Local Government Studies

Delivery of public services and economies of scale: Cooperation as an alternative for small municipalities

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Germà Bel

The economic crisis has strongly affected many developed countries, and has caused serious tensions in government finances. These constraints are particularly important at the local level, because local governments have limited taxing bases, and fiscal competition is stronger. Policy discussion on local government reform and local cost reductions, as well as increasing efficiency in local service delivery, is widespread.

Besides the measures of suppression or reduction of intermediate local government in some countries, the most relevant feature of local government organizational reform is the search for a better scale, to be able to provide local services in a more efficient manner. A policy frequently proposed to reduce costs is merger of municipalities. In practice, most experiences worldwide have had compulsory character, given the usual reluctance of municipalities to merge. However, it is by no means clear that municipal amalgamation results in cost reduction.

An alternative reform of local service delivery increasingly which is increasingly used has been intermunicipal cooperation, which focuses on functional consolidation of services instead of focusing on amalgamation or consolidation of governments. Little is yet known about why municipalities engage in cooperation to deliver local public services.

Shedding further light on this question is the aim of our recent article ‘Why do municipalities cooperate to provide local public services? An empirical analysis’. We use a database of the Spanish region of Aragon, characterized as having many small municipalities. Our empirical analysis confirms that small municipalities need to cooperate with other municipalities so as to reduce the costs of providing services. The need to exploit scale economies, which is not possible for small municipalities individually, may be one of the main factors driving the decision to cooperate.

Of course, municipalities could also contract to a private vendor to benefit from scale economies. However, higher transaction costs with privatization seem to be particularly influential in the decision of local governments to privatise or cooperate in the delivery of solid waste collection. Our analysis shows that small municipalities prefer to cooperate so as to reduce costs, while larger municipalities prefer to privatise the delivery of the service.

The clear policy implication of our work is that intermunicipal cooperation, as opposed to privatisation, may well be an optimal solution for the delivery of services by local governments in small municipalities. Municipalities of this type have to face the problems of a lack of competition and high transaction costs, while facing the need to exploit scale economies. By cooperating, scale economies can be achieved with lower transaction costs and fewer concerns for competition than is the case for private production.

A full account of this research is available in my recent article with Xavier Fageda and Melania

Full details of this research are available in my article with Xavier Fageda and Melania Mur: Why do municipalities cooperate to provide local public services? An empirical analysis.  Local Government Studies, 39(3), 435-454.

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Germà Bel is professor of Economics at Universitat de Barcelona and Visiting Professor at Princeton University (Woodrow Wilson School). His research focuses on public sector reform, with a special emphasis on privatization and regulation, and he is particularly active in the study of transportation infrastructure and local public services.

Planning and the new (new) localism – what chance of success?

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Nancy Holman

Planning in a time of austerity is never easy – budgets are cut, needs are great and regulation can be seen as stifling growth.  In England we are in just such a position and in the midst of a reformulation of planning that is on the one hand meant to deliver growth and on the other designed to empower communities. Most of these reforms are being couched in the language of localism with community participation at the forefront of policy.

However, these reforms raise a series of questions that have yet to be answered: Who will get involved in local planning? Will localism foster increased NIMBYism? And most importantly, can the localism agenda actually engender action toward policy implementation? My article, co-authored with Yvonne Rydin, examines these dilemmas through the lens of social capital and offers key insights into this latest governmental foray into local social relations.

Who will get involved?

The Localism Act provides communities with an opportunity to come together and formulate their own neighbourhood plans thereby shaping their locale.  Key to this is engaging people in sufficient, meaningful and constructive participation. Social capital suggests that this can be kindled when like-minded communities come together over locally salient issues thereby creating networks of mutual trust and reciprocity.  However, this scenario is not without problems as in order for it to work communities must believe that the benefits of participation are not offset by the opportunity costs of participating. In addition, the strong ties of bonding social capital that emerge from participative exercises can in turn foster more insular and exclusionary localities outweighing any strategic benefits to greater community involvement.

Will localism foster NIMBYism?

Even if the localism agenda fosters communities burgeoning with social capital and a zeal for participation, a real fear, from the government’s perspective, is that these communities will be those best able to resist growth, which runs counter to the Coalition’s aspiration for localist planning.  Countless studies, from the location of mobile homes in post-Katrina New Orleans to LULUs (Locally Unwanted Land Uses) in Japan, have shown that strong social capital is associated with heightened abilities to avoid unwanted development.  Whilst the government has put in place a number of measures like the New Homes Bonus to incentivise local communities to grow the jury is still out on how well this will work.

Will the agenda actually engender policy action?

As the old adage goes, “Almost anyone can write a plan, the difficult part is putting into action”. Critically, there is nothing in the new system of Neighbourhood Plans that makes them more proactive and action oriented in terms of bringing land and development forward to achieve plan outcomes. Here, social capital tells us that, if communities wish to see their plans implemented they must situate themselves in networks that extend beyond local bonding ties into a bracing matrix tailored to the needs of the development activity so that they may access additional resources and investments.  This means that there is scope to ‘shape’ networks to deliver more effective planning.

So, what might be the outcomes of government reform?  As it stands, the rhetoric of localism is in danger of delivering only failed promises and thwarted desires for local communities.  However, planners could regain a key role under the new agenda by focussing on how they could actively build the networks of specific forms of social capital needed to achieve participation, frame localist planning in broader terms by injecting much needed planning skills into the neighbourhood planning exercise, and deliver development that meets community needs by considering the necessary resources and engaging with those who have the power to deliver such change.

A full account of this research is available in my recent article with Yvonne Rydin: ‘What can social capital tell us about planning under localism?’ Local Government Studies. 39 (1), 79-88.

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Nancy Holman is the Director of Planning Studies at the London School of Economics and Political Science. Her work deals primarily with issues of governance and local planning including sustainable development, heritage conservation and community participation. She has often used social network analysis to explore the complex relationships in the multi-level, multi-actor partnerships present in modern governing arrangements.

Examining citizen participation: theory and practice

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Laurens de Graaf

As a researcher of citizen participation I often discuss the functioning of local democracy with, among others, councillors, officers and citizens. These discussions are showing that knowledge of democratic theory in the field is not often very present.

Partly, this is understandable –if the field consisted of political scientists only, would democracy function at all? But it seems as if limited knowledge about democracy creates some practical problems. To put it more precisely, the perspective on democracy appears to depend on the slogan: ‘where you sit is where you stand’. Councillors see themselves as guardians of democracy, because they are (the only ones) elected, and are the representatives of the people. Officers don’t often understand the (seemingly) irrational decisions councillors make and see democracy often as frustrating for their policy process. Citizens are distant observers and only a few committed citizens are actually participating in democratic processes.

Councillors and officers have been aiming for (more) citizen participation since the 1990s. But what effect does citizen participation have on local democracy?

Citizen participation is vital to democracy

Citizen participation is usually seen as a vital aspect of democracy. Many theorists claim that citizen participation has positive effects on the quality of democracy. Theories of participatory democracy, deliberative democracy and social capital assert that citizen involvement has positive effects on democracy. It contributes to the inclusion of individual citizens in the policy process, it encourages civic skills and civic virtues, it leads to rational decisions based on public reasoning, and it increases the legitimacy of the process and outcome. These aspects are summarized in the table below.

Aspects of democracy Clarification Theoretical Perspective
Inclusion Allow individual voices to be heard (openness; diversity of opinions) Social capital & Deliberative democracy
Civic skills and virtues Civic skills (debating public issues, running a meeting) and civic virtues (public engagement and responsibility, feeling a public citizen, active participation in public life, reciprocity) Participatory democracy & Social capital
Deliberation Rational decisions based on public reasoning (exchange of arguments and shifts of preferences) Deliberative democracy
Legitimacy Support for process and outcome Participatory democracy

Table: Aspects of citizen participation and democracy; a framework for analysis

What councillors and officers are telling me is that they are not fully aware of all these different aspects, but like the overview. It helps them to reflect on democracy from different angels.

Local participatory policymaking in the Netherlands

My article – co-authored by Ank Michels – examines the probability of these claims for local participatory policymaking projects in two municipalities in the Netherlands. However, I think that the claims can also be applied to local democracy in the UK and other countries. The article focuses on the relations between citizens and government from a citizens’ perspective.

The findings show that the role of citizens in participatory projects is limited, serving mainly to provide information on the basis of which the government can then make decisions. Nevertheless, the article argues that citizen involvement has a number of positive effects on local democracy: not only do people consequently feel more responsibility for public matters, it increases public engagement, encourages people to listen to a diversity of opinions, and contributes to a higher degree of legitimacy of decisions. One negative effect is that not all relevant groups and interests are represented. The article concludes that for a healthy democracy at the local level, aspects of democratic citizenship are more important than having a direct say in decision-making.

Reflecting on the functioning of (your local) democracy can be a fruitful exercise once in a while. The framework of analysis that was presented here may help, among others, councillors, officers and citizens to understand democracy more broadly and empathise with (each) other’s perspectives and roles.

A full account of this research is available in my recent article with Ank Michels: ‘Examining Citizen Participation: Local Participatory Policy-making and Democracy’. Local Government Studies 36 (4), 477-491.

Laurens de Graaf is a lecturer at Tilburg School of Politics and Public Administration, Tilburg University, The Netherlands. In the last ten years he conducted theoretical and empirical research with regard to citizens participation and in a broader sense: the functioning of local democracy. He is often in the field moderating workshops and trainings for councillors, mayors, active citizens and (neighbourhood) professionals about their role and their potential added value to local democracy.

Neighbourhood governance: Community empowerment or containment?

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Madeleine Pill

In the UK, the deprived neighbourhood has long been a site and scale for intervention and action, giving rise to a variety of forms of neighbourhood governance to achieve a range of purposes.  The four predominant rationales for neighbourhood governance are defined by Lowndes and Sullivan (2008): the empowerment of citizens and communities (the civic rationale); partnership to take a holistic approach to an area (social); government through new forms of representation and participation (political); and management in terms of more effective local service delivery (economic).

The relative emphasis upon these rationales changes over time due to policy shifts, exacerbated given central government’s hand in the instigation and operation of neighbourhood-targeted initiatives.  Initiatives have increasingly stressed the civic rationale in terms of encouraging neighbourhood-level ownership of problems and of attempts to resolve these. This, paired with the need for deficit reduction, is demonstrated in ‘Big Society’ policy rhetoric. Its amorphous bundling of approaches seeks the transfer of responsibilities for services to local communities and third sector agencies. Its promotion of social enterprise models contrasts with the neighbourhood management approach of influencing other service providers rather than engaging in direct service provision.

The associated shift to ‘small government’ heralds the end of central government-led initiatives targeting deprived neighbourhoods which have left a heritage of varying types of neighbourhood governance infrastructure. How is this infrastructure affected by changes in its governance context?

An evaluation of neighbourhood management in the City of Westminster, delivered through a third sector organisation, the Paddington Development Trust, enabled exploration of these issues.  The findings show that the Trust was recognised as delivering an effective form of neighbourhood management which emphasised community involvement and the civic rationale of neighbourhood governance, but which absorbed large amounts of officer time and was resource intensive.  The Westminster approach to neighbourhood management was a product of New Labour strategy and of a genuine desire to tackle the problems of the most deprived wards in an otherwise affluent local authority.

While funding was provided, the City Council sustained a strong commitment. But the approach was contingent on the prevailing ethos and funding regimes and remained relatively detached from mainstream services.  It proved easy to decouple the deprived neighbourhood infrastructure from ‘normal’, mainstream service delivery with the advent of the coalition government in 2010.  As neighbourhood initiatives have been largely instigated by central government, it is unsurprising that the principal purposes of neighbourhood governance have been imposed, with additional funding offered as an incentive. In reality, once funding ends, the ability of neighbourhood governance to be sustained, despite the rhetoric about ‘capacity building’ towards neighbourhood empowerment, is very much in doubt.

Herein lies the paradox of the centralised approach to neighbourhood initiatives in the UK: commitments to localism, devolution and community empowerment are largely dependent on central government resource provision. While community empowerment is an important part of the policy rhetoric, in practice a ‘strategy of containment’ operates whereby residents in deprived neighbourhoods have relatively little control.

A full account of this research is available in my recent article with Nick Bailey: ‘Community Empowerment or a Strategy of Containment? Evaluating Neighbourhood Governance in the City of Westminster.  Local Government Studies. 38 (6), 731-51.

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Madeleine Pill is a Research Fellow at the Cardiff School of Planning and Geography. Her research focuses on critical governance studies exploring the scope for and limits to community action at neighbourhood level and she teaches on the MSc Regeneration Studies.