GDP is both vitally important and hopelessly inadequate as a measure of prosperity.
Many attempts have been made to find a better yardstick. One of the best is the PwC-Demos Good Growth for Cities Index. Like GDP, it avoids subjective, hard-to-measure criteria like happiness; unlike GDP, it represents whether or not people can access the benefits of growth. For example, it takes into account factors including jobs, skills, income distribution, home ownership and housing affordability. Furthermore, the index , as the name suggests, is localised: it shows what’s going on in different parts of the country. Best of all, this is not a one-off exercise, but an ongoing project that started in the immediate wake of the global financial crisis.
The most recent report was published last year and covers the 2015-2017 period. The top three cities on the Good Growth Index were all in the South – Southampton, Reading and Oxford taking bronze, silver and gold. However the top three most improved cities (compared to the 2011-2013 period) were all in the North – Hull coming third, Middlesbrough-and-Stockton second and Preston in clear first place.
Writing for CityMetric, Neil McInroy and Jonty Leibowitz say that Preston has become “the poster child for an insurgent economic approach known as ‘local wealth building'” whose purpose is to “[rebuild] wealth from the bottom-up rather than the top-down”.
The core strategy is to develop “a dense local supply chain of local enterprises, employee-owned businesses, social enterprises [and] cooperatives” using the purchasing power of what are called “anchor institutions”,
“…such as housing organisations, universities, schools and hospitals. These institutions hold a unique position in the local economy, as they employ people, buy things, hold property and assets and are unlikely to relocate from the local area.”
An allied strategy is to increase “flows of investment within local economies by, for example, directing the funds from local authority pensions away from global markets and towards local schemes and community-owned banks and credit unions.”
As reported in The Economist, this has made a significant difference to the amount of money being spent locally:
“The Centre for Local Economic Strategies, a Manchester-based think-tank, audited the spending of six such institutions last month and found that they spent 18% of their most recent year’s budget in Preston, compared with 5% in 2013. In cash terms, this meant an extra £75m being spent in the city—around £530 per citizen. The share of their spending in Lancashire doubled from 39% to 79%. It required no extra money nor new legislation.”
The Economist describes Preston as “Jeremy Corbyn’s model town”. Preston City Council is Labour controlled – as is Manchester City Council, which pioneered the local wealth building approach together with the Centre for Local Economic Strategies (CLES). Nationally, the Labour Party has established a Community Wealth Building Unit.
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