The Hartlepool Model of Community Wealth Creation

Executive Summary

This white paper is on the side of Hartlepool residents, and attempts to forge a future in which they benefit fully from as much of the town’s economic activity as possible. Its chief premise is that money spent in Hartlepool is best kept in Hartlepool. It is also based on the belief that any employer or purchaser located in Hartlepool has a civic responsibility to act in a fashion which has the interest of the local economy and local residents at its heart. It draws on work already undertaken in the UK (which itself is premised on work undertaken in the US and across Europe) – in particular the work done in Manchester, Preston and Birmingham – but attempts to move beyond these successful ventures to truly provide innovative solutions to the problems facing the town.

It looks at the problems associated with traditional private models of ownership and how they can be overcome via co-operative ownership models. It looks at the pitfalls of such co-operative models and how these can be overcome, in turn. It looks, too, at the key role played by ‘anchor institutions’ in any local economy but reflects on how the traditional understanding of such institutions may not be completely appropriate to Hartlepool’s context – insofar as they may not provide adequate opportunity to improve the prospects of residents – and thus reconsiders the concept to ensure bespoke solutions can be found to the town’s problems. Further, the paper considers the different models of co-operative procurement and reflects on which may be appropriate for use at different points. It also considers how to make the area an attractive prospect to entrepeneurs.

For success in improving Hartlepool residents’ prospects, the chief argument here is that investment and procurement must be inward-facing. That said, there is no merit in isolationism: Hartlepool must collaborate and learn from other councils and authorities wherever possible, and it must also work with non-governmental agents to secure funding and expertise to aid the process of community wealth creation.

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Background/problems

Private ownership, investment and productivity

Private ownership models are short-termist, with shareholders to satisfy and annual accounts to unpick. (This just focuses on the ‘regular’ operations of firms, but the ‘extreme’ instances of asset stripping are consequences of the same failure to view firms as long-term viable concerns.) As a result, Britain finds itself “weighing near-term outcomes too heavily at the expense of longer-term opportunities and thus forgoing valuable investment projects and potential output”. (Davies, 2014)

British investment is lower than that of other countries with similar levels of development. Further, a comprehensive report from The Department for International Trade (Trade, 2018) flagged the North East as the English region in receipt of the least inwards investment, with only 69 FDI projects over the last year as compared to 139 in the North West, 171 in the West Midlands, and over 1000 in London and the South East. This lack of Foreign Direct Investment (FDI) is undoubtedly holding back the growth of the region. In the absence of FDI, it is of paramount importance to attract as much local and domestic investment as possible, and to ‘capture’ as much of all investment as possible.

Low productivity is doubly problematic: where cheap labour is widely available (as it is in regions of low employment) then firms have less incentive to invest in labour-saving and productivity-enhancing capital; the flipside is that when productivity is higher, firms can afford to pay workers higher wages. (Tuckett, 2017)

All of this outlines structural reasons why Hartlepool struggles with short-termism, under-investment, low productivity, and low wages. Hartlepool is not alone in being a ‘struggling’ sea-side town. (Christina Beatty, 2008) They typically suffer from higher deprivation and lower skills than the national average.

The concentration of decision-making powers in small elites at the financial ‘top’ of firms inevitably means that these decisions are made by, and on behalf of, and for, the interests of these elites. By increasing the number of ‘shareholders’ involved in a firm’s decision-making, it would be possible to improve the democratic nature of decisions made by firms. That’s a quantitative truth. More interestingly, if decision-makers were drawn from a pool wider than the current pool of wealthy individuals, then there seems reason to suspect they would have access to a wider range of societal interests. It’s a qualitative speculation, but firms co-operatively owned may well make decisions ‘better’ for society. The premise here is that if we can increase the number of shareholders making decisions via shifting models of ownership, we may be able to much more dramatically increase the number of stakeholders positively affected by decisions made.

This makes clear how privately owned firms can make decisions which are adverse to the interests of Hartlepool and its residents.

Wealth has become concentrated in landed property and finance, as well as in London and the South East. Increasing rates of precarious work or ad hoc (“gig”) employment has increased insecurity for individuals and families. The concentration of decision-making power in the few has failed to redistribute wealth or to ensure it flows across localities. Wage gaps tend to be lower under co-operative ownership models, and – during periods of economic difficulty – they tend to reduce labour costs by wage reductions and/or time off, rather than job losses.

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A lack of inward investment has created a lack of funding for regeneration and public services. Co-operatives are a means of capturing local wealth and channelling it back into the area, like Preston council supporting and creating a network of local co-operatives to fill procurement gaps.

Different models of alternative ownership

Co-operatives

Co-operatives are autonomous associations of persons united voluntarily to meet their common needs and aspirations through a jointly-owned and democratically-controlled enterprise. They include: worker co-operatives, consumer co-operatives, purchasing co-operatives, producer co-operatives, and multi-stakeholder co-operatives. In general they: adhere to openness and inclusion; are democratically controlled by members; have capital contributions from members in an equitable fashion; and work for sustainable community development.

Cooperatives UK defines worker cooperatives as those businesses where the members and beneficiaries work for the cooperative and have direct ownership and control. The UK legal framework for cooperatives is not as prescriptive as in many countries where a worker cooperative would have a precise legal definition. Hence in the UK, the boundaries between employee ownership and a worker cooperative are difficult to pin down. Many would argue that there has to be at least 51% ownership by workers and that the business should adhere to the core co-operative values and principles.

The International Cooperative Alliance and Institutional Organisation of Industrial and Service Companies issued the following summary: “Worker cooperatives have the objective of creating and maintaining sustainable jobs and generating wealth, in order to improve the quality of life of the worker-members, dignify human work, allow workers’ democratic self-management and promote community and local development.” (CICOPA, 2005)

The UK – out of a 2012 workforce of roughly 30million – employed 80,000 workers in cooperatives (around 0.27%) and employee-owned businesses were worth approximately £25billion (around 2% of GDP). These figures are far lower than in many other developed countries. For instance, Spain has 20,000 worker cooperatives.

A big concern to consider is that capital providers are unlikely to provide long term funding to firms over which they lack control, which may place worker-owned firms at a disadvantage when it comes to competing with privately-owned firms in terms of attracting investment. They are also particularly vulnerable to capitalist take-over during periods of difficulty. This suggests the need for a “shelter” organisation which would help fund the sector through difficult times. (Vanek, 1975) In this context, HBC would need to become that shelter organisation: one of its core purposes moving forwards should be to shield its residents and their endeavours from a hostile climate fostered by austerity and cuts.

Municipal and locally-led ownership

Municipal ownership is when the Borough Council takes direct ownership of firms. There may be scope for this as an option in extreme cases where HBC looks at a firm facing closure and deems it of such vital strategic importance that it cannot be allowed to do so. If municipal ownership were to take place, it should be viewed as a temporary measure only whilst they wait for opportunity to hand it back over to the private sector (ideally, though not necessarily, to a collaborative ownership model.)

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“Locally-led ownership” is the encouragement of the involvement of local entities in the decision making process. It is about economic decisions made locally serving the community rather than the narrower interests of privately-owned firms’ decision makers. It aims at community wealth building.

Community wealth building includes:

- Work around ‘anchor institutions’ - Ensuring that commissioning and procuring strategies give primacy to local firms - Using land/property holdings to benefit the local economy - Using pension funds to benefit the local economy - The development of ownership models which circulate wealth rather than extract it - Work around smart technologies to promote a new open-source collaborative economy,

where peer-to-peer activities take economic wealth production away from the few within a vertical hierarchy, to many within horizontal systems.

- Create a deeper relationship between producers and consumers, increasing sensitivity to social concerns and unmet social needs

Organisational choices which are incorporated by this model would include:

- Buying groups, where a group of consumers pool their buying power together to order things in bulk and at discount

- Community-owned shops (which are also typically staffed by, as well as owned by, locals)

- Development Trusts, which develop community assets and community enterprise

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The term ‘anchor institutions’ is commonly used to refer to organisations with an important presence in a place, and examples include local authorities, NHS trusts, universities, trade unions, local businesses and housing associations. An ‘anchor institution’ needs to be relatively bound to the area, to provide ‘sticky capital’ through which progressive local economics can be promoted. Firms too footloose would be inappropriate to focus on. Anchor institutions can leverage their assets and revenues to benefit the local area in a wide range of ways. (Jackson, 2017) Anchor institutions also have significant roles as employers, land-holders and owners of properties which can be used for local benefit, and also as investors.

Preston City Council was the first formally accredited LA in the North of England to become a Living Wage employer, and undertook work to encourage other institutions and organisations in Preston to become Living Wage employers. (Preston, 2017) Following that, they identified anchor institutions which employed a lot of locals, and spent a lot on procurement, and were unlikely to leave the area. They spent 18 months ensuring the anchor institutions were engaged with the work, with a specific focus on the procurement strategy. It involved securing understanding and ‘buy-in’, promoting/sharing strategies that could bring about greater benefits, and – importantly – ensuring that the institutions agreed to share data around their procurement spend, and access to procurement officers. Then, they completed a full audit of the procurement of these institutions to provide baseline information and a deeper understanding of where their spend went. Following that 18 months of early information-gathering work, Preston City Council brought together all the leaders of the anchor institutions and their procurement officers to explain the findings of the spend analysis, and to create a

What they did in Preston

Preston City Council, taking their lead from ‘the Cleveland model’, identified six pre-existing anchor institutions (Preston City Council, Lancashire City Council, Preston’s College, Cardinal Newman College, Lancashire Constabulary and Community Gateway). They assessed the procurement procedures of these institutions: only 5% of the £750million annual spend was with organisations based in Preston, and only 39% with organisations based in Lancashire. More than £450million was leaking. Procurement strategies were revised, including:

- Breaking contracts into portions to enable smaller organisations a chance to bid

- Requiring quotes from local organisations on procurement opportunities between £10000 and £50000

- Exploring a ‘community bank’ - Launching a city-wide credit union as part of a financial inclusion strategy - Working with the Chamber of Commerce to encourage retiring business

owners to sell their companies to their employees - Using local pension fund resources for local investment - Creating a cooperative infrastructure and support system

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common statement of intent for how the spend could be better directed to benefit the local economy. A Preston Procurement Practitioners Group was formed to meet quarterly to devise and share best practice around how procurement spend could be enhanced and maximised. Social Value scores were embedded into the procurement practices, focusing on Future Workforce (working days committed to outreach in schools, work experience placements offered, undergraduate placements offered and paid internships offered) and Inclusive Workforce (number of employment offers made to the unemployed, ex-offenders, the disabled, and work days committed to training NEETS).

The on-going work can be summarised via the following diagram:

And its impact via:

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And a comprehensive infographic of the approach is available here:

Issues with Hartlepool just adopting the Preston model uncritically

In Hartlepool’s context, we may struggle to use just these natural and pre-existing anchor institutions to compete with other regions who have used the approach to good effect: the purchasing power is probably not comparable. The Draft Financial Report for 2017-2018 claims a total annual expenditure from HBC of £14,545,000. This will doubtlessly not be the full picture, as HBC attracts investment from other bodies for substantial works programmes, but it seems equally doubtless that Hartlepool’s natural and pre-existing anchor institutions would not match the £750 million annual spend of those identified and worked with in Preston. For the approach to work in Hartlepool, there would likely be a need for work to be done to ensure that private firms bound together into purchasing-blocks to become ‘anchor institutions’ of their own, or at least to try and effect change in the procurement practices of large local private firms.

Hartlepool will struggle to generate and retain wealth unless it engages in a process of building and forming collective and synthetic anchors, as well as

identifying and reforming the natural and pre-existing anchors.

Groups of private firms could not formally become purchasing co-operatives with the sole aim of procuring locally even when the costs were higher, due to laws against acting in a way to fix prices or manipulate the market; they could, however, collectively agree to procure locally where that proved

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cost-effective, and if that does not provide those firms with enough of a financial incentive (due to the added administrative burden of having to ‘shop around’) then one ought be provided to them via HBC, most likely through preferential business rates. Above and beyond just an ‘agreement’, there would be merit for these firms sharing expertise and best practice, which could be facilitated via HBC. Further, through transparent procurement procedures, gaps in local provision of goods and services could be identified, and then growth in these sectors could and should be encouraged and facilitated via HBC.

Firms to consider as ‘anchor institutions’ without the need even to band together would be: Heerema Hartlepool, (offshore engineering) Camerons Brewery, (brewery and pub operator) and Stadium Group PLC, (electronics manufacturer). These being private firms rather than public bodies, there will need to be a tactically different approach to engage them in altering their procurement practices. The social good will likely not be persuasive enough on its own, and a fully fleshed out argument for cost-effectiveness would need producing.

If the proposal to ‘group together’ smaller firms into purchasing blocks which could act as collective and synthetic anchor institutions were pursued, it would be advisable for only two or three sectors to be worked with in the first instance: the process would be complex, and would need rigorous evaluation and support before the approach ought be considered for up-scaling. These few sectors identified for growth could well be part of the process of identifying emergent sectors (see later in the paper – Making the area attractive to entrepreneurs). Whatever the sectors, real thought would need to be given to selecting them and working with them prior to any contact being made with private firms.

When dealing with the procurement practices of the anchor institutions found in the public sector, it will be essential to identify the portion of the spend which is tied up with national level procurement frameworks and/or products/services unavailable in the local economy. This will leave HBC with an ‘influenceable spend’ to focus on in the first instance. The group of products and services unavailable in the local economy would provide sensible direction for HBC to foster local growth.

Hartlepool would need to reflect on the Social Value score adopted in Lancashire, and create its own system responding to the town’s actual needs.

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Comparison of Hartlepool and Preston’s situations

Preston self-professedly hit “rock-bottom” in 2011 (Guardian), facing serious problems with austerity. The figures below demonstrate the reasons why Hartlepool would do well to emulate Preston. All information and reports provided by https://www.nomisweb.co.uk/.

Hartlepool (numbers) Hartlepool (%) Preston (%) North East (%) Employment and unemployment (April 2017 - March 2018)

All people Economically active 41500 70.8 79 75.2 In employment 37100 63.1 77.3 71 Employees 33200 57.3 71.8 62.9 Self employed 3800 5.8 5.5 8 Unemployed 3500 8.7 4.3 5.5 Males Economically active 22900 77.5 86.7 78.8 In employment 20200 68.2 83.4 73.9 Employees 16800 57.9 77.5 63.4 Self employed 3300 10.1 Sample too small 10.3 Unemployed 2600 11.5 Sample too small 6.2 Females Economically active 18600 64.3 70.9 71.7 In employment 16900 58.1 70.9 68.3 Employees 16400 56.6 65.9 62.4 Self employed Sample too small Sample too small Sample too small 5.7 Unemployed 1800 9.4 Sample too small 4.7

Qualifications (January 2017 - December 2017) NVQ4+ 12700 22.4 31.1 31.7 NVQ3+ 26000 46 51.6 52.1 NVQ2+ 37200 65.8 72.7 72.6 NVQ1+ 44500 78.7 83.3 84.1 Other 3200 5.7 7.7 6.3 No qualifications 8800 15.6 9 9.6

Out-of-work benefits (June 2018) All people 4050 7 2.4 3.5 Males 2565 9.1 2.9 4.5 Females 1485 5.1 1.9 2.6 Aged 16+ 4050 7 2.4 3.5 Aged 16-17 5 0.2 0.2 0.2 Aged 18-24 960 12.7 2.2 5 Aged 18-21 540 13.1 2 5.3 Aged 25-49 2205 7.7 2.8 3.8 Aged 50+ 875 4.6 2.2 2.8

Labour demand (2016) Jobs:population ratio 0.58 1.04 0.71 Full time jobs 63.3 68.3 66.1 Part time jobs 36.7 31.7 34

Business Counts (2017) Enterprises Hartlepool (numbers) Hartlepool (%) Preston (numbers) Preston % Micro (0-9) 2160 90.2 4515 87.6 Small (10-49) 185 7.7 525 10.2 Medium (50-249) 45 1.9 90 1.7 Large (250+) 5 0.2 25 0.5 Total 2395 5155 Local units Micro (0-9) 2465 82.9 5205 81.1 Small (10-49) 395 13.3 940 14.7 Medium (50-249) 105 3.5 225 3.5 Large (250+) 10 0.3 45 0.7 Total 2975 6415 % Units in use Micro (0-9) 87.62677485 86.74351585 Small (10-49) 46.83544304 55.85106383 Medium (50-249) 42.85714286 40 Large (250+) 50 55.55555556 Total 80.50420168 80.35853468

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Models of co-operative procurement

“Cooperative procurement” is defined by NIGP: The Institute for Public Procurement as “the combining of requirements of two or more public procurement entities to leverage the benefits of volume purchases, delivery and supply chain advantages, best practices and the reduction of administrative time and expenses.” (NIGP)

It is not appropriate for all circumstances or all goods; they are best developed to meet specific needs as and when they are appropriate. New forms of collaboration between institutions are evolving, including cooperative contracts for like institutions. (Schotanus, 2007) The internet has enabled sellers to reach wider markets, but has also allowed for orders to be placed via standard forms which facilitate cooperative purchasing.

There are multiple models for purchasing cooperatives:

Joint Solicitation Model: Purchasing bodies group together in advance of procurement activities and agree requirements, then one of the bodies – or a body created with representatives from each, acting on behalf of them all – undertakes the procurement activities on their collective behalf. There is an agreement in advance that all firms will accept the resultant service. “Piggyback” Model: One purchasing body undertakes procurement activities on their own behalf, but allows others – electively on a case-by-case basis – to utilise the agreed service/contract. This seems most appropriate where one body is much larger than others but doesn’t feel threatened by the added competition of helping others: perhaps firms in different sectors would be most appropriately partnered up here? It should prove no problem in the public sector.

Third Party Aggregator or Broker Model (Prier, 2008): An external agent not securing any of the procurements for themselves undertakes the work of securing procurement contracts and then allows purchasing bodies – electively on a case-by-case basis - to utilise the agreed service/contract. The different models will be each appropriate in certain contexts; part of the work around devising and sharing best procurement practice will necessarily involve considering the merits of the different models on a case-by-case basis. Advantages and disadvantages of cooperative procurement Aggregating the spend of several purchasing bodies to maximize buying power can result in lower costs, better service and advantageous contract terms. It can also result in lower administrative costs and processing times. There is obviously, though, a risk of losing flexibility: this is why cooperative procurement should not be used for all goods and services. The benefits of adopting the specific approach to cooperative procurement in Hartlepool are that it would create contracts for local suppliers and jobs for local workers. Both of these create wealth for the local economy.

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Resources already available in Hartlepool

Based on a series of FOI requests made to HBC, there are vacant and unoccupied commercial and industrial properties in the town. These provide capacity for growth in sectors which are identified in the procurement analysis as ‘gaps’ in local provision of goods and services. HBC should do all it can to fill local procurement gaps, and should do all it can to ensure that properties already invested in are made use of. https://www.whatdotheyknow.com/request/commercial_industrial_building_o#incoming-1161874 https://www.whatdotheyknow.com/request/commercial_buildings_vacant_over#incoming-1161873 https://www.whatdotheyknow.com/request/industrial_buildings_vacant_for#incoming-1161872

As of 21.05.2018 Unoccupied Vacant Vacant for 12+ months Commercial units 1727 301 205 Industrial units 430 52 33

Making the area attractive to entrepreneurs

Areas hoping to regenerate and to increase the amount of wealth they create must care for their local entrepreneurs, as well as making themselves attractive to outside parties (CfE, 2015).

The first strategy to attract entrepreneurs is to create a unique selling point for the town surrounding its heritage and its identity. It needs to decide how it is best packaged and branded, and then needs to make sure that it identifies areas for emerging specialisation. Once these decisions are made, HBC would need to: ensure that the local infrastructure was supportive of these areas; ensure that the education and skills provided by the town’s schools and colleges were supportive of these areas; provide and promote events to embody these emerging areas of specialisation; and promote the specialisation and its connection to the town, its heritage, and its future. It is not necessary, though, for HBC to focus solely on commercial activity, even if increasing commercial activity is its goal. Evidence shows that investment in the arts and culture can generate greater returns than investments in wholesale, retail, professional and business service sectors. (CEBR, 2013) Evidence also links increases in cultural tourism directly to coastal economic regeneration (Kennell, 2011), and suggests, further, that this is most effective when universities, businesses and government pursue this together (Powell, 2009). The last Labour government invested £37m towards cultural improvement projects in coastal regions, and it has been calculated that this generated upwards of 700 jobs, and brought about wider economic benefits to the tune of £276m. (Rose, 2012). There is real grounds for optimism in relation to the promotion of domestic tourism, because studies have shown it to be ‘income elastic’, meaning that as people earn more, they spend more on it (Fothergill, 2003) and that domestic tourism need not be threatened by cheap package holidays abroad etc. Brexit seems likely to increase the costs of foreign tourism, anyway, so there is at least the potential for an upsurge in domestic tourism over coming years. This is most true for those with health concerns, as the benefits of European Health Insurance Cards will likely cease. For decades, the elderly have constituted an increasingly large proportion of foreign UK tourists, and they have increasingly been heading to EU countries (D McKee, 2018). The loss of EHIC and the according changes to health insurance requirements for this demographic in particular provide cause for optimism with respect to domestic tourism, which Hartlepool would do well to capitalise on.

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The second strategy to attract entrepreneurs is to improve and/or promote the town’s accessibility. Reasonable travel times, if expertly communicated to those interested, can: convince entrepreneurs that the town is a practicable base for their activities; draw in skilled workers who wish to retain their ties to major cities; and attract domestic tourists looking for a viable option for shorter stays. Post-industrialisation, the collapse of static heavy industry, and the rise in creative, digital industries have meant that geographically flexible working is an increasing norm. Low rents, cheap costs of living, the inherent benefits of coastal life: all could be well-marketed to attract a new breed of skilled professional. Technology enables businesses to relocate from their historical centres of activity. In particular, impressive broadband connectivity is important to most modern entrepreneurs. Cornwall Council, in collaboration with the EU and with BT, launched ‘Superfast Cornwall’, which saw them invest in a super-fast fibre-based network covering over 95% of premises and allowing over 90% to connect at speeds of over 24Mbps. For details: http://www.superfastcornwall.org/programme. Research suggests this connectivity boost generated over £180m of economic activity in the area, protecting or creating over 4500 jobs. (SERIO, 2015) Simply providing the connectivity, though, is not enough: only 61% of small businesses in the UK have a website (RetailMeNot and the Centre for Retail Research) and only 30% sell their goods or services online (Lords report). As well as improving connectivity, providing training and guidance on how to utilise it would be of merit.

The third strategy surrounds improving education to ensure that young people in the town have the skills and expertise necessitated by the new and improved labour market. There is more at stake in education than employability, and as such, a separate White Paper will be produced to outline the town’s challenges here, and the necessary response. It is worth noting now, though, the interconnectedness of the two strands of HBC involvement in improving the lives and prospects of its residents, particularly its young people.

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A note on Brexit

Brexit will not affect all income groups or regions equally. (Morris, July 2018) The North East faces severe consequences. Studies by LSE point to the service industries taking the brunt of the hit, which would harm London and the South East the greatest. Other studies by City-REDI suggest that areas with the greater physical trade links with the EU will suffer most, which would include the North East, which, with sixty per cent of the region’s trade being with the EU (Phil Wilson, 2018), is genuinely a ‘powerhouse’.

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So the North East is a net exporter to the EU, and is amongst the regions with the highest share in some key sectors of physical exports. On a pessimistic reading of Brexit, it would be these physical exporters who would be hardest hit: the North East would have a lot to lose. A more optimistic reading (for the North East at least) of Brexit would run that it will be the service sectors who lose most; in these sectors, London and the South East export more services than does the North East. However, this analysis misses a key point; whilst London exports more in total, the North East is the region with the single largest share of its service exports going to the EU (Borchert, 2018). So, even on the ‘optimistic’ reading, the North East stands to lose out from Brexit. Several analytical models have reached this conclusion, including a study by Cambridge Econometrics for the Greater London Authority, (GLA, 2018) and the government’s internal modelling (Committee, January 2018).

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The region itself stands to suffer relative to other regions. That geographical inequality itself should be enough to prompt the region’s policy-makers to adopt strategies to ‘Brexit-proof’ themselves. However, of equal concern is the way Brexit looks set to affect individuals with different earning power. Several studies point to the impact of Brexit on real incomes being uniform across income groups. (This is the best-case scenario for equality, and ignores the very real possibility that it will be the worst off hardest hit.) However, even under this scenario, lower earners will still most likely see an impact on their quality and cost of life, as they tend to spend a greater share of their income, and have less in savings, than their more well-off peers. Thus, they have less of a buffer to protect themselves from increased prices or decreased earnings.

The best-case scenario is that Brexit hits service industries harder than physical exporters, and impacts all income groups broadly uniformly. This scenario, though, still hits the North East, as we are the region exporting the biggest share of its service industry to the EU, and because even in the case of uniform income impact, lower-income households will still struggle the most to maintain their current quality of living and rates of consumption. The worst-case scenario is that Brexit hits physical exports hardest, and hurts low-income earners the most. In either scenario, regional and local policy-makers need do all they can to ensure that: i) money spent locally is kept local, ii) more is done to generate wealth by and for local residents, iii) more residents are sought and attracted who can contribute to this community wealth creation and iv) more inward investment is sought to boost this community wealth creation.

Whilst Brexit has the potential to cause some devastating consequences for areas like Hartlepool, by thinking and acting pro-actively, much can be done to safeguard residents and businesses alike. Indeed, shifting away from transnationalism and globalism and exploring and adapting new and innovative local economic models seems almost a moral and political imperative at this stage. The rhetoric of Brexit freeing the UK from European red-tape may be relevant here, as much of the anti-trust law which would prohibit some forms of collective procurement is enshrined in European rather than British law.

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Solutions/recommendations

Officers at HBC need to network with other councils who have already delivered some or all of these ideas (notably Manchester, Birmingham and Preston) and they also need to secure the support of other agencies including but not limited to:

• URBACT http://urbact.eu/ • The Centre for Local Economic Strategies https://cles.org.uk/ • Cooperative Technologists https://www.coops.tech/ • The Federation http://www.thefederation.coop/ • The Democracy Collaborative https://democracycollaborative.org/ • National Coastal Tourism Academy https://coastaltourismacademy.co.uk/

Whilst there are a series of proposals below, HBC would do a better job of improving the lives of its residents if it acted in partnership with anybody with access to finance, resources, or relevant skills.

Make worker-owned firms more common and more successful in Hartlepool

1. Establish a fund through which worker-owned firms can access finance at rates comparable to their privately owned competitors.

2. Provide comparably favourable business rates (or provide rates relief) to worker-owned firms relative to those offered to their privately owned competitors, in line with the assistance already offered to firms via the Hartlepool Enterprise Development Fund, the Rates Equivalent Grant scheme, the Capital Investment Grant scheme, the Jobs Creation Grant scheme, and other support offered via Tees Valley Unlimited. Grant support – presently – can amount to 50% of annual business rates, up to £10000.

3. Provide worker owned firms with access to dormant council-owned properties at favourable cost/for free.

4. Provide funds for worker buyouts when they: a) anticipate the closing of a firm or b) if part or all of a firm is offered to employees by its owners or c) if a group of employees have been or will be laid off due to the closing of part of the business.

5. Create a fund to part-match outside investors who choose to provide funding for worker owned firms.

6. Provide technical assistance and have a team – centrally provided – available to worker owned firms as-and-when they require the technical know-how to tackle any problems we foresee as likely being common.

7. Create a supportive network – with centrally provided staff and resources – to allow worker-owned firms to learn from and support one another.

8. Explore a ‘community bank’. 9. Launch a town-wide credit union as part of a financial inclusion strategy. 10. Work to encourage retiring business owners to sell their companies to their employees. 11. Use local pension fund resources for local investment as per the above. 12. Ensure local worker-owned firms are given primacy in the council’s procurement strategy.

Make Hartlepool’s procurement practices work better for the town

1. Make HBC a Living Wage employer. 2. Identify ‘natural’ and pre-existing anchor institutions in the town.

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3. Convene the leaders and procurement officers of these anchor institutions to explain the benefits of local procurement and to draft a common statement of intent.

4. Complete an audit of their procurement over the financial year 2017-2018. 5. Analyse the audit to identify the spend which could have been local but was not. 6. Analyse the audit to identify the spend which could not have been local due to no local

provision, and encourage the establishment of local providers of that good/service. 7. Work with the anchor institutions to promote local procurement practices. 8. Incorporate a Social Value score into procurement decision making practices. 9. Draw up common procurement protocols which benefit the town through giving local

providers of goods and services primacy and which, when observed, are met with favourable business rates.

10. Facilitate ‘smaller’ institutions coming together to form ‘artificial’ anchor institutions, through acting as purchasing groups who can collectively apply their purchasing power and observe the common procurement protocols.

11. Facilitate the firms who do agree to procure locally convening and sharing expertise and best practice in terms of procurement.

12. Provide financial incentives (probably via preferential business rates) to firms complying with the common procurement protocols.

13. Create a process of certification for firms and other bodies in Hartlepool who comply with the common procurement protocols to signal their good work to the public and to improve visibility of the scheme.

14. Break contracts into portions to enable smaller, local organisations a chance to bid. 15. Require quotes from local organisations on procurement opportunities between £5000 and

£100000. 16. Utilise technology to provide open and transparent procurement practices across the town, in

both the public and private sectors, to identify gaps in the local provision of goods and services, and then respond to these gaps via encouraging and facilitating local growth in the relevant sectors.

17. Allow ‘locally procuring’ firms to use dormant council-owned properties at reduced costs/for free.

Make Hartlepool attractive to entrepreneurs

1. Determine the best method of promoting Hartlepool as a place of unique benefits, linked to its heritage and its commercial future.

2. Promote that vision of Hartlepool. 3. Identify several sectors relevant to that vision which can act as areas of emerging

specialisation. 4. Ensure infrastructure is in place to support those areas of emerging specialisation. 5. Provide and promote events to embody those emerging areas of specialisation. 6. Invest in the arts and culture, in partnership with tertiary and higher education institutions and

with business. 7. Promote the town as a centre for domestic tourism. 8. Audit the accessibility of the town from i) major cities/towns and ii) major centres of

commuters. Either promote the strengths of the town in this regard, or address the short-comings.

9. Audit the town’s broadband connectivity. Either promote the strengths of the town in this regard, or address the short-comings.

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10. Provide training and guidance for the town’s businesses on how to best utilise broadband connectivity to harness a wider market.

11. Improve the education outcomes for the town’s young people. (Separate White Paper to follow).

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Case studies worth HBC councillors & officers studying

For evidence of these types of strategies working across a variety of contexts and countries, consider looking at:

https://cles.org.uk/news/bringing-community-wealth-to-birmingham/ for an analysis of how anchor institutions have been used to keep millions of pounds in the local economy.

https://cles.org.uk/wp-content/uploads/2016/10/Anchor-institutions.pdf for analysis of the process in Preston.

https://cles.org.uk/wp-content/uploads/2017/02/The-Power-of-Procurement-II-the-policy-and-practice-of-Manchester-City-Council-10-years-on_web-version.pdf for an analysis of the power of altering procurement practices in Manchester.

http://urbact.eu/sites/default/files/media/procure_final_report.pdf for an analysis of how focusing on procurement activities has helped improve the situations for Lublin (Poland), Koskalin (Poland), Albacete (Spain), Almelo (The Netherlands), The Satu Mare (Romania), Bologna (Italy), Prague (Czech Republic), Koprivnica (Croatia), Candelaria (Spain) and Nagykálló (Hungary). https://www.tmi.org.uk/files/documents/resources/NCTA_CaseStudy_Folkestone.pdf for an analysis of how forward-thinking, investment, and a focus on culture can generate regeneration in a coastal town (Folkestone). https://www.bournemouth.co.uk/dbimgs/Bmth%20Poole%20Tourism%20Strategy%202017-22.pdf for Bournemouth and Poole’s collaborative tourism strategy, and https://www.bournemouth.co.uk/dbimgs/Tourism%20Marketing%20Plan.pdf for the associated marketing plan.

https://www.portsmouth.gov.uk/ext/documents-external/cou-regeneration-strategy.pdf for an explanation of Portsmouth’s concerted efforts to deliver growth and prosperity.

http://council.lancashire.gov.uk/documents/s101719/Appendix%20A%20-%20Social%20Value%20Report.pdf for Lancashire’s approach to embedding social value into procurement practices.

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Conclusion

The suggestions above are based on evidence from areas of the UK (and beyond) which have already made huge strides in improving their practices, but – hopefully – outlines how Hartlepool could go a step further, through tying in local business to the procurement practices which natural and pre-existing ‘anchor institutions’ can develop and utilise to benefit the town. It also outlines how Hartlepool can make itself better suited to inwards investment, and how to better market this suitability. Taken in tandem, the town is in the enviable position of being on the cusp of doing two things at once: drawing in more resources from outside sources, and retaining more of the resources found internally. By doing so, the resources at the town’s disposal can rise rapidly, to the benefit of all.

This paper is not to be read as a checklist, an exhaustive set of ideas, or a panacea to the town’s ills. It is to be read as a declaration of intent that those ills can be overcome through concerted collaborative action, led by Hartlepool Borough Council, but embracing existing local firms, facilitated by the creation of new firms, and enhanced by the attraction of firms from elsewhere.

The process will be complicated and there must be capacity to adapt plans as matters progress, all the while upholding the principles that democratic decision-making applies to the corporate world as much as it does to the overtly political.

It moves beyond dominant Labour contemporary thought, and builds on an under-developed aspect of Ed Miliband’s proposals, reflecting the very real potential that public procurement has as a means of promoting and furthering social justice. (M. O'Neill, 2012) It is too important and too sensible an opportunity for the town to forego. It will be a gradual shift, taking potentially decades to come fully to fruition (G Alperovitz, 2010) but there is, too, a sense that real and rapid gains can be made: through no additional expense or expenditure, money can be injected into Hartlepool’s economy, almost immediately.

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Appendices

Appendix 1: Possible metrics for evaluating impact of activities on the town (adapted from Wakefield)

Successful People 1. % working-age population with a Level 3 qualification 2. % working-age population with a Level 4 qualification or higher 3. % working-age population in employment 4. % working-age population who are economically inactive 5. % gap in workforce employed in elementary occupations between Hartlepool and the region (NE) 6. Median full-time earnings (residents, weekly) (£) 7. 20th percentile earnings (total, hourly) (£) 8. Gross weekly pay gap in average full time earnings between Hartlepool and the region (NE) (£) 9. Apprenticeship starts (all levels) 10. Higher apprenticeship starts (all levels) 11. % overall achievement rate for Hartlepool Adult & Community Education Service (whole service) Successful Businesses 12. Gross Value Added per capita (£) 13. % employment in knowledge intensive business services 14. Employment in creative industries 15. Employment in digital industries 16. Active enterprises per 1,000 population 17. % active enterprises that are start-ups 18. % 3-year business survival rate 19. Number of Community Interest Companies 20. Proportion of earners paid the Real Living Wage or less 21. % access to superfast broadband (over 30 Mbps) Successful Places 22. Net additional homes provided in the district 23. Number of affordable homes delivered (gross) 24. Housing affordability ratio (lower quartile) 25. % households in fuel poverty 26. Carbon dioxide emissions per capita (tonnes)

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