Putting the “local” in our local economy

When people talk about the economy, it can often feel distant. Like something that happens to us, not something we can influence ourselves. Many of us feel powerless in the face of global markets, as if we have no say in the decisions that affect our lives. Too often, the economy feels rigged in favour of a few, leaving communities behind, and harming people and the planet.

But there is another way. Across the country, a new economic model is gaining traction. It focuses on building a local economy rooted in community power, dignity, and ownership.

It is called community wealth building. At its heart, it is about making sure that the wealth created in a place, stays there. It challenges the idea that the economy should serve large corporations first, with people and planet left behind.

Community wealth building starts with a simple question: how can local institutions like our councils, universities, and hospitals keep wealth in our communities? The answers to that question lead to some radical results.

Typically, when councils and public bodies contract out services, public money leaves the area. It is channelled to distant supply chains or funnelled into shareholders’ pockets. Community wealth building flips that script. It shifts spending towards local businesses, social enterprises, and co-operatives, so that every pound spent locally stays in the local economy.

This was first trialled in the UK in Preston. There, the local council used its purchasing power to keep millions of pounds circulating locally and improve conditions for workers. Their approach kept an extra £74 million in Preston, and an extra £200 million in the wider Lancashire economy. By requiring contractors to pay staff the real living wage, they helped give four thousand Preston workers a pay rise.

Under the leadership of Matthew Brown, Preston became a national example of what community wealth building can achieve. Where they led, others followed.

In 2022, Sheffield City Council successfully adopted a community wealth building policy. A motion I proposed, seconded by Councillor Fran Belbin, called for a person-centred approach to local economic development. One that keeps more wealth in Sheffield and puts control in the hands of local people.

I proposed this motion, and worked to implement it while serving as Labour’s lead for Economic Development, because I deeply believe that we need a fairer, more rooted, and more just local economy.

That remains our mission, and we are already seeing real progress.

One of the most visible shifts has been in procurement and contracting. In 2021, only nineteen percent of council contracts went to Sheffield-based businesses. By last year, that number had risen to forty-nine percent. So far in 2025, Sheffield businesses have won sixty-one percent of council contracts.

To put that another way, for every £100 of council contract spending, £61 now goes to local firms, supporting people that live here.

And that is not just a number. It means more local businesses winning contracts, hiring local workers, paying higher wages because of the conditions we attach to those contracts. It means more money staying in our local economy rather than disappearing into shareholders’ pockets or offshore accounts. That matters.

It is also a climate strategy. Sourcing goods and services locally means fewer transport miles and lower emissions. But it goes further than that. When local businesses are hired to build or retrofit homes, we help grow a skilled local workforce ready for our postcarbon future. This approach creates good, sustainable jobs in our communities and builds the local expertise needed to power our green transition.

Progressive procurement and strong local supply chains are key pillars of community wealth building. Another is encouraging broader ownership of the economy. That means supporting a range of local ownership models like co-operatives, social enterprises, and community-led projects, spreading economic power beyond large corporations and giving people a real stake in the local economy.

In Sheffield, we have seen this through our Economic Recovery Fund. In 2022 and 2023, the council distributed £4m in grants to help residents, communities, and local businesses improve their high streets. What began as post-pandemic recovery soon became a way for communities to lead their own regeneration. From shop front improvements to local events, installing parklets and planting fruit trees orchards, this funding has helped people shape their neighbourhoods and their future.

This is what community wealth building is all about. Shifting power and resources back into the hands of our communities. Creating an economy that works for all Sheffielders, supports good jobs, protects the planet, and gives everyone a real stake in our city’s future.

We are already seeing what is possible when we put these principles into practice. The challenge now is to build on this progress and make sure our local economy is fairer, greener, and truly shaped by everyone that lives here.

This is how we will truly take back control and build a city that works for everyone.

Minesh Parekh is a Labour & Co-operative councillor for Crookes & Crosspool.