In the fifth programme of the Matrix of Power series, Anne Perkins examines the relationship between central and local government, and between the regions and their local councils.

For 30 years local government has been in decline, its powers slowly eroded and its image tarnished by events like the 'loony left' sagas of Liverpool and Lambeth.

Even now the government is embarrassed by tales of corruption and cronyism in councils where Labour has been in unchallenged control for a generation.

Tony Blair does not trust local government - but he needs it, to deliver his election promises on education, social services and fighting crime. So he plans big reforms of the way it works.

Councils will have to choose between London-style directly elected mayors, or setting up a cabinet structure to replace the old council committees which obscure the way decisions are taken.

But perhaps the most important reform is his insistence that councils must work with what Mr Blair calls 'stakeholders' - unelected representatives of local interests, especially businessmen.

Focus on stakeholders

The City of York council has got there already, pioneering new ways of bringing business into the decision-making process and making the council responsive to its needs.

The city's chief executive. David Clark, says that councils must look for new ways of delivering services rather than demanding more powers, or more control over how much money they raise and spend.

Mr Blair though is on a tight timetable: the next election looms and he wants service improvements in place well before that. So central government is taking more and more control over the way councils operate.

If councils don't move fast they could find themselves relegated to the sidelines for ever.

Searching for a new relationship

At the same time John Prescott, Environment Secretary and long-time advocate of regionalism, is introducing Regional Development Agencies to tackle regeneration in England's regions and try to bring incomes up to a European standard.

But Mr Prescott's old ambitions for elected regional assemblies have been postponed 'due to lack of interest'. Instead of looking to the interests of local voters, the RDAs will be accountable only to Mr Prescott.

The regional interest will be represented by 'stakeholders' - reflecting rural as well as urban concerns, universities and of course business who, together with some local councillors, are being appointed to new regional 'chambers'.

Mr Blair is looking for a new relationship between government and people, and stakeholders, the organisation of groups of voters by interest as well as by where they live, is a part of it.

Ironically, electoral reform - which Mr Blair does not like - could give democratic legitimacy to the idea and bring about the transformation he is seeking.