Austerity Economics

Below is a report, given by Irene Leonard, Treasurer of Wavertree CLP, at Grassroots Politics and Alternatives, our Political Education Event from May 2018.
Lena Šimić, Walton’s Political Education Officer, chaired the event, and also speaking at were Ronnie Hughes and Tim Jeeves (click the links to read write-ups of their talks).

Introduction

1. The rise and intended fall of neo-liberal, neoconservative, austerity economics
2. Some current experiments in socialist, co-operative cures and antidotes, transformative political methodologies.
3. Call to further co-ordinated actions. How can we combine together?

 

1949 – 201?
Neo-Liberal Economic Orthodoxy
The rise and intended fall of neo-liberal, neoconservative, austerity economics

Following the end of the 2nd WW and in the wake of the economic devastation across Europe, 733 delegates from 44 countries devised a set of rules and procedures intended to regulate and stabilise the international monetary system. (The Bretton Wood Agreement of 1944).

3 mechanisms were intended to stabilise the world economy:

1. All currencies were linked to the dollar and gold standard
2. A regulatory International Monetary Fund came into being
3. International Bank for Reconstruction and Development (now the World Bank Group) was established

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 3 years later, in 1947 in the Swiss village of Mont Pelerin, a group, of discontented but extremely influential men, gathered with the precise aim to stop the threatening spread of ideas that supported common purpose and to halt governments acting directly in the public interest.[1]

Their purpose was to rescue the reputation of market systems from the total failure of the financial crash of 1929 and to champion the concept of unbridled individualism, limited forms of state intervention and deregulated financial markets against all forms of collective organisation

As with any extreme ideological group, the neo-liberals were selective in the ideas and concepts adopted from other schools of thought, including the work of Adam Smith, actually a more complex thinker than neo- libs care to remember and, a classical economist, whose work also influenced Karl Marx.

Smith, despite espousing the economic benefits of specialism and the division of labour, that self interest and unfettered markets work best, warned that the resulting monotony of labour would be dehumanising. He also derided the consumerism that this market system would breed and was especially sceptical of corporate power believing that a combination of the (consumerism and corporate power) would lead to a: conspiracy against the public or some such contrivance to raise prices. For Smith the state should also erect and maintain those public institutions and those public works’ that, although of great value to society, are by nature not profitable and therefore should not be expected to be delivered by the private purse – a veritable anathema to free marketeers.

In further contrast, Smith argued strongly that the role of the State was vital to protect society from violence and to protect every member from the injustice or oppression of every other member. A notable attendee of the Mont-Pelerin conference, Karl Popper [2], foresaw, immediately, that such a combination of power, unregulated markets and unrestrained individual behaviour would be destructive and enslaving, rather than liberating, and quickly distanced himself from this school of thought.

The Mont-Pelerin society that was formed in 1947 remains active today, still true to its original tenets, that human dignity and freedom are set free through the working of the competitive market and the individual’s accumulation of private property and has been followed by a proliferation of many other, influential, neo-liberal, think tanks.

Today, one of the original Mont Pelerin group, Milton Friedman ( b 31/07/1912 d 16/11/2006) is hailed by many as the most influential economist of the past 50 years, counting among his disciples U.S. presidents, British prime ministers, Russian oligarchs, dictators, secretaries of the Chinese Communist Party, directors of the IMF and recent chiefs of the Federal Reserve. Over three decades they perfected a successful strategy of moving quickly to sell off pieces of the state at times of crisis when the public were still reeling from the shock. They were/are not averse to manufacturing crisis and Friedman acted as advisor to the Chilean dictator General Pinochet after his successful and extremely violent coup. In his later years Pinochet was given asylum in Britain by Margaret Thatcher.

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The 70’s ushered in a continuing period of unparalleled opportunities for free marketeers when, on 15 Aug 1971, in response to America’s internal economic situation, the Bretton Wood Agreement was abruptly ended (the Nixon Shock) and the US dollar became a fiat currency – Fiat money is an alternative to commodity (e.g backed by gold) and representative money.   The value of fiat money rests entirely upon the value that can be guaranteed by the government issuing it. Because of the dominance of its currency, with the end of the Bretton Wood agreement, the American dollar became reserve currency for many countries.

Historically although fiat money came to dominate the 20^{th   century} it has never been successful over time and the floating currencies, including American dollar have, all have declining values in relation to the timeless stopgaps of gold and silver.

Timeline of neo-liberal and advancing austerity economics

1971 The end of the Bretton Woods arrangement and elimination of checks and balances gave red light to move money around the globe more freely, with less checks and greater volatility.

1973 Chilean coup d’etat on 11 September1973 followed an extended period of agitated opposition, and American economic warfare under, against the elected socialist president Salvador Allende. Shocked and unprepared, there was no effective resistance and a period of brutal military dictatorship. was maintained until the 1988 plebiscite restored an elected civilian government.

1973-1975 UK secondary banking crisis

1980’s Predatory lending by the international banking sector saddled Africa with debt, destroyed the economic , denuded countries of their natural wealth and trashed their health and education systems.

1982 Economic crises throughout Mexico and Latin America

1987 US savings and loans crisis and Black \Monday saw markets falling like dominoes across New York, London and Hong Kong. Each crisis led to greater resources being appropriated by the free marketeers.

1999 Bank deregulation
End of Glass-Steagall bank regulations (brought in to prevent any repeat of the 1929 Wall Street crash). Now bankers were allowed to get very, very rich by gambling with our money at no risk to themselves.

The economist JK Galbraith responded to this:
“The sense of responsibility in the financial community for the community as a whole is not small ….it is nearly nil”

2000-2002 Dot.com bubble and US energy crisis.
Financial implosion in Ireland

2007-2008 Great crash triggered by US sub- prime lending.

2009 On 26^th April 2009 David Cameron in his key note speech to the Conservative Party forum in Cheltenham declaring that:
“The age of irresponsibility is giving way to the age of austerity” and committed to end years of excessive government spending.

2010 Cons and Lib Dem Coalition government initiated the austerity programme and in his June 2010 budget speech Chancellor George Osborne committed to substantial reductions in public expenditure, achieved by public spending reductions and tax increases amounting to £110 billion.

2013 David Cameron indicated that his government had no intention of increasing public spending once the structural deficit had been eliminated and proposed that the public spending reduction by made permanent.

2016 Philip Hammond did not mention austerity in his first Autumn statement, however following the snap general election of 2017 Hammond confirmed that the austerity programme would be continued.
The Departments for Work and Pensions and the Ministry of Justice will have undergone reductions of approximately 40% in real terms between 2010 and 2020.

2018 The Resolution Foundation calculated that the proposed reduction in spending on working- age benefits amounted to £2.5 billion in 2018-19 and £2.7 billion in 2019-20 with the poorest households most affected.
Institute for Fiscal Studies calculated that to meet the Office for Budget Responsibilities targets then spending on public services per person in real terms would continue to fall until 2023.

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Socialist, Transformative, Co-Operative Alternatives 

London
Poplarism of London Borough of Poplar led by George Lansbury in 1921.
Elected lab council in 1919 led a comprehensive programme of social reform including equal pay for women and minimum wage for council workers. Designed to relieve the problems of desperately poor borough in times of high unemployment.
Municipal led relief for the vulnerable and needy, investment in local services and wages.

Spain
In June 2015 in Barcelona and Madrid mayors were elected sweeping the indignados movement into parts of the gvt.
Start of Fearless Cities – experiments designed to empower citizens movements worldwide.
En Comu (B Comu) a citizen led platform of housing rights activists echoed across Madrid to A Coruna to Zaragoza.
B Comu also produced :

• a code of ethics designed to guard against the institutionalisation of those preparing to run for public office.
• An emergency action plan that embraced measures to halt evictions, fine banks leaving multiple properties empty, and subsidise energy and transport cost for the unemployed.
• From the beginning this was not a simple return to electoral politics but an experiment in transforming local institutions and adopting an internationalist perspectiive.
• Municipal institutions were not to lead but to support, expand and generalise the movement.

USA
Chokwe Antar Lumumba was elected as mayor of the state capital and largest city in Mississippi on the promise of making Jackson the most radical city on the planet.
Worker owned, democratically self managed enterprises. In an otherwise highly conservative Re[publican State Jackson is pioneering a strategy for the self-determination of black working class communities.

VALPARAISO CHILE

An autonomist movement candidate elected to combat corruption

IN NAPLES ITALY

Critical Mass has forced the mayor to concede legal protection for the commons.

In Beirut, Lebanon and from Zagreb, Croatia and New york the list of radical civic platforms standing up to entrenched political interests continue to grow.

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Call to further co-ordinated actions. How can we combine together?

Each story/community is unique. There is no single model of radical municipal organising but there are a number of principles and practices that the new movements must share.
Margaret Kohn political theorist defined municipalism as a “politics of everyday life concerned with the issues that immediately affect citizens, including education, policing, jobs, culture and services.
Municipalism is a political approach to community and was exemplified in late 19^th century and early 20^th century Italian municipal socialism which fostered a form of governing through participation, in associations that blurred the line between state and society.
Today women are at the forefront of many of these movements.

 

[1] This is in contrast to the Europe wide wave of civic innovations that were being introduced to repair the ravages of war. (e.g. in England preparations for the introduction of the NHS launched the 5^th July 1948 were underway).
[2] Karl Popper “The Open Society and its Enemies”.

On everyone having a secure home as a human right, ten thoughts

The following is a summary of the presentation given by blogger and activist Ronnie Hughes at our Political Education Event – Grassroots Politics and Alternatives from May 2018, that was chaired by Lena Šimić, Walton’s Political Education Officer.
Ronnie has also published this on his blog A Sense of Place, which is well worth checking out, but has kindly agreed that we can also publish it here.
You can download a list of Ronnie’s 10 points by clicking here.

Write-ups of the talks given on the night by Tim Jeeves and Irene Leonard can be found by clicking the links.

Introduction

From a lifetime working in and around housing and communities and at the request of the Walton Constituency Labour Party these are my ‘Top 10’ thoughts, a mixture of policies and practicalities, on how we might go about fixing the wide ranging housing crisis we are now in. Where we have increasing numbers of the homeless on the streets, brutal benefits and immigration systems that cause much of the homelessness and then pay most of their housing moneys on to private landlords, grown up children still living with their parents or, again, paying an indecent proportion of their incomes to those same private landlords for short term exploitative tenancies. I could go on.
This, then, is necessarily a mix of local and national thoughts.
And while I was reducing my many thoughts to these ten principal ideas, the Labour Party nationally issued a green paper aimed at opening up discussions on what a future Labour Government might do about it all. A welcome but limited paper in my view, which I’ll refer to now and then, but which didn’t cause me to change any of my suggestions. Here goes.

1 Establish having a secure home as a basic human right

The market won’t and never has provided secure homes as of right for the great variety of people and needs that now makes up our country. So a future Labour Government will need to accept and promote this as a right and work out, with local Councils, how to deliver this for both home owners and tenants. The secure homes created might be owned or rented, as not everyone wants to own their own home. But renting shouldn’t be seen, as it increasingly is, as a last resort for the poor. The human right thought is proposed by Jeremy Corbyn in the introduction to the current Green Paper, but after that mention the paper largely tinkers with the established housing establishment rather than considering a more radical approach, which I believe will be necessary.

2 Reinvent Council Housing

Council Housing is the only realistic way of providing mass rented public housing with democratic accountability that we’ve yet come up with. It was invented here in Liverpool in the C19th because the private market, then as now, simply wouldn’t provide homes in sufficient and affordable numbers. But we’ll need to do it better than the last time round, including seeing how the building of new homes can work for local workers as well as developers in generating incomes that stay within the local economy. Also, policy makers will need to recognise that housing can’t be done in isolation. Secure homes, quality healthcare, education and fair incomes, in particular, need to be seen as prime governmental responsibilities, the sound and linked bases for a confident future society to build our lives around.

3 Be secure and safe from the cradle to the grave

A home, owned or rented for all, is then one of the core requirements for having a life in a healthy and stable society. If you live here, I passionately believe, you’re entitled to have somewhere secure and safe to live (which is why these thoughts don’t cover specific needs as if they’re special, we’re all special). So for rentals we need to reintroduce permanent tenancies, together with transfers and choice, as of right, as lifetime needs change. Policy makers also need to explore alternatives to home owners being so exposed to exploitation by a rapacious property market at vulnerable times of change in their lives too. Where we live is about neighbourhoods as well as homes. And also about how we live. So housing policy needs linking to other basics such as health, education, employment, transport and support services for those of us with particular needs, together with a wholesale reform of the brutalised welfare system. And of course these homes, in both their management and design, need to guarantee levels of safety as well as security that private and even supposed ‘tenant management organisations’ have shown they can no longer be relied on to provide in a commodified economy where costs are relentlessly cut, at the cost of human lives.

4 Create homes we can truly afford

The property market is progressively commodifying homes and needs controlling rather than trusting if we are to get to the position where everyone can afford to live in a home they can properly afford as a human right. We need, in fact, to break the nation’s and much of the Labour Party’s obsessions with this market dependant way of providing housing. It’s too essential for that. We’ll therefore need to think about setting maximum proportions of income for either mortgages or rents that would be considered fair and would leave people with decent disposable incomes for having a fulfilling life. Linked to something like median local income levels. Fair Rents should be reintroduced for public and private housing, to make homes truly affordable and end so much housing benefit being paid to what would then become a reducing proportion of private landlords.

5 Try out new ideas

There never was a golden age where everyone had the home they needed. So policy makers need to be doing new things. Like enabling the local ownership of land, properties and money through locally owned banks and credit unions. Encouraging group and community co-ownership and shared responsibilities through such vehicles as asset-locked co-ops, community land trusts and mutual societies. And it’s hardly new, but policy makers need to be responding to and anticipating climate change like it’s really happening, as an integral part of all planning and development decisions.

6 Learn from what’s worked before

Like council housing itself, some other long abandoned housing policies and practices are worth another look. I’ve already mentioned Fair Rents and secure tenancies. Something like Housing Action Areas (HAAs) as carried out in Liverpool in the 1970s and 80s might also be worth revisiting as a method of helping neighbourhoods recover from years of low private market care and investment, in both rented and bought homes. The original HAAs were enabled by the huge increases in public spending introduced by the 1974 Housing Act. This time round, along with possible new national investments, policy makers could look at developing the local economy, along ‘Preston’ lines as we’ve also heard tonight, incorporating some of the new approaches just mentioned to get things moving.

7 Sort out the housing associations

The Labour Green Paper places considerable future reliance on social housing providers,
reasoning that councils and the private market can’t be expected to provide all the kinds or volumes of housing that will turn out to be necessary. I get this logic but think this trust in housing associations might be misplaced, with many of the larger ones in particular seeming to have left their founding principles so far behind them that even the term ‘social housing’ is no longer widely trusted. Therefore we’ll need to sort out which housing associations, and they do exist, can be trusted for the future, and which should be seen as now part of the private market, and therefore part of our problem.
Finally, three more local thoughts. Thinking particularly about working where we are and with current reality.

8 Using our existing homes and powers

We have a high number of empty homes in Liverpool and the City Region, arguably as many as 20,000 of them, and policy makers could build on work already done through community land trusts, homes for £1 and other initiatives to bring more of them back into use considerably faster than we have been doing so far. Existing powers to take actions leading to compulsorily purchase plus transfers of ownership from inactive owners, including social landlords in some neighbourhoods, will need to be much more pro-actively used and seen to be used by council officers than currently. Possibly in conjunction with the declaration of HAAs and promoting some of the new ideas mentioned earlier to get empty homes lived in again. The existing policy of merely penalising empty home owners, as is proposed again in the Green Paper, being a particularly ineffective way of achieving this, as local experience around the streets of Liverpool has shown.

9 Work faster and better locally

The inter-departmental culture of the City Council, like most large organisations, is slow and resistant to change. Particularly now when so many council posts have been lost to the effects of political austerity. So where existing ways of doing things within and between departments are shown to be slowing everything down, policy makers need to look at ditching adherences to outdated due processes, and introducing new cross-departmental working methods where Council policies and decisions can get moving and be delivered much quicker than frustrating experience shows they often are. This will be particularly necessary where new methods and ideas are being tried out. This more local focus should also include a greater willingness to support local communities and organisations, as opposed to a perceived tendency to view all external investment as good, with the resultant low quality buildings and moribund private sites we currently see around the city.

10 And recognising we’re not all the same, work with the people, really

‘Community led housing’ is more talked about than understood. And isn’t always the answer, particularly where previous council and governmental policies have dispersed and destroyed the communities of various places around the city. But as a starting point for all neighbourhood developments it beats existing consultation and planning practices easily. So council policy makers and officers need to work carefully with people and projects all over the City establishing the basic approach that: everywhere is different; we’re all different; people and places really matter; imposed solutions don’t work; having a say and control really count; and that going with local energies can and does change things, for the better, for everyone.

Conclusion

I don’t pretend that these ten thoughts are everything or even enough. But they come from a lifetime’s experience and are offered quietly as a starting point for debating and thinking about how a Labour Government and a local Labour Council, with a still large majority, can begin turning a long and deep housing crisis into a future where everyone can expect to have a secure home, as a human right, from the cradle to the grave. It’s about time.

Ronnie Hughes
May 2018

The Preston Model, Alternative Models of Ownership and other possible policy directions

These are the notes from Walton CLP member Tim Jeeves’ contribution to the Grassroots Politics and Alternatives political education event that was organised in May 2018.

Other speakers at the event included Irene Leonard and Ronnie Hughes (click the links to see write-ups of their talks).
Lena Šimić, Walton’s Political Education Officer, chaired the event.

Sources:

• Labour’s Alternative Models of Ownership report
• Community Wealth Building Day in Preston, Feb 2018
• Local Government Day at Devonshire House, Feb 2018

Key Quotes / Comments

“Cities are vital engines of political change, they’re not just economic engines.”
Prof. Jonathan Davies, Centre for Urban Research on Austerity, De Montfort Uni

The grassroots is where innovation is to be found. Nye Bevan based the NHS on a model that was developed by the Tredegar Workmen’s Medical Aid Society, a locally run health scheme which gave coverage to nearly all of the town’s residents through the 1920s and 30s.
Ted Howard, founder of the Democracy Collective in Cleveland

It’s important to develop a social procurement guide, so that when the council is procuring goods and services, social, environmental, racial / disability / gender justice is factored in alongside cost.
Prof. Jonathan Davies

“Preston has become a pilgrimage for London folk.”
John McDonnell

What is the Preston Model?

In 2011, amidst the reverberations of the 2008 crash, John Lewis pulled out of a key regeneration scheme in Preston. Left in the lurch, the city undertook a number of radical, and somewhat experimental, actions in response:

• Anchor strategy review – Anchor institutions are significant contributors to the local economy. They are organisation such as the police, schools, unions, etc. that have a large stake in their local area because, due to the nature of their activities, they cannot easily relocate. In Preston, these institutions had a combined spend of nearly £1 billion / year, so the decision was taken to try to increase the share of this spend going to local suppliers (reducing the money that left the area – typically into the pockets of shareholders elsewhere).
  • Lancashire Constabulary now requires quotes from local organisations on procurement opportunities between £10,000 and £50,000.
  • Lancashire County Council has revisited its commissioning and procurement strategies and has broken contracts into lots to support smaller organisations that might want to bid. e.g. rather than bidding just on supplying school dinners (a massive undertaking for a local company), a supplier can now look to win a contract for just the yoghurts, or the bread, etc.
• Utilising the local government pension fund – the money invested in the pension fund has been used to support a £100 million investment and build student accommodation.
• Supporting cooperatives and employee owned businesses – through the creation of the Preston Cooperative Development Network (Presco) with UCLAN and others. The long-term plan for this is to create cooperative infrastructure as is found with  Mondragon in Spain (75,000 people employed by 257 companies).
• Reviewing local engagement with finance:
  • by establishing the Lancashire Community Bank and continuing to support local credit unions and community finance initiatives.
  • working with trade unions such as Unite and PCS to promote credit unions.
• Becoming a local energy supplier – Preston partnered with Cheshire East Council to supply Ovo Energy.
• Working with the local Chamber of Commerce to encourage retiring business owners to sell their companies to their employees
• When, due to austerity, the council has had to transfer loss-making assets to maintain existing services  they have prioritised giving them to organisations in line with their values: eg. leisure centres were sold to a worker owned business in London.

The effects
In terms of how spending has changed in the area:

• In 2012/13 – 5% of total anchor spend by 6 anchor institutions was in Preston.
  In 2016/17 – 18.2%.
• In 2012/13 – 39% of total anchor spend by 6 anchor institutions was in Lancashire.
  In 2016/17 – 79.2%.

It’s still very early days, so any conclusions need to be qualified, but so far, the following impact has been identified:

• A significant reduction in the number of jobs paid less than the real living wage by the local authority. From 2016 to 2017 the following shifts have been identified:
  In Lancashire: 120,000 to 112,000 (1.4% reduction)
  In Preston: 19,000 to 15,000 (4% reduction)
• In 2017, Preston went from 143 to 130 in the social mobility index (out of 324 local authority areas).
• In 2015, Preston moved out of the bottom 20% most deprived areas.
• In 2016, Preston was in the Top 50 of UK local authorities for job density.
• In 2015/16, 5% increase in Gross Value Added (GVA), equivalent to £1,157 per capita.

As Jade Morgan, Preston Councillor, said “It is possible to flourish in hard times”.

Of course, austerity has had a massive impact on what councils can do, and this needs to be fought on every level; we need more money coming in to our councils, particularly in the north which has been hardest hit by national cuts. But it’s also about the models that we adopt to spend that money, we need to remove the capitalist in our heads, and Preston is pioneering the way in which we do this.

Other speakers at the launch of Labour’s Community Wealth Unit included:

Mika Minio-Paluello, Labour Energy Forum – Talking about Energy
Mika talked about the importance of utilising the commons for energy production, be that wind, solar or tidal.
She also shared the quite shocking statistic that over 51.2% of UK offshore wind is publicly owned, but only 0.07% is owned by UK public entities (the rest is owned by overseas national and local governments).

In terms of good practice, Mika drew attention to:

• In 2015, Stadtwerke München (Munich’s city utility) was the 4^th largest installer of new offshore wind farms across Europe.
• Hackney council are supporting a local community group to install PV solar panels on the roofs of an estate; they’ve also guaranteed to buy a proportion of the energy generated.
• In Nottingham, the council are bulk buying large numbers of photovoltaic cells (solar panels) to sell on to local community groups at more affordable rates.

She also emphasised the need for public / co-operative and public / public partnerships (where two municipalities partner up) in order to fund these new sources of power.

Pension funds can be utilised to the same ends – more and more councils are divesting from fossil fuels, which are a risky investment, they don’t have a future. It makes both financial and environmental sense to put the money into something that is safe and sustainable in the long-term.

Catherine Howard, Share Action – Talking about Finance
Catherine also emphasised the need for us to be taking back control of our pension schemes more broadly. There should be worker representation on pension boards, but she also advised us all to go to pension meetings – savers have the right to challenge where their money goes.

Marianne Sensier, Manchester University – Talking about Community Banks
In 1950, 60% of bank lending was to industry.
In 2010, 15% went to industry.
In the same period, lending to financial companies has risen from 10% to 38%.

Banks are disappearing off our high streets. Credit Unions are a valuable alternative, but additional support can be provided by regional banks. Preston is working towards setting one up, and Warrington Council has a 33% stake in a bank that lends primarily to Small to Medium Enterprises in the area.

We should also be exploring the possibility of a green investment bank – to help fund the installation of solar panels, to retrofit insulation to homes, and to tackle fuel poverty.

Alternative Models of Ownership Report

This report, commissioned by the Labour party, considers alternative modes of ownership at both the small, mid and national scales, and is inspirational in what it proposes.
In case you’re someone who doesn’t love reading reports, selected highlights are below:

On automation
In the next decade, we are not likely to be a ‘post-human economy’. We may, however, be at peak-human in terms of the central role of human labour within the production process.

On co-ops
Research has shown that there is no productivity disadvantage to co-ops, which raises the question as to why are they not more common:

• Usually this is understood as related to the fact that worker owned firms struggle to attract finance; capital providers (either capital markets or banks) won’t fund what they can’t control. Another reason to call for the formation of state / municipal banks.
• When a worker cooperative or worker owned firm is under financial stress, the pressure to issue stock, or sell to a capitalist firm with greater access to long term finance, is high. And when this happens, the cooperative structure will nearly always be lost.
• The plywood worker cooperatives of the US Pacific Northwest are some of the best-researched worker cooperatives in the world and show this.

Cooperatives can be supported if the right legal framework is put in place. This will obviously often be outside of the remit of councils, but is still  worth considering:

• As in France, Italian law around cooperatives requires that a certain proportion of annual profit is put into an indivisible reserve (currently 30%) and in the event of the cooperative being privatised, this reserve cannot be accessed by members or investors. Instead, it must be donated to a federation or another cooperative.
• The cooperative sector in Italy also enjoys tax advantages, preferential access to public contracts, job creation loans, and access to the financial expertise of banks and research institutions.
• To assist the setting up of worker cooperatives, a possible UK version of the Italian Marcora Law, which provides funds for worker buyouts, could also be examined.

There used to be more support for cooperatives in the past, re-establishing previous government support seems vital:

• Labour’s 1976 Industrial Common Ownership Act – provided the legal definition of common ownership; £100,000 in seed funding to the Industrial Common Ownership Movement (which would be worth £500,000 today); and £250,000 to the Industrial Common Ownership Loan Fund (worth £2,005,580 today).
  These aren’t huge sums but are still significant.
• 1978 Cooperative Development Agency Act – promoted grants to Cooperative Development Agencies. There were 60 of these, giving local support and supported by local authorities, that could provide start up assistance. In 1984 the funding for the national Cooperative Development Agency was increased to £3 million (£6,750,000 today).

This kind of support is essential – there is often the risk of burnout by staff within co-ops, they need support.

On developing other strategies

The report also proposed the following tactics as a means to encourage the development of new ways of organising at the municipal level:

Work with CLES – Centre for Local Economic Strategies:

• This ‘Think and Do Tank’ were key in developing the work in Preston that led to the Preston Model, and before that they also undertook significant activity in Manchester.
• As their website describes them – ‘the community wealth building activities of CLES are looking to maximise the fruits of the economy, creating a context for greater economic and social inclusion.’

Support existing activity:

• There is a new movement of social innovation, with a growth in local currencies, local banks, community shares and community energy schemes
• Living Wage activities
• Advancing the ‘Foundational Economy’ – an economy that prioritises health, care, education, housing, utilities and food supply
• The development of ownership models which circulate wealth rather than extract it – cooperatives, mutual, CiC’s etc
• Work around the collaborative economy and the circular economy – use smart technologies to herald a new open source collaborative economy, where peer to peer activities take economic wealth production away from the few within a vertical hierarchy, to many within horizontal systems
• Work stimulating the growth and social responsibility of business. This would include the advancement of employee involvement in the boardroom, and the adoption of voracious corporate social responsibility activity.

Support community business and community projects, such as:

• Buying groups – a group of consumers who, by ordering food in bulk, direct from farmers or suppliers, buy good quality food at a more affordable price.
• Community owned shops – a shop owned and, typically, also run by a local community
• Community supported agriculture – partnerships between grower and consumer
• Cooperatives
• Development Trusts – a community-owned and led organisation, which develops community assets and community enterprise
• Farmers’ Markets
• Social Enterprises – a business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners. (The report notes that there is some controversy around government definitions of social enterprise though, like ‘Free Trade’ and ‘the Living Wage’, it is worth being slightly cautious when encountering the term).

 

Liverpool

There is already a lot of good work being done in Liverpool:

The Leccy – Liverpool Energy Community Company
Have a good ethos – they prioritise helping people get off pre-payment meters, and offer cheap rates. They are run as a shell for Robin Hood Energy ‘a not-for-profit energy supplier wholly owned by Nottingham City Council’.

Perhaps this could be built on though? Is a more equal partnership with somewhere possible? Or could we even set up our own not-for-profit municipal supply in Liverpool?

Liverpool’s Landlord Licensing Scheme
We are the only local authority in the country that demands that all its landlords are licensed. Again, this is a step in the right direction, but perhaps could be pushed further – tenants could be supported through the creation of tenants’ unions (which differ significantly from Tenant’s Associations).

Granby Four Streets and Walton’s own Homebaked

These are internationally recognised models of cooperative ownership and urban community land trusts. Homebaked’s vision for a social high street is slowly transforming the streets of Everton that were devastated by the failed Housing Market Renewal Scheme (not the emphasis on renewing the housing ‘market’!)

There are also a host of other organisations doing incredible work in Walton, too many to list here (though there is a list here!)

The Future

Looking to the future, automation and technology is both an opportunity and a threat.
We have a choice between things like:

1) a municipally owned ‘Uber’ style fleet of autonomous cars, that operates at affordable rates whilst raising money for the council, or
2) Uber, whose business model sees it run at a loss in order to kill the competition, and create a monopoly that extracts local wealth to California.

Change is happening fast, too fast to predict. Fundamentally though, whatever path the council takes, what they do has got to be about speaking with experts. These might be  experts in alternative energy or they might be experts in community banking. Most of all though they need to engage with the expertise of those that live in the community. These experts know what it is that their community needs.