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Category: Economics

“Economic democracy deficit” warning as vast majority of citizens say they have little or no influence over institutions

A new report by the RSA has warned that barely one in five citizens feel they have any influence over the key economic decisions that affect thei...

6 March 2018


A new report by the RSA has warned that barely one in five citizens feel they have any influence over the key economic decisions that affect their lives

A report by the Royal Society of Arts’ Citizens’ Economic Council has revealed that 72% of Britons feel they have “little” or “no” influence over central government. The two-year qualitative study that informed the Building a Public Culture of Economics report involved a survey by the RSA and Populus, warning of an “economic democracy deficit” between citizens and key institutions.

The report said only 22% of citizens think they influence central government’s economic policy, with those in areas of the country “left-behind” by economic growth feeling the most disenfranchised. Although, by contrast, citizens in these areas did feel like they had more influence over local government. 42% of residents in the North-east said they had influence over the local council but only 13% said they had influence over the national government.

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Despite being initiated by a referendum, Britain’s exiting of the EU was also seen as something far-removed from the public. Although the vote was sold as a decision to “take back control”, 72% of those polled said they still 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,” said report co-author Reema Patel. “It is essential that we find ways to preventing a huge disconnect between those who voted and those who take economic and political decisions.”

Likewise, most people felt they were unable to hold national institutions to account. 73% felt they had little or no influence over the Bank of England. The UK’s central bank sets interest rates and identifies and manages inflation, making decisions that affect the financial well-being of millions, as interest rates inform mortgage rates and retail prices.

Andy Haldane, the Bank of England’s chief economist, addressed the report’s findings saying the Bank must do more to engage with the populace: “The RSA’s excellent report affirms the importance of all UK institutions engaging with citizens. We will be climbing a few more [engagement] rungs in the year ahead, speaking to a wider audience than ever previously, in language more accessible than ever previously. The RSA report will be a spur to us doing more with more people, in a way which improves understanding of, and the performance of, the economy and economic policy.”

However, the Bank of England is far from unique in needing to engage the public. Only 33% said they felt they had “a lot” to “a little” influence over local government, followed by:

Local businesses (31%)

Trade unions (28%)

The NHS (25%)

Central government, including HM Treasury (22%)

The Bank of England (20%)

Local high street banks (20%)

FTSE 100 chief executives (18%)

Local Enterprise Partnerships (16%)

Economic juries  

Although economic estrangement pervades, it need not be inevitable said Tony Greenham, director of economics at the RSA, who highlighted how more people might trust economic decision making if they knew ordinary people like themselves were involved, such as in a jury. “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. 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.”

Other recommendations from the report are for “double devolution” whereby local citizens are given a formal scrutiny role, for more councils to adopt measures like participatory budgeting to engage citizens and for Local Enterprise Partnerships to take “radical” action to improve transparency, such as via local economic “jury service”.

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