Statement by Johan HÖÖK, Director for the Division for Local Government Affairs
Ministry of Finance, Sweden, at the Autumn Institutional Session
of the Congress on 8 November 2005

Mr Speaker, ladies and gentlemen,

I would like to thank you for this opportunity to comment on the recommendation from the Congress on local and regional democracy in Sweden. The Swedish Minister for Local Government and Financial Markets, Sven-Erik Österberg, is unfortunately not able to attend the meeting today. In his place, I would like to present some reflections on the report from the Swedish Government’s perspective.

The principle of local self-government is protected by the Swedish Constitution and is considered a cornerstone in Swedish society. In the very first article of the Swedish Instrument of Government, local self-government is mentioned as one of the basic principles of the Constitution. Local self-government has a long historical tradition in Sweden, dating back as far as the creation of the municipalities and county councils in the year 1862. The Local Government Act from 1991 has broadened the local authorities’ right to form their own internal organisation. As early as 1989, Sweden signed and ratified the European Charter of Local Self-Government. I note that the Congress recognises in its recommendation that Swedish legislation, tradition and practice of local government are broadly in line with the spirit and provisions of this Charter.

The Congress has made recommendations to the Swedish Government on certain issues. One such recommendation is that the Swedish Government, in consultation with the Swedish Association of Local Authorities, examine the question of “rights” legislation with a view to evaluating the factual costs of providing these services and preserving the local authorities’ policy control. The Swedish Committee on Public Sector Responsibilities is currently looking at this issue. The Committee’s terms of reference also include considering the general recommendation from the Congress that central government allow local authorities greater scope to carry out their duties for the benefit of the local population.

The Congress would like clarification of the general possibility of introducing tax capping. From a legal standpoint, it is doubtful whether the European Charter of Local Self-Government can be interpreted as preventing a member state from imposing tax capping. Having said that, and turning to the issue as such, I firstly must underline that the Swedish Instrument of Government gives municipalities and county councils the right to levy taxes. According to the Swedish Council on Legislation, a permanent tax cap would be in conflict with this right. The Government is not planning, or proposing, any form of tax capping and consequently sees no need for further investigation in this area.

The Congress recommends that the system of equalisation be examined with a view to reducing infringement of local authorities’ discretion over their own levied resources while still maintaining the principle of equalisation. The Swedish system of equalisation has recently been changed in order to reduce horizontal equalisation. The system now gives the vast majority of municipalities and county councils general government grants. A few municipalities with very high tax incomes have to pay a fee to the system. Municipalities and county councils pay fees amounting to some SEK 5.5 billion, while they receive grants of SEK 54 billion. With this in mind, the Government considers that the reform is in line with the recommendation.

The Congress points out in its recommendation the fact that earmarked grants have increased in recent years. The Congress recommends that local authorities benefit in priority from general grants in the performance of the tasks assigned to them. Considering this issue, I would first like to underline that since 1993, the general principle in Sweden has been that government grants should not be earmarked. Although this is case, the Swedish Government considers that in some cases earmarked grants can be motivated. When analysing this issue, it should be borne in mind that government grants only cover 20 per cent of the municipalities’ total revenue. More than 70 per cent of the total revenue comes from local taxation, which municipalities and county councils are free to use as they wish. Therefore, the Swedish Government position is that, although there are some earmarked grants, Sweden protects the right of municipalities to dispose of their economic resources as stipulated in Article 9 of the Charter.

The Charter stipulates in Article 11 that municipalities should have recourse to a judicial remedy in order to secure free exercise of their powers. The Congress considers that, although the principle of local self-government is given constitutional and legal recognition in Sweden, its constitutional position could be strengthened by obliging Swedish legislators to refer to the Charter when drawing up all legislation. Sweden is as a country obliged to follow the Charter. The Swedish Government’s position is that Sweden must always honour international commitments, including the Charter of Local Self-Government. The obligation that follows from the Charter is a factor that is always taken into consideration when Government is preparing a bill. Since this is the case, the Government sees no great benefit in referring explicitly to the Charter when adopting every new piece of legislation.

The Congress also proposes the introduction of a system of redress to which local authorities could refer regarding breaches of the principle. This may mean a constitutional court. The question of whether Sweden should have a constitutional court is currently being investigated by the governmental inquiry on the constitution. The inquiry will report in December 2008. Another suggestion from the Congress is that Sweden should create a parliamentary committee on local self-government. The Swedish Parliamentary Committee on the Constitution already has the responsibility of evaluating whether a Government bill is in line with the constitutional principle of local self-government. The Government is not considering making any changes in this respect. In any case, from a constitutional point of view this is a matter that has to be dealt with by Parliament.

Although the Swedish Constitution does not recognise any form of subnational government other than municipalities and county councils, the Congress commends and supports the Swedish authorities for adopting an approach which has allowed for the establishment of the two pilot regions Västra Götland and Skåne and for extending the period of experimentation.

The Congress further stresses that these regions should be considered as true regions with elected regional governments and a wider range of responsibilities than the traditional county councils. In accordance with the Swedish Government’s position, the county councils of Västra Götaland and Skåne have been given responsibility for certain governmental tasks.

The question of whether there should be a charter that protects regional self-government has been debated in the Council of Europe. There is currently no majority among the member states for introducing such a charter. It is, of course, possible to have diverging political views as to whether such a charter should be introduced. From a legal standpoint, the Swedish Government’s position is that the Charter on Local Self-Government cannot be interpreted as imposing an obligation on Sweden to introduce regions in a formal sense. This is solely a matter for national consideration. The question of future organisation is currently under examination by the Swedish Committee on Public Sector Responsibilities.

In conclusion, ladies and gentlemen, the Charter of Local Self-Government protects just that – local self-government. Sweden vigorously supports the idea of strong local self-government and this is firmly protected in Swedish national legislation. The Congress has pointed out several areas where local self-government could be strengthened and some of these issues are under debate in governmental committees. Although there may be differing political opinion as to whether municipalities and county councils should have more far-reaching self-determination, the Swedish Government’s position from a legal perspective is that Swedish legislation is in line with the Charter.