Blue sky thinking

From free copies of birth certificates to a new currency based on Bitcoin, towns and cities across the north are coming up with new ways to combat the effects of austerity

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For Debbie Brown, some of the smallest changes are the most telling.

Her city’s care leavers have been exempted from two years of council tax to help them get back on their feet, while birth certificate copies are now free for homeless people so they can prove their identity.

“We also learned some people were suffering from ‘brown envelope syndrome’, where they were scared to open anything official looking,” she says. “So we’ve started using white envelopes instead.”

Brown is director for service reform at Salford City Council and for 18 months has been part of its Poverty Truth Commission – an exercise in which people who have experienced hardship help those in power to bring about positive change.

“We’ll collect more income this way as the medieval approach wasn’t working.”

A process that has also taken place in Leeds, the commission fosters trusting relationships between officials and community members, leading to genuine consultation. It is one of a number of innovative ways that towns and cities across the north are seeking to respond to the austerity foisted on them by central government cuts and a lack of private-sector investment in the area.

One result of the Poverty Truth Commission is a change to the process used to chase money – previously achieved through letters, court summons and debt collection. Brown says: “Commissioners explained how awful it was to hide from bailiffs at the door. The system was so impersonal. The first time they spoke to anyone about their debt was in court.”

Drop-in sessions now take place across the city where residents can talk to the council and, if need be, arrange a payment plan.

“I’m convinced we’ll collect more income this way as the medieval approach wasn’t working anyway,” she adds.

Salford has undergone something of a revolution over recent years. Seven new libraries are planned and the council is merging adult social care with the hospital to protect services. Salford City Council has raised care workers’ pay by 10.7 per cent at a time when most public sector pay is effectively frozen, and it has plans to get 8,000 hard-to-reach people online by 2020 – something that can save households up to £700 per year.

The council has also invested £2 million from its affordable housing contributions pot into a development company to kickstart the building of social housing.

The progressive impulse is being put down in part to the influence of elected mayor Paul Dennett, a self-described “sensible socialist” who came into post in May 2016. Some of the work, however, pre-dates his arrival.

Salford is seeking new ways of reinvigorating its economy, using its financial, physical and social assets for community benefit. One feature is to ensure “anchor institutions” such as universities and hospitals spend as much of their big budgets with local suppliers – something that Preston has also effectively managed, with the help of
the Manchester-based thinktank the Centre for Local Economic Strategies (CLES).

“Salford and Preston are testing the limits and thinking progressively in response to the context they find themselves in,” says CLES deputy chief executive Matthew Jackson. “They are both doing economic development differently.

“Councils investing in supermarkets and shopping centres is quite a standard approach really and these methods have been falling woefully short, in local and national economic, social and environmental terms.”

CLES helped Preston build a partnership that includes the city council, county council, hospital and university. Ten major institutions with a combined annual spend of £1.2 billion have joined a procurement initiative aimed at maximising the money spent locally, and local suppliers have been advised on how to go for tenders that may previously have seemed out of reach.

There are also plans to support the development of more local co-operatives and worker-owned firms in areas of the economy that are badly served. One possibility is a food growing cooperative, which would supply university catering services.

Public sector organisations are also being encouraged to invest employee pension pots in Preston to generate social and economic benefits as well as financial. Lancashire County Pension Fund is carrying out a £100 million investment spree, including the regeneration of a Victorian hotel.

Local businesses are being encouraged to commit to paying the Living Wage – with 50 having done so already. Future plans include a long-term commitment for a municipally-owned wind farm, a £5 million investment in markets and the creation of a Lancashire Community Bank.

The result is that the proportion of procurement funds spent in the city increased from 5 per cent to 18 per cent in five years, meaning £74 million more spent with local suppliers. The proportion spent locally across Lancashire jumped from 39 per cent to 79 per cent – with an additional £199 million spent inside the county.

Jackson says: “There is no doubt that some city centres and economic hotspots have experienced growth, but what about other locations where the economy has been hollowed out through years of neglect and under-investment?

“We must get better at thinking about wealth in a different way. It must be utilised in a way that local economic, social and environmental benefits are at the forefront.

“Making these changes meaningful not only involves more money being spent in a defined geographical area, but also means shifting behaviour for the better. Procurement becomes a lever to promote a more diverse and fairer kind of market – one that is not dominated by large corporates but informed by greater worker control and social responsibility.

“This is absolutely not about economic protectionism. We are not trying to bring everything back into the Preston economy, which wouldn’t make economic sense. But we are looking at gap analysis and seeing what could be done differently.”

Innovation is happening on the other side of the Pennines too. In 2014, David Shepherdson was the financial inclusion officer for Hull City Council. Now, he and his former line manager Lisa Bouill are preparing to launch the world’s first digital local currency, in a project aimed at boosting economic resilience.

HullCoin, now in the pilot stage, will have 4,000 participants when it launches later this year. It is designed to inject liquidity into a system that is creaking after years of benefits cuts, austerity and shrinking household incomes.

Inspired by the online currency Bitcoin, their version however has no intrinsic financial value, so rewards volunteers rather than speculators. It is tax-free and won’t affect people’s benefits.

Unlike local currencies, HullCoin works more like a loyalty card – where users earn points by volunteering, recycling or achieving positive milestones such as making efforts to quit smoking.

These can be exchanged for discounts in local shops, gyms and council services. Public health, the job centre and even local criminal justice teams are considering signing up. Library workers will be trained to use the system, so they can encourage people to access it when they apply for benefits or jobs online.

“If you are working with the public sector or any charity and trying to help, support or enable people with the impact of austerity and welfare reform, at some point you have to draw the line,” says Shepherdson, who – together with Bouill – left the council and set up social enterprise Kaini Industries to develop the currency.

“The bottom line is there is simply not enough money in the economy. HullCoin is crude but provides people with a new way to do things. There are not enough jobs but by paying people benefits in kind you can put extra liquidity in the economy and that helps people to be more resilient.”

Progressive responses to austerity are taking place at a grassroots level too. Community land trusts are non-profit organisations set up and run by local people to develop and manage homes and other community assets. There are several across the north, including two-year-old Leeds Community Housing – which aspires to build 1,000 affordable homes for rent over the next decade.

Last year, the organisation raised £360,000 from 275 investors through a community share offer – money that was put towards purchasing 16 city centre flats built through developers’ affordable housing obligations. Of those, nine are let out on social rents, while the others were sold with the condition that they can only be re-sold at a discounted rate. The city’s core strategy says 1,158 affordable homes need to be built in Leeds every year for the next five years.

Founder member Rob Greenland says: “[Buying is] not a perfect solution but we wanted to do something fairly quickly. In the longer term though we want to be building homes ourselves, where possible using innovative building techniques.

“I think it speaks volumes that we have predominantly local people invested in an issue in their community. If all goes well they will get a 2 per cent return in two years time but this is not predominantly a financial investment. There’s a housing crisis and people want to do something about it.

“I think this is a positive development in the midst of a really negative situation of cuts and austerity. We have got to be realistic – as the state retreats, people have to do something to improve their own communities.”

Frances Northrop, principal director of communities and localities at the thinktank New Economics Foundation (NEF), believes strong community-led initiatives have always existed but they are now seen as more political.

“Our view is that a lot of areas in Yorkshire and Humber, for example, have been held back for many years,” she says. “Austerity has brought this into sharp focus so whereas community development initiatives would previously have been about filling the gaps and mitigating the worst impacts of underinvestment, people are now seeing their work as far more radical and starting to see that it is about the economy.

“There is a strong backbone of small business in these towns but not so much big business. The rhetoric about ‘big business will come’ doesn’t apply for many of these places. I think we are at the point now where traditional models of inward investment do not work for most places because of what we’d describe as the viability gap.”

Councils are left with a choice over which model to pursue, she believes. While some will continue to put their money into orthodox development schemes, others will dare to think a little differently.

“Providing more of the same is not going to meet the needs of local people who want to see a well-rounded economy,” she says. “We think the better approach is one of internal investment – where local authorities look at reserves and pension pots for money to invest, and think about which anchor organisations there are in their locality and which are the parts of the economy where they can make a difference. The best projects work in collaboration with their citizens, voluntary sector bodies and small businesses.”

Back in Salford, Brown says: “Fifteen years ago, Salford was being talked about in terms of decline and disadvantage but now it’s almost a boom city. We now have regeneration schemes coming out of our ears and the mayor is very clear that he wants Salford people to benefit from this growth.

“We have a fantastic opportunity now to create the right environment where we can genuinely make a difference.”


Core values

Bolton Council is to invest £100 million in bridging the “viability gap” that puts private-sector developers off working in many areas. But while it is hoping to use the money to entice investors and developers, its plans for the town centre actually envisage a smaller area for shopping in response to people’s changing habits.

The council’s ambitious development projects, unveiled last year, include office space, 1,800 new homes, new university halls, a shopping centre refurbishment and more bars and restaurants.

Bolton Council aims to bridge “viability gap”

The £100 million loan will be used to kickstart these developments and will be repaid using a dividend the council receives from its investment in Manchester Airport.

Stephen Young, the council’s director of place, says: “By investing this money into the town we are acting as a community leader and helping to revitalise the area, and that’s in everyone’s interests.

“Bolton can’t sustain a sprawling retail core any more because the town’s raison d’être has changed. As recently as the 1980s, one of these earmarked development areas would have been a busy shopping street but now it’s nearly empty.”

The council will promote Bolton as a commuter town for those priced out of Manchester, just 15 minutes away by train. Office space is earmarked for an area next to the station and can be developed for half the price as in the city, adds Young. Work could soon begin on several sites, including one with 130 housing units.

He says: “I’m talking here about developing shiny buildings and all of these projects will represent £1 billion of investment once they’re finished. But we are also concerned with how we get people living in deprived areas of Bolton to link with these new work opportunities.

“Since the recession, people have had to look really long and hard at the investment decisions they are making. Places like Bolton are always going to have a viability gap with most projects. The role of the public sector is now often to be a community leader – we have to ask how we can improve things. If we don’t take on this role, who will?”

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Interact: Responses to Blue sky thinking

  • Mike Hodson
    12 Feb 2018 12:36
    It all sounds very interesting and worthwhile - however the test of this is often how local people think it is working in practice. That is lacking so far it seems. Another issue is whether public bodies do actually involve people in the ongoing management and responding to problems - too often in my experience there is an innovative initiative followed by things returning to normal when managers want to get things done quickly, often under pressure from senior staff.

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