For a while now there’s been a lot of talk in the party about how we need to adopt more radical policies, although this does often seem to lead back to Universal Basic Income.
Another idea I think we should look more closely at is the ‘Preston Model’. I think that we Lib Dems are, for better or worse, often at our best when pulling apart big ideas so I’m interested to see what others think of this approach. If it’s something we already do at local government level then we should be talking about it much more.
The Preston Model refers to a community wealth building approach taken by Preston Council since the early 2010s that has enabled the town to outperform many other ‘left-behind’ areas in similarly dire post-austerity situations. In 2011, a new shopping centre, the planned hub of local regeneration in Preston, was cancelled. At this point Preston Council realised it could not bet its future on outside investment from big corporations or on central government, so it had to find solutions from within.
The council therefore focussed on promoting a policy of localist procurement to its six core ‘anchor institutions’, including the university, police force and housing association. These rooted organisations are encouraged to source goods and services like repairs and cleaning from local suppliers. In 2013, only 5% of £450m annual anchor institution spending was in Preston. By 2017, this £38m had increased to £111m. This required active leadership from the council, looking at how contracts could be broken up to allow smaller suppliers to bid, and supporting suppliers to bid for such contracts – the confidence and expertise in these areas had to be rebuilt after decades of the city relying on big outsourcing firms.
The theory is that a greater proportion of every pound an anchor institution spends on a local supplier rather than a multinational will stay in the area – some claim 63p for the latter vs 40p if outsourced. The extra £75m spent in Preston led to tangible life improvements for Preston residents. A Demos report into the model shows that since 2014 its unemployment rate has been lower than the England average, deprivation has been reduced in the poorest areas and productivity and wages have increased. In 2018 Preston was named the most improved city in the UK. The approach has now gone further than reversing outsourcing, with the incubation of co-operative businesses and a regional investment bank being explored.
I think the appeal to civic pride is crucial here. It is localism, but less about keeping outsiders out and more about recognising the skills and abilities innate to every place. It restores not just local economies but democratic participation. I’ve seen this kind of approach work in my role at Tempo Time Credits, a social enterprise which aims to revive pride and confidence in supposedly left-behind communities through the implementation of a social currency.
The Liberal Democrats are a party with a strong local government base that has pioneered localism and community politics, but at the same time we are hampered by working within one of world’s most centralised democracies. The Preston approach could provide more room for manoeuvre in straitened times. On the other hand it’s arguably a form of protectionism that raises the familiar localism vs liberalism tensions. I’m interested to hear what fellow Lib Dems, especially those in local government, think about it.
* Sam Martin is a member based in Sutton, London, He is standing as a candidate in the current Social Liberal Forum council elections..
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23 Comments
Sam Martin | Sat 25th April 2020 – 6:26 pm
Does anyone remember the Isle of Wight have a local currency yo keep the money local?
Sam – I wasn’t aware of the ‘Preston Model’ so thanks for sharing. When reading the description of the model, I instantly interpreted this to be a form of small scale protectionism. You acknowledge this at the end of the article, so my question would be: has Preston seen some of the known downsides of protectionism? For example, higher prices and/or lower quality products due to less/lack of competition (even though contracts are up for grabs within the local gov. RFP process).
“For example, higher prices and/or lower quality products due to less/lack of competition”
Have you seen how poor some of the services provided by outsourcing companies are because their bids are so low that they can only make contracts workable by cutting quality to the bone?
I don’t see how preferring small, good quality, local bidders who pay a decent wage and who actually care about the areas they’re providing services to could be a bad thing.
What it isn’t, of course, is a Lib Dem idea, given that Preston is Labour-run and the Preston model is one frequently championed by Labour leaders as one to be emulated by local government in other parts of the country. Only fair to give credit where it’s due, I think – there’re good things being done by Lib Dem councils elsewhere, and the fact this is a Labour council doesn’t mean we shouldn’t look to emulate the model ourselves if we think it will benefit our own communities.
There is an argument for ‘local credentials’ being part of the procurement criteria for local authorities, on the basis that it helps keep money within the area. However, if it were part of the criteria it should never be the only, or even the most important, criteria. Indeed, the weighting a local authority gives to such criteria should be a matter for them – and something they have to justify to their own electorates. Other criteria, such as value for money, past performance, and what the organisations governance is like (e.g. are they a private company or are they a mutual or a cooperative and does the council want to increase the latter forms? Do they have user representation within their organisation?) should also be factors to consider in such a process. Furthermore, if a local company already has an effective monopoly in a local area for the provision of some service or is certainly a ‘big player’ in the local market, and is thereby pretty much guaranteed to be awarded the relevant contract, I would be very worried by the taxpayer sustaining such a private monopoly. We want those who bid to be innovative and dynamic in service provision and a spur to that is competition. The above idea, unfortunately, cuts off a lot of potential competition from the outset. I fear this idea serves certain producer interests very well, but it is more questionable when it comes to consumer interests i.e. the people who will rely on the contracted service.
Another point – could this lead to a situation in which a mutual or a cooperative – the kind of organisation Liberals have long campaigned to see more of – loses out to a private company because the latter is thought local and the former is not? I don’t think this sits comfortably with liberalism and our commitment to diversity and pluralism. I would also be interested in looking at the Preston model before and after its implementation in other ways that those in the article. For example, compared with before it was introduced have bids for contracts become greater in number and more competitive? Or are they now fewer in number? If they are fewer that is concerning. Markets must be free, but they should also be open.
Being Liberal involves recognising the benefits of free markets, free trade and competition.
Incidentally if you don’t like the quality of your outsourcing then you have not got your specification or management right. Outsourcing is not abdication – it requires having clear purpose, clear specs, quality control and monitoring.
The problem, as I see it, is that if EVERY local authority focused on sources from local companies, the advantages would cancel themselves out. Perhaps it works in Preston because their companies are also receiving business from, say London. If that business was withdrawn (eg by a London council keen to pursue their own localism agenda) where is the advantage ?
Outsourcing largely seems to be the preserve of some of the worst companies in the world. Who really has faith in G4S, Serco, Capita, Atos, Mitie, A4e, Sodexho and so on? Time and time again these awful coprorations have failed the public – in some cases with very serious consquences.
Anything which stops that bunch, be it local business, charities, state ownership or mutual / co-operatives should be considered. Whenever I see any of the above names anywhere, I assume the worst – and I always seem to be proven right…
@Richard Easter “Who really has faith in G4S, Serco, Capita, Atos, Mitie, A4e, Sodexho and so on? Time and time again these awful coprorations have failed the public – in some cases with very serious consquences.”
How do you define “failed the public”? Do you have any evidence that shows that their rate of failure is any higher than other corporations of a similar size, or public sector organisations of a similar size? Do you have any evidence that the “failure” was as a result of the actions of the coproprations themselves, or was a result of poor procurement and contract management behaviour within the organisation contracting their services?
has there been any proper evaluation of this ?
I sympathise due to the environment but it would be more liberal to increase the competitiveness of local suppliers. We can’t be paying a fortune to inferior businesses just because they’re local. So taking everything into account, I say no to the Preston model.
Failing out-sourcing companies – we could use Carillion as an example. That went bust.
It also was reported to have all the usual abuses, including shameless pension practices. It was temporarily competitive enough to win contacts, and ‘operated at scale’ so being friendly to officials with limited procurement skills.
It is standard big business practice to target an area with ‘loss leader’ tactics, until the small local businesses fold. Think Walmart and Starbucks. Their documented tactics are to overlap catchment areas, leaving nowhere to hide. They even cannibalise franchise unit sales.
Preston are just fighting back with mutualism. Or are we supposed to be so purist that every corporation puts up everything for external quotes?
https://en.wikipedia.org/wiki/Controversies_surrounding_G4S
https://en.wikipedia.org/wiki/Capita#Criticism
https://en.wikipedia.org/wiki/A4e
https://en.wikipedia.org/wiki/Atos#Controversy
https://www.theguardian.com/commentisfree/2016/dec/23/g4s-prisons-contracts-hmp-birmingham
https://www.sfo.gov.uk/cases/serco/
https://www.sfo.gov.uk/cases/g4s/
These companies are a litany of failure and in some cases serious criminality.
The evidence is everywhere about these
I am interested in votes and more votes. Have we ever been more ineffective?
The added advantage of using local can be seen in the old adage about ‘Eggs/Baskets’..
When Carillion failed it took all it’s subcontracted firms work down with it..Handing overall control to one unit is a recipe for disaster; except that in the view of some on here ‘Big is Best’..
You might add the big consultancy firms to the list of outsourcing giants, charging large sums to government for often mixed results. Note that Deloitte have been organising the Coronavirus teasing stations so far. What was their particular expertise to provide this?
@ William Wallace Deloitte’s expertise is to make profits out of the public sector, William, and, of course, they were severely criticised for their role in the Carillon affair mentioned by expats.
David Evershed has obviously forgotten the shambles by G4S at the London Olympics and the tagging scandal. Look it up, David.
William Wallace – Quite so. Deloitte is apparently the outsourcer running the Chessington World of Adventure coronavirus test centre. Allegedly they are failing at Admin 101 in that they have been recording wrong contact details for some of those coming to be tested so they’re never getting a result.
Separately, the latest issue of Private Eye reports that Deloitte is technically insolvent. Not a good look for a leading accounting firm!
What I would like to see is the response of our Councillors in Preston to this article and to the effectiveness of the policies. Has anyone asked them?
The 2019 Demos report addresses many of the issues raised here. See p30-31 for convincing arguments that preferential procurement processes need not necessarily raise prices as is often argued. In fact it should increase competition through creating more suppliers. p46-47 for more of the theory on this. https://demos.co.uk/wp-content/uploads/2019/06/June-Final-Web.pdf
I would also argue that it’s not just about the balance sheet. The Guardian’s coverage brings out the human element well, showing how inspiring this kind of local approach can be. Political leadership is about articulating meaning and purpose as well as competent public management, and restoring civic pride and confidence is both an effective means of economic revitalisation and an end in itself.
https://www.theguardian.com/commentisfree/2018/jan/31/preston-hit-rock-bottom-took-back-control
https://www.theguardian.com/commentisfree/2019/mar/06/brutal-cuts-fight-back-preston-dragons-den
I’m leader of the Preston LibDems and I think some context is needed.
First on the principle of giving extra weight in the tendering process to local companies is nothing new, most areas do it and I have no problem it’s sensibly done. public money and contracts from Preston Council still go to companies outside the Preston area.
Simon raises the key point about evaluation – and the truth is no body knows if the Preston Model has made any difference and there is no proof either way. Preston is a growing city which is fantastic. We have a very successful university (UCLAN) as well as high tech industries like BAE Systems. Would UCLAN still have invested £200m in the Adelphi quarter without the ‘Preston Model’? Yes of course it would.
Preston Labour make huge claims about the community wealth building in the city but as I said to the BBC, they have no idea if they are driving this car or just a passenger.
Final point, this may have been popular with Corbyn and comment articles in the Guardian but I knocked On the doors of 4,000 residents last year and not one resident ever raised the Preston Model.
@ Chris Cory, “…if EVERY local authority focused on sources from local companies, the advantages would cancel themselves out.
That might be true for small companies but most of those would only sell to their own and/or nearby authorities anyway so the money would continue to circulate locally which is the whole point.
With large companies that’s not the case. They are overwhelmingly based in and around London so spending with them leads to money being sucked out of the local economy.
Some of it reappears in London, some of it travels even further and disappears into tax havens.
I am Deputy Leader of Lewes District Council where we run the show in an Alliance with other parties. We are actively exploring the idea of community wealth building and have included it in our corporate priorities.
It’s really interesting to hear Cllr Potter’s thoughts given the high profile of the ‘Preston Model’.
We have a number of potential anchor institutions and strong potential for greater inward investment. I think it is a fundamentally liberal idea that can empower our community.
My main concern is the one voiced by others here that it could tip into a form of protectionism, but I have been reassured by our early steps. We are working with the Centre for Local Economic Strategies who have done a lot of thinking on this.