That Tenner’s Actually Worth £50. Really!

There’s a bit of maths that says if you spend £10 in a local shop that sells stuff from local producers the amount of money that goes back into your local economy can be over £50!*

Well if you imagine that when you buy a locally-made pie from a local shop, a big part of your money is passed on to the local piemaker. The shop employs a local accountant or even a decorator. In turn the piemaker who sources his meat from a local farm spends a big percentage of his money with the farmer. The farmer then spends some of his money at his local garage, the garage owner… etc. etc.

With each step, around 80% of each spend goes into the local economy. So in effect the money that stays locally increases locally. The more everyone spends within our area the stronger our economy grows, which means more jobs, better facilities, a vibrant town centre and a nicer place for us all to live.

But there’s a problem

The percentage of revenue that is generated by small and medium business as a total for the UK is much smaller than our European cousins. Here in the UK we are more reliant on large businesses (the chain stores and the supermarkets).

The problem with this is that large corporates quite rightly exercise economies of scale. They pick suppliers to do all of their stores throughout the UK rather than using a local provider. If the supplier is in your area, well that’s great for your area (unless the large company suddenly changes suppliers). If not, the money you spend leaks out of your town.

Large businesses pay money to shareholders (dividends) both inside and out of the UK, and profits get distributed around to the companies to different areas. An even worse leak happens when you spend with an internet based company registered as an offshore company. They pay no or very little tax to the UK.. so almost all of your money tends to leak out at this point.

Why is this so important?

Well it is economics in its simplest of terms. If there is more money swirling around your local economy then the better your local area will be. By better we mean that there are more prosperous businesses and shops in the area you live, leading to more employment. In turn, this means more money in people’s pockets in the area, meaning that community projects and charities are more likely to be supported. Which means there are more things to do and everyone feels better about their town…

Local independent businesses are far more likely to use other local firms than any of the big national giants would – it’s what makes them tick and they know the true value of keeping it “Totally Locally”. It’s also a lot easier!

It’s not about protectionism, it’s about small decisions that have a big impact on where we live. Ask you local butcher, baker, accountant, lawyer, mechanic, whomever how many local suppliers that they use – and you will soon see how you are affecting your local economy. Chances are that you will know someone employed by one of these companies.

Only by following the money trail do you get a true sense of the knock-on effects of buying Totally Locally. It takes you in all kinds of directions, ping-ponging from groceries and clothing, to tradesmen and accountants, each time adding to our economy. The trail is staggering.

So when you go for your next purchase, be it eggs, a sofa or new pair of shoes, consider the true effect of how you buy. Turn that tenner into fifty quid for your town.

*The New Economics Foundation – Plugging the Leaks

Here are some examples of the Magic Tenner in action in Totally Locally towns: