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It matters to local economies who own and control businesses, said Sarah McKinley, director for European programmes with the US-based Democracy Collaborative last Thursday.
“So that wealth is not extracted out of communities, but is rooted in it, recirculated and benefits the people,” she said, in a presentation to members of Dublin City Council’s finance committee.
McKinley, alongside Sarah Longlands, the chief executive of the UK-based Centre for Local Economic Strategies (CLES), gave examples of how governments and institutions elsewhere had recognised that, in deciding how to use their spending power.
After the presentations, councillors talked about how they could emulate some of that here in Dublin, and what they may be able to put into the next city development plan, which is currently being drawn up, to support it.
They decided to refer the policy on what’s known as “community wealth building” to the full council for a vote.
If the full council backs it, “there is a lot that could happen in terms of HR”, said the council’s finance manager, Kathy Quinn, at the meeting.
“Are we ensuring that we are giving opportunities to people from disadvantaged communities?” she said.
The council could also look at breaking up their contracts to give more small businesses a shot, she says.
At the meeting, McKinley focused in on Cleveland, Ohio.
There, half of all children live below the poverty line, she said, and parts of the city have high concentrations of residents with criminal convictions who struggle to find employment.
Cleveland’s big institutions, including the university, the hospitals and the city government got together to work out ways to redirect their spending of around $3 billion a year.
They created a network of industrial cooperative businesses to service their existing contracts, said McKinley.
All workers are paid a living wage, get a share of profits and have access to homeownership schemes, she said.
Longlands, the chief executive of CLES, said her charity in the UK works with councils and local public bodies to help them plan how to use their influence to lead community wealth building.
“Spending is a really big chunk of community wealth building,” she said.
Changing how you spend might mean directing public money to back existing locally owned businesses, social enterprises, co-operatives or businesses that pay the living wage, she says.
Not all economic growth trickles down and helps alleviate poverty, she says, and community wealth building aims to make sure that money spent is circulated in the local economy.
Big monopolies in business often don’t generate as much wealth in the local economy as locally owned businesses, she says, but often public bodies put out big tenders that small local businesses can’t apply for.
“It’s about trying to diversify and break up that monopoly and develop more local and social enterprises that can actually generate community wealth for the people in those communities,” says Longlands.
Preston City Council used its procurement to support local businesses and drive up wages, she says.
It estimates it created 1,600 jobs, and that 4,000 more people are being paid a living wage as a result of its interventions, said Longlands.
The social value that you can leverage through public land is also very important, she says. “Land and property are hugely challenging in a city like Dublin.”
Public sector bodies can lead by example too, by having employment charters, local work agreements and encouraging local businesses to see that providing decent pay and conditions benefits everyone, says Longlands.
Independent Councillor Noeleen Reilly welcomed the presentation, saying that it is disappointing when major regeneration projects don’t boost the local economy.
“Large regeneration projects in the city had little or no impact on local communities,” she says.
Reilly said that when councillors advocated for social employment clauses to be put in contracts they were told that it wasn’t possible because of EU procurement law.
Longlands said there’s nothing in EU law that restricts that. “In terms of using procurement in a much more imaginative and creative way to try and support local and economic regeneration.”
Tenders should be drawn up to reflect the specific aims of the procurement, including what benefits the public body wants to accrue, she says.
Quinn, the council’s finance manager, said that EU law doesn’t stop the council from breaking up its contracts into smaller chunks.
If community wealth building is voted through and becomes council policy, she would look into changes to how the council does procurement and breaking up the contracts, she said at the meeting.
Procurement would be the easiest place to start making a difference, she says.
Green Party Councillor Janet Horner said she understands the council’s chief executive, Owen Keegan is agreeable to community wealth building being adopted as a council policy in the next city development plan, for 2022 to 2026.
Sinn Féin Councillor Anthony Connaghan asked how the initiatives in Cleveland described by McKinley were funded.
The co-operative businesses in Cleveland include an industrial-scale, environmentally-friendly laundry, an industrial greenhouse, and an energy retrofitting company, says McKinley.
At first, they were funded through a combination of funding streams, including philanthropy, public funds, and borrowing.
“It’s not an easy thing to do. It needed a fair amount of collaboration and working together,” she says.
Those companies have now cleared their loans, though, she says, and as well as paying dividends to workers, a share of their profits is also being re-invested into assisting new co-ops to get off the ground.
In some cases, with the assistance of the network, the employees have bought out existing businesses and converted them into co-operatives.
Is breaking up the contracts more expensive for the public body doing the tendering? asked Reilly, the independent councillor.
Longlands said that the experience in the UK is that it doesn’t end up costing more because often the bigger companies also have bigger overheads, she says.
There are also costs involved in not doing these kinds of things, she says.
Poverty costs the state money in a wide variety of ways. “What is the cost of unemployment to the state”, asks Longlands, “if you are not prepared to intervene?”