Lessons of Porto Alegre

Last week, when the UK Local Government and Communities Minister Hazel Blears announced plans for participatory budgeting - people organising themselves with council support to help decide local public spending priorities - she did so with a very significant statement. "We are now at a tipping point where there is a will right across government to devolve power," she said, pointing to the success of experiments elsewhere, most notably in the Brazilian city of Porto Alegre.

Devolving power is one of those feel-good phrases that need to be considered critically if we are to make the most of such announcements. The problem with devolved power is that it can easily be revoked. This is particularly the case if the power and resources of local government are not increased. So how can participatory budgeting - which, Blears insisted, is "not just consultation" - become a foundation stone of a renewed democracy?

It is worth looking more closely at what can be learned from the Brazilian experience. Direct popular participation in decisions over the municipality's budget for new investments earned Porto Alegre a United Nations prize as the world's most habitable city, led to a significant redistribution of resources to the poor, and caused such an improvement in the general quality of life that middle-class citizens accepted a tax increase.

As a means of monitoring investments as well as deciding on them, the participatory budget contributed to an impressive improvement in the infrastructure and services as well as in the transparency and efficiency of financial systems. It also proved to be a strong defence against the pressure to privatise public services.

Since 1989 the participatory budgeting process in Porto Alegre has been built up steadily, renegotiated by citizens and the municipal government every year. Three important principles underpin the process: first, it is city-wide - citizens meet in open assemblies in their neighbourhoods and debate and vote on local priorities, which are then negotiated across neighbourhoods; second, the negotiation takes place on the basis of a set of agreed criteria of need and population size and through a transparent, regular cycle of meetings; third, every citizen has the right to be directly involved through the election of a representative to the neighbourhood assembly.

A striking feature of the Brazilian experience is the high level of support that municipalities give to the process. In Porto Alegre teams of community organisers and popular educators have been involved in training citizens in "budget literacy" - reaching young people, the disabled, the elderly, ethnic minorities and others who might be inhibited from participating - and working with them to help them prepare their proposals.

A basic institutional contrast between the British and the Brazilian experiences is highlighted by a World Bank report on Porto Alegre, which notes that municipalities in Brazil have "considerable autonomy over their revenues and expenditures". This is fundamental to the embedded nature of the process. Locally elected municipalities will find it difficult to take away power from an active and autonomously organised citizenry.

A recent Mori poll indicated that there is significant public support for direct involvement in budget decision-making. The Blears proposals need to build on this support in a way that avoids simply institutionalising small expectations, but rather strengthens the challenge to inequalities both within towns and cities and on a national scale.