Scotland doesn't have powerful local government - it's time we did

Tom Arthur, MSP and Minister for Community Wealth and Public Finance, is one of Holyrood’s smarter MSPs. He thinks about things and is responsible for a brief which, if it can be delivered, is capable of transforming local economics.

Community wealth building is an approach to economic development that focuses on building the long-term economic prosperity of communities through the creation of wealth controlled by those who live in that community. It sits opposed to an extractive economy owned by outside capital and focuses instead on the five pillars of inclusive ownership, business, fair work, finance, land, and procurement. As a framework within which to think about how to advance the economic wellbeing of communities it has much to commend it and the Scottish Government is on a mission to deliver through new legislation.

In January the government launched a consultation and the analysis of the responses has just been published. There are a lot of good ideas and a high level of ambition among respondents, who clearly want to see a significant transformation. The proposed bill itself, though, is one of those that focuses on process rather than tangible reform. It places duties on public bodes to produce strategies and plans. This might lead to fairer work, some more local purchasing and a few more community-owned assets, but it will not build any significant wealth.

Respondents to the Scottish Government’s community wealth building consultation welcomed the proposals to place duties on public bodies to promote community wealth building but as a framework bill it also provoked criticism. The STUC said that “placing another duty on financially ravaged councils is unlikely to lead to the change needed”. Others responded with proposals to change the institutional context, to promote more local and community ownership, to reform financial incentives and fiscal policy, and to strengthen local institutions to play a greater role in the economy.

It will, instead, take major institutional and economic change to deliver the kind of aspirations set out by ministers – the kind of change that involves long-term control over key parts of the economy by public, private and community institutions.

Unfortunately, Scotland does not have the powerful local government, the large producer and financial co-operatives or the democratic control of its natural resources that many European countries do and so we start from a position of weakness. In Lochaber, where I live, much of the economic base of the region is owned and controlled by external capital. Fort William has no municipal authority, and its economic history is dominated by external shocks of industrial closure. Lochaber is not alone.

Last month, the Forest Policy Group, a small think tank on forestry and land use matters, published a report authored by me. It is a follow up to one I wrote in 2012 looking at the ownership of forests across over 250,000 hectares of forest in Scotland. Ten years on, what has changed?

Well, we have more forests, which is good, but the less good news is that ownership has become concentrated in the hands of fewer owners than even owned the smaller forest extent of 2012. Private ownership has increased by more than 11 per cent and that ownership is dominated more than ever by financial corporations and absentee ownership.

This follows a long-term trend of more than 50 years where ownership has slowly but surely shifted from the state and traditional landed estates to external capital and financial institutions. This makes the job of community wealth building significantly harder. To achieve progress, it will be necessary to restructure the economic base of many parts of the economy to increase democratic and local control and to maintain key decision making within local communities.
Continental European countries have generally done this more effectively.

In the 1950s, for example, the agricultural economy in north-west France was in a bad way, with farmers producing plenty good quality produce but lacking control over the marketing and upstream economy. In response to this, farming cooperatives established a port and cargo service in the 1950s to export produce to the UK and thus was born what is Brittany Ferries. It is still majority-owned by the farming co-operatives of north-west France and its chair remains a working French farmer.

In Finland, the Metsä Group is one of Europe’s leading forest products companies and is owned by over 90,000 Finnish forest owners. A similar corporation, the Södra Group, is one of Sweden’s largest forest-products groups owned by its 53,000 forest-owner members.

Clearly, when citizens have meaningful economic stakes in their local economy it enhances economic resilience and wellbeing. That is why community ownership of land, social enterprise, co-operatives and municipal government are key institutions. But whereas Scotland has some of this capacity, it is still an economy largely controlled by external interests. 

The renewables revolution has delivered some community benefit funds that transfer sums of money from the owners and operators of wind farms to community groups. But community wealth building is where communities would own the energy systems, would benefit from cheaper energy and would be able to invest profits in the local economy.

Community wealth building is thus a long-term endeavour. I hope Tom Arthur is both radical and patient.