As the parliamentary expenses scandal continues to career between the baroque and the banal, the politicians at its epicentre are becoming ever more prodigal in their calls for constitutional reform. While some of this is half-baked, diversionary or a frightened reaction to the revulsion of the public, a real debate is getting under way about the relationship between power and the people in the UK. About time, too.

For this scandal has not only exposed the (mostly petty) venality of (many of) the honourable members of the House of Commons, it is also turning into a merciless X-ray of their role and functions: what exactly are MPs for and how does power work in this dysfunctional democracy? Restoring public faith in politics depends on getting the answers to these questions right.

Over the past three decades, the UK has become ever more centralised. Some power in Europe has been transferred upwards: from national capitals to Brussels. But while most European countries have simultaneously devolved power, London has sucked up power from local government. Yet parliament has been squeezed. The separation of powers between executive and legislature has been blurred, and the power leached from local democracy has flowed not to Westminster but to Whitehall.

Unlike federal systems, such as in the US and Germany, or even non-federal countries like France and Sweden, the UK has put all its money on central government. At least in their relentless centralising, British politicians are the Jacobins of contemporary Europe.

All recent governments are to blame, but some more equally than others. Between 1979 and 1987, for example, Margaret (now Baroness) Thatcher rammed through some 50 amendments and laws curtailing, abolishing or generally emasculating local democracy.

Parliament, for its part, has become a rubber stamp. Tony Blair, notoriously, had as little time for it as he did for his cabinet. Too many bills, allotted too little time after shoddy drafting, inadequate consultation and cursory scrutiny, are whipped through by the ruling party machine, which holds the keys to ministerial preferment. Select committees are under-resourced, their memberships decided by the whips rather than the house. They can show teeth – as Gordon Brown and Alistair Darling found to their cost when the Treasury select committee called into question the credibility of the last Budget. But unlike, say, in the US Congress, they offer no real alternative career structure to the ministerial payroll.

This massive imbalance of power has turned MPs into spear-carriers in the house and glorified social workers in their constituencies. In the absence of real local democracy, they have become proxy mayors, like French deputies doubling up as mayors and prioritising their local responsibilities. This will not change so long as selection is in the hands of small cabals choosing MPs for performance at a local rather than national level – a system almost designed to reject talent.

Tony Blair’s first government devolved power to parliaments in Scotland and Wales, and to an elected mayor of London. These were important reforms. Yet he made elected mayors possible without the political will to make them probable – and he baulked at a fully elected House of Lords.

The immediate issues now are not proportional representation or fixed-term parliaments. Even if those were introduced, the balance of power between central and local government, executive and legislature, would still have to be reset.

In parliament, the Lords should be an elected revising chamber, while the Commons must be freed from the grip of party machines. MPs should be selected in local primaries – Tory leader David Cameron’s idea is a good one, if he means it – and select committee members should be elected and empowered by the house. There should be more time for fewer bills, on which the committees should conduct consultation with outside experts before they go to the floor. MPs might then make law in ways that hold the executive to account.

Revitalised municipal government is the cure to hyper-centralism. The UK should shed its preference for decentralised administration that remains centrally controlled and rate-capped. Local democracy is meaningless without fiscal power. Almost every developed country except the UK raises local taxes as well as local levies linked to property value, or devolves a fixed share of nationally raised tax; about half of local revenue is raised locally in Germany or France. It will take a lot to get that past Britain’s bureaucratic caste and political elites. But they should remember they are public servants – of citizens whose patience they have exhausted.

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