Scotland’s Economic Future: An In-Depth Conversation with Tom Arthur on Community Wealth-Building and Inclusive Business Models

By Kim Holmes

December  3, 2024

We recently sat down with Scotland's Minister for Employment and Investment, Tom Arthur, to delve into the evolving role of social enterprises and the potential of community wealth-building (CWB) in reshaping Scotland's economic landscape. Below, we share the insights Mr Arthur offered on how inclusive democratic business models (IDBMs) can be a driving force for sustainable growth, a wellbeing economy and social equity.

A Starting Point: Resilience in the Face of Crisis

At our recent meeting, we were struck by Tom Arthur's commitment to building resilience within Scotland's economy. He began by highlighting the role social enterprises have played, especially in times of crisis. Reflecting on the pandemic, he praised the sector for stepping in when it mattered most.

“Social enterprises in Scotland,” Mr Arthur said, “showed their resilience and importance during the pandemic, and that same strength is crucial as we face today’s cost-of-living challenges.” Rising utility costs, inflation, and limited funding have created significant pressures, but Mr Arthur remains optimistic, noting that a collaborative, community-focused approach could turn these challenges into opportunities.

Community Wealth-Building: A Vision for Local Empowerment

Central to Mr Arthur's economic philosophy is the idea that communities should have control over their resources. Community wealth-building (CWB), a framework being embraced by Scotland’s policymakers, aims to bring economic power closer to local hands. Mr Arthur shared his belief that this approach represents a cultural shift away from traditional, top-down extractive economic models.

“Our community wealth-building agenda,” he explained, “is about enabling communities to control local resources, fostering conditions for sustainable, locally rooted growth.” This model, Mr Arthur believes, could drive a shift in economic thinking that values social and environmental returns as much as financial ones. Mr Arthur sees Inclusive Dynamic Business Models (IDBM’s) as essential to this vision. These models, which include co-operatives, community-owned businesses, employee owned businesses and social enterprises, offer an alternative economic framework — one that prioritises both community benefits and economic sustainability.

Shaping Government’s Role in an Era of Financial Challenges

A significant part of our conversation centred on the role of government in a time of limited financial resources. Mr Arthur acknowledged the constraints that austerity has imposed on funding initiatives, but he believes the government still has an essential part to play. Instead of solely relying on funding support, Mr Arthur sees policy as a tool for empowering local actors and fostering a supportive environment.

“There isn’t always funding for every new policy,” he admitted, “so our focus is on creating the right conditions for communities to thrive independently.” This means implementing policies that promote sustainable procurement and expand opportunities for IDBMs, giving them priority when public contracts are awarded.

Mr Arthur’s view signals a shift towards policies that support IDBMs to be a stronger part of a mixed economy, through legislation and procurement reform, recognising that direct financial support may not always be feasible. By creating a policy landscape that favours locally rooted businesses, the government can build long-term resilience within the economy.

Building Capacity: Preparing for Local Procurement

One of the most pressing challenges facing the sector is the need for capacity-building. Mr Arthur acknowledged that while the government can encourage local procurement, Scotland’s social enterprises could struggle to meet the scale required for larger contracts. Our CEO, Douglas Westwater, took this opportunity to raise the importance of continuing bespoke social enterprise business support that would prepare the sector for this imminent opportunity. “If a local authority needs to source something, a thousand notepads for example, we need to be ready,” said Douglas. Mr Arthur agreed, emphasising the government’s role in strengthening the sector’s capacity. He also emphasised the progress that has been made in recent years, particularly in sustainable procurement. Scotland has been a leader in sustainable procurement practices, thanks to legislation passed over a decade ago. The upcoming CWB legislation will build upon this foundation, strengthening the mechanisms that allow IDBMs to engage in the economy at scale. He highlighted the importance of partnerships with initiatives like Community Enterprise’s Accelerate programme, Just Enterprise, and Business Gateways to prepare Scotland’s social enterprises for such opportunities.

“It’s not just about policy,” Mr Arthur explained. “It’s about readiness, so when opportunities arise, our social enterprises can rise to the challenge and contribute meaningfully. It’s not an overnight transformation,” Mr Arthur reminded us, “but we’re moving in the right direction by supporting long-term growth and sustainability.”

Fostering Partnerships Across Sectors

Community wealth-building isn’t just about the public and third sectors; it’s about fostering cooperation with the private sector, too. Mr Arthur sees the private sector as a crucial partner in advancing Scotland’s community wealth-building goals, particularly as more businesses adopt Environmental, Social, and Governance (ESG) standards that align with community-focused values. Mr Arthur shared a story of a business in Ayrshire, where employees were actively involved in financial decision-making. Although not a co-operative or an employee- owned business, the company had adopted a participatory approach, encouraging workers to bring their expertise into discussions on profitability. This approach, Mr Arthur pointed out, exemplifies the type of inclusive and community-oriented values that Scotland aims to promote across sectors.

“The ethos of community wealth-building isn’t limited to social enterprises,” he noted. “Private businesses, too, are adopting practices that align with community values, and we want to encourage this integration across the economy.”

Cultivating Relationships Between the Private Sector and Social Enterprises

Mr Arthur was clear that community wealth-building can succeed only if the boundaries between sectors become more porous. Private businesses can be valuable allies in the CWB movement, he said, and there are many ways they can work alongside social enterprises for shared goals.

One inspiring example Douglas shared with Mr Arthur was that of a butcher in Ayrshire who, although a for-profit business, contributes extensively to his community. He donates food parcels, supports local families, and creates a gathering space for the village. “He’s running a private business, but his impact goes far beyond economics. He’s a vital community asset,” Arthur noted that this example highlights how private-sector involvement in CWB does not detract from social enterprise growth but rather enhances it. Arthur sees such locally focused businesses as valuable partners who can enhance the strength and reach of Scotland’s community wealth-building efforts.

A Collective Effort Toward an Inclusive Economy

Mr Arthur emphasised that community wealth-building is a collective effort. It requires involvement from all sectors — public, private, and third — to transform Scotland’s economy. He stressed that the Scottish government is fully committed to supporting IDBMs, both through policy frameworks and through collaborative initiatives. Community wealth-building, Arthur argues, will only succeed if Scotland moves beyond “business as usual” to adopt a holistic approach that values social and environmental gains alongside economic ones. “We can’t just wait for government action alone. This needs to be a collective vision for the whole community,” he urged.

Laying a Legislative Foundation

A cornerstone of the Scottish government’s strategy is forthcoming community wealth- building legislation, which Mr Arthur confirmed aimed to be introduced before the summer recess. This legislation, he explained, would set a framework to encourage local procurement and give local authorities more flexibility in prioritising local and social enterprise. However, Mr Arthur was quick to note that legislation alone won’t solve all challenges. “The law can create a foundation,” he said, “but community wealth-building is also about culture and mindset.” For CWB to succeed, Mr Arthur believes, Scotland needs both legal structures and a cultural shift that places long-term community resilience over immediate financial gain. Mr Arthur hopes the new legislation will provide consistency across Scotland, allowing local authorities to integrate CWB into their economic strategies in a way that meets the specific needs of their communities. The legislation would formalise Scotland’s commitment to community wealth-building, making it a guiding principle rather than an aspirational concept.

Looking Ahead: Scotland’s Path to Inclusive Growth

As our conversation drew to a close, Mr Arthur returned to the idea that building a resilient, community-led economy is a journey rather than a destination. The upcoming legislation will be a milestone, but it will be up to Scotland’s social enterprises, community groups, and local governments to turn the vision of community wealth- building into a reality. “The foundation is being laid,” he said. “Now it’s up to us to continue building together.”

At Community Enterprise, we’re excited about what the future holds and ready to play our part. As Scotland prepares to introduce transformative CWB legislation, we’re committed to helping social enterprises build capacity, foster partnerships, and seize the opportunities that lie ahead.

In these challenging times, community wealth-building offers a hopeful path forward. By empowering local communities and supporting sustainable, inclusive business models, Scotland is charting a course toward a fairer and more resilient economy — one that returns wealth and opportunity to the communities that create it.