May 14, 2020 Blog

Building North Ayrshire’s community wealth, building Scotland’s future

The Covid-19 pandemic has shown the best of Scotland’s communities, with people supporting one another through a crisis like none we have seen before. But it has also exposed the fragility of our economic model. A system based on extraction rather than production has failed individuals, communities and our whole planet.

In the aftermath of this pandemic, we cannot rely on traditional economic development. There can be no return to business as usual. Richard Leonard’s calls for an industrial strategy to change the economic landscape of Scotland is more pertinent than ever. Both the pandemic itself and the forthcoming economic turbulence underline the importance of having an industrial strategy that provides a return to a planned economy. And the lack of government planning for possible crises is a stark reminder of why we need a just transition from extractive fossil capitalism to a green economy, encompassing a resurgence in Scottish manufacturing.

But it’s crucial that we start to lay the building blocks for these changes in our communities. That’s why the Labour council I lead in North Ayrshire is launching Scotland’s first Community Wealth Building strategy.

Rather than be beholden to capital, which has no loyalty to place, our Community Wealth Building strategy will utilise the untapped economic power of the local state to shape a new collaborative, inclusive, sustainable and democratic local economy.

The public sector across Ayrshire spends in the region of £1 billion a year procuring goods and services. It holds substantial land and asset holdings. We have large capital investment programmes, and in North Ayrshire, Labour has pioneered a £250 million council house building programme.

Since we already have this financial arsenal at our disposal, why not use it to drive forward a new economic model? We can create a model which will put North Ayrshire’s economy – and by consequence, that of Ayrshire as a whole – back on the map. It will shift the local state from a mere market participant to a leader in innovation.

For every one per cent of spend from local public bodies that we repatriate to North Ayrshire, the local economy will receive a £6m boost. That will boost businesses and stimulate job creation in our communities.

But we will not be in the business of creating jobs just for the figures. We must create good jobs that pay a real living wage, offer regular hours and allows our citizens to reach their economic potential with career progression opportunities. Our recruitment will target those in deprivation, meaning we will use our economic levers to lift people out of poverty.

Capital flight has been a key cornerstone of the neoliberal economy, with jobs transferred across the globe in pursuit of the lowest employment conditions and maximum profits. But Community Wealth Building emphasises the need to place control over wealth in the hands of communities. We will support local supply chains through procurement practices, boosting the local economy as a result – but we will also promote community, co-operative and employee ownership. One objective of our strategy is to convert family-owned businesses, the majority of whom do not have succession plans, to employee ownership.

Since Labour delivered devolution, the need for land reform has never gone away. Modest progress cannot disguise the fact that our councils have acted largely as bystanders in the land debate. Over the last decade, the situation has got worse as local authorities have been forced to pursue property rationalisation, in effect selling large swathes of their land and asset holdings, to fill budget gaps as a result of centrally imposed austerity cuts. But by leveraging the power of our land and asset holdings, we could advance a more radical approach. We can transfer ownership to the community and co-operative enterprises, putting land into productive use as part of locally rooted, democratic local economy.

Turning all of this from a strategic policy document into practice will be a long journey. It will require investment and at our budget in February, set before the Covid-19 crisis, we set aside a £8.8m investment fund to capitalise projects. We have ring-fenced funds to create a Community Wealth Building staff team to drive innovation across all the pillars.

But long-term our ambition is to democratise local finance too, through the creation of a Community Bank, mutually owned by its members and able to use their deposits to invest in our region. We must also divest the Strathclyde Pension Fund from fossil capitalism, betting companies and the high cost credit industry – and direct it instead towards building community wealth, providing not only a stable financial return to the pension fund but also wider social and economic benefits to the region where its members live and work.

Our economy faces an unprecedented challenge in the wake of Covid-19. But through Community Wealth Building, Scotland’s localities and regions can take back control of their economies – and put people and communities at their hearts.