Complexity or resilience?

In the Times, Ed Conway (right), economics editor of Sky News, describes problems arising from the complexity of ‘the hallmark of 21st-century life’ and the International Alliance for Localization records examples of new modes of development and progress.

Conway writes about the vast supply chains, financial instruments and legal structures ‘sitting beneath every industry’:

  • Where once a company made its products in one country, these days most sophisticated goods are the product of many hundreds of contractors from around the world, eventually assembled into one unit and quickly shipped to your door.
  • Where once a bank manager would know to whom he lent money, these days debts can be packaged and repackaged so many times that the link between borrower and lender is effectively lost.
  • Financial globalisation — the ability to move money seamlessly from country to country leaves countries even more vulnerable to banking crises.
  • And in much the same way as companies outsource non-core production and services, the public sector delegates responsibilities to private operators.
  • By replacing tightly knit relationships with impersonal complex structures we lost something — consider the 2008 financial crisis,

The complexity of the regulatory system played a part in the Grenfell Tower disaster tragedy. Not only were regulations extensive yet oddly vague — allowing builders to use various loopholes — they were not even checked by government officials. These days contractors in England can instead hire “approved inspectors”, private outfits which provide a bit of advice and tick the appropriate boxes.

Globalisation, once a means of boosting everyone’s income, has instead evolved into an excellent vehicle to help the rich get richer.

The International Alliance for Localization sees that the building of more resilient economies will require a rethinking of the financial system, and its Planet Local series has been turning the spotlight on some inspiring examples of ethical banking:

* In Maine, USA, a local resident with money to invest  is providing nearby small farmers with loans whose interest is paid exclusively in the form of farm products.

* Brazil’s Banco Palmas, governed and managed by residents of the impoverished Palmeiras neighborhood in the city of Fortaleza, has issued a local currency, dramatically shifted spending patterns to keep money circulating locally, and extended basic financial services to people shut out of the mainstream banking system.

* In Croatia, the democratically-owned Ebanka functions as a non-profit bank, in stark contrast to most financial institutions worldwide. Their loans are given without interest, and every member has an equal voice when it comes to voting on big decisions, regardless of the value of their deposit.?

Visit IAL’s growing library of localization initiatives

 

LWM is a member of IAL, a cross-cultural network of thinkers, activists and NGOs from 58 different countries.

 

 

 

c

 

Economic Prospects for 2017: Andrew Simms – New Economics Foundation

nef-logo             

As John Nightingale who sent the link says, this ‘reads well’: 

Each year the Financial Times conducts a survey of leading economists on the UK’s upcoming prospects. The New Weather Institute is part of that survey and predicts a bumpy ride. A lot of the FT material sits behind a paywall, so for interest here are the answers we gave to their questions (which are themselves interesting in terms of locating mainstream concerns) on issues ranging from economic growth, to Brexit, monetary and fiscal policy, inflation, immigration and, unavoidably, Donald Trump.

Highlights (full text on WM New Economics Group website):

It is time to stop measuring the health of the economy using orthodox economic growth measured by fluctuations in GDP as the primary indicator. By mistaking quantity for quality of economic activity, worse than telling us nothing it can be actively misleading. It tells us nothing about the quality of employment, the intelligence of infrastructure, the economy’s resilience, the environment’s health, or the life satisfaction of the population. As the United Nations Development Programme pointed out (as far back as 1996), you may have growth, but it might be variously jobless, voiceless (denying rights), ruthless (associated with high inequality), rootless (culturally dislocating in the way that fed Brexit, for example) or futureless (as now, based on unsustainable resource use) . . .

. . . tax breaks, subsidies and the way investment portfolios get managed means that money flows cheaply in fossil fuel infrastructure and operations. At the same time, necessary and successful emergent sectors like solar and other renewables can still struggle for affordable, patient capital. The privatisation and weakening of the mission of the Green Investment Bank is deeply concerning in this regard . . . prevalent economic uncertainties seem to be having the effect of putting everyone, the MPC included, on ‘watch’, and unlikely to do anything radically different in the ‘phony war’ period of approaching Brexit negotiations . . .

If anything, far from being downgraded by the Brexit debate, the economic importance of immigration to key UK sectors has been made more acutely obvious, ranging from higher education, to food, retail and a range of other service industries. Importantly, many of the drivers of population movement from inequality to conflict and environmental degradation show no sign of lessening and, if anything, growing worse.  The tone and promise of government policy seems mostly to affect the degree of xenophobia experienced by immigrants rather than significantly changing their numbers. With all these things in mind, I doubt trends in immigration will change much in 2017 and that this will buoy-up a UK economy facing a wide range of threats . . .

There is no reason in principle why QE cannot be used in a more intelligent and focused way. The UK is weighed-down with an aging, creaking, high-carbon infrastructure. The case for public investment as necessary to rebuild the foundations for a modern, clean and efficient economy to underpin our quality of life is overwhelming. The cost of money for conventional borrowing is cheap. And the decision by the Bank of England to expand its quantitative easing (QE) programme from £375 billion to £445 billion in the wake of Brexit, demonstrates that public money creation is also possible when the situation demands it. Up to date, QE has benefited the banks, and the holders of certain assets, with broader economic benefits being questionable. But, as Mark Carney has previously indicated, there is no reason in principle why it cannot be used in a more intelligent and focused way to aid the productive, low carbon economy. I and others have consistently argued that far more good could be done if the same basic mechanism was used, for example, to capitalise a much larger and more ambitious green investment bank via bond purchases. The work subsequently undertaken such as large scale energy efficiency retrofitting of the UK housing stock and the roll out of renewable energy would generate good quality local employment and better prepare Britain for the future. There is no sign yet that the government intend to seize this opportunity and rather too many signs that any borrowing that is undertaken will not be put to as good use . . .

Combined with the sentiments unleashed by Brexit, and the UK government’s active new embrace of industrial strategy, it is possible that the economic pendulum may swing back some degrees from globalisation toward localisation. Done in a purely autarchic way this might be negative. Done with respect to international cooperation and obligations, and to help build a more environmentally sustainable economy, it could snatch success from the jaws of chaotic self-destruction.

http://network.neweconomyorganisers.org/conversations/11898 Did you know… Adding your events to the NEON calendar will automatically promote them to our 1414 membersadd your events here.

 

 

 

Crickhowell’s tax plan: an example of ‘people power’ raising awareness of injustice and HMRC’s failures

crickhowell 3

Crickhowell has an independent high street with very few of the trading names which now dominate look-alike urban and suburban commercial centres. The town made news earlier this year after offering shares to residents at £50 each to buy their Grade II listed Corn Exchange pub from Punch Taverns to avoid it being used as a convenience store by one of the large retail chains.

The FT reports that the town’s traders, including a salmon smokery, local coffee shop, book shop, optician and bakery have now submitted tax plans to HMRC, using the offshore arrangements favoured by multinationals. They hope that their ‘tax rebellion’ will spread to other towns forcing the Government to tackle how Amazon, for example, paid £11.9 million tax last year on £5.3 billion of UK sales.

The details of the scheme are not in the public domain, but townspeople say it involves shifting intangible assets to the Isle of Man and setting up a trading arm in the Netherlands.

High street coffee shop owner Steve said: ‘I have always paid every penny of tax I owe, and I don’t object to that. What I object to is paying my full tax when my big name competitors are doing the damnedest to dodge theirs.’ Starbucks, for example, has paid £8.6million in UK corporation tax since it opened its first shop in London’s Kings Road in 1998, funnelling revenues/royalties out of the UK and into the Netherlands and Switzerland where they have been offered better tax deals.

Retailers are ‘trying to create a level playing field’ by changing the law

Jo Carthew, who runs Crickhowell’s Black Mountain Smokery told the Independent: “We do want to pay our taxes because we all use local schools and hospitals but we want a change of law so everyone pays their fair share”.

Samantha Devos of Number Eighteen café cites the example of Facebook, which paid less than £5000 in corporate tax last year, according to the government’s ‘tax gap’ report, and insists that spending cuts would not be needed if big companies paid their tax.Steve Askew, the local baker, says the traders never intended to put the tax plan into practice. Their goal is to embarrass big companies and the government. “Any right-thinking person accepts we have to pay taxes. What people can’t accept is the injustice,” he added.

Despite the findings of the government’s Public Accounts Committee (PAC) – massive staff redundancies and poor performance – HMRC has responded by pointing to its extra funding to crack down on multinational avoidance and this April’s introduction of the diverted profits tax, a new “Google tax” on multinationals moving profits out of the UK. It also publishes estimates of the difference between tax paid and the amount that should be paid. This attributes just £1bn of the £34bn gap to tax avoidance.

HMRC speaking with ‘forked tongue’? Is it actually in meltdown? See the Committee of Public Accounts’ report on Revenue and Customs (summary and pdf): “HMRC still failing UK taxpayers”.

Quantitative easing to fund climate change programmes?

finance murphy header

Colin Hines, co-founder of Localise West Midlands and Richard Murphy, Professor of Practice in International Political Economy, City University, London, warn that the Paris Climate talks are facing an enormous funding problem to which there is only one viable solution.

In a new report published by Finance for the Future, entitled ‘Climate QE For Paree’, they suggest that the measures to be put on the table in Paris will not go far enough to halt a disastrous global temperature rises of more than 2 degrees because no one has suggested how the enormous cost of tackling this issue is to be addressed, particularly at a time of global economic slowdown.

The paper offers a solution to this problem, using a variation on the idea of People’s Quantitative Easing that has received much attention during 2015:

The world has or is intending to print €7 trillion of quantitative easing to keep the financial system afloat​. In that case, why not use this mechanism in the form of Climate QE to save the planet?

The European Central Bank is already e-printing €60 billion a month under its QE [programme and is committed to doing so till September 2016.

If it allocated say €10 billion a month either from this QE programme, or from an additional QE commitment, it could use it to buy climate change bonds from the European Investment Bank. The EIB could then direct these funds to climate change programmes in both Europe and developing countries.

This could have a galvanising effect on other rich countries, putting pressure on them to introduce their own Climate QE initiatives and thus further bolster global funds towards the many hundreds of billions eventually needed to keep temperature rises at 2oC.

Importantly, since Climate QE involves one arm of the EU, the ECB, creating e-money and using it to buy assets from another arm of EU, the European Investment Bank (EIB), this will not increase Europe’s repayable debt levels. This would also hold true for countries like the United States and the UK, something that is crucial to making involvement in ‘Climate QE’ post Paris politically acceptable to all rich countries.

How the European Investment Bank Could Spend Climate QE

The EIB already invests around 10% of its funds in developing countries and prioritises climate change mitigation and adaptation (e.g. renewable energy, energy efficiency, urban transport and other projects that reduce CO2 emissions).

To achieve the goals likely to be set in Paris, Climate QE funding should be used by developing countries to fund low carbon emitting industrial and agricultural infrastructure and energy efficient buildings in cities. Such projects face difficulty attracting private finance, since the returns are harder to identify and the process of capturing and sharing them are more complex than normal investment programmes.

Rich Countries would benefit too

Colin Hines said:

‘Climate QE is not just for poorer countries. The economic and employment advantages of investing in energy efficiency and renewables is not only a way to generate economic activity in every city, town, canton and hamlet across Europe, but will also ensure our continent’s significant contribution to helping solve the biggest threat facing humanity, which is climate change.’

For further details contact:

Richard Murphy, Director of Finance for the Future LLP and Professor of Practice in International Political Economy, City University, London

Tel +44 (0) 1366 383500

Mobile +44 (0) 7775 521 797

And

Colin Hines, Convenor Green New Deal Group

Tel +44 (0) 20 8892 5051

Mobile +44 (0) 7738 164 304

Financial tools supporting the local economy: the world’s first crowd-funded fee free payment app

“There seems be a real appetite among consumers to buy from independent retailers and support community shopping”

droplet header

Those who have been expressing interest in Localise West Midlands’s involvement with a future Birmingham Pound will also read the Birmingham Press account of Birmingham’s Droplet a mobile app born in Birmingham promising a ‘customer loyalty revolution’.

droplet snapshot 1a brum

The Press reports: “Droplet, the brainchild of tech entrepreneurs Steffan Aquarone and Will Grant, has used £575,000 of Crowdfunding to take the world’s first fee free payment app into eight cities across the UK. More than 300 independent retailers across Cambridge, Edinburgh, Exeter, Glasgow, Leeds, Manchester and Norwich are now accepting transactions by using the simple mobile app . . . The first eight cities have been chosen due to their vibrant independent scenes and their willingness to embrace new idea. Local ambassadors, who are well known in the community, have been appointed in each location to work with merchants to introduce the technology and grow the Droplet brand organically. With user numbers now over 23,000, there are plans already in place to build on the initial rollout by targeting another ten cities in 2016.

Will Grant says: “Birmingham is still a critically important city for us. This is where the Droplet story all began and we have just strengthened our team here to include new ambassador Laura Patricia Jones. She will be charged with building on our existing merchant base of 35 retailers and growing our user numbers in the city.”

droplet snapshot 3 brum

Using Droplet is simple for the consumer, just tap ‘pay here’ when entering a registered outlet for the first time and the payment is taken directly from your chosen card – you’ll get a notification on your phone to show how much you’ve been charged and the reward stamps you’ve earned.


For further information, please visit www.dropletpay.com follow @dropletpay on twitter or watch the launch video on YouTube: https://www.youtube.com/watch?v=hzG1cO1-jXA

Bristol Pound – Birmingham Pound?

In March LWM’s co-ordinator reported the local interest in the potential of a Birmingham Pound – the Birmingham Mail following up one tweet about a first-stage meeting of a few potentially interested people. News of an increasingly well-developed scheme in Bristol gives an insight into the role of a local currency.

bristol poundThe Financial Times reported recently that theBristol poundis beginning to take root and ‘count’ in the local economy.

There are now about 1,200 members with Bristol pound accounts. Around 900 businesses in the city accept the currency including:

  • the local bus company which accepts Bristol pounds;
  • the council which accepts the local currency for council tax;
  • Good Energy, which takes the local currency as means of payment;
  • Yurt Lush, a Mongolian themed restaurant, which this month became the first business to pay its electricity bill using Bristol Pounds;
  • the council which will give staff who opt for this, all or part of their salary in Bristol pounds; George Ferguson, the mayor, is paid in the currency.

The Bristol Pound was launched in 2012 to support local business and reduce the environmental impact of long supply chains. There are notes of £1, £5, £10 and £20 denominations and someone opening an account with the Bristol Credit Union deposits sterling and is credited with an equal number of Bristol pounds. This money can be cashed, or drawn on electronically to pay bills online or via a mobile phone.

A case history from the FT:

bristol pound case history

The organisers say because the credit union is regulated by the Financial Conduct Authority, Bristol pound deposits will enjoy the same protection as an ordinary bank account.


Read the article here – free registration: http://www.ft.com/cms/s/0/4fe13c82-31e8-11e5-91ac-a5e17d9b4cff.html

 

Event: Guild of Independent Currencies: June Meetup

$R6FYG7R

Date: 15th June 2015
Time: 9:30am to 5pm
Where: Exeter Quaker Meeting House. Wynards Lane EX2 4HU
Cost: £5 includes lunch and refreshments

The Guild of Independent Currencies has been created by the Bristol Pound (covered on sister site in 2013) to help others to launch their own independent currencies, supporting them through shared technology, best practice and with anything else they may need. Read more here: http://guildofindependentcurrencies.org/

bristol pound

(Covered on sister site in 2013) Bristol Pound director Chris Sunderland explains that “Most of the money spent in a city, leaves almost as soon as it’s spent. It goes up to the financial institutions and gets lost. What people can be sure of with Bristol Pounds is that they’re circulating in the city and that’s where they’ll stay.”

Around 650,000 Bristol Pounds are in circulation and more than 750 local businesses use the scheme. Inspired by Bristol Pound’s success, locations including Cardiff, Bath and Kingston are considering starting their own scheme. Local currencies also exist in Totnes, Stroud, Lewes and Brixton.

If you are interested in local currencies, thinking of setting one up in your local area or currently engaged in trying to make one work, then Exeter is the place to be at the moment. This September they will launch their own currency and preparations are in full swing, come and meet the team at our June Meet Up and find out how they are getting on.

Agenda (Draft)

We’re packing it in for a fun and informative day! All the information and help you need for your local scheme plus swap tips and stories about how you are making it happen.

9:30 Arrive, Coffee, Mingle
10:00 Welcome to conference from Exeter Pound, practical info
10:10 Keynote Chris Sunderland, Founder Director Bristol Pound CIC
10:30 Introductions and updates from currency schemes attending
11:00 Workshop: Community and trader engagement
11:30 Tea Break
12:00 Workshop: Institutional Engagement and Procurement
12:30 Workshop: Legal and Regulatory Issues, including Credit Union involvement
13:00 Lunch provided by Real Food Cooperative
14:00 Printed Currencies Presentation Brian Kenworthy, Orion Security Print
14:30 Workshop: Technical Developments
15:00 Open Space Discussions – topics to be decided throughout the day
16:30 Guild of Independent Currencies – Next steps
17:00 Close

Limited places available so don’t miss out by booking now!

Booking: http://www.eventbrite.co.uk/e/meetup-june-2015-tickets-16875566273

 

Is a quiet political revolution getting under way?

As the old order with its class and gender hierarchies gave way, George Monbiot points out that the void filled with junk could have been occupied by a better society, built on mutual support and connectedness, without the stifling stratification of the old order.

The feast to which we were invited is only for the few’

foe logoInstead, as the developed world – saturated with advertising, the handmaiden of market fundamentalism – became reliant on rising consumption to avert economic collapse, he notes that Friends of the Earth has begun to explore how we might reconnect with each other and with the natural world. New models for urban living are based on sharing rather than competitive consumption:

  • the sharing of cars and appliances and tools,
  • of money (through credit unions and micro-finance) and power.
  • community-led decision-making, over transport, planning and, perhaps, rent levels, minimum and maximum wages,
  • municipal budgets and taxation.

Such initiatives, facilitated by the state can bring people together with a sense of shared purpose, ownership and mutual support that centralised decision-making can never provide. But in some areas, non-party political movements are achieving this without that elusive government facilitation

Independents

Peter Macfadyen, Kate Bielby and Mel Usher of Independents for Frome
Peter Macfadyen, Kate Bielby and Mel Usher of Independents for Frome

Today, a neighbour gave the writer a cutting about Frome’s declaration of independence.

This Somerset market town has developed “flatpack democracy”, taking political power at a local level and enabling people to have a greater say in the decisions that affect their lives.”

Independents for Frome took all 17 seats on Frome’s town council, with vote-shares as high as 70%, and support from people who cast their other votes for the main political parties.  

Localism in action

Though local Conservatives were convinced that austerity had to apply even at the most local level, the council has borrowed around £750,000 to invest in buildings and land:

  • green spaces have been spruced up
  • game-changing help has been given to the local credit union
  • he council is involved in a new renewable energy cooperative,
  • and has put money into the setting up of a new “share shop”

In Devon the Buckfastleigh Independents group have followed a similar path. the town’s new deputy mayor, Pam Barrett says the town is ”a working-class town that’s been suffering from a real loss of services.” After fighting – successfully – to keep open a library and swimming pool, she and other residents stood for town council seats that had not been contested for “20 or more years”. One of the catalysts, she says, was a box of 10 copies of the Flatpack Democracy booklet, which was brought in by one of her colleagues. On 7 May, they also took nine of 12 seats, and started running the show.

Flatpack Democracy ideas are being shared with other groups in Devon and Somerset and though people in Alderley Edge, Cheshire were not aware of developments in the West Country, their thinking is much the same: as one newly elected councillor, Mike Dudley-Jones, said: “our basic mantra is that there is no place for mainstream party politics at this level”.

On election day, Conservatives lost all nine of the parish council’s seats to this group – Alderley Edge First – which also took the village’s one seat on Cheshire East council.

Community energy solutions: Plymouth

In 2012 Plymouth’s co-operative city council established a Low Carbon City Team, which helped to identify the city’s potential for community energy solutions and forge partnerships. The council funded pre-development, initial community engagement and business plan development.

plymouth bencom header

In 2013 it joined forces with local residents to form Plymouth Energy Community (PEC) which then set up a second Industrial & Provident community benefit society (Bencom), PEC Renewables, to fund and manage renewable energy installations. PEC has 850 members, 95% of whom are local residents, and the number is rising, with more joining as the current share offer progresses.

Marie-Claire Kidd reports that Plymouth’s energy future is changing. PEC Renewables launched its first share offer in February 2014. It closed after seven weeks, oversubscribed at £602,000, with 144 investor members, around half of them local. This enabled it to install free solar photovoltaics on 18 schools and three community buildings between May and November 2014.

pec investors

The installations, which collectively represent 0.78 megawatts, are now generating half-price electricity for their community building hosts. Surplus electricity is sold to the grid. The bencom also receives income in the form of a government subsidy, via the Feed-in Tariff.

PEC Renewables launched its second community share offer this February, this time with a £950,000 target. It will fund more free solar photovoltaics, and bring the bencom’s community fund to more than £1.2m. It is forecasting a return of up to 6% for members, which rises to 10.5% including tax relief. The offer, which closes on 5 May, has already raised £510,000.

midland house council offices plymouth

Plymouth’s largest solar roof will be installed on Plymouth Life Centre, a diving centre and one of the busiest leisure centres in the country, and there will be solar panels on four more schools, bringing the total to 1.3MW. (Above: panels on Midland House, a Plymouth council office)

Plymouth has 11,500 households in fuel poverty – 10% of its population – and an energy-inefficient housing stock. The city council has produced a plan to reduce emissions from the council estate by 20% by 2015 and reduce citywide emissions by 30% by 2020.

One of its main aims is to help local people to understand their energy options, so it is promoting grant schemes for free cavity and loft insulation and subsidised external wall insulation, offering savings of around £260 per household per year. It has also provided energy tariff advice for over 600 households, offering average savings of £180 per year.

PEC Renewables’ community fund is being used to tackle the challenges of rising energy costs, fuel poverty and climate change. Projects include PEC’s fuel debt advice service, which has helped local residents clear £55,000 of energy bill arrears in the last 10 months, and its energy team, which trains volunteers to provide free home energy advice to at-risk households.

 

To learn about Plymouth’s plans for the future, read Ms Kidd’s article.

Could Brummie bonds fund house building?

john clancyCity councillor John Clancy, who once worked in the venture capital market, explains in a Chamberlain Files article,  [accessed via the Brummie], that  ‘Brummie bonds’ can provide much needed investment and kick-start building by local councils and housing associations across Birmingham.

Some readers will remember that the Brummie Bonds concept was incorporated in the 2003 People’s Pensions Proposal, informally presented to MPs, an MEP and NGOs by a London colleague Colin Hines (co-founder of Localise West Midlands) with co-authors, accountant Richard Murphy (now of Tax Justice fame) and MP Alan Simpson. Read on here.

In October 2004, David Bell’s article on the subject in the Post: Buy a share in Brum pointed out that bond issues are used to raise finance by federal states in Germany and many other local authorities around the world, but although English councils have powers to issue bonds none are believed to have used them.

John Clancy’s vision is of a 40-ward investment strategy. An access-all-areas Brummie Bond investment issue is needed and he records that the Labour Party’s policy announcement last weekend on the Future Homes Fund is effectively the revival of the concept of housing bonds itself:

  • Anyone saving for a house deposit can put it in an ISA to which the Government would contribute 20%. The Labour Party is proposing that those funds would be earmarked for new house building. The banks would be directed to invest these assets into housing bonds.
  • Local councils and housing associations would issue bonds into which the UK’s banks would be required to invest. This would keep investment by UK citizens in the UK and, effectively, into local and regional investment.
  • If local developers are sitting on a land bank where planning permission for housing is already given, then the “use it or lose it” principle would have to apply. If there is capital ready and willing to buy and build from housing bonds, then so be it. Positive, active creative capital will need to push out dormant, destructive, delayed capital.

There is now a growing consensus that investing in UK housing is the best investment strategy for the health and wealth of the funds. They provide healthy returns on a risk adjusted basis to the pension funds.

A recent analysis by TradeRisks.com recommends hard-nosed investors (especially pension funds) to go into social housing bonds rather than corporate bonds, and that now is the best time to do so. Sixteen of the biggest 60 Housing Associations have now issued own-name public housing bonds. It’s time for local councils to do the same.

Government has relaxed the rules on investment and recognised the key part that local government pension schemes have to play in regeneration, infrastructure and ‘green’ investments. Cllr Clancy says that if any local government pension fund has not laid out its 30% housing and infrastructure asset investment strategy, we should ask why it has not done so. He ends:

It’s time for Bonds: Brummie Bonds.

Let’s build.