From Policy to Architecture: Scotland's Community Wealth Building Law

Executive Summary

In January 2025, Scotland's Parliament passed Stage 1 of the Community Wealth Building (Scotland) Bill—making it the first country in the world to legislate community wealth building at a national level.

This is not merely a policy announcement. It represents a fundamental shift from operational commitment to legal architecture. Where Preston and Cleveland demonstrated that community wealth building works, Scotland is demonstrating that it can be made structurally permanent.

For IRSA, this case study is significant because it shows what happens when regenerative economic principles move from the operational layer (where they depend on political will) to the architectural layer (where they become embedded in legal infrastructure).

“This is what it looks like when well-being economics stops being theory and becomes legislation.”

1. From Policy to Law: Why the Distinction Matters

Community wealth building is not new. The principles—local procurement, plural ownership, fair work, place-based investment—have been implemented in various forms across the world.

But in Preston and Cleveland, community wealth building remained a policy choice. It depended on political champions, council priorities, and the willingness of anchor institutions to participate.

The problem with policy-dependent approaches is their reversibility. A change in government, a shift in priorities, a new chief executive—any of these can unwind years of progress.

Scotland is doing something different. By embedding community wealth building in legislation, it moves from the operational layer to the architectural layer. The principles become part of the legal infrastructure of how public institutions must operate.

2. The Five Pillars of Community Wealth Building

The Community Wealth Building (Scotland) Bill is built around five pillars, each addressing a different mechanism through which wealth either circulates within or leaks out of communities.

The goal is structural: keep wealth circulating inside communities instead of being extracted by distant shareholders.

Each pillar addresses a specific extraction mechanism:

• 1.Plural ownership counters shareholder extraction by building enterprises where value stays with workers, communities, or social missions.
• 2.Progressive procurement ensures public spending strengthens local economies rather than flowing to distant corporations.
• 3.Fair work ensures value created by workers is shared with workers, not extracted through wage suppression.
• 4.Socially just land use ensures land value accrues to communities rather than speculators.
• 5.Financial power keeps savings and investment circulating locally through community banking.

3. Learning from Preston and Cleveland

Preston and Cleveland proved the concept. Preston redirected anchor institution spending—from hospitals, universities, and councils—toward local suppliers, increasing local procurement from £38 million to £111 million in four years.

Cleveland's Evergreen Cooperatives created worker-owned businesses—a laundry, solar installer, and urban farm—that kept wealth in one of America's poorest neighbourhoods.

Both demonstrated real results. But both remained vulnerable to political reversal.

Scotland learned from both successes. The Bill doesn't just encourage community wealth building—it requires public bodies to develop CWB strategies and report on progress.

4. IRSA Framework Mapping

Scotland's approach maps directly to several IRSA frameworks, demonstrating how regenerative principles can be embedded in legal infrastructure.

4.1 Institutional Operating Architecture (IOA)

IOA distinguishes between three layers of institutional design:

• Operational: Day-to-day decisions (reversible by managers)
• Governance: Policy and strategy (reversible by boards/councils)
• Architectural: Legal structure and constitutional commitments (requires legislation to reverse)

Preston and Cleveland operated at the operational and governance layers. Scotland is operating at the architectural layer—embedding CWB in the legal infrastructure of public institutions.

4.2 Commitment & Enforcement Architecture (CEA)

CEA examines how commitments are made binding. The spectrum runs from:

• Voluntary pledges: No enforcement (easily abandoned)
• Policy commitments: Administrative enforcement (reversible by policy change)
• Legal obligations: Statutory enforcement (requires legislation to reverse)
• Constitutional embedding: Constitutional amendment required

By legislating CWB, Scotland moves from policy commitment to legal obligation. Public bodies will be required by law to develop CWB strategies—not merely encouraged.

4.3 Decoupling

The five pillars each address a specific extraction mechanism—shareholder extraction, wage suppression, land speculation, capital flight. By legislating against these mechanisms, Scotland decouples local wealth from extraction cycles.

5. The Architectural Significance

Why does it matter whether regenerative principles are embedded in policy or law?

The answer lies in institutional learning. Policies teach institutions what to do. Laws teach institutions what they are.

When community wealth building is policy, institutions learn to comply when monitored and deviate when not. When it is law, institutions learn that CWB is part of their fundamental operating architecture—not an optional extra.

This connects directly to IRSA's work on Carney's Davos address. The global order discussion is fundamentally about what happens when institutional claims diverge from operational reality. Scotland's approach is the opposite: making institutional claims legally binding so they cannot diverge.

“Scotland is doing something different. It's turning these ideas into law, making them permanent, not political.”

6. Implications for Institutional Design

Scotland's approach offers several lessons for institutions seeking to embed regenerative principles permanently:

For Organisations and Institutions

Scotland's approach raises a diagnostic question for any institution seeking to embed purpose:

Is your mission protected by policy (reversible) or architecture (permanent)?

If a new CEO, board, or government could reverse your purpose commitments without legal consequence, they are policy. If reversing them requires changing your legal structure, they are architecture.

Scotland has shown that the architectural option is possible—even at national scale.