The Limitations of Community Wealth Building

Richard Hatcher explores 'New Municipalism' and the ideas promoted in the new book 'Paint Your Town Red' based on the Preston model.


Various forms of localism, sometimes referred to collectively as the ‘New Municipalism’, have developed and spread in many countries in the past decade. The distinctive form of localism that has come to the fore in England is Community Wealth Building (CWB). During the years of Tory austerity CWB, pioneered by Preston City Council, has offered the promise that there were progressive, even transformative, policies that local councils could put into practice. A CWB approach has been adopted by or influenced many local councils in England and the Welsh and Scottish governments. Here I will focus on England. The case for CWB is spelled out most recently in the book Paint Your Town Red by Matthew Brown, the leader of Preston Council, and Rhian Jones, the editor of Red Pepper, published in May this year by Repeater Book.  Quotes are from this unless otherwise stated.

After Labour’s general election defeat in 2019 CWB has seemed to continue to offer a viable localist strategy under the Conservative government, including a solution to the economic crisis created by Covid.

The local and placed based nature of community wealth building means that it does not require a favourable national government (or even a favourable leadership of the Opposition), but can proceed through local movements, groups and individuals  – including but not limited to local councillors. (p23)

One of the obvious strengths of localism is that it is already producing results, while attempts to develop a global or even national alternative to the status quo through an electoral path have not yet had significant success. […] Many on the left have responded to Labour’s electoral defeat by identifying the need for a longer term strategy that rebuilds engagement and credibility on a local level, through focusing on bases of community support and solidarity, including welfare and social, cultural and leisure provision. (p30)

matthew brown and rhian jones

What is Community Wealth Building?

Brown and Jones quote this definition of CWB by Joe Guignan and Martin O’Neill from their 2020 book The case for community wealth building:

Community wealth-building is a local economic development strategy focused on building collaborative, inclusive, sustainable, and democratically controlled local economies. […] Community wealth-building supports democratic collective ownership of the local economy through a range of institutions and policies. These include worker cooperatives, community land trusts, community development financial institutions, so-called ‘anchor institution’ procurement strategies, municipal and local public enterprises, and public and community banking. (pp13-14.)

joe guigan and martin o’neill

These are all positive policies which should be supported as part of any socialist agenda. What is contentious about CWB are the claims that are made for them, the evidence they are based on, the class basis of the CWB strategy, and the absence of any strategy of mass action.

What is ‘the local economy’?

CWB aims to create local ‘circular economies’ which will support local businesses, including co-operatives, rather than local wealth ‘leaking away’ to large firms, often multinational, based outside the local area. The foundational concept of CWB is ‘the local economy’. Sometimes it is used to refer to a local authority area, such as Preston or a London borough, but at other times to a much larger region, such as Lancashire or the West Midlands. It is defined by political boundaries, not economic and social relations. But a ‘local economy’ is not a geographically bounded economic entity. It is a spatially defined node in a dense network of economic relations that stretches far beyond the local political area into the national and the global economy.

The problem with CWB’s geographical definition is exemplified by the difficulty of defining what is a local firm. Does an outsider-owned firm based locally count as local? Or does a locally-owned firm with operations outside the local area? Equally problematic, because people cross political boundaries to work, is the similar issue of the definition of the local workers who CWB claims to benefit.

There is another problem with the ‘local economy’: nowhere in any of the CWB literature is there a comprehensive analysis of an actual local economy. For example, there is no analysis of the Preston economy beyond some basic statistical data. By far the largest employer in the local economy of Preston is BAE Systems, one of the world’s largest ‘defence’ companies. It has two bases just outside Preston, as well as offices in Preston itself. Yet it, and its local suppliers, are not mentioned in any reports of CWB in Preston.

How significant is public procurement in the local ‘circular economy’?

The use of the term ‘the local economy’ to apply (in addition to cooperatives) just to the sectors where public procurement operates, not to the whole local economy, raises the question of the relative size of the CWB sector. For example, according to Lancashire County Council’s website, in 2019 there were 5,375 active enterprises in Preston. It is typical of the basic procurement data that is missing from the CWB literature that there is no information available of how many of them are involved in procurement by the Council and the associated anchor institutions.

Does local spending stay local?

In 2019 the thinktank Demos published a report titled ‘The Wealth Within: The ‘Preston Model’ and the new municipalism’. It notes that:

A ‘localist’ procurement strategy is a key pillar of the ‘Preston Model’ strategy. It is informed by the belief that spending on local organisations by anchor institutions will ‘stick’ in the local economy of those organisations; less will ‘leak out’ to other economies. (p30)


But the question is does it stay local, fuelling the local ‘circular economy’? When, for example, Preston Council buys something from a local supplier, has the supplier sourced it locally, or does the supply chain extend beyond the local economy? And what does the supplier do with the profit? How much is used by the supplier, or its staff in the form of wages, to purchase goods and services, and what percentage is in turn bought from a local supplier or from a supplier outside the local economy? And if they are bought locally, does their supply chain extend outside the local economy? No such evidence is provided in the CWB literature, and the conclusion of the Demos report is that

Unfortunately, we were unable to find sufficient evidence to conclusively answer whether a ‘localist’ procurement strategy will always benefit the local economy by ensuring more money ‘sticks’ in that local economy. (p39)


Is the ‘circular economy’ argument a zero sum game?

The Demos report raises another fundamental question about CWB: is it a zero sum game? Demos acknowledges that

…there is also not a great deal of available information as to where in Britain – or indeed the world – the wealth is retained from i.e. if Preston increases the spend of money retained in the city and Lancashire more broadly, who is losing out? This is crucial because it forms part of Community Wealth Building’s defence that the approach is not simply a zero sum ordering of wealth patterns … (p46)


The logic seems inescapable: early adopters of the CWB strategy can gain from local protectionism at the expense of other areas, selling goods and services to them but not buying from them. But as more and more cities and regions adopt CWB it increasingly becomes a zero-sum game in which no-one gains. So for example the chair of Conlon Construction, a Preston company, is quoted favourably in Paint Your Town Red, but nine of the 32 projects on its website are outside Preston and Lancashire – 8 in Manchester and 1 in Leeds. If Manchester and Leeds councils applied the same procurement strategy as Preston is advocating then Conlon Construction would be excluded from their contracts, with a consequent loss of jobs for its workers.

The underlying tacit assumption of the CWB argument is that a CWB authority is surrounded by neighbouring areas with which it is in competition, whether or not these areas are pursuing their own CWB policies. This scenario does in fact accurately reflect the real situation of cities and regions which actually are in competition with each other for inward investment and government grants in the neoliberal economic context.

Cooperatives and social enterprises

Promoting cooperatives is a key strand of Preston’s Community Wealth Building policy, as it is of the Labour Party’s 2017 report Alternative Models of Ownership and the Co-operative Party’s 2018 pamphlet ‘6 steps to build community wealth’, which includes a short case study of CWB in Preston, based on an interview with Matthew Brown. In 2017 the Preston Cooperative Development Network was launched. Paint Your Town Red says:

This work has so far led to the creation of several new local cooperatives in a range of areas, including: Link, the UK’s first educational psychologists’ cooperative, offering services locally; The Larder, a healthy cafe, cooking academy and catering service; the Preston Digital Foundation, a media cooperative […]; and North West Black Cabs Ltd, a cooperative of local taxi drivers. There are at least 10 potential new worker-owned Cooperatives in care, construction, education and supporting former prisoners, with the aspiration that hundreds of workers in Preston will become worker owners in the next few years. (p59)


To put this in comparative context, the economically active population of Preston in 2020 was 61,100 and the private sector economy in 2018 comprised 5,165 enterprises.

In addition, Preston plans a regional community bank for the North West, in conjunction with several other local councils, to tackle financial exclusion. Similar municipal developments are underway in North of Tyne, Avon, and the South West counties.

These proposals for cooperatives can have positive benefits for the working class but the reality is cooperatives are a marginal sector of the economy and, as Jonathan Davies notes in ‘Just do it differently? Everyday making, Marxism and the struggle against neoliberalism’, ‘Cooperatives often subsist comfortably within a neoliberal political economy and without posing any challenge to it, though they too are subject to market forces and failings.’

Community Wealth Building and participatory democracy

CWB has had little to say about participatory democracy – Preston is no more democratic than any other council – but recently there is a growing recognition of the need for more active public involvement.

Although the ideas of community wealth building have been taken up by a spectrum of institutions, think tanks and political networks, getting ordinary people involved and putting them in the driving seat to empower and improve their own lives must be a priority. Building a base of discussion, ideas, participation and support for change among local groups and individuals is vital for strengthening and sustaining any attempt at long term improvement.’ (p76)


However, the examples in Paint Your Town Red are very limited. Most space is given to participatory budgeting. Some element of public choice in local spending in limited areas is now commonplace in local government policy, for example as community grants, but this is far removed from the Porto Alegre model. There is no recognition that real participatory democracy entails the fundamental restructuring of local government, including the creation of committees with community and union representatives alongside councillors, issue-based citizen forums, and elected local assemblies in combined authorities.

Is CWB a strategy for socialism?

Some advocates of CWB, including Matthew Brown, have been explicit in their claims that it represents a strategy not just for a reformed capitalism but for a transformation to post-capitalist socialism. In 2016 the journal Renewal published an interview with Matthew Brown, at the time Preston’s Cabinet Member for Social Justice, Inclusion and Policy, under the title ‘The Road to Socialism is the A59: The Preston Model’. In it he says:

We want to create a new economic system within Preston and Lancashire. It’s going to sound like a very dramatic statement but I think over the next twenty or thirty years […] we’ve got to move to a different system, bit by bit. I think we’ve got to move beyond capitalism to a new system. It’s not going to be the state running everything. It’s going to be a devolved economy, a democratic economy, using all these different mechanisms and institutions to localise wealth.

matthew briown

The vision here is of the gradual spread of co-operatives and other non-profit social enterprises, displacing or taking over capitalist businesses one by one, until the entire capitalist economy is transformed into a socialist one. Paint Your Town Red claims that CWB offers ‘a pluralist mosaic of initiatives which […] can add up to a comprehensive transformation of existing economic and social relations.’ (p41).

But Paint Your Town Red is silent on the power of capital, including the big capitalist companies and the banks, backed by the power of the state, to resist this metamorphosis. A rather dramatic case in point in Lancashire itself is the aerospace industry: as the Invest in Lancashire website says, Lancashire is ‘Number 1 in the UK for aerospace with 500 aerospace supply chain companies; 4th largest aerospace cluster in the world’.

It is an illusion to believe that the power of big capital and government could be gradually eroded away by CWB. This is an illusion with a long history, as Greg Sharzer points out in ‘Cooperatives as Transitional Economics’:

Many left-wing advocates suggest that cooperatives are not only part of a post-capitalist future but a central tool to create it. The activists of the early socialist movement grappled with similar questions […] First, the entire left cooperative tradition, from the founder of the movement Robert Owen to his critics Marx, Luxemburg, and Lenin, agreed that cooperatives remain bounded by a global market that coerced firms to cut costs and conform to the law of value. This made the prospects of a gradual socialist transformation of capitalism impossible. (p1)

Addressing co-ops as one of the 12 planks in his instructions to IWA delegates in 1866, Marx said […] individual efforts at association will fail without “changes of the general conditions of society, never to be realised save by the transfer of. . . state power, from capitalists and landlords to the producers themselves” (italics in original). (p4)

greg sharzer

Challenging the domination of capital requires a combination of militant class struggle and a strategy for state power. CWB proposes neither, for two reasons. First, for CWB, and spelled out most explicitly by the Centre for Local Economic Strategies in a number of publications, the progressive – ‘generative’ – forces in the economy are working people and the overwhelming majority of capitalists – the owners of small and medium-size businesses. The reactionary – ‘extractive’ – class forces are those of corporate capital. The political project of CWB is to mobilise this potential progressive alliance to create a gradual transformation of the economy. The strategy and tactics of this project must exclude any which risk alienating the mass of small and medium business owners on whose support it depends. That rules out actions which strengthen working class solidarity and militancy potentially at their expense.

The second factor is that CWB is based on the role of local councils and therefore avoids advocating measures which challenge council regimes, including Labour ones. But local councils are the local instruments of national state policy, bound by the combination of national government control of funding and legislative regulation. Mass popular action would be required to effectively challenge it, including active movements of resistance by community campaigns and council workers to oppose further government-imposed cuts being implemented by councils themselves, Labour as well as Conservative. Thus CWB provides social democratic councillors with an ideological rationale and political programme for limited progressive reforms while avoiding overt class conflict.

CWB has become part of the mainstream agenda of local government

CWB offers a programme of moderate progressive reforms which have been adopted by many councils as one element of their repertoire of strategies to keep the council afloat while alleviating some of the impact of neoliberalism. A case in point is its adoption by the Association for Public Service Excellence (APSE), a mainstream local government agency which describes itself as ‘a not for profit local body working with over 300 councils throughout the UK. Promoting excellence in public services, APSE is the foremost specialist in local authority front line services’. In 2018 APSE published a 32-page report, ‘The new municipalism: Taking back entrepreneurship’, which advocates a set of policies for CWB, based on councils using local procurement for economic and social benefit, which parallel those advocated by Preston Council.

CWB is not a programme for radical transformation of a neoliberal capitalist economy, but it can raise important issues of local politics for socialist activists. Momentum held a webinar on ‘Paint Your Town Red’ on 16 June this year with the leaders of Preston, Salford, Wirral and North Ayrshire councils and is now developing a CWB Toolkit. CWB will be a theme of TWT at Labour Party conference. One key issue coming to the fore in the CWB debate is the need for participatory democracy in local politics, and this should be an opportunity to argue that campaigning combines mass activity in communities and workplaces with the opening up of local government to enable an effective voice in decision-making for citizens, communities and unions.

This article is an updated version of a longer article that was published in January 2021 on the Birmingham Against the Cuts website at

All the references in this shorter version can be found there, apart from Greg Sharzer (2016) Cooperatives as Transitional Economics. Review of Radical Political Economics

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