Institutional features of inter-municipal cooperation: Cooperative arrangements and their national contexts

Selection of countries

To create favourable conditions for theoretical generalisation, the selection aimed for a considerable variation in the national institutional context, more in particular in the formal state structure, with special attention to the position of local government within it. A distinction was made between (1) federal systems with strong positions for the states and municipalities, and limited central government (Germany, Belgium); (2) quasi-federal systems, where relatively autonomous states co-exist with central government that not only performs a number of functions but also establishes the framework of law for lower tiers of government (Spain); (3) regionalised unitary states with an intermediate level of government of substantial weight, but with a strong presence of central government (France, Italy); and (4) de-centralised unitary states with a weak or absent intermediate level and relatively strong local government (England, Finland, the Netherlands). Furthermore, the selection had to represent variation in the average population of local government, because it seemed likely that rising scales of production and growing externalities would especially affect small municipalities with a limited policy capacity and not, or to a much lesser extent, large-scale local government. Lastly, variation was sought on the policy domain of local government, because of the possible correlation between the responsibilities of local government and the presence of inter-municipal co-operation. The expenditure of local government (as a percentage of total public expenditure) was used as an (imperfect) indicator of the local policy domain. The sample as a whole includes substantial variation on the formal state structure and on the scale and policy domain of local government (Hulst and van Montfort, 2007a: 18).

Research

After the countries had been selected, public administration scholars with expertise on the different national administrative systems were invited to write studies on the co-operative arrangements in their respective countries. ⁵ The experts conducted their country studies according to a standardized topic list based on the conceptual model which was discussed above. It included: the central features of the national administrative system, the legal framework specific forinter-municipal co-operation, central government policies concerning inter-municipal co-operation, the actual situation (e.g. the number and legal status of institutions of inter-municipal co-operation), the design dimensions of co-operative arrangements and their performance (i.e. effectiveness, efficiency and democratic quality).

The contributors to the research project mainly based their country studies on their own previous research, on existing research reports, and on available databases. Additionally, small-scale desk research was carried out to fill vital gaps. For each of the countries the experts produced a comprehensive picture of the presence and characteristics of inter-municipal co-operation, of developments over the last decade(s) and of the role of elements of the institutional context. ⁶

Policy coordination and planning

Quasi-regional governments and planning forums are both arrangements to provide for the planning and co-ordination of local policies. Before we turn to the two different types of arrangements, the question must be addressed of under what circumstances local governments seek co-operation for planning and co-ordination. The country studies suggest that specific features of the national institutional context serve as conditions for the establishment of co-operative arrangements of this kind to cope with the pressures caused by specific external factors.

With respect to environmental factors, strong natural, social and economic interdependencies in a region seem to constitute essential drivers for co-operation. Such interdependencies imply that local policy decisions have an impact beyond the local boundaries on the one hand and that municipalities depend on their neighbours to deal effectively with issues that manifest themselves within their jurisdiction on the other. They call for the regulation of the externalities of local policy decisions and for the distribution and redistribution of scarce resources on a supra-municipal level: some form of regional co-ordination and planning is required.

The need for regional planning that results from regional interdependencies is well documented in the literature. Much attention has gone to metropolitan areas where high population densities create complex, boundary-crossing policy issues which cry out to be solved (Barlow, 1991; Jouve and Lefèvre, 2002; Salet et al., 2003). The country studies, however, suggest that nowadays semi-rural areas with regional urban centres and even rural areas have to cope with comparable policy issues. ⁷

The country studies show that whether regional natural, social and economic interdependencies actually result in inter-municipal co-operation as a strategy to cope with the need for regional planning depends on the presence of an intermediate tier of government and the functions it fulfills. The presence of a strong intermediate tier of government that has the formal competencies, resources and the willingness to co-ordinate local policies or to establish regional plans reduces the pressure on local governments to provide for regional co-ordination and planning through co-operation. Flanders and Spain present examples. In Flanders both the regional government (gewest) and the province dispose of the formal authority to establish spatial plans that bind local government policies. Inter-municipal co-operation to coordinate local spatial policies is a rare phenomenon (De Peuter and Wayenberg, 2007: 26-27). ⁸ In Spain, formal decision-making with respect toregional spatial planning and regional socio-economic development is the competence of the Comunidades Autonomas. As a consequence inter-municipal co-operation in these fields is rare. Only two of the numerous metropolitan and urban areashave standing arrangements for inter-municipal planning and co-ordination (Barcelona and Valencia), and these were established by the respective Comunidades, not by the municipalities themselves (Nieto Garrido, 2007: 180-181). ⁹

In contrast, there is a high incidence of arrangements for inter-municipal policy coordination and planning in countries without an intermediate tier of government, where the intermediate tier of government does not have the formal authority to fulfill planning functions or where it deliberately chooses not to make use of its competencies. Reference can be made to Finland, England and Germany. Finland and England are examples of two-tiered administrative systems where over the past decades co-operative arrangements for regional planning have developed: regional councils in the former and regional chambers and assemblies in the latter. Although the French regions constitute intermediate governments in their own right, their policy domain is limited and they do not dispose of formal competencies in relation to local government. At present the number of co-operative arrangements engaged in spatial and/or social economic planning is well over 2000 (West, 2007: 81).

The case of Germany illustrates the role of willingness. The states (Länder) represent a strong intermediate tier of general government and are competent to establish regional spatial or socio-economic plans. A number of states (Baden-Wurttemberg, Brandenburg, Sachsen, Bayern, Rheinland-Pfalz amongst others), however, have chosen to limit themselves to the establishment of legal frameworks for inter-municipal planning. In these states we find a large number of arrangements for policy coordination and planning, where local governments co-operate with each other and (sometimes) other entities (Heinz, 2007: 102). Sleswig-Holstein created its own regional planning agency and establishes spatial plans for its five regions. In this state, inter-municipal co-operative arrangements for planning and coordination are absent.

So the different patterns found in the countries included in the research suggest that co-operative arrangements for co-ordination and planning will tend to develop if two conditions concur: the presence of strong natural, social and economic interdependencies in a region and the absence of a strong intermediate tier of government that actually fulfills planning functions. But which of the two basic forms in use for inter-municipal co-ordination and planning arises in a concrete situation?

Quasi-regional governments or planning forums?

The research data suggest that the presence or absence of interventions by upper-level government constitutes an important factor in the institutional design of co-operative arrangements for planning. In-depth study of inter-municipal co-operation shows that the planning and co-ordination of local government policies is a zero-sum game or at best a mixed motive game: the interests of the actors involve conflict, at least partially. Planning decisions made at the supra-local level may avoid inefficiencies and enhance the efficacy of local policies; they also restrict the policy options of individual municipalities and can result in an uneven distribution of resources and benefits (Ostrom et al., 1961: 842; Toonen, 1990; Hulst, 2000: 3-4). For example, a regional plan to lay out business parks and co-ordinate local economic policies can avoid cut-throat competition between local governments to attract investors, but it will also restrict municipalities in their choice of policy instruments and will favour some municipalities over others as regional centres for economic growth.

Because of these characteristics of the co-ordination issue, municipalities are not very willing to establish joint authorities with formal decision-making powers to co-ordinate local policies. Therefore, quasi-regional governments seldom arise spontaneously. Local governments generally prefer planning forums, where decision-making takes place on the basis of consensus and local government autonomy is not at risk (Lefèvre, 1998; Salet et al., 2003; Hulst, 2000: 180-181). If upper-level government keeps aloof from the issue of inter-municipal co-operation in the field of planning and policy-making, planning forums will have the upper hand.

In England and Finland central governments have encouraged inter-municipal co-operation with respect to regional planning, but otherwise have left the design of institutional arrangements to local government. This would explain the lack of regulatory power and formal decision-making authority of the Finnish regional councils and the English Regional Chambers and Assemblies. On the other hand, quasi-regional governments in France and the Netherlands can be directly linked to legal and/or financial interventions of upper-level governments. These interventions include the introduction of administrative forms for co-operation that imply compulsory functions, the attribution of the right to levy taxes and/or the allotment of specific grants to finance projects for the joint municipalities.

In France, until 1992, central government by and large left it to the municipalities to organize their co-operation. As a result co-operation predominantly focused on public service delivery. Inter-municipal planning, if present, took place in loosely coupled networks where conflicts between the participants frequently paralyzed decision-making (Scargill, 1996). The 1992 law on territorial administration, and even more so the 1999 Chevènement Law, marked a change in the central government approach to inter-municipal coordination and planning. New administrative forms of co-operation were introduced – Communautés de Villes, Communautés d'Agglomération, Communautés Urbaines – that defined blocks of competencies obligatory for municipalities to transfer to inter-municipal public bodies. Moreover, financial incentives were created to promote the use of these new administrative forms. The legal operation to create ‘federative’ inter-municipal authorities resulted in an increasing number of cooperative arrangements that can be labelled as quasi-regional governments. These authorities possess competencies in the fields of, amongst others, socio-economic development, environmental protection, spatial planning and town policy (West, 2007: 72-78).

In the Netherlands, voluntary co-operation under the 1950 and 1985 Joint Provisions Acts time and again failed to produce effective planning for urban areas. Local governments cooperated in loosely coupled networks, and decision making on pressing issues related to regional spatial planning and infrastructure lingered on for years without resolve. Therefore, in 1995 central government invited the municipalities in seven urban areas to establish metropolitan joint authorities. They would receive grants for regional infrastructure and transport, and social housing. The establishment of a metropolitan joint authority was a voluntary matter. However, if the municipalities decided to do so, it implied a series of mandatory responsibilities and competencies that all somehow relate to the planning and co-ordination of local policies. Ultimately, under the regime of the 1995 legal framework metropolitan joint authorities were established in all seven areas (Hulst and van Montfort, 2007b: 159). In other regions, urban and rural, municipalities did not establish quasi-regional governments.

The French and the Dutch cases illustrate the way different forces interact. On one hand the increasing regional interdependencies in both countries and the absence of upper-level government provisions for planning and co-ordination make inter-municipal planning almost imperative. On the other hand, local governments seek administrative forms that minimize a loss of autonomy. Financial incentives increase the common interests of local governments involved and serve to make municipalities accept the obligations to transfer formal planning authority to the new institutions. But within the newly created institutional setting local governments in France preferred the administrative forms with the least statutory obligations and local governments in the Netherlands were reluctant to establish plans that constrain local government opportunities (West, 2007: 84-85; Hulst and van Montfort, 2007b: 160-161). So, while central government interventions seem a determinant factor when it comes to the establishment of quasi-regional governments, they do not guarantee that institutions act as genuine regional actors.

Inter-municipal co-operation with respect to public service delivery

Reviewing the patterns of purely inter-municipal co-operation with respect to service delivery, there are striking differences between the eight countries included in the research. The presence of co-operative arrangements ranges from an almost total absence in England, a relatively modest number of 91 dienstverlenende and opdrachthoudende associations in Flanders, through 600 unioni and comunità montane in Italy to a staggering 13,000 SIVU and SIVOM in France. ¹⁰ This information raises the question of under what circumstances is co-operation on service delivery likely to occur.

As for the external factors, it is evident that in general the scale for the efficient production of public services tends to increase due to technological developments and rising expectations of citizens. But different services have different production functions. Some services – waste processing, hospital services – require substantial capital investments and make small scale production prohibitive. Other services – waste collection, home care for the elderly – tolerate small-scale production, although scale efficiencies may occur.

The foregoing implies that there are two conditions (i.e. elements of the administrative context in a country) that determine whether local governments are actually confronted with pressures on their performance and are likely to engage in inter-municipal co-operation. The first and obvious condition is the local policy domain. If municipalities lack responsibilities for certain public services, evidently there is no need to co-operate. In Spain, France and Italy the provision and distribution of drinking water is the responsibility of local government; in England it is in the hands of privately owned licensed water companies operating on a regional scale. Not surprisingly, there are no inter-municipal co-operative arrangements for water provision in England, while such arrangements are very frequent in Spain, France and Italy (Nieto Garrido, 2007: 178; West, 2007: 71; ANCI, 2009). The near absence of inter-municipal co-operation in England finds its explanation in the relatively small policy domain and constraints local governments face with respect to the delivery of public services. Over the last decades local governments have lost responsibilities and/or control in policy areas that were suitable for co-operation. Moreover, the ‘ultra vires' doctrine implies that local governments themselves cannot expand their policy domain, as councils that act beyond their powers act unlawfully (Kelly, 2007b). ¹¹

This contrasts with the position of local government in, for example, France, Italy, Spain and the Netherlands. In all these countries the municipalities have substantial responsibilities in the field of service delivery, and decentralisation has increased local control. Moreover, local government in the countries mentioned enjoy a general competence: they are free to take up new tasks and services, provided these have not already been assigned to other public authorities (Schaap and Ringeling, 2006: 39, 140). Given the fact that the municipalities in the four countries mentioned possess more competences and tasks than their local counterparts from England, it is understandable that they more often cooperate with each other.

The second feature of the administrative context that bears upon the extent of inter-municipal co-operation is the scale of local government. The greater part of local government in France (average: 1,600 inhabitants), Spain (4,800) and Italy (7,200) is so small that it faces difficulties offering basic public services in a cost efficient way. In these countries municipalities intensively co-operate to provide a wide range of basic public services such as waste collection, water provision, urban sewage and public transport (West, 2007: 87; Nieto Garrido, 2007: 178; Fedele and Moini, 2007: 132).

But inter-municipal co-operation with respect to service delivery is not restricted to small local government or to countries characterized by small local government. Here the specifics of the production function of services come into play. Where services are at stake which require substantial financial investments and/or offer large efficiencies of scale, municipalities are inclined to collaborate, irrespective of their own scale. Therefore, in all countries where local governments bear responsibility for public health services, fire departments or waste processing, we found even the larger communities in a region to engage in co-operation. Typically, with some of the constraints on co-operation lifted, even the large councils in England have begun to co-operate to share services such as revenue collection and IT (Kelly, 2007a: 208). In contrast, in our sample of country studies, we did not find examples of co-operation with respect to capital or knowledge-extensive services such as the maintenance of public parks or the management of children's playgrounds.

The analysis of the patterns of co-operation in the countries included in the research allows for the conclusion that the policy domain of local government, its scale and the features of the public services delivered constitute the ingredients which set the stage for inter-municipal co-operation. These factors define the opportunities and constraints, and create the incentive structure. A combination of small-scale government and a large local policy domain is likely to result in a high density of inter-municipal co-operation, while a low density will be the probable outcome of a combination of large scale government and a restricted local policy domain. Co-operation involving large scale municipalities will occur when local government bears the responsibility for capital or knowledge-intensive services.

Service delivery organizations or service delivery agreements?

In the earlier section on the four basic types of inter-municipal co-operation a distinction was made between two basic types to organize co-operation on public services: service delivery organizations and service delivery agreements. The former are standing organizations governed by the municipalities, which provide the service to all partners or their citizens; the latter are contract-like arrangements that organize service provision through a big neighbour, a private company or the co-ordinated efforts of the partners.

In some cases the characteristics of the service or the service industry constrain the options of local government. Some services require large investments and a standing organization for their efficient provision (power plants, environmental agencies). If there are no large-scale standing organizations present in the industry – private or public – local governments must resort to the joint establishment of such an organization. In many cases however both options are open and municipalities will seek the form that is likely to suit their goals. Then the national administrative context comes into play, creating opportunities and constraints, and affecting the preference for certain forms of co-operation. The patterns of co-operation in the countries included in our research show that three elements of the administrative context play a role: the legal framework for co-operation, incentive structures related to co-operation and the administrative culture.

With respect to the legal framework, the following observations can be made. In all countries under investigation the establishment of standing service organizations must meet some formal criteria and follow certain procedures. As a general rule, the municipalities must draw up a statute for the service organization, install a governing board, and comply with certain rules for decision making and accountability. The more elaborate these requirements, the bigger the costs to start up and manage a service delivery organization. Sometimes, there are also rules with respect to the minimum number of inhabitants or the territorial boundaries for co-operation.

Italian national legislation with respect to co-operation established in 1990 was particularly restrictive and upper-level government (the regioni) had a big say in the boundaries of the service organizations, their statutes and the relationships with other government entities. Under this restrictive legislation, only 19 standing organizations for service delivery (unioni) were created between 1990 and 1999, while municipalities co-operated through agreements (convenzioni) on a much larger scale. When the 1999 reform lifted the most pressing restrictions, the number of service organizations rose rapidly to reach a number of 255 in 2005 (Fedele and Moini, 2007: 126-127). So, while heavy formal requirements and legal restrictions can withhold municipalities from establishing standing organizations and make them choose lighter, contract-based forms of co-operation, the simplification of legislation can have the opposite effect.

Whereas legal requirements and restrictions may induce local government to opt for co-operation through service agreements, financial incentives provided by central or regional government can make service organizations the preferred alternative. In some cases upper-level governments have offered grants to cover the costs of specialized personnel or equipment or to cover the general costs involved in the management of an inter-municipal service organization. As a result, informal or contract like forms of co-operation are replaced by co-operation through service organizations.

The Dutch Ministry of Housing, Spatial Planning and the Environment successfully used financial incentives to replace informal inter-municipal co-operation with standing inter-municipal environmental agencies. The Ministry offered municipalities with a population under 70,000 grants to cover part of the costs of the establishment and staffing of joint organizations. The financial support led to the establishment of a series of inter-municipal agencies and had a positive influence on the quality of environmental protection activities (Tonnaer, 1992; ECWM, 2003: 8). In the same way, Italian regional governments have successfully offered grants to promote the consolidation of different local service units co-operating through agreements into single service offices (Fedele and Moini, 2007: 131-132).

A last factor to bear on the choice between service organizations and service agreements is the administrative culture. For the larger part of the twentieth century, public administration in the Western world has been dominated by the traditional Weberian paradigm, although there have always been considerable differences between Western European countries. The traditional model of public administration has, however, been on the retreat since the 1980s. The ideas of New Public Management (NPM) pervaded both the science and practice of public administration. Competition and contracting, flexibility in organization and horizontal relations between the public and the private sector and within the public sector itself became popular concepts. They have contested, and up to a certain point replaced the principle of service provision through hierarchical, public organizations (Pollitt and Bouckaert, 2000; Hughes, 2003: 51-60). This new administrative culture also bears upon the way co-operative arrangements have been set up over the past two decades. England and Finland provide good examples.

Under the influence of NPM, governance through horizontal networks and contractual relations has become a dominant characteristic of British local government (Rhodes, 1996; Stoker, 1998). These elements are also reflected in the way central government has approached inter-governmental co-operation with respect to service delivery. In England, single local governments have engaged in cooperative arrangements with specialized agencies and central government to provide for co-ordinated and improved service delivery at the local level. In line with the dominant approach, co-operation was organized through agreements (Local Public Service Agreements), not through the establishment of joint service organizations (Kelly, 2007a: 201-205). In Finland, NPM themes such as de-centralisation, lightening of bureaucracy, the introduction of market mechanisms and a stronger focus on results have become part and parcel of the administrative culture. They have not only stimulated inter-municipal co-operation in general, but also seem reflected in the growing preference for contract-like agreements (Haveri and Airaksinen, 2007: 47-48). The opposite situation is found in Spain. This country is considered to be operating in the rear guard with respect to the adoption of NPM principles and practices. Inter-municipal co-operation with respect to service delivery to a very large extent still takes place through standing organizations (Hood, 1995; Nieto Garrido, 2007: 174 et passim).