Reviving a genuinely local entrepreneurial culture

david boyle2Innovative thinkers often have to wait ten to twenty years before their concepts become mainstream. Two years ago David Boyle (New Economics Foundation) listed ten linked propositions, many borrowed from the most successful cities in Europe and North and South America, which could effectively allow cities to take back control of their economic destiny.

Agreeing with the City Growth Commission that a new economic agenda is emerging in these successful cities (and setting aside the issue of the desirability of growth) these propositions offer a more interesting and convincing contribution to the Core Cities debate, than Jim O’Neill’s four points:

Boyle’s ten linked propositions offer an outline agenda – a composite drawn from these urban centres:

  1. Rebuild local economies by plugging the leaks that are draining local money away. How money circulates in an area is just as important as the amount of money flowing into it. Traditional economics suggests that cities must specialise. That may be true for the largest businesses, but it is irrelevant for local business. For them, the best way forward is not just by specialising, but also by building diversity and looking for ways of replacing imports.
  1. Develop local diversity and distinctiveness. Too many of our cities have devoted their imagination and resources to making themselves look the same as each other. But because economic diversity keeps money circulating locally, it is critical that any new developments design well-being, distinctiveness and sustainability indicators into Master Planning processes and that any new retail effort must make high streets more, not less, diverse.
  1. Bust local monopolies to let enterprise flourish. One major reason why so many of our local economies have been hollowed out is that so many cities have been using net wealth destroyers as anchor stores.
  1. Organise enterprise coaching, support and advice in every neighbourhood. Coaches, backed up by a panel of local business people, bank managers and other local volunteers, can help to break down the barriers preventing enterprise from starting, replicating the kind of social networks that successful places have.
  1. Use local resources to build an effective new local lending infrastructure. Our businesses are now in a far weaker position than American or German competitors, and potential competitors, because we have no equivalent lending infrastructure. The real problem is not lack of capital to lend, it’s a serious lack of institutions capable of lending it.
  1. Invest in local energy. At present only 0.01 per cent of electricity in England is generated by local authority-owned renewables, despite the scope that exists to install projects on their land and buildings. In Germany the equivalent figure is 100 times higher.
  1. Use waste products as raw material for new enterprises. Traditional economics confines its interest to the point where money becomes involved and to the point when a product is thrown away. Cities are often blind to the potential value of what is wasted and thrown away – because all these have potential for enterprise.
  1. Use public sector spending to maximise local money flows. Making sure that public sector contracts build the local economy, and provide permanent economic assets for depressed areas.
  1. Launch a range of new kinds of money. Successful models are now running all over the world, keeping local resources circulating locally and providing independence for impoverished communities. They can provide low-cost or free credit, and – in some countries – they underpin whole sectors of the economy.
  1. Experimenting with new kinds of credit creation for local public benefit. There will be occasions when regional economies require the creation of new public money, free of interest, where necessary to cope with unprecedented financial emergencies, and as the basis for loans to rebuild the infrastructure of productive local economies.

Boyle notes that not all of these ideas could be organised without central government support, but that the rest could be done by imaginative and forward-looking city leaders, grasping the new powers of general competence made available in the Localism Bill.


Read the full article here.


Should QE now be used for the common good – extending and adapting the work of Birmingham Energy Savers?


Quantitative Easing currently benefits the non-bank financial sector, commercial banks and the Treasury

HansardUnder QE, Hansard evidence informs us, the Bank of England’s Asset Purchase Facility purchase of just under £375bn of government bonds from the non-bank financial sector has led to a lowering of long term interest rates. The non-bank financial sector and commercial banks now hold more liquid assets in the form of interest-bearing reserves.

The consequent reduction of borrowing costs for the government means that debt issued or re-financed since 2009 has been substantially cheaper, saving some £50bn in immediate funding costs.

But QE could be used directly for the common good: MP Caroline Lucas:

Caroline Lucas 3“There is huge, and as yet untapped, potential in renewable energy, energy and resource-use efficiency and the transformation of our transport system that would create high-quality jobs across the country and reduce the UK’s overall ecological impact.

“If we are serious about staying below 2C warming, as we have legal obligations to do, then to invest in a destructive Dash for Gas when there is a Green New Deal on the table borders on criminal negligence by my parliamentary colleagues.”



GND logo


This is the National Plan advocated by the Green New Deal Group: Larry Elliott of the Guardian, Tony Juniper, formerly FOE’s director, Jeremy Leggett of Solarcentury, Richard Murphy Tax Justice Network, Ann Pettifor of NEF and Debtonation, Charles Secrett, currently working with ELF, Triodos Bank and London’s Development Agency and Wildlife Trust, MP Caroline Lucas, Andrew Simms director of NEF, and the convenor Colin Hines, LWM co-founder and Co-Director of Finance for the Future.

Birmingham Energy Savers

birmingham energy saversEarly beneficiaries of Birmingham Energy Savers’ (BES) activities gave testimony of the positive impact the innovative scheme is having on their lives at its official launch event at The Council House in February.

It was attended by local people helped out of long-term unemployment, residents that are now enjoying warmer homes plus lower energy bills joined representatives of Birmingham City Council, who originated the scheme, and its delivery partner Carillion Services.

If such schemes could be more widely implemented and adapted for use all over the country, welcome social, economic and environmental benefits would be offered to most people – but minimal ‘rich pickings’ for the few.


In similar vein, Fran, Ben, Andrew, Mira and rest of the team at Positive Money urge:

“Get the Bank of England to create new money instead. This new money would be granted to the government, who would spend it into the real economy where it can create jobs and support businesses”.


The FSA, who let the banks run riot for years, promptly step in and block a community bank

David-Fishwick[1]Discontent with the banks is rife, and on this site last year we reported that in Burnley, a former cotton town, among the country’s most deprived, the Financial Times and other sources reported a citizen’s innovation: Colne businessman David Fishwick started his own lending institution to support a television show after becoming infuriated with the banking industry. In 2008 he started providing finance to help cash-strapped customers to buy his minibuses.

He set up a savings and loans institution which offered 5% annual interest, and lent it to local businesses at 8.9%, offering a personal guarantee to make good any losses. Profit left after paying the three staff of Burnley Savings and Loans was given to charity. This “bank” did not lend more than £25,000 a week and had a two-year waiting list.

It is sad to hear from Ian Potter in the Farmers Guardian that the Financial Services Authority has effectively stopped his bank taking in deposits from locals on the grounds he was operating an unregulated, collective investment scheme.

However Dave is taking on the FSA and Channel 4 is filming his progress.

Ian Potter comments:

“On the face of it, it appears the Financial Services Authority sat back watching fat cat bankers who raped this country and crippled our economy get away with robbery, yet they take the easy option to close down a community bank, the brainwave of an enterprising northerner”.

We agree with Ian Potter’s verdict: “These are real David and Goliath battles” and join him in wishing David Fishwick success.


Building strong regional economies – Schumacher-style

The Schumacher Center for a New Economics sends news of this year’s Left Forum annual gathering in New York, which will be exploring ways of confronting climate change and global economic crisis and creating a more equitable and ecologically resilient world.

Such a world will require economic institutions which respond to local and regional needs and conditions, decentralising control of land, natural resources, industry, and financing to serve the people living in an area in an equitable way.

An infrastructure that encourages local production of food goods and services for local needs will be needed; the tools for building strong regional economies include:

  • community land trusts,
  • worker-owned and worker-managed businesses,
  • non-profit local banks,
  • and regional currencies

Farming: the cornerstone of strong regional economies

Successful farmers operating at an appropriate scale are the cornerstones of strong regional economies. They care for the soil and water, produce healthy food for diverse markets, employ others and support themselves. However, the current valuation of land makes it nearly impossible for farmers to capitalize a business, sustain a livelihood, build equity, and still afford secure long-term access to land.

Import replacement
In our globalized economy the tools that supported local production for local consumption have been lost and in a system where financial tools, education, and community expectations are turned toward the global, the convenient, and the cheap, how can regional “import-replacing” businesses be helped to establish themselves and succeed?

Building a responsible movement for a new economy will require planning how to create new jobs without increased growth.  One approach is a strategy of import-replacement, with more labor intensive, smaller batch production, transported over shorter distances.

The goal would be to create more jobs, but not more “stuff,” with a smaller carbon footprint overall.  This is an ambitious objective, but it is necessary if we are to transition to an economic system that is equitable and sustainable. 

The Financial Times reports a co-operative revival

Andrew Bounds has reported ‘a co-operative revival’ in the Financial Times – a trend first noted in this blog in 2010. He notes that the number of share offers and co-operative members in new societies doubled between 2009 and 2012 as the economic downturn has continued, according to figures from Co-operatives UK, the umbrella group for mutual societies.

Unlike most of the large retail co-operative societies, smaller co-ops are democratically controlled by their members, have low income differentials and some offer training for job rotation.

The Daily Bread Co-operative

A fine example is Daily Bread in Northampton – above. News of other worker co-operatives may be seen here.

Wind farms, hydroelectric projects, book shops, village stores and pubs,are among assets now owned by their communities. Of the 114 funded (2009-2012), there were 28 shops and 35 power schemes (see the LWM blog), raising in all £20.9m from 23,700 members.

An earlier article noted that Oliver Letwin, at the cabinet office, works four hours a month behind the counter in Thorncombe village shop, in his Dorset constituency. He is a founder member of a co-operative that took over the store in 2009 when it was threatened with closure.

William Hague joined 150 members of his constituency to reopen a pub, buying shares in a co-op that took over the George and Dragon in Hudswell, North Yorkshire.

The co-operative renaissance, kick-started by the 1976 Common Ownership Act and its revolving fund, led to a boom with worker co-ops opening every week, which slowed down to a trickle as recession set in. Now, as banks are reluctant to lend and are offering very low interest rates for savers, local investment opportunities which serve the community are attracting more people.

A Very British Coup – How the Bank of England brought us Austerity

Alistair Darling explains a crucial moment in the fall of Gordon Brown in his book Back from the Brink. He explains how as Chancellor he decided to keep Mervyn King on as governor of the Bank of England in 2008.

‘I told Gordon my view, that Mervyn should stay, and with some reluctance he aquiesced. I don’t think that he and Mervyn ever got on. Certainly the next two and a half years saw a growing antipathy between them. This really came to a head during the Treasury select committee hearings in 2009, when Mervyn appeared unilaterally to announce that there was no more money available for fiscal stimulus. Gordon quite rightly felt that this was crossing a line, that he was addressing fiscal policy, which was the remit of government. Certainly Mervyn would have been furious if Gordon or I had expressed an opinion on what the Bank ought to to be doing over monetary policy. Gordon was very angry and tried to phone me during the committee session, which I was watching from the Treasury. He asked me what I was going to do about it and suggested that I should go in and stop him there and then. It was tempting, but not practical.'(p.69)

Brown loses control of his own cabinet

Up until then the Tories had been supporting Labour’s plans to maintain public spending. Very soon after they changed tack to argue that the deficit needed to be addressed. Within the year Alistair Darling was then himself bringing forth a deficit reduction plan. The Labour Cabinet swung then behind Darling and spending cuts, despite the resistance of Gordon Brown and Ed Balls. In the end it was only Ed Balls who resisted.

As it became more and more clear that the outcome of the 2010 General Election would be a hung parliament, the Governor of the Bank of England and the Cabinet Secretary Gus O’Donnell began to work closely together to put together a coalition with a coalition agreement organised around the principle of deficit reduction.

Preparing a new government

For Mervyn King at least this would be a suicide pact of a programme. The measures required to shore up the country’s finances would be so unpopular that the next government would be out of power for a generation.  This is what he said to a American visiting  economist whom he had known for years, who then apparently blurted it out on Australian television. The story got picked up in the British press just hours before the final episode in the series of leaders’ debates that became central to the 2010 British election.

In his book  22 Days in May – The Birth of the Lib Dem-Conservative Coalition David Laws, who was the Lib-Dems  lead negotiator tells us how on the Sunday after the elections that resulted in the hung Parliament the negotiators met.

‘Gus O’Donnell welcomed us and made some comments about the state of the markets and the importance of our work. He said that the Civil Service could offer advice on constitutional issues, budgetary and other matters. He then offered a have us briefed by the Governor of the Bank of England and a representative from the Joint Intelligence Committee, so that we could understand the ‘seriousness of the economic environment’ and other matters.’

Laws goes on …

‘Both sides declined this opportunity. We Liberal Democrats suspected that we knew what both were likely to say, and we did not think it appropriate to have such a briefing at this stage in the negotiations. I suspect the Governor of the Bank of England’s intervention would be perceived to have been aimed more at us than at the Conservatives, and we didn’t want to feel manoeuvred into policy positions that we weren’t confortable with by outside advice.

Later in the day, concerned that our rejection might be misinterpreted, we suggested that Vince Cable, our Treasury spokesman, might speak to the Governor instead.’ (P. 95)

Despite the caution Laws professes about his party being manoeuvred, is it really credible that they really remained masters of their fate ?

Not even in Greece

Conaghan I have assembled these little known snippets from the already published recent history, in order to help get the change in government and policy  into perspective.

Many governments around the world have fallen since the crash of 2008, but nowhere else has the central banker played such a role in putting a government and its priorities together as they did in London in 2010.

Although in Greece a government was put together around a former central banker as prime minister, it was but a stop-gap government with a deliberately restricted lifespan put together by a president.

Andrew Lydon   – LWM Bank of Britain Project 

The Resilience imperative – Cooperative Transitions to a Steady State Economy

resilience imperative conatyLocalise West Midland’s co-founder, Patrick Conaty, has just published a book co-authored with Mike Lewis: The Resilience imperative – Cooperative Transitions to a Steady State Economy. It examines many elements of a resilient local economy, collating and critiquing many examples of how this has been achieved all over the world over the last 150 years.

The term ‘resilience ‘ is coming to the fore; the American organisation of that name focusses on building community resilience in a world of multiple emerging challenges: “the decline of cheap energy, the depletion of critical resources like water, complex environmental crises like climate change and biodiversity loss, and the social and economic issues which are linked to these”.


Extracted from Pat’s interview with Naresh Giangrande from the Transition Network:


NG: Why should someone involved in a Transition Initiative read this book?

PC: Mike and I were aware that although there have been many social and environmental change solutions developed, there has been a lack of strategic thinking. How can we join these partial solutions up? Through co-researching and co-writing the book over three years, we felt that we could clarify a Great Transition strategy for going forward by bringing together different fragments of positive change strategically and practically. We saw a need to bring ecological and cooperative economics together. Kenneth Boulding, a founder of ecological economics was the first to call for a Great Transition in the mid 60s, and saw the need to link cooperative and ecological economics together. . .

NG: You were involved in the 1990’s in The Real World Coalition seeking to bring together the third world development, green movement, social justice movement, small business, and micro credit movement.   Is this book in some way an expression of that impulse?

PC: The Real World Coalition united over 30 NGOs in the UK from these sectors and was led by Jonathan Porritt, Sara Parkin and Mike Jacobs. It was unique in that it spent three years developing a common manifesto among the NGOS. We need something like this again. How do we unite the fragments of change, to tackle the big issues? We have to come together .Yes this book is looking at the intervening years and what are the practical, tried and tested ways that people have been cooperating and  been successful in creating the pieces of local resilience . . .

NG: If you were to synthesize ecological and cooperative economics what would you come up with?

To root the integrated theory with practice, we looked at basic needs – food, shelter, finance, and energy services – and how could we meet human needs  co-operatively and what are the practical ways that have been pioneered to satisfy these needs and build a sustainable society  . . .

NG: I loved your tables at the end of chapter showing the costs to an average family.

PC: Yes we took a family of four and looked at what if we were addressing their needs in the new economics way and what would be the impact on their household budget.

NG: And the result?

PC:  We substituted usury based on high rates of compound interest with mutual fee based money and private energy and food monopolies with energy and food coops. We also show savings by converting housing to Community Land Trusts to take the land cost out of the market. The result we found is that there are significant savings to be made in each instance and the cumulative results show the practical potential for a steady state economy.

For an average family of four, you make a savings on energy and financing of over $360,000 over 25 years. Local organic food would be more expensive, but the net savings including food are still $280,000 over 25 years. We converted this to life hours which translated into saving 10 hours a week per household. This is significant . . .

NG: You have a keen sense of how there is nothing new. The REconomy project, need for land access, and social justice. Others have been over this ground many times before.

PC: We have lost sight of the historic and international struggles over that past 170 years for achieving land reform, economic democracy and for a co-operative economy.

As a result each generation typically starts with a blank page which is tragic because we lose sight of what these struggles can tell us so we can move forward faster and more effectively.

I am convinced that cooperative solutions lie at the heart of the new economy. We explore in diverse chapters the growing social solidarity economy internationally – which is generally below the radar – but none the less a powerful force. It is often unaware of its power, despite the fact that co-ops globally employ more people than multinationals . . . Some exciting work we show is going on with La Via Campesina uniting small farmers globally, in Quebec with co-op federations in Montreal and in the social co-ops in Northern Italy.


The Resilience Imperative Michael Lewis and Pat Conaty New Society Publishers 2012. Paperback: ISBN: 978-0-86571-707-7; ebook ISBN: 978-1-55092-505-0

Read this interview in full on the Resilience website and an interview with Mike Lewis here.



A new social revolution – an emerging trend “a million miles away from the fantasy localism agenda espoused by David Cameron”?

David Thorpe, news Editor at Energy and Environmental Management (EAEM) writes about “An emerging trend that, if allowed to develop its potential, could transform society for the better by increasing democracy and individual responsibility”.

Its roots: “(A)nger with the banks and corporate greed (last month, vitriol was directed at water companies and the month before, energy companies; this week it’s pharmaceuticals) and a desire to create practical alternatives at grassroots level.”

He gives some recent examples of positive expressions of this trend:

  • A report released a week ago recommending that the Labour Party adopt as policy the re-nationalisation of the rail network and its incorporation as a mutual rather like the Co-op
  • Tory MP Tim Yeo pursuing a call for personal carbon trading, saying he will trial it in his own constituency
  • Vince Cable calling for more banks to be ethical and mutual like the Co-op bank and old-fashioned building societies
  • the growth in community renewable energy co-ops.

David Thorpe believes that a commitment to ‘fairness’  is at the heart of these examples:

“They all do away with the idea of ‘us’ versus ‘them’, where a minority own and grow rich on a collectively-used resource, and replace it with collective ownership, i.e. just ‘us’.”

Disillusionment is leading many individuals and civil society organisations to develop their own different agendas

As he notes, over the last few years, we have seen governments, corporations and their economists failing to learn from mistakes, failing to listen to public opinion and failing to come to meaningful solutions to the problems of worsening biodiversity, increasing climate change and economic chaos.

Many people are asking: what is the point in continuing with a one way dialogue and expecting change from these people?

To read about taking the railways back – the Rebuilding Rail report, taking the air back – Sharing for Survival, and taking back power, read the whole article here.


An important recommendation from Andrew Lydon in Birmingham and Andrew Hilton in London

Andrew Lydon (WM New Economics Group and Localise West Midlands) has long stressed the vital importance of giving a fair return to savers in his presentations and the latest LWM blog:

Long before the Governor of the Bank of England claimed he heard that the big banks were rigging the now famous LIBOR, we were pointing out how the banks were squeezing us all.

Savers in the UK are being offered derisory returns, but average mortgage-payers are usually paying over 5%.

The difference in the UK is far more stark than in France and Germany, or even countries in crisis like Ireland and Greece.

An elaboration on this theme was seen recently in the FT by Andrew Hilton, Director of the Centre for the Study of Financial Innovation – a forum for debate and research about the future of the financial services sector, supported by sponsorship from leading institutions in banking, insurance, investment, government, technology and the professions:

The key is confidence. If that is there, investment will follow . . .

If the authorities seem hell-bent on pushing interest rates down to historically unprecedented levels, consumers may well ask: Why? And when they realise the answer is panic, they will stuff the money under the bed. They certainly won’t go out and buy a new car or a washing machine . . .

[T]he fastest-growing demographic is the elderly – for whom low or zero interest rates are a disaster. If your old age income is to be determined by annuity rates, a cursory look at FT tables will be enough to dissuade even the most feckless oldie from that Caribbean cruise.

Mr Hilton’s answer: government should “keep calm and carry on” and increase interest rates, to “say 2 to 2.5 per cent real – not cut them”. People would then have more confidence in buying what they need and manufacturers would have enough confidence to invest.

Andrew Lydon recommends that – as the difference between what the banks are making on loans and paying on savings is currently so stark in the UK  [see also his December 2011 blog] – the Bank of England should start giving guidance on a norm for savings rates, which could be eased upwards without the need to put up rates for borrowers.



Public SME investment bank launched in France – and Green Investment Bank in Britain


Hugh Carnegy reports from Paris that the French government is to stimulate business growth by setting up a state-owned investment bank offering €42bn in financial backing for small and medium-sized enterprises which – as in Britain – are large employers overall.

It will incorporate the work of three existing state agencies and will aim to provide finance and long-term support for business which is currently lacking for smaller companies. This has been seen as one of the causes for France’s recent loss of industrial competitiveness.

Arnaud Montebourg, the industry minister, said that the bank would be more patient and less greedy in its approach to risk than mainstream banks, but would not take risks that put taxpayers’ money in peril.

It will have strong regional representation and will be owned 50-50 by the state and the Caisse des Dépôts et Consignations, sometimes described as the “armed wing” of the finance ministry.

How will it compare with the service offered by Britain`s Green Investment Bank?

This has just been approved by the European Commission – was France`s new venture? The GIB will begin operations in the next few weeks, with £3 billion of Government money and `mobilised` additional private capital.

Read more of the latest GIB news here: