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The role of local government in a modern state

Part of policy series: In the public interest - the role of the modern state

In its heyday, local government had the vision and resources to confront challenges from healthcare and housing to utilities and infrastructure. In the past local government has shown the unique and vital role it can play in responding progressively to local needs.

This paper highlights how the role of local government has been significantly reduced for over thirty years, with local democratic control diminished and services fragmented as powers have been moved both 'upwards' to central government and 'downwards' to other local actors in an effort to bypass the state. Local government has been cut out of the equation through preferences for market-based provision and contracting out.

The weakening of local government and services has been made even more severe through the Coalition's austerity drive. This paper highlights how, despite the Coalition's determination to restrict local government's influence and competencies through severe budget cuts and other changes, some town halls have responded by taking a more interventionist role. This includes: building homes; regulating the private-rented sector; streamlining services by bringing them in-house; tackling low pay; improving education; and using collective purchasing power.

In using these examples as the basis of an argument for the devolution of further power and resources, this paper avoids arguing for an arbitrary shift of power and resources to local government – indeed it asserts that many provisions of the welfare state are better maintained and guaranteed through national government. It argues instead for local government to take the lead where it is best-placed to innovatively tackle local problems.

While there is broad agreement on the left that a new approach is needed, this paper disagrees with those who, though opposed to the Coalition's attack on public services, nonetheless argue for forms of decentralisation that involve a lessened role for the state and a greater focus on citizen choice and autonomy. Whilst increased choice can be an outcome of better services, a market-based choice mechanism should not be relied on for changing or controlling services. Such approaches lead to fragmentation and a lack of accountability, and overlook the fact that the provision of many services is inherently collective.

The case against austerity is central to this paper, but its recommendations apply in any budget situation. It argues for a fairer distribution of funding, for councils to borrow to build more homes, and for funding and powers to be devolved where councils are best-placed to act. It makes the case for the potential benefits of in-house services to be built into councils' operations and for local authorities to be empowered to use their procurement powers to tackle the low-wage economy and improve vital frontline services.

By recognising the unique role that local authorities can play, and by showing the benefits of them being bold and active, this paper sets out a vision of how local government can be enabled to make a difference for the better.