1. Connected local economies
Understanding local economies and
local economic impact

2. Challenge
The current economic system:
» Unsustainable
» Unfair
» Unstable
Well-being

3. Ultimate goal
- Resources
- Money
- Decision making
Living within - Institutions
environmental Well-being
limits Economic activity
at a scale to
maximise
social, environment
al benefits.

4. Adaptation & local economic opportunities
Supporting and shaping the structure of the economy for
long term benefits
Environmental transformation of infrastructure
Energy – saving and generation
Transport
Waste management
Food systems
Focus:
Reducing reliance on fossil fuels
Reducing negative environmental impact
Seeking positive economic, social and environmental outcomes
from how delivered

5. Need to make money
work harder locally
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

6. 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 area
Reduces 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.

7. 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

9. 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

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

11. Practical tool to measure local spending (LM3)
Construction – Norfolk district council
Sea wall Car park
Local Non-local
Round 1 £ 72,000 £ 120,000
Round 2 £ 57,600 £ 20,400
Staff 24,480 0
Suppliers 33,120 20,400
Round 3 £ 24,980 £ 6,760
Staff 17,038 0
Suppliers 7,949 6,768
Total £ 154,580 £ 147,160
LM3 2.15 1.23

12. 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?

13. 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.