Anchor institutions and economic resilience in the city of Leeds
What would Leeds look like if large organisations in the city used their buying power to keep wealth circulating locally? Could it lead to a more inclusive and resilient economy? And how would this work in practice? Sherif Youssef and Tim Joubert are asking these questions as part of a new project with Leeds City Council and the local anchor networks.
‘Anchor’ institutions are large local employers, like local government, universities, colleges, hospitals, and large private sector organisations. They can be thought of as forms of ‘sticky capital’ as they are unlikely to move from where they were established. The ‘anchor’ metaphor works in two ways: they are anchored in place, meaning their investments in local employees and property assets (and in most cases their public service responsibilities) keep them from leaving; and they anchor the local economy, in that their employment and spending gives them a ‘weighty’ impact on local economic development. We tend to use the term especially where organisations act self-consciously as local place leaders, where they actively use their influence to participate in local policy decisions and contribute to change. This is often enacted through their public service remit or in the case of private and third sector organisations, their locally pledged social commitments. In that sense an anchor institution is any organisation rooted in place with a stake in its future.
Commencing in October 2024, our project is exploring how local procurement driven by anchor institutions in Leeds can enhance economic resilience and positively impact local communities. While recent research has highlighted the potential for such organisations to use their supply chains as policy levers for delivering social value, little is known yet about the practical challenges and opportunities for using procurement in this way. Recent evidence has similarly underscored the need for rethinking local economic governance to address longstanding regional inequalities. We are looking to understand the specific role procurement can play in this wider rethinking, and want to understand how local anchor institutions are adopting and adapting new strategies, especially in light of recent economic shocks such as the pandemic and cost of living crisis.
In many cities we have seen anchors join collaborative partnerships to work together on developing more transformative strategic local place leadership. In Leeds we have the 14-member Leeds Anchor Network, established in 2018 after work with the Joseph Rowntree Foundation (JRF), and 9 private sector organisations partnering as Leeds Business Anchors. The networks are involved in Leeds’s wider Inclusive Growth Strategy, and will likely play an important role in future Local Growth Plans as part of the UK government’s future devolution plans.
Since they already play a significant role in the local economy, our research will share how organisations in these networks can use their procurement spend to create positive impacts that support a more resilient and thriving city. Previous analyses by JRF and the Centre for Local Economic Strategies (CLES) have shown the staggering spending power of local anchors in Leeds: in 2015/16 ten anchors spent £1.4 billion a year procuring goods and services, and in 2017/18 six anchors spent over £1.2 billion, about half of which is spent locally. This represents a large chunk of the total Leeds economy of around £26.3 billion. Part of our work will investigate how much progress has been made since the work by JRF, who set up a Progression Framework that includes measures for procurement to create community benefits. We also want to investigate the impact of the new Procurement Act, which took effect on 25th February and includes government policy guidance that allows purchasers to prioritise local SMEs, charities and social enterprises.
Meanwhile, we have seen local procurement become a key part of Community Wealth-Building, a local economic development approach aimed at keeping wealth circulating within local economies, spearheaded in Preston and spreading to other cities and civic authorities, including the Scottish government. Instead of chasing inward investment, which they argue results in wealth ‘leaking’ out of local economies, proponents of community wealth-building look to develop existing capabilities and potentials within places, using anchor organisations’ procurement as a lever for knitting together resilient local economies. They argue that redirecting procurement locally will not only support local industries but can help cross-pollinate the benefits of local investment. For example, it can generate positive ‘ripple effects’ as local businesses employ more people, who in turn have more spending power, more of which can then be spent in the local economy if thriving local options are available.
This can also be seen as a stepping-stone toward a deeper transformation for a more democratic economy. CLES’s definition of community wealth-building, for example, positions ‘progressive procurement of goods and services’ alongside four other principles:
- plural ownership of the economy;
- fair employment;
- making finance work for local places; and
- socially productive use of land.
Taken together they offer a framework not only for alleviating poverty and strengthening local resilience but also more forward-looking goals of deepening collective forms of ownership and improving the quality of work. Ultimately, they imagine that anchor institutions could help build dense and resilient local ecosystems of community-minded cooperatives, social enterprises and SMEs that circulate wealth locally and use their surplus in socially useful ways. One of the things we want to explore is whether more of these principles can be advanced in Leeds through procurement. While we have existing anchor networks, more could be done to develop their positive local impacts by adopting and really embedding these principles in their supply chains, for example by prioritising local cooperatives, or pressuring suppliers to adopt Living Wage commitments through contract criteria or tender scoring.
Achieving such goals, however, requires engagement with the practical work of procurement. While it has significant potential to impact local economies, procurement can often be a mystified, bureaucratic process that smaller suppliers find difficult to engage with. For anchor institutions to increase their local spend and deliver social value, they also need to engage better with suppliers and improve the technical aspects, like tender specifications, contract monitoring, scoring systems, and so on. We are working with Leeds City Council and other local anchor institutions to explore together how these aspects of procurement can be used to support local economic resilience and a more democratic and flourishing local place. Our project will further develop these relationships to support change, including making important connections between local procurement and a wider rethinking of economic development approaches. The research will be fed back to the Leeds anchor networks, and will lead onto further collaborative research in partnership with Leeds City Council.
For more on this work, please keep an eye on our project webpage and the LSSI news feed where we will be posting updates.
Sherif Youssef is the Partnerships and Engagement Officer art Leeds Social Sciences Institute. He is a principal investigator for Anchor Institutions and Economic Resilience in the City of Leeds a project funded by Research England Policy Support Fund
Tim Joubert is a Research Assistant in Leeds Social Sciences Institute on the project Anchor Institutions and Economic Resilience in the city of Leeds.
Find more information on policy collaborations from across the University of Leeds on the Policy Leeds website. If you would like to keep in touch with our work between signposts, please connect with us on LinkedIn, or find us on Bluesky.