The ‘Preston Model’ and the modern politics of municipal socialism

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.