Brixton Pound

Brixton Pound

Introduction

The Brixton Pound (B£) is a community currency in the London Borough of Lambeth, United Kingdom. Originally launched in September 2009 by Transition Town Brixton as a paper currency, an electronic version of the currency was introduced in September 2011. The scheme has been supported by Lambeth Council since 2009 which consequently became a member of the CCIA Project.

The Brixton Pound is the U.K.’s first local currency in an urban area and the fourth transition town to have its own currency, following the Totnes Pound in Devon, Lewes Pound in Sussex and Stroud Pound in Gloucestershire (see Transition Currency). The Brixton Pound is accepted by participating retailers on purchases made by consumers.

Purpose

The Brixton Pound aims to:

  • Help protect jobs and livelihoods of community members within Brixton through developing a strong local economy
  • Support and build diversity and resilience in the local Brixton economy in light of a recession and chain store dominance
  • Raise community awareness of the local Brixton economy
  • Encourage and facilitate a self-help model and ethos in order to protect the social and financial futures of the residents of Brixton
  • Encourage local sourcing of goods to decrease CO2 emissions
  • Raise Brixton’s profile regionally and nationally and contribute to positive perceptions of Brixton by drawing attention to its strong community, diverse economy and capacity for innovation

Community Overview

Size, location

Brixton is a district within the London Borough of Lambeth in South London in England.  It is a multi-ethnic community with up to a quarter of the population being from African or Caribbean descent.  It is mainly a residential area with a renowned and popular street market as well as substantial retailer and entertainment sector

User Demographic

Brixton is the major town center at the heart of Lambeth and is the most populous area in Lambeth, with around 71,000 residents. It is within a borough that is the 14th most deprived district in England, as measured by the 2010 Index of Multiple Deprivation, but, similar to other inner London boroughs, there are areas of affluence and deprivation often side by side.  Of the 8 areas identified in Lambeth by the 2010 study as being among the 10% most deprived in the England, 5 are in Brixton.

There is therefore a persistent pool of economically inactive people with little mobility and this group tends to experience high levels of social exclusion and poor education, employment and health outcomes.

Organisation and History

The B£ paper currency was developed by the Transition Town Brixton initiative. The primary goal was to help support local independent businesses in Brixton. Following the financial crisis, small businesses in London and the UK were and continue to face serious problems accessing credit and also face very high rents and fierce competition from multinational chain stores and supermarkets. The organisers of the Brixton Pound recognised that small businesses are vital to the sense of community in Brixton but also create more employment because they re-spend more of every pound spent in them than chain stores, as research by nef has demonstrated 1. Lambeth Council’s business team also wanted to support small businesses and felt the scheme would enhance Brixton’s wider public image  2.  The Brixton Pound is run by a Community Interest Company (CIC), a UK form of social enterprise.

Stakeholders

The Brixton Pound works closely with local independent businesses and entrepreneurs, some of which are on the board of directors of the Brixton Pound.

A good working relationship has been established with the Lambeth City Council, which made it possible for participating business to pay their business rates in Brixton Pound.

Two of the founders of the Brixton Pound are or were also researchers at the New Economics Foundation which resulted in several research and development partnerships between the two organizations.

Impact

The City Council of Lambeth, the borough in which the neighborhood of Brixton is situated, had recognized the impact of the Brixton Pound in term of stimulating a positive local identity and awareness of local production and local consumption and the potential of community currencies in the wider context their “cooperative council” program. This encouraged the council to become a partner in the EU Interreg collaboration project “Community Currencies in Action (CCIA)”.

Currency Details

The Brixton Pound in numbers

There are currently more than £B 100,000 in circulation. Paper B£s can be spent/redeemed at around 200 businesses and the e-currency is accepted at 100 businesses. About 30.000 user accounts have been registered on the online platform, 60% can transact by text message.

Function and Unit of Account

The principle function of the currency is to act as a local medium of exchange. The unit of account of the Brixton £ is the pound sterling – one Brixton Pound has the same purchasing power as 1 GBP.

Issuance – Backing

B£ can only be bought into circulation in exchange for sterling at a 1 to 1 rate (with 10% bonus for purchasing the e-currency until December 2013). Customers can purchase paper notes at 7 different establishments in Brixton. Customers can purchase the e-currency by registering on the B£ website and then transferring funds or setting up a standing order from their bank account to the B£ bank

The currency is denominated in and backed Pound Sterling, but is not legal tender  3.

Currently is operates both as a digital, through a pay by text model, and paper currency, with physical notes of 1,5,10 & 20 B£.

Although the two currencies come under the umbrella name of B£ and the legal and financial accountability and liability for both schemes lies with the B£CIC (Brixton Pound Community Interest Company), they are separate entities and not exchangeable. Customers and businesses are not, during the pilot phase, able to a) deposit paper B£s on to their online B£e accounts nor b) withdraw paper B£s from their online B£e accounts.

Software

Brixton Pound uses the CC2.0 ICT platform 4 to administer the e-currency scheme. Customers can use the platform via the internet or by sending text messages on their mobile phones. In the future an ‘App’ (Application) will be available for smartphone users.

Taxation and Compliance

The Brixton Pound is operating under an exemption of the electronic money directive as the area it caters to is locally limited. Business accepting the Brixton pound account for it as GBP income, no tax exemptions apply.

Lambeth City Council allows participating businesses to pay their local taxes (business rates) in Brixton Pound through the Brixton Pound CIC.

Specific Attributes

Customers purchasing e-B£s are not permitted to change back to sterling. However, they have received a 10% ‘bonus’ until December 2013 – so buy Brixton Pound for £10 sterling gave them B£11 which is equivalent to £11 sterling in purchasing power. In contrast, businesses being permitted to change back to sterling, had to pay a 10% malus if they did so.

Funding – Business Model

The B£CIC has received funding from:

The B£CIC raises further funding through sponsorship from participating businesses. For example, a business would pay £200 to have their logo on the website and in the Brixton £ user guide. The B£CIC also charges a small transaction fee to businesses whenever they accept the e-currency on their mobile phones.

B£CIC has also received significant in-kind support from Lambeth Council and a large number of volunteers. Its Board of Directors all work in a voluntary capacity.

How it works?

Consumers typically purchase paper Brixton Pound at the several issuance point in business across Brixton and spend them at participating business along with Pound Sterling.

More often the electronic B£ is used. User register for an account the Brixton Pound website and purchase credit to their online accounts through credit card payment, paypal or bank transfer on the Brixton Pound website. Employees of the Lambeth City Council and a few pilot businesses can also voluntarily receive part of their salary in B£.

When paying at a restaurant or participating shop, the customer would request the shops user-name and send a text message to the Brixton Pound payment line in a format specifying the amount to be paid to that business. Both customer and business get confirmation message on their cell phones when the payment has gone through, which typically only takes a few seconds.

References

  1.  The Money Trail: http://www.neweconomics.org/publications/entry/the-money-trail
  2.  http://brixtonpound.org/media/
  3. http://www.bankofengland.co.uk/banknotes/Pages/localcurrencies/default.aspx
  4. http://sourceforge.net/projects/cyclos-cc2/
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