1. Structure of Local Government in the Netherlands

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The Netherlands is a kingdom with about 15 million inhabitants. Over 50
% of the population lives in the urban areas around Amsterdam, Rotterdam
and The Hague. The country is a decentralized state, with three levels
of government and public administration: the state, 12 provinces and
about 700 municipalities. The state is represented in the provinces by
the Queen's Commissioner, who chairs the Provincial Council, and at
local level by the mayor, who is appointed by the state for a period of
six years. The provinces do not have statutory powers, but they do have
essential supervisory functions in respect of the municipalities.
 
The institutions of local government are the same throughout the
Netherlands and are regulated by a special statute. The highest body at
local level is the directly elected local council which has up to 45
members, depending on the size of the local population. The council
appoints advisory and executive committees. Further instruments of local
government include the mayor and a Collegium comprising two to six
aldermen (wethouders), again depending on the size of the community. The
Mayor is chairman of the Collegium. He has a purely advisory function on
the local council. The aldermen are chosen from the council and retain
their right to vote on the council even if they are employed full-time
as aldermen, as is often the case in larger municipalities.
 
The Collegium normally mirrors the political composition of the council.
It can only take decisions on a majority vote; the individual members do
not have any powers of decision or authority on their own. As a result,
political polarization is highly unlikely in the Collegium. Larger
communities have an internal structure giving each alderman special
responsibility for a particular field for which he acts as spokesman and
is empowered to make proposals. The Collegium normally accepts such
proposals from its members.
 
The Council Secretary forms the link between the political and
administrative bodies. He heads the "corporate" staff department, which
is the central coordination and controlling unit. The Council Secretary
is not organizationally superior to the directors of the various
departments, but is head of a "complementary" unit. Central financial
management functions are placed in the hands of the corporate
controller, who reports to the Council Secretary.
 
For historical reasons the local authorities have an autonomous
administration, but the functions delegated to them by central
government are in fact far more important. Central government regulates
many matters which are actually carried out by the local authorities
(principle of subsidiarity). These include provision for the poorer
members of society and the unemployed, job creation schemes, provision
of housing, schools and the police force. The local authorities are also
responsible for cultural affairs, youth, sport, health care, road
building, economic development, environmental protection, and the
transport system.
 
The mayor is legally responsible for law and order. He is head of the
local police force and fire brigade. The Collegium is responsible for
the day-to-day running of the local authority, for the duties imposed on
it by law and for preparing and implementing decisions passed by the
local council.
 
Local authorities have little real financial and economic freedom. They
receive only a small amount of income from their own taxes and from
charges for their services. Over 60 per cent of local government finance
comes from general or specific subsidies from the state.
 
 
2. Local Government Reforms in the Netherlands
 
 
From the late seventies onwards, the economic situation in the
Netherlands caused state income to stagnate while expenditure rose
sharply (e.g. unemployment benefit, welfare payments, capital costs,
etc.). The subsequent belt-tightening measures also trimmed the
resources allocated to local authorities. Consequently, planning,
regulation and controlling became far more important. As a result of the
sudden drop in local government finances and the rise in claims on their
resources, many services were reduced in part and staff levels were cut.
 
 
As in many other countries there was a lively public debate on "value
for money" in the public sector. People were concerned about whether the
local authority was giving them their money's worth and in many cases
the answer was "no". In the debate on reforming the system, the public
started to take on the status of "clients". The state began to move away
from its authoritarian role to that of a "service provider", making
intensive use of management practices and management tools taken over
from the private sector. This led to the development of the idea of the
local authority being run along corporate lines.
 
In the organizational model on which this reform was based, the local
authorities were seen as holding companies comprising the Council, the
Collegium and the Council Secretariat (regulatory and control
functions). The service departments were regarded as the operating units
with related tasks, products, processes, mar- kets and target groups
being grouped together. In this context, the holding company began to
make more use of external contractors to provide services.
 
Day-to-day organizational, financial, staffing and technical matters are
delegated to the operating units as part of an integral management
concept. In other words, the operating units have all the authority they
need to carry out their appointed tasks, e.g in the field of
construction, social services or environmental protection. Each
operating unit has its own organizational, computer, finance and
controlling departments.
 
The term "contract management" can be applied aptly to key areas of this
management philosophy. Every year a formal contract is made between the
Collegium and the operating units. This specifies the duties assigned to
each operating unit and its budget. The contract is the outcome of
negotiations in which the local council and the Collegium decide what is
to be provided, i.e. they determine the services that are to be provided
and the standards to be achieved (the "output" of the local authority),
while the operating units state how these things are to be achieved and
what they will cost.
 
Output-oriented contracts have to be clearly defined and realistic
yardsticks (indicators) are needed to measure performance. Measuring
performance is, however, problematic and in the social services for
example it is not fully realizable. The operating units are independent
and free to make decisions within the framework of their contract. They
also bear full responsibility for their actions. There are marked
differences in the authority accorded to the heads of operating units in
different towns.
 
One important milestone in the reform process was a change in the law on
local authority finance in the mid-eighties. Until then local
authorities had used a single-entry system of book-keeping showing
expenditure and receipts. This has now been replaced by a more
commercially oriented system showing costs and income. The change in the
law gave local authorities a greater degree of organizational and
financial control over their operations. This made costs and services
more transparent by separating "preliminary costs" (the suppliers) from
"final costs" (the municipal departments receiving the service) and
paved the way for authorities to contract out services.
 
Delegation of duties is only possible if it is backed up by a reporting
system. The reporting system and continuous reports to the management of
the "holding company" and the politicians are therefore key elements in
the organizational structure. They enable the management to check that
the operating units are sticking to the terms of their contracts,
remaining within their budgets and achieving the policy targets they
have been set. Although the reporting systems are basically similar, the
precise details vary from one local authority to another.
 
At the behest of the Dutch Ministry of the Interior, in 1987 an advisory
project was set up to improve management and control systems (Beleids-
en Beheers-Instrumentarium). In 1990 this work was handed over to a
foundation under the auspices of the Dutch Association of Local
Authorities (VNG), the Association of Local Authority Directors and the
Association of Resource Managers.
 
Some 120 local authorities are involved in the project. Local
authorities have tried out various reform strategies, taking their local
situations into account. However, the core is much the same and local
authorities run along corporate lines will soon be the norm in the
Netherlands.
 
 
3. Description of Delft
 
 
Delft is a typical old Dutch town with a network of canals. It is
situated in the Province of Southern Holland on the edge of The Hague
and to the north-west of Rotterdam. Its pottery is world-famous and in
the 17th and 18th centuries it was the centre of the Dutch decorative
pottery industry.
 
Delft has about 88,000 inhabitants. The local authority employs about
1,300 people and has a budget of some 450 million guilders, about 120
million of which go on expenditures over which it has some degree of
control. The local council has 37 members and the Collegium, the
political executive body, comprises 5 aldermen and the mayor.
Organizationally, the local authority is divided into 7 operating
departments and a staff department. These are "Welfare" (workshops for
the handicapped), "Education and Cultural Affairs", "Building and the
Environment", "Town Planning", "Social Services", the police force and
the fire brigade. Utilities and water supply are completely separate.
 
 
4. Local Government Reform in Delft
 
 
Delft was one of the first towns to embark on a reform programme. The
structure of the local authority in Delft follows the pattern described
above, i.e.
* the departments have overall management responsibility
* each department has its own resources
 
* the staff department coordinates and "serves" the other departments
 
* there is no compulsion to use services provided by other departments
 
* the Collegium bears the overall responsibility. Negotiated contracts
form its main management tool.
 
 
 
The old Council Secretariat has been replaced by a staff department,
responsible for finance and controlling and for working out guidelines
for the local authority as a whole. However, it can only draw up such
guidelines if they are needed or requested by the operating departments.
The aim of this rule is to prevent a gulf between policy and action.
 
In the course of the reform process, which started ten years ago, Delft
has exhibited many interesting ideas of its own, particularly with
regard to citizen and client orientation and in the form of
decentralized management it has chosen.
 
 
Citizen and Customer Orientation
 
 
At an early stage in the process, Delft decided to give priority to the
quality of its services to the general public rather than to efficiency
in the provision of these services. Attempts to focus on internal
services, e.g. by forcing departments to use services provided by other
operating units within the authority, were repeatedly quashed. As a
result only absolute customer orientation and self-criticism had any
chance of survival.
 
The paramount importance of citizens as clients was incorporated into
assessment of the performance of the local authority early on. For a
number of years, polls have been conducted regularly to obtain
information on how the local community assesses the local government and
the services it provides. Delft spends 300,000 guilders a year on a
Citizens Panel covering all services. The Panel is used in evaluating
management performance and helps adjust the services provided to demand
in the community. In addition, the operating units (departments) carry
out their own polls and surveys, e.g. a survey on the integration of
foreigners led to the creation of education and other services to
improve the integration of non-Dutch speaking citizens.
 
Delft has increased its efforts to involve members of the community more
closely in the decision-making process, e.g. in urban development and
waste management. Neighbourhood groups, workshops with representatives
of the local community, etc. have proved very successful and these
schemes have been extended as a means of improving communication between
local government and the community.
 
 
Decentralized Management and Motivation of Employees
 
 
Delft has adopted "the human yardstick" as its management philosophy. In
other words, it has tried to reduce the complexity of procedures,
responsibilities and other mechanisms so they are easier for people to
understand and use. It has thus avoided the pitfall of providing each
department with a "ready-made" concept. Instead it recognizes that a
certain amount of scope is needed to accommodate the learning process --
and that includes learning from one's mistakes -- and cultural changes.
The aim is to encourage employees and departments to think about what
they are doing.
 
One important spin-off of this philosophy has been the introduction of
"integral" management. For example, personnel management, which used to
be strongly oriented towards ensuring equality and job security and was
therefore primarily concerned with the legal aspects of employment, now
has to include a social dimension. In other words, the personnel
department has the task of managing the potential inherent in the local
authorities' human resources and of achieving acceptance by employees.
 
The effects of this management philosophy, e.g. the concept of internal
and external reporting, have been extensive and local politicians are
frequently required to discuss modifications and additions to the
overall concept. Through the idea of a "learning organization" the local
authority hopes to achieve greater flexibility with which to deal with
the constantly changing demands made by its citizens and the framework
within which it operates.
 
 
5. Contact
 
 
Gemeente Delft
Gemeente Secretaris
Postbus 78
2600 ME Delft
 
NETHERLANDS
 
Phone: 0031-15-602960
Fax: 0031-15-602418
 
 
6. Description of Tilburg
 
 
Tilburg's advertising slogan is "Tilburg -- a modern industrial town".
This links the present with its roots as a centre of industry (textiles,
machinery, metal, leather and dyes). Tilburg is in the Province of North
Brabant and has about 160,000 inhabitants. The local authority employs
about 1,600 people and has a budget of around 1 billion guilders.
 
The local administration is divided into seven departments. These are:
"Social services and cultural affairs", "Building", "Environmental
Protection", "General Services", the fire brigade, the police force, and
"Employment". The abattoir, works department, building association,
computer centre, recreation park and mortgage bank have been privatized.
 
 
 
7. Local Government Reform in Tilburg
 
 
As is often the case, a change in personnel played an important role in
the reform process. A new Collegium took office in the early eighties
and its members saw the reform of local government as a good way of
making their mark. They therefore embraced the cause of change, replaced
the Council Secretary and brought in innovative young managers in place
of the older, less flexible administrators in many posts.
 
The outcome of the systematic approach implemented over a number of
years is well-known in Germany as the "Tilburg model". Decentralized
management is particularly important here and is basically ensured by
the organizational structure, which comprises the following bodies:
 
 
* the Collegium (executive body) comprising the mayor and the aldermen
* the Council Secretariat, backed up by the Controlling Department
 
* the management conference comprising the directors of the various
departments and headed by the Council Secretary
 
* the conference of controllers comprising the controllers of the various
departments and headed by the Controller General.
 
 
 
Tilburg defined its priorities very clearly: without financial
transparency the council's democratic management functions are impaired.
A clear concept for reporting and controlling was therefore worked out.
This exemplary system is based on a logical structure and is easy for
both members of the authority and outsiders to understand.
 
 
Controlling and Reporting
 
 
So that Tilburg could be run along corporate lines, what is known as the
product-management model was adopted. This model assumes that all in all
the local authority is similar to a manufacturing company: everything it
produces can be defined, has certain properties and the production
process costs a certain amount.
 
The instruments used to manage "production" are:
 
 
* The General Policy (Algemeen Beleidsplan)
After local elections and before appointing a new Collegium the
coalition partners draw up a four-year plan outlining their policy.
Political aims, priorities and standards are outlined in varying degrees
of detail.
 
* The Annual Outlook (Perspectiefnota)
 
Every year the controlling body presents a budget to the Collegium. This
gives a financial and economic forecast for the year ahead, reports on
progress in implementing the General Policy and proposes changes to and
continuation of the basic programme, together with the reasons for this.
The Perspectiefnota defines the strategic policies set out in the
General Policy and how they are to be delegated to the various
departments.
 
* The Budget
 
The budget is the council's main managerial tool. It is drawn up once a
year and comprises a section dealing with policy goals and a section
dealing with the "products". The policy goals section forms a summarized
introduction to the "product" reports. It looks at strategic policies,
administrative developments, the financial position and new projects.
 
The "products" section is broken down along departmental lines and then
further subdivided according to the services provided by each
department. The smallest unit is the product and a separate section is
included for each product, detailing receipts and expenditures, together
with capital spending, background data and key figures on performance
and the financial position.
 
The breakdown of the budget does not follow the standard pattern
required for local government accounting in the Netherlands so it has to
be converted for statistical purposes. The council votes on the budget
in November.
 
* The Departmental Management Report (MARAP, Management Rapportage). < P>
Three times a year the departments present a progress report. MARAP 3 is
produced in the spring of the subsequent year and forms a sort of
preliminary report on the whole of the past year.
 
* The Group Management Report
 
The consolidated management report gives the Collegium details of the
overall position and is similar to the reports submitted by the
individual departments. In addition to consolidated data on the various
departments it reports on relevant inter-departmental issues and
developments.
 
* Annual Report of the Departments and the Local Authority
 
Three months after the end of the financial year the departments present
their final accounts for the year. One section comprises the accounts,
based on traditional input-oriented budgeting techniques, including a
statement of the assets of each department. The annual report is audited
by independent auditors. A second section comprises an annual
output-oriented report which provides information on performance.
 
On the basis of the annual reports produced by the various departments,
a consolidated annual report is drawn up for the local authority as a
whole. This shows how council decisions have been put into practice.
 
* Preventive operating audits
 
Every four years each department (operating unit) is subjected to a
detailed analysis by an independent consultant. The purpose of this is
to obtain an objective report on the situation (management, costs,
procedures used) and to generate suggestions on improvements.
 
 
8. Contact in Tilburg
 
 
Gemeente Tilburg
Stadhuisplein 130
Postbus 90155
5000 LH Tilburg
 
NETHERLANDS
 
Phone: 0031-13-428811
Fax: 0031-13-429307