How we can restructure society through progressive procurement
Written by Hannah Gardiner.
Back in Autumn 2017 I was lucky enough to attend a workshop on Community Wealth Building from the Centre for Local Economic Strategies (CLES) and STIR magazine. Community wealth building looks to challenge the paradigm of our extractive economy through a variety of restructuring mechanisms to ‘seal up the leaks’ in local economies — community saving banks associations and local currencies being a few.
CLES have been working on the concept for more than 10 years; in Preston, this has been in the main focus on working through anchor institutions. Anchor institutions are public or private businesses which are anchored to the area and therefore have a stake in its economic development, for example hospitals or universities. With the public purse tightening further every year, the money spent on procurement by these institutions represents a significant opportunity (over £700 million a year between 7 ‘anchors’ in Preston alone).
“Previously we spent a lot of time trying to attract large corporations to regenerate our city and when the financial crash came they pulled out… the new approach was out of necessity really”
- Councillor Matthew Brown, Cabinet Member for Social Justice, Inclusion & Policy, Preston City Council.
Procurement is currently tied to European Law and has historically focused on efficiency and cost savings. However the seeds of change are starting to bear fruit. The Public Services (Social Value) Act 2012 gave a steer from the UK government requiring “people who commission public services to think about how they can also secure wider social, economic and environmental benefits.”In fact, the government now gives annual ‘Social Value Leadership Awards’, however there is more that needs to be done (see a critique of the social value act).
The 2014 EU Procurement directives sought to bring in a balance of considerations including the importance of small or medium enterprises’ (SME) and environmental goals, for example recommending that contracts be broken into lots to facilitate SME participation and suggesting the potential for ‘innovation partnerships’ to be formed.
However all this is still far from the possibilities that could be unlocked if this progressive procurement movement was linked to a more contemporary understanding of local economic development, one that is less focused on attracting inward investment from large corporations.
In the wider context of austerity, and the apparent move in the UK towards much lighter central government involvement with devolved administrations and reduced public spending, localities need to meet far more of their own needs. At this point a bit of navel-gazing may be appropriate, to understand not just what those are, but also what community capacity and assets there are. Especially if a systems approach is to be taken to meet those needs, transforming them to potential opportunities where multiple local challenges can be addressed is key. In this mindset, a challenge plus a challenge can equal an opportunity, and the possibilities opened up as this way of working spreads and develops may be huge.
In the UK there has been recent interest around community management of parks and woodlands, which creates multiple benefits for all involved. In Manchester the council have written a Social Value Toolkit and increased their weighting on social value from 10–20% for procurement, now meeting part of their catering needs through locally run cooperatives. And this is not only happening in the UK. In America, Democracy Collaborative have been developing similar projects, with Cleveland as a prime example, where Evergreen Co-operatives have three new worker owned businesses providing laundry, energy and food.
These thoughts were further strengthened for me by attending Sustains’ AGM and seeing Felicity Lawrence talk about where the wealth has gone from the farming industry.
She discussed how in 1979 £10 out of every £100 profit was paid out to shareholders, by 2016 nearly £70 in every £100 profit is paid to shareholders. Further, in 1980 top CEO to worker pay ratio was between 13.1 and 44.1, by 2013 it was 174:1.
This is on top of the ‘restructuring’ that we all know has been going on since the 90’s, with some companies breaking up into subsidiaries and holding profits in ‘efficient’ offshore havens.
It’s so important now that attention is paid to flows of resources, to where the wealth goes and grows with locally owned enterprises, meaning money going directly to local people instead of just a promised ‘trickle down’; direct redistribution instead of just ‘after the fact’ through the tax system.
CLES have also created a multiplier model showing that SMEs will on average spend 40p from every £1 in the local economy, whereas a large organisation will only spend 10p for every £1.
Employee ownership and social enterprise models may not be as easily adaptable for every industry or service because a certain ecosystem is needed. But strategically identifying and creating a supportive environment for those industries could be one catalyst for much needed local economic growth, and the procurement spend of ‘anchor’ institutions may provide a good stable base to start.
Hannah Gardiner is the co-founder of smart city solution AirPublic, and the Consultancy and Innovation Manager at Shared Assets. She is concerned with the physical and social constructions within which we enact daily norms and cultural practices that have a detrimental effect on the planet, and in some cases our fellow human beings. Her work has ranged from socially engaged art projects to behaviour change programmes, and from supporting the development of social enterprises to carrying out work with local authorities. See her previous discussion on ‘restructuring society through doing business’ here. Reach Hannah on Twitter at @HJGardiner.