The true value of pounds and sense


LOCAL CURRENCY:A small British village is printing its own currency in a bid to preserve community values and fight climate change

WHEN THIRTYSOMETHINGS tire of London they move to Brighton, where they wear expensive Japanese denim and talk in an accent just this side of Michael Caine. After a few years, their aspirations shift to Lewes, a pretty hillside town in southern England - like Dalkey, but 10 miles inland - which takes Brighton's laidback, arty atmosphere and adds about a hundred grand to the price of a small Victorian terrace.

A morning in Lewes is like walking through the Johnny Boden catalogue; the high street is lined with shops selling austerity chic, complete with small garden tools with flowery handles and crisp white towels hanging over the edge of Victorian washing bowls.

What sets Lewes apart is that it has its own currency, the Lewes Pound, which was launched in September last year to promote the town's status as a "transition town". This is an international scheme whereby residents unite to preserve community values and fight climate change and fossil-fuel dependency by favouring local produce over that available from international conglomerates. An initial launch of 3,000 Lewes pound notes was greeted with enthusiasm by the locals, and by the online community who traded the £1 notes on eBay for up to £35 each.

Each has a picture of the 18th-century radical Thomas Paine, the town's most famous former resident. The scheme now has around 25,000 Lewes pounds in circulation, which can be exchanged for sterling in the local town hall. The scheme, which was originally planned to run until August this year, may be extended and larger denominations of £5, £10 and £20 notes will come into circulation. The money tracks the value of sterling but is not legal tender, relying on the trust of local people and the shop owners who have bought into the scheme, as indicated by a small green sign in their windows.

"I have a few notes in my till," says Scott, from behind the counter in Wickle, a gift shop in the town's renovated Needlemakers factory. "We use them to pay for local services. For example, the window cleaner takes them." Not so the lady in WH Smiths: "We're not allowed to take them, we're a national chain you see." Likewise, the bureau de change desk in the local post office was having none of it.

But the walls of Oliver Dudok van Heel's office are covered with newsprint, testimony to the media interest in the scheme which he, as a key member of the Lewes Pound Group, has had a big hand in setting up. The money, however, is just a part of the story, a Trojan horse for a broader environmental agenda.

"In order to build resilience to the challenges of climate change and the economic crisis," says van Heel, "localising the economy is one of the ways forward. It is not the only solution but it's part of it. By definition, if you localise you use less fossil fuels, because of transportation primarily. If you can grow food that doesn't require petrochemical-based additives then you can start feeding the town without worrying about where it comes from."

We walk down the high street and over the cobbled bridge, passing the local Harvey's brewery, a route that has remained little changed since Victorian times. We order coffee from Bill's Product Store, one of the town's landmark eateries, which was recently bought by Richard Caring, owner of London restaurants The Ivy and Le Caprice. "I'll have a soya latte," says van Heel, before quickly correcting himself: "No, make it just a normal latte." (Later he confessed his irritation at a recent Financial Timesarticle referencing the town's "soya-latte-drinking, peasant-blouse-wearing, upper-middle-class residents.")

Good timing, I say, to launch a new currency just at the moment the entire global economic infrastructure goes in to meltdown. "Yes. We created the financial crisis to promote the Lewes pound," he smiles as he sips his conventional latte. But his views are serious.

"The knee-jerk response [to the onset of recession] is that because of the economic climate funds will not be made available to this sort of work and we will have to focus on the short-term, not the long-term," he says.

"But what is also happening is that we are reconsidering everything that our society has stood for these last 50 years - we are asking whether economic growth is the right thing to be aiming for.
"The consequences of our blind devotion to economic growth have led to where we are today; climate change is driven by that, depletion of resources whether natural or otherwise is also driven by it. Asking questions as to the supremacy of the financial sector is a healthy process. Because the next question is, if it doesn't work then what do we put in its place?"

Local exchange trading schemes (Lets) like the Lewes pound are not common, but hardly unique. For instance, a Lets system was operating in Galway city in the mid-1990s, and America now has at least 12 separate local currency schemes.

"I do find it staggering that we see the need to buy apples from Chile or beans from Kenya," says van Heel, "which by the way doesn't mean the Kenyans are better off, as they are being pushed into a monoculture society where if something goes wrong with their crops or the market they are stuck.
"We will always need a global economy, but this is about a rebalancing," he says. "Lewes can't meet all of its needs, nor can any other town. Some trade will be local, some will be global, but we need to find that balance again. I'm not saying we should go back to the 19th century, but there is a middle ground."

For their part, economists can be sceptical about the long-term benefits: "Community currencies may very gently encourage trade with locals rather than strangers," says Tim Harford, author of The Undercover Economist.

"But the gains from more trade with locals are more than offset by the losses from less trade with strangers - otherwise, economic sanctions would be a blessing. This also explains why no community currency movement tries seriously to restrict broader trade. Everyone knows that is a recipe for a return to the Dark Ages."

Harford points to Weimar Germany and modern Zimbabwe as instances were an alternative currency would be preferable to the real thing. "There is also a healthy debate in economics over the appropriate size of a currency union," says Harford, "but few serious economists think that the optimal currency area is the size of Brixton [the south London area is to launch its own currency, the Brixton Brick] or Lewes.

"Local trade sounds environmentally friendly," he says, "but it is a distraction: the environmental costs of driving to the shops or growing food on inappropriate local land far exceed the costs of carbon emissions from long-range shipping."

Such views will not deter the Lewes Pound Group and it might be that, not for the first time, the economists have got it wrong. In their desire to try something different, Oliver Dudok van Heel and his colleagues deserve encouragement. "The problem with the environmental movement," he says with the authority of someone with 20 years' experience in the field, "is that it is hard to get people excited about being against something. At some point the energy just drains. People want solutions, they want to do something positive with their lives.

"If we're wrong, then it's no drama," he says with a shrug, adding that if all the scheme achieves is a fostering of community spirit in Lewes and an awareness of its transition town status, then it will have been worth doing. "It's not like we're harming anyone."