Lessons from Preston

Hartlepool is a post-industrial, northern, coastal, and predominantly white-working class town. The town ticks the majority of policy-makers’ problem boxes. This makes it a perfect place to try and address some of the key challenges in 21st century Britain: how can life expectancy, quality of life, employment and education. be improved in the areas where such improvements have proven most elusive? How can the citizens of these areas feel as though the political system recognises them, and works in their interest? Otherwise, if the political system continues to starve people of money, resources, services and opportunity, then the players in that political system cannot be surprised when someone other than them comes along, strikes a chord, and attracts all of their votes. 

Preston asked itself these questions some years ago. In search of answers, it looked abroad, and in America – Cleveland’s rust-belt, specifically – found a model of community wealth growth which sought to democratise decision making through the promotion of co-operative models of ownership; retain investment through localising procurement practices; and encourage the private sector to serve public interests. After the best part of a decade, Preston is in a much better position than it was when it began this journey. And, importantly, it finds itself in a much better position than Hartlepool. 

Democratise decision–making 

It would be absolutely intolerable to the British public if they felt political decisions were being made undemocratically. The reality, though, is that plenty of incredibly important issues related to Britain’s political economy are decided not by politicians, but by businesses. These decisions are, too often, made undemocratically, and are incredibly short-termist. Pension schemes and wage-rates and working conditions and parental rights are just some examples of the incredibly important aspects of workers’ quality of life which are left, largely, to their employers to decide. The state has regulatory frameworks in place providing a safety net, a bare minimum. But if you widened the pool of decision-makers, through incentivising cooperative models of firm ownership, this regulatory framework would not only be inadequate, but unnecessary. Boards deciding the pay of their workforce, if constituted by the workforce, would be generous towards the workforce. There would be no need to legislate pay-gap ratios or cap salaries. Pledges to do so are conflating the symptom (pay differentials) with the problem (power differentials). Local authorities, such as Hartlepool Council, can use rates relief, grants, and favourable contracts to incentivise cooperative ownership: they should ensure they do so. 

Retain investment through localising procurement practices 

Preston, early on in its journey, audited procurement practices. They identified some pre-existing anchor institutions – bodies which had a significant spend and were permanently situated in the relevant location – and calculated that of these anchor institutions’ collective £750m annual spend, only 5 per cent was going to organisations based in Preston. Simple procedural shifts such as breaking contracts into smaller portions to allow local firms to bid, and insisting on local quotes being sought where possible, saw almost immediate gains made on that 5 per cent. This worked with the ‘influencable spend’ – the portion of the £750m which could immediately be spent locally, but which wasn’t. The rest of the spend required a longer term approach: identifying gaps in local provision, and supporting growth and investment into these areas. So for goods and services where local suppliers could not be sourced, local government facilitated easy access to credit and provided technical support to ensure that local providers did in fact emerge. Hartlepool needs to do all of this, and more. The audit and subsequent shifts to procurement procedure genuinely provide the opportunity for an almost instant injection of cash to the local economy at no extra cost. This is a moral imperative.  

There are issues though. Hartlepool’s natural and pre-existing anchors, even if you were charitably inclusive whilst devising the list, would not compete with the £750m which Preston and Lancashire were working with. Sothere needs to be a body of work done in Hartlepool which ties together smaller, privately owned firms into synthetic anchors which collaborate, in their own interests, and in the wider interests of the town as a whole. The role for Hartlepool Council here would be in facilitating cooperation, identifying opportunities, modelling and supporting collaborative procurement practices, promoting participation, and fiscally and financially incentivising local procurement. There are obvious arguments against what could be broadly perceived as protectionism; however, when places like Preston and like Hartlepool are seeing the lives of their people shortened, and when they are , we need to try alternative approaches. Somebody arguing that the Hartlepools of the UK ought not cost the country more than they contribute, but also must not be afforded the opportunity to try innovative economic approaches, must provide their own plan for rebalancing decades of economic policy which has almost exclusively concentrated on wealth creation in everywhere but the Hartlepools.   

Encourage the private sector to serve public interests 

Preston’s procurement practices concentrated, as do everybody’s, on price and quality. But they also incorporated a social value score. This allows contracts to be awarded to firms which pay the living wage to local workers rather than firms which only pay the national minimum wage. It allows contracts to be awarded to firms partly on the basis of whether or not they take on local apprentices, allow their staff to support the governance of local schools, or provide resources for the artistic and cultural enrichment of the local area. This is not about ideologically challenging the private sector’s existence, but rather more pragmatically, challenging its practice.  

Hartlepool will face some of the same problems Preston faced, but will also have unique issues. The model is universal, but the application needs to be bespoke. Hartlepool Council should identify which issues the private sector has an influence over and which could be incorporated into the social value score for Hartlepool’s procurement practices, and then incorporate them. Central government funding of local government is falling; it is incumbent on those local governments to identify other means of ensuring the town’s essential services can be provided for, protected, and rebuilt.  

What next? 

Hartlepool Fabians have produced a policy paper, which also talks about how Hartlepool can be made more attractive to outside investors and outside individuals. The dual approach of bringing more money in, and keeping more money in when it’s in, is one that is replicable elsewhere. Democratising the private sector so that it serves society better can be done anywhere. The strategy of identifying public issues which are a priority, and encouraging private sector support, is one that is also replicable. But this is not to say this is a universal policy which can be adopted off-the-shelf. Rather, it’s a replicable policy which must be adapted to suit context and meet needs.  

Beyond the overtly economic arguments, there is a very real opportunity that community wealth growth, locally led ownership, cooperative practices, and cooperative models of ownership offer chances to improve people’s self-worth. This will have obvious benefits for employment, education and earning: but it is also about more than that. Frankly, a lot of the people of Hartlepool feel as though politics and economics have not worked for them. This could change that.

Hartlepool Fabians will be launching their policy proposals on February 28 in the town. Contact hartlepoolfabians@gmail.com for more details.