THE BLOG

Why Local Economies Hold the Key to Our Economic Future

19/06/2013 23:59 | Updated 19 August 2013

Why is the city of Bristol printing its own money? Why have Brixton and Bath created their own energy companies? Why is the community of Totnes about to become the developer of an eight-acre site in the town? Why did people in Dunbar club together to start their own bakery? Before we can answer that, let's start with a simple enquiry.

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Image credit: Charlie Waterhouse

What's a local economy worth? And if we knew, how might it help us imagine an economy beyond austerity? Transition Network has recently undertaken two studies (with a third to follow) to measure this. The intention has been to find out how much money circulates through local, independent shops, as opposed to supermarkets, in three diverse settings, and to get a sense of the economic potential that represents. The findings are fascinating.

The first, for Totnes in Devon, a town described in a recent report by the Campaign for the Protection of Rural England (CPRE) as having an "extraordinarily rich local food web", found that Totnes spent £30million on food every year, of which £22million is spent in two supermarkets, £17.5million in just one of them.

The second, for the county of Herefordshire, estimated that the top five major supermarkets in Herefordshire account for between 71% - 83% of all household expenditure on 'brought home' food and drink, around £180m annually. They concluded that the true 'local spend' figure, i.e through local, independent businesses, could be around 16% of the total. The third of these reports, focusing on Brixton in London, reports later this year.

What does that look like nationally? The best figure I've been able to find is from the recent Portas Review, which states that 8,000 supermarkets now account for over 97% of all UK grocery sales. Clearly other smaller supermarkets account for some of the remaining sales, but let's assume, for argument's sake, that nationally, 3% of what we spend on groceries goes through local and independent businesses.

Why does that matter? Surely a shop's a shop, whatever the name written above the door? Yet we know local shops employ three times as many people for the same amount of turnover as a large supermarket. We know that when a new supermarket opens, on average 276 local jobs are lost; an impact which can be felt "up to 15km away".

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Image credit: Mark Simmons

We know that local, independent businesses are more likely to create stronger and happier communities. One striking extensive study from the US in 2001 found that communities with large supermarkets had fewer non-profit-making groups and organisations that build social capital. The study even linked the presence of large supermarkets with lower voter turnout at elections!

We also know that that local independent economy is increasingly under threat and vulnerable. As the CPRE report on the Totnes local food economy put it:

Although the Totnes food web is thriving and offers an important range of triple bottom line - social, economic and environmental - benefits, it remains vulnerable to major supermarket development.

It increasingly appears that the 3% is better suited to meeting our core needs better. As a recent report by Localise West Midlands on 'community economic development' states:

Our research has found strong evidence that local economies with higher levels of SMEs and local ownership perform better in terms of employment growth (especially disadvantaged and peripheral areas), the local multiplier effect, social and economic inclusion, income redistribution, health, civic engagement and well-being than places heavily reliant on inward investment where there are fewer, larger, remotely owned employers.

Also, if we want a stable climate, reduced energy vulnerability, economic stability, and a healthy human culture, we really have no choice than to shift our focus to the 3%. As Maria van der Hoeven of the IEA said recently, "the path we are currently on is more likely to result in a temperature increase of between 3.6 °C and 5.3 °C". If we're currently on a path with that as the destination, we need a new path.

So the question I'd like to pose, and which I pose in The Power of Just Doing Stuff, is whether, in our pursuit of a response to the current economic crisis, we put our energy into growing the 3%, or the 97%? The government's response in the UK is to remove any 'red tape' perceived as standing in the way of economic growth, which often means forcing unwanted retail or development onto communities and the increasing homogenisation of our high streets and the dismantling of community resilience gathering pace.

Yet, the projects I mentioned at the start of this piece, and many many more besides: pop-up shops, new butchers and bakeries, community-supported farms, local currencies and so on, aren't waiting for permission, they're getting on and beginning the push for this new economy, now. Many of them are Transition initiatives, Transition having emerged as a powerful approach for organising with the people around you to make this happen.

The Totnes and Herefordshire reports also look at energy, the potential from retrofits and care for the elderly, finding a potentially huge boost to local economies that could result from this shift of emphasis. I believe what we are seeing is the historic emergence of a new economy, one far better suited to our times. And it starts with you, and I, and the people around us. Talk to your neighbours. See what happens.

Rob Hopkins' new book, The Power of Just Doing Stuff is now available to buy online.