Decentralization

Shifts in Governance as Partial Decentralization

“New” governance arrangements are characterized by processes of coordination without full central authority (see Van Kersbergen & Van Waarden, 2004, p. 152). In the public sphere, a shift in governance is observed in which traditional, hierarchical governance mechanisms are being replaced by horizontal, interactive, or multilevel arrangements. The idea of a shift toward “new” modes assumes a “traditional” mode of governance that the current mode has shifted away from. This traditional mode, often indicated as “government,” is one specific mode of governance. It is characterized by coordination, by “hierarchical imposition” (Héritier, 2002), and by national, democratically legitimated institutions, possibly mandating competencies to lower levels of government. This hierarchical mode of governance is currently being replaced by other modes that differ with respect to their location, mechanisms, and styles (Héritier, 2002; Knill & Lenschow, 2003; Scharpf, 2001; Van Kersbergen & Van Waarden, 2004).

New governance constellations emerge in response to a constellation of interdependencies in which the capacity of a central, coordinating entity is incomplete and power is shared—in the material sense of the word—between levels of coordination. Knill and Lehmkuhl (2002) discussed European multilevel governance arrangements and argued that centralized coordination is required because mutual interdependencies between decentralized actors exist. This is an important motivation, for example, European social policy integration that addresses problems related to coordination of national welfare states and labor markets. However, the same literature on European Union (EU) integration amply shows that national preferences and institutionalized welfare state and labor market arrangements stand in the way of further social policy integration (Citi & Rhodes, 2007; De la Porte, Pochet, & Room, 2001; Falkner, 1998; Ferrera, Matsanganis, & Sacchi, 2002; Jacobsson, 2004). Interdependencies between European states engender pressures toward policy coordination and convergence. However, at the same time, the comparative advantages of national economies (Hall & Soskice, 2001) form an incentive to protect policy autonomy and divergence. That is, the low social cost advantage of new European member states invokes pressures from high social cost states to harmonize wages and social security systems while it invokes efforts to protect the own market from such pressures. Such paradoxical relation between the interunit and intraunit level exists independent from the existence of explicit supraunit coordination projects like the path toward the single European market. What is more, supraunit interdependencies often function as the impetus to increased coordination, although they recurrently invoke opposition against these same efforts (De Swaan, 1988). Interdependencies between employers in the late 19th and early 20th century have led various employer groups to strive for the introduction of state coordinated welfare arrangements; there were also employer groups who opposed against coordination in the Netherlands (De Vries, 1970; Schwitters, 1991) and in other states, like the United States (Berkowitz & McQuaid, 1980). Concurrent and recurrent pressures toward central coordination and decentralized autonomy have determined the history of the Dutch welfare state (Bannink, Kuipers, & Lantink, 2006; Bieber & Bannink, 2005; Cox, 1993).

For both downward and upward shifts in governance, it goes that the locus of governing capacity is partially situated at the central level of entities engaged in the coordination of action and partially at the decentralized level of entities whose action is being coordinated. Both shifts appear to take place at the same time and in response to similar pressures (Mayntz, 1993). Central governments lose power to decentralized actors because of the complexity of local conditions, although interdependencies between decentralized actors require upward shifts in governance. Shifts in governance are conceptualized as decentralization operations responding to capacities in a material sense being shared between the central and decentralized levels of a governance constellation.

The partiality of central governmental capacities proves to be highly problematic for the conceptualization of sovereignty. Sovereignty can, under such conditions, no longer be fully justified.

Decentralization and Sovereignty

The distinguishing mark of sovereignty is “the autonomy of the political” (Loughlin, 2003, p. 56). But with the rise of governance actors, the state is no longer constitutionally independent from other communities. With current challenges posed by globalization and the related interdependencies between sovereign states and by localization and the dependency from localized units, sovereignty becomes “organized hypocrisy” (Krasner, 1999).

In the sovereignties in transition debate, it is therefore widely argued that the rise of governance structures makes sovereignty an outdated principle. The sovereign state changes into a “post-Westphalian state” (Falk, 2002) or “responsible state” (Etzioni, 2006). Such a sovereign state no longer functions to guarantee legal security but is responsible for the whole of humankind, organizing the legalization and enforcement of human rights (Cohen, 2004; Levy & Sznaider, 2006). Carozza (2003) fully abandoned sovereignty and introduced “subsidiarity” as a more fitting political form in an era of “glocalization.” Subsidiarity implies that no higher authority can legitimately act if a lower authority is able to and that a higher authority can intervene in the affairs of lower authorities only if this enables them to govern themselves (Ossewaarde, 2007b). The central state under subsidiarity is a derivative of local authority, deriving its legitimacy from the belief that lower, typically local or regional communities lack the capacities that they need to flourish, although higher authorities, such as the EU, United Nations, Roman Catholic Church, or the state, can provide these.

Sovereignty is in transition because sovereign government presupposes the existence of monopoly power and policy-making capacity—not only in the legal arrangement but also in the material content of the constellation. It is this capacity that is limited to an increasing extent. Policy capacity is increasingly shared between the central and decentralized level. This implies that the responsibility for policy formation and implementation is shared accordingly. In the next section, we outline four aspects of administrative responsibility that we, in the subsequent section, link to four governance constellations, indicating conceptually different sovereignty transitions.

Administrative Responsibility

Bovens (1998) made a distinction between four different types of responsibility. In the first place, responsibility may refer to “capacity.” Actors’ responsibility follows from their alleged capacity to carry their duties, in the sense of position and available means. In terms of capacity, responsibility refers to holding sovereign power to effectuate the policy objectives of the sovereign state. Sovereignty in transition implies that capacity is no longer sufficiently available at the level of central government. Responsibilities are decentralized within the state and a “new social contract” is drawn (Ossewaarde, 2007a). Capacity is shared between the central and decentralized levels of governance systems.

Capacity is shared in the second responsibility type: responsibility as “accountability.” This responsibility refers to regulated actors being held responsible for the consequences of the choices that they make within the sovereign state. Accountability is primarily an economic type of responsibility, which is carried within the institutional context of market capitalism and “freedom of choice.” In this responsibility type, a market relation is constructed between a central, regulating government and decentralized, regulated implementing agencies or local governments. Regulated actors are considered free agents, responsible for the outcomes of their own, free choices. These organizations are treated as service providers. Central government, acting as service purchaser, introduces incentives to influence the free choice of service providers. Citizens are defined as “consumer-citizens,” who consume public services and construct their civic identities through their consumptions (Bevir & Trentmann, 2007).

A third responsibility type, in which capacity is also shared, is the delegation of responsibility as “task.” This responsibility refers to the duties or obligations that are attached to the autonomy and competencies that subjects are considered to have. The task of central government is primarily understood in terms of supporting or enforcing the role obligations of decentralized target groups. Decentralized actors have a duty or are obliged to provide services at adequate standards. If decentralized levels of a governance system fail to fulfill their tasks appropriately, then the sovereign denies them the legal right to act as implementing agency or local government. This threat allows central government to influence decentralized agencies.

The fourth mode comprises the full transfer of policy capacity to the decentralized level. In this case, responsibility as “virtue” is pursued. This type of responsibility is not exercised within the sovereign state. Instead, it is governed by the subsidiarity principle. Regulated actors are considered to have personal qualities that induce them to act responsibly. In the subsidiary state, central government is not a sovereign power but a higher authority that is responsible for assisting decentralized actors in support of their self-government. Self-government is an end in itself, not a means or policy instrument to effectuate central government’s objectives. A key function of subsidiary government is to sustain decentralized authority and safeguard pluralism and diversity.

In the sovereign state, decentralization implies the delegation of centralized power to lower levels of sovereign power. This power shift takes place within the government, which implies that the sovereign keeps its power but transfers responsibilities to enhance its efficacy. This indicates the emergence of a “neoadministrative state” (Durant, 2000), a state that shows a traditional pursuit of social control by new means. Sovereignty, also decentralized, regulates the relations between citizens, social organizations, and decentralized public agencies and mitigates the effects of social conflict.

The redistribution of responsibility typified as virtue signals the radical transformation from the sovereign state into the subsidiary state. It implies localization. Subsidiary states are political entities in themselves that enable their citizens to acquire (civic) virtue and thereby govern themselves. As subsidiary states offer no legal protection, but count on the potential virtue of citizens, self-government is a potentially dangerous affair, in the sense that it may prove unable to mitigate the potentially conflictual relationships between social actors.

These different responsibility types are pursued by different modes of decentralization. These modes may evoke specific paradoxical effects.

The Pursuit of Responsibility and the Paradoxes of Decentralization

Decentralization occurs under the acknowledgment of interdependencies between central and decentralized actors; that is, the locus of capacity is partially situated at the decentralized and partially at the centralized level. Next to a fully centralized mode, three modes of decentralization can be conceived. A policy is comprised of (a) substantial content of the policy and (b) the resources needed for policy implementation (Hoogerwerf, 2003, p. 20). Decentralization may concern (a) the transferal of policy content, that is, the transferal of policy-making autonomy and implementation discretion from central to geographically or functionally decentralized levels of administration; (b) the transferal of policy resources, the financial and other risks of policy failure and success, from the central to decentralized levels of administration; or (c) the transferal of both substantial and resource competencies. In a fully centralized constellation, substance and resources are situated at the central level.

The transferal of only policy-making autonomy and implementation discretion is aimed at supporting the decentralized actor fulfilling his centrally defined role obligations. Resource risks remain at the central level, whereas decentralized actors are allowed to substantiate their role obligations in the concrete local context. Responsibility as task is pursued. If only the resource risks of policy failure and success are transferred to the decentralized level, responsibility as accountability is in order. Local government becomes responsible for the attainment of specified policy goals that are formulated elsewhere, at higher hierarchical levels. This responsibility is supported by influencing the choice options of decentralized units. The transferal of both resource risks and policy-making autonomy to the decentralized level is aimed at responsibility as virtue. In this responsibility mode, central-level capacities essentially become irrelevant. A subsidiary constellation is pursued.

The first two are “incomplete” modes of decentralization. Decentralized levels of a governance system support central sovereignty, albeit “in transition.” We call the third, subsidiary variant “complete” decentralization. The decentralization of neither policy content nor resources produces a “nontransition” sovereignty constellation where capacity is considered completely located at the central level.

When an agency is given implementation discretion, although a specified output component of this agency is measured and rewarded, accountability is pursued. Such incomplete decentralization mode may lead to unintended effects. A so-called “performance paradox”—a seeming contradiction—may occur (Van Thiel & Leeuw, 2002). The establishment of a specified performance indicator supports increased control over decentralized performance. The same increased specification of the indicator, however, enables the decentralized actor to concentrate his efforts on a more limited policy goal, circumscribed by the rewarded aspects of performance while ignoring the nonmeasured aspects of performance (Van Thiel & Leeuw, 2002). The policy goal that is implied in the performance indicator “overrules” decentralized implementation discretion. Rewarded performance increases, whereas actual performance, circumscribed by the aims of the policy at large, may deteriorate. Coming up to measured performance criteria, the decentralized actor influences the substantial content of the policy as it is implemented at “street level” (Lipsky, 1980). “Creaming,” prioritizing the easier cases from a caseload to increase the number of successfully finished cases, is an example. Actual implementation contains a different client selection criterion than the originally formulated policy.

This particular mode of decentralization often occurs in New Public Management (NPM) arrangements. NPM arrangements are characterized by a more distanced relationship between (centralized) policy-making authorities and (decentralized) policy-implementation authorities. This goes along with a separation of policy formulation and performance assessment functions on one hand and policy implementation on the other hand: Osborne and Gaebler’s (1992) “Steering Rather Than Rowing.”

Another paradox, the “paradox of self-regulation,” often occurs in corporatist policy implementation constellations (Bannink, 2004; Schmitter, 1974) and in many other instances in which a central governing actor seeks the cooperation and consent of actors in the field. Central governments may seek decentralized involvement in policy formulation to increase the support for a policy. For example, in the context of European social policy making, the Open Method of Coordination is considered as an instrument the European Commission uses to involve EU member states that cannot be controlled through hierarchical regulation (Jacobsson, 2004; O’Connor, 2005). Furthermore, because decentralized actors command relevant information about important issues at the decentralized level, the efficacy of policy implementation may be improved. Decentralized actors are given a role in both “steering” and “rowing.” This implements responsibility as task. Collective funds are made available to finance policy aims that are formulated in a constellation in which central actors share regulatory power with decentralized actors. Decentralized actors apply these means to implement the policy. Héritier and Eckert (2008) argued that self-regulation is often implemented under “weak control.” Weak control leads to gaps in the implementation of policy proposals: Instead of providing increased decentralized information and policy support, decentralized actors may show rent-seeking behavior (Olson, 1971) and apply the available funds to strengthen their own organizational capacity (Bannink, 2004; Moe, 2005). This signifies a paradox. Deregulation was intended to increase the policy-making and implementation capacity of a central actor only capable of weak control. Improved capacity is pursued by giving decentralized actors a role in the policy process, implying responsibility as task. Instead, the same self-regulation under weak control might empower decentralized actors, ultimately allowing them to give priority to decentralized interests.

Incomplete decentralization may give rise to paradoxes. A performance paradox may occur where centralized control is too strong (not leading to increased performance but to an instrumental emphasis on rewarded performance); a self-regulation paradox may occur where centralized control is too weak (not leading to increased decentralized information and support but to uncontrollable policy costs).

Complete decentralization might address problems related to the performance paradox and the paradox of self-regulation. Decentralized actors can neither pursue decentralized interests funded by centrally provided means nor adjust their policies to centrally rewarded policy aims. Complete decentralization implies transferring policy autonomy and implementation discretion as well as the financial risk of policy failure and success, supporting responsibility as virtue. A subsidiary constellation emerges. However, a complete mode of decentralization is not necessarily adequate. Are policy objectives indeed most feasibly addressed at the local level or are supralocal and intralocal interdependencies included in the issue that need to be addressed at the centralized level? A subsidiarity paradox may occur: not virtue is attained, but the transfer of central-level policy conflicts to the decentralized level.

Skocpol (1995; see also Huber & Shipan, 2002) identified such a paradox with respect to the decentralization of public assistance in the United States. The budgets of public assistance were transferred from the federal state to the local level, and decentralized actors were given policy-formulation autonomy. However, without taking into account the extent of necessary means, a specific policy objective—of social policy retrenchment in this case—was imposed on decentralized actors. As a result, decentralized actors were transformed into instruments for the attainment of federal retrenchment objectives. It became difficult for the decentralized actor to formulate a policy that addressed specific, complex local conditions and policy preferences.

Previously, we discussed the sovereignty in transition debate and related that to modes of decentralization. “Sovereignty in transition” results from partial capacities at the central level of a governance system, leading to problems of policy formation and implementation. Three possible modes of decentralization were distinguished (see Figure 1). Either policy content (a) or policy resources (b) or both (c) can be decentralized. These modes support specific types of administrative responsibility but may each evoke specific paradoxes of decentralization. The transfer of the financial risks of policy failure and success supports decentralized responsibility as accountability. However, it may lead to overregulation, requiring decentralized actors to be accountable for the policy aims of the central actor, preventing them to apply relevant local information. The transfer of policy-making autonomy might instead of supporting decentralized responsibility as task and decentralized involvement in central-level policy issues lead to decentralized action being oriented to the concerns of decentralized actors. The transfer of both risks and policy autonomy to the central level might instead of supporting decentralized responsibility as virtue lead to the transfer of central-level conflict to the decentralized level.

OPEN IN VIEWER

Figure 1

Responsibility outcomes of three decentralization modes

In the following section, we present three empirical cases of social policy decentralization—one for each of the decentralization modes—and illustrate how decentralization supports administrative responsibility and evokes decentralization paradoxes.

Work and Social Assistance Act (WWB)

In 2004, the WWB was introduced to replace the Social Assistance Act of 1996. The Act pursued a new substantial policy objective indicated as “Prioritisation of Work Above Income” (TK 28870, No. 3, 2002-2003, pp. 2-4); the “rules of the act have to activate the responsibilities and capacities of citizens and local governments as much as possible” (TK 28870, No. 3, 2002-2003, p. 2). To do so, the obligations and incentives of citizens and local government are intensified (TK 28870, No. 3, 2002-2003).

The new policy objective is to be attained through a changed administrative organization of policy implementation, characterized by “three Ds”: decentralization, deregulation, and the decrease of reporting obligations. The “decentralization” of financial responsibilities (TK 28870, No. 3, 2002-2003, p. 15 ff.) was introduced as an incentive to local governments aimed at client activation. Local governments can no longer claim the expenses of benefit provision from the national budget. Instead, this so-called “income-component” of the social assistance budget was integrated in the general municipal budget. This entails that local governments bear the risk of policy failure and success: An increase of the number of beneficiaries directly affects the local budget. Expenses of beneficiary reintegration activities, the “work-component,” were not integrated in the local budgets. Local governments can claim expenses made for client reintegration from a separate, national fund. “Deregulation” of social assistance provision granted local governments the competency to establish decrees in which benefit provision and client reintegration activities are further specified (TK 28870, No. 3, 2002-2003, p. 40 ff.). The decrease of reporting obligations formed an additional operation to increase administrative efficiency (TK 28870, No. 3, 2002-2003).

The act included additional, secondary regulations to mitigate the expected effects of the act (Bosselaar, Bannink, van Deursen, & Trommel, 2007). Required was that municipal decrees be of a “balanced” nature so as to include different client groups (TK 28870, No. 3, 2002-2003, p. 40) and that the income guarantee remain in place (TK 28870, No. 3, 2002-2003). Collective exemptions of work obligations were forbidden.

Central government considered that the decentralization of the financial risk of policy failure and success would contribute to the attainment of the new primary policy objective of “work before income.” This mode of decentralization supports administrative responsibility as accountability. The incentive of the decentralized income-component appeared to unequivocally stimulate local governments to focus their efforts on immediate client reintegration. The governance concept of the act therefore can be characterized as “governance by performance management,” implying “strict regulation” (Bosselaar et al., 2007, p. 111). A performance paradox occurred. The incentive of the act overrules possible local considerations concerning work and social assistance that do not lead to immediate client reintegration. More complex individual cases and more complex local conditions are pushed out of the range of policy options that local governments can cover. For example, the WWB has made it more difficult for local governments to support intensive reintegration activities for clients who have a greater distance to labor participation or the nonlabor social integration of citizens. Creaming of clients seems to occur (Bosselaar et al., 2007; Van Ours, 2007). However, although various actors in the field initially argue that such creaming may be temporary, the incentive system of the act appears to reinforce creaming in economically difficult conditions. Divosa, the association of directors of municipal social service agencies, argued in the 2009 publication of their yearly “WWB Monitor” that social services initially centered attention on the easily reintegrated clients, although later on the effort was broadened to also include the more difficult groups (Divosa, 2009, p. 29). This picture is supported by quantitative research that shows that the number of beneficiaries from more difficult groups (clients aged above 45 years and clients who have received benefits for more than 2 years) declines (Bosselaar et al., 2007). In 2010, when the economic crisis that started in 2008 hit the social services, Divosa argued, however, that

the financial incentive in the Work and Social Assistance Act causes municipalities to primarily aim at the “quick fix.” The money firstly goes to people who can be re-integrated into labour by means of limited and not too expensive instruments. (Divosa, 2010, p. 11)

Possibly as a result of the quick reintegration of the easier client groups, the reintegration into labor as a percentage of the total number of clients decreased continuously between 2006 (16.2%) and 2009 (11.4%; SGBO, 2009). Between 2006 and 2008, the percentage of clients who received benefits for more than 5 years has increased from 37.4% to 41.4%, to decrease in 2009 to 40.5% primarily as a result of increased new intakes (SGBO, 2009). Although we feel that we need to emphasize that the interpretation of such quantitative figures is extremely problematic, we deem the social integration of citizens with a greater distance to labor less supported by the new WWB than under the previous regulation.

Although the strong emphasis on more easily reintegrated clients actually conforms to the intentions of the policy maker, the WWB is not exclusively aimed at the reintegration of these groups. “Social activation,” a “balanced implementation of the act” including varying targets groups, and the “prevention” of benefit dependency are among the aims and objectives of the act (Bosselaar et al., 2007, pp. 30-31; TK 28870, No. 3, 2002-2003). This implies that the local emphasis on immediate reintegration can indeed be considered an instance of a performance paradox: The required performance was broader than the produced performance.

Unemployment and nonparticipation in labor and society have strong local aspects. The national state has indeed transferred financial risks to the decentralized level. The local responsibility type that the governance relation of the WWB pursues can therefore best be characterized as responsibility as accountability. Direct central regulation has been exchanged for incentives to stimulate local governments to fulfill the policy objectives of the national sovereign. However, the introduced incentive appeared to restrict local policy autonomy and implementation discretion, and orient local policy implementation to a specific, nationally inspired policy objective of immediate client reintegration. Instead of responsibility as accountability, a performance paradox occurs. Local governments come up to the rewarded aspects of performance and downplay other aspects. This leads to increased reintegration efforts for the more easily treated clients but deteriorated access for more difficult cases. The costs of the policy arrangement are transferred downward to vulnerable client groups who face the danger of social exclusion.

Health and Safety Covenants

The Ministry of Social Affairs and Employment established the policy program of health and safety covenants in 1999 (TK 26375, No. 1, 1998-1999). The program was inspired by the Health and Safety Act of 1998, in which the own responsibility for health and safety of employers and employees was enlarged. The health and safety covenants changed the coordination and governance of health and safety conditions by central-level rules and regulations controlled by the public Labor Inspection into decentralized development and implementation of health and safety measures (Veerman et al., 2007).

Health and safety covenants are tripartite agreements (labor unions, employers, and national government) on labor conditions and health and safety measures in a specific branch of industry. The covenant approach acknowledged that such targets could not be laid down in legal regulation but instead required branch-level input in both the definition of targets and the implementation of the required measures. Therefore, decentralized involvement in policy formation and implementation was pursued, supporting responsibility as task.

So-called branch-level advice committees supported the covenant decision and implementation process. These committees consisted of representatives from the ministry of Social Affairs, of labor and employers’ organizations in the branch and of the public Labor Inspection. The latter organization is responsible for supervision over health and safety conditions at work and as such has a role in the traditional regulation of the health and safety issue. The Labor Inspection eventually withdrew from the committee. It took a distanced position because it did not want to stand in the way of decentralized input in decision making and implementation (Veerman et al., 2007).

Financial resources were made available for the policy-making and implementation process in the various branches. The costs of the design and implementation of health and safety measures could be claimed at a level of 50% of total costs. The number of participating branches exceeded expectation. A total of 67 instead of the expected 20 branches participated, although more than half of the total number of Dutch employees was eventually covered by one of the covenants (Veerman et al., 2007). However, although the number of participating branches was relatively large, the actual success of most of the covenants was limited at best. The phase of discussing health and safety issues in the branch and the design of measures took longer than expected and showed relatively high levels of conflict. Often, partners were brought together who had only limited contact before, for example, only in the case of collective labor agreement negotiations. This may be explained by the financial means that could be claimed (Veerman et al., 2007). It stimulated actors to participate in the process that would not cooperate with each other without these additional funds (Veerman et al., 2007).

This had repercussions in the implementation phase. Although the number of actually closed covenants was greater than expected, actual implementation of the measures was limited. The evaluation of the program shows that “the covenant program mobilised additional financial means supporting branch-level organization” (Veerman et al., 2007, p. 75). But the actual effectiveness of policies was limited. The covenants considered most successful were most easy to attain, whether because these branches already had strong branch-level governance arrangements for health and safety issues or because the nature of health and safety problems in these branches was relatively simple (Veerman et al., 2007).

The covenants can be seen as a governance arrangement in which branch-level cooperation in the field of health and safety measures is “bought” by the provision of financial means, whereas the national government refrained from involvement in policy making and implementation. The Ministry proved willing to support decentralized policy autonomy and implementation discretion and finance the health and safety measures the branch level came up with. Responsibility as task was indeed supported by the governance constellation, but it did not lead to strong efforts for the implementation of the designed measures. The decentralized actors indeed proved willing to devise such plans, but the actual improvement of labor conditions in various branches appears limited or unclear at the least (Veerman et al., 2007).

We see responsibility as a task in which the central government provides resources to his subjects to attain objectives the central actor cannot attain himself. The state reluctantly requested the decentralized actor to help along with some of the issues that are beyond his own capacity. In response, the decentralized branch-level actors indeed claim the provided resources but do not fully come up to the central actor’s policy aims. This is an instance of the self-regulation paradox: Central deregulation was introduced to improve decentralized self-regulation. Instead, however, decentralized interests gained importance over the central policy aims of the government. Decentralized actors shifted the costs of the policy upward, to the central actor, while being able to autonomously decide how to use the provided resources. However, the central actor provides the claimed resources but proved unable to control the action of decentralized actors.

The Social Support Act

In 2007, the Social Support Act was introduced. The Act aims to promote the “participation” and “self-responsibility” of citizens in the public domain of municipalities. It seeks to promote social participation in terms of “strengthening social cohesion” and “self-reliance” through community care and civil volunteering (TK 30131, No. 3, 2005-2006). “Everyone participates” is a key slogan (Ministry of Health, Welfare and Sport, 2007, p. 4). The Act prescribes that local governments include civil associations and active citizens, including community care workers and volunteers, in all stages of the policy process (Ministry of Health, Welfare and Sport, 2007). In the Act, nine so-called “performance criteria” are defined, such as promoting social cohesion, promoting community care, volunteering, supporting youth, supporting people with psychosocial problems, and supporting addicts. A minimum degree of care is legally specified: The so-called “compensation duty” to the most vulnerable citizens includes a limited number of public services, like the provision of wheel chairs (TK 30131, No. 41, 2005-2006). Apart from that, local governments are authorized to administer the Act according to local demands. Local governments are no longer accountable to the national government but are accountable to their local “governance partners.” The local council, not the central state, is the institution that evaluates whether the policy implementation process conforms to the performance indicators of the Act, given specific local social and political circumstances.

Rather than regulating conduct and funds, the Social Support Act localizes substantial policy making and the financial risks of policy failure and success. As such, it supports subsidiary responsibility as virtue. The Act has no substantial objective. It does not define solutions to the social problems of specific target groups. Instead, its objective is to reorganize administrative relationships and to redistribute governmental responsibilities. The Act is an instrument for organizing a local governance constellation, in which a wide variety of local governance actors participate, to activate associations and citizens in the public domain of the municipal community. Local governments are financially responsible for the implementation of the Act. The central government distributes public funds among the local governments according to a number of social indicators. These budgets are part of the general municipal fund. Local governments can no longer claim public refunds for specific policy efforts or target groups. The Act abolishes financial support for interest groups that are organized around a specific identity. These costs are now also covered from the municipal budget. About 40% of the entire municipal budget is reserved for implementing the Social Support Act.

As an actual social consequence, intimately experienced by the former target groups, the Social Support Act, though it provides local governments with the compensation duty, makes the local provision of public services largely dependent on local governance processes and local council decisions. The Act demonopolizes the policy making of civil servants to make space for including a wide variety of (nongovernmental) governance actors. In reality, it appears that local governments tend to include only a limited amount of cooperative associations in the policy process. Local governments typically expect from local target group associations that they come to engage with all sorts of associations, as only the broader network stands a chance for being included as governance actor. Hence, local (or regional) elderly unions, patient organizations, volunteering groups, and migrant associations have typically come to join efforts to present themselves collectively—as a broad network that supports social participation and civic participation—to local governments. Local governments, bearing the resource risks of the policy, redefine their role and use local networks as efficient “civil service providers,” granting them a task with respect to local government policy objectives (SGBO, 2006). A similar constellation emerges at the individual level. The Act prescribes that professional care is only to be financed if families, neighbors, friends, volunteers, or social networks fail in their social support tasks of delivering their services to the needy. Therefore, the Act invests citizens with social support tasks and accountability requirements, such as financial resources and support from governance partners to provide social services that the municipal government used to provide. In this sense, local governments act as sovereigns, applying the self-government of local governance actors as a means for realizing municipal policy aims.

Notwithstanding these limitations, the objective of social participation is adequately addressed at the local level. Local opportunities to exercise virtue in self-government that did not exist under previous legislation are indeed opened. Citizens are now being invited by their local governments to reflect, in publicly organized sessions, on how to reorganize public spaces or make their neighborhoods cleaner and safer. The transfer of both the policy-making autonomy and implementation discretion on one hand and the financial risks on the other hand, indeed, seems to support responsibility as virtue. It is an alternative to direct regulation, to decentralized involvement in central policy making (as in the health and safety covenants; evoking a self-regulation paradox) and the imposition of incentives (as in the WWB; evoking a performance paradox).

However, the danger of the transfer of central-level conflict to the decentralized level appears not to be precluded. Localized governments operate as sovereigns transferring the responsibilities of incomplete decentralization on local subjects, who, however, now lack the protection of the central state. This implies that, for example, financial issues now affect the actual social support that is provided at the local level: while—at the national level—individual citizens’ needs would remain to be protected in the context of legal “entitlements,” the limited availability of “provisions” (Dahrendorf, 1988) at the local level stands in the way of granting these entitlements. The Act accordingly not only functions as a framework that shapes local responsibility as virtue but also replaces central government conflict to the local level: the paradox of subsidiarity.