Select Committee on Public Administration Appendices to the Minutes of Evidence


Memorandum by Pam Dixon and Kate Oliver


  Are you searching for ways to involve as many people as possible in the decisions that affect them?

  While surveys, focus groups, public meetings and visioning exercises enable us to get views of at least a cross-section of our citizens, those who respond may well not believe that any real change will occur as a result. But why should we be bothered by this?

  Turnout in local elections is very low—30 per cent nationally. If we don't enable and empower our citizens to participate in local decision-making in between local elections, increasingly Councils will be unable to claim that they are democratically accountable.

  This is especially the case when the current political emphasis is on regional government and very local government. If local authorities, as they are presently constituted, do not react constructively to this and redefine their role, their existence may be in jeopardy.

  The first step to reinvigorating local democracy is to ensure that it has its own local power base as well as devolved power from central government. Most local taxes are collected centrally and most local revenue is still ring fenced by central government to spend as it sees fit, including expenditure on high-profile projects such as the Single Regeneration Budgets and Education Action Zones. As Henry Tam pointed out:

"Devolution to the regional level of statutory bodies is a useful step, but unless there is further decentralisation to the more local and accessible level of governance, participation of citizens is not likely to increase . . . Incentives against devolving functions and budgets to others are almost built into the system, and responsibility for democratic participation does not feature at all." (Henry Tam, "Communitarian Ideas and Third Way Politics", VOICE, August 1999.)

  The second step is to think about how we can devolve power to the citizen in a meaningful way and in a way that could include every individual. Here we propose a process that could do just that—by putting the power in people's pockets.


  Each year when the Council Tax is collected, a proportion of it could be given back to citizens in the form of `community pounds' or `com-pounds'. In return for paying Council Tax each citizen would receive a number of com-pounds that they could then spend on enhancing or using council services of their choice.

  Citizens could choose to spend their com-pounds either to increase the quality or quantity of the statutory and essential services already provided, or to receive new, discretionary services and facilities. For example, a person may be assessed as needing to receive meals-on-wheels three times a week. They could use their com-pounds to increase the number of times they receive meals or they could choose meals from a higher quality menu. Other examples could include citizens using their com-pounds to reduce the price of leisure facilities, or to employ a home help.

  Com-pounds enable people to `buy' a range of different services from the same supplier—their local authority. They differ from voucher systems, which enable people to buy the same service from a range of suppliers with the result that money may leave the public sector. Although the com-pounds system uses the basic concept of the expenditure of money, it can actually be seen as a sensitive voting system rather than a purchasing system.

  The amount citizens receive would be limited by the proportion of the council's budget that is used to provide statutory or essential services. At its most radical, any expenditure on the rest of the services could be at the discretion of citizens rather than the council. It would be up to councillors to decide the proportion of their budget that would be allocated in this way. Initially, during a pilot phase, the proportion might be quite small, expanding if the proposal were successful.


  As well as, or even instead of, using their com-pounds to increase the quantity or improve the quality of services to individuals, citizens could choose to use com-pounds for community services or projects—their children's school, a campaign to have speed bumps put in their street, or a luncheon club. This would help to identify local priorities.

  Com-pounds could even be spent in other communities. For example, elderly people with an independent and adequate income could choose to spend com-pounds on a skateboard rink in a community other than their own so that the street environment in their own community would feel safer.

  Councils could specify the proportion of each person's allocation of com-pounds that had to be spent on community services rather than on services to individuals; or it could restrict the spending of com-pounds to the purchase of community services.

  The availability of funding for local groups would be an incentive for community interest groups to lobby local people about issues in their community. Potentially this could increase the level of community debate. However, there would need to be safeguards (such as restricting the amount of money spent on lobbying) to protect individuals from undue pressure to spend their com-pounds in a particular way.


  Com-pounds would need to be allocated to each individual in the household, including children, to help balance inequalities within households. Councils could also decide to give additional com-pounds to those in receipt of benefits or on low incomes. This would automatically shift investment to poorer areas and could be the basis of a redistribution of wealth and enfranchisement that current local anti-poverty strategies can only dream of.

  Varying contract specifications according to need/location has already been addressed by councils that were creative with the constraints of compulsory competitive tendering. In Birmingham this approach has been deployed with some success in certain services; for example, there are three times as many planned bulk refuse collections in the deprived areas of the city as there are in other areas. The initial allocation process to each Ward was based on Census-derived indicators of deprivation, following work done by the Social Exclusion Unit. The subsequent local decision-making was devolved to each Ward Sub-Committee. If contract variations are combined with com-pounds, bottom-up regeneration could become a reality.

  Councils could also allocate com-pounds directly to voluntary sector and campaign groups to encourage community action and cohesion, and overcome inequality. A group that could demonstrate that it represented a particular minority ethnic community could be allocated com-pounds and this would help to redirect council services to the needs of the minority ethnic communities.


  Councils would need to cost the discretionary services and provide a catalogue of services that citizens could purchase with their com-pounds. This catalogue also could be published on the world wide web and be made available through other IT avenues at a lower cost than more traditional publications. This would have increasing significance as access to IT increases. In addition, local communities could ask the council to cost a proposal that they might have. Placing a value on a service may encourage citizens themselves to value community services or services that are `free' at the point of use. For example, it is possible that if the cost of graffiti removal or litter removal were better understood it might encourage more community action to prevent it.


  The proposals could be extended to other public sector settings. For example, citizens could be offered an allocation of com-pounds for purchasing a range of preventative (but not essential) health care services from the local health authority. Choices could be made to purchase health checks, a range of healthy foods or stress management courses.


  At present, participative consultation techniques tend to be constrained by inadequate prior education and training, the lack of good quality information, and the time and cost required to provide them. For example, surveys of local people on subjects about which they have partial or inaccurate information produce skewed results and undermine people's faith in the consultation process.

  To make informed decisions about spending com-pounds people would need to be given, and have access to, high-quality information. This is made feasible by local television and radio, and now the internet and the world wide web. Where information is not made easily available people will be increasingly in a position to acquire it anyway and will use it outside the democratic process or despite it. It is an urgent task and one that sits well with our proposal that people should have access to and can share information pertinent to decision making.


  Com-pounds could be the answer to a number of key issues that councils have been struggling with for sometime. Potentially they allow all citizens to have a direct input into how a range of personal and community services are delivered and, therefore, could result in personal empowerment. However, in part this would be dependent upon the effectiveness of the implementation of our proposals and we are aware no currency system is perfect. Therefore a number of questions need to be addressed.

  How would com-pounds be distributed? Each citizen could have a com-pounds account and cheque book or debit card with which to spend them. They would need to have a way of checking their balance whenever they needed. This would either be based on telephone banking principles and/or a system of automatic teller machines (`hole in the wall' cash machines).

  What would be the administration costs of such a scheme? Often, administering current consultation is not fully costed, especially the staff resources involved. Whilst we recognise that there would be administrative and promotion costs, we question whether these would outweigh the benefits of our scheme, or the costs of consultation and other arrangements for devolution that are currently used.

  Is it possible to plan services in response to what could be erratic expenditure? For instance, a community play project may need to be funded for three years to be effective. A local community group starts an effective campaign that attracts sufficient com-pounds in the first year but, as other campaigns develop or personal needs kick in, the project fails to get funding in subsequent years.

  A way round this would be to apportion com-pounds on a rolling three-year cycle, so that not all the currency is coming in (or not) in one year, and more stability could be built into projects. The Government, as part of the DETR's review of local government finance, is considering whether long-term grant allocations are feasible and desirable. If longer grant cycles were introduced, each person's allocation could be divided into one portion that is allocated annually and another portion that is allocated three yearly, the latter to encourage people to invest in services over a longer time span. The services could spend only a third of it in each year, but would have a better idea of what they had already been pledged over the next three years.

  What would happen if people failed to spend their com-pounds? In effect it would mean money lost to council services and to the particular communities in which the person lived. The proposals would need to allow for the re-allocation of com-pounds unspent by a certain date. This responsibility could be devolved to area-based sub-committees as well as service communities. Equally there would need to be mechanisms in place to ensure that people did not overspend.

  What are the implications for council staff and the services they supply? Council services could be put further or more directly into competition with each other and may feel the need to undercut. The introduction of training credits and independence for FE colleges from local authorities has certainly meant that further education is delivered in a way that is more useful to the student, for example Saturday morning courses. But this may have resulted in reduced pay and benefits, and hours of work that make it even more difficult for staff to meet their family responsibilities.

  We would propose that com-pounds be made available from top-slicing existing budgets or from new money available, so that if com-pounds are allocated to a particular service it does not result in immediate loss to another service. In this way the shift in service provision can be better planned and managed.

  What impact would the com-pounds system have on the relationship between citizens, officers and councillors? In the current model of local government, citizens are the experts in services they want or need but are not often asked to express a view. Officers provide expertise on how they think services should be delivered, and councillors provide the facilitation. Councillors would have a representative role in setting the proportion of the budget that would be allocated to com-pounds, in determining the local minimum standard or meeting statutory standards and in the monitoring of service delivery. They would no longer, however, have control over how the com-pounds—the proportion of the budget devolved to very local areas—are spent. This power would pass to the local citizens. Thus, a minimum acceptable level of provision of services and any statutory levels would have to be maintained by a part of the budget not available for com-pounds. How much of the remainder Members choose to devolve into com-pounds is always negotiable through the ballot box, so people could vote for the candidate who is willing to devolve the most.

  The most important test of our proposal is whether it would actually cause the truly disengaged to engage. It is possible that it would actually reinforce inequality as those who are more articulate learn to play the system to their advantage. The proof of the pudding will be in whether people use their com-pounds to buy the pudding. We feel hopeful that the proposal would, at least to some degree, empower even those at the edges of our society.

  Its strength is that it is based on a system that everyone understands—the spending of personal money—and in which all can participate whatever their limitation, whether it be time, family commitments or mobility. It allows the individual citizen to affect, more directly and locally than through the ballot box, how much of their taxes are spent on providing what services and how. It can enable communities of place or interest to club together to achieve their priorities, and it potentially shifts resources to areas where poorer people live. To do this it may be necessary to provide an education and support package, including the employment of support staff, to ensure that the most disadvantaged within communities make best use of the scheme.


  There are enough unknowns about this approach for it to be interesting to set up a number of well-monitored pilots. Initially these could be linked to government funding schemes such as SRB and other local area-based regeneration initiatives, or specific policy initiatives could trial the impact. `Quality Projects' could use com-pounds not only to change service delivery standards, but also to change the role and status of traditionally oppressed groups of clients, such as those suffering mental ill health and the very elderly, in relationship both to those services and to local government.

  If we are serious about involving people in the decisions that affect them, let's take our courage in both hands and devolve some of the decision making to them. It would be a lot more empowering than focus groups, don't you think?

Pam Dixon and Kate Oliver

Lead Officer: Corporate Initiatives (Job Share), Birmingham City Council

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2001
Prepared 30 April 2001