The living wage in Preston: the floor in the Preston Model

The most concrete part of a strategy that is otherwise mostly about where money is spent.

The living wage is the part of Preston's economic approach that is easiest to explain and hardest to argue with, which is why it tends to be the entry point into everything else the city has done.

It needs a distinction first. The statutory minimum wage is set by government and applies to everybody. The real living wage is a voluntary, independently calculated figure intended to reflect what it actually costs to live, and employers choose whether to pay it. The two are different numbers with different logic, and conflating them makes the whole subject incomprehensible.

Why a council cares about a voluntary wage floor

A local authority is usually a large employer and always a large purchaser. That gives it two levers on wages: what it pays its own staff, and what it requires or encourages from the suppliers it buys from. Neither lever is legislation, and both work.

Preston pulled both. Becoming a living wage employer covers the first; using procurement to favour suppliers who do the same extends it into the local private sector without any new statutory power. That combination is the mechanism, and it is why the wage floor and the procurement argument are the same argument.

The procurement half

The insight behind the Preston Model is that a large institution's spending is a policy instrument. Hospitals, universities, councils, colleges and housing providers in one city buy an enormous amount between them, and where that money goes determines whether it circulates locally or leaves immediately.

Redirecting even a modest share of it towards suppliers in the area changes local demand, and changing local demand changes local employment. It is a slow instrument and an unglamorous one, and it does not require anybody's permission.

What the policy actually changes

It is not protectionism, because the institutions still buy on value; it is a change in how contracts are specified and split so that local suppliers can realistically bid. It is not a subsidy, because no money is added. And it is not a substitute for national policy on wages, which is where the statutory floor is set.

Being precise about that matters, because the approach is frequently described in stronger terms than it deserves in both directions — as a transformation by supporters and as municipal socialism by critics. What it actually is is a procurement and employment strategy.

The cooperative strand

The other half of the thinking is ownership instead of wages: if the problem is that money leaves the area, one answer is that more of the businesses earning it should be owned by people in the area. That is where the cooperative interest comes from, and where Mondragón enters the story.

The two strands are complementary as opposed to alternative. Wages set a floor under existing employment; ownership changes who benefits from future employment.

Why this is on a city guide

Because it is the reason people who are not tourists come to Preston. Delegations, researchers and journalists have come to look at the procurement approach, and a guide to the city that left it out would be describing the buildings and missing the argument.

The physical results, insofar as there are any, are on the invest sheets: the City Deal, the markets quarter and the university masterplan are what a city does with money it has decided to keep.

The figures, and why they are contested

No figures. The published numbers on procurement shares, wage rates and local spend change annually and are contested, which is why the mechanism is the subject here and not the totals.

What is stable is the mechanism, and that is what this page sets out. For current numbers, the council and the independent living wage body are the sources.