Features: April 30th, 2004

Learning Lessons About Regional Co-operation

By Peter Newman and Tassilo Herrschel.

Reproduced by permission of the Public Management and Policy Association.

European regional governments, especially those in federal states, often appear to have significant advantages over confused English regionalism. Underpinning contemporary academic and policy debate about regional, institutions is the belief that the mix of governance institutions has a substantial impact on the competitiveness of local and regional economies.

International networks provide flows of information, the European Commission and consultants promote ‘best practice’ and the number of visits undertaken by politicians and officials suggests an eagerness to learn from others. Our work on urban and regional governance over the past few years suggests that other people’s grass is often not so green and that we need to try harder to understand exactly how things do work in other countries.

The emerging body of academic work which looks at cases of institutional or policy transplantation seems to indicate that there are important differences arising from, on the one hand, imposition of new institutions and, on the other, adaptation, when local cultures and actors are allowed to get to grips with institutional models and shape them to local conditions. There is much to be learned not so much from the design of formal institutions but from how they get adapted on the ground. In considering borrowing from experiences elsewhere it is also not wise to rely on just one model drawn from a single context. Not getting fixed on the idea of one superior model for funding urban infrastructure, for example, is probably a lesson for the mayor of London as he reflects on hid first term.

In this article we look at two European experiences of regional-scale governance. We suggest that current experience in Berlin and Paris of the involvement of local governments in regional institutional development gives much food for thought. In turn we look briefly at the consequences of an imposed model of regional government in the Berlin region and at how local actors have responded and adapted to address urgent issues of regional development across boundaries. We then look at how sub regional co-operation in the Paris suburbs emerges from a combination of top down institutional reform and bottom up experience of regional co-operation. In the one case local governments have no stake in or faith in regionalism and in the other they share a commitment to a regional governance experiment.

Berlin – tax policy limits co-operation

In Berlin the institutions of government are relatively new. The West German model was grafted onto the east. Two regions were created – Berlin city surrounded by the much more extensive and largely rural region state of Brandenburg. Fragmented and relatively autonomous local governments surround Berlin. The division of the functional urban region between two Land governments was controversial in the political arena but voters (in Brandenburg in particular) threw out a merger proposal in 1996. Interrgional co-operation has been developed for individual issues, such as public transport and utilities because it is there that technical necessities and mutual interests – such as cross border commuting – facilitate or demand, agreement.

The situation is much more difficult with competitive issues, such as attracting business investment or new, tax-paying residents by developing green field sites. The constitution provides local authorities with significant income through locally levied business tax and a fixed share in personal income tax. Just over 40% of average local fiscal income is generated by central government grants (block grants) based on residential populations. Local taxes, primarily business tax and local income tax, are the second major source of income. The proportionate importance of the two main local taxes depends on the relative attractiveness of a locality to business. For those in less competitive locations, working to become a commuter village may well be a financially more rewarding (and, possibly, more realistic) policy goal than trying to attract substantial new business. But whatever the location, the local tax system effectively rewards localist policies rather than regional co-operation. Thus it weakens the readiness to adopt regional perspectives and priorities in policy making. But there is no enthusiasm for co-operation with neighbours that have no development assets.

In the years since reunification development pressures have concentrated on the suburban ring around Berlin. But the fiscal pressures on local governments mean competition for development rather than regional co-operation. There would seem to be an argument for higher local, regional, government to step in and manage local competition. The two Land governments are happy to make agreements on soft policy areas – tourism, marketing – but less so when it comes to real money. A Joint Land Planning body provides a more formal, institutionalized, framework for co-operation between Berlin and the immediate hinterland of the inner ring of Brandenburg, but its powers are limited and its regional structure plan cannot override the numerous commitments made by local governments. The regional planners take some comfort from a perception that localism is becoming less vociferous and from the quiet development of informal plans for development zones spanning the Berlin/Brandenburg boundary. But the fundamental fiscal issues faced by regional local governments in a struggling economy limit co-operation. Non-co-operation is the rational choice for both regional and local governments.

The Berlin case raises interesting questions about local government autonomy, about fiscal competition and about the impact of cultural and historical factors on regional governance. Formal co-operation is weak (there are no votes in it) but numerous informal arrangements exist. But such informal arrangements are easily dissolved and financially neutral forms of regional co-operation are preferred. The imposed West Berlin model of regional governance is not working well in this context of economic and political rivalry.

France – enjoying the benefits of co-operation

Over the last few years the French state has introduced a series of initiatives, using both carrots and sticks, to encourage highly fragmented local governments to work together. Local governments in the Paris region (1200 of them) have seemed less keen than communes in other regions to form new relationships. For many of the rich communes in the western suburbs there is simply no problem that regional co-operation would be the answer to. However, in the north and east – the old industrial areas – there are interesting innovations. The elected tier of regional government for the Ile-de-France for example, does region wide planning. At the sub-regional scale there are many different economic pressures. The intercommunal association Plaine Commune was set up in 1999 linking initially five communes with common interests in the development of this formerly industrial suburban wedge. Plaine Commune has its roots in both the informal intercommunal associations created in the mid 1980s and in the 1990s national legislation to underpin new forms of intercommunal institution.

The communes originally came together to plan a future for substantial areas of dereliction in an area of high unemployment and social problems. In the 1990s these initiative were further encouraged by the location of the Stade de France in this part of the Paris region. The stadium and the substantial transportation improvements that came with it created a commercial and residential development boom. The question for the communes became how best to manage this in the interests of their residents. Whereas the informal planning done by three communes in the 1980s failed to interest either the development market or regional and national government in the area, the economic impact of the Stade de France changed perceptions and brought more neighbours into the co-operative network.

In 2003 Plane Commune increased its size and now includes seven communes. What makes it work is the desire to exploit the benefits of development, to have substantial voice in debate about development, and to share the resulting tax income (the stumbling block in Berlin). We can see in Plaine Commune a history of co-operation and trust between political leaders. But this bottom up perspective on rationalization is only one side of the story. From the viewpoint of central government, larger local government units may be better planners and they will certainly produce administrative savings. Thus Plane Commune has an agreed set of competencies or responsibilities – including economic development and waste management – and the constituent communes are not meant to duplicate these activities. As the list of competencies expands so sub regional government becomes more efficient.

Key lessons

Regional governance involves more than just formal region-wide institutions. In Berlin the imposed western model works against regional co-operation. In Paris, central imposition plus a legacy of voluntary co-operation produce an entirely different result. The information institutions developed in Paris could draw on their experience in managing the new, formal, regional institutions. In considering the lessons for others it is, of course, important to bear in mind the completely different contexts of these two examples.

We nevertheless suggest three general lessons from these experiences. It is clear from the Berlin experience that the boundaries of new regional governments need to be got right. In the London region government offices and RDAs struggle to co-operate across artificial boundaries. Second, regionalism is not just about new regional bodies, but about the relationships with other tiers of government. The attitudes of the small local governments around Berlin are shaped by both hard constitutional and fiscal positions and by softer cultural and historical factors. This leads on to our third potential lesson. In the Paris case, the communes can hold on to their existing identities as the reality of the new scale of governance develops. New identities take time to develop and the mix of top down and bottom up regionalism in the suburbs of Paris may have some lessons for the patchwork of partnerships and central planning of the Thames Gateway.