Building and leveraging infrastructure

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Providing infrastructure – in the broadest sense - to support inclusive economies is an emerging area of local policy making. This aspect of the inclusive economies agenda goes beyond traditional economic development in that there is generally a focus on ensuring that the infrastructure:

  • facilitates the retention of profits and benefits in the local community
  • targets economically excluded groups and places
  • promotes inclusive economic activity and is restricted by some means to achieve this.

There are elements of this which are longstanding and well known to councils, such as using community asset transfers to provide community businesses with homes or supporting community businesses/social enterprises to set up to deliver local authority services.

Aside from building new infrastructure, councils are also leveraging their existing assets. Councils can use the control they have over buildings they own (including commercial property), as shareholders in companies, through local authority trading companies, and other areas of ownership.

The importance of councils understanding what their assets are is clear as well as seeking to maximise their usefulness for the inclusive economy agenda.

It is important that councils continue to lay the ground to access levers even if development is not forthcoming for a period of time given the current COVID-19 context.

With respect to leveraging existing assets, this may become more important to hep kickstart local economic activity and ensuring that inclusive principles are built into recovery.

Case studies 

London Borough of Islington: Using planning powers to provide affordable workplaces

In 2010/11, Islington Council held a Fairness Commission which highlighted the stark inequalities that exist within the borough. One specific problem highlighted by the Commission was ‘commercial gentrification’ where small businesses faced the threat of being displaced from the borough due to a hyper-competitive commercial property market and high business rate increases. Islington therefore developed an Affordable Workspace Strategy. This involves negotiating leases using the Section 106 process from developers at very low rents for periods of 10 to 20 years which are then managed by selected affordable workspace providers. These providers are offered the spaces at peppercorn rents in return for social value, such as education, training, and employment opportunities for local people.

Islington have also used their understanding of local communities to ensure that this support helps those groups which are harder to reach and builds on existing activity. For example, in one case (which received match funding from the Mayor of London), an emerging garment making industry among predominantly BAME women has been supported with conversions of garages and workspaces for their use. This is also complemented by sewing and garmentmaking classes and support in the local area.

The council is now exploring how to further this approach as part of its local plan update. Islington has explored its wider regulatory orbit in order to provide more affordable workplaces, and support inclusive growth.

Joining up its approaches, it has used planning powers to obtain workplaces and used social value to maximise the impact providing these workplaces through affordable workspace providers will have. By including Islington’s goal for a more inclusive economy in strategies across the council, it has been able to embed it in areas where it has not been traditionally included like planning.

Preston City Council: Supporting co-operatives and developing a community bank

Preston is also furthering its efforts on community wealth building, by looking at ownership of local economy activity and
supporting co-operatives. The latest phase of the so-called Preston Model involved a partnership between the city  council, UCLan and Co-operatives UK to help seedfund a range of worker co-operative start-up businesses.

Over three quarters of a million pounds is being used to support these businesses in cash and in-kind support. The scheme is drawing on international practice, including Mondragon in the Basque Country in Spain and recognising that co-operatives have a difficult time starting up.

The council also helped to set up a new Preston-based credit union in 2015 to tackle financial exclusion in the city. GuildMoney was supported with £150,000.

The council now hopes to build on this work by helping financially excluded people and businesses by working with other councils in the North West like Wirral Council to set up a community bank. The bank is planned to be co operatively owned and will have a particular focus on lending to small businesses. It is also hoped that the bank will
have physical branches, in response to the decline in the number of bank branches on high streets across town and district centres.

Preston City Council wanted to further its agenda to generate and retain wealth in its economy and the wider Lancashire economy having seen success with its progressive procurement agenda. Local and inclusive ownership was seen by the council as a clear way to retain these benefits, and so they have supported co-operatives, credit unions, and now a community bank. The council have been clear in the development of these projects about the local challenges that they are seeking to address including financial exclusion for local people and difficulties for small businesses in accessing finance.

Key lessons

- Building, obtaining, and leveraging economic infrastructure can help councils retain wealth in the local area, target those most affected by economic exclusion, and directly shape activity to be more inclusive.

- Direct ownership over economic assets gives councils direct control over aspects of a more inclusive economy like living wages, good working conditions, and local supply chain expenditure.

- Even during economic downturns councils can encourage more inclusive economies to emerge and they can support or invest in co-operatives and the social economy which tend to be more resilient in economic downturns.