Community Wealth Building is an increasingly popular approach to local economic development in the United Kingdom

By Marcus Coetzee, 10 September 2023.


Community wealth building (CWB) is a philosophy and approach to local economic development that is packaged into a coherent and marketable model. CWB is gaining traction in the UK.

CWB aims to promote economic activity and investment in local areas and enable equitable economic growth. It opposes the idea of extractive economics where wealth is taken out of communities by national and multinational corporations. It rather promotes generative economics and embraces concepts like localism and new municipalism. This involves prioritising local matters and increasing the autonomy of local municipalities or councils.

The Scottish Government has embraced this concept and is working on a CWB Bill for the Scottish Parliament. This fits with its National Strategy for Economic Transformation and vision for a Wellbeing Economy. It has also appointed a Minister for Community Wealth and Public Finance to lead these efforts.

The National Centre for Local Economies (CLES) has been the main advocate for CWB for almost two decades. It sees itself as a think tank for progressive economics and “the curators of the community wealth-building movement in the UK.”

CWB is a good concept and a positive trend. However, because CWB is relatively new in the UK, its track record is emerging. Many organisations that might implement CWB are still learning about the concept.

This article introduces CWB and reflects on its value and limitations. It will be interesting to anyone involved in sustaining and growing a local economy. I wrote it to contribute to the discussion about CWB. 

The inspiration for CWB

There seem to be three main sources of inspiration for CWB in the UK.

The first is the famous Mondragon collection of cooperatives in Spain. This consists of 95 self-governing cooperatives that collectively employ 85,000 people.

The second is the Cleveland Model. This is a network of worker-owned cooperatives called the Evergreen Cooperative Initiative that was established between 2008-2010 in the City of Cleveland in the USA. 

The third and primary influence is the Preston Model. This is based upon the work of the Preston City Council in Lancashire in England since 2013. Six government entities collaborated to increase their procurement spend on local suppliers. They also established worker-owned cooperatives whenever a suitable supplier was not available. They calculated that this strategy increased the money retained in the Lancashire economy by over £200 million in the five-year period between 2012-2017. The Lancashire economy also grew at the same time but it’s unclear whether this growth is attributable to CWB.

Anchor institutions and the five principles of CWB

CWB requires a set of large ‘anchor institutions’ to drive the strategy. These are organisations with big procurement budgets that are committed to improving a place – the economy of a local authority, city, town or village. Anchor institutions have tended to be local authorities but might also include organisations like hospitals, mines, energy companies, retailers and manufacturers. 

These organisations then work together to implement the following five principles of CWB.

Principle 1 – Plural ownership of the economy. This is when a wide and diverse spread of local people and organisations ‘own’ parts of the local economy. In other words, they share in the wealth that is generated by this economy. CWB favours organisations like cooperatives, social enterprises and community-owned enterprises since they tend to be embedded in local communities and have their interests at heart. 

Principle 2 – Making financial power work for local places. This is when money generated in a local economy remains in the local economy and unlocks other opportunities for it to grow. For example, an investment fund should preferably invest any local contributions in the geographical areas where they were made. This principle aligns with the concept of a circular economy which is also gaining traction in the UK. 

Principle 3 – Fair employment and just labour practices. This is when organisations should pay people fairly and try to employ and accommodate minorities and vulnerable people in their organisations and supply chains. Inclusion isn’t a warm fuzzy concept but a practical method of absorbing vulnerable people into organisations and being in a position to mitigate their multiple deprivations.

Principle 4 – Progressive procurement of goods and services. This is when organisations that are active in the local economy use their supply chains to procure from local businesses, social enterprises, cooperatives and others that are community-owned. Furthermore, they should help to cultivate such suppliers when they are lacking. Dense and diverse supply chains are preferable to those that only contain a handful of big suppliers.

Principle 5 – Socially productive use of land and property. This is when any vacant or underused land is utilised to benefit the local community and economy. For example, many local authorities in Scotland are busy with community-asset-transfer processes that give ownership or long-term leases of such properties to community organisations.

A summary of North Ayrshire Council’s CWB Strategy is available online. This is worth reviewing as an example of how a local authority or council might embrace CWB. 

These five principles of CWB have been packaged together into a single branded and easy-to-understand model and promoted as such. This is a key reason why the concept has grown so rapidly recently. Another is the increasing awareness of the challenges facing local areas in the current economic climate.

Reflecting on CWB and the challenges of implementation

Here are my main thoughts on CWB. While it’s a great concept, it will be more difficult to implement than anticipated.

1. The star of CWB is rising in the UK. However, we must recognise that other popular models have also had their turn in the limelight – models like community-led regeneration, place-based approach, town centre action plans, local place plans, and the 20-minute neighbourhood. All policymakers want to be associated with the latest new and exciting things. This enables them to appear like progressive visionaries.

2. The components of CWB are not new. They are present in many economic development initiatives throughout the world. I have encountered all the components in one form or another in South Africa where I lived for many years, and elsewhere in Africa on projects I did with Imani Development. In some cases, these components were embedded in the policies and strategies of government entities and businesses. In others, they were simply part of project design.

3. There is a surprising reluctance for wealthy countries like the UK, Europe and North America to learn from the amazing work that is taking place in developing countries like Africa, though they are so ready to prescribe policies and approaches to them. These wealthy countries are missing out on the vibrant diversity in how organisations are working together to improve things – a melting pot of different approaches. There is no better place to learn about local economic development than in countries that are grappling with these issues on a daily basis, under dire circumstances and with much higher stakes.

4. CWB is a form of local protectionism – protecting local economies at the expense of other economies in the UK. This point was raised by Richard Hatcher from Birmingham City University in his critique of CWB called, “The Limitations and Illusions of Community Wealth Building.” If everyone does CWB, then it would simply redistribute economic activity in a sub-optimal manner (e.g. skewed pricing) where every local economy will both gain and lose some. No new economic activity will be added at a national level and its efficiency and economic complexity might be undermined. It will be a zero-sum game where one area and/or organisation wins and another loses.

5. CWB struggles to define what is local since value chains may transcend a town or local authority’s boundaries. This point was also raised by Richard Hatcher, who I mentioned above. It is unclear where to draw the line. For example, a local business might buy supplies from outside of the area or sell to customers based elsewhere. Similarly, a person might live locally but work for an organisation based elsewhere, and vice versa. There might be valid economic and logistical reasons for these arrangements that evolved sensibly through trial and error in our modern age. 

6. It is also always tricky to calculate the proportion of local content required for a value chain to be deemed local. This varies across sectors and business models. This challenge is faced by several ethical and national accreditation agencies. It also depends on the complexity of products – less sophisticated products require fewer specialised inputs but then less economic value is added to the local economy. It is even more difficult to calculate the amount of economic leakage that is taking place in a diverse economy.

7. While procurement policy can be constructive, it can also have unintended consequences if done rashly. For example, the South African government hardwired an approach to progressive procurement into law and embedded it in the economy. This has significantly improved the number of enterprises being developed and integrated tens of thousands of them into supply chains throughout the country. However, these policies also excluded thousands of people and businesses from supply chains on the basis of race and nationality, created a class of politically connected entrepreneurs, increased emigration, created more red tape, and made it more difficult for social enterprises and charities to become suppliers.

8. Supplier development can be a complex and time-consuming process. It is relatively straightforward to scale an existing supplier that already has some customers. However, it can take up to five years to develop a new supplier and ensure that it is stable and has a diversity of customers (i.e., not wholly dependent on one or two supply chains.) This challenge increases if the supplier is involved in any sort of processing or manufacturing operation, requires economies of scale to be viable, or provides sophisticated goods and services that require multiple inputs. One might even need to link it to external investment and do some market development to gain customers outside of the local area. These are the types of suppliers that will contribute most significantly to growing a local economy.

9. Applying the CWB principles requires deep-rooted changes to the strategies and policies of these anchor institutions and any others involved in a CWB collaboration. This is a good thing since CWB wants to have deep-rooted impacts. However, it is very challenging to get a local branch or subsidiary of a national or multinational organisation to be willing and able to adapt its approach so that it prioritises progressive local procurement and strives to invest locally. Such decisions tend to be centralised in the head office for efficiency. 

10. There is a lack of detailed information on how CWB is being implemented and the exact impact thereof. This is because CWB is a relatively new concept. It explains why so many of the documents and talks that I’ve encountered seem to reiterate its philosophy, principles and hopes. They explain why a localised and regenerative approach is better than a national and extractive approach. They also advocate for more organisations to be involved in CWB. Such conversations are typical of an emerging field. More substance will inevitably emerge over time if CWB continues with its current trajectory. 

11. I hope that CWB never becomes a dogmatic ideology and gets seen as a panacea for all struggling local economies. Proponents of CWB must be mindful of the cognitive bias called “Law of the Instrument.” This is often expressed as, “If you have a hammer in your hand then every problem looks like a nail.” We should strive to equip ourselves with several ‘hammers’ or mental models. We shouldn’t fixate on any single one lest we become blind to its appropriateness. This will expand our metaphorical toolkit for designing local economic development strategies.

12. Ultimately the context will determine the best approach. For example, the local, national and regional economic development projects I worked on had different entry points. These were determined by the client, context and need. Interventions included activities such as working with small traders, supply chain development for large national or multinational corporations, market development, impact investment, enterprise development, removal of trade barriers and policy advocacy. The project teams debated the best theoretical models to inform our perspectives on any given project – models such as the Sustainable Livelihoods Approach, Market Systems Analysis and Value Chain Analysis. We usually ended up adopting a few perspectives rather than choosing a particular model. CWB is now part of this set.


CWB’s focus on neglected local economies and how they can retain wealth and ensure that it is widely distributed makes sense. It is encouraging that organisations like local authorities and government entities are talking about how they might implement CWB.

We must be cautious that CWB is not blindly applied and that everything local is seen as good and virtuous and everything national or transnational is seen as bad. Economies and value chains are more nuanced than this. Such judgements all depend on the unique context. Policymakers must continue to develop and refine their mental models so that they can choose the best approach for any given situation. However, there is value in using a single easily understood concept such as CWB to serve as a beacon and exemplar for the type of economy that they want to design.

CWB is likely to become more popular in the UK as cities, towns and villages start to grapple with the consequences of the UK’s economic policies and prioritise their own interests and those of their citizens. This will be a good thing.

In pursuit of strategic clarity

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