Rebuilding local networks: it has to hurt

Last week I came across this interesting article in The Economist on Business Improvement Districts (BIDs), which are having some success in reviving local economies. It prompts several thoughts about how to rebuild local communities. And, as I advocated in my recent blog on the poverty of ideas on the British Left (The unbearable lightness of British politics) , I think this offers the key to future progress in our society. But some ways of attempting this are more helpful than others.

Here’s what I think the problem is. Over the last generation our social, business and political networks have been reconfigured. Local connections have been downgraded and replaced by national and international ones. In Britain (England and Wales anyway) this has given rise to a strong geographical focus on London. If you want anything done, chances are that at some point you will have to talk to somebody in London, or within its commuting orbit. It makes sense for most people to invest time in their London networks in place of local ones, a process that feeds on itself. This is part of a general process usually referred to as “globalisation”, with London serving as a global hub. There have been plenty of benefits to this: the country as a whole is economically much more efficient. But it brings with it two problems.

First is that the main beneficiaries of greater economic efficiency are a globally well connected elite. To make it, as a sports star, an artist or as a banker or business executive you need to be world class. The marzipan layer or national or, still less, regional stars are also-rans who, in some fields at least, find it difficult to even make a living. You can’t make much money out of the British “First” Division of the football league, because it is in the shadow of the Premier League. In the developed world at least, the economy does not work well for most people. The most successful developed world economies (in terms of widespread distribution) tend to be smaller – think of Denmark or Sweden.

The second is that in larger countries like Britain many local economies are struggling as the decent opportunities are elsewhere. Britain’s highly centralised political system exacerbates this. There is a growing gap between London and the South East and the rest – though Scotland may be starting to buck that trend. The poverty of local networks is surely part of the problem. The London centred networks are in control.

But we can’t turn the clock back. It isn’t just that a centralised political system has impoverished peripheral communities in a simple grab for power. Changes in technology made much of the old way of doing things obsolete. If the next step in our political evolution is to rebuild local networks, it must be done in such a way that economic efficiency is enhanced. That is where a lot of ideas for rebuilding local communities fail.

This is one of the things that make BIDs interesting. BIDs are an American idea (I think the Canadians may have started them); businesses in a locality organise themselves, and if a critical mass support the idea they can compel all businesses to take part, including contributing to the scheme’s funding. This raises money to make small improvements to local infrastructure which then have more widespread benefits. And the process of doing so revives local networks. As councils retreat, as central government funding is cut, the importance of BIDs rises. This prompts a couple of further thoughts.

First is the local councils, though obviously part of the solution, may also be part of the problem. In order for local networks to revive, local accountability is critical. If the trail of responsibility simply ends up in an office somewhere in London then it is compromised from the start. This is what undermined many of the last Labour government’s attempts to delegate power locally, such as through NHS Primary Care Trusts (PCTs). Local councils are electorally accountable locally, but get most of their funding centrally and are heavily constrained on what they can do without asking some national body for permission. And they often try to monopolise local power and smother initiatives that they did not invent. A diversity of locally accountable power centres is surely helpful. “Locally accountable” does not necessarily mean “controlled by the local council”. We must hope that the coalition government’s invention of Clinical Commissioning Groups (CCGs) in the NHS become genuine local power centres, not the playthings of the central bureaucracy, as the PCTs were. The jury is out on that one.

The second point is that it is about money. The BIDs’ power and influence derives from the money they levy from their members, which in turn can unlock funding from other sources, such as the National Lottery. As I have already noted, one of the weaknesses of local councils is that their local taxation powers are so limited. They have the Council Tax, a sort of residential property tax, and the Business Rate – both of which are highly constrained by central regulations. These taxation powers will have to be extended.

Which is a third point. The design of BIDs overcomes the “free-rider” problem, which is the bane of many local initiatives. There is a strong tendency for most people to sit back and let somebody else do the work. That makes legal powers to raise money – taxation in other words – a central requirement.

At the moment the London government is playing with localism. It is letting a number of ideas go forward if they promote better local management at no serious cost to the power of the centre. At some point progress will require reforms that will hurt the centre. So our political leaders, all of whmo have played with the idea of localism, need commit serious political capital to it. Unfortunately neither David Cameron (after the flop of the “Big Society”), nor Nick Clegg (in spite of the Lib Dems’ theoretical commitment to the idea), nor Ed Miliband show any real sign of taking the revolution out of Westminster’s comfort zone.

 

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