26th June 2024
Power to the people: boosting citizen participation and fiscal flexibility in local government.
New research suggests the two issues of trust and funding are interconnected – and point to a path forward. But creating a “new settlement” for local democracy will require bold action from both central and local leaders.
Trust in government is a precious commodity – and one that is in short supply. According to the latest research from the Local Government Information Unit (LGIU), published in January to mark the organisation’s 40th anniversary, just 36% of British citizens trust their local council – a figure that, while higher than the 27% who trust the central government (a seven-year low), is still worrying.
The consequences are stark: 61% of people want to be more involved in local decision-making, but over half say they need to understand how their council actually makes decisions.
This vicious circle of declining trust and participation poses an existential threat to local democracy. As the LGIU’s Chief Executive, Jonathan Carr-West, warns: “We need local government more than ever. We cannot tackle the big problems of the 21st century without it. But too often, local government is not as strong as we need it to be.” However, the report also suggests a way forward that puts citizens at the heart of local governance and gives councils the fiscal autonomy they need to deliver.
Rebuilding trust through participation
So, how can local authorities win the trust of their communities? The LGIU report argues that the key lies in promoting civic engagement and embracing “relational governance”. This means opening up council decision-making processes, having rich conversations with residents about priorities and trade-offs, and putting participation at the centre of everything the council does.
Some authorities are already leading the way. In one example cited by Emily Douglin, Director of Local Government at Civica, the Chief Executive of Sheffield City Council asked citizens a simple but profound question: “Where do you want our locality to be in X number of years? And what help do you need from the council to get there?” This framing recognises that the council can’t solve every problem on its own – but it can play a vital role in enabling communities to shape their futures.
The coronavirus pandemic provided a crash course in community resilience. Confronted with an unprecedented crisis, people stepped up to look out for themselves and each other, rather than relying solely on public services. “How do we maintain that little spark of accountability that rose out of communities?” asks Douglin. “How do councils maintain that and build on it?”
The answers lie in “social prescribing” approaches that connect people to community support networks and digital tools that make it easier for citizens to engage with the council and each other.
“The best outcomes are from community asset owning,” stated one anonymous leader in the LGIU report. “I want to be able to reinvest in the creation of social capital at a hyper local level. That is a version of giving back control.”
Driving change through fiscal devolution
But participation alone is not enough. To empower communities, councils need the financial resources and flexibility to invest in local priorities. This is where fiscal devolution comes in. Currently, local government is heavily dependent on short-term, ring-fenced funding from Whitehall, which 86% of council leaders say is unsustainable. The LGIU report calls for a radical shift, with multi-year budgets, needs-based funding formulas, and the ability for councils to raise more of their own revenue through local taxes.
International comparisons show what’s possible. Local authorities have far greater control over their finances in Germany, Italy and Japan, with mechanisms to equalise funding between richer and poorer areas.
Devolving power in this way gives councils the tools they need to drive local growth and reform public services. It also creates a virtuous circle of trust and accountability. When citizens can see a direct link between the taxes they pay and the services they receive, they are more likely to engage positively with local democracy.
Towards a ‘new settlement’ for local government
Ultimately, rebuilding trust and reforming funding are two sides of the same coin – a new settlement for local government that puts power in the hands of communities. Getting there will require a fundamental shift in the relationship between central and local government, based on genuine partnership and a shared commitment to subsidiarity – the principle that decisions should be made as close to the citizens as possible.
Douglin believes that technology can play a crucial role in enabling this shift. Civica’s digital engagement solutions are helping councils inform, consult, and co-create with citizens in new ways – from online participatory budgeting to artificial intelligence-powered community engagement platforms. By harnessing the power of data and digital, local authorities can improve services and build a more transparent and responsive relationship with the people they serve.
But technology is only part of the puzzle. Achieving a genuinely participatory and fiscally sustainable model of local government will require political will and leadership at all levels. Central government must let go of the reins and give councils the autonomy to drive change locally. And local leaders need to seize the moment by engaging their communities in a meaningful dialogue about the future.
As the LGIU report makes clear, the stakes could not be higher. With trust in democracy at an all-time low and councils facing a perfect storm of rising demand and shrinking budgets, a new settlement is urgent.
By putting power in the hands of the people – both through participation and fiscal devolution – we can start to rebuild the foundations of local government from the ground up. The road ahead may be challenging, but the destination is worth striving for: a resilient, responsive and truly democratic system of local governance that puts communities first.
Find out more about how Civica supports local authorities to engage citizens and drive digital transformation.