Government, it has been said, is boring. Local government bores absolutely. Yet local government is the only representative institution we have outside Parliament. It is through participating in local institutions that we learn the political skills necessary to a healthy democracy. "To be attached to the subdivision," argued Edmund Burke, "to love the little platoon we belong to in society, is the first principle (the germ as it were) of public affections. It is the first link in the series by which we proceed towards a love to our country and to mankind."

Alas, modern Conservatives have departed far from the spirit of Burke's teachings. Since 1979, there has been a massive transfer of services out of local authorities to agencies, boards and quangos dominated by the appointees of central government. In education, the former polytechnics, further education colleges and sixthform colleges have been nationalised, while the establishment of grant-maintained schools brings built-in instability into central/local relationships, preventing local authorities from planning ahead for the management of surplus school places. In housing, the local authority role has almost come to an end; local authorities are no longer regarded as the natural agencies for inner city regeneration; nor are they represented on the boards overseeing trust hospitals, while their representation on police authorities has been drastically reduced.

This has been accompanied by a transfer of financial powers away from local government. Until the 1980s, governments sought to determine not how much each local authority should spend, but solely the total of local government expenditure. Today, however, central government seeks to determine, through expenditure targets and standard spending assessments how much each local authority ought to spend. Moreover, the percentage of local expenditure financed from local taxation - currently varying in different authorities between 15 per cent and 30 per cent - is far too low to sustain local autonomy. In addition, the Secretary of State for the Environment has, since the Rates Act of 1984, been able to "cap" local authority expenditure, thus negating the principle that local authorities should be able to decide for themselves how much they wish to spend from locally raised revenue. Central government now declares, through standard spending assessments, that it knows better than local authorities how much they should spend; and, through capping, that it knows better than local authorities how much they should raise.

The weakening of local government since 1979 has brought with it what Lord Jenkins of Hillhead has called a "threat of civic degradation which it is almost impossible to imagine being imposed in any other country". Local government is in danger of becoming merely residual, a welfare state safety net responsible solely for pupils in special schools and sink schools and some very local services such as refuse, street cleaning and local roads. Local authorities would become the repository for those services that no one else can be bothered to provide, rather like the Poor Law guardians in the early part of the century before the creation of the modern welfare state.

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We have heard a great deal in recent years about the democratic deficit in the European Union. Yet we in Britain now have our own democratic deficit. It consists in the replacement of local elected representatives by appointed managers who are largely insulated from democratic accountability.

In a lecture in 1993 to the Public Management Foundation, William Waldegrave, the then minister for public service, denied that such arrangements gave rise to a democratic deficit. On the contrary, he declared, they yielded a democratic gain through making public services - grant-maintained schools, trust hospitals and housing associations - directly accountable to those who use them, to their "customers".

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This, however, is a sophistical argument. For government in a democracy is more than a provider of services; it is also a vehicle for the representation of opinion. Citizens are more than customers or clients; they are members of communities with the right to decide for themselves how they should be governed.

Under our current arrangements, however, civil servants in Whitehall are insulated from public pressure by distance and time; funding agencies, quangos and the like, "the unelected in pursuit of the unaccountable" in Simon Jenkins's words, serve to blur rather than clarify accountability. Boards, as Jeremy Bentham, noticed, are screens. It is to local government that we must look if we wish to restore a proper sense of accountability to our public services.

Local authorities, then, ought to be conceived of as representatives of local communities. This does not mean that they need be the sole or even the main providers of services such as education or housing. Their role is better understood as being one of ensuring that these services are properly provided. Moreover, local authorities ought to have a supervisory role even over services, such as the National Health Service, for which they are not statutorily responsible. They might, for example, use the select committee mode to question, on a regular basis, the chairpersons of trust hospitals and of quangos whose policies bear on local communities, to ensure that these bodies are meeting local needs.

If local government is to be responsible for ensuring that public services are properly provided, the financial framework must be such as can sustain that responsibility. The first step towards achieving this aim must be an improved system of local taxation, so that the share of local taxation vis-a-vis grant from the centre is increased. In addition, the capping of local authority expenditure and the use of standard spending assessments as indicators of how much local authorities should spend, ought to be abandoned. The only controls which central government really needs if it is to manage the economy effectively are controls on the total of local government expenditure, and on the total amount of local authority borrowing. There might also perhaps be a ceiling on the permissible rate of change in the level of local authority taxation in any particular year. Such controls would not be found onerous by local authorities, and they would be in accordance with the principle that local authorities should decide for themselves, within the limits of national policy, how much they should raise and spend each year.

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Is it utopian to believe that we can re-establish a proper constitutional relationship between central and local government? Just over 100 years ago, following the passage of the Local Government Act of 1894, providing for the establishment of elective parish councils, a great continental observer of our institutions declared that: "The grand principle of representative democracy has now been fully applied to local government - England has created for herself 'self government' in the true sense of the word. She has secured self-government - that is to say, the right of her people to legislate, to deliberate, and to administer through councils or parliaments elected on the basis of popular suffrage. And this is the root of the incomparable strength of the English Body Politic." Cannot we now emulate the self-confidence and determination of our Victorian forebears, by recreating a system of local government which serves to strengthen our democracy rather than undermining it?

Vernon Bogdanor is reader in government, Oxford University. His book Essays on Politics and the Constitution will be published by Dartmouth in November.