In 2007, Denmark implemented the so-called Structural Reform which was a major reform of the Danish local government system.
The Structural Reform contains the criteria for a new division of municipalities and regions and a new distribution of tasks between municipalities, regions and the state.
Danish local government reform historically
The foundation of the Danish local government (until 2007) was established with the local government reform of 1970. Following this reform, the number of counties was reduced from 86 to 14 and the number of municipalities from 1300 to 275. The reform created the basis for restructuring the distribution of tasks and cost burdens from the state to the counties and municipalities.
Since 1970 the degree of decentralization in Denmark has increased and local government has considerable autonomy. This, in part, is related to the restructuring of the financial system which came about with the local government reform. The restructuring meant that a major part of the reimbursements schemes were replaced by general state grants – the so-called block grants – and financial equalisation schemes between the rich and the poor municipalities were expanded.
Elements of the Structural Reform
The Structural Reform consists of three main elements: A new map of Denmark, a new distribution of tasks and a new financing and equalisation system.
The new map
The map of local government in Denmark has been changed in several regards. The 271 existing municipalities were merged into larger units creating 98 new municipalities. Further, the Structural Reform abolished counties and five large regions were created instead.
The new financial system
The majority of the public sector revenue comes from taxes. With the Structural Reform the number of taxation levels was reduced from three to two. The regions have lost their right to impose taxes and therefore they will be financed partly by the municipalities and partly by the state.
A financing and equalisation reform will adjust the equalisation system to the new distribution of tasks and the new local map to ensure an adequate balance between rich and poor municipalities.
The new distribution of tasks
The distribution of tasks between municipalities, regions and state has been laid out as follows.
The municipalities have increased their portfolio and they are now responsible for most of the welfare related tasks. They have become the citizens’ main access point to the public sector. Responsibilities of the municipalities include preventative health care, social services, collective transport & roads, and employment.
The five new regions will primarily be responsible for health care, preparation of regional development plans and solutions to certain operational tasks for the municipalities.
The state generally undertakes those tasks where delegation to municipalities and regions would be inappropriate, e.g. the police, the defence, the legal system, further education and research.
Local democracy and the Structural Reform
The Structure Reform has impacted on local democracy in Denmark. There will be fewer local politicians due to the merging of municipalities, but the district councils will be larger and have more tasks and political responsibility. Creation of the regions means that a new democratic government body will be established: The regional council. Compared with the total number of county council members, the number of regional council members has been reduced from 357 to 205.