We have also thought it obvious that if more local community organisations could win contracts for work that is being delivered through regeneration programmes then it would be better for that community.

Last year the New Economics Foundation produced a fantastic tool for measuring and proving that the longer money can be kept in a local economy, the greater its positive effects will be. Heeley City Farm was one of the pilots of a national research programme and we are now pleased to report that the answer is 2! (or 1.93 to be precise).

The theory goes something like this:

Imagine Heeley's local economy as a bucket. Nothing fancy or complicated, just an ordinary bucket like the one under the kitchen sink. Swirling around in the bucket are all the people and organisations that make up the local economy, such as schools, shops, etc.

Now think of the Heeley City Farm Community Cafe in this bucket. It spends on a vegetables grown by a local producer, so the stays in the bucket. But when it shells out on a bread order from an out of town bakery, that money doesn't stay in the bucket. Spending on the bakery is like a leak in the bucket. The leaks out and doesn't return.

There are usually ways of stopping some or all of this from leaking out. In Heeley City Farm's case, we could use a local bakery instead, or, if there isn't one big enough, maybe even use several small bakers together.

Heeley City Farm's Local Multiplier

An economic measurement tool called the 'multiplier' is used to calculate the overall economic impact of Heeley City Farm. The graphs below show how one local economy, Localton compares with another, Leakyville. Starting with A310 entering each local economy (someone purchases some plants from the local Garden Centre for example) the graph shows how much remains as the Garden Centre itself spends the money on more plants or staff wages. No guessing which one has the fuller bucket at the end of the day.

How money flows

Looking at the actual numbers over a few cycles of spending:The method the New Economics Foundation have developed to measure precisely how leaky the bucket is calculates a figure called LM3 (which stands for 91Local Multiplier 392). This involves analysing all the money that comes into Heeley City Farm and following where it goes to at three levels: to its own employees, to suppliers and to suppliers92 suppliers and their employees. In a typical town92s local economy the LM3 is usually just 1 meaning that every pound spent by a local business is likely to result in the re-spending of the money just once before it leaves.

Even if we plugged a lot of our leaks, how could we find electricity or petrol from a local source? We could generate our own electricity (which we already do using the wind and sun) but also setting up a local electricity supply company that sells to local businesses and households on a not-for-profit basis. And the petrol? Well, we already have a diesel engine on site that runs on used vegetable oil so who knows where this might lead.

The New Economics Foundation tries to create practical and enterprising solutions to the social, environmental and economic challenges facing the local, regional, national and global economies it was named Think Tank of the Year in 02.

For more information see http://www.neweconomics.org.