New model economy benefits business and the community

The Preston Model is showing the country how grassroots growth can drive business and community prosperity. Dr Julian Manley, Social Innovation Manager at the University of Central Lancashire’s (UCLan) Centre for SME Development, explains how.

Certain politicians have derided the notion that Preston can blaze a trail to economic prosperity and social inclusion. Yet the concept of ‘what is spent in Preston, stays in Preston’ has given doubters food for thought, as more and more local authorities implement the model in their own areas.

The Preston Model – an ambitious community wealth building project – made Preston the most improved city in the UK in 2018, and triggered a transformative upturn in local prosperity. The ranking, in an independent report from PwC and Demos, also cited a dramatic drop in Preston’s unemployment rate, from 6.5 per cent in 2014 to 3.1 per cent in 2017. Meanwhile, the Preston Model has seen local procurement spend rise by £74 million in the five years from 2012 to 2017.

Why the Preston Model was developed

In an age of widespread disillusion with traditional approaches to politics and economics, the Preston Model represents fresh possibilities for creating prosperity for business and communities.

The model involves ‘anchor institutions’ – big-spending organisations, such as UCLan, the hospital, the county council, Gateway Housing Association and others – creating local wealth by spending more of their budgets in Preston, which can be retained for the local good. Just as importantly, the model identifies gaps in the local economy and the development of worker-owned co-operatives to generate local wealth, high quality jobs and promote co-operative values. In this way it supports participative democracy in communities and radically improves Preston’s social and economic ecosystem.

How UCLan is working with businesses

UCLan has been working in partnership with the city council to develop all aspects of the Preston Model, including worker-owned co-operative businesses. In May, a Propeller Networking event held by the University unveiled a new seedcorn funding offer for people who are thinking of creating co-operative businesses, which fits the Preston Model.

Dr Julian Manley

Dr Julian Manley

The finance is being provided by the Open Society Foundations, which has funded UCLan to promote the establishment and expansion of co-operatives. The fund will be managed by UCLan in collaboration with the city council and the Preston Co-operative Development Network (PCDN), which was itself created as a result of UCLan research and recommendations to the council.

The University also contributes to a substantial research programme to support local communities and to encourage local democracy through the creation of worker owned co-operatives. The Open Society Foundations-funded project will create at least 10 new worker-owned co-operatives in a two-year period.

Among them will be a Co-operative Education Centre that will also become part of the federated Co-operative University currently being progressed by the Co-operative College in Manchester. This Co-operative Education Centre will provide education and training for Preston people who want to start up local co-operatives.

Why the Preston Model was developed

In an age of widespread disillusion with traditional approaches to politics and economics, the Preston Model represents fresh possibilities for creating prosperity for business and communities.

The model emerged as a reaction of local stakeholders – and particularly the city council – to central government cuts and austerity measures. The council has developed a new participative role in the local political economy by becoming involved in changing behaviour and co-operation between communities, businesses and anchor institutions.

This has resulted in a strong and enduring partnership between UCLan and the city council as well as a growing sense of business development through local empowerment and creative innovation processes.

Indeed, a sense of frustration among many local people at the politics of the past has resulted in an increasing realisation that the Preston Model can provide the potential for future prosperity by, and for, local people. Sometimes, the words ‘taking back control’ have been used to describe this shift in perspective.

SME and start-up involvement in local wealth generation

The good news for local SMEs and entrepreneurial start-ups is that they can also share in the upturn in Preston’s economy by seeking out new opportunities from anchor institutions that are actively looking to increase their local spending.

Forward-thinking enterprises should also consider the potential benefits of converting to worker-owned co-operative businesses with the support of the PCDN, UCLan and Preston City Council.

In addition, local companies can become part of the University’s Centre for SME Development, where membership is free and which can provide advice and guidance about the opportunities available for co-operative development in Preston.

What might the future hold?

Looking ahead, in two to five years’ time Preston will have a network of worker-owned co-operatives collaborating under the umbrella of the PCDN, which will continue to encourage an increase in local spending and the creation of high quality local jobs. The PCDN will also have developed a Preston Co-operative Education Centre (University) and a Co-operative Community Bank.

Nor is the Preston Model restricted to Preston. According to city council leader Matthew Brown, aspects of the model are already being applied elsewhere in the UK, partly due to media attention and partly as a result of strategies being implemented by some 50 Labour-run local authorities.

After Preston, perhaps the most advanced of this kind of strategy is being developed in major cities such as Manchester, Liverpool, Birmingham and Newcastle. In the meantime, at least eight London councils are actively pursuing some ideas arising from the Preston Model, and there has been significant interest from the National Assembly for Wales and the Scottish Government.

All these developments underscore the transferrable and adaptable nature of the Preston Model, while discounting arguments that localism is a form of protectionism or parochialism. Nothing could be further from the truth.

For information on becoming part of the Centre for SME Development, please contact SMEDevelopment@uclan.ac.uk or 01772 894321.

02 July 2019