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13. September 2011

Good Governance

What Austrian and UK local government can learn from each other


In July, Governance International arranged a visit of Martin Huber, CEO of the Salzburg Local Government Association, to LGiU to share practice between the two organisations and to learn from each other. Laura Wilkes, LGiU, organised a very interesting programme at LGiU and also set up a visit to Birmingham City Council. Here is what Martin Huber learnt from the two visits:

My recent visit to London and Birmingham was to look into how English local government is trying to cope with the fiscal crisis. It left a lasting impression on me.

Firstly the scale of the  challenges facing local authorities in the UK is remarkable. The current social and economic problems are far greater than in Austria - and quite a lot tougher than I had presumed. Indeed, the reductions in local council staff in the UK would be unthinkable in Austrian local government. Basically, local authorities in Austria cannot dismiss staff, as people are civil servants for life or have a very strongly protected employment status. Therefore, Austrian local authorities have to cut other costs in order to reduce current expenditure levels. Indeed, seven out of ten local authorities in Austria are currently not able to balance their budgets anymore. I was interested in learning about the kinds of strategies that UK local authorities use in order to achieve efficiency savings and to see if these strategies might be transferable.

For me it was thought-provoking to find out how local authorities are weighing up very different options for delivering various public services in the future: providing the services themselves, externalising them to private or third sector providers, or sharing the provision with someone else, or - where no cost-effective way is found - stopping the service, either completely or  partially. In Birmingham, for example, the City Council has set up a public-private partnership, Service Birmingham, to undertake all its customer contact and to help it transform all its public services - this is a joint venture, partly owned by the City Council and partly by Capita, a large private sector provider of public services, with the profits to be shared by the two partners. 

In Austria, many local authorities have also semi-privatised their utilities and other public services but local authorities still have a long way to go in sharing provision with other local authorities or even other administrative levels. Smaller local authorities have already become active in running shared services with neighbouring local authorities but in big cities an Austrian citizen may find two Citizen Advice Bureaus within 100 metres offering exactly the same services, one run by the municipality and the other one by the county. Stopping a service is also almost impossible when a local authority has to provide a service on behalf of central or Land (regional) government - as is the case for most public services in health and social care. This is why we currently have a very strong political debate about reform of the central-Land-municipality financial redistribution system in Austria.

I believe that we can also learn from the UK approach to commissioning from the voluntary sector. At present, most local authorities in Austria provide funding to voluntary associations on the assumption that a vibrant civil society is important for a strong local democracy. However, as local authorities have to reduce grants to football clubs, local music bands or other local associations there is now a debate on meaningful performance indicators which demonstrate to what degree their activities contribute to socially desirable outcomes. Most progress has already been made in the grants system for improving the quality of life of young people.

What struck me in the UK is that localism is now a hot topic, but the position of central government is still very strong. I am convinced that British central government will sooner or later realise that one of the most important requirements for solving the current economic problems and social conflicts is to strengthen the local level now. I believe this because locally people have real capacity to make things better - and to give them sufficient resources, funding and responsibilities to take on more of the tasks which central government is less able to perform.

Actually, if UK local authorities are still uncertain about what 'localism' means in practice, they need to visit Austria. Here, local councils benefit from local autonomy in budget decisions and public services and are free from interference from central and Land levels of government. This means there is no 'one size fits all' solution but things are done differently in different places - without the widespread criticism that I heard in England about the inequities of the 'postcode lottery'. There is also strong local accountability through a directly elected mayor - most Austrian regions have adopted this model for their municipalities.

Although administrative structures in the UK and Austria are quite different there are similarities in  the current challenges we face. This includes: demographic change (particularly the ageing population in rural areas); loss of confidence in the political establishment at several levels (especially the European level); 'booming growth' in the metropolitan engine of the economy (London in the UK, Vienna in Austria) - these are only a few examples. At the same time, there are also stark differences - for example, social cohesion is a lot stronger in Austria than in the UK. This is partly because the level of unemployment in Austria is much lower in the UK but also because Austria has always had a strong tradition of a welfare state, characterised by a culture of dialogue and partnership working between social partners.

However, with increasing costs of public health and social care, we need to reform the Austrian welfare state model. In this respect the current UK debate on the 'Big Society' and public service co-production is very instructive. So maybe we are all working towards the same vision of a more collaborative state, even though we are coming from different directions: In Austria, we clearly need less government but need to trust citizens more, accepting that they can help themselves. It seems to me that in the UK the state needs to rebuild trust with some of disenfranchised parts of society and invest resources into peer support schemes. Although this is already showing first results, it could be much more effective if it were systematically supported by the state.


2 Comment(s)
Salvador Parrado
19. September 2011
Director of Governance International, Spain

When I spoke at a national conference in Austria on service standards, it struck me that Austrian public agencies have been quite concerned with measuring the costs of public services – e.g. how much does it cost to issue a passport? However, most agencies lacked performance targets, particularly in relation to outputs and outcomes. The UK public sector, however, offers a lot of experience with performance management. I wonder what colleagues in the UK think are the three most important lessons from more than 20 years performance management in local government? Do local councils still continue to measure performance, given that there are now no more central government targets? Does it now work better in a situation where local councils can do it voluntarily and tailored to their needs? Or has performance management been abandoned or relegated in priority in UK local government?

Klaus Wirth
10. November 2011
senior expert - consultant

I very much agree that Austrian local government has a lot to learn from the UK in terms of outcome-based management. When I ran a KDZ seminar on grants systems for the voluntary sector with Governance International earlier this year it turned out that most grants are still based on input targets – like the number of members of a club – and in many cases funding depends on which voluntary organisation is closest to the mayor. However, as local budgets are getting tight questions are being raised how voluntary organisations contribute to the strategic objectives of the local council. Do local football clubs really promote diversity and make efforts to reach out to children with a foreign nationality? At present, we often do not know but just assume that’s the case. The Land of Salzburg, however, is looking closely at the gender impact of sports clubs and promotes sports associations with women in leadership positions and consider gender aspects in their facility management and communication policies. So this may be an innovative practice which could be of interest to UK local government.

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