There is no telling when the next UK general election will come, and when the Corbyn Project could accede to national political power in what R.H. Tawney once called ‘the oldest and toughest plutocracy in the world’. But there is still plenty of work to be done in the meantime. While there were some advances in last month’s local elections, the mixed results underscore the difficulty of mobilisation around a stale and sterile managerialist model of local government, as embodied in all too many Labour councils.

Austerity at the national level may have been eased, at least rhetorically, but a fiscal crisis of the local state still rages. Since 2010, government funding to local authority budgets has been slashed by 49.1 per cent, with more pain still to come; by 2020, cuts in central government funding are forecast to reach 56.3 per cent. Although plans for all councils to receive 100 per cent rates retention by 2019/2020 have been placed on ice, cuts premised on this change continue unabated. Almost half of all councils are set to lose all central government funding by 2019/2020, with a yawning £5.8bn funding gap opening up by the end of the decade. Even with the best will in the world—clearly lacking in places like Haringey, where until recently a ghoulish Blairite zombie local government politics still walked at night—this has not been a promising context in which to build political support for and project out a Corbyn-inflected ‘new economics’.

But difficulty need not be impossibility—as can be seen in the path taken by the flagship Labour council of Preston in Lancashire. In a few short years Preston has gone from being one of the most deprived parts of the country to a model of radical innovation in local government through its embrace of community wealth building as a modern reinvention of the longstanding political tradition of municipal socialism. Community wealth building is a local economic development strategy focused on building collaborative, inclusive, sustainable, and democratically controlled local economies. Instead of traditional economic development through public-private partnerships and private finance initiatives, which waste billions to subsidize the extraction of profits by footloose corporations with no loyalty to local communities, community wealth building supports democratic collective ownership of—and participation in—the economy through a range of institutional forms and initiatives. These include worker co-operatives, community land trusts, community development finance institutions, so-called ‘anchor’ procurement strategies, municipal and local public enterprise, participatory planning and budgeting, and—increasingly, it is to be hoped—public banking. Community wealth building is economic system change, but starting at the local level.

The term first emerged in the United States in 2005, and was coined by our colleagues at The Democracy Collaborative. It was used to describe the model then beginning to emerge in the severely disinvested inner-city neighbourhoods of some of America’s larger cities as a response to crisis and austerity. As federal and state fiscal transfers dried up, social pain intensified in communities that had long been suffering from high levels of unemployment and poverty. Precisely because large public expenditures for jobs and housing were seen to be no longer politically achievable, more and more people started turning to economic alternatives in which new wealth could be built collectively and from the bottom up.

There are now two flagship models of community wealth building—and a growing number of additional efforts in cities across the United States and United Kingdom.  The first model is the Evergreen Cooperatives in Cleveland, Ohio—created, in part, by our own organisation, The Democracy Collaborative. Cleveland had lost almost half of its population and most of its large publicly-traded companies due to deindustrialisation, disinvestment, and capital flight. But it still had very large non-profit and quasi-public institutions such as the Cleveland Clinic, Case Western Reserve University, and University Hospitals—known as anchor institutions because they are rooted in place and aren’t likely to up and leave. Together, Cleveland’s anchors were spending around $3 billion per year, very little of which was previously staying in the local community. The Democracy Collaborative worked with them to localise a portion of their procurement in support of a network of purposely-created green worker co-ops, the Evergreen Co-operatives, tied together in a community corporation so that they too are rooted in place. Today these companies are profitable and are beginning to eat the lunch of the multinational corporations that had previously provided contract services to the big anchors. Last month came the announcement of an expansion of the Evergreen Cooperative Laundry to a new site serving the needs of the Cleveland Clinic, with a hundred new employees on fast track to worker ownership.

The ‘Cleveland Model’ is one of the sources of inspiration for Preston, now the pre-eminent example of community wealth building approaches in the UK. Back in 2012, Evergreen caught the attention of Labour councillor Matthew Brown, now a colleague at The Democracy Collaborative. With the help of others, such as Neil McInroy at the Centre for Local Economic Strategies (CLES), Brown took the Cleveland Model and radically expanded it. The ‘Preston Model’ now encompasses a string of public sector anchors across Preston and Lancashire, to which has been added public pension fund investment, affordable housing, and—hopefully, in the near future—an energy company and a community bank.

A longstanding tradition

Both the Cleveland and Preston Models represent a reinvention of a longstanding political tradition that played a significant role in the development of mass socialist politics in Europe and North America—and could now do so again, just when such a politics is most needed. In the late nineteenth and early twentieth centuries, activists on both sides of the Atlantic began to articulate a sophisticated political-economic theory of change. They suggested that by advancing a radical yet popular economic strategy of democratised ownership, good governance, and better working conditions at the local level, they could begin to build political power from the ground up. “Little by little the conditions of the people are to be improved”, Carl Thompson, a Wisconsin State Legislator and one of the United States’ leading municipal socialists, argued in 1907. “[T]hus, in every way, society will be gradually prepared for and led into the experience of Social-Democracy” (Thompson, 1908, 28). Similarly, in Britain in 1919, the Russian émigré and radical journalist Theo Rothstein asserted that local councils should be transformed “into so many forts from which to assail the Capitalist order” (Rothstein, 1919).

Municipal socialists believed that by pursuing policies and conducting campaigns around economic issues that directly affected the community, they could build durable political coalitions, raise the aspirations and political awareness of ordinary working people, and develop the political and administrative skills for further social and economic transformation (Judd, 1989; Stave, 1975). This coupling of consciousness-raising with the marked material enrichment of everyday life could then be deployed to the furtherance of socialism more broadly—in local, state, and national elections.

In the UK, interest in the economic and political possibilities of municipal socialism came and went with the rising and ebbing of the tides of economic reform and mass politics. At the beginning of the twentieth century it was led by early Fabian thinkers, with six Fabians—among them Sidney Webb—being elected to the London County Council in the 1892 elections. Of the first hundred Fabian tracts, written between 1884 and 1900, some forty-three discussed issues of local government (Chandler, 2007, 130-131). In What About The Rates?, Webb’s 1913 treatise on the financial autonomy of the municipalities, he protested vociferously against a political strategy which sought to marginalise the municipal: “Let us leave such proposals to the enemy … We, as Socialists, much cherish local government, and aim always at its expansion, not its contraction” (Webb, 1913, 9-10).

Municipal socialism was thus conceptualised as a consciously-evolving process, simultaneously shifting ownership—and with it power—whilst raising local living standards. Economic and political successes were consciously built upon to expand the strategy both horizontally (to other municipalities and industries) and vertically (to larger enterprises and services, and higher levels of governance). F. Lawson Dodd demonstrated the unfolding logic of this approach in a 1905 tract, arguing that the merits of water municipalisation warranted a further municipalisation of the milk supply on the bases of both power and public health: “The establishment of municipal milk depots supplied from municipal farms is the first step towards the social organisation of the dairy industry … The community would take over the whole of the supply”, he argued (Lawson Dodd, 1905, 17). The full extent of the impressive economic footprint achieved by municipal ownership in late-nineteenth-century Britain is nicely captured in the account given by Webb in his 1890 book Socialism in England:

“The ‘practical man,’ oblivious or contemptuous of any theory of the Social Organism or general principles of social organisation, has been forced by the necessities of the time into an ever deepening collectivist channel. Socialism, of course, he still rejects and despises. The Individualist Town Councillor will walk along the municipal pavement, lit by municipal gas and cleansed by municipal brooms with the municipal water, and seeing by the municipal clock in the municipal market, that he is too early to meet his children coming from the municipal school hard by the county lunatic asylum and municipal hospital, will use the national telegraph system to tell them not to walk through the municipal park but to come to the municipal tramway, to meet him in the municipal reading room, by the municipal art gallery, museum and library, where he intends … to prepare his next speech in the municipal town hall, in favour of the nationalisation of the canals and the increase of government control over the railway system. ‘Socialism, sir,’ he will say, ‘don’t waste the time of a practical man by your fantastic absurdities. Self-help, sir, individual self-help, that’s what’s made our city what it is’” (Webb, 1890, 65)

Tensions soon arose, however, between local and national aspirations. With the rise of Labour as an electorally successful national party committed to a top-down reorganisation of the British economy, municipal socialism began to wither. This was partly the party’s own doing, with one of the deleterious consequences of the centralising tendencies of Attlee’s post-1945 nationalisation programme being the abandonment and erasure of the rich tapestry of local traditions of municipal ownership, mutualism, and co-operation. The boards of the newly nationalised (and centralised) public companies were comprised of a curious assemblage of the contemporary elite, which often meant that the extensive tacit knowledge of the workers and successful economic practices of municipal enterprises were marginalised, ignored, or lost altogether. Knights, Lords, and generals were well represented on these boards (Jenkins, 1959, 16), but—to take but one example—not a single member of the fourteen appointees to the board of the first Gas Council had been connected with any of the numerous previous municipally owned public gasworks (Kelf-Cohen, 1973, 59).

Only with the sunset of the top-down Keynesian economic management of the postwar Golden Age did municipal socialism begin to re-emerge as a political force. In the dark days of Thatcherism, radical local experiments re-appeared in the shape of the Greater London Council (GLC) and other metropolitan councils. As Stuart Hall wrote, the GLC “operated right across the spectrum, politicising sites of daily life and drawing them into the orbit of politics in ways unthinkable to most conventional Labour councils” (Hall, 1988, 237). Thatcher, perhaps more than anyone, immediately saw the political danger inherent in any significant revival of municipal socialism—especially one with a strong participatory, democratic character. “The GLC represents modern socialism”, the arch-Thatcherite Norman Tebbit stated, concluding that ‘we must kill it’ (Wainwright, 2003, 8).

Many of Thatcher’s own colleagues were made somewhat uneasy by “her deep-seated and almost obsessive objections to urban socialists” (Kösecik and Kapucu, 2003, 87), whilst the municipal socialist and Labour MP for Manchester Central, Bob Litherland, wondered aloud in Parliament as to whether it might be deemed “unfair that the metropolitan counties have to suffer because a Prime Minister takes a paranoic view of Ken Livingstone and thinks that he is immortal” (HC Deb 11 April 1984). George Tremlett, a Conservative councillor on the GLC and outspoken critic of Thatcher’s abolition agenda, was dropped from the Conservative Group altogether after arguing that “the proposals were so outrageous and so contrary to all the Conservative traditions of government that they must call into question Mrs. Thatcher’s capacity to form a balanced judgement on important issues of public policy”, and eventually encouraging Conservatives to vote Labour in the 1984 by-elections (Kösecik and Kapucu, 2003, 77).

Despite this opposition, Thatcher persisted in her determination to abolish the GLC, which was accomplished with the Local Government Act of 1985, wherby these resurgent experiments in municipal socialism were legislated out of existence. With Thatcher’s defenestration of local government, municipal socialism once again faded from the picture politically in Britain. Recent plans to devolve power to local government have been a mixture of unintelligibility and—especially since 2010—cynical exercises in political buck-passing, particularly attempts to shift the blame for implementing austerity. As a consequence, the public has quite rightly reacted negatively to such efforts, as well as other associated attempts to address the overwhelming centralisation of Britain’s political economy and governance. Referenda on regional assemblies in England advanced by Tony Blair were soundly rejected—by as much as 78 per cent in the vote on devolution to North East England in 2004—while George Osborne’s lopsided localism agenda has been plunged into legislative formaldehyde with the arrival of Theresa May in Downing Street.

Municipal socialism revisited

In the modern era of 24-7 news cycles and horserace political coverage, local politics rarely receives much attention. When local campaigns and politics are covered at all, it is usually because such elections are deemed to be a bellwether for the relative national political strength of the parties. This downgrading of local politics also extends to political analysts and activists, and often even to the political parties themselves, as can be seen in their reluctance to invest precious resources in local campaigns.

There are promising signs, however, that this is now beginning to change. With the leadership of Jeremy Corbyn and John McDonnell, municipal socialism has once again returned to the Labour Party’s agenda in a powerful way. “With amazing creativity in the toughest of times, we are seeing the first shoots of the renaissance of local government for the many, not the few—the rebirth of municipal socialism”, Corbyn proclaimed in February of this year.

As indicated above, one of the leading models of re-emerging, modern-day municipal socialism in the UK is to be found in Preston. In 2011, the city—which had been declining economically since the 1970s—was reeling from a bitter double blow. Central government funding was plummeting under the austerity regime of Cameron’s coalition government and long held revitalization plans based on a £700 million shopping centre had collapsed. The newly-elected Labour council realized that they needed to come up with a new strategy. It was then that Councillor Matthew Brown, Cabinet Member for Social Justice, Inclusion, and Policy, stepped forward with his ideas. Inspired by alternative forms of economic development around the world, including the Mondragón cooperatives in the Basque region of Spain and the Evergreen Co-operatives in Cleveland, Ohio, Brown and his fellow councillors began to develop plans to deploy Preston’s existing assets and financial clout to catalyse a new local economic model that builds wealth rather than extracts it from the community. Working with the Manchester-based CLES, Preston Council approached the large anchor institutions in the area and came up with a strategy to shift as much of their spending and procurement back into the local economy as possible. In 2013, six of the local institutions that signed up for the effort spent around £38m in Preston and £292m in Lancashire as a whole. By 2017 this had skyrocketed to £111m and £486m respectively. The new localized contracts cover everything from school lunches to large-scale construction projects. Moreover, contracts shifted locally have a multiplier effect, as pounds circulate and recirculate throughout the local economy, creating jobs which in turn lead to more spending on goods and services, which then leads to the creation of more jobs, and so on.

The Preston Model, however, is about much more than just developing the local economy through shifts in spending and procurement. It is about alternative forms of ownership that not only enrich the lives and livelihoods of residents and workers, but also give them the opportunity to actively participate in the economic decisions that affect their lives and the future of their city. Even before working with the anchor institutions, Preston Council backed plans to develop co-operatives (and link them to the procurement needs of the anchors) and a public financial institution (see Chakrabortty, 2018; Sheffield, 2017; Singer, 2016).

Preston has been lauded by the Labour leadership and by sections of the media as an example of what could be achieved—albeit on a far greater scale—nationally under a Corbyn-led government. “This kind of radicalism”, argued John McDonnell in a 2016 speech at the Preston-based, worker-owned transport company TAS, “is exactly what we need across the whole country”.

Star Guardian columnist Aditya Chakrabortty kicked off his excellent new series exploring real-world economic alternatives with an in-depth study of the Preston Model, following on the heels of a broadly sympathetic write-up in The Economist, which dubbed Preston ‘Corbyn’s model town’. In a speech to the Co-operative Party, Corbyn himself praised the “inspiring innovation” of developments in Preston, particularly when set against the wider backdrop of swinging cuts to local government funding.

Preston also demonstrates the renewed potential of modern municipal socialism as a political strategy. As was the case a century ago, advancing a radical and innovative program of local economic regeneration can quickly lead to tangible political benefits. In the May 2018 local council elections, the Preston Labour Party pledged (among other things) to increase investment and jobs based on the Preston Model; to create a public bank and local wealth fund; to support the creation of new worker cooperatives; and to ask the Lancashire Pension Fund to invest more in the local economy (Preston Labour, 2018). The voters responded, as Labour increased its majority on the local council by picking up two seats—College Ward and Garrison Ward—that had long been controlled by the Tories. Moreover, as new councillor for College Ward Freddie Bailey explained to local journalists, “what we found helped was the Preston Model” (Farnworth, 2018). This was reinforced in the wake of the election when Matthew Brown was elevated to become Leader of Preston City Council.

Onwards to municipal socialism!

While it is right to remain cognisant of the limitations placed on local government by colossal cuts and decades of restrictive legislation, the twin temptations of fatalism—that nothing can be done—and deferral—that nothing can be done until Labour is in power in Westminster—must be roundly rejected. As Preston today demonstrates, a new radical municipalism can indeed emerge in Britain (as it is doing all across the world in the face of neoliberal crisis and austerity) and can serve as the basis for potentially much further reaching national and international change. Exorcising the zombie councils who do little besides implement austerity is vital, but so is creatively, confidently, and collaboratively exercising the significant powers councils do still possess.

As Daniel Frost recently urged in New Socialist, and as we have argued previously, there is much that can be done already—as a movement we need not wait for Labour to gain power nationally before we begin advancing ambitious programmes around a ‘new economics’ based on radical modern reinventions of municipal socialism.

Working with and for the local community to invigorate popular participation in economic decision-making and create—rather than merely extract—community wealth represents both an electorally and an economically successful strategy that can be implemented by councils across the country. The manner in which Preston has caught the imagination as a laboratory of ‘Corbynomics’ points to the wider role such approaches can play, not just in delivering for their local communities (vitally important though that is, the foundation of all else that follows) but also in helping us all to imagine, experience, and get involved with systemic economic transformation.

In an earlier period of economic contraction and difficulty in Lancashire, none other than Karl Marx wrote, in the New York Herald Tribune, of the emerging workers’ movement in the region: “The eyes of the working classes are now fully opened, they begin to cry: Our St. Petersburg is at Preston!”

Today, anyone looking around, from Capita to Carillion to the grim shadow of Grenfell Tower and the travails of East Coast Mainline, can see the existing neoliberal economic model failing and collapsing. But what holds a system in place, often, is a failure of imagination that things can fundamentally change, and that there are real, viable alternatives for organising a next system. Part of the answer to our failing economic system lies in on-the-ground experimentation and model building that embraces the design and principles of a new systemic alternative.

There is precedent for this. In the political science literature in the United States, it is known as the ‘laboratories of democracy’. In Britain, when Nye Bevan launched the NHS in 1948, he drew as inspiration from the Tredegar Medical Aid Society, a community-based model in South Wales that began in 1890. This small Welsh experiment was then scaled up into one of the world’s truly great public health systems.

We now have an opportunity—in the unknown amount of time between now and the next UK General Election—to get people familiar with the elements of the democratic economy through a widespread embrace of community wealth building approaches by Labour councils and local authorities. This suggests the potential basis for a new institutional underpinning for socialist politics, building support for our new economics from the ground up in a way that is far less scary and more comprehensible in a local context than it can sometimes appear at the national level. Our ambition, as the Corbyn Project, should be to bring about what Tony Benn termed “a fundamental and irreversible shift in the balance of power and wealth in favour of working people and their families”. Community wealth building is what that looks like when you start at the local level and begin creating systemic economic change from the ground up.

***

References

Chakrabortty, A. (2018) ‘In 2011 Preston hit rock bottom. Then it took back control’, The Guardian, 31.01.2018, https://www.theguardian.com/commentisfree/2018/jan/31/preston-hit-rock-bottom-took-back-control

Chandler, J. A. (2007) Explaining local government: Local government in Britain since 1800.Manchester: Manchester University Press.

Farnworth, A. (2018) ‘Labour turns two parts of Fulwood red with local election wins’, Blog Preston, 04.05.2018, http://www.blogpreston.co.uk/2018/05/labour-turns-two-parts-of-fulwood-red-with-local-election-wins/

Hall, Stuart. (1988) The Hard Road to Renewal: Thatcherism and the Crisis of the Left.London: Verso.

HC Deb (11 April 1984) Vol. 58, https://api.parliament.uk/historic-hansard/commons/1984/apr/11/local-government-interim-provisions-bill#S6CV0058P0_19840411_HOC_413

Jenkins, C. (1959) Power at the top: A Critical Survey of the Nationalized Industries. London: MacGibbon and Kee.

Judd, R. (1989) Socialist Cities: Municipal Politics and the Grass Roots of American Socialism. Albany: State University of New York Press.

Kelf-Cohen, R. (1973) British Nationalisation 1945-1973. London: The Macmillan Press.

Kösecik, M., and Kapucu, N. (2003) ‘Conservative Reform of Metropolitan Counties: Abolition of the GLC and MCCs in Retrospect’, Contemporary British History, Vol. 17, No. 3, pp. 71-94.

Lawson Dodd, F. (1905) Municipal Milk and Public Health. London: The Fabian Society.

Preston Labour. (2018) ‘Preston Labour Manifesto 2018 City Council Elections’, https://docs.wixstatic.com/ugd/b14b61_3f842b96c215443cac627887a71a18d7.pdf

 Rothstein, T. (1919) ‘A Revolutionary Municipal Policy’, The Call, 27.11.1919, https://www.marxists.org/archive/rothstein/1919/11/27.htm

Sheffield, H. (2017) ‘The Preston model: UK takes lessons in recovery from rust-belt Cleveland’, The Guardian, 11.04.2017, https://www.theguardian.com/cities/2017/apr/11/preston-cleveland-model-lessons-recovery-rust-belt

Singer, C. (2016) ‘The Preston Model’, The Next System Project, 09.09.2016, https://thenextsystem.org/the-preston-model

Stave, B. (ed.) (1975) Socialism and the Cities. Port Washington, N.Y.: Kennikat.

 Thompson, C. (1908) The Constructive Program of Socialism. Milwaukee: Social-Democratic Publishing Co.

 Wainwright, H. (2003) Reclaim the State: Experiments in Popular Democracy. London: Verso.

 Webb, S. (1889) Socialism in England. Baltimore: American Economic Association.

Webb, S. (1913) What about the rates?: or, Municipal finance and municipal autonomy. London: The Fabian Society.

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In the light of Brexit, can a new coalition of social class and territorial interests mobilise to deliver a meaningful industrial strategy?

This week, the government published its Industrial Strategy. It is a hefty document, weighing in at 255 pages, and clearly the product of many months of analytical and policy development work. Like most such papers, it is littered with the mini-reviews, micro initiatives and small spending pots that characterize cross-departmental policy documents. The prose is occasionally tortured by the Whitehall compromises it embodies. But it has a thematic coherence, drawn from a focus on tackling the UK’s productivity problem and proposals to orient economic activity strategically towards four “Grand Challenges” of an ageing society, the transition to a low carbon economy, mobility, and AI and the data economy. This focus on societal missions, some big increases in R & D spending, and the recognition that governments have a strategic role in shaping economic growth have pleased advocates for industrial strategy. It has been broadly welcomed.

The government’s white paper follows hard on the heels of two important contributions to industrial strategy policy, the first from the Commission on Industrial Strategy, established by the Universities of Manchester and Sheffield and chaired by Dame Kate Barker whose final report was published a few weeks ago, and the second, a discussion paper from the Institute for Public Policy Research (IPPR) Commission on Economic Justice.

Each of these sets out, in different ways, the persistent weaknesses in the British economy that justify a strongly articulated, non-partisan and consistently delivered industrial strategy: poor productivity performance, low rates of business investment, regional imbalances, chronically weak export performance, and poor diffusion of skills, R&D and innovation. These are familiar and largely indisputable lists.

Barker’s Commission on Industrial Strategy refrains from describing these weaknesses as symptoms of a deeper neo-liberal malaise or characteristics of a fundamentally broken British economic model; it positioned its report to appeal to policymakers across the political spectrum and its analytical framework reflects that.

In contrast, the IPPR contribution is directly addressed to the construction of a new economic model. It believes that the UK’s economy is governed by a neo-liberal intellectual paradigm that has manifestly failed and is on its way out, in academia as much as the institutions of economic policymaking. It adduces the government’s new industrial strategy as further evidence of the paradigmatic transformation in economic thinking that is underway.

Universal Basic Infrastructure

Like the government’s white paper, both of these contributions address policy frameworks and instruments that typically fall within the ambit of industrial strategy: infrastructure investment, innovation and R & D, skills, and regions (or “place” in the government’s parlance). Perhaps the most eye-catching feature of the Manchester and Sheffield report – doubtless a consequence of Diane Coyle’s membership of the commission – is the call for the state to ensure that a Universal Basic Infrastructure is provided in every area as a social minimum offered to all citizens. In broad terms, this infrastructure would be “hard” (rail, bus, broadband) and “soft” (schools, health and care services). The proposal deliberately echoes but subverts the idea of a Universal Basic Income, which has attracted significant political attention in recent years. Infrastructure is more important than income, the report argues, in promoting the capabilities of citizens for economic development while regionally-balanced investment in infrastructure would do more to address exclusion from centres of economic agglomeration and growth than income transfers.

The UBI proposal overlaps with recent calls for Universal Basic Services, another intellectual and political route into debates about securing inclusive citizenship in unequal, open economies like the UK’s. It has some congruence too with the argument for promoting the growth of the “foundational” or “everyday” economy that has been developed in recent years by the Centre for Research on Socio-Cultural Change at the University of Manchester. Here the anchor institutions of the local state – local government, the NHS and so on – are used to underpin sustainable demand in the local economy by paying living wages and using public procurement to keep income circulating locally, in strategic partnership with non-tradeable sectors like retail, hospitality and catering. A Corbynite version of this approach has been pioneered, with some apparent success, in Preston, where procurement budgets have been used to buy locally provided services and farmed food, and where cooperatives and other forms of worker control are being encouraged.

What about the millions in low waged sectors?

It is noticeable, however, that the commission’s report says relatively little (aside from the significant health and social care sector) about the low-skilled, low-wage sectors in which millions of British people work. This is also a major lacunae of the government’s Industrial Strategy, which focuses almost exclusively on high value-added sectors. This oversight is not accidental: political economists argue that all governments have an interest in meeting the needs of high value-added businesses, but it takes particular kinds of political coalition to ensure that the needs of low- and semi-skilled workers are addressed. Whereas in Fordist economies the interests of these workers could be aligned with those of skilled workers, in post-industrial service economies these working class coalitions have broken down, often leaving the low-skilled without allies. This is particularly true of majoritarian political systems that have co-evolved with liberal market economies, in which high-skill, professional employment in services has grown alongside low-wage, low-skilled work in the non-tradeable sectors.

To its credit, the IPPR discussion paper pays much more attention to these low skill sectors, where it empirically locates the bulk of the UK’s productivity problems. Importantly, it advocates a new focus on skills utilisation, rather than familiar invocations to improve skills supply. There is considerable evidence that UK employers do not appropriately utilise the skills of their employees and do not integrate skills into the design of job roles and business capital investment strategies. In a flexible labour market with high employment rates, employers have less incentive to invest in skills training, and weak trade unions and limited coordination between firms ensure that vocational skills development and utilisation are historically under-developed in the UK, in common with other liberal market economies.

Pet schemes – or Nordic vision and lifelong learning?

In this policy area, the government’s industrial strategy is noticeably weak. It claims to overhaul technical and vocational education in terms that are wearingly familiar from official policy documents of the last forty years (and even further back). But it amounts to little more than the usual policy mélange of small funding pots for pet schemes and the reorganisation of qualifications. This is a mark of how limited Whitehall’s understanding of the political economic and institutionalist determinants of employment training in the UK remains.

In the Nordic countries, the persistence of coordinated economic management, large public-sector employment and PR electoral systems has ensured that the interests of low-skilled workers have been represented in governing coalitions (although in recent years, the rise of anti-immigrant parties has fractured social democratic political strength). Liberalisation in the labour market has been accompanied by significant rights to skills training and flexible working, and increased public and business investment in lifelong learning (see in particular, Kathy Thelen’s work on reforms in the Netherlands and Denmark in Varieties of Liberalisation and the New Politics of Social Solidarity). In contrast, in parts of continental Europe, dualism in the labour market has led to a weakening of social protection and employment regulation for lower-skilled workers in the domestic economy, while the core social bloc of the export sector interests remains politically predominant, symbolised in grand coalitions (although this is under stress, as the recent German election showed). Yet here too, skills investment and high productivity in the manufacturing and higher valued added service sectors ensures that low unemployment is combined with significantly higher per capita GDP than in the UK.

A coalition of workers’ interests?

These considerations raise important questions for advocates of industrial strategy in the UK: who will be the political agents of economic transformation, and how can broadly based coalitions that unite the interests of low- and semi-skilled workers with those of middle-class professionals be created? The decline of the industrial working class, the rise of finance and decline of the UK “national” business class in core sectors, the spread of the gig economy and the parallel growth of higher education as a social insurance policy for the middle classes, coupled with the electoral dominance of a socially conservative older population, have all made the task of constructing progressive economic reform coalitions much harder.

In piecemeal fashion, the spread of devolution may provide new openings. It is noteworthy that Wales and Scotland have PR electoral systems and strong traditions of social solidarity, and each is pursuing prototypical industrial strategies with the (still limited) tools at their disposal. And on the same day as the Commission on Industrial Strategy published its report, England’s seven metro-mayors met together for the first time to advocate for increased devolution of skills and fiscal policy. In the more complicated multi-level governance of the UK, new political coalitions could emerge.

But these developments are unlikely to generate national economic transformation of the kind envisaged by industrial strategy advocates. Brexit may yet provide the critical juncture through which a coalition for political economic change can be formed, though the task is a monumental one and Brexit hangs over the government’s industrial strategy like a dark cloud, without any silver linings. In 20^th century, transformative change was driven by the exigencies of depression, war or the exhaustion of growth models, and it was typically state-led. In the 21^st century, Brexit and the painful realisation of relative economic decline may provoke the kind of rethinking that has hitherto eluded Britain’s political-economic elites. The question is whether a new coalition of social class and territorial interests in the UK can mobilise to underpin the necessary changes. For industrial strategy advocates, the politics ought to matter as much as the policies.

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In 2017, the Labour party manifesto pledged to lay the foundations of a national care service – repeating commitments hinted at prior to previous elections. This comes at a time when experts are increasingly warning of a social care system in “crisis”. Real-terms funding has fallen despite an ageing population creating greater demand, and when the government eventually caved into enormous pressure to release more money, it provided only a small fraction of what is needed – £2 billion over three years, when more than that is needed in this year alone. But the crisis is not just one of funding. It is deep and systemic – but I believe that the “tipping point” experts say we have now reached is an opportunity to take stock and build something more sustainable, resilient and just than the failing system we have today.

The social care problem is three-fold:

• Decreasing resource at a time of increasing need. This is the funding problem.
• The fact that healthcare and social care and separate services despite serving those with the same needs. Healthcare is free at the point of use, whereas social care is heavily means- and needs-tested. This is the integration problem.
• You don’t hear much about the third dimension. Social care services are delivered by private providers in a marketplace, but this market has failed. This is the marketisation problem.

I’m going to tackle these three areas individually, but first, let’s take a look at the social care system itself.

The social care system

Unlike healthcare, social care is commissioned by local authorities (LAs), and usually provided by private agencies. Unlike our free-at-the-point-of-use NHS, subsidised care is heavily means- and needs-tested. To confuse matters further, the NHS runs a service called Continuing Healthcare – those who meet the criteria have their fees fully paid without means testing. About half of care users have all their fees paid by the LA or the NHS, and around 41% pay for their own care. The rest get some help towards their fees. Social care is paid for out of council tax and business rates, as well as central government grants such as the Revenue Support Grant.

I’m going to tackle three problems individually, but I should point out that all three are interrelated, part and parcel of the same systemic issues.

The funding problem

Fewer and fewer people are receiving the care they need. Money going into the system is dropping in real terms, even though the need is increasing as our population ages. The number of people aged 85+ grew by almost a quarter between 2001 and 2011, but according to Age UK, the number of people receiving care fell from 1.2 million in 2005/6 to 850,000 in 2013/4. According to the regulatory body for social care, the Care Quality Commission (CQC), real-terms funding was 1.5% lower in 2015/16 than it was ten years earlier, despite the ageing population. More and more, care is limited to those with the highest need, and to the minimum required.

The funding situation is set to get worse. The government is phasing out its Revenue Support Grant (RSG) to councils as it hands over 100% discretion over business rate spending to LAs in 2019/20. The government argues that this will enable councils to meet their social care spending needs, in combination with the Social Care Precept, which gives LAs discretion to raise council tax above centrally capped levels for the express purpose of spending the proceeds on social care. But organisations like the Association of Directors of Adult Social Services (ADASS) points out that this will create greater care inequality, since the areas most in need of social care are poorer ones where less money is raised through local taxation.

Funding cuts mean councils limit services to those with the highest need, and to the minimum required – often less than that. Cuts impact care workers’ pay. Median pay for care workers stood at £7.76 per hour in 2017. In residential care, it is estimated that between 160,000 and 220,000 care workers earn less than the national minimum wage. According to Skills for Care, registered nurses working in social care in 2015 were paid a mean annual salary of £25,000 – much less than their counterparts in the NHS, and without the same scope for careers progression.

Training is woeful as well. No formal qualifications are required to work in social care – making decent training all the more important. According to UNISON, over a quarter of care workers receive no dementia training, and less than a quarter of those who administer medicines are trained to do so. No wonder turnover is high, with almost a half of care workers leaving within a year in 2015, and over a third of nurses quitting the sector. Poor training and high turnover and vacancy rates have a knock-on effect on the quality of services on offer.

The integration problem

Because health and social care are separate services, many people experience a bumpy transition from hospital to homecare. Bed delays increased by almost a third between 2013 and 2015, costing the NHS about £820 billion a year, according to the National Audit Office. Largely, this was because there was no one available to provide adequate care to these patients at home.

The NHS and social care spend a lot of time and money disputing who has responsibility for the patient, because neither wants to bear the cost. This often has tragic consequences – as Ray’s case illustrates. His daughter Sally-Ann tells Ray’s story, picking up the story at the point of discharge from hospital: “He could not be left unsupervised as he was unable to do anything for himself. He was at risk of malnutrition, dehydration and pressure sores and prone to recurrent infections. None of this seemed to be defined as a health need, and it took five weeks to reach a decision about whether he was entitled to NHS Continuing Healthcare as health and social care fought over who should pay. Where was the person in all of this?”

Ray’s application to NHS Continuing Healthcare was declined. This meant the care team he and his family had become familiar with had to change, and suddenly the family had to bear the cost, which ran to a four-figure monthly sum. The community nursing team attempted a last-ditch application for NHS Continuing Healthcare, but it was turned down just 24 hours before Ray died. Sally-Ann says, “What I now ask is: why should anyone at the end of their life have to pay for their own care to die at home?”

The marketisation problem

Since the 1990 NHS and Community Care Act, the system has been run on a marketised model where care is delivered by private providers. Prior to this, LAs generally provided care themselves, but the Act recast them as “enabling authorities”. To ensure this happened, funding from central government came with the requirement that 85% of money should be spent on the purchase of care services from the private sector.

If the motive behind marketisation was the idea that a competitive marketplace would incentivise high quality at low cost, then the market has failed spectacularly. Instead of a competitive, dynamic marketplace, we have one made up of a few large providers. According to the Professor Bob Hudson in a paper for the CHPI thinktank, the 10 largest providers account for 20% of the market, the largest 20 make up 28%. In this climate of austerity-driven fee-squeezing by councils, the system has become precarious as business becomes increasingly untenable for providers. Southern Cross, which collapsed due to financial hardship in 2011, was responsible for almost a tenth (9%) of the national market, and up to 30% in some areas. There is no back-up plan to protect services should providers withdraw.

The Southern Cross example shows that the market is not only “inefficient”, to use Professor Hudson’s term, but also unstable. The government says in its guidance to the 2014 Care Act that “high-quality, personalised care and support can only be achieved where there is a vibrant, responsive market of service providers”, but places the burden of creating such a marketplace on local government at a time when a lack of funds has put it in “panic mode” (as put by Alex Fox of Shares Lives Plus), with no appetite for creating such a marketplace.

Instead, price has become the driving consideration for LAs when choosing a provider, rather than a balance between cost and service quality. This in turn encourages some providers to put in unrealistically low bids which result in poor-quality services, or end in providers handing back undeliverable contracts. LAs often adopt a coercive attitude towards providers, with providers saying that councils have already decided on a price before consultation even begins. As a weighted average, councils pay £2 less than the £16.70 per hour estimated by the UK Homecare Association as the minimum cost of care.

Providers rightly argue that profit is needed to make investments in staff and facilities and keep pace with growing demand, with one telling the Care Association Alliance that “without profits there can be NO future for this industry and certainly no reinvestment”. On the other hand, providers say they expect a 12% return on investment – which Professor Hudson in his paper notes is abnormally high for a low-risk industry such as care, where expected returns would usually be in the region of 5%. It is dishonest of providers to claim that they wish to make profits simply to reinvest them – the majority are for-profit businesses. Regardless of who is right and who is wrong, this discourse suggests that there are deep and irreconcilable tensions between private care providers and councils. LAs appear to mistrust profit-making organisations. Care providers on the other hand appear to have unreasonable expectations about the level of profit they should be making.

If the market cannot profitably provide for people’s needs, this raises the question of whether it should be there in the first place. The social care market has failed citizens, and it has failed providers. The government knows it – that’s why it seeks to balance it through regulation, such as by awarding greater powers awarded to the CQC, including the Fit and Proper Person Test to be applied to directors of CQC-registered agencies. We can keep regulating and reforming the current system until we’re blue in the face, but in the end we’ll find ourselves at the end of a dark alley, with no money and no time. Marketisation has existed for so long, and has become such a dogma, that we’ve lost the ability to imagine beyond it.

What is the way forward?

There are a number of sensible options on the table to bring us back from this tipping point, if the government would only listen. Everybody acknowledges the funding crisis and even our austerity-obsessed government has pledged extra money to help plug the gap – although the money put forward falls far short of what is needed. The government has also latched onto the buzzword “integration”, but failed to make the fundamental reforms needed to achieve this is in any meaningful way. I believe that a combination of three proposals from the King’s Fund, the CHPI and the (cross-party) Local Government and Communities Committee could tackle all three problems I’ve talked about in this article.

An integrated and fully funded system

In 2014, the King’s Fund published a report called “A New Settlement for Health and Social Care”, the culmination of work carried out by a commission chaired by Kate Barker. The report proposed a fair and sustainable alternative to the current failing system, which the government has since ignored. The report makes two central proposals. Firstly, it recommends meaningfully integrate of health and social care by bringing the two under a single ring-fenced budget, which it suggested could be administered by a single local commissioner. This it says would resolve the seemingly irreconcilable tension between the NHS and LA-provided social care, bringing about the commission’s stated aim of achieving “equal care for equal need”. Secondly, the report also recommends making social care free at the point of use to those in critical and substantial need.

The commission’s proposal would cost an extra £3 billion per year, rising to around an extra £5 billion on top of projected spending of £9 billion by 2025. This sounds like a lot, but projected growth to GDP mean that GDP-spending on social care will only actually increase by 1 percentage point. If we adopted the commission’s more radical scenario, whereby free-at-the-point-of-use social care is extended to those with moderate need as well, we would spend a total of roughly £20 billion per year by 2025, compared a projected spend of £9 billion in 2025 at current levels. The report says that this would cost an added 2p per £1 at the basic rate of income tax, although there are other ways to fund it. I should also set the figure in context – in 2017-18, the UK government will spend over £36 billion on defence alone.

Bringing together commissioning and provision

The Barker Report sets out a brilliant, radical vision of a social care system that works for all and even presents a broad-brush vision for how it can be funded and delivered in a realistic, gradual manner over a ten-year period. What it doesn’t take on is the seeming irreconcilability of the current outsource model. In his report for the CHPI, Professor Bob Hudson sets out an approach for how social care can be gradually and sustainably brought under public provision. He recommends “a gradual resumption of the statutory and third-sector role” through a mixed system which prefers providers with a social purpose in the not-for-profit or public sectors. This could happen over the ten years it takes for the King’s Fund recommendations to come in.

An integrated workforce

In their 2017 report, the Communities and Local Government Committee urges the government to work with Skills for Care to look at sustainable wage level to aid staff retention in social care. It also says the government should encourage LAs and the NHS to work together on local joint strategies to reduce competition. Social care will continue to lose out while nurses of the same skill level have better pay and career prospects in the NHS. I would go further and say that the government needs to work with Skills for Care to establish a required training path for workers in social care to ensure that everyone has a minimum level of training. This could begin by mandating the vocational qualifications which underpin existing social care apprenticeship schemes. A combination of better pay, required qualifications and a clear career path could give workers a greater sense of pride, and encourage employers to value and invest in their workforce more.

This path is ambitious, but it is realistic with a little political will and imagination. The alternative is unthinkable – a slippery slope into a world where care is denied to those in desperate need, and where many of us must lose most of what we have just to maintain our basic needs. In the 21^st century, we might not design a care service on the model of the NHS, but as we reap the benefits of that great institution’s success, we need more than ever a truly universal care system.

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Minutes before the West Midlands metro mayoral election result on May 5, Green Party candidate James Burn responds sharply to my suggestion that the campaign he has just fought had been more consensual than other present-day political battles: “There were key disagreements about economic plans!”

The election was won by Conservative candidate and former John Lewis managing director Andy Street, who saw off rivals by a mere 3,766 votes. He issued a green-coloured manifesto rooted in bread-and-butter jobs and skills issues, and played up his Birmingham and Solihull upbringing on the campaign trail. Burn contends this glossed over his underlying message of trickle down prosperity from booming industries and new construction.

“If you look at Sheffield City Region, we’ve seen significant growth but it’s not been shared. Or in Barking, there’s great transport links to a massive new development, but the development has not economically benefitted Barking or significantly changed poverty levels. The West Midlands is at the bottom of the table for most indexes of deprivation. We need a very different approach.”

When Street suggests a leading role for the West Midlands in UK industrial strategy, or innovative new approaches to public service delivery, Burn accuses him of a naïve faith that central government makes evidence-based, rather than ideological decisions. His ambitions for an improved public transport network, Burn says, are pole-axed by the rail companies being locked into contracts, the government’s Bus Services Bill which rules out new municipal bus companies, and Transport for West Midlands lacking the money to carry out the franchising exercise Street wants to undertake.

Not everyone agrees. Community activist and former council housing officer Desmond Jaddoo, who interviewed all six candidates, praises Street for being “crystal clear” about the mayor’s powers, while his rivals wanted to veer off into wilder political waters. Being a high street store boss gives him an advantage, Jaddoo suggests, when it comes to proposing technocratic convincing solutions against the background, in Birmingham at least, of a long underperforming local authority.

“We needed an independent lead who has cross sector experience and more importantly, proven impact” says Birmingham-born serial entrepreneur and diversity champion Joel Blake, who looks forward to a greater fusion of private and public sector thinking and shared resourcing under Street and the West Midlands Combined Authority.

Other analyses would point to other factors: the degree that Street outspent other candidates against the spirit of campaign limits, the mixed local reputation of Labour contender Sion Simon and discomfort with his party leadership, and the loyalty that John Lewis inspires as a West Midlands employer. Simon Jeffrey of the Centre for Cities think tank believes that ideological differences take a back seat in urban leadership, recalling 1930s New York mayor Fiorello La Guardia’s “no Democratic or Republican way to take out the garbage” quip.

Andrew Stevens of citymayors.com sees Street as both a partisan Conservative central to Number 10’s plans for further regional devolution, and “a very emollient quiet operator” as the chair of the Greater Birmingham and Solihull Local Enterprise Partnership. Rebecca Riley of Birmingham University remarks that with the calibre of runners-up – including an ex-MP and serving MEP, the leader of the opposition group on Solihull council and a former CBI regional director ­– “it’s a shame we didn’t get more of a debate and that we can’t do more with them as a region”.

Black Country: from employment black spot to in the black

In a 2016 report, the Resolution Foundation pinpointed the West Midlands’ economic challenges – the lowest employment rate of any UK city region at 64.5%, and the slowest recovery in employment prospects after the financial crisis (half the average for conurbations). Average household income post-housing costs is the lowest in any of Britain’s city regions. Chronic and severe skills shortages hold back productivity growth as measured by GVA per hour worked.

Charts produced by the Resolution Foundation

In late 2015, eight out of nine manufacturers reported to the Greater Birmingham Chambers of Commerce that they faced hiring problems. 16.3% of residents have no formal qualifications and only 28% have a degree, compared with 37% nationally. Rebecca Riley outlines the supply and demand mismatch: a long line of older workers without advanced technical qualifications who aren’t reskilling, migrants arriving who may be highly skilled but not with UK-recognised qualifications, and limited graduate retention, despite the highest per head student population of any region. Areas like Wolverhampton have structural skills gaps going back generations.

Street’s ambitions to make wage growth the fastest in the UK, a zero youth unemployment target, and a string of initiatives – from a “West Midlands First” graduate programme to an All Age Careers Service – align closely with the Resolution Foundation’s skills and jobs priorities. His manifesto emphasis on boosting tech, creative, life sciences, professional services, construction and green jobs also addresses think tanks’ calls to champion growth potential across the West Midlands’ diverse economy, beyond the car industry and other manufacturing.

However, there is a far bigger economic challenge for the metro mayor than this, as Street acknowledged when he told the Birmingham Mail that the competition is Berlin and Barcelona, not Liverpool and Manchester. The region has scored a striking success with 50% export growth since 2008 – “quite phenomenal for a mature economy”, says Black Country-based economist Paul Forrest. Along with the North-East, it functions as a dynamic standalone economy in the global supply chain, giving it a key role in an export-led, globally trading vision for the UK post-Brexit. Meanwhile output, Forrest argues, has been damagingly underestimated by statistical practices, such as attributing some manufacturing firms’ output figures to their London HQs. Local Conservatives’ claims of a £16 billion productivity gap on the basis of £20,137 output per resident fail to square with separate calculations of almost £45,000 output per worker, said think tank IDEA Birmingham in 2015.

“We are owed billions”, says the Lib Dems’ Beverley Nielsen, who welcomes the £1.1 billion devolution deal over the next 30 years but insists that it does not detract from decades of underinvestment, or the massive cuts in public services now being exacted. With 80% of rail freight and 30% of the nation’s road freight passing through the Midlands, 45% of the UK’s exports to China coming from the West Midlands, 30% of UK automotive manufacturing and 3% of the world’s aerospace industry located there, Nielsen argues that her region is the heartland of the UK economy, and should be treated as such. She worries about a Brexit double whammy through the impact on supply chains and exports. She laments the lack of serious thinking about how to access substitute markets such as India and, for all the talk of industrial strategy, about how to protect regional economies.

Top down or bottom up?

Directly elected mayors have been energetically championed in the UK since Tony Blair’s government introduced them. Simon Jeffrey of Centre for Cities argues that the individualization of policy and accountability yields dividends locally and for the rest of us: “Getting Birmingham close to average productivity would move the needle on national aggregate performance, as well as doing so much for the people of Birmingham”. While Andy Street’s executive power is constitutionally limited, Jeffrey concedes, he enjoys a “bully pulpit” that foot-dragging local councillors and national politicians will find hard to ignore, and will be able to galvanise schools and academies over skills, for example.

Jeffrey admits to the “anathema”, for many voters, of having yet another politician on the scene – the city of Birmingham voted against an elected mayor in 2012 – but points to the historic lack of collaborative working between West Midlands local authorities and the huge strides made to address this in just a few years. Andrew Stevens of citymayors.com says the lack of a mayoral scrutiny function was an oversight and may soon be remedied.

For others, it is more the notion of a top-down development agenda which is anathema. Karen Leach of Localise West Midlands says that the metro mayor is “part of this macho individualistic emphasis on big and shiny. We’re going to have faster trains and bigger buildings! It’s deeply frustrating”. Questioning the emphasis on foreign direct investment investment by Street and the region’s business and political leadership, she points to Localise’s 2013 research literature review, which found community economies delivering better on job creation, resilience, stability and economic returns compared to a centralised approach. She thinks the skills debate is mistaken by failing to anticipate companies’ needs in future, and by falling into a crudely reductive approach of matching deprived community A with company B rather than putting humans at the heart of policy-thinking.

Localise is working on a report with New Economics Foundation looking at social care as an economic sector bringing value to communities, rather than as a service to deal with a social problem. Leach argues that serious investment in the sector would generate returns to the regional economy which would compare favourably to billions being poured into the car industry or HS2,.

“We’ve been known as a city of a thousand trades in the past, and I’d like for us to become a city of a thousand SME clusters” Birmingham City Council leader John Clancy said last year. In the metro mayor race, Beverley Nielsen called for platforms for in-region investment – a West Midlands regional bank, £1 billion innovation fund and Chamber for Business Growth – and suggests FDI is better directed into supporting local businesses through on-shoring supply chains than in the form of headline-grabbing mammoth projects.

The scale of funding in the UK for start-ups and scale-ups is dwarfed by that in California and Germany. Rather than put £100 million into self-driving vehicles, Nielsen asks, why isn’t the government dedicating billions in innovation funding for the likes of Dudley-based Westfield Sportscars, whose experimental autonomous POD has done half a million miles more than Google’s driverless car? Her other priorities include getting university innovation closer to market and offering meaningful business support by getting companies like Jaguar Land Rover and engineers GKN sharing expertise with SMEs. “We need more ambition in our economy – we’ve got talent, we’ve got the people” she says.

Towards a sharing and caring economy

The opening of a new chapter for the West Midlands presents an exciting opportunity for economic experiment, such as the pilot of Universal Basic Income (UBI) that the trade union Unison called for in its mayoral election manifesto. Becca Kirkpatrick, chair of Unison West Midlands community workers’ branch, describes UBI as “recognition that at this point of history it is not right that some are going without”. It would enable people to study or reskill and figure out what kind of work they really wanted to do, she says. “It provides a safety net for innovation”, James Burn argues, pointing to the wasted potential of much smaller numbers of BME and female West Midlanders than white males starting their own businesses.

Filmmaker and campaigner Paul Stringer would like to see UBI in combination with a “West Midlands Pound”, on the model of the Bristol Pound, payable for local government services and at participating independent shops to keep more money in the regional economy. In the mayoral campaign, Sion Simon and James Burn committed themselves to a UBI trial while Nielsen, Street and UKIP candidate Pete Durnell expressed some degree of interest. (On the Living Wage, Street says his retail experience has shown him it isn’t the best way to deliver prosperity).

In his first weeks in the job, Street has struck an inclusive tone, setting up hot desk offices in Birmingham, Wolverhampton and Coventry and making a commitment to eliminate rough sleeping, while at the same time saying he will pursue the “economic feelgood factor” by lobbying for the Commonwealth Games and Channel 4 to come to the region. But how relevant is his upbeat, growth-driven vision to those at the bottom: the increasing number of residents using food banks, the one in three children growing up in poverty and the children of refugees who are starved of training opportunities, jobs and youth provision? How much room will the John Lewis mayor allow for co-operative and collaborative economic thinking?

Street won the election with 50.4% of the vote to Sion Simon’s 49.6%, but perhaps the key figure is voter turnout at 26.7% ­- more than expected, less than the 30% Street described as “credible” during the campaign. A successful economic policy will mean engaging with many more people of the West Midlands before the next vote comes around in 2020.

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Toby Lloyd from Shelter, and Josh Ryan-Collins and Laurie Macfarlane from the New Economics Foundation have a new book out helping us get to grips with what’s gone wrong and how to fix it. I had a chat with Laurie in the NEF offices to find out more – enjoy.

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Britain’s decision to leave the EU has sparked much debate about the future of the economy. The government aims to boost productivity and spread prosperity across the country. Thinking again about how the UK supports small and medium-sized businesses (SMEs) needs to be part of this process.

SMEs, normally defined as companies employing 250 people or fewer, are the bedrock of long-term economic performance. In the UK, however, they face challenges – in particular accessing credit.

Finance conditions for SMEs in the UK generally are less favourable than in some comparable EU countries, including Austria and Germany. SMEs in less prosperous parts of the UK have an even harder time – more often being turned down when applying for credit. In 2014, a Government-commissioned report estimated the SME finance gap to be between £26 billion and £59 billion.

The structure of the British financial system is part of the problem. Lending to SMEs is generally a long-term investment that delivers modest returns. So it’s not a compelling proposition for commercial banks which dominate the UK market.

A new form of banking could help: local or community banks.

Local banking

Local banks differ from commercial banks in a couple of key respects. First, they are profit-making but not profit-maximising – they take a long view and target steady but not spectacular returns. Second, they have a mandate to promote local economic growth alongside profit: a so-called dual bottom line.

This could deliver real benefits in the UK. By increasing the volume of lending in local economies, they could help SMEs access credit and improve regional economic resilience. They could also help to dampen the economic cycle by increasing their lending during downturns – when commercial banks often cut their exposure. And they could strengthen competition for savers’ deposits.

Several European countries – Germany, Spain, Switzerland – have networks of local banks which illustrate the potential.

The Sparkassen in Germany is one useful example. There are over 400 Sparkassen across the country; they are financed by public money so have to turn a profit; they are operationally independent; and they have a mandate to lend in their local area, with a focus on SMEs. Together they provide around 40 per cent of all business finance in Germany.

There are local initiatives in the UK as well. The Cambridge & Counties Bank is funded by local institutions with a mission to provide credit – in chunks of between £50,000 and £1 million – to SMEs in the counties of Cambridge, Northampton and Leicester. In 2015 it passed a quarter of a billion in lending.

Making it happen

What would local banking in the UK look like?

First, they would have an explicit mandate to lend to SMEs, and promote local growth. This would differentiate them from the existing banks.

Second, they would be operationally independent. International experience, for instance in Spain, highlights the risks associated with political involvement in local banks. Robust governance arrangements are vital.

Third, local banks would ideally be established as a national network. The network would provide mutual support e.g. expert advice, informed scrutiny and finance in at times of economic shock.

Where would the money come from? Because of their long-term approach, local banks are unlikely to be initially attractive to potential shareholders. One option is for the state to be the first investor. Safeguards to ensure public money is used wisely would be needed, but experience from other countries could help.

In the UK, the British Business Bank (BBB) is well placed to invest in local banks. The BBB was created in the last parliament with a mission to make finance markets work better for small businesses and around £4 billion of public money has been committed. This wouldn’t bridge the whole SME funding gap, but it could support a network which would be able to grow over time.

Looking ahead

Brexit has, if anything, reinforced the case for spreading economic opportunity more evenly across the country. SMEs will play a central role in this – but today they are hampered by unhelpful finance conditions.

Governments of different stripes have recognised this challenge. But their preferred policy response – increasing competition in the banking sector – hasn’t delivered real change. A more creative approach is called for.

Local banks could help. By improving credit conditions for SMEs they could unleash pent up commercial energy; they could reinforce economic resilience through counter-cyclical lending; and by pursuing local growth they could reduce long-standing regional imbalances.

The full Demos report on local banks is available here.

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Over a two-week period every summer, residents in the UK can inspect their council’s accounts under the Audit Commission Act and object to any spending they see as irrational. This may sound like a bureaucratic endeavour, and councils certainly aren’t advertising it to encourage residents to become active in their local democracy. But with a more than 20% cut in central government funding under the last Parliament that has prompted the Local Government Association to warn of councils being on the brink of financial failure, local authority finances could still become an important anti-cuts battleground.

Take Newham, the East London borough that three years ago evicted single mothers from a hostel to save £41,000, only to become the face of the housing crisis: it consulted residents earlier this year on where to cut to achieve £50m savings. What it failed to mention was that the £50m figure is just under what it pays to banks in interest every year.

Debt repayments amount to an equivalent of 80% of Newham’s council tax income. It is an extreme example, but only one of the 240 councils across the UK that have borrowed from private banks instead of central government via the Public Works Loan Board (PWLB).

The loans councils have taken out are long-term, variable interest rate loans called LOBOs, which interest rates can be up to 7-9%. This is despite the fact that PWLB is, long-term, the cheapest source of funds.

‘LOBO’ is an acronym of “Lender Option, Borrower Option”: the option the lender has is to change the interest rate at pre-agreed call periods, giving the borrower the option to either agree or pay the loan back in full. In many cases, the loans have started with a lower “teaser rate” that has then increased over time, and the low interest rate environment we have seen after the financial crisis has caught councils out in far worse deals than they probably ever imagined.

High interest rates are only the tip of the iceberg: some of the more complex LOBOs contain derivatives, which local authorities are prohibited from taking out. There are concerns about conflict of interest: for example, where Butlers was hired to give councils “independent” financial advice, part of the same company, ICAP brokered 84% of the LOBO deals. These companies have made hefty profits from both sides of the trade, and brokerage costs alone have been estimated to cost Kent County Council, the top LOBO borrower in the country, £1m.

And it seems councils don’t want to face the problem. This year, residents in 24 councils across the UK exercised their right under the Audit Commission Act and submitted objections to their councils LOBO loans, requesting either a public interest report on them or a High Court ruling on their legality.

The councils’ responses haven’t been encouraging. Most have been silent, waiting for their auditors’ responses. Audit Scotland – a public body, contrasting to England and Wales where all councils are audited by private companies – has said it does “not have powers to overturn previous decisions made by councils”. Some councils, like Liverpool, have publicly defended their decision to enter LOBOs – although Liverpool did so by incorrectly stating they can exit LOBOs at any time. Newham council discussed at length how costly the objection would be and seemed desperate to identify the objectors.

Luckily, there are always examples on how to do politics differently. The revolution sweeping the Spanish state reveals that reclaiming our local authorities could be a catalyst for real change.

In May 2015, progressive coalitions took over councils across Spain: the most famous ascent into power was housing activist Ada Colau’s election into the Mayoral office in Barcelona. But dozens of other councils too chose representatives that stood for participation and democratic management of resources, against corruption of the old elites.

One and a half years later, many of the councils are starting to enact policies such as participatory budgeting, online participation in decision-making and debt audits. Madrid, the largest and most indebted city, is preparing an official audit to examine the origins of its debt. The urgency for this stems from a 2011 change in the Spanish constitution that forces local authorities to prioritise debt repayments over social spending, even when that is suffocating much-needed public services.

Despite leading the charge, the council of Madrid is far from alone. In October, over 500 elected representatives – including 40 Mayors, hundreds of Councillors, dozens of MPs and some MEPs – from across the Spanish state signed a declaration against illegitimate debt. The manifesto rejects “illegitimate debts and austerity that hinder our fundamental rights, our access to quality services and any improvement in living standards”, demands an “immediate termination of budget cuts, austerity, and the redress of their consequences, identifying those responsible in order to compensate the victims” and calls for “the launch of debt audits from our public administrations with the participation of citizens in order to demand the cancellation of all debts deemed illegitimate that have so far only served the interests of a privileged minority rather than those of citizens.”

It’s not hard to argue that prioritising LOBO loan repayments hinders our access to fundamental rights such as housing or social care, or that they have served the interests of the financial sector rather than those of citizens.

For local authorities across the UK struggling to provide for their residents, it too would be sensible to question whether paying debt – and interest – to banks is the right thing to do. It is time we follow the Spanish example and celebrate people’s interest in their local democracy and the people power that could transform it.

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Why was social care missing from the Chancellor’s Autumn Statement? It seems government fears the issue is just too big to tackle, or assumes someone – normally women – will always step in.

There is a crisis of social care in England. This is increasingly a consensus among researchers and campaigners. In the lead up to the Chancellor’s Autumn Statement, campaigners, policy experts, trade unions, academics, politicians from across the political spectrum, NHS chiefs, and even the care regulator –  the Care Quality Commission, called on the government to put in place measures to address the sustained under-funding of the sector. These calls appear to have fallen on deaf ears. The Chancellor’s Autumn Statement failed to even mention it, let alone outline measures to tackle the situation.

It’s not that there hasn’t been enough information available for the government. In recent months, the issue has been highlighted in a range of reports including the Kings Fund and Nuffield Trust report into the home care sector. In September, Age UK reported on the increased costs facing an ever-growing number of older people self-funding their care and a report from the United Kingdom Home Care Association highlighted the low rates paid by local authorities to home care providers which was prompting some providers to hand back contacts to local authorities. October’s Care Quality Commission’s 2016 State of Care Report provided a damning indictment of government policies that have seen successive funding cuts to social care provision for older people. November has seen the Local Government Association report on adult social care funding stressing that funding for the sector has reached crisis levels – due to both current austerity related cuts to local government block grants and the historic underfunding of the sector. UNISON has also continually reported on the dire state of working conditions in social care sector and this month launched a Save our local services campaign that highlighted cuts to social care.

Now, a new report – Towards a New Deal for Care and Carers published by the PSA Commission on Care – has added to the growing clamour for addressing this crisis. It has been put together by a consortium of researchers and campaigners and the Universities of Warwick and Sheffield, the Fawcett Society and the Women’s Budget Group. In it we bring together the analysis of the crisis of care with the crisis of caring. It emphasises the diversity of needs of different groups of care receivers and care givers including Black and Minority Ethnic communities and migrant care workers.  Moreover, the report points to the specifically gendered impacts of the social care crisis. The ‘gender norms’ of caring mean that women are the group most likely to have to step in and care for family members, neighbours and friends in need of care. And this matters, because it appears that the ability of successive governments to cut social care spending reflects, ultimately, assumptions that the family (and women in particular) will always step in to fill the social care gap.

There is little acknowledgement anywhere that women’s paid work will become increasingly difficult to reconcile with unpaid caring responsibilities and will also increase the costs of the health and well-being of women carers who engage in the double burden of care work and paid employment. The 2011 UK census identified that 6.5 million people are carers – an increase of 11% since 2001. At the same time, an increasing number of carers are themselves old and in need of support, with their own care needs. Women have been disproportionately affected by cuts to funding care because of their role as the main providers of unpaid and paid care and also as they are more likely to be users of care services.

In the report we also examine both a privatisation process, whereby publicly financed care is outsourced to private providers, and a marketisation of care, whereby public commissioning as well as individual purchasing of care has been accompanied by the entry of a range of commercial providers into the market. There is also an increasing gap between publicly financed provision of care and the growing need for care services at home and this has seen a transfer of responsibility onto informal, unpaid domestic care by family, friends and neighbours. Again, this is trend that disproportionately impacts women and has implications for the ability of carers to combine paid and unpaid work.

Now, as Brexit unfolds, the report also reflects on the role of migration and precarious labour on the working conditions of carers. Just under a fifth of the adult social care workforce in England was born outside the UK and over a quarter of these workers were born in the EU, making the sector heavily reliant on migrant labour. So, urgent questions facing the care system are how far and in what ways changing immigration patterns are affecting changes in paid care work in England and how would a shortage of care workers affect care-users’ ability to participate in the labour market?

So why isn’t social care a political priority? Possibly, because of a number of interwoven factors:

1. The size of the problem is seen by many as too big to tackle. There is a view that it is financially unaffordable to provide good quality care for all who need it, instead of a recognition that a failing care system is very costly in social and economic terms.
2. There is an assumption that someone will step in to keep the system going, and specifically, that women will step in to do unpaid caring or work – particularly if they are migrants, or unemployed – for low pay and under poor conditions.
3. The lack of value placed on the lives of older people and carers. Despite talk of the ‘grey vote’, the concerns of older peoples are overlooked through a lack of cross-party political consensus on a way forward.
4. The assumption that ‘anyone can care’ leads to caring being regarded as low status and unskilled work, not requiring training and continuous professional development.

Building on this analysis, we would make several recommendations:

1. Establish a National Care Service which gives social care equal status with the NHS.
2. Invest in social care infrastructure rather than pursuing austerity policies
3. Professionalise and support the care workforce by establishing a national policy on recruitment and training of domiciliary and residential care workers, with a new qualification which will bridge the gap between care workers and nurses to deal with increasing complex care needs.
4. Recognise and support unpaid carers by establishing and promoting a national source of information and guidance for individuals and family members about entitlements, availability of different services, and assessments.

The crisis in the social care sector is happening now, and future scenarios are looking even bleaker. The failure of successive governments to tackle this issue for so long is striking – but the negligence shown by our current government and the previous coalition government is particularly alarming. On Wednesday, both Theresa May and Philip Hammond faced question after question from MPs on the lack of funding for social care – but failed to explain why no further funding would be forthcoming. This to our mind raises deep questions about the value that our government places on the lives of older people and those that care for them.

As it stands now, social care provision is only accessible to those with the most severe needs and, for many, it is easier to rely on unpaid family carers than to attempt to navigate complex systems to access care. And, as the bill for social care steadily increases, Councils are cutting services that served to support older people and their carers – like lunch clubs, library services and respite care.

Fundamentally, as a society we need to provide for older people – not only for economic reasons but to secure a fair and caring society where everyone gets the support they need, irrespective of their colour, class or creed. As our report makes clear, we have some way to go in attaining this goal.

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The 2009 Stiglitz, Sen and Fitoussi report drew widespread attention to the inadequacies of GDP as an indicator of social progress. Traditional approaches measure how a society is progressing based on the view that a growing economy will result in an improved society. While economic growth is important, it is not the only thing that matters. To truly measure progress, governments need to focus on measuring the wellbeing of citizens.

Wellbeing is a holistic concept comprising social, environmental, economic and democratic outcomes. Measuring citizen wellbeing should be a key focus of governments at all levels. The Carnegie UK Trust has actively supported governments across the UK to develop wellbeing frameworks to guide what they do. Most recently, the Trust has supported the Northern Ireland Executive to place wellbeing at the heart of its work through the new Programme for Government. Internationally, the development of wellbeing frameworks by governments to define their purpose, set priorities and measure progress has gained traction at a jurisdictional level.

But wellbeing approaches shouldn’t be restricted to this level. The OECD describes wellbeing as ‘a description of social progress in terms of improvements in quality of life, material conditions and sustainability’ (OECD, How’s Life?). While policies at jurisdictional levels are important for these factors, individual wellbeing is also shaped at a very localised level.

In this regard, city and regional-level governments have an important role to play in promoting wellbeing. Given the dominant focus on jurisdictional level approaches to developing wellbeing frameworks, governments at city and regional levels face particular challenges in establishing and using wellbeing frameworks.

The OECD and Carnegie UK Trust have recognised this challenge, and come together to develop straightforward guidance for decision makers in regional and sub-regional governments on the benefits, challenges and possibilities of using wellbeing frameworks. The guidance includes evidence from 16 case studies across the OECD, including regions and cities in North America, Europe and Australia that are developing and using wellbeing strategies, objectives and measures.

The guidance outlines the common steps that governments in cities and regions across the world have taken in developing wellbeing frameworks to bring data collection, policy and community priorities closer together.

Key messages from the guidance include that the process of developing a wellbeing framework is an ongoing one, involving multiple iterations and refinements, and enduring leadership by local leaders. While leadership from the top is important, so too is continuous communication with and engagement from citizens. Meaningful citizen engagement is important to ensure community by-in to the wellbeing framework.

The use of wellbeing frameworks to set priorities and measure progress, at all levels of government and across the world, is still in its infancy. However, we know that implementing a wellbeing framework can have a transformative effect on governance, allowing for greater transparency and accountability, and more joined-up working and public sector reform. Ultimately, using a wellbeing approach to determine and measure what really matters leads to better outcomes for citizens.

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Climate change is the biggest threat we face. It’s the poorest communities; those less able to deal with the impacts and those that are least responsible that will suffer the worst. At the same time many areas of the UK have been allowed to decline through deindustrialisation. We urgently need a new economy and a new energy system to tackle these problems. This will need a change in direction towards a rapid transition away from fossil fuels and a wholesale rehaul of UK economic policy from austerity to investment. If the current government is not prepared to invest then local authorities that are willing can do so can start now.

A year ago, Platform published data showing that local governments in the UK invest at least £14 billion of their pension funds in fossil fuel corporations. Divestment has already started thanks to pressure from our growing movement. London Borough of Waltham Forest’s pension fund has just become the first UK public authority pension to commit to divesting 100% from fossil fuel companies. Three other pension funds – Environment Agency Pension Fund, South Yorkshire Pension Fund, and Haringey Pension Fund – have committed to sell off some of their fossil fuel investments, mostly those in coal and tar sands.

Investing pensions in fossil fuels is an unacceptable long-term financial risk. The governor of the Bank of England – Mark Carney – has warned that fossil fuel companies face “potentially huge” losses from climate change action that could make vast reserves of oil, coal and gas “literally unburnable”. Pension funds have a duty of care – ‘fiduciary duty’ – to pension fund members, which includes preserving a decent world not wrecked by climate change for its members and others to live in. If funds ignore material and financial risks associated with fossil fuel investments, they are effectively preferring the short-term interests of older members to the long-term detriment of younger members. But even in the short-term fossil fuel investments are not safe. In October 2015, Platform revealed that UK local councils have lost up to £683 million of their pension funds, because of failed investments in coal firms.

Fossil fuel divestment is an opportunity to create jobs and boost local economies by reinvesting in socially usefully projects, as well as taking pension wealth back from unaccountable investment management firms in The City. For example, £14 billion could be used to build 60,000 wind turbines, increasing existing wind power by 50% and generating enough electricity to power Wales. It could be used to build over 200,000 energy efficient social rent homes or put solar panels on all 10,000 schools with suitable roofs, on a further 20,000 municipal buildings, and on 2 million homes.

Reinvesting in the new economy can deliver significant social, environmental and economic benefits to communities but also financial returns to pension holders. For example, Lancashire County Council invested £12 million in Westmill Solar Coop, the UK’s largest community owned solar farm. Lancashire and the individual members will receive interest for 23 years, with a projected 11% annual return. Similarly, Strathclyde Pension Fund – which supports council workers across the West of Scotland – has reinvested £50m of its pension fund into the construction of offshore wind.

Another future is possible. We can have higher employment levels and better jobs, a safer and more stable economy, stronger communities, a long-term future as an energy exporter and move from energy colonialism to energy democracy. Let’s start by taking back our collective pension wealth so we can own our future.

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A Citizens’ Wealth Fund is a state investment vehicle that invests a chunk of a community’s public wealth in global financial markets for a return. The returns of these funds provide an additional revenue stream for the state that can be used for a range of policy goals including tackling inequality, kick-starting growth or investing in local infrastructure. Thus, the public reaps the benefits of investing public assets. 

But to fully count as the citizens’ wealth, people must be able to directly influence the management of the fund as well as the use of its income. The UK’s recently announced ‘Shale Wealth Fund‘ looks set to become one of the world’s first fully-fledged citizens’ funds, with its commitment to localism, where citizens both retain control over and benefit from the fund. If realised in practice, Britain will be a pioneer of this citizen’s wealth fund model, offering a blueprint for the rest of the world to emulate.

Around 80 governments worldwide already have a version of these funds, known as ‘Sovereign Wealth Funds’. Yet, the assets of sovereign funds are rarely described or managed as citizens’ wealth. This is despite the underlying capital of the funds originating from different types of collective state property. Whether natural resource revenues, privatization proceeds, fiscal surpluses or central bank reserves, all such windfalls ultimately belong to the people. But unless citizens directly benefit from, and exert control over the funds managing these windfalls, their assets remain sovereign rather than citizens’ wealth.

There are certain exceptions that, if not fully-fledged citizens funds, are at least promising steps in that direction. Israel’s newly created citizens’ fund for its natural gas revenues is a semantic exception. Created in 2014 and due to commence operations by 2020, it is the first fund in the world to explicitly label itself a ‘Citizens’ Fund’. But time will tell if it actually operates as such. The deal itself, as well as the disputes over the ownership of the natural gas fields, cast doubt on that possibility. Alaska’s ‘Permanent Fund’ can also claim citizens’ wealth status by virtue of its unique annual distribution of a portion of its investment returns directly to Alaskan citizens. These examples aside, no existing sovereign fund boasts mechanisms for direct community influence over both fund management and spending.

Until now. In 2014, the UK became the first country to embrace the term ‘Citizens’ Wealth Fund’, when Boris Johnson proposed combining the UK’s 39,000 public pension funds to create one large investment fund for Britain to invest infrastructure. Those plans have stalled. But the UK is still trail-blazing with another citizens’ fund.

The Chancellor’s 2015 Autumn Statement set out plans for a £1 billion Shale Wealth Fund, seeded with a portion of tax revenues from shale gas production in the country’s Northern and midland counties. A key purpose of the fund is to benefit communities where shale gas sites are located and to engage the views of community members on how best to distribute that benefit to ensure that the industry leaves a positive legacy.

A government consultation is under way on the design and governance of the shale fund. Encouragingly, the consultation is heavily focused on issues of local control and benefit. Public views are sought on a range of questions around how the government can ensure local communities benefit from the Shale Wealth Fund and that decisions are directly influenced by local residents. This includes whether the fund should make direct payments to households; what decision-making bodies, new or existing, would be the most appropriate to oversight and administer the fund; and what level of community (local or regional) should be the primary beneficiary of the fund’s activities.

Setting aside the thorny issue of whether the UK should pursue fracking at all, the drive to ensure residents of affected communities have a direct say on how the proposed shale fund is designed and managed, and how they can directly benefit from its operations may be a world-first. Almost twenty years after Britain became one of the first countries to grant its central bank operational independence, the UK is once again assuming a leadership role in the institutional innovation of key economic architecture. British citizens must not waste this opportunity to help shape their economic future, and the first genuine citizens’ wealth fund.

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Public promotional banks are used in many countries to provide cheaper credit to infrastructure projects and businesses. Given that investment in these areas has been endangered by austerity, setting up a national investment bank seems like a sensible move to help shield capital investment from opportunistic government cuts.

But let’s not just set up a bog-standard promotional bank. As I discussed recently, the results of these initiatives tend to be underwhelming. We should be more ambitious. We should set up a decentralised and locally accountable “National Investment Bank Network” with branches at the municipal level; a network of Regional Investment Banks. These would be public services working closely with municipalities and county councils, local companies and local initiatives. They would help to identify and develop investment opportunities and provide tailored finance to support the economic revitalisation of communities across the UK. They should:

Support small businesses directly: The usual practice of lending to other banks “for on-lending to Small and Medium-sized Enterprises” is just a cheap way to hit targets – there’s no way to know how much SMEs really benefit. A public service investment bank should invest in municipal-level branches and local client relationships to support small businesses directly.

Package funding with technical support: This would unlock investment opportunities, local municipalities, businesses and social enterprises need advice and support. Matching funding with technical support can have a larger macroeconomic impact than just trying to lower costs and maximise volumes.

Support the cooperative economy: We need not just investment in businesses, but a different way of doing business. Corbyn’s Digital Democracy Manifesto proposes that the national investment bank will be used to support platform cooperatives. Indeed, all kinds of cooperatives and social enterprises such as housing associations should be prioritised, helping to bridge the funding gap for coops and providing backing such as guarantees for cooperative P2P financing. 

Be radically democratic: We need to explore and develop a new public service model that moves away from top-down command management and fosters accountability to workers and the communities they serve. This model would be based around four principles of organisation (1) Run the local branches like cooperatives, so that managers are selected and accountable to the whole workforce and not the other way round. This already helps to reflect the public interest and keep managers honest. (2) Vest branch ownership in local authorities and make them accountable to those authorities, if not directly to citizens. Branch workers should decide operational matters (e.g. which projects are worth funding) and local communities should set the policy priorities (coops or housing or renewables…?). (3) Confederate these branches to create each Regional Investment Bank, like a coop of coops, each with a with a regional HQ to provide services to the network and support pan-regional operations. (4) Coordinate the actions of these regional banks at a national level. This way the whole system becomes radically democratically accountable, and very hard for the national elite to capture.

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The push for public ownership of vital services should not be about a return to top-down state industries. We can’t go back to the past – and we want the public ownership of the future to be better than ever before. But also because the public ownership of the future must explicitly involve a new dimension: local public ownership. Of course, national level services like the NHS and the railways are absolutely key. But local public ownership – of energy, water, buses and council services – is just as important.

Public ownership should mean more accountable, efficient services, whether that’s at the local, regional, national or international level. Locally, this involves councils running or taking over strategic public assets or contracts for services, and it has huge potential.

Extreme government pressure on budgets has led to council cuts and privatisation – what Polly Toynbee calls ‘the retreat of the human face of the state’. At the same time, there’s an exciting countertrend towards more local public ownership, not just in conversations happening within Labour, but also globally and in the UK.

170 German municipalities have bought back their energy grid since 2007. 235 cities worldwide, including cities like Atlanta and Houston in the US and Paris in Europe, have taken water services into public ownership since 2000. APSE research has shown that dozens of UK councils have brought services like recycling in-house to save money and improve quality. 12 municipal companies provide excellent bus services in places like Reading and Edinburgh. We now have Robin Hood Energy in Nottingham, the first council-owned energy company.

It’s no surprise that there’s been a global surge of interest in public ownership at the local level. Prices for basic needs like power and water keep rising, and private providers are often inadequate. But local public ownership is also exciting because of its potential impact on the wider economy and society. Here are five reasons to embrace it.

• Many people feel a lack of control over their lives in the UK today. At least one reason for the Brexit vote in June is that a large group of people had a sense of political powerlessness channelled into anti-EU feeling. Local ownership brings people closer to services, restoring people power and accountability.       
• Local ownership provides an employment boost. While nationwide unemployment dipped below 5% in mid-2016, unemployment remains high in some cities and regions.  Local ownership could be a part of a jobs strategy for these centres.      
• Strong local public services boost local economies through the multiplier effect. Councils who spend money on in-house services or local procurement will boost the money in the pockets of local employees and providers who re-spend a high proportion within the same area.
• Local ownership produces an important stream of revenue. Some compensation or payment is required at first to secure local ownership. But after an initial investment, local ownership builds the asset base of local government, which can be used to pay for public services or reduce debt
• Local ownership improves social cohesion and local pride, mobilising people to take action in their own lives or to be more involved with politics. Scottish community energy projects have boosted awareness of the benefits of renewables. It’s also a bridge to other forms of community ownership. Danish windfarms have succeeded through a combination of local ownership, national ownership, and cooperatives.

Privatisation often costs us more – in shareholder profits, fragmentation and higher interest – while evidence shows that it’s not more efficient. Local ownership gives us a clear alternative that would also boost local economies and communities across the UK. Let’s take it local.

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London’s Garden Bridge will cost £60m of public money, and may even require a public bailout upon completion. Meanwhile, museums in Derby, Lancashire, Jarrow and Durham face closure. The cost of keeping them open is a tiny fraction of the public money funnelled into the Garden Bridge.

Of course, the problems with Britain’s economy don’t begin and end with the Garden Bridge, but it is a fantastic symbol of how skewed the nation’s economy, culture and infrastructure investment are towards London and the South East. It’s also an explanation for the resentment people living outside of London feel for the national overemphasis on the capital.

The first thing to address when it comes to rebalancing the economy is George Osborne’s idea of ‘Northern Powerhouse’. This was marketed by the then Chancellor as a way of rebalancing the economy and fueling economic growth in the North. But, as Daniel Bailey wrote for the Centre for Labour and Social Studies: “there is a great incongruence between the soaring rhetoric of devolution and the actual policy content of City Deals, such as the one in Sheffield, where only modest budgetary powers have been handed down. Moreover, an analysis of the specific powers being transferred speak to Whitehall’s existing objectives rather than an enabling of any deeper sense of decentralisation.” The emphasis on Whitehall has been demonstrated in farcical news stories about over 200 Northern Powerhouse jobs being moved from Sheffield to London.

In short, the Northern Powerhouse initiative is an exercise in devolving blame but centralising power. City deals mean British regions will get the choice over how they spend an ever-decreasing pot of money, and may even end up undercutting one another if business rates are also devolved. This doesn’t devolve power, it just outsources austerity. It’s not a solution to the problem of a London-centric economy; it is part of the problem.

What the UK needs is a proper industrial strategy to develop communities across Britain. This would involve investing more in the manufacturing industries so that there are plenty of well-paid skilled jobs in areas that have previously suffered industrial decline. Part of this industrial strategy would be to invest heavily in research and development to ensure the technology Britain develops can be exported to other countries, and the revenue used to invest in the country’s future.

A proper transport strategy is also needed to balance the economy away from London. By improving transport links and reducing commuting costs, the government could create a metropolis encompassing many northern cities – like a spiderweb of different economies across the north. This would be a far better solution to Londoncentricity than HS2, which is essentially a project to make commuting to London easier.

Finally, some national institutions should be relocated to the north. Parliament could be moved to Newcastle, taking many journalists and lobbyists – and the money they spend – with it. The BBC already has a huge media centre in Salford, but this could be expanded further. National newspapers could be offered peppercorn rent for opening regional offices outside of London. The financial, political and media hubs of the US are spread across the country. It is absurd that the UK crams all of them into the same city at the expense of everything else.

These are just a small number of ideas for a balanced economy. The government must think of more, and make enacting them a priority. London can no longer be allowed to remain Britain’s black hole, sucking in all the resources in its vicinity.

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The obvious thing we need to fill this gap is new, properly affordable, homes to rent. At social rents for the lowest paid workers in shops, cleaning and delivering, and at a ‘living rent’ (around a third of take-home pay) for those the wages paid to people in the public sector. Both are essential groups of workers currently priced further and further away from our city centres.

The big problem is that new housebuilding projects with a combination of social and affordable rented homes aren’t top of the list for the big companies doing most of the big development schemes in our cities. But they’re a hugely important goal for housing associations, councils and long-term investment funds like pensions, and for the growing number of people getting together proposals for a new generation of co-operative housing. The government should work with such groups to promote the growth in affordable housing. In our cities there is public land that is ideal for these low- and non-profit sectors, much of it near transport services and stations. In the capital, Transport for London has already identified over 120 hectares of land in large plots, and is working on the next tranches of medium and small sites around its network and depots.

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The phrase ‘municipal budgeting’ conjures up an anaesthetised and jargon-laden world of bureaucracy, a process of directing taxpayer money into communities in line with upstream policy directives. Given that, ‘participatory’ is perhaps the best word you can put in front of ‘budgeting’ – and for good reason.

Under participatory budgeting programmes, citizens of the municipality decide how and where to use the money spent on their behalf. It’s an immersive process and often a creative one, through which citizens take control of their immediate local area. This process allows citizens to learn about the wider processes involved in ensuring that their area flourishes, and about the realities of their neighbours’ lives. It’s historically led to the breaking down of cycles of poverty and inequality, the exorcising of preferential treatment of special interest groups and a cementing of local identity and purpose.

In 1989, the Brazilian city of Porto Allegre embarked on the first and perhaps most comprehensive city-wide participatory budgeting (PB) programme in the world. In Porto Allegre, participatory budgeting involves neighbourhood meetings, thematic assemblies – discussing water, sewage, public spaces, schools etc – and city-wide coordinating sessions. After the city has published the available budget, citizens propose initiatives that are voted on in person or online. These initiatives are later deliberated with the help of experts in ‘great assemblies’ held in churches, school gyms, clubs or circus tents. Over the years, the populace has been granted an increasing share of the public budget and participation has increased enormously, with up to 50,000 people a year deciding up to 20% of the budget. This widespread involvement has been coupled with a with a dramatic decrease in inequality and poverty.

There are now more than 1,500 similar projects worldwide, delivering billions in public funds in the name of people-powered community cohesion and development. Paris gave control of tens of millions of euros over to citizens between 2010 and 2015, with €500m to be spent before 2020. New York, Toronto and the Indian state of Kerala are other notable examples in which public money has been ring-fenced for projects like public housing, food-banks, social care and arts projects. While individual initiatives differ, citizens have often been given a considerable say in which prospective investors and businesses to invite into the community. The people of Porto Allegre, for example, turned down a 5* hotel’s bid in favour of a public park and community centre.

In the UK, small portions of local authority budgets have been put aside for participatory initiatives in select regions for a decade. Cumulatively, tens of millions have been spent, but small grants seem to be the model – whether they be from local authority budgets, primary care grants, police authorities or housing associations across the nation. Scotland has been taking participatory budgeting most seriously, the SNP proposing recently that 1% of Glasgow’s budget, £100m, be cordoned off for PB, with a sizeable portion dedicated to grassroots decision-making.

While participatory budgeting seems a perfect fit with the government’s ‘Big Society’ philosophy and program of ‘devolution deals’, the rarity of large-scale proposals like Glasgow’s – as well as the scrapping of the government’s PB Unit in 2012 – suggests the government is only dipping its toes into the water (and getting cold feet), failing to fully take advantage of what could be transformative experiments in democracy. As Jez Hall, Director of Shared Future CIC and PB expert put it to me, PB is about “creating deliberative space between politicians, service managers and citizens”. UK government reports have highlighted the potential of PB to increase turn-out in council and general elections, but it could have more systemic impacts. PB is a framework for a more direct democracy. The town of Frome, the birthplace of the revolutionary Flat-Pack Democracy, has recently announced its intent to implement PB.

PB isn’t free from challenges. Some, including the World Bank, have criticised the participatory process as excluding of so-called ‘hard-to-reach’ poorer community members. However, as Mr Hall outlines “the real ‘hard-to-reach are finance officers in the town hall, the people who think they have the right and power to make the decisions.” Opening a city’s or region’s finances to a radically transparent and deliberative process allows for the possibility of partner projects like co-production – in which citizens (or ‘service users’) help plan the development and delivery of local public services, often leading to cost-savings, and reduced long-term demand for policing and health interventions while alleviating alienation and loneliness.

Rather than an option for last-resort experimentation in an age of austerity and post-Brexit uncertainty, PB is an opportunity with a strong international track record to collectively form a common identity and engage in the long-term reimagining and recreation of how we wish to live. We’re lagging behind in what’s considered best practice worldwide and it’s high time we catch up.

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