Connected local economies

Understanding local economies and local economic impact

Challenge

The current economic system:» Unsustainable» Unfair» Unstable

Well-being

Living within environmenta

l limits

- Resources - Money- Decision making- Institutions

Economic activity at a scale to maximise social, environmental benefits.

Well-being

Ultimate goal

Adaptation & local economic opportunitiesSupporting and shaping the structure of the economy for long term benefits

Environmental transformation of infrastructure Energy – saving and generation Transport Waste managementFood systems

Focus:Reducing reliance on fossil fuelsReducing negative environmental impactSeeking positive economic, social and environmental outcomes from how delivered

The problem is not necessarily that too little money flows into a community. Rather it is what consumers, public services & businesses do with that money.

Too often it is spent on services with no local presence, and so immediately leaves the area

Need to make money work harder locally

Value of local spending

Marsh Farm, Luton: est. £58m spending power locally, £21m on home expenditure – 90% spent outside the estate. Including £1m on takeaways .

Sleaford, Lincolnshire: est. £38.2m available to spend on consumer goods annually.70% of this money is currently spent outside of Sleaford.

Manchester City Council: Tracked their spending of top 300 suppliers (of a budget comprising £600m revenue and £300m capital expenditure per annum) Found:86 per cent of spending are with businesses based in greater Manchester areaReduces to 55 per cent for suppliers ranked 301 – 1000.

Can use this data to understand the local enterprise and job opportunities available within the city region if these supply chains become more localised. What actions can be taken to retain wealth in economically disadvantaged areas.

Housing associations £10bn. annual turnover TSA Global Accounts of Housing Providers 2010

Annually invest over £435 mn. in community investment activities ...made up of £272 from own funds NHF Neighbourhood 2008

- 3.5 million (56%) social housing residents of working age are not working.DWP 2011.

- 88% of housing associations offer support / work opportunities to residents – mostly as separate to considerations of mainstream spending . HACT 2012 survey

Circulating Pound - The local multiplier effect

• It’s not just where you spend your money that matters

• It’s also important where the people you spend it with - then spend it

LM3 - Measuring money flowsPurpose: • To measure the impact of spending locally• Can be applied at local (self-defined) and regional

levelLM3 (Local Multiplier 3): • Adapted from Keynesian multiplier• Measures how money is spent and re-spent locally to

3 rounds of spending to determine local economic impact

Applied to: Municipalities, Organisations, Projects,on Contracts or whole organisations

Construction – Norfolk district council Sea wall Car park Local Non-local

Round 1 £ 72,000 £ 120,000Round 2 £ 57,600 £ 20,400Staff 24,480 0Suppliers 33,120 20,400

Round 3 £ 24,980 £ 6,760Staff 17,038 0Suppliers 7,949 6,768

Total £ 154,580 £ 147,160

LM3 2.15 1.23

Practical tool to measure local spending (LM3)

Increasing LM3 - What to think about

How many of your staff live in the local area? How could you address local staffing issues? Where are your suppliers located? How much are your suppliers spending locally? How could you improve local sourcing decisions? Are there supply chain gaps? Will changes you make matter?

How could goods and services be delivered differently?

Every way housing associations spend money has the potential to:

Achieve sustainable economic development aims.

Open up local employment and business opportunities.

Generate positive local economic, social and environmental outcomes.