Reducing Costs and Investing for Tomorrow: strategies and operational solutions for optimising public resources management


Fonds mondial pour le développement des villes (FMDV)

The recent crises, be they related to the economy, finance, energy or climate – coupled with the existing dynamics of decentralisation and metropolisation – have engendered an in-depth calling into question of the funding models of European countries. Many reports, for example, have underlined a desire or even a necessity to decrease, rationalise and optimise public spending, in the short as well as long terms1.

To download : local_innovations_to_finance_cities_and_regions4.pdf (1.5 MiB)

These documents also highlight that, above and beyond financial aspects, the crucial issue is overall public-performance optimisation that has to take into account the territories’ governance frameworks. The search for more integrated governance has thus become a recurrent theme in European2, national or regional policies3. Far from being a monolithic approach, public-performance optimisation is thus a multi-faceted issue that combines multi-dimensional and multi-level approaches aiming at complementarity, and it requires a rethinking of the forms of funding and of government of spaces and regions. Furthermore, cities – which are often marked by high rates of inequality and poverty as well as by a consequential ecological footprint – are perceived as environments that are conducive to developing and implementing solutions for improving public performance. This chapter will focus on the initiatives implemented by local governments to improve public performance in terms of both governance and spending. It shows their capacity to be true vectors of innovation capable of carrying out ambitious projects within their communities. How can costs be reduced and optimised, all the while improving the quality of public services in the short and long terms? How can current and future challenges be met with few resources? In other words, how can we do better with less? What efforts are being made to improve forms of cooperation on the one hand and the performance of local governments on the other? What are their impacts in terms of social and territorial cohesion, economic revitalisation, and sustainability? Finally, what indicators should be used to evaluate the success of these measures?

These questions will be studied through the analysis of three case studies:

In these three case studies, the local governments have implemented new plans of cooperation and of spending rationalisation. While not exhaustive, these cases are nevertheless representative of the dynamics at work on the European continent and demonstrate the capacities of local governments within a context of crises. They also include present-day questioning regarding the need to take into account externalities and the long term in public decision-making.

Local governments: crucial actors in the optimisation of public performance

In this context of systemic crises, local governments have a major role to play, given the significant weight they have in public spending 4, their key role as a public service provider and their particularly awkward position in a crisis context (increase in necessary spending and noteworthy decrease in available income). They are also key players in how public policies, citizen aspirations and local needs are linked. Indeed, despite the variance in governmental architecture in Europe, local governments are often in charge of the same prerogatives (water, transportation, training and employment, energy policies5), and they simultaneously work closely with the inhabitants and act as go-betweens for national institutions. They are thus invested with a real public-interest mission. The various existing initiatives bear witness to the fact that the main challenge of European local governments is not so much the availability of resources, but the possible ways of mobilising and orienting them. What is crucial is thus to implement effective measures that can unite the various stakeholders of urban governance, as well as their resources, to work on a shared and coproduced project6.

Local governments: showing the way for regional development

Local governments thus seem to be positioning themselves more and more actively as facilitators in relations among private, public and citizen stakeholders, making it possible to mobilise resources in a more concerted way. This is the case of the Îlede- France Region and its local-authority partners (cf. SEM Energies Posit’if case study), which have set up a third-party funding line for energy-efficiency improvements of private buildings and are acting as coordinator among the various players involved in it. Public investments thus act as catalysts, with the goal of initiating similar dynamics put into motion by private players. More generally, the city of Amsterdam has also set up a cooperation platform among urban stakeholders (cf. Amsterdam Smart City case study), which seeks to initiate “intelligent” projects that lead to sustainable urban development, with public grants helping to develop private funding lines. Finally, the city of Barcelona and many partner municipalities have decided to create an additional government level in the form of a metropolitan area (cf. BMA case study) to coordinate the activity of the area’s local governments and stakeholders, and to enable better regional cohesion. Despite their diversity, these three cases demonstrate the dynamism of local governments that position themselves as vectors of cooperation among the various actors of urban governance, be it by creating government levels or cooperation platforms, or by setting up targeted funding lines. At various levels, these initiatives reveal a capacity on the part of different actors to mobilise financial and non-financial resources to orient regional development and initiate ambitious projects. In this respect, local governments seem to be sketching out a new type of urban governance in which their role is that of initiating, putting into relation and supervising, as well as targeting and orienting investment, rather than that of being the body in charge of funding and of the execution of large-scale projects. Public funds are thereby used with the aim of mobilising private investors as well as of encouraging the taking into account of extra-financial aspects in the choices of projects, more especially with regard to quality of life and environmental benefits. Finally, the uniform development of local communities is perceived as one response to crises: the main city is thus no longer necessarily the centre of investments, and municipalities are grouping together in organisations that enable more uniform regional development. Municipalities joining together or with other regional players thus seems crucial in optimising resources. Nevertheless, all these case studies came into being thanks to strong political backing and significant support from the partners. The question thus arises as to for whom the city of tomorrow shall be made, and what types of partners join in to develop it. Far from withdrawal, the policy of local governments must instead be that of guaranteeing the effective redirection of resources, so that development of the urban space is “coproduced” and not monopolised by a single type of actor.

1 AT Kearney, 2013; “Economic Development and Employment at the Local Level” Working Group, 2012; Mandl et al, 2008; Allain-Dupré, 2011.

2 Integrated governance framework as part of the 2007-2013 European cohesion policy, confirmed in the 2014-2020 cohesion policy.

3Economic Development and Employment at the Local Level” Working Group (2012), Développement économique, emploi, ressources humaines : pour des stratégies territoriales intégrées

4 Responsible for 65% of public investment in Europe in 2011

5 Bauby P. and Similie M. (2013), Governance of Basic Public Services in Europe

6 Empirically, this shared work is often implemented within the framework of projects related to energy-efficiency improvements, a field with broad opportunities in terms of sustainable and economic development. (Urbact, 2013)