The continuous profit-driven growth model is killing ecosystems, humans and millions of other species. In our City, after 3 decades of neoliberalism, many people feel no benefits and must battle for survival. But things can change. Cities across the world are challenging the neoliberal status quo. This series looks at alternative economic models.
Part 1. It’s our money – spend it here
The recently published Cities Versus Multinationals report offers a great deal of hope and inspiration for Municipalist movements across Europe and beyond. From Berlin to Belgrade, the hegemonic forces of neoliberalism are being challenged and turned away, as people organise themselves to reclaim their homes and their communities. The report documents examples of such resistance, as well as exploring the wider lessons to be learned for the Municipalist movement as a whole. In our first look at Cities Versus Multinationals, we begin relatively close to home, in Preston, a city in the north of England. Like many other cities in the northern part of the country, Preston has suffered from the effects of de-industrialisation, as well as a decade of Tory-led austerity. Against this background, new ideas have started to sprout that challenge the retrograde assumptions built into the neoliberal worldview. At the heart of what has come to be known as “the Preston model” is a re-imagining of public procurement policy. It is to this issue that we now turn our attention.
The progressive potential of public procurement is twofold: first of all, the opportunity to retain money in the local economy exists when procurement is aimed at supporting local businesses. If public institutions purchased their goods and services from local suppliers, the community in which these institutions are rooted would stand to benefit. Secondly, the businesses that benefit from a progressive procurement policy could take the form of worker co-operatives. This would mean that the workers, rather than the sole business owner or shareholders, would benefit. Progressive procurement could, therefore, support the local economy as well as a different set of social relations within the economy. This is the basic idea behind the Preston model’s re-imagining of public procurement policy.
Martin O’Neill, a senior lecturer in political philosophy at the University of York, shares the Preston model’s enthusiasm for re-evaluating the role that public procurement can play in social transformation: “It’s the sense that procurement, which sounds like a dull and technocratic issue, is intensely political and we have massively undersold an important function of government to improve people’s lives by not seeing procurement as having this role” (CitiesvsMultinationals, p.76). O’Neill’s words highlight an unfortunate reality: the ideological assumptions of neoliberal capitalism are so deeply rooted in our culture, that something as politically important as public procurement policy has largely been ignored, and has, in fact, come to be viewed as an almost apolitical financial process. The first step in re-politicising this important function of public institutions is challenging this ideological assumption.
Prior to the Preston model, the Democracy Collaborative think-tank in the United States was commissioned by the Cleveland Foundation in 2007 to conduct a spending-analysis in the Ohio city. Cleveland had been suffering from years of disinvestment, as well as a shrinking population. Nevertheless, the city still had a number of “anchor institutions” rooted in it, such as schools, hospitals, and universities. The spending-analysis carried out by the Democracy Collaborative found that the city’s anchor institutions spent around $3 billion a year. Despite this massive sum of money being spent by Cleveland institutions, most of the cash was leaving the city. The impoverished neighbourhoods that existed around about the hospitals and university buildings received very little benefit from the investment. The Democracy Collaborative’s findings revealed that a lot of money was going to Mexico and Chicago based businesses. It then identified whether those contracts could be given to Cleveland-based suppliers in the future. If no suppliers existed for a given contract, they explored opportunities for new suppliers to fill the gap in the market. Over the following years it supported the establishment of worker co-operatives, including a laundry and an indoor farm. This allowed the workers to share in the profits of the newly-formed companies, and provided employment opportunities for city-residents, including those who had previously spent time in prison and struggled to find work as a result. The Democracy Collaborative have described this process as “community wealth building”, and they hope that it will be able to transform similarly struggling communities across the United States.
Like Cleveland, Preston has experienced the negative consequences of global capitalism’s shifting sands. A lot of industry has disappeared from the north of England, and the austerity that followed from the 2008 banking crisis has left local councils across the country short of cash. Preston has also struggled to attract outside investment to the area. In 2008, the council signed off on a £700 million regeneration project, but when major retailers like John Lewis pulled out in 2011, the project collapsed. The area was in major need of fresh ideas. Fortunately, that same year the Centre for Local Economic Strategies (CLES), inspired by the Cleveland model, were looking for opportunities to test their ideas about procurement and its progressive potential.
The Preston council commissioned CLES to carry out a spending-analysis in the city. The first step was identifying the anchor institutions: these included the city and county councils, the local university (University of Central Lancashire), the police, and the local housing association. CLES found that collectively, these institutions had an annual spending power of around £750 million. But in 2012/13, only £1 from every £20 spent by these institutions remained in the local area. CLES worked with the public bodies to rewrite their procurement policies, so that in 2013 they spent £38 million in the city of Preston, and £292 million in all of Lancashire. By 2017, these figures increased to £111 million and £486 million respectively (CitiesVersusMultinationals, p.78). This was despite an overall reduction in the council’s budget.
The institutions were also helped to implement the living wage. Amazingly, the procurement transformation occurred within EU Law, which stipulates that contracts worth over a certain amount of money (£181,302 for standard contracts, £4,551,413 for works contracts) must be put to the market in the interests of transparency and competitiveness. One of the ways the anchor institutions were able to get around EU procurement law was by breaking down large contracts into smaller lots. They also utilised the Social Value Act; an act that requires public institutions to think about how they can secure social, economic, and environmental benefits in their decision making.
In 2018, Preston was named the most improved city in the UK by the Good Growth for Cities Index. In September last year, the council was closing in on the funding necessary to apply for a banking licence. If only 2% of the local population switched their banking accounts to the new municipal bank, it would allow the institution to lend half a billion pounds to local people. If that number increased to 10%, then four billion pounds could be recirculated in the local economy. Matthew Brown, the council leader since 2018, believes that the community bank could be used to democratise the economy through supporting the establishment of worker co-operatives, and co-operative education centres. This could help Preston follow in the footsteps of Cleveland, and other progressive projects such as Cooperation Jackson in Mississippi.
Despite the exciting potential that progressive procurement policies offer, there are obstacles to be overcome. Firstly, EU procurement law can create difficulties in changing strategies. It’s not clear what the situation will be when the UK leaves the EU at the end of the year, but it’s likely that the EU directives will still influence the UK beyond Brexit. Matthew Jackson, formerly of CLES and now working with Preston Council, believes that leaving the EU will embolden councils to use the Social Value Act: “There will be an opportunity to embed social values far more effectively than authorities have to date…I still think UK local authorities are a bit scared to embed this in policy because of EU law.” (CitiesVersusMultinationals, p.82).Jackson also believes that many European cities are unwilling to change their strategies because of the lack of good case studies. The thinness of current evidence supporting a more progressive approach means that price remains the most important consideration for local authorities. The lack of willingness to experiment is, therefore, another obstacle facing advocates of progressive procurement policies; perhaps the biggest obstacle of all.
The leader of Glasgow City Council, Susan Aitken, has informed us that the council plans to restructure its procurement practices to lend greater support to local businesses and social enterprises. This is a promising start. However, our ambitions should match those of Preston and Cleveland. The council’s procurement policy shouldn’t merely shift in a slightly more progressive direction; it should become a powerful tool used to transform Glasgow’s economic practices. This means that we should not be afraid to experiment with new ideas. It also means that Glasgow’s public institutions should re-affirm their commitment to serve the people of the city, and to place their needs above the greed of multinational businesses.