For many years until recently, Preston had consistently failed to deliver its full economic potential. It attracted very little inward investment between 2004 and 2008 and suffered after the 2008 financial crisis and subsequent austerity measures. In 2013, Preston City Council and the Centre for Local Economic Strategies (CLES) sought to reverse this trend by reforming public procurement processes and harnessing the potential of anchor institutions through community wealth building.
In 2016, they invested GBP 4 million directly into the community, and the Preston Model has since become an economic policy proposal for the Labour Party and a model for other small cities.
Preston, a city of around 140,000 inhabitants in Central Lancashire in the UK, faced significant socioeconomic challenges following the financial crisis. A 2009 report highlighted that the region failed to deliver its economic potential, capturing only 3 percent of inward investment projects between 2004 and 2008. VAT stock growth and wage levels lagged behind national averages.
Although public sector employment increased, productivity did not keep pace. Indicators of decline included stagnant population growth, limited retail expansion, low-quality housing, and 22 percent of children living below the poverty line.
Since 2011, Preston City Council partnered with CLES to address these challenges. In 2013, they formally collaborated to reform procurement by leveraging anchor institutions—local organizations such as councils, universities, and hospitals with significant economic influence and deep local roots.
The goal was to retain wealth locally by encouraging these institutions to spend within the community. For example, a hospital might choose a local supplier instead of outsourcing services externally.
The six key anchor institutions involved were:
- Preston City Council
- Lancashire County Council
- Lancashire Constabulary
- University of Central Lancashire (UCLAN)
- Preston’s College
- Community Gateway Association
The model draws on community wealth building, originally developed in Cleveland, Ohio by The Democracy Collaborative. It aims to increase local asset ownership, anchor jobs locally, support environmental goals, strengthen public services, and ensure economic stability.
Preston adapted this model to local needs. Where local suppliers were lacking, worker-owned cooperatives were encouraged to fill gaps.
Within a few years, Preston became a national example of local economic resilience. Despite budget cuts of up to 56 percent, local spending increased significantly. By 2016, local spending in Preston rose from 5 percent to 19 percent, and Lancashire-wide spending rose from 39 percent to 81 percent. Public sector spending increased by GBP 74 million in Preston and GBP 200 million across Lancashire.
Beyond economic impact, the model strengthened community identity, pride, and civic engagement.
Stakeholders and Leadership
Key external support came from The Democracy Collaborative, whose model inspired Preston’s approach. Internally, the six anchor institutions collaborated closely with CLES.
Leadership—especially Councillor Matthew Brown—played a major role. The initiative also received political backing from Labour Party leader Jeremy Corbyn, who promoted it as a model for economic policy.
Notable figures such as Ed Miliband, John McDonnell, and Martin Sheen visited Preston to study the model.
Impact and Outcomes
Preston’s reputation improved significantly. It had previously been labeled the unhealthiest city centre in the UK and had one of the highest suicide rates. By 2016, it was ranked the best city in northwest England to live and work.
Local businesses benefited from increased procurement. Construction firms hired local workers, farmers gained contracts, and creative spaces supported local artists.
Objectives of the Model
The initiative aimed to reduce economic leakage and strengthen the local economy. Its objectives included simplifying procurement processes, increasing local spending, supporting local businesses and cooperatives, raising awareness of opportunities, and encouraging cooperative ownership models.
Origins and Development
The concept traces back to the Mondragon cooperatives in Spain, developed further by Ted Howard in the United States and implemented in Cleveland.
Preston leaders learned from this experience and adapted the model with support from CLES, which had prior experience in Manchester and Birmingham.
Legal and Operational Context
The model complied with EU procurement laws, which require fair competition and non-discrimination. While this posed challenges, Preston worked within the framework by incorporating social and local economic value into procurement decisions.
CLES adopted an inclusive management approach, engaging stakeholders collaboratively rather than imposing top-down changes. Their step-by-step approach allowed the project to adapt to new research findings, include more anchor institutions, and better understand local supply chain needs.
Criticism and Response
Critics have argued that procurement should prioritize value for money regardless of location and warned that favoring local suppliers could reduce competition and innovation. Some suggested that widespread adoption could slow national economic growth and resemble protectionism.
Preston City Council responded by emphasizing that local suppliers are only selected if they can compete on price, quality, and performance. The model does not support inferior contractors but aims to ensure fair competition while retaining local economic benefits.
Measurement and Evaluation
CLES evaluated the initiative three years after its launch. The results showed that local spending increased from 5.2 percent in 2013 to 18.2 percent in 2016. Media coverage and external analysis further highlighted the model’s success.
CLES also developed a measurement framework to assess supply chain impacts and broader community wealth building activities, including supplier behavior, Living Wage adoption, infrastructure development, and potential initiatives such as complementary currencies, pension funds, and community land trusts.
Additional surveys and case studies were conducted with Preston-based businesses to understand their economic contributions and their role in addressing social and environmental challenges.
Stakeholder Alignment and Implementation
There was strong alignment between CLES, Preston City Council, and the participating anchor institutions. Early face-to-face meetings ensured shared understanding and commitment.
Each institution developed tailored procurement practices based on detailed analysis. These practices were then coordinated with the council to create spending strategies that supported the local economy while maintaining efficiency.
