In 1986, the Centre for Local Economic Strategies (CLES) was established by a number of municipalities in the UK. Through research and analysis, CLES identified challenges undermining local economic development. The first was local economy initiatives relied on subsidies or “transfer payments” from the central government which alleviate the symptoms of underdevelopment without addressing their root causes. The second major issue was that local development funds were often used to attract external investors who would set up operations that had little connection to the local economy and whose profits would be sent back to company headquarters with minimal local benefits.
Beginning in 2006, CLES began working with dozens of local governments to assess how policies and spending was impacting local businesses, jobs and community wealth generation. They realised early on that in order to be successful, they had to work with what they called “anchor institutions” which were institutions that employed large amounts of people, bought from other local businesses and were unlikely to leave the community (such as hospitals, schools, housing associations, local authorities, etc.)
These anchor institutions ended up playing a critical role in leading local development efforts with for example, a multi-million-pound renovation of the City of Preston’s Covered Market being led by Conlon Construction, a family business that used local contractors to build the infrastructure for local enterprises. Manchester’s city council now spends 75% of their public procurement on anchor institutions which ended up generating 8,000 local jobs over 10 years. Islington has been exploring how to reduce the extractive and speculative nature of their land and property markets by empowering their anchor institutions.
The major realisation by CLES was that there was no single model or policy approach across these various towns and cities and that effective policy reforms and implementation required working with each community and core partners to better understand their needs, strengths and contexts.
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