If “going local” creates more jobs …
Clearly communicating the importance of the local economic multiplier effect or “local premium” is a key part of effective “buy local” and public education campaigns. The multiplier results from the fact that independent locally-owned businesses recirculate a far greater percentage of revenue locally compared to absentee-owned businesses (or locally-owned franchises*). In other words, going local creates more local wealth and jobs.
… then these facts about the local multiplier effect should be part and parcel of advocacy as it pertains to (for instance) Develop New Albany. Typically they’re not, and they’re also not much of a factor in the city of New Albany’s economic development “program,” which tends to mimic the One Southern Indiana approach of plying corporate-chain-think with abatements and incentives, while doing absolutely nothing for locally-owned businesses (save claiming credit when they do well and fleeing the podium when they don’t).
Imagine if the multiplier effect of local independent businesses was embraced by local government in the area of procurement, as illustrated by the example of Preston.
‘Poverty was entrenched in Preston. So we became more self-sufficient’, by Hazel Sheffield (The Guardian)
The city voted for Brexit because it felt cut off by a failing economic system, says councillor Matthew Brown. But the region has been revived by thinking locally
Matthew Brown believes few available jobs and rising inequality led Preston, like every other district of Lancashire, to vote to leave the EU in June. “People are angry with how the economy is structured. Brexit has happened because of a failure of the current economic model,” says the 44-year-old councillor. But he adds: “What we’re doing now is in response to that, it’s about how we can change local economies to work for people who feel excluded.”
Since 2011, the Lancashire council’s central government grant has been almost halved from £30m to £18m, leading to cuts in everything from community engagement to parks and the leisure centre. “The intention was to devolve cuts and blame it on us,” Brown says. “But you can become more self-sufficient.”
The Preston model he devised involves 12 of the city’s key employers – including the county constabulary, a public sector housing association, colleges and hospitals – buying goods and services locally, to stop 61% of their procurement budget being spent outside of the Lancashire economy. As a result, Brown has been called a visionary thinker for his work to boost the economy in his hometown.
He was appointed cabinet member for community engagement and inclusion almost seven years ago, in a city riven by inequality. “Poverty was entrenched. We were in the bottom 20% of the index of multiple deprivation. In the most prosperous ward you would expect to live to 82, and other wards 66,” he says.
Preston was the first northern city authority to implement the living wage in 2012. A year later, Brown embraced the Public Services (Social Value) Act 2013, which allows public bodies in England to take into account the social, environmental and economic impact of their commissioning. A key step was to redirect lucrative contracts, such as printing services for the police and food for council buildings, towards local businesses.
Brown met with the heads of six so-called anchor institutions. He helped them to reorganise their supply chains and identify where they could buy goods and services locally. By using spend analysis and social value criteria, the city council doubled its procurement spend with Preston companies from 14% in 2012-13 to 28% in 2014-15. Lancashire county council has since introduced a social value framework to inform all aspects of the procurement cycle, while the college, police and housing association that signed up to the programme have all committed to applying this framework to their projects, though there is not yet quantitative analysis of the effect on spending …