On paper, it was a brilliant idea: encourage people to buy from independent businesses by printing pound notes bearing the name of the town or city where they are accepted and help to save local high streets. Local currency schemes sprung up in places such as Bristol, Brixton, Kingston, the Lake District, Lewes, Liverpool, Totnes and Exeter in the last decade, to make money more “sticky” as it circulates between a town’s consumers, businesses and local suppliers.
But in 2020, the hype is over and a large percentage are in the process of either calling it a day or have already quit. Schemes in the Lake District, Totnes and Exeter have ended while Liverpool, Brixton and Bristol are still ongoing.
Bristol, which launched its local currency successively in 2012, 2015 and 2018, is trying to carry on against the odds. It’s the most well-known and best funded local currency and so is usually regarded as the most successful, but it could follow suit next year. Its organisers have to decide whether to carry on printing Bristol pound notes when the use-by date on the current batch runs out in 2021.
“I think the local pound movement is very positive, but it’s come across as very middle class and twee,” says Diana Finch, managing director of Bristol Pound. She admits her project is suffering from people using cash less frequently in favour of contactless payments. Local currencies simply do not have the technological skills nor the budget to keep up, she admits.
But the Bristol Pound is fortunate to have a good working relationship with the Bristol Credit Union, a not-for-profit scheme through which members save money which is then loaned out to fellow members. This relationship means it can operate an app where the money is digitised. However, both payer and payee need to load it up and manually pay, and then check that payment has been made. It simply can’t compete with contactless payments with a card reader.
“It’s great to spend local money on your high street on small cafes and shops, but it’s not so great if you’re attracted by the prices of a national supermarket,” Finch says. “It’s also difficult if a business is receiving Bristol Pounds but your suppliers don’t accept them. By trying to build a kinder, locally-focussed economy, we’ve been seen as having a ‘holier than thou’ attitude, and that hasn’t worked.”
The local currency has also become an unexpected target for collectors and tourists, who will happily buy the interesting looking money from the Tourist Information Office but then not spend it. “Too much of the currency is ending up behind a magnet stuck to a fridge or in a holiday scrapbook,” she admits.
Against such challenges, the future of the Bristol Pound will rely on it going digital and securing local authority funding through operating a reward scheme for citizens, she says. This scheme would involve local government bodies issuing the environmental equivalent of Nectar points to citizens for recycling, cycling, taking public transport or, perhaps for a business, committing to a net zero carbon future.
For now, these are just theoretical ideas presented to the Mayor of Bristol to tie in local council funding with the environmental goals. The Mayor of Bristol’s office declined to comment on whether they will take the project forward.
That leaves Finch and the Bristol Pound project moving on from trying to save the high street to saving the environment. With this, there is still a lot of hyperbole against large corporations and organising people to shop locally with independent businesses. The message that she admits was too twee, would remain the same. Big businesses are bad and will ruin the environment, small businesses are good.
According to Ian Martin, the former director of the Exeter Pound (which is currently being wound up), local currencies just aren’t needed. “Local businesses want to promote a scheme where they buy from each other and consumers think local, they just don’t need a local currency to do that,” he says. “With a local pound they’d receive local money and they had nowhere they could spend it because often their suppliers didn’t accept the money.”
This led to a common problem, typified by Bristol’s experiences, he says, where large organisations which accept the money end up soaking up much of the cash in circulation before they convert it back into sterling. “Businesses don’t usually have anywhere to spend the complementary currency you end up with the problem of a local council and, in Bristol’s case, an energy provider, acting like a sponge,” he says. “Businesses make contributions to their business rates or their electricity bill, so the money just sits with those guys, or they just don’t bother and swap the money back for sterling. Either way, the money goes out of circulation.”
That would sound logical, but what do the companies accepting the local currency think? There are many reports of small shops either loving the idea or not even realising their boss had signed them up to it. Perhaps the most scientific approach came recently from Manchester Metropolitan University research by Adam Marshall and Dan O’Neil. Their paper, The Bristol Pound: A Tool For Localisation? was published at the end of 2019. It laid out the argument for what the currency was hoping to achieve before asking 27 businesses about their experiences. Of that number, just one said the complementary currency had had an influence in encouraging them to deal with local suppliers who were part of the scheme.
For 26 of the 27 businesses, the Bristol Pound had had no reported impact in encouraging them to deal more with local suppliers. The researchers also found no evidence the Bristol Pound had any impact on local productivity. The report’s conclusion might not read comfortably for local authorities. They suggest the only way to achieve a greater degree of localisation is not through isolated schemes like the Bristol Pound. Instead, they suggest, people need to steer policies or take control of government institutions.
Taking over government institutions might prove a little tricky, given that they are typically a funding option for a local currency. They have typically been financed through grants from local government and the occasional boost from lottery funding. The alternative is to charge businesses to accept the local currency, and that has yet to happen.
As Ian Martin from the Exeter Pound points out, it is at this stage of being asked to pay a membership fee that companies make it clear they like the sound of a campaign to promote local businesses but don’t see the need for it to be linked to a local currency. People can be encouraged to shop locally, but with the pound already in their pocket (or more likely, their contactless bank card). “We had EU funding to set up to celebrate the 2015 Rugby World Cup coming to Exeter,” he explains.
“Once that’s gone you have to move to a subscription model or you have an app through which you try to take a small percentage of payments, a little like a credit card business. The trouble is, the proportion you make from transfers in an app is so tiny, it won’t keep the lights on. Plus businesses don’t want to pay a subscription fee to accept local pounds.”
As Bristol attempts to rise from the ashes before next year’s cut-off point – when the equivalent of a ‘sell by’ date on its notes run out and they must be spent or converted back into sterling – it is keeping a close eye on the tactics used by a different currency: the Hull Coin. Organisers decided to make Hull's currency a digital token awarded by local authority bodies, such as hospitals and schools, for volunteers and those people who were doing good deeds. After funding dried up, a new scheme is about to be announced.
Peter Kemp, a Hull coin volunteer, says there are plans to launch a new project called the Community Coin in the next couple of months By Christmas, he claims, local authorities will be awarding its digital coins in a region that he dubs “the M62 corridor”, stretching from Hull across to Liverpool. “We’re not trying to be a currency, we’re a coin token schools, hospitals and local authorities can award citizens for discounts at participating businesses,” he says.
“If someone quits smoking, does really well at school or volunteers in their community, they can be rewarded with the digital coins which they can use to get some money off from a café, or their weekly shop. We even had one deal with Hull Coin where you could get a 90 per cent discount on broadband installation.”
Being digital will get around the huge problem local currencies have: it will be trackable, and won't be sitting around waiting to be converted back into sterling, because the coins are not linked to a currency and so hold no value. That opens up another opportunity for people to take on voluntary work and be rewarded by the digital tokens without it affecting their benefit entitlements.
If local businesses will not pay for the schemes that were claiming they would save the high street, the only alternative is helping local authorities save the environment. Complementary currencies have clearly failed to save the high street, now they have their sights set on saving the environment instead, maybe with a little thanks dispensed to those quitting smoking, getting good marks at school and volunteering in their community. Just as people don’t need a local currency to shop locally, do they need digital rewards to encourage them to live responsible lives? The future of local currencies could well depend on the answer.
Updated 05.03.20, 11:30 GMT: The Lewes pound was incorrectly included in the list of local currencies that had ceased to exist.
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This article was originally published by WIRED UK
