Northumberland County Council
Northumberland and LM3
Barry Mitchell
LM3 Project Manager
We’re here for you.
Why look at the local economic
impact of public spending
What happens to all the
money we spend on goods
and services?
How does our procurement
behaviour relate to our corporate
strategy? Are we promoting
regeneration through our public
spending activity?
We’re here for you.
The Leaky Bucket
money enters the local economy…
Tourism
Welfare benefits
Business investors
Export earnings (spending on
businesses from non-local
people and businesses)
Regeneration funding
Q: How does money already
come into my area?
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The Leaky Bucket
…and money leaks out
Energy and waste
Taxes
Spending on non-local services
and products (care, food, etc)
External contractors
and consultants
Q: How do we currently spend
our budget?
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The multiplier effect
A pound can be more than a pound
Every time money is re-spent
in your local economy, it is like
new income for the person who
receives it. The more money is
re-spent, the higher the multiplier
effect.
£12
£10
£10.00
£8.00
£8
£6.40
£6
£5.12
£4
£2
The areas in blue in the images
on the right represent how much
money would be generated in
your local economy if people
spent 80% (top) versus 20%
(bottom) locally, over and over.
£0
1
2
3
4
£0.40
£0.08
£12
£10
£10.00
£8
£6
£4
£2.00
£2
£0
1
2
We’re 3here for4 you.
LM3 (Local Multiplier 3)
a DIY economic indicator
Enables you to measure the
impact of your initiative or
work on the local economy
Adapted from the Keynesian
multiplier
You measure three rounds - how
money enters, how it is spent, and
how it is re-spent
Clear, simple, transparent, and
replicable
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How LM3 works in practice
Two construction contracts
NNDC compared two
contracts. The LM3s are on
the right. Note that the smaller
contract in fact generated more
money for the local economy!
This example shows the
importance of economic linkages.
It’s not just where you spend your
money, but what happens to your
money after that.
North Norfolk District Council
Contract 1
Round 1 £ 72,000
Round 2 £ 57,600
Round 3 £ 24,980
Total
£ 154,580
LM3
2.15
Contract 2
£ 120,000
£ 20,400
£
6,760
£ 147,160
1.23
We’re here for you.
LM3 Project
LM3 project in Northumberland
• Partnership - Procurement and Regeneration
- NEF, NSP and ONE
• Supporting Key Objectives and Innovative
• Measure and improve its local economic impact
• Key initial Milestone targets
- LM3 Benchmarking completion
- Proactive Food Tender activity
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LM3 Project strategy
• Strategy and Project plan developed and
agreed by end January 04
• Definition of local a critical criteria
• Survey form and letter prepared and tested
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Implementation of Strategy
Survey Completion
• 372 Survey requests issued February 04
• Reminder requests issued April 04
• Results consolidated June 04
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Implementation of Strategy
LM3 Benchmark Completion
• Completed Supplier Surveys result in 31% return
• Benchmark LM3 Calculation
- Comprised In Area
- Comprised Out of Area
2.19
2.76
1.36
• Overall Benchmark classed as positive
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Model evaluation highlights
•
£1 of income spend from government
generates
•
£2.19 in total and £1.19 additionally for
the local economy
-
£1.04 from In Area suppliers
£0.15 from Out of Area Suppliers
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Local and Non Local Spend
• In Area suppliers spend 76 % locally
- predominantly labour cost and local
suppliers
• Out of Area suppliers spend 36 % locally
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Food Tender initiatives
• Seminar with Suppliers
• Encourage networking
• Liaise with Agencies
• Personal contact
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Food Tender initiative
• Additional Communication to EU notice
-
Newspaper advertisements
-
Shown on NCC web site in tenders invited
-
How to do business guide published on NCC website
-
Example business questionnaire published on NCC website
-
Links from above to SBS,EU and Business Link websites
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Food Tender initiative
Repackaging the Tender
• Facility to tender by smaller lots
- Food contract opening into 7 categories
- 4 of 7 food categories opened into 4 Areas
• Quality weighting on evaluation criteria
- 60% / 40% in favour of quality against price
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Food Tender initiative
• Option to tender as manufacturer or
wholesaler
• Required to assist in pursuing a
sustainable food strategy
- Quality criteria including sustainability
- Ability to supply locally grown or organic
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Tender Results
Food Tender statistics
• 42 Expressions of interest
- 22 local food suppliers
• 16 Tenders received
-
7 local food suppliers
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Tender Results
Food Contract Award 2004
•
4
Categories to Local Suppliers
Meat, Bread, Fruit and Vegetables and Milk
•
3 Categories to non-local Suppliers
Frozen, Groceries, Crisps nuts and snacks
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Continuing Work on Food
• Formalise an approved Food
Supplier list process
- agree abridged application process
but with necessary compliances
- coordination between customer
and suppliers
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Continuing Work on Food
• Pursue PDO/PGI EU Accreditation
- liaise with Trading Standards on
inspection
- liaise with DEFRA on processes
- work with producers to complete
applications
We’re here for you.
Continuing Work
• Ongoing key initiatives
- proactively encourage local SME’s
- meet the buyer sessions
- liaison with Business Link
- contact with umbrella organisations
- repackaging relevant tenders
- increase awareness of local suppliers
We’re here for you.
Continuing Work
Enhancing Policy statements
•
Best Value and Community strategy
updated
•
Strategic statement enhanced
•
Finance Plan
We’re here for you.
Other LM3 Evaluations
• Working with the Private Sector
- work completed with 2 local multi-national companies using LM3 to
establish annual worth to local community
• Working with Social Enterprises
- work carried with ADAPT on benchmark and community worth and
planned work with The Alnwick Garden Trust to commence shortly
• Working with other Local Authorities
- work completed with 1 District Council to establish indicative
benchmark
We’re here for you.
Other LM3 applications
• Involvement on Buildings and Property
tenders
- innovatative community benefit clause in
OJEU notice
- liaison with Business Link
- encouraging awareness with local suppliers
- 16 out of 18 PQQ’s local
- All contracts awarded to 3 local builders
We’re here for you.
Community benefit clause
Under this procurement exercise the
Contractor is required to actively
participate in the economic and social
regeneration of the locality and
surrounding the place of delivery for the
provision of the service. Accordingly,
contract performance conditions may
relate in particular to social and
environment considerations.
We’re here for you.
Other LM3 applications
• Involvement on Grass cutting tenders
-
liaison with Business Link
encouraging awareness with local suppliers
22 out of 24 EOI local
All contracts awarded to 4 local suppliers
• Involvement on Fresh Sandwich tenders
-
liaison with Business Link
encouraging awareness with local suppliers
20 out of 21 EOI local
Contract awarded to 1 local supplier
We’re here for you.
Other LM3 applications
• Identify potential on pending
tenders
- liaise with relevant operational dept
- ensure optimum tender packaging
and awareness by local SME’s
We’re here for you.
Northumberland LM3
• Quoted as best practice
- Presentation at DEFRA suppliers conference
- Presentation at Government Office NELL
- Case studies within National SME Concordat
- Case study within SBS publication
- Case study within OGC publication
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LM3 Project Expansion
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LM3 Monitoring clause
• A new requirement introduced for tender
applications to include both a current and
projected local spend analysis if the tender
is successful
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LM3 Monitoring clause
• Tenderers should note that completion
of Schedule H is for Northumberland
County Council’s monitoring purposes
only and does not form part of the
evaluation criteria for this tender. Your
answers to this schedule will not be
used to determine the award of this
tender.
We’re here for you.
LM3 Monitoring clause
• LM3 Monitoring
1.29 One of Northumberland County
Council’s strategic objectives is to
measure the effect of our expenditure and
to increase the amount of money which
the Council spends in the local economy
We’re here for you.
LM3 Evaluation criteria
Continual review to include by end of 2006
within tender process
• Evaluation criteria to include LM3
assessment as part of whole-life cost
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Potential Benefits
10% Increase in local spend from non
local
• Supported by our Strategic Statement and
Finance Action Plan
utilising LM3 model highlights
•
Benefit to local economy of £34m per
annum
• Achieves £9.5m per annum efficiency
We’re here for you.
Northumberland LM3
THANK
YOU
We’re here for you.