Community wealth funds - a means to address inequality
Margaret Bolton, our Director of policy, describes how thinking is developing on community wealth funds and puts the Community Wealth Fund Alliance proposal in context
Over the last few years concern has grown about the extent to which some areas of the country have missed out on the benefits of economic growth. Often these are communities and neighbourhoods in which the effects of wage stagnation, austerity and benefit changes have hit the hardest. Sometimes they are communities that have seen their services and facilities including pubs, community centres and youth services closed. This was graphically described by a worker in one Big Local area I visited recently as “asset stripping”. Our proposed Community Wealth Fund would invest in areas like these, the ones the government describes as “left behind”.
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Take for example, the Scotlands and Bushbury Hill estates in Wolverhampton. The area has a high level of child poverty and life expectancy is much lower than in the rest of the region. But, life on the estates is improving. If you ask Karen Trainer, local resident and a driving force behind much of the recent change what made the difference, she’d point to the flexible, long term investment Big Local has made in the area.
"The Scotlands estate now has a thriving community centre – the Big Venture centre – saved from closure by local residents and run successfully by a group of committed volunteers."
Over £2m of match funding is supporting new resident-led initiatives: a new community garden and kitchen is being developed, other projects are tackling loneliness and mental health (both major challenges for local residents). And, there are ambitious plans to extend the community centre to accommodate all the activity now taking place.
Wealth funds - like the one proposed – generally large scale, independently managed endowments seeking to achieve change over the long term, exist elsewhere. Norway, Alaska and other countries have established them. Norway created an oil-financed wealth fund in the 1980s. It supports disability care costs and medical research. The state of Alaska uses its ‘permanent fund’ to pay an annual citizens dividend. In the UK, Shetland has a wealth fund because of a deal the council did with oil companies giving them operational access to the North Sea. The Shetland fund has supported new leisure services and projects for the elderly. While these funds differ in their purposes, they have one key feature in common; they make long term investments which extend well beyond conventional political time frames.
Wealth funds and community wealth building are fashionable concepts in policy circles.The last Conservative manifesto proposed the creation of a number of UK sovereign wealth funds to be called, “Future Britain Funds”. The Labour party is developing policy aimed at community wealth building. Earlier in the year it established a Community Wealth Building Unit bringing together councillors, unions, think tanks and experts to offer advice to Labour councils. The Unit aims to build on the experience of Preston City Council. It has persuaded six large local public bodies - known as “anchor institutions” - to commit to buying goods or services locally wherever possible and it has helped to set up worker co-operatives.
"The overall objective is to develop the local economy and address inequality."
A U.S. organisation called Community Wealth Building Unit, which is credited with having inspired the work in Preston, describes the community wealth building field as comprising a broad range of approaches aimed at, for example, increasing asset ownership and anchoring jobs locally by broadening ownership of capital.
The proposal developed by the Alliance for the Community Wealth Fund is gaining support. Many describe it as a ‘no brainer’, given increasing poverty and inequality, and the general sense that we need to turn anti-inequality rhetoric into action and model new ways of enabling everyone in our nation to share in its prosperity.