RSA warns of ‘economic democracy deficit’

Only one in five citizens believe they have any influence over key economic decisions, according to a new report.

The Building a Public Culture of Economics report, which is published today by the RSA warns of an ‘economic democracy deficit’ and calls for ‘double devolution’ to help restore public trust.

A survey by the RSA and Populus for the report shows just 22% of people believe they influence central government’s economic policy, while 33% believe they have ‘a lot of’ or a ‘little’ influence over economic decisions made by councils.

North East residents reported the most influence in the UK over local councils (42%) but the least over central government (13%), while just 9% of people in the South West feel they have any influence over local high street banks.

The report also shows few people think they have any influence over Brexit, despite the vote to ‘take back control’ in 2016.

Almost three quarters (72%) of people said they still feel that they have either not very much, or no, influence over how central government is handling Brexit.

And a similar number (73%) feel the same about the Bank of England.

In addition, just 3% say they have ‘a lot’ of influence over Local Enterprise Partnerships, which have been tasked by the government to develop local economic strategies in England.

The report recommends giving local people a formal scrutiny role, as part of any future devolution deals.

It also calls on more councils to use participatory budgeting to help engage citizens, like Newcastle City Council already have.

The report also calls on local enterprise partnerships to take ‘radical action’ and improve transparency.

‘We all know that trust in economic institutions is low – but this isn’t inevitable,’ said the RSA’s director of economics, Tony Greenham.

‘Our research shows that half of citizens would trust economic decision-making more if they knew ordinary people like themselves were involved, as with the jury system,’ added Mr Greenham.

‘This is a two-way process too: not only do citizens feel more confident about economics and more able to influence the economy, but crucially, it means “experts” make more informed decisions that enjoy broader public support.

‘Locally, although it’s generally a better story, councils can do much more to engage citizens and rebuild trust, especially as they agree devolution deals,’ said Mr Greenham.

‘Local enterprise partnerships in particular as unelected bodies must work harder to involve ordinary people, such as through “local jury service”, if they are going to secure a real mandate.

‘Rebuilding trust, especially in post-industrial areas, will take time – which is exactly why the Bank of England, and other economic bodies, must adopt this approach without delay.’

The report’s co-author, Reema Patel, added: ‘Brexit has illustrated a widening chasm between those who take decisions and those affected by them the most.

‘Despite the EU referendum vote, Brits have still not ‘taken back control’ of the important economic decisions that affect their lives: 72% of our survey respondents feel that they have either not very much, or no, influence over how central government is handling Brexit.

‘We spoke directly with residents in Port Talbot, Clacton-on-Sea, Oldham, Birmingham and other areas with a significant “Leave” vote, who told us how disenfranchised and locked out they feel.

‘It is essential that we find ways to preventing a huge disconnect between those who voted and those who took decisions economic and political decisions arising again, and engaging at a regional level is key to that.’

To read the full RSA report, click here.