This is the third in a series of essays co-ordinated by the IWA Economy Policy group on the foundational economy and its value to Wales.
It is fair to say that the concept of the foundational economy has both vocal backers and detractors. There are those who consider that nurturing the foundational economy has significant potential in places across Wales that the economic policies of many years have failed to benefit. Offering better prospects than more of the same, it can help to make the economy work for everyone. And there are those who consider that the foundational economy is ill-defined, that the means by which the foundational economy can be nurtured are lacking or insufficient, that it does not offer sufficient prospect in helping to bring the ‘prosperity for all’ that is the aspiration for Wales and that a focus on the foundational economy will not sustain communities.
In writing this blog, I am not going to try to make the case for the foundational economy as ‘an answer’; rather I will reference the work that is emerging in the housing sector to show that institutions that are already in our communities can usefully and helpfully pay attention to the foundational economy in how they work within and with communities. And how the foundational economy approach has a high degree of synergy with other approaches being used by housing organisations such as asset-based community development and restorative approaches:
‘The foundational economy includes the goods and services which are the social and material infrastructure of civilized life because they provide daily essentials for all households.’
As noted in Rhys ap Gwilym’s blog, what is included within the definition of the foundational economy can and does vary, but at a fundamental level, it is about universal basic services: health, care, education, housing, food (growing and purchasing) and utilities, including digital. A significant proportion of the population work within these sectors and therefore the quality of those jobs and the health/sustainability of the employer organisations are highly important. We have too much experience in Wales of sectors and individual employers failing with loss of jobs and negative impact on local communities. The way that commissioning/tendering is carried out in at least some of the foundational economy services compounds the risks to individuals, local communities and economies. An example would be competitive tendering for social care contracts through which large companies, often headquartered outside of Wales, are more likely to win contracts than smaller, locally based companies, often with negative impacts on pay, terms and conditions and service delivery. Other blogs/papers in the foundational economy series deal in more detail with the concept of ‘rent extraction’ in the foundational economy and how it might be reduced/avoided.
To me, it is clear that our economic policies since devolution have not worked for many communities and have certainly not worked for everyone. As a long-time resident of Splott in Cardiff, I see the massive investment going into the centre of our city and how the benefits largely fail to make their way even a mile south-eastwards. And we now face the likelihood of ongoing austerity, cuts in welfare which are affecting huge numbers of people across Wales, as well as taking money out of local communities, and significant economic uncertainties due to Brexit and changes in the global picture. In this context, looking at the foundational economy and how it can be nurtured seems entirely rational to me; not suggesting it will solve all our problems, but at least acknowledging its existence and considering how we might do things differently to increase the quality of foundational economy jobs, develop and sustain local assets and keep money in local economies.
As Laura McAllister said at this year’s Hay Festival in a totally different context (talking about women in public life in Wales), ‘we have a great ability to will the end without doing the means.’ So what might the means on the foundational economy look like and what role might housing organisations play?
In their article for issue 108 of Welsh Housing Quarterly, Debbie Green (chief executive of Coastal Housing), Joe Earle and Karel Williams note that:
‘the development of the foundational involves building up local assets and capabilities, provides citizens with better foundational services and decent jobs and business opportunities; and, just as importantly, particularly in the post Brexit environment, develops the new institutions, skills and cultures which begin to empower participatory decision making.’
Housing organisations are seen as having an important role in such activities, of being important anchor institutions, alongside local authorities, further and higher education providers. According to the think-tank CLES; ‘Their purchasing power, and their links to the local community as employers and holders of land and property assets mean that they are ‘sticky capital’ on which new local economic approaches and social improvements can be based.’
Karel Williams sees housing associations, in particular, as place-based anchor institutions that are well placed to experiment locally and share learning between them. They have resources (people, buildings, money, networks etc) and the ability to lead change, alongside detailed knowledge of local communities and assets. And housing associations have a vested interest in seeing local economies thrive; they provide homes to low income households, many of whom are experiencing income stagnation and increasingly precarious employment opportunities. What if tenants, both in work and in receipt of benefits, cannot afford social rents? Should housing associations change who they rent to or change their role in communities and become more concerned with local economic development?
While all housing associations in Wales are not actively engaged in thinking about the foundational economy, notable examples of those that are include Coastal Housing and United Welsh. And current thinking is likely to have been influenced by work carried out in the Welsh social housing sector a number of years ago that focused on ensuring investment in social housing to reach the Welsh Housing Quality standard delivered wider community benefits (the Can Do Toolkit).
In Blaenau Gwent, four housing associations, including United Welsh, have come together with the local authority and other organisations to undertake a piece of work which seeks to understand the assets housing associations bring to the foundational economy in the area and identify where greater collaboration between associations and other partners could build foundational economy opportunities. The rationale for this work is that the associations have significant assets and supply chains, are employers, provide a range of services to communities and are committed to the area for the long-term; disinvestment is not an option. Mapping of the foundational economy and housing association supply chains in the area is underway.
An issue already identified by the project is a need to help build relationships with local businesses to find out what is important to them and how they can reach their potential. Project recommendations are likely to include the need for a new shared enterprise facilitation resource that would work across the housing associations, the local authority and other key partners. Such a resource would include:
- plugging these businesses into existing support
- making housing association future plans more visible to local businesses, and
- opening up more conversations to increase opportunities for collaboration
Conversations with SMEs and the associations are ongoing.
Recent research led by Joe Earle, supported by Coastal Housing, CREW and the Alliance Manchester Business School research support fund, looks at asset based policies and the foundational economy in the Swansea Bay City Region. It makes the case for both a new asset based approach to policy in the City Region across all of its economic activity and adding a focus on the foundational economy. As part of this it explores what role institutions (non-state actors) such as housing associations can play, making the case that they can, and should, change their role in communities.
The research report notes that associations can ‘act with strategic intent, whilst recognising that it is often small practical interventions that make a difference, not just for tenants, but also for citizens and broader communities. For example they could:
- support projects like helping communities run local facilities such as swimming pools or sports centres
- bring forward sites and buildings that can be used to enable start-ups and work space for maker space and/or provide community hubs
- deploy their expertise and financial skills to mentor small businesses, for example taxi services or small building firms and support community groups in collective purchasing of energy, food etc
- sponsor consortia funding bids/partnerships, especially with community groups/social enterprises who struggle with tendering and the complexity of public service commissioning
- make small investments in resource that would lever significant benefits such as employing a local economy co-ordinator who would build relationships with micro and SME business, support networking between businesses and provide a single access point for all available support from local authorities, Welsh Government and other organisations’
The research also makes clear that tackling poverty, community development and economic development are not silos of activity, but are all part of one inter-related system.
Coastal Housing has, and is, doing a number of things that have had a role in nurturing the foundational economy in Swansea. Just a few examples. In its approach to regeneration, it has provided local organisations and businesses with a range of spaces, on both a meanwhile basis and permanently. The association also recently supported a pop-up business school in Swansea, along with the local authority and Pobl (another housing association). It has increased its in-house workforce in areas such as gas maintenance and repairs and has members of staff who work on well-being and community assets. It uses asset-based community development and restorative approaches in its work with communities and other organisations, including providing support for the local authority Local Area Co-ordination initiative which seeks to help build and foster relationships within communities. Coastal is also looking to get involved in community energy schemes, has experimented with ways of providing reliable, affordable broadband services to tenants and has started a specific foundational economy project in Morriston.
The organisation recognises in a very practical way the links between asset-based community development, nurturing the foundational economy and restorative practice; all reject deficit models and ways of working with individuals and communities. Work to improve the foundational economy could be badged as asset-based economic development, building on what is there in communities, rather than looking at what isn’t there (lower GDP etc) and seeking help from external sources to rectify the deficit. The association also recognises the links between the foundational economy and work to put the Well-being of Future Generations (Wales) Act 2015 into practice.
This work is at the stage of experimentation; there is no blueprint, but it is heartening to see practical activity at a local level starting to make the thinking on the foundational economy a reality. I anticipate that, over the coming months and years, Welsh housing associations such as Coastal and United Welsh will increase our collective knowledge of the practical steps that anchor institutions can take to support and nurture the foundational economy.
‘By committing to supporting and nurturing the foundational economy they [Welsh housing associations] can become economically pivotal and socially useful to all the citizens in their local communities and in doing so, begin to rebuild the local economic prosperity which would ensure their long term financial sustainability. Indeed we could go as far as to argue they have no choice.’
My thanks go to Steve Cranston of United Welsh and Ross Williams of Coastal Housing for their comments and input.
All articles published on Click on Wales are subject to IWA’s disclaimer.
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