The foundational economy, whilst not a complete analysis of our economy, is a very important analysis of a key part of it. Given the needs that the sectors meet, the foundational economy is here to stay, but public policy in all parts of the UK hasn’t adequately addressed how we can help it to flourish and to deliver jobs that support a decent living. I want to focus in my speech on the particular role that the public sector can play to support the foundational economy generally.

Public bodies, and I include in that local councils, NHS bodies and universities, are huge economic actors as well as deliverers of essential services. They have the capacity to stimulate their local economies through procurement. Some see this role as closer to their core mission than others. Whereas local councils probably have this at least as an aspiration, I’m willing to bet that there aren’t many conversations happening within our universities, for example, about how they can proactively grow the local supply chain.

It’s not realistic to expect to procure everything from the local economy, but we need an approach to procurement that cultivates the local economy, helping to develop and grow businesses in the local supply chain over the long term, and not being satisfied simply with community benefits or a billing-postcode approach.

In a recent conference that I convened in Neath on the regional economy, we heard of contractors shut out of bidding for construction work because the contracts let were too large, when they could have been disaggregated and made accessible to local players. What we need to tackle this sort of issue is a new duty of local economic development on major public bodies, which would take us beyond the idea of community benefits.

Julie Morgan mentioned examples from Ohio, and, in Cleveland there, public bodies have worked together, developed a collaborative model, through which, in partnership, they proactively support local economic development through their procurement capacity. We are a small country and this is what we should be doing in Wales as well. But there is a more ambitious role for public bodies to play in key parts of the foundational economy. Take the social care sector, which several speakers have already referred to: a growing sector embedded in local communities, and one where the foundations on which it will grow in future are, frankly, precarious. Councils could invest in building care homes and rent them to not-for-profit operators. There’s an enormous gap between the profit margins that a commercial operator demands and the current returns on local authority pension funds, and somewhere in between those two points is a point where the public sector can invest for a better return, and for care to be provided more cheaply and with better wages for the workforce than today. Most care workers are women, of course, so let’s recognise today, of all days, the particular need to address terms and conditions in this sector.

Take, as well, the energy sector, which has also been mentioned. Our communities are totally detached from their own capacity to generate energy, resulting in loss of value to major utilities companies and in fuel poverty, which will never be addressed by a community benefits approach, however generous that is. There are 300,000 residential properties across the Swansea bay regional area. A large number will need energy efficiency measures or renewable energy installation, and all can benefit from cheap energy. Nottingham council owns and operates an ESCo, an energy supply company, Robin Hood Energy. It has created local jobs, cut fuel poverty, reduced energy inefficiency and cut carbon emissions. It generates revenues to reinvest locally. They’re looking to expand, by the way, so it’s another growing sector.

We should also acknowledge today some of the very innovative work under way in both energy and care, and other fields, by social housing providers in our community, who are key partners in the foundational economy. Smart local intervention could transform the foundational economy across, say, the Swansea bay city region. We are about to have a city deal. What we need alongside our city deals are region-wide community deals, investing in sustainable models in the foundational economy to take advantage of low borrowing costs, as well as the potential of the new UK municipal bonds authority and innovative joint pension fund management. There are long-term returns to the public sector and huge economic and well-being gains to the community.

What the foundational economy is about is a broader, less economistic view of the economy—one that takes well-being seriously. It isn’t about altruism, but about a sustainable economic model with a long-term horizon. It requires some imagination and the confidence to look at the economy differently, informed by a sense of common purpose.