Robin Hambleton: Swedish-style economic growth
Sweden’s very strong local growth system helps it generate much better economic growth than the UK, writes the Emeritus Professor of Urban Leadership at the University of the West of England, Bristol.
If the central government wants to bring about strong economic growth while leveling the country, it should learn from countries that have already done so.
A prime example is provided by Sweden – a prosperous country which for the past 20 years or so has operated about 12-20% above the average level of prosperity for OECD countries.
How does Sweden compare to the UK?
OECD figures on productivity per head show that Sweden’s economic performance is much better than that of the United Kingdom. So in 2021 Sweden’s GDP per hour worked was 107 compared to a benchmark of 100 in 2015, compared to 103 in the UK.
Sweden also outperforms the UK on a range of indicators related to tackling climate change. For instance, OECD Environmental Indicators show that in 2020 Sweden’s greenhouse gas emissions per capita were 4.5 tonnes of CO2, compared to a figure of six tonnes for the UK.
More importantly, income inequality in Sweden is much lower than in the UK. OECD data on the Gini coefficientan internationally respected measure of income inequality, shows that the UK, with a figure of 0.37 (in 2019), is one of the most unequal countries in Europe, while Sweden, with a figure of 0.28 (in 2020), is one of the most equal.
There is of course no question for the central Swedish state to cap the fiscal powers of elected local authorities
Zarah Sultana, Labor MP for Coventry South, made headlines in April when she posted a catchy tweet noting that “there are now more food banks in Britain than there are McDonalds restaurants”.
She was right and unfortunately the situation is now even more troubling. A Information session on research at the Library of the House of Commons released in July says there are now more than 2,500 food banks in the UK. That’s nearly double the total number of McDonald’s locations, which now stands at just under 1,400.
What can we learn from a society that outperforms the UK on all fronts, a society that doesn’t need food banks?
Perspectives from Swedish local government
Sweden has a strong state that boldly intervenes in society to improve the quality of life. Interestingly, the central state is relatively small compared to the local state – the main task of providing public services is rightly seen as the role of local government.
As the Swedish Association of Local Authorities and Regions (SALAR) (equivalent to the Association of Local Governments) points out: “Since local self-government allows services to be designed in different ways, it is possible to find flexible solutions and tailored to a particular municipality or county council.
The Swedish system not only provides exceptional services, but also enjoys an impressive level of democratic legitimacy.
Local self-government, including the right to tax, is enshrined in the Swedish constitution. This ensures that the central government cannot trample local voters.
Local authorities in Sweden have immense taxing power – they derive around 70% of their revenue from local taxes, including a local income tax. This proportion compares to approximately 50% for English local authorities collected via housing tax.
There is of course no question for the Swedish central state to cap the tax levying powers of elected local authorities. This would immediately be ruled out as unconstitutional.
The Swedish justification for a very strong local government is twofold. The political argument is that powerful elected local authorities can represent local people and act as a strong barrier against national authoritarian rule.
The managerial argument stems from a desire to deliver truly profitable public services. Why impose all the costs of a massive and overly centralized state on citizens when elected local authorities can do most things on their own?
The Swedish system not only provides outstanding services, it also enjoys an impressive level of democratic legitimacy. Voter turnout in recent UK local elections has been in the range of 31% to 39%. In Sweden, the turnout in local elections in recent years has exceeded 80%, although they take place at the same time as national elections.
Lessons for the UK
Evidence from Sweden demonstrates that strong local authorities can play a major role in addressing the pressing challenges facing societies today – including the cost of living crisis, the climate emergency and the importance of including excluded groups in the social and economic recovery from the devastation imposed by covid.
Three lessons for the UK emerge from the Swedish experience.
First, international, and not just Swedish, evidence shows that truly strong local governments can play a central role in addressing the complex challenges that local communities around the world are currently facing.
Second, if economic growth and leveling up are to be assured, the British state must intervene in a smart way that responds to the different needs of different places. It 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 UK governance should be put in place as soon as possible.
It should examine how power has been removed from localities over the years, collect testimonies from civil society, trade unions, businesses, voluntary organizations and civil service leaders, learn lessons from local democracy abroad and come up with 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 UK’s social, economic and environmental performance. What is needed is political will.
Robin Hambleton, Emeritus Professor of Municipal Leadership, University of the West of England, Bristol. His last bookCities and Communities Beyond Covid-19: How Local Leadership Can Change Our Future for the Better, was published in 2020.