Economic growth Swedish style

Robin Hambleton originally published this piece in Local Government Chronicle on 30/9/22

Sweden’s very strong system of local government helps it deliver far better economic growth than the UK, writes the emeritus professor of city leadership at the University of the West of England, Bristol.

Robin-Hambleton-300x200.jpg

Robin Hambleton, emeritus professor of city leadership at the University of the West of England, Bristol

If central government wants to bring about strong economic growth whilst also levelling up the country it should be drawing lessons from countries that have already done this.

An excellent example is provided by Sweden – a prosperous country that has for the past 20 years or so operated at around 12%-20% above the average prosperity level for OECD countries.

How does Sweden compare with the UK?

OECD figures on productivity per head show Sweden’s economic performance is far better than the UK. Thus, in 2021 the Swedish GDP per hour worked was 107 from a 2015 baseline of 100, compared with the UK’s 103.

Sweden also outperforms the UK on a whole raft of indicators relating to tackling climate change.  For example, OECD environmental indicators show that in 2020 the Swedish greenhouse gas emission per capita was 4.5 tonnes of CO2 which compares with a figure of six tonnes for the UK.

Most important, income inequality in Sweden is much lower than in the UK. OECD data on the Gini coefficient, an internationally respected measure of income inequality, shows the UK, with a figure of 0.37 (in 2019), is one of the most unequal countries in Europe, whereas Sweden, with a figure of 0.28 (in 2020), is one of the most equal.

Zarah Sultana, Labour MP for Coventry South, attracted headlines in April when she issued an eye-catching tweet noting that “there are now more foodbanks in Britain than McDonalds restaurants”.

She was correct and, sad to say, the situation is now even more troubling. A House of Commons Library research briefing published in July indicates that there are now well over 2,500 foodbanks in the UK. This is close to double the total number of McDonald’s locations, which stands today at a little under 1,400.

What can we learn from a society that is outperforming the UK on all fronts, a society that has no need for food banks?

Insights from Swedish local government

Sweden has a strong state that intervenes boldly in society to improve the quality of life. Interestingly, the central state is relatively small when compared with the local state – the main job of providing public services is rightly seen as being the role of local government.

As the Swedish Association of Local Authorities and Regions (SALAR) (equivalent to the Local Government Association) points out: “Since local self-government makes it possible to design services in different ways, it is possible to find flexible solutions that are appropriate for a particular municipality or county council.”

Local self-government, including the right to tax, is enshrined in the Swedish constitution. This ensures central government cannot ride roughshod over the heads of local voters.

Local authorities in Sweden have immense fiscal power – they raise around 70% of their revenue from local taxes, including a local income tax. This proportion compares with around 50% for English local authorities raised via the council tax.

There is, of course, no question of the Swedish central state capping the tax raising powers of elected local authorities. That would be instantly ruled out as unconstitutional.

The Swedish justification for very strong local government is twofold. The political argument is that powerful elected local authorities can represent local people and act as a robust barrier against national authoritarian rule.

The managerial argument stems from a desire to deliver really cost-effective public services. Why burden citizens with all the costs of a massive, over centralised state when elected local authorities can do most things for themselves?

The Swedish system not only delivers outstanding services, it also enjoys an impressive level of democratic legitimacy. Voter turnout in recent UK local elections has been in the region of 31% to 39%. In Sweden voter turnout in local elections in recent years has been over 80%, although they take place at the same time as national elections.

Lessons for the UK

The evidence from Sweden demonstrates that strong local authorities can play a major role in tackling the pressing challenges that societies now face – including the cost-of-living crisis, the climate emergency, and the importance of including excluded groups in social and economic recovery from the devastation imposed by covid.

Three lessons for the UK emerge from Swedish experience.

First, the international evidence, not just from Sweden, shows that really strong local governments can play a pivotal role in meeting the complex challenges local communities across the world now face.

Second, if economic growth and levelling up are to be delivered, the UK state needs to intervene in an intelligent way that is responsive to the different needs of different places. This means giving the political and fiscal power of all elected local authorities in the UK a truly transformational boost.

Third, an independent constitutional convention on the governance of the UK should be set up as soon as possible.

It should examine the way power has been removed from localities over the years, take evidence from civil society, trade unions, businesses, voluntary organisations and public service leaders, learn from local democracy abroad, and set out bold proposals to rebalance the local/central power structure of our country.

As Sweden shows, it is not difficult to identify how to improve the social, economic and environmental performance of the UK. What is needed is political will.

Robin Hambleton, emeritus professor of city leadership, the University of the West of England, Bristol. His latest book, Cities and Communities Beyond Covid-19: How Local Leadership Can Change Our Future for the Better, was published in 2020.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s