Please send me SCA's fortnightly briefing:

August 31, 2010

Big Society is bigger elsewhere

Amidst all the hype given to the coalition Government’s plans for the Big Society, it’s important to keep some perspective.  Compared to Switzerland, Big Society’s ambition appears almost tame.  The highly decentralised system of local government with 26 cantons and 2,600 communes , all with powers to set policies and raise taxes, reveals just how much scope there is to vest real power with local communities

If the coalition really wants to give power back to the people, it should look to the Alps

While sceptics in Britain worry that David Cameron’s localism agenda might create “postcode lotteries”, the Swiss rejoice in their local diversity. There are 26 cantons and 2,600 communes in the country, each setting its own policy and raising its own different taxes. Even methods of choosing representatives in the federal government are decided locally, provided the method is democratic.

Cantons have their own constitutions, their own laws and their own courts. They decide their own rates for local income tax, inheritance tax and road tax. They raise about 40 per cent of the tax take, the communes another 30 per cent and there are big policy differences between localities.

For example, cantons decide the minimum legal age for buying alcohol, a measure far stronger than Theresa May’s plan to let local authorities decide pub opening hours. Cantons set their own rules on issues such as prostitution and drugs. Some of them recognised civil partnerships well before they were adopted nationally, while others banned smoking in public long before it became national policy. Cantons even decide who is eligible to become a citizen (in one, this involved a popular vote on each candidate until the Supreme Court ruled that tests must be more objective).

Cantons decide how much autonomy communes should have, but they have plenty. For example, they are responsible for their own policing — local control that is, again, much stronger than the Home Secretary’s proposal for elected police commissioners. They also manage their own welfare, local transport and (dream on, Michael Gove) schools.

Switzerland’s federal Government, does only the things that need some measure of co-ordination. It issues the national currency. It is responsible for defence and foreign policy. It manages transport, telecoms and energy networks. But even where policy is decided centrally, the cantons and communes often decide exactly how it will be implemented.

The idea of Eric Pickles, the Local Government Minister, to allow local voters to veto above-inflation rises in council tax is another measure that would scarcely register on the Swiss scale. In all but one canton, spending proposals can be rejected or amended in a referendum. In one, all large and exceptional spending plans are approved by referendum. Some rural cantons even have a system allowing local people to meet and debate local policy — a form of direct democracy that David Cameron must envy. One such assembly of 4,000 people in Appenzell Innerrhoden banned nude hiking after efforts by the canton (Switzerland’s smallest) to tax nude hikers had failed to curb the craze.

Because the cantons enjoy enormously wide powers to decide the level of taxes and services, competition between them is sharp. In particular, they compete on low taxes to induce businesses to locate in their area. One canton, Zug, with its 11 per cent top rate of income tax and 16 per cent company tax, has proved so successful at attracting national and multinational firms — 1,600 of them last year alone — that it is running out of housing and office space. But other cantons are happy to step into the breach, such as Obwalden, which now undercuts Zug with a company tax rate of 12.7 per cent. Geneva, with its 35 per cent top rate of income tax, has been happy to welcome British hedge-fund managers who have balked at the UK’s 50 per cent top rate.

Diversity on this scale makes the UK coalition’s efforts at direct democracy look pretty faltering. When we are all paying the same taxes, postcode lotteries in public service quality are, of course, unacceptable. But it is hardly unfair if towns with ageing populations vote for higher taxes to fund better NHS care, or cities with teen-binge problems raise the drinking age or other places decide that they would rather have fewer services but lower taxes.