Building community wealth: consultation

Part 1. Introduction: The Contribution of Community Wealth Building (CWB) to a Wellbeing Economy

1.1 Overview

The Scottish Government has adopted the internationally recognised Community Wealth Building (CWB) approach to economic development as a key practical means by which progress can be made towards realising our wellbeing economy vision outlined in the National Strategy for Economic Transformation (NSET).^[1]

CWB is an approach designed to tackle long-standing economic challenges and transform Scotland's local and regional economies by considering the ways in which the public sector, in partnership with the private, third and community sectors, can ensure more wealth is generated, circulated and retained in communities and localities.

In short, CWB is focused on growing the influence communities have on the economy and ensuring communities receive more of the benefits from the wealth they help to generate.

CWB can produce a range of economic, social and environmental benefits. CWB can be a key tool in supporting a just transition to net zero and ensuring environmental sustainability, helping Scotland's places and communities thrive within the planet's sustainable limits. The approach is also recognised as a key action in our ambitions to tackle child poverty through the creation of Fair Work opportunities.

Any new legislation on CWB is intended to provide a statutory underpinning to deepen and further embed CWB activity across Scotland, creating a fairer and more resilient economy. Learning from the range of CWB action already underway, we want to gather the broadest range of views on how new legal measures or changes to existing laws can accelerate the delivery of CWB in Scotland and deliver real benefits for local communities.

Part 1 of this consultation paper describes what CWB is, provides an overview of CWB activity in Scotland and outlines the background to and ambitions for CWB legislation. Part 2 provides an opportunity to offer views on a legislative proposal and share perspectives on what is required to advance CWB in Scotland. Part 3 provides details on how to respond to this consultation and next steps.

In line with the approach itself, legislation on CWB should be bold and ambitious. We look forward to engaging with as many organisations and communities as possible as we develop legislation and other measures to give the people of Scotland a greater stake in their economy and wealth to realise our ambition for a wellbeing economy.

1.2 What is Community Wealth Building?

CWB is a practical approach to economic development focused on five pillars of activity. These pillars are the key areas of focus due to the economic levers they represent. All of the pillars play a complementary role in the retention of wealth in local places and regions for the benefit of communities. Increased spend with local businesses and higher levels of inclusive or community forms of ownership means that more money stays in the communities that create the wealth through higher incomes, fairer employment opportunities and a greater say over the use of local and regional assets.

The five pillars of CWB are:

Spending

Pillar definition: Maximising community and business benefits through procurement and commissioning, developing good enterprises, Fair Work and shorter supply chains.

Overview of activity: This includes a focus on ways to achieve greater economic, social and environmental benefits such as growing investment in local businesses, supplier development and innovation, and ensuring the delivery of tangible community benefits.

What this will achieve: Higher levels of spend with SMEs, micro-businesses and inclusive business models resulting in business growth and improved, resilient local and regional economies.

Workforce

Pillar definition: Increasing Fair Work and developing local labour markets that support the prosperity and wellbeing of communities.

Overview of activity: Ensuring public sector anchor organisations and other employers embed Fair Work principles, promoting the payment of the real Living Wage; recruiting locally, from groups who face inequalities and are furthest from the labour market; and promoting work that is secure, provides flexible working and training opportunities and supports the workforce to have an effective voice.

What this will achieve: Access to local and fair employment opportunities, fairer wages, skills development opportunities and improved wellbeing of employees.

Land and Property

Pillar definition: Growing social, ecological, financial and economic value that local communities gain from land and property assets.

Overview of activity: Productive use of anchor organisation land and property, for example through diversified ownership models including community ownership, and tackling vacant and derelict land and buildings.

What this will achieve: Land and property are used for the common good and benefit communities, SMEs and micro-businesses and the environment.

Inclusive Ownership

Pillar definition: Developing more local and inclusive enterprises which generate community wealth, including social enterprises, employee-owned firms and co-operatives.

Overview of activity: Promoting greater diversity in the business base by encouraging formation and development of inclusive business models^[2] which support the local retention of wealth.

What this will achieve: More inclusive and democratically owned enterprises and assets which means the wealth created locally and by local people stays in those communities in the form of incomes and profits rather than being extracted out.

Finance

Pillar definition: Ensuring that flows of investment and financial institutions work for local people, communities and businesses.

Overview of activity: Increasing investment and re-circulating wealth within local economies including through access to affordable credit and business finance.

What this will achieve: Money and investment stays in a local area and is available to support communities and businesses.

'Community Wealth Building is a transformative approach to local economic development' The Democracy Collaborative

'Community Wealth Building is about developing wealth with local roots and ownership' Centre for Local Economic Strategies (CLES)

CWB seeks to use the economic levers available to 'anchor organisations' such as local authorities, health and social care bodies, further and higher education institutions and enterprise agencies, to better support their local and regional economies. Anchor organisations are typically large employers with a strong local presence in an area. They can exert sizable influence through their commissioning and purchasing of goods and services, through their workforce and employment capacity, and by creative use of their facilities and land assets. Positive use of these aspects can affect social, economic and environmental change in a locality or region.

Our democratically elected local authorities are at the heart of the action required to advance the CWB approach in Scotland, playing a key leadership and convening role in its implementation, acting as economic stewards of their place including through local activity or wider regional collaboration for example through Regional Economic Partnerships. CWB recognises the impact that public sector bodies make – both individually and collectively – is not just through the services they deliver but also through how they choose to use the resources at their disposal.

While, in some places, the public sector may represent the catalyst for CWB introduction and development, it is critical that business, the third sector and community organisations all play collaborative roles. In particular, larger private sector employers can be considered anchor organisations. Community organisations, such as community-led bodies, Development Trusts and micro-businesses, can play a key role in driving forward CWB, particularly in rural areas and islands. Third sector organisations have a range of levers through their spend, employment, assets and local relationships.

The CWB approach has already proved successful internationally. The experience in Cleveland, Ohio and in Preston, UK, of re-directing wealth back into the local economy and placing control and benefits into the hands of local people, has inspired the Scottish Government and other places across the world to consider the merits of this exciting and progressive approach.

Cleveland

Often cited as the original CWB initiative, the 'Cleveland model' was developed as a response to post-industrial decline and depopulation. The principal feature of this approach was to localise and retain the spending of local public, private and third-sector 'anchors' through the development of new local cooperatively-owned businesses. These innovative worker-owned enterprises – the Evergreen Cooperatives – grew to include large-scale sustainable laundry services, a large urban greenhouse and an energy production company. A key feature of Cleveland's model is that wealth re-circulates in the city, as organisations procure services from the cooperatives (within the United States procurement context), which employ local workers and help tackle urban inequalities.^[3]

Preston

Following recognition of the success of this model in generating local opportunities and tackling inequalities, a similar strategy was adopted in the city of Preston, UK. Preston City Council worked with other anchor organisations to develop a CWB approach, primarily with a focus on procurement, looking at spending more in the local Preston and the wider Lancashire economy. Working over several years, there has been a significant increase in the amount the anchors are spending with local enterprises. Analysis shows that £74 million was redirected back into the Preston economy through this procurement work, with £200 million invested into the wider Lancashire economy.^[4]

CWB is a 're-wiring' of current economic development practice through use of a strategic framework that can help the public, private, third and community sectors to take a place-based 'whole system' approach to re-direct money that is already being spent and the wealth that already exists back into the local economy and into the hands of local communities. If implemented successfully, the approach has the potential to act as a preventative measure – reducing public service demand by tackling inequality and ensuring wealth is retained by local communities in a just and fair way.

Whilst CWB is a catalyst for medium to longer-term change and reform, adoption of the approach is gathering pace across Scotland and the Scottish Government is supporting this. The CWB approach is being taken forward in regions and localities across Scotland. A number of rural areas and islands are leading the development of CWB initiatives, including through community-led activity and the start-up and development of micro-businesses supporting the retention of wealth in their local areas. Due to the distance from major goods and service provision, local rural businesses and communities are well placed to respond to local opportunities with adequate support and awareness. CWB can play a role in supporting population retention and growth in areas facing depopulation.^[5]

CWB can also support our efforts to achieve a just transition.^[6] Scotland continues to bear the scars of poorly managed, abrupt and unplanned transitions of the past. Through local business growth, sustainable procurement and community ownership of assets, CWB can support the creation of fair, green jobs which are anchored to local communities.

1.3 Progress to Date

There has been significant progress in implementing CWB in Scotland over the past few years. Much of this has been led by local authorities working in the vanguard, often in partnership with their community planning partners.

The Scottish Government has been working with local authorities and other partners to build capacity to help drive forward the implementation of CWB at the local and regional level, including supporting five CWB pilot areas (Clackmannanshire, Fife, Glasgow City Region, South of Scotland and the Western Isles) and £3 million investment in CWB in Ayrshire through the Ayrshire Growth Deal which builds on the pioneering work of North Ayrshire Council.^[7]

A significant number of local authorities are now assembling CWB strategies and action plans. In addition, more local authorities and their partners are assessing the potential of CWB to enable the transition to local and regional wellbeing economies, recognising that CWB provides strategic means of connecting all contributory actions across the economy for economic, social and environmental benefit. Inspired by the work of the pilots, as part of our Covid Recovery Strategy the Scottish Government has committed to working with all local authorities to produce a CWB plan which sets out objectives to protect and create good quality local employment opportunities as part of wider recovery plans.^[8]

A number of other sectors, including health and social care, are working to integrate CWB principles into their work, embracing their role as 'anchors' and the wider contribution they can make to reduce inequalities.

The Scottish Government has supported activity to raise awareness and improve understanding of CWB as well as accelerate practice and delivery. Our partnership with the Economic Development Association Scotland (EDAS) has supported the implementation of CWB through communities of practice, open workshops, peer support and development of materials to support anchor organisations and wider stakeholders develop, implement and realise the benefits of CWB approaches.

A CWB Guide, supported by the Scottish Government and produced by EDAS and the Centre for Local Economic Strategies (CLES), was published recently and offers practical support for those seeking to pursue a CWB approach. It is both a first introduction for those new to CWB as well as a source of helpful advice and resources, including case studies, for any stage of the implementation journey.^[9]

Scotland has a strong track record in delivering projects and programmes which link to the different aspects of CWB – led by the public sector, business, third sector and local communities. These can be found in communities across the country, some current examples include the regeneration of Midsteeple Quarter in Dumfries, West Harris Community Trust, Scotland's growing number of employee owned businesses such as the Jerba Campervans in East Lothian and Collective Architecture in Glasgow,^[10] and examples of innovative procurement practice such as the Supplier Development Programme, Perth and Kinross Council's 'Community Benefits Wish List' and East Ayrshire Council's partnership with Mossgiel Farm.^[11]

Annex A provides a short summary of CWB development activity in Scotland.

1.4 Development of Community Wealth Building Legislation

The Programme for Government 2021-22 set out the following commitment:

'Building on the development of the approach across Scotland, we will take forward a Community Wealth Building Bill in this Parliament, to enable more local communities and people to own, have a stake in, access and benefit from the wealth our economy generates. The Bill will cement and augment the role local authorities and other public sector anchor organisations, such as Health Boards, play in supporting local economic development and advancing a wellbeing economy, legislating for them to consider their economic footprint within a wider place system.'^[12]

The Bute House Agreement came into effect in August 2021 and is an agreement between the Scottish Government and the Scottish Green Party Parliamentary Group to work collaboratively in a spirit of cooperation and consensus building. As part of this, a Shared Policy Programme (SPP) was agreed and sets out policy positions and commitments that both the Scottish Government and the Green Group agree should be delivered. The SPP sets out the following commitment:

'We will develop a Community Wealth Building Bill, which will focus on encouraging diverse and inclusive local economies, finance, land, and ownership models. It will include:

• working within and developing procurement practices to support local economies, including Small and Medium sized Enterprises (SMEs) and micro- businesses, and improved access to training and labour markets for disadvantaged communities and individuals.
• encouraging public kitchens, including school canteens, to source more food produced by local businesses and organic producers.
• where possible, to base public sector capital and revenue funding decisions on targeted social, economic and environmental outcomes.'^[13]

The commitment to CWB legislation is re-iterated in NSET:

'Introduce Community Wealth Building legislation that builds on the successes and learnings of all of the Scottish Government community wealth building local and regional pilot areas in urban and rural Scotland.'^[14]

NSET outlines our vision to create a wellbeing economy in Scotland. That means transitioning to an economic system, within safe environmental limits, that serves and prioritises the wellbeing of current and future generations. Our approach to a wellbeing is based on the principles of resilience, sustainability, equality and prosperity. The principles of a wellbeing economy cannot be achieved through simply redistributing a proportion of wealth created in order address deep-seated problems with poverty and disadvantage and to clean up environmental damage; they need to be hard-wired into everything we do through pro-active economic development policy, planning and action.

Wellbeing economy

NSET commits the Scottish Government to taking a broader view of what it means to be a successful economy, society and country, and putting people and the planet at the heart of our approach.

The economy should serve a purpose. While economic objectives such as sustainable, inclusive growth remain important, they should serve as a means to an end – that of collective wellbeing. The wellbeing economy approach regards the economy as being in service to the health and happiness of people, rooted in human rights and social justice, and embedded within society and the natural environment, upon which our wellbeing depends.

The transition to a wellbeing economy is about whole system transformation. It recognises that the economy is everybody's business – from health and care to education, and from housing and energy to food and agriculture – requiring a strategic, joined-up focus across government at all levels, across all sectors of the economy and all parts of society. The building blocks of this transition include the Scottish Government's work to progress legislation, targets and plans on areas spanning equality and human rights, child poverty, climate change, biodiversity, land reform, circular economy, good food, Fair Work, infrastructure investment, 20-minute neighbourhoods, community empowerment, among many others. CWB sits alongside other progressive commitments that will support economic reform including the upcoming Land Reform Bill, Just Transition Plans, the Refreshed Fair Work Action Plan and a review of how best to significantly increase the number of social enterprises, employee-owned businesses and cooperatives in Scotland.

Scotland is already leading this agenda on the international stage as a member of the Wellbeing Economy Governments network (WEGo) with New Zealand, Iceland, Finland and Wales, and with Canada becoming a member in 2022. The National Performance Framework (NPF) – Scotland's Wellbeing Framework – first introduced in 2007, provides a clear long-term purpose and set of national outcomes for Scotland's future wellbeing, and is our vehicle for delivery of the United Nations Sustainable Development Goals.

Our Wellbeing Economy Monitor has been developed to look beyond traditional metrics of economic success, such as Gross Domestic Product (GDP), to measure how Scotland's economy contributes to improving things that people really value, such as health, equality, fair work and environmental sustainability. The basket of measures, based on the NPF national indicators, includes metrics of child poverty, income and wealth inequality, community ownership, gender pay gap, educational attainment, young people's participation, employees below the real Living Wage, greenhouse gas emissions and biodiversity, among others. The Monitor will complement traditional economic indicators to provide a broader picture of how Scotland's economy is contributing to national outcomes of social and environmental wellbeing.^[15]

CWB is an example of our practical approach to economic development that supports a wellbeing economy at the local and regional level and is a key way to turn the wellbeing economy vision and strategy into tangible action. We have also published a Wellbeing Economy Toolkit to support local authorities and regions across Scotland to embed the wellbeing economy approach in their local and regional strategies.^[16]

Where it is embraced, CWB can accrue more than economic benefit. It can support better health outcomes and contribute to a reduction in child poverty. The approach can play a key role in a just transition to a net zero, circular, nature-positive economy and in rebuilding natural capital including through actions such as sustainable procurement, a focus on fair and green jobs, green investment decisions and recognising the ecological value of land.

Through this consultation, we want to identify if new legal measures or changes to existing laws are required to accelerate the implementation of CWB, building on the good practice already underway. As we work through the responses, it may be apparent that not all measures necessarily require new or amended legislation to take them forward.

This consultation has been structured to enable respondents to offer suggestions for legislative change across all five pillars of CWB and from a general CWB perspective. In particular, we wish to gather views on a proposal for a new duty to advance CWB.

Some of the principles of CWB are expected to be supported by other Bills in the legislative programme, for example the Land Reform Bill which will be introduced by the end of 2023. In addition, the 2022-23 Programme for Government included a commitment to explore how to ensure the interests of future generations are taken into account in decisions made today. Subject to Ministerial decisions, a Wellbeing and Sustainable Development Bill later in the Parliamentary session may include placing duties on public bodies and local government to take account of the impact of their decisions on wellbeing and sustainable development, and the creation of a Future Generations' Commissioner.

CWB will also build on existing legislation such as the Community Empowerment (Scotland) Act 2015. The current review of that Act will explore if the legislation is doing what it set out to do and if any changes are required with a particular focus on community ownership and strengthening decision-making to improve outcomes for local communities.

To support the development of CWB legislation we have established a CWB Bill Steering Group chaired by the Minister for Public Finance, Planning and Community Wealth, with representatives from CWB pilot areas and key stakeholders across the public, private and third sectors, to provide oversight as we develop legislative proposals (full membership is detailed in Annex B).

Wider tailored engagement has also taken place with stakeholders including with local authorities, the third sector, businesses and policy organisations. We have received written feedback from the CWB pilot areas on their work and Scottish Local Authorities' Economic Development Group (SLAED) on the opportunities and barriers from a local economic development perspective. Further engagement will take place during the consultation period and we welcome the input of a broad range of groups and interests. Given CWB has been identified as a key action in tackling child poverty including within the Tackling Child Poverty Delivery Plan 2022-26,^[17] we are working with the Poverty Alliance through the Get Heard Scotland programme to ensure the voices of those with lived experience are included and to hear from grassroots organisations during this consultation period.

Whilst local progress in implementing comprehensive CWB approaches, as well as initiatives within specific CWB pillars, is notable, our ambition is to go further and faster in embedding CWB as a core economic development measure across Scotland. Rather than focusing on discrete examples of activities within particular pillars, this consultation paper recognises that the full power of CWB is delivered through the culmination of activity and connections across all of the pillars.

The Scottish Government's objective is to develop legislation that learns from the experience of those delivering CWB 'on the ground' and provide an enabling framework to catalyse the implementation of CWB. Scotland's local authorities, community planning partnerships, Regional Economic Partnerships, wider public sector anchors, businesses, the third sector and communities need to be at the centre of driving the change required.

Through the work of the CWB Bill Steering Group, CWB pilots and wider CWB engagement, a number of potential areas of opportunity to accelerate delivery of CWB have been highlighted as well as the identification of barriers. It is clear from early engagement that there is a desire for legislation to build on existing work, remove barriers and inertias, strengthen commitment and collaboration, and enable action to achieve outcomes faster.

Of course, legislation alone will not deliver CWB. In several areas, the need for culture change, capacity building across the public sector, third sector and inclusive business models, community capacity building, stronger guidance and practice, and changes to policy have all been highlighted. The Scottish Government welcomes views and additional proposals relating to those areas.