Update: Op-Ed in ’Aktuellt i politiken’

Lars M. Andersson, together with Sören Häggroth, appears with an Op-Ed in the Swedish weakly ‘’Aktuellt i politiken’ demanding more support to the municipalities. They ask for a comprehensive approach to the problems that the Swedish municipalities will encounter in the future. Sweden, as many industrialised nations, face a demographic challenge as the population become older. Urbanisation is also continuing. Long-term solutions for the financing of welfare services will need to be found. The authors outline a number of suggestions and stress the need for the state to take an active and vigorous role in, together with municipal actors, planning the future financing of local authorities. 

Read the article in full here (in Swedish only).

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Update: The President of France, François Hollande, gives a green light for a new local government funding agency

Yesterday, at the congress of mayors, the French President gave his support for the creation of a local government agency in France. An article in La Gazette de communes, written by Jacques Paquier, tells us about the historic event. According to this article, François Hollande said: ”I want local authorities to fully participate in this funding agency, so that they can take advantage the historically low interest rates”. One of the key persons in this project, Olivier Landel at the Association de Communautés Urbanes, ensured that ”this agency will provide a welcome source for diversification of the funding of local authorities”. Another key person who has been an advisor in the project during many years is Yves Millardet. His comment was: ”The creation of a funding agency is in itself a historic step in the decentralisation”.

Read the article in the Gazette here.

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Under Aktuellt, LGFA France

Update: Article in ’New Start’

Austin Macauley writes about municipal bonds in the online magazine ‘New Start’ published by the Manchester-based Centre for Local Economic Strategies (article published October 31). He writes in particular about Kommuninvest of Sweden and Municipality Finance of Finland as examples of well-established Local Government Funding Agencies. He concludes with the following sentence: “When you have examples like Kommuninvest to draw inspiration from – and the likelihood that Europe’s two biggest economies, Germany and France, will set up agencies of their own – the case in favour of a collective local authority bonds agency is growing by the day.” Read the article in full here.

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Update: Visiting Aix-en-Provence

Aix-en-Provence, in the south of France, has 140 000 inhabitants. It is a university city with about 40 000 students. The proximity to Marseille have led to that 25 000 commutes both ways each day.

On October 30, M. Guy Januel, Directeur Général des Service Administratifs of Communauté du Pays d’Aix (CPA) received Lars M Andersson to discuss the project of creating a local government funding agency in France. CPA is a so-called EPCI (Établissement  Public de Cooperation Intercommunale). It comprises of 34 local authorities (communes) around and including the City of Aix-en-Provence.  

During this year the CPA has not had any borrowing needs, but are investing heavily in different project. This will probably result in borrowing needs in the years to come. The creation of an agency is very interesting for CPA, and even more so for some of the communes within CPA, which already have experienced problems in borrowing for investments.


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Update: French mayors push for LGFA

Thierry Fabre at ’Challenges’, the international business magazine by the French weekly Le Nouvel Observateur, published October 23 an article about French local financing [link]. The Association of French Mayors (Association des maires de France – AMF) claim that the situation is urgent and that 4 billion Euros will be missing from local budgets by 2013. The president of AMF, Jacques Pélissard, has together with the head of Association des présidents de communauté urbaine, Gérard Colomb, written to the French Prime Minister Jean-Marc Ayrault to express their concern over that the government is not reaching any decision on the proposed LGFA (l’agence de financement des collectivités locales). This is the second time the organizations put pressure on the government, a similar letter was sent in the end of September. This time they have even more signatories, including prominent local socialist politicians. To remedy the most pressing problems French local governments have recently collectively raised 610 million Euros on the markets, but to a rate of 4,3%. It is believed that a LGFA could significantly lower that cost. 

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Update: Localism and Fighting the Crisis in the UK

Sir Merrick Cockell, chair of the UK Local Government Association [link], writes about the relationship between local and central government in The Guardian, October 15. He argues that ‘fundamental changes’ are needed in this relationship to make it possible for local government to deliver the best services they can to their communities. Sir Merrick writes about the ‘localism’ involved in devolving central power as a way to delivering growth in a UK hard hit by the economic crisis. Local solutions could provide a way forward, national schemes for fighting the present problems do not take crucial local conditions into account. The article makes a passionate plea for increased local autonomy; bolstering what is already ‘widely regarded as the most efficient and increasingly, most innovative part of the public sector’. Read Sir Merrick’s interesting article in full here [link].

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Update: Wellington Joins the New Zealand Local Government Funding Agency

Wellington, the capital of New Zealand and the largest city after Auckland with an urban population of close to 400,000 inhabitants, has decided to join the nation’s newly established LGFA. In a press release (link) the Mayor Celia Wade-Brown states that the LGFA ‘will provide lower-cost funding for council projects’. Wellington City Council is one of 17 local authorities in New Zeeland to have invested in the agency (together with the Government that owns a 20% share). In the case of Wellington the investment was $2 million (around 1,700,000,000 USD). Wade-Brown goes on to state that the current economic crisis highlights the importance of having access to affordable funding: ‘The LGFA will increase our options for access to secure long-term funding’. The New Zealand Local Government Funding Agency holds an AA+ by Standard and Poor’s and Fitch, which is the same as the NZ Government. 

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Update: Proposal for a German Local Government Funding Agency

Deutsche Bank has, in a study by Dr. Frank Zipfel entitled ‘Einer für alle, alle für Einen? Kommunale Finanzagentur – ein Überblick’ (link), suggested that the local authorities of Germany should consider creating a Local Government Funding Agency. The background of the proposal is the upcoming Basel III rules that will limit the banks’ possibilities to lend to local authorities. The proposal is refered to in an article in the Handelsblatt by Yasmin Osman: ‘Alternative zum Kredit – Die Deutsche Bank bringt Gemeinschaftsanleihen für Kommunen ins Spiel’ (link to shorter online version). In it a representative from Deutscher Städtetag (The German Association of Cities), Helmut Dedy, makes the following comment ‘Zwar gibt es aktuell keine Engpässe beim Kommunalkredit, doch könnte eine solche Agentur perspektivisch in der Lage sein, das kommunale Kreditangebot zu erweitern’. (Even if there is no shortage of credit to local authorities at the moment, such an agency would be able to expand the options).

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Update: Publication of the book ‘Municipalities at the Crossroads’

Lars M. Andersson has, together with Sören Häggroth, written the newly published book: Kommunala vägval (Municipalities at the Crossroads). The book is in Swedish.

The subject for the book (link) is the future challenges for local authorities. Many parts of the world face a development with a growing elderly population and an accelerated urbanisation. This will put strain on the production of local welfare services. How can the local welfare sector be financed in the future? How can local authorities’ activities be more efficient? Is cooperation a way to save money? Which are the implications of the fact that more and more private companies are involved in providing public services? How should the legal framework for future local public sector look like?

The book is published with the support from Kommuninvest and the Association for Swedish Municipal Finance Officers. The publishing house is Nya Doxa. ISBN: 978-91-578-0606-2

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Seminar about English and French local authorities

On august 22 the largest Swedish convention for local authorities took place in Malmö, with more than 3000 participants. One of the seminars focused on the situation for English and French local authorities and what the Swedish society could learn from them. The seminar was led by Lars M Andersson and the speakers were Sir Merrick Cockell, Chairman of the English Local Government Association and Council Leader of the Royal Borough of Kensington and Chelsea, and Yves Millardet, local authority expert in the French bank Natixis.

The discussion circled around the fact that English local authorities will have a 28 % cut in central governments grants, while the French government have decided to freeze the grant on the present level. Sir Merrick and Mr Millardet reflected on how the local authorities in their respective countries have reacted to this and how, for example,  they will manage the demand of the increased numbers of elderly people. A situation that will bring about higher costs for healthcare and social services.

Other topics were outsourcing and cooperation. Sir Merrick was quoted in Financial Times in the beginning of August, saying ’The days of assuming that private companies offer the best way of delivering public services are over’ (link). He stated that it is easier to adapt to changing circumstances if services remained in-house. In France several cities are discussing to bring back services that have been produced by private companies to the local authorities again.

Finally, the question of financing local infrastructure investment were discussed. In France local authorities are responsible for more than 70 % of total public investments. In England the share is above 50 %. To facilitate the financing of these investment projects have started in both countries to create local government funding agencies. The French project is a little ahead of the English and the French local government associations have hopes that the agency will be up and running during next year.

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