The Preston Model

The Preston Model

In a new series looking at how to make the economy work for everyone, Guardian columnist Aditya Chakrabortty finds out how Preston turned its fortunes around by spending locally

via The Guardian


The city of Preston in Lancashire dates back to Roman times. It is listed in the Domesday book as Prestune. It’s where inventor Richard Arkwright kickstarted the cotton trade. Yet ask local people to tell you its history and they jump straight to 2011. That was Preston’s year zero, when the grand schemes for the city fell apart. For more than a decade the council had bet everything on a massive shopping mall. The Tithebarn would sprawl over the city centre, cost £700m and be built by two of the biggest developers on the planet. It was going to have a Marks & Sparks, a multiplex and a huge John Lewis store. It was the lottery ticket, said the council leader. The lifeline, the turnaround, the magic bullet.

Then came the banking crash, and cranes across the country stopped dead. Businesses grew cooler on the Tithebarn until, in November 2011, John Lewis pulled out. The council found its sums no longer added up, and killed the entire scheme. Where once there was a masterplan, Preston now had a vacuum.

Such stories lie scattered all over post-industrial Britain. During the boom, lest we forget, ex-mining town Barnsley proposed to turn itself into a “Tuscan hill town”. Yet “the T-word” serves two purposes for Prestonians. The story reminds them of the precariousness of their perch. It also marks the point at which everything changed.

Small cities trailing big histories rank among the flotsam of 21st-century capitalism. With a big enough dowry (some subsidies, perhaps, or free roads and cheap labour), they might catch the eye of a passing multinational bearing some dubious inward investment. A distribution warehouse, say, with poverty-pay jobs, or a high-street killer of a retail park. That was Preston at the start of this decade – and it’s several other places still.

But the city council no longer plays that game. Instead it has adopted a guerrilla localism. It keeps its money as close to home as possible so that, amid historically drastic cuts, the amount spent locally has gone up. Where other authorities privatise, Preston grows its own businesses. It even creates worker-owned co-operatives.

Now Labour leader Jeremy Corbyn praises Preston for its “inspiring innovation”. Westminster thinktankers talk about “making a pilgrimage” – and they are only half-joking. Even actor Michael Sheen has dropped by.

There is much talk of a “Preston model”, of this place being Corbynism on Earth. But what’s most remarkable is how somewhere so beaten-up – with its streets a mix of empty shops and rough sleepers, and having the highest suicide rate in England – got itself off the floor. How a council that only a few years back hugged multinational Lendlease now espouses localism. How a place that has been on the wrong end of the past 40 years mustered the confidence to strike out on its own. The answer each time has something to do with Matthew Brown.

When the Tithebarn dream died, Brown was in the council cabinet, although not in the Labour mainstream. Something about him suggests he will always swim alone. Over the lunchtime din of a pub, he casually mentioned his adoption as a baby and how it had left him with “a sense of not being good enough”. His days are spent in a clerical job with the Department for Work and Pensions; evenings are devoted to books on leftwing economics. He makes more radical statements than 99% of Westminster politicians in a diffident tone, as if he is unsure which sandwich to get. And in the time we spent together I never once caught him with both his shoelaces done up.

Early in his teens he was watching the BBC’s Question Time when Tony Benn came on – and it was as if postwar Britain’s most eloquent socialist was talking directly to him. Thatcher was in charge and Preston was on the slide (“Some of the social housing was like a third world country”). His commitment to social justice and economic democracy made him marginal, even within Labour – until 2011 came along and the council began groping around for new ideas. In meetings, Brown quoted research showing “big supermarkets cost jobs” and urged colleagues to expand the city’s handful of co-operatives. “People were like, ‘Can this stuff work?’ The council officers were suspicious.” Yet in 2012 Preston declared itself the first living wage employer in the north of England. To take on the loan shops, the council backed a credit union. But the transformative moment came as Brown worked with a Manchester-based consultancy, the Centre for Local Economic Strategies (CLES), on how to harness public services.

These public bodies account for thousands of jobs and hundreds of millions in spending. Yet calculations in 2013 showed that a mere fraction – one quid for each £20 spent – stayed in Preston. Much of the rest was going to building firms headquartered in London, say, or to global catering companies.

Years before PFI builder Carillion keeled over and the rest of the country realised the importance of which particular private firms take public money, Preston had already begun fretting about where its pounds were going. “There was all this money in the community and it was leaking out,” says Brown. The Federation of Small Businesses has published research by CLES showing that for every pound spent with a small or medium-sized firm, 63p is respent locally. That drops to 40p for every pound given to a large or multinational company.

Brown’s team persuaded six of the public bodies on their doorstep to commit to spending locally wherever possible. It sounded commonsensical; yet it defied procurement convention, which trades cost against quality and rarely thinks about the environment or society. “You don’t go in saying, ‘Have you thought about an alternative to neoliberalism?’” says CLES chief executive Neil McInroy. “It’s practical. You say to the housing association, ‘How would you like to do more for your residents so they’ll be better off and pay their rent on time?’”

To hear how that conversation sounded from the other side of the table, I visited Community Gateway, which manages 6,500 homes around Preston. In a tower overlooking the docks, where ships once came in, head of finance Phil McCabe explained what the new regime meant to his team. Once they outsourced repairs and grass cutting; now they are inhouse. There’s been no drop-off in quality, only marginal rises in cost, at most. They meet every quarter with counterparts at the other public bodies to compare notes. CLES gives each a progress report.

McCabe’s latest update calculated that he was still spending £3,934,672.51 a year outside Lancashire. Most of that was on construction, then consultancy and vehicle management. The implication was clear: this shy man who had spent decades looking after the payroll and the rainy-day fund would now be judged by his localism.

He is battling what economists call path dependency. Decades of hollowing out and of contracts going to big companies elsewhere means Preston doesn’t have much of a local economy left. There is no shoal of eager contenders clamouring for each new job. Some firms simply aren’t used to applying for big contracts, so need coaxing. In other cases, Community Gateway asks bidders to detail how they will employ locally, provide training, and partner with other local businesses.

In 2015, Lancashire county council put a contract to provide school meals out to tender. That was impossibly large for local firms, so officers broke it into bite-size chunks. There was a tender to provide yoghurt, others for sandwich fillings, eggs, cheese, milk, and so on. One contract was split into nine different lots. It meant officials actually shaping a market to fit their society – and it worked. Local suppliers using Lancashire farmers won every contract and provided an estimated £2m boost to the county.

In 2013 the six local public bodies spent £38m in Preston and £292m in all of Lancashire. By 2017 those totals stood at £111m in Preston and £486m throughout the county. That is a huge turnaround, especially as their budgets shrank from £750m to £616m. The county’s pension fund is now building student accommodation in the city and doing up a hotel. Over the next few months Brown will get two new worker co-ops off the ground – one in IT, the other in food. He talks about establishing a local bank for Lancashire. But right now his pride is the multimillion-pound revamp of the covered market, built by family firm Conlon using local contractors, which opens in February.

Asked about Brown’s localism, Michael Conlon shrugs: “If a client said to me, ‘I want all your staff to wear kilts’, I’d say: ‘Which tartan would you prefer?’” But the increase in work means that each major firm involved in the market can point to more apprenticeships or employees.

A few minutes from the market is a lovely Georgian square where, among the solicitors’ and accountants’ firms, stands a statue of Robert Peel. Residents built it in gratitude for the Conservative’s repeal of the corn laws in 1846, the point at which Britain converted to free trade. It remains the establishment creed, but Preston’s guerrilla protectionism suggests how it might break down.

For decades this city has been one of many losers in Britain’s political economy. Its great achievement has been to recognise how badly it has lost out at the hands of finance and Westminster – to London, in short. The tantalising possibility is that other towns and cities might also come out as losers: that Britain could form a coalition of loser regions, stretching from outer London through south Wales to Strathclyde. “If there is anything we are trying to protect ourselves against, it’s shareholders,” says Martyn Rawlinson, the councillor in charge of finance. “Those people who live hundreds, thousands of miles away and just extract value from our community.”

Bombing around in his “smelly” hatchback, its dashboard warning of low fuel and a faulty catalytic converter, Rawlinson gestured towards the hospital and talked about other large public sector employers. “They’re the only things that save our arse from the shit.”

But what if Brown and Rawlinson walked along the main shopping thoroughfare of Fishergate, and told the banks and chain stores that they expected them also to do more for the city? These businesses also “extract value”, taking Preston pounds and shunting them down to London.

Perhaps Brown is already pushing his political speed limit. The same council that talks about social value also published a committee report last summer bemoaning the city’s lack of a Zara store. In 2016 it flogged a Grade II-listed building to a hotel group specialising in stag weekends. Brown and his supporters have achieved a lot in a culture that sometimes views him quizzically. “Matthew’s a very bright guy,” council leader Peter Rankin says. “I’ve encouraged him where his ideas have had prospects. Other things, I’ve had to say, ‘Pfft – forget it!’”

Yet Brown believes others will catch on. Preston’s ideas could spread, he thinks, to Birmingham, Oldham, Bristol. And he’s off: “Imagine if every Labour city were setting up its own banks, supporting worker-owned businesses and credit unions? Imagine it. That would be our way of taking back control.”

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