Including use of LM3 (Local Multiplier 3)
You can can measure the local economic impact of your services using various indicators – this briefing explains and discusses the options, including use of the methodology LM3, Local Multiplier 3.
New Economics Foundation developed Local Multiplier 3 (LM3) as a way of measuring local economic impact. It can help in thinking about local money flows and how your organisation can practically improve its local economic impact. The model has been refined and improved based on work with all 26 local authorities in the North East of England, with over £3 billion of annual spending with 140,000 suppliers. This work formed an important step in influencing national procurement policy and areas of legislation such as Social Value Act and National procurement and sustainability policies.
LM3 measures how income entering the local economy then circulates within it. An economic multiplier effect describes the impact that spending has in the economy, taking into consideration knock-on effects. The measuring process starts with a source of income and follows how it is spent and re-spent within a defined geographic area.
A higher proportion of money re-spent in the local economy means a higher multiplier effect as more income is generated for local people. The more income you retain locally, or nationally, means more jobs, higher pay and more tax revenue for government, all of which leads to better living standards.
Who is it for?
This briefing is aimed at senior decision makers and leaders in the public sector including those in local authorities, education and the health services.