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1 November 2018

How Preston – the UK’s “most improved city” – became a success story for Corbynomics

The Lancashire city has transformed its growth model through public investment and innovation. 

By George Eaton

Labour may not be in government but its ideas are already reshaping Britain. This week’s Budget resembled a raid on the party’s manifesto: higher spending on the NHS, higher government borrowing (rather than seeking a budget surplus), a digital services tax and the abolition of PFIs.

And beyond Westminster, Corbynomics is already being implemented. There is no more successful example than Preston. The Lancashire city, which I reported from earlier this year, has been named the UK’s most improved urban area in a study by PricewaterhouseCoopers and Demos (Preston was ranked 14th overall, ahead of London in 15th place).

When a planned £700m redevelopment of the city centre collapsed in 2011, the Labour-led authority resolved that Preston would chart its own course. Rather than chasing inward investment from large multinationals, as it previously had, the city forged an alternative growth model (council leader Matthew Brown cited research showing that “big supermarkets cost jobs”).

Before 2013, major public bodies, such as the University of Central Lancashire and Lancashire Constabulary, had a combined annual budget of £1bn, but startlingly little of this money was spent locally. Inspired by the “Mondragon model” in the Basque Country and the “Cleveland model” in the US, Brown’s team persuaded six of these “anchor institutions” to procure more goods and services from Preston-based firms (such as local builders, printers and farmers), rather than relying on outsourcing companies often headquartered in London. The council also became the first northern employer to pay the full living wage.

Since then, the share of the public procurement budget spent in the city has risen from 5 per cent in 2013 to 18 per cent (a gain of £75m), while across Lancashire it has risen from 39 per cent to 79 per cent (a gain of £200m). Unemployment has fallen from 6.5 per cent in 2014 to 3.1 per cent and, as the Demos study notes, Preston has also achieved above-average improvements for health, transport, work-life balance, and youth and adult skills.

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Worker-owned co-operatives are promoted through the recently-established Preston Co-operative Network, a credit union combats avaricious payday lenders and a not-for-profit energy firm Fairerpower Red Rose has saved consumers more than £2m.

“We needed to do something that was more resilient but also, crucially, put more democracy and ownership in the Preston economy,” Brown, the left-leaning council leader, told me when we met in September.

Long before the latest study, Jeremy Corbyn and John McDonnell cited Preston as an example of the potential for economic transformation. “This kind of radicalism is exactly what we need across the whole country,” said McDonnell when he visited in 2016. The following year, Corbyn praised the city’s “inspiring innovation”.

In February, McDonnell established a Community Wealth Building Unit to export the Preston model to other areas of the UK. On 9 September, he announced that Labour would require all private companies employing more than 250 people to establisher worker “ownership funds”. Like Brown, McDonnell recognises the flaws of past nationalised industries, characterised by a management he described as “often too distant, too bureaucratic and too removed from the reality of those at the forefront of delivering services”.

Brown acknowledged that “there are lots of critiques emerging saying this is a form of protectionism”. However, he added, “they are very easy to deal with because we’ve got social value and European regulations. If there’s a much better bid on price, quality, social value from outside it would have to go to that outside supplier.”

The council leader is now heightening his ambitions. He aims to establish a Lancashire-wide community bank to provide loans to small businesses and Preston is pioneering the use of drone technology in public services and urban construction.

The city exemplifies what Neil McInroy, the head of the Centre for Local Economic Strategies, calls the “new municipalism”. Rather than a narrow commitment to the state, this model encourages a plurality of forms: co-operatives, mutuals and trusts, as well as government ownership. In Spain, the Mondragon Corporation, the world’s largest worker owned co-operative, encompasses 260 individual co-ops, employs 75,000 people and has annual revenues of over €12bn.

Crucially, as Brown argues, Preston’s approach makes socialism more resilient to attack. “One of the reasons that Thatcher found it so easy to privatise a lot of the public assets was that working people didn’t have a huge amount of affinity with them. If they had been on the board, sharing the profits and had a real ownership stake then she wouldn’t have been able to do it, they would have been hugely popular.”