The concept of a local currency is one way to encourage people to go to the high street through a creative use of supply side economics. A local currency would enable towns and cities across the country to stimulate economic activity in their floundering high streets. We need to encourage small business activity during this time of economic uncertainty, as small and micro businesses encourage entrepreneurship and form the backbone of our economy. Independent shops give our high street character and provide an incentive for people to visit our historic towns. The so-called ‘Death of the High-street’ is not just about national chains relocating, but the closure of small businesses. The use of a local currency would help reinvigorate it.One of the most notable successes of a Local Currency initiative in Britain is the the Lewes Pound. The Lewes Pound has a story behind it which is as applicable today as it was during the Financial Crisis in 2008. It was first inspired by the Totnes Pound which is intended to support the local economy of Totnes, Devon, and also BerkShares in the Berkshire region of Massachusetts, United States, which has been perceived as a great economic experiment for the United States – both used to facilitate and help engender growth in local businesses. Its innovative launch supported over 100 businesses but the criticisms were that it was not launched in a large enough geographic area, and it was not supporting those on lower economic brackets.
A local currency would enable towns and cities across the country to stimulate economic activity in their floundering high streets.
An even more important, and successful, case study is the Bristol Pound, a scheme supported by the Bristol City Council. Previous to the Bristol Pound, UK local currencies have included Totnes (2006), Lewes Pound, (2008), Brixton Pound (2009), and the Stroud Pound (2010).
The Bristol Pound case study shows us a number of different areas of success, starting with its value of £1 to 1 Bristol Pound. It functions therefore as a complementary currency, which keeps capital within the local area, fostering growth. It is set up between the British Pound Interest Company and the Bristol Credit Union. The Bristol Pound is just one example of what other local currencies are able to achieve for their locality. The Mayor of Bristol has also offered to take his entire salary in Bristol pounds. Interestingly, Bristol is the first city where both taxes and business rates can be paid in local currency. Furthermore, Bristol City Council and other organisations offer to pay their employees in Bristol pounds. It has implications for clean energy renewable schemes, where Good Energy Company, which is 100% renewable and part of the reason for the 2015 recognition of European Green Capital for the city, is the first energy company where you can pay bills in local currency.
The retail sector as a whole is suffering for the a number of factors of late. Consumer uncertainty about the economy has put a dampener on our spending habits, which in turn has impacted on the high street and local shops. We need to look at new ways to encourage people to shop and buy local. Other places have found the need to adopt a local currency in a bid to boost independent retailer sales and local economic activity.
Additionally, there is an economic rationale applied to this concept of a ‘local currency’ which goes beyond the simple concentration of capital within a given geographical area. This is based on the ‘Local Multiplier’ effect. To put it simply, the use of a local currency increases the cash flow between two local businesses, which in effect encourages economic development in the area. In contrast to national currency such as the £ sterling, if you do your grocery shopping in a national chain, an 80% of that money will leave the area. .
Statistically, the growth of the Bristol pound is impressive. According to the Chief Executive Officer (CEO), £1 million has been issued in 1 million Bristol pounds. Furthermore, more than 800 businesses accept Bristol pounds and more than a thousand local users even go as far as to have a Bristol Pound account. I know this is not as well publicised – maybe because it challenges the national model of having one economy, but if a city the size of Bristol with a population of 454,200 can produce these results so can others.
The more times the local currency is used, the more local wealth it will generate.
That’s why I call on all the political parties at Norwich City Council to seriously consider the relative merits of adopting a local currency, which can be traded on the high street and our independent shops. We should have a similar scheme in Norwich. If someone buys an item for £40 from a shop in Norwich Lanes for example, the money is guaranteed to pass to another local enterprise, and this then could be spent with another local business (generating the local multiplier effect). The more times the local currency is used, the more local wealth it will generate. It could also set up schemes with local credit agencies which allow users to set up accounts using Norwich Pounds, and local renewable energy schemes could allow people to use the Norwich Pound. Imagine how local commercial businesses particularly in the Lanes, Magdalen Street, the Norwich Market, as well as other small and medium businesses, the non-profit sector, and charity organisations could benefit, as well as energy and other sectors. It will keep money circulating in a local economy – ours – and boost economic demand for local goods and services, as well as community cohesion.
However, there are wider social implications to having a local currency adopted in a given area which lead to greater shared values between members of the local community and increasing social connectivity, explored in more detail in this paper.
We have already seen national success with local currencies adopted in Brixton and more recently in Bristol. Local currencies have also achieved success internationally when looking at case studies in New York and Massachusetts in the United States. There is more reason than ever to adopt a local currency for Norwich, to boost our local economy and create much needed demand for our independent retail sector.
Featured image via Pxhere
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