The role of the communities in the shrinking state

Vidhya Alakeson, CEO at the Power to Change, reflects on the recent budget and what it means for our communities.

One attention grabber in the budget was the announcement of a ‘national living wage’. Less noticed was the conclusion that at the end of this parliament, government spending measured as a percentage of GDP will have fallen to 36 per cent. According to the Office for Budget Responsibility, public spending will be smaller in 2020 than at any point since the mid-1960s and a lot smaller than at its peak in 2009-10. It will also be leaner than many of our international competitors. The United States – often considered a country with a preference for a small state – will actually in 2020 have a state that accounts for a slightly larger proportion of GDP than we have in the UK.

Whatever your views about the optimum size of the state, we can agree that the UK is not returning to the level of government spending we got used to in the 2000s. Furthermore, with an aging population, much of the spending of the state will be focused on the NHS and pensions. Add in welfare, education and defence and there is little left for many other things that, regardless of where you sit on the political spectrum, we tend to think of as areas for government such as adult learning, regeneration, youth services and support for civic infrastructure. But unlike in the United States, citizens here still expect government to play an active part in solving problems, protecting people and improving standards of living.

With a smaller state, this means government looking at new ways of doing this and looking at the role that other actors can play alongside government. We already saw some of this in the Budget itself with the introduction of an apprentice levy on companies, with the private sector asked to fulfil a role traditionally occupied by government. Growing interest in social investment provides another dimension to this, as new investment is drawn in to support public services and to sustain parts of the voluntary and community sector once dependent on government grants and contracts.

As a supporter of community business, we at the Power to Change see the real potential of community business to tackle local challenges that can no longer be fully addressed by government, whether that be running community and leisure facilities, providing affordable housing or supporting those less close to the labour market into employment. I recently visited Gateshead and saw how the local authority is working with some of its libraries and the local people who use them to make the transition from publicly run services to enterprising community businesses, providing library services alongside new sources of income from events, workspaces and jobs programmes that can sustain libraries as community hubs for the long term.

What is exciting about this transition is that community business offers more than simply filling holes that were once occupied by the state. Community business creates the opportunity to bring often remote services closer to people, to have them truly reflect and respond to the concerns of those for whom they are intended and to create opportunities for local people to shape, run and own them, thereby building community assets that form the bedrock of sustainable local economies. The council officers in Gateshead told me that when their community centres were council run, they were well heated but largely empty. Now over a period of several years they have been transformed into community businesses, they are self-sustaining, oversubscribed and thriving.

Community business will need government to continue to play a role alongside organisations like the Power to Change and other funders. In Gateshead, the local authority has facilitated the transfer of assets to the community and provided ongoing support. But it is a different role for the state, one that gives permission and support to others to take action. Much as Citizens UK created the movement that has now led to the announcement of a ‘national living wage’, the development of community business will need government to work alongside others to kick start this new social force.

Read about the achievements of Citizens UK in the Evening Standard