Building With Common Purpose: Reinventing the Building Society for New Towns

The creation of new towns in the UK presents a unique opportunity to build not just homes, but vibrant, resilient, and healthy communities. To reimagine what it means to live together now, and create spaces where people can connect, grow, and thrive. By learning lessons from successful community-building approaches and the mechanisms needed to implementing them, reframed for 2024 context, the New Towns Taskforce can help ensure new developments meet the diverse needs of their residents and stand the test of time. The success of these towns will ultimately be measured not by the number of houses built, but by the quality of life and the strength of social fabric in the communities that call them home. How can we achieve this in the context of New Towns? For too long we have expected the community to manifest as an outcome of development. Time to put community first as the purpose of development. Time to start with the social. I propose that reinventing the Building Society or Mutual model for the 21st century, especially within the context of new town development, is not only timely but also a powerful way to promote community ownership, retain wealth locally, and support sustainable development. I call this approach Building With Common Purpose.

Building With Common Purpose

Building Societies in the UK were originally established in the late 18th century as cooperative financial institutions with the primary purpose of enabling working-class individuals to save money and borrow funds to purchase homes. These societies emerged during a time when access to homeownership was limited, particularly for those of modest means, and traditional banks did not typically offer mortgages to working people. Sound familiar? By pooling the savings of members, these societies provided a way for people to gradually accumulate the necessary capital to secure a mortgage, which was otherwise inaccessible to many. Building Societies operated on a mutual model, meaning they were owned by their members rather than external shareholders. This model ensured that any profits made by the society were returned to the members, either through better savings rates or lower loan interest rates, rather than distributed as dividends to shareholders. By enabling more people to own their homes, this model played a significant role in community building. Homeownership was seen as a means to encourage stability, responsibility, and investment in the local community, which in turn fostered stronger, more cohesive neighborhoods. Early examples were often closely tied to specific communities or groups, such as workers in a particular industry or residents of a particular town. This local focus helped ensure that the benefits of the Society stayed within the community.

Restoring the Social Heart of Development

Reinventing the Building Society model for the 21st century is not just a nod to the past but a strategic move toward creating resilient, inclusive, and sustainable communities in new towns. By establishing a new form of Building Society, we can empower local people to invest in their future, ensure that wealth remains within the community, and support a just transition to a sustainable economy. These societies could become the financial impetus of new towns, driving both economic growth and social equity in ways that traditional financial institutions cannot. Establishing a modernised Building Society for each New Town—let's call it a Community Building Society (CDS) - could operate as a locally-focused financial and social value model, based on its original frame, but with a more modern-looking jacket on. So, residents and local businesses could become members of the CDS by purchasing shares or making deposits. These funds would be pooled to finance community projects, home loans, and small businesses within the new town. The model would encourage residents to invest in the growth and development of their own community, rather than relying on external financial institutions. The CDS could offer low-interest mortgages and loans specifically tailored for first-time buyers, affordable housing projects, and sustainable home construction. By prioritising local borrowers, the Society would ensure that profits and interest payments stay within the community, fostering economic resilience. A portion of the funds could be allocated specifically for climate-related projects, such as renewable energy installations, green infrastructure, and energy-efficient housing. This could be aligned with the principles of a just transition, ensuring that the shift to a low-carbon economy benefits all residents, particularly those who might otherwise be disadvantaged by economic changes. The Society could directly finance community-led development projects, such as public spaces, co-working hubs, or social enterprises. By providing grants or low-interest loans for these initiatives, the CDS would empower residents to shape the future of their town according to specific local needs and priorities. It could support local businesses by offering tailored loan terms, fostering a vibrant local economy that provides jobs and services to residents. This focus on local economic resilience would help to create a self sustaining community less dependent on external economic fluctuations. By keeping investments and profits within the community, a CDS could prevent the outflow of local wealth to distant shareholders or corporate entities, something we see happening amongst UK pension funds. This wealth retention strengthens the local economy and can be reinvested in further community development. This approach empowers residents by giving them a direct stake in the development of their town. This sense of ownership can help foster a deeper emotional connection to the community and encourage active participation in local governance and decision-making.

Mission-Driven Place-Making

However, the crucial and fundamental benefit and purpose of this is to provide access to affordable housing. Ultimately a CDS must be able to help people access and participate in the local housing market and address major structural housing inequalities and ensure that all residents benefit from the town’s growth. It can also prioritise funding for projects that address social needs, such as community centres, affordable housing, and health services. Working with local authorities, it could ensure that essential services, such as healthcare, education, and public transport, are affordable and accessible to all residents by subsidising the cost of services or supporting the development of community-based service providers. This purpose and mission-based approach is gaining ground, see Mazzucato’s (et. al.) recent work on mission-driven government as an alternative theory and practice of statecraft. (UCL Institute For Innovation And Public Purpose, 2024) The CDS can play a critical role in promoting sustainable development and climate resilience by prioritising financing renewable energy, green building practices, and public transport initiatives that reduce the town’s carbon footprint, and infrastructure to enhance flood resilience. This includes funding for flood-resistant housing, natural flood management systems, and emergency preparedness initiatives. By creating a new locally focused financial institution rooted in the local community, its decision-making can be more responsive to local resilience needs.

Making it Happen for New Towns

New legislation or amendments to existing laws would be needed to establish and regulate this new generation of Community Development Societies. This includes defining their structure, governance, and operation. The legislation should ensure that CDSs can operate ethically and soundly as mutual organisations and provide a clear framework for their financial activities. The government could facilitate partnerships between CDSs and public institutions to leverage additional funding and resources. This could include collaborations with local authorities, existing housing associations, and educational institutions. The private sector could provide funding, resources, or expertise as part of Social Value or ESG programmes, giving them more of a place basis. It will be critical to build trust and transparency with communities to ensure the Society truly delivers on its purpose – to build community. Each Society should therefore have a “Community Client” - an advisory board made up of community representatives to ensure that CDSs remain aligned with local needs and values. These boards can provide ongoing feedback and help shape the direction of the society. There is enough knowledge, skills, transferable frameworks, and mechanisms that could enable this model to be set up quickly and for this model to enable multiple policy objectives and benefits in one. The question is: what is the appetite for this and for taking the opportunity for new towns to be more than bricks and mortar but the building of new communities too?