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A city ravaged by Toryausterity is now thriving after pioneering a system it calls “radicalism on a shoestring”.

Fed-up officials in Preston, Lancs, took matters into their own hands after a £700million redevelopment collapsed in 2011. Since then, the council’s Central Government grant has been cut from £30million to £18million.

The city was in the bottom 20 per cent of deprived areas and life expectancy for its poorest was just 66.

But determined officials looked for a model to turn its fortunes around – and found it in the US in Cleveland, Ohio. The idea was to keep money in the local economy and the tactic has led to the creation of hundreds of jobs and renewed building work.

(Image: Julian Hamilton/Sunday People)

Preston had the second-best ­improvement on the Multiple Deprivation Index between 2010 and 2015. And last year it was named the best city in the North West to live and work in.

Shadow Chancellor John McDonnell says Preston’s “radicalism is what we need across the whole country”.

The Manchester-based Centre for Local Economic Strategies reported that six major local institutions had spent 18 per cent of their budget there in 2017 – up from five per cent in 2013.

The increase means an extra £75million was being spent in the city.

(Image: Julian Hamilton/Sunday People)

And none of Preston’s innovations meant any extra cash or new laws. The council says it is simply a case of people working together more effectively.

That meant councillors approaching schools, hospitals and police to ­encourage them to spend their cash in the city rather than farther afield.

These ­“anchor institutions” spend about £1.2billion each year and until the ­project began, they were not considering where goods and services were bought.

Neil McInroy, chief executive of the Centre for Local Economic Strategies, said: “The attraction of wealth is ­important but of more importance is understanding and harnessing existing wealth for the benefit of local ­economies and communities. That is exactly what we have done in Preston through our anchor institution work.”

Cllr Matthew Brown, described as the “visionary thinker” behind the Preston model, said: “A big part of it is looking at what we spend and ­encouraging key employers to spend more in the local economy.”

(Image: Julian Hamilton/Sunday People)

He said there had been a £200million increase in spending in Lancashire and more than £10million in public contracts went to local firms.

Farmers benefited when the council allocated £1.6million of its food budget to be spent locally and local builder Conlon Construction won the ­£2.6million deal for a new market hall, plus a deal to regenerate the bus station.

The firm was able to take on five extra staff and three apprentices, with more jobs being created for subcontractors.

Cllr Brown said: “We see it as a ­virtuous circle of activity. This is a response to austerity. It is a very, very socialist thing we are trying to do, keep money in the community and spread it around.”

Preston City Council, led by Peter Rankin, has looked after workers as well as firms, becoming the first ­accredited Living Wage employer in the North in 2012, ­guaranteeing a minimum £8.45 an hour.

(Image: Julian Hamilton/Sunday People)

A new credit union scheme has over 500 members and the Lancashire County Pension Fund invested £100million in student digs, office space and a hotel.

Another innovation was teaming up with an energy supplier to offer cheaper deals than the Big Six .

But some people are critical of the scheme. Colin Talbot, a public policy expert at Cambridge University, said: “There is no value being added.”

And some experts say because local institutions are so closely linked, a downturn could cause collapse. But Cllr Brown said the scheme is attracting attention from places including Wakefield, Oldham and Birmingham.

(Image: Julian Hamilton/Sunday People)

Preston is also getting advice from Richard Werner, professor of international banking at Southampton University, about starting a community bank based on the German system. In the UK the five big banks attract 90% of business while in Germany 1,500 small banks cover 70% of banking.

Prof Werner said: “Great things are happening in Lancashire.

“We have seen how big banks treat their customers. They have no appetite for small firm lending.”

In the meantime, Preston continues to flourish and was recently one of 97 European cities named a Good Practice City. Cllr Brown added: “Change doesn’t always come from Westminster or the Town Hall. The community has been very receptive to working together. Harnessing their strength has been key to this success.”