How to make the local economy work for communities

Our local economy shapes our everyday lives, yet each neighbourhood faces its own set of challenges. So, how do we make sure economic growth works for local communities first? In this blog, Jack Loughnane, senior quantitative researcher, explores how building community wealth can help, and what this looks like in practice, drawing on examples from Big Local areas.

Wealth inequality remains one of the biggest challenges facing the UK today. Over the past few decades, the gap between those with wealth and those without has grown dramatically. Previous research shows that as of 2021, the bottom half of the population owns less than five per cent of total wealth.

But inequality isn’t only about individuals. It’s also about places. Many communities face a mismatch between the resources they receive and the level of need they experience. For residents living in these areas, national economic growth doesn’t always translate into improvements in everyday life.

So, what would it look like to build an economy that genuinely works for communities?

One approach gaining traction is ‘community wealth building’ – a way of thinking about local economies that prioritises people, local institutions, and shared prosperity.

Rather than focusing solely on headline economic growth, community wealth building asks a different question: how can economic activity improve the lives of the people who live in a place?

This approach focuses on practical changes that communities and local institutions can make. These include:

• Making local labour markets fairer
• Using the spending power of public institutions to support local businesses and enterprises
• Ensuring land and property create benefits for residents
• Supporting more democratic and social forms of ownership
• Strengthening local finance so it works for people and places.

While many Big Local partnerships might not have used the language of ‘community wealth building’, their work often reflected these same principles: finding ways to make money and resources work better for the communities they serve.

Many Big Local partnerships recognised that local buildings and spaces can play an important role in local economic activity.”

Supporting local enterprise

In Keighley Valley Big Local, the partnership focused on building a local social enterprise ecosystem.

Working with partners, they secured £50,000 of additional funding and a three-year programme of mentoring and training to support 12 social enterprise start-ups. This support helped residents turn ideas into viable enterprises rooted in the community.

The partnership also invested £25,000 in a social enterprise working to regenerate Keighley’s historic Dalton Mill, helping to bring a key local asset back into productive use.

Alongside this, the partnership worked with the town council to open opportunities for new social enterprises to compete for local contracts — even when they didn’t yet have the long trading histories typically required in procurement processes.

Investing in community assets

Many Big Local partnerships also recognised that local buildings and spaces can play an important role in local economic activity.

In Dover Big Local, the partnership helped establish a co-innovation space in a vacant high street retail unit. The space created smaller retail outlets that allowed new businesses to test ideas and build a customer base before committing to their own premises.

Inside Biggin Bizr: Dover’s co-innovation hub of retailers. Photo: Zute Lightfoot/Local Trust

In a rural area in Northumberland, the CELL Big Local partnership supported the redevelopment of a medieval tower into a community-owned asset. Initial investment from Big Local helped unlock a further £800,000 in funding. The restored Pele Tower has since become both a tourist attraction and a valuable asset for the local economy.

Pele Tower: a medieval tower redeveloped with Big Local support. Photo: Paul Norris/Local Trust

These examples show how relatively modest investments can unlock larger opportunities when communities are able to shape how local assets are used.

What difference did this make to local economies?

Research conducted by ICON suggests that participation in the Big Local programme may have helped protect areas from some of the economic challenges experienced elsewhere.

Compared with similar areas, Big Local communities saw smaller increases in economic inactivity and smaller declines in employment rates.

While many factors influence local economies, this research suggests that community-led investment and local decision-making can help strengthen local resilience.

…when communities have the power to shape their own future, they can begin to tackle inequality from the ground up.”

What can we learn?

Traditional measures of economic success, such as GDP growth, don’t always capture what matters most to people in their everyday lives. Communities can experience economic growth without seeing improvements in wellbeing or opportunity.

The experience of Big Local offers a different perspective.

When local people have the time, resources, and freedom to invest in their communities, they often prioritise initiatives that strengthen local economies in practical ways — supporting businesses, developing community assets, and creating opportunities for local people.

In short, they focus on making the economy work for the community.

The examples above are just some of the ways Big Local partnerships showed that when communities have the power to shape their own future, they can begin to tackle inequality from the ground up.

You can read more about the ways that Big Local partnerships supported their local economies by investing in various forms of capital on the Learning from Big Local website.