The foundational economy in Wales – briefly fading firework or key to inclusive economic growth?
At the recent Social Innovation in the Foundational Economy conference, Mark Drakeford, the Welsh Government’s Cabinet Secretary for Finance, spoke about a pivotal moment for the foundational economy in Wales where there is a risk that the theory briefly blazes and fades like a firework.
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So what can we do to ensure the foundational economy is not a ‘firework’ but the basis of inclusive local growth in Wales? This blog summarises recent developments and ideas from this field.
The foundational economy provides essential goods and services for everyday life. This includes infrastructures; utilities; food processing, retailing and distribution; and health, education and welfare. It provides goods and services essential to local needs and it also provides a substantial number of jobs – up to 45% of employment in parts of Wales.
The Wales Co-operative Centre has placed building inclusive local economies at the heart of our strategy as it fits with our values as an organisation. We are committed to helping to create and retain wealth within our communities and to working for a fairer economy. For us, the foundational economy is key to developing inclusive local economies. This also matters for the social businesses and co-operatives we support. Our research demonstrated a strong overlap between the foundational economy and the social economy with many social enterprises and co-operatives working in the foundational economy services sector.
There is a growing movement for the foundational economy in Wales, bolstered by the Foundational Economy Network of which the Wales Co-operative Centre is a member. Pilot projects supported by the network include housing associations in Blaenau Gwent collaborating to review how they can spend more locally and Coastal Housing’s Asset Based community vevelopment work in Morriston. Welsh Government have also recognised the foundational economy in their Prosperity for All Economic Action which proposed supporting four foundation sectors – tourism, food, retail and care.
Conversations about how we move the foundational economy sector forward in Wales frequently focus on procurement. The Social Innovation conference explored this issue in detail and you can read the report here. Suggestions for how we reconsider procurement in Wales ranged from implementing local wealth building strategies in Wales through to a legal challenge fund to enable public bodies to defend possible action from large outsourcing companies.
Procurement and local wealth building strategies were also the focus of a recent Assembly debate on the foundational economy. Assembly Members highlighted good practice from Preston, where Preston City Council has worked with local anchor institutions (such as the university and housing association) to spend more locally. Through analysing procurement spend and placing less emphasis on cost alone, Preston has 5% of total spend with local organisations in 2012/3 to 18.2% in 2016/7. Members of the Foundational Economy Group also produced a briefing paper for Assembly Members ahead of the debate which outlined further ideas on actions needs to support he foundational economy sector in Wales.
Our report with the Bevan Foundation highlighted the foundational economy’s role in building inclusive local economies and suggested practical steps to support the foundational economy. It recommended that Welsh Government, City Deals and local authorities should embrace an asset-based, collaborative and capacity-building approach to developing the foundational economy. They should support and evaluate innovation and encourage the adoption of good practice. The recommendations were supported by BCT and CLES’s Our Local Economies report. This recommended that local economies in Wales could be developed through local wealth building, building small firms and community asset development.
The ideas summarised in this blog for growing and supporting the foundational economy in Wales are by no means exhaustive. We’d also be interested in hearing from social businesses across Wales what their perspective on how we can grow the foundational economy in Wales. What else needs to happen for the foundational economy sector to grow in Wales? What can social businesses and co-operatives do to support the growth and development of the foundational economy in Wales?