The Preston Model was once again in the national spotlight.Advertisement
During Friday (8 June), the leader of Preston City Council councillor Matthew Brown was quizzed by Jeremy Vine.
The BBC Radio 2 presenter had a segment exploring the economic strategy which has been catching lefty and media eyes across the UK and beyond in recent years.
The city council has embarked on ‘community wealth building’, where it and other large institutions of the city, seek to spend local where possible.
Cllr Brown, who became leader of the city council following councillor Rankin standing down, explained the concept alongside economist Neil McInroy.
Me and @MatthewBrownLab. About to go on @theJeremyVine. #localwealthbuilding Apparently following us on show is a Burmese python. pic.twitter.com/D9tyTQE3Rc
— Neil McInroy (@nmcinroy) June 8, 2018
Here’s how the conversation went…
Vine: Local councils are facing funding cuts, and now doing something different, Preston council has been restructuring by keeping spending local to home, setting up a new market hall. Is it working? Well, before 1 in 3 children in Preston were in deprivation and then in 2016 Preston one of best placesto live and work. I’m joined by Cllr Brown… you’re quite new aren’t you?
Cllr Brown: It is, been in job for two weeks,
Vine: Haven’t messed anything up? Tell us about this?
Cllr Brown: Not yet, no. We’re responding to a national economic situation, within Preston, we had promise from two big developers, and economic crash came, 15 years of trying to bring money in and left with nothing.
We went collaboratively, round the public sector, housing association, university, trying to keep more wealth within the area.
Repatriated £75m to locally based suppliers, equivalent to 1,600 extra jobs, wealth is coming from the South East. It’s been very successful so far.
Our pension fund, instead of spending in speculative investments, it has built some student flats. One of first to pay the living wage, now best for people in Lancashire to receive it.
Read more: Why Michael Sheen was looking to Preston for economic inspiration
Vine: If got £75m to spend, seems obvious you want to spend with local builders etc, why do councils go to Carillion? They come in slightly sharper suits, we worked in Manchester, Bournemouth
Brown: I think there’s been a certain culture, 10 years of crash, this is a new way of looking at things.
Neil McInroy: Trickle down economics is not working, failing, this is a torrent down of wealth, harnessing the power of local govs, hospitals, ripple through. Dozens of councils are doing it across England and Scottish government.
Vine: What about if you need something of scale, what if you build underground train system?
McInroy: It’s about supply chain. It might be a need big international company, but you need skip hire.
Vine: How do you get best price?
McInroy: Procurement rules, you can animate the local market and make those firms fit to bid
Vine: Rules against just making it to someone down the road?
Brown: Got to be done legally and through fair and open competition. It’s about changing culture. You can break contracts down to smaller thresholds. Make local companies aware of the opportunities.
Vine: Closer the better?
Brown: Crucial, if local 63p goes to local economy. If goes to large corporation then only 40p stays local.
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McInroy: Small businesses more likely to spend locally, employ local. Somewhere small not going to be a resident of Cayman Islands
Vine: I’m trying to think of arguments against, so lets go back to 60s and 70s, scandals, on procurement, John Paulson, he ended up with the largest architecture practice in Europe, he had been bribing people and political contacts. He went to jail in 1974 and brought down Home Secretary. You could get a bit too chummy? You’ve got £75million but to your friends neighbours dogs uncle, that’s the danger?
Brown: I do understand that but we’ve not had any experience of it. I understand that argument and it’s done through a transition. Anything spent over £500 is spent is published online. If there was a much better bid from outside, this isn’t about protectionism.
Vine: Give example of Preston where a local firm has benefited?
Brown: Our new market, we waited for a lot of inward investment. Had a number of companies, the one owned was local family construction. It was worth about £5million. Locally owned, you have 30-40 sub-contractors, plumbers, painters, within.
Vine: Would they have come in from outside before?
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Brown: If you support ownership models like co-ops and they keep the money, then I think that creates a more vibrant economy
Vine: The danger here is that this is successful… companies pretend to be local when they aren’t?
McInroy: This is all about making a market that’s competitive. If every area did this you would have more small businesses fit to complete. There’s a lack of entry to market place. This is good for growth and good for success of the country.
You can listen back to the show on the BBC iPlayer