Birmingham).
CLES was able to show that, overall, just over 30 per cent
of spending by the average local authority was spent in their
own boundary. If the new hospital managed something
similar, then it would mean another £14.2 million flowing
through the local economy, which might could translate into
over 700 new jobs.
It was Karen Leach at Localise West Midlands who
pointed out the Cleveland Evergreen project to Conrad.The
USA was different, of course, and hospitals there have more
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flexibility to start co-ops and contract them – but it was an
inspiring story of what might be possible if the new
Midland Met began to irrigate the local economy with its
planned spending. If it deliberately set out to reach parts of
the local economy that were particularly intractable it could
have a significant impact on the local economy and,
especially, job prospects for local people.
So Conrad has been working with Co-operative Futures
to do feasibility studies of similar kinds of enterprises set
up around the hospital. It has also been possible to raise
money from foundations to do the pilot studies so that the
NHS doesn’t have to pay, as long as local managers give it
their blessing. As a part-time geography lecturer, Conrad
has also been encouraging his students to do more detailed
studies of where the money is going now. One of them has
found that Sandwell Hospital used to spend nearly
£100,000 on frozen curries, imported from Newcastle and
trucked down the M1.
“This is the Black Country, for goodness sake,” he says. “It
is the home of British curry. Bringing them in from outside
is like bringing coals to Newcastle. It could be the backbone
of a local business.”
Given that a fifth of all households in the mile and a
half around the hospital site speak no English at all,
perhaps one of the sectors the neighbourhood might
supply is expertise in various different kinds of ethnic
cuisine. There are possibilities there as well for new
enterprises on the hospital site, because the hospital trust
decided to be the first to exclude those options from its
main Private Finance contract.
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There are objections, of course. It could be argued that
contracting locally is bound to involve more expense. As
discussed previously, there are economists who regard this
kind of thing as a form of protectionism, though you might
equally well see it as increasing the competition by bringing
in smaller local companies who might be able to take on the
competition.The Treasury might reasonably object that this
is re-arranging the geography of money, rather than
bringing in anything new (see Chapter VII).
“It is true that taking curries from here rather than
Newcastle isn’t creating any new jobs,” says Conrad. “But
this is the hospital raising their spending on creating health
outcomes in the community they’re serving, and they’re not
serving the community of Newcastle.”There is also the idea
of what is known in local economics circles as the ‘local
multiplier’, a repurposed local version of Keynes’ original
idea that money gets re-spent. If the money is spent locally
once, some of it will be re-spent locally, and so on and so on,
each time keeping people employed.There will be secondary
and tertiary businesses which benefit Sandwell – perhaps
instead of secondary businesses in Newcastle. And we know
that local spending is recycled into jobs more than national
spending is.This is because smaller businesses take out less
in profits than bigger businesses and send less abroad.
“It isn’t quite science yet, but we are bound to be building
in economies with less distance,” says Conrad. “And the
evidence is that, if you take your eye off the money and
think instead about quality of life, and if we can keep the
money flowing through – and developing thriving,
connected communities – then crime will go down, and
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educational achievement will go up, and teenage pregnancies
will go down.Those are the unknown savings of bringing
jobs nearer.”
But Conrad also has another argument for local curry
which he calls romantic, but may actually be very hard-headed.
“I like to think that this local company will make curries
for their local hospital, and will do so in knowledge that it
will be their mum or their neighbour eating them, and they
will be made, as a result, with a bit more love, a bit more
care and a bit more passion.” It is an argument that won’t
appeal to utilitarians, or anyone for whom a curry is a curry
is a curry – they will tell you that you can’t measure the
difference – but very small differences, as we know, can
create major shifts. So Conrad may well be right.
**
The local authorities were backing the idea.The research was
complete.The projects were under way in ever greater
numbers, and CLES were preparing to present their research
findings in detail to a network of NHS procurement chiefs
for the Midlands with the hope of trying to attract other
hospital trusts to come on the journey. Conrad didn’t realise
he was heading for his worst moment so far.
It was now 2014, and the room was full of twenty senior
managers. At the end of his presentation, “you could have
heard a pin drop”. One of the managers put up a hand to
break the silence: “This isn’t our democratic responsibility,”
he said. “All this idea of supporting local business is not
our job.”
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“I felt crushed,” said Conrad. But he also realised just
how fortunate he was to be working with a partnership
like Right Care, Right Here who were already
committed to this way of working. A year on, he believes
that the idea is difficult – they have at least two failed
projects for every success – but he also believes they are
probably now unstoppable. The Right Care, Right Here
partnership is still on board and enthusiastic, despite
ever increasing budget challenges and performance
targets. There is a momentum now behind a way of
thinking that goes back to George Cadbury, and which
has been brought bang up-to-date by the idea and
practice of an ‘anchor institution’ that’s alive and well in
Cleveland, Ohio.
The difficulties are especially intense when it comes to
housing. Conrad and his colleagues have started a series of
conversations with housing associations, only to have their
senior managers leave and hand over to new managers half
way through the project – and now the housing associations
are facing political uncertainty too.
The successes look less symbolic.The main PFI
contractor Carillion is splitting their sub-contracts into
smaller chunks and making them public on a website,
developed in partnership with Sandwell Council, that is
based on a virtual model of the new Midland Metropolitan
Hospital.Through this award winning approach, they are
hoping that 70 per cent of the spending during the
construction phase will go through local supply chains.
Sandwell Borough Council is also seeking out small
manufacturers and training them in the ubiquitous Building
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Information Management system (BIM) used for big
projects of this kind.
There are also ambitious plans to start small food
production businesses on site for many of the 80 or so
ethnic groups that live within a mile radius of the new
hospital, supplying the hospital catering team and maybe
beyond. Officials are asking fascinating and potentially
visionary questions – what does a primary school look like if
it is linked to a hospital? How do you link the new housing
developments more directly to the hospital? How can you
train up the local population to be the nurses and
professionals the hospital will need so desperately?
“I don’t know what it will look like, but I know what it
won’t look like,” says Conrad, shunning the specified
deliverables – the detailed KPIs that governments crave.
“Most hospitals look like a castle with moat of car parks,
with no connection to the place, and no idea that their
neighbours might be assets. Our new hospital will have
five new housing developments around it. It can either
block them out or try to connect and, this time, they’re
going to connect.”
If it happens, and it now seems likely to – at least to some
extent – then Conrad’s role will remain pretty obscure. He
has no glorified job title which will allow him to take the
credit.The actual task of finding and shaping the new
environment of micro-businesses that are capable of
delivering the services the new hospital will need – or
training the staff from the cohort of young people emerging
from local schools – will be carried out by others:
procurement officers, training officers, officials from a wide
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range of different professional and public sector silos. Yet
the hospital trust’s board became one of the first to publish a
Public Health Plan in 2014, overseen by a committee run
directly by its chairman, so there is commitment from the
top of the organisation.
“I’m just the interpreter,” he says. “That’s my day to day
job. I don’t do any of the work; I just sit in meetings with
procurement teams and the hospital trust and the third
sector and help them to talk to each other – and, when you
do that, you release all these opportunities. I’ve always
worked between the spaces.That’s my background.”
It’s a demanding task nonetheless, “On a good day I feel
like a spider pulling strings from the middle of a web. On a
bad day I feel like a bad magician failing to keep all the
plates spinning.” But out of this cacophony of projects and
ideas, a new kind of economy seems to be taking shape.
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173
Epilogue
The purpose of this book is pretty simple. It is
to try and make visible the emerging social
entrepreneurial revolution in neighbourhoods
around the UK, especially to policy makers and
to the people who run our towns and cities.
Because this isn’t quite like previous
unleashings of enterprise, and it escapes most
conventional categorisation and classification. It
isn’t just about private profit – though it can
be, and it seems to make this more likely –
but about “imagining the world differently”, as
the late Anita Roddick put it. It isn’t about
globalisation; it is about building more
successful economies that are resilient enough
to ride out the global economic storms. And
which can, to some extent, wean themselves
off dependence on Whitehall.
This quiet revolution has remained largely invisible to
national commentators and policy-makers because they
are wedded to the old models of development – patiently
waiting for the government grants or the international
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EPILOGUE
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investment which no longer flows in. It remains largely
ignored because, to Whitehall, it seems too small to count.
But the idea of featuring the stories in this book is that
they represent an important new movement – an
entrepreneurial determination to use what local reserves
of money, energy, people and imagination there are, to
weave an economy that supports the rich tapestry of local
life.
It is also emerging at a very significant time.The
devolution of power is high on the political agenda, and the
Chancellor has hailed a ‘devolution revolution’ – but the
benefits of devolution are still vaguely expressed and,
specifically, how the ‘growth’ is expected to filter down and
underpin the lives of the people who live there.8
The
promises of jobs are not about the quality of jobs.The hopes
of improving national finances are only vaguely linked to
how it might improve local prosperity. And city leaders are
still stuck in the mind set of supplicants to central
government, nervous about how they might go about
generating prosperity themselves – unsure whether they are
even allowed to.
On the face of it, the stories in this book are completely
different.They are tales of very different people, from very
different political and social backgrounds, who nonetheless
share some key assumptions, but there are a number of
common themes.The stories all tell a tale of effective,
hard-working, imaginative and enormously resourceful,
pioneering people.They all have some interest in politics,
though only one in formal party politics, and they probably
vote differently too (I didn’t dare ask).
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EPILOGUE
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But there are some other similarities and these are the
themes which run through these stories:
1. They see money differently: it needs to flow around a
local economy.
There are not bottom lines in these stories in quite the
same way as conventional regeneration suggests that
there should be.The concern of these pioneers is not how
much money is going into a city economy, but what
happens to it when it gets there – how many times it
changes hands before it flows away again, how deep into
society it reaches, how many businesses it supports.They
are interested in money more broadly as buying power
too: it might take other forms, just as the Bristol pound
is designed to provide spending power that flows more
enthusiastically around the city.The point is that it isn’t
their concern to let money mount up, or to attract
outside investment or regeneration grants, but to make
sure that what income there is flows better.
2. They can see the importance of shaping local
institutions to make regeneration easier.
Nearly all the pioneers have found themselves advising
other places which want to follow in their footsteps, then
shaping the networks and support that can underpin this.
3. They need more flexibility than conventional
regeneration targets give them.
The entrepreneurs here have tended to be sceptical, not
just of KPIs but of strategies and plans that try to pin
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down precisely what will happen – and which tend to
end up in bottom drawers.Their approach is often more
intuitive, going with local enthusiasm, experimenting and
encouraging experiment and being flexible enough to
change direction when they need to.This implies that,
despite the way Whitehall sees it, individuals are
considerably more important than policies.
4. They are intensely practical rather than ideological.
These are problem solvers: people who have been
frustrated with the conventional way of doing things, or by
the sometimes extractive behaviour of big organisations in
a local economy, and who are motivated and determined
to find new ways – whatever works – of helping people to
be a bit better off.
5. The need to partner with the mainstream.
The Bristol Pound team needed to partner with the local
credit union; the Wessex group is supported by the
expertise of conventional bankers; the Transition team in
Totnes found themselves working with the district
council and its chief executive. It can be uncomfortable
working closely with mainstream institutions that may,
or may not, appreciate new methods and objectives. But
the alternative is a kind of powerless ghetto.This also
works the other way around: official institutions which
realise their existing methods are less effective than they
should be also need to find ways of building alliances
with local entrepreneurs – just as Right Care, Right Here
has done in Sandwell.
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That is the common pattern, set out in such different ways
by the stories here: enterprising and uncompromising
individuals and their friends, who learn to compromise over
the details, and who go on to found the local institutions
that small-scale regeneration requires.They are mostly wary
about conventional ‘scaling up’, but also aware that smallplus-small-plus-small
equals big. It can, as we have seen, be
frustrating and slow for both sides in these new
relationships between the small-scale and the mainstream.
But our contention here is that there is an acceleration – and
these stories are a testament to the emerging shift.
**
What needs to change to speed up this small economic
revolution emerging below the radar?
Given it is emerging by itself; the short answer is, perhaps,
there isn’t anything that needs doing. But a closer
examination of these stories implies otherwise.The damage
that is done by the wrong kind of government intervention –
or a sudden change of policy direction – is huge. Government
intervention created the solar revolution that is devolving a
small measure of economic power, and now also threatens to
undermine it. Nor is it just renewables policy – the peculiar
demands and targets attached to other government funding,
in banking or school meals, have succeeded in compromising
and, sometimes, ruining the best efforts of local entrepreneurs
in a number of examples here.
The real problem is that government policy is blind to the
pioneers’ efforts. Government doesn’t celebrate the successes
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of local enterprise, doesn’t recognise that they are important,
doesn’t see the potential and – worse than this – often
actively disapproves. So the first thing we need to achieve is
a new level of understanding, in central and local
government, about what is emerging. But there are more
fundamental changes that are needed to accelerate the local
entrepreneurial revolution: making sure the education
system promotes practical skills, enterprise, creativity and
the ability to make things happen. Finding ways to embed
the idea of entrepreneurial regeneration in the minds of
national leaders, as well as local ones, so that economic
policy reflects its potential importance for making places
economically independent. And promoting an interest
among local leaders about where the money flows, and how,
around the economies they are responsible for.
Because, although the people are local, and the levers and
credit and enthusiasm is local and the results are felt
locally – the implications are national.This is the paradox
for policy-makers and the reason they need to engage.
There are three areas that need immediate attention:
1. Policy-makers, local and national, must be better
informed about the new paradigm of local
regeneration. If they are not aware of it, there is a
tendency to discount the benefits.There are also cities
where no other solution seems likely. We propose that
the government:
a. Set up a joint team at the Treasury or Cabinet
Office between very local economic practitioners
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and civil servants, along the lines of the
community energy team at DECC, with the
responsibility for intelligence gathering and
identifying obstacles, and making proposals about
how they might be eased.The same unit needs to
exist in a small way in every city and district too,
so that the pioneers are also involved in deciding
what data to collect.
b. Link this team up with a university business
department with an expertise in the area,to take the
lead in gathering local economic data – which is
almost entirely missing.Every city also needs to know
where the local spending power is flowing and where
it is not – and where it could flow more effectively.
c. Track the balance of national wealth that is
investing in SMEs compared to multinationals,
aware that at least half of our national wealth
comes from the former and that our economy is
unbalanced and inefficient if it fails to invest in
local wealth-creators.The same knowledge needs
to be available at local and regional level.
2. Local entrepreneurs need local institutions that can
support them. Policy-makers need to develop a more
appropriate level of regulation that accepts that you
can’t expect the same systems that work for giant
multinationals to also apply to local enterprise or
community entrepreneurs.
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We propose that the government:
a. Set up a mechanism to review LEP strategies in
disadvantaged areas, against how much they
maximise the local economic benefits of all local
spending, and encourage them to find more
representation from people who understand the
needs of smaller companies, locally owned
companies and companies demonstrating a
commitment to the local area through their
supply chains and employment practices.
b. End the use of preferred supply lists and
minimum size thresholds for public sector
contracts and make sure that contracts are smaller
and last for longer, so that local organisations have
a chance to bid.
3. These pioneer social entrepreneurs need credit at a
lower, more accessible level. Policy-makers have not
yet got to grips with the implications of the
withdrawal of mainstream banking from the SME
market and what can be done instead. We propose
that the government:
a. Give banking regulators a duty to promote a
diverse banking system. With institutions that owe
their knowledge and profits to city or regional
economies – this is probably the most important
policy change needed.
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b. Hold the reins for a dialogue with the banks about
their own potential role in funding and shaping an
effective local lending infrastructure.
c. Use the British Business Bank to create a
community finance loan facility of £100 million, to
be deployed at low interest by credit unions,
CDFIs to lend on to SMEs, social enterprises and
individual consumers denied access to mainstream
credit and finance services, along the lines
pioneered by the German bank KfW.
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Acknowledgements
We are tremendously grateful to the staff and trustees of the
Barrow Cadbury Trust, without whom this book would not
have been possible, and particularly to Clare Payne and her
colleagues for all their help and advice.The Trust has played
a pioneering role in the development of local economic
regeneration and deserves the gratitude of the emerging
sector for their important role.
We also need to thank them for funding what has been
an invaluable document to support some of the claims in
this book. For further evidence, the review by Localise West
Midlands is invaluable (Morris, J.; Cobbing, P.; Leach, K
and Conaty, P. (2013), Mainstreaming Community Economic
Development, Birmingham: Localise West Midlands).9
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184
We would like to thank the team who ran the project,
including Sarah Burns, Angie Greenham, Andrew Simms
and Lindsay Mackie, and all those involved in the
production of this book. Finally, we would like to thank all
those who feature, who read through versions of the stories
and gave their time so generously to advise us or give us
interviews.Their inclusion doesn’t imply that they agree
with us about everything, but they all helped our thinking
and we couldn’t have done it without them.
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Notes
1
http://www.mondragon-corporation.com/eng/
2
There have been various attempts to do so, notably in Michael
Danson’s micro studies, and much less precise attempts using LM3
(https://www.lm3online.com/about).
3
Bernie Ward and Julie Lewis (2002), Plugging the Leaks: Making the
most of every pound that enters your local economy, London: New
Economics Foundation.
4
Matt Cunningham and Dan Houston (2004), The Andersonville
Study of Retail Economics, Civic Economics, Chicago.
5
Justin Sachs (2005), Public Spending for Public Benefit, London:
New Economics Foundation.
6
http://www.cles.org.uk/wp-content/uploads/2015/02/
Final-briefing-pa
7
Paul Krugman (1996), Pop Internationalism, Cambridge: MIT
Press, 211.
8
Sarah Lyall et al (2015), Democracy: The missing link in the devolution
debate, London: New Economics Foundation.
9
http://www.barrowcadbury.org.uk/wp-content/uploads/2013/02/
MCED-final-report-LWM-Jan-2013.pdf
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