There’s one way of selling that’s been around for probably thousands of years. It doesn’t involve shops, websites, money, packaging or even a company name. All you need is a product or service that someone else wants, and who has something to offer in return. It’s called bartering.

Bartering is not the preserve of some old hippies stuck in a 1960s time warp, swapping eggs for hand knitted socks or cabbages for leather thong bracelets. Instead, in the last couple of decades, bartering has been re-invented and is now seen as a valuable selling mechanism, both for businesses starting out and for those already established.

Local Exchange Trading Schemes, or LETS, provide a framework for members to exchange skills or goods without money changing hands. There is a nominated unit of ‘currency’, usually named locally. Provide someone with a product or service and you are credited with X units of this currency. When you want to buy something, you use the credits you have in the ‘bank’.

A WAY OF LIFE

As an added bonus, LETS schemes help create a sense of community among members and bring together people from different backgrounds. Some groups go further still, and see bartering as a way of creating harmony in a community, where members can fulfil a genuine desire to help others. They consider it more of a philosophy, a statement about how we should be living our lives, rather than just a crude mechanism to swap goods or services.

A member whose account is in credit is identified as someone who’s given more ‘favours’ than they’ve received, while a debit account identifies a member who’s taken more ‘favours’ than they’ve given, so far. Neither situation is a problem because a debit/credit situation is necessary to make the system work. Instead, it demonstrates the principle of give-and-take between LETS members.

WHAT CAN BE BARTERED

Virtually anything can be bartered, as long as one party offers and another has the need.

Specific skills or professions:

• plumbing
• car or bike repairs
• legal advice
• book keeping
• shiatsu.

General odd jobs:

• ironing
• gardening
• babysitting
• chopping wood
• dog walking.

Something to offer:

• a van for hire
• tall ladders
• lifts to shops/work/school
• muscle power to move large furniture.

Goods to sell:

• clothes
• home grown fruit and vegetables
• homemade food such as bread, cakes, jams and chutneys
• crafts such as leather goods, jewellery, pottery.

HOW THE LETS SYSTEM WORKS

There are variations, but essentially members are given a ‘cheque book’ and a list of members, along with what they have to offer. If you want a product or skill, you contact the member and negotiate a price in LETS. When the transaction has taken place, the book keeper or administrator of the scheme credits the LETS to the right account. LETS are not usually physical tokens.

The unit of currency doesn’t have to be called a LET: there are regional variations. For example, the currency of the North East Dartmoor LETS scheme is called the Tin (tin used to be mined locally). The name is also a play on the name of the local River Teign. Some LETS schemes break down their currencies into smaller units. The currency in the Forest of Dean in Gloucestershire is called the Dean, which is subdivided into Vicars.

New members’ accounts start at zero. When members leave, they’re expected to close their account at zero or in credit. Most LETS schemes allow members to become overdrawn on their credits, within reason, because if someone is spending a unit then it means another member is earning them. No interest is usually paid on LETS accounts.

The currency’s value

But what is a unit of LETS currency actually worth in real money? Or is it even necessary to fix an exchange rate? It probably is worth establishing a guide, if only to give members a starting point for negotiating a price. Many schemes seem to end up thinking of a unit of their currency as equal to about £1. Some recommend an hourly rate, again as a starting point to negotiate. This tends to be in the five to ten unit range.

In practice, pricing in LETS is more fluid than in the world of hard cash. Negotiations are carried out between individuals and there’s rarely a take-it-or-leave-it price. If the price being asked for clearing an overgrown allotment is too high, perhaps it’ll seem more reasonable if the provider also digs over the ground and clears a few sickly boundary trees. Because of these negotiations, there tends to be a far wider range of pricing than you would usually expect to find.

Membership

Most LETS schemes are cheap to join, charging only enough to cover costs which usually have to be paid for in sterling, such as postage and printing. North East Dartmoor charges up to about £5 to join, depending on your income. For that, you receive a LETS directory, cheque book and regular updates. The renewal is £3 a year, payable in sterling or Tins.

Schemes generally seem to have between 50 and 150 active members. North East Dartmoor has 120 trading members, and a larger group of about 250 loose members who have passed through the system since it began in the early 1990s.

The book keeper

One member is nominated to keep records. When there’s a transaction, a receipt or ‘cheque’ is issued and the book keeper receives a copy and enters it, usually on a computer spreadsheet or similar. The book keeper sends out regular statements to members, usually monthly. In the North East Dartmoor scheme, lists are posted in the local courtyard cafe which is used by members. Many schemes post public lists of activity because it:

• demonstrates to current members how active the system is
• encourages new members to join.

Keeping in touch

Almost all LETS associations meet regularly and publish newsletters, keeping members up to date with what’s on offer, who’s left the scheme and who’s joined.

Many also hold trading days a few times a year where members trade goods and services between themselves. They’re also seen as recruitment drives to bring in more members of the local community.

POLICING THE SYSTEM

LETS schemes are run on trust. Self-regulation usually works because in rural communities, where the bartering system is most common, it makes absolutely no sense to fall out with fellow members who are probably your neighbours and whose children go to school with yours. Some groups have an ‘overdraft’ limit to stop accounts going into debit rapidly (easy for a new member to do). In these cases, the member is usually encouraged to try and reduce their debit or overdraft as soon as possible. They can widen the range of goods or services that they offer, never refuse a trade or perhaps tweak their service to meet a gap in the market.

In the North East Dartmoor scheme, there’s a 500 Tins overdraft limit. Very rarely does anyone take advantage. They report that occasionally a nice letter is written to suggest ways of reducing the debt.

On the whole, LETS currencies are thief- and fraud-proof. Because the units of currency can never leave the system they have no worth in the outside world and therefore there’s little point in stealing them. The currency isn’t usually tangible vouchers, therefore there’s nothing to counterfeit (in the unlikely event anyone would bother, just to secure a free babysitting service or regular bakery supply). It’s a near perfect currency where the worst that could probably happen is that a member runs up a big deficit and leaves the area quickly.

BUSINESS OPPORTUNITIES

There’s an argument that LETS systems create more business opportunities in the largely rural communities where they’re based. LETS, the theory goes, adds a new tier to a local economy and generates wealth that isn’t accessed through the conventional monetary system. In English, this means that even if hard cash isn’t available, trade in goods and services is still possible. This in turn creates new opportunities for business expansion.

For example, you’re a market gardener. You’re desperate to expand your growing area but can’t afford to pay anyone to clear an overgrown field and don’t have time to do it yourself. You consult your LETS directory, do a deal with someone fit and healthy with time on their hands and pay them with a three months’ supply of fruit and veg. Result: they cut their shopping bill and you have more produce. Everyone wins.

LETS schemes are also excellent marketing and networking tools (though some of the ‘greener’ members may not like to see it in such harsh capitalist terms). If there’s a loose alliance of a couple of hundred members in your own scheme, and perhaps one or two other schemes operating within your county, you’ve automatically got an introduction and shared goodwill among a significant section of your local community. If they have a choice between getting their fruit and veg from you or from Tesco, where are they going to go?

It’s also claimed that LETS schemes can make you cash richer because the more transactions you conduct through bartering the fewer pounds you need to spend. This is probably only true if you have plenty of free time. If you’re turning down sterling-paid work in order to do something tradeable, then that’s not cost-effective. You still have to pay the mortgage, the gas, electricity, phone, water, council tax or business rates, insurances, run the car, buy petrol …

If you do want to use a LETS scheme to advance your business, you have to be honest and upfront about it. Offering your time in return for a regular supply of potatoes is one thing: doing it because you want to make lots of money is quite another. It’s usually possible to buy or sell something using a mixture of the LETS currency and sterling, especially if part of the transaction has to be brought in from the outside (petrol, for example). But it’s generally frowned upon to ask for sterling for the whole trade.

Multi-LETS

LETS systems have developed to such a sophisticated level that a method has emerged where a group can benefit from the scheme but doesn’t have the hassle of administering it itself. A multi-LETS system is effectively an umbrella organisation which registers individual schemes and its members. The members can elect to trade in as few or as many individual schemes in the collective as they choose. The benefit is that members can have access to a far wider range of goods and skills and in return have a larger potential customer base for their own. But at the same time they can still belong to a smaller local club whose aims and objectives they’re more likely to share.

International trade

LETS is now global. Have a look at this website: www.LETS-Linkup.com. It’s an international LETS directory which features 1,500 like-minded schemes in 39 countries spread across all continents. It allows you to:

• travel, using the system
• trade your goods through the system.

THE GREATEST ENEMY

The greatest enemy is apathy. Every scheme starts off buzzing with energy and enthusiasm but after a few years many report that membership tails off. There seems to be two main reasons. First, there always has to be an administrator, so someone has to put in a lot of unpaid work, updating records, arranging meetings and trading days and sending out statements. And second, bartering usually involves negotiation or haggling and that’s something the British still aren’t very good at. It’s difficult and embarrassing to pick up the phone and ask a complete stranger to mend your curtains or give you a lift to the doctor.

TIME BANKS

Time Banks neatly avoid those two problems. Banks usually employ at least one paid person who looks after all the boring paperwork and who acts as a broker or co-ordinator in deals between members. Time Banks work by valuing everyone’s time equally. You give an hour and you get an hour back, no matter what level of skill is needed for delivery. It’s a literal form of communism, where a dog walker’s hour is valued on a par with that of a doctor or dentist.

Have a look at the website www.timebanks.co.uk. It says (December 2004) that there are 71 Time Banks up and running, with about the same again in development. More than 4,000 people are involved, who’ve traded more than 200,000 hours.

TAX AND INSURANCE

If you’re considering trading via a LETS scheme or Time Bank you need to seek advice at the time about any tax implications.

According to the Time Bank website, there’s a ruling that time credits are tax exempt and will be disregarded by the Benefits Agency. It adds that LETS scheme members have not been allowed this same benefit. You also need to speak to your insurance company if you start trading beyond the usual scope of your policy.