Denmark

Denmark - Monitoring report

Date of the monitoring visit: From 2 to 5 October 2012
Report adopted on: 31 October 2013

This report on the situation of local and regional democracy in Denmark summarises the findings of the monitoring visit carried out from 2 to 5 October 2012. It highlights the overall positive (and, in some areas, exemplary) nature of local democracy in Denmark, where a "Charter culture" prevails in local government affairs, ensuring the implementation of the principles of self-government enshrined in the Charter. The report notes with satisfaction the existence of good practices which deserve be cited as examples for consideration by other member States of the Council of Europe, such as the procedure for amalgamation of municipalities, consultations with local authorities in decisions concerning them directly, and the participation of citizens in local public life. However, the report also expresses concern that certain competences are not clearly devolved to local authorities, creating the risk of overlapping competences, assignment of inadequate financial resources or an inequitable distribution of financial burden due to inadequate mechanisms and procedures for financial equalisation at local and regional levels. The report also underscores the limited competences of the regional authorities who are unable to raise taxes and do not have their own financial resources.

 

It is recommended that the Danish authorities clearly define the local authorities’ competences (including those specified in “municipal authority rules”), allocate them more financial resources covering all their domains of responsibility and improve procedures for financial equalisation between municipalities in order to make them compatible with the Charter. The report invites the Danish authorities to take inspiration from the Reference Framework for Regional Democracy for the development of Danish regions, revising the regions’ competences and providing them with an opportunity to raise taxes. Lastly, Danish authorities are encouraged to sign and ratify the Additional Protocol to the European Charter of Local Self-Government on the right to participate in the affairs of a local authority (CETS No. 207) in the near future.

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Article ratified Ratified with reservation Non ratified
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Article 2
Constitutional and legal foundation for local self government - Article ratified

The principle of local self government shall be recognised in domestic legislation, and where practicable in the constitution.


The principle of local self-government is guaranteed under the Danish Constitution, Article 82 of which reads as follows: “The right of the municipalities to manage their own affairs independently under the supervision of the State shall be laid down by statute”. In legal doctrine, this article is often interpreted as being primarily a legal safeguard against the abolition of the municipalities by statute. Abolishing the municipalities would therefore require an amendment of the Constitution in accordance with the procedure set out in Article 88 thereof. Secondly, Article 82 grants the local authorities the right to manage their own affairs and their budget independently, in compliance with the legislation on the administration of municipalities and the many statutes and regulations on the various competences delegated to the municipalities by the Parliament and the Government. The legal limits on such self-government cannot, however, be precisely defined, any more, in fact, than can the restrictions and limitations imposed on the legislature (Folketing). This lack of clarity in the legal definition of self-government could cause problems.

 

At the same time, this article provides for administrative or State supervision of the municipal administration. Such supervision is confined to the legality of municipal and regional council decisions. It does not permit the State to pronounce on the expediency of the acts of local and regional councils. Supervision is a separate administrative responsibility of the Ministry of Economy and the Interior. There are five offices in all – one per region – responsible for supervising the relevant municipal and regional councils. 58. The safeguards set out in Article 82 of the Constitution do not apply to the regions set up under the 2007 reform. On the other hand, these regions are subject to the same general system of administrative supervision of the State as the municipalities. Prior to the reform, there were counties which held the same legal status as the municipalities and to which they were therefore comparable (in fact, they were known as amtskommune (“county municipalities”) in Danish). On the legal front, the abolition of the counties is considered as a reorganisation of the country’s municipalities, alongside the creation of a new territorial authority, the region.

 

There are many laws providing the regions with a wide range of freedoms as regards the management of issues falling within their remit. The municipalities have far more responsibilities than the regions and therefore enjoy greater freedom and independence. The legislation applicable to the regions accordingly provides for a lesser degree of self-governing powers and, in particular, does not permit them to levy taxes.

 

The rapporteurs conclude that all in all, the Law on Local Self-Government safeguards the scope of local self-government as set out in Articles 2 and 3 of the Charter. However, they also note that the municipalities consider that legislation is increasingly tending to reduce their autonomy, particularly owing to the weakening of legislative power under EU regulations and directives.

Article 3.1
Concept of local self government - Article ratified

Local self-government denotes the right and the ability of local authorities, within the limits of the law, to regulate and manage a substantial share of public affairs under their own responsibility and in the interests of the local population.


Consult reply indicated at article 2

Article 3.2
Concept of local self government - Article ratified

This right shall be exercised by councils or assemblies composed of members freely elected by secret ballot on the basis of direct, equal, universal suffrage, and which may possess executive organs responsible to them. This provision shall in no way affect recourse to assemblies of citizens, referendums or any other form of direct citizen participation where it is permitted by statute.


Consult reply indicated at article 2

 

Article 4.1
Scope of local self government - Article ratified

The basic powers and responsibilities of local authorities shall be prescribed by the constitution or by statute. However, this provision shall not prevent the attribution to local authorities of powers and responsibilities for specific purposes in accordance with the law.


According to the Ministry of the Economy and the Interior, the powers and responsibilities of local authorities are not always prescribed by statute. Local authorities can manage specific tasks in pursuance of municipal decrees, which constitute a set of non-written rules and principles relating to the municipalities’ non-statutory responsibilities. Initiatives relating to leisure, cultural and sports activities are classic examples of tasks (responsibilities) which, by virtue of municipal decrees, must be managed by a local authority. Such decrees follow the principle that local authorities cannot exercise profit-making activities (trade, crafts, production of goods and services, etc). Municipal decrees are subordinate to written law.

 

Municipal decrees comprise a number of vague rules which often overlap. This makes it difficult to pinpoint which fields fall within the remit of a municipality under the terms of such decrees. They generally specify that the tasks to be carried out or managed by the local authorities must have a public interest. The local authorities cannot transfer such tasks to individuals or private companies, unless provided for by law.

 

The 2007 reform was primarily based on the principle of subsidiarity, according to which the various tasks facing Danish local authorities must be assigned to the authority closest to the citizens, with due respect for the nature and budgetary and professional demands of the different tasks. Another principle of the reform was that overlapping of responsibilities should be avoided.

 

Most social welfare functions were transferred to municipalities by two major local government reforms, in 1970 and in 2007. Municipal and regional responsibilities are set out in sectoral laws (legislation on schools, social affairs, etc). These texts grant the local and regional authorities a greater or lesser degree of autonomy in deciding on the level and scope of services and benefits.

 

In some cases, framework laws provide a wide range of possible means of implementing them. Other types of law assign the municipalities or regions clearly-defined tasks, leaving the individual authorities responsible for implementing them, limited discretion. Lastly, municipalities are responsible for a number of tasks which are not specified in legislation, as well as for other duties which the State delegates to them, such as keeping civil status registers.

 

Local authorities have full discretionary powers in the exercise of most of their functions. Exceptions to this rule are certain social security benefits (including old-age pensions), some of the costs of which are covered by the central Government. According to the LGDK, the 2007 reform further reinforced municipal self-governing powers by assigning them, for instance, responsibility for such fields as planning and environment. Spatial planning and management of the environment and water resources were generally devolved to the municipalities, although responsibility is shared by the counties and the local authorities. Management of highways now comes primarily under the responsibility of the municipalities, which look after 90 % of the Danish road network.

 

Some examples of highly decentralised or centralised responsibilities were brought to the rapporteurs’ attention. The decentralised responsibilities include primary education, social welfare services, health, public services, environment and spatial planning and road management. The highly centralised responsibilities include supervision of foodstuffs, which has become a completely centralised function despite the two wide-ranging local government reforms. The tax administration system, which was a shared responsibility prior to the reform, has now become a centralised function exercised by the Ministry of Taxation.

 

The local authorities’ right of consultation is fully respected at both regional and municipal level, and also vis-à-vis their respective associations. The municipalities, through the intermediary of their association, LGDK (which covers all municipalities), and the regions through the intermediary of their association, Danish Regions, are consulted formally, and exert their greatest influence, during the annual budgetary negotiation procedure.

 

The rapporteurs can therefore conclude that local and regional councils are fully responsible for the administration and management of their municipalities or regions, particularly in the wake of the 2007 reform, which further raised the level of local autonomy. However, it would appear that local authority responsibilities are still not provided for by law. Consequently, a number of competences laid down in municipal decrees are still fairly vague and often overlap. This makes it difficult to pinpoint which fields a municipality can manage under these decrees. The rapporteurs consider that the question of local authority competences ought to be reviewed in the light of Article 4 para.1 of the Charter.

Article 4.2
Scope of local self government - Article ratified

Local authorities shall, within the limits of the law, have full discretion to exercise their initiative with regard to any matter which is not excluded from their competence nor assigned to any other authority.


Consult reply indicated at article 4.1

Article 4.3
Scope of local self government - Article ratified

Public responsibilities shall generally be exercised, in preference, by those authorities which are closest to the citizen. Allocation of responsibility to another authority should weigh up the extent and nature of the task and requirements of efficiency and economy.


Consult reply indicated at article 4.1


 

 

 

Article 4.4
Scope of local self government - Article ratified

Powers given to local authorities shall normally be full and exclusive. They may not be undermined or limited by another, central or regional, authority except as provided for by the law.


Consult reply indicated at article 4.1

Article 4.5
Scope of local self government - Article ratified

Where powers are delegated to them by a central or regional authority, local authorities shall, insofar as possible, be allowed discretion in adapting their exercise to local conditions.

 


Consult reply indicated at article 4.1

Article 4.6
Scope of local self government - Article ratified

Local authorities shall be consulted, insofar as possible, in due time and in an appropriate way in the planning and decision-making processes for all matters which concern them directly.

 


Consult reply indicated at article 4.1

Article 5
Protection of local authority boundaries - Article ratified

Changes in local authority boundaries shall not be made without prior consultation of the local communities concerned, possibly by means of a referendum where this is permitted by statute.

 


Protection of boundaries is guaranteed both by statute and in practice. Law No. 382 of 3 May 2006 on changes in local and regional boundaries and the dissolution and establishment of binding partnerships lays down the rules applicable to changes in local and regional boundaries. It stipulates that such changes must be approved by the councils of the municipalities concerned.

 

Where municipal mergers are concerned, the rapporteurs learned that municipalities which opposed mergers had the option to conclude co-operation contracts with other municipalities. Mergers are therefore basically voluntary, although there are a number of constraints. During the debate on the reform, it was decided to derogate from the general criterion of a minimum population of 20 000 for specified islands. This exception concerns five municipalities (Læsø, Fanø, Ærø, Samsø and Langeland), which have populations ranging from 1 841 in the case of Ærø (the smallest Danish municipality) to 12 861 in the case of Langeland, the most densely populated island municipality.

 

After the political negotiations leading up to the reform, two municipalities near the capital (Vallensbæk and Dragør, which have some 14 500 and 11 900 inhabitants respectively and were not included in the compulsory co-operation scheme because they are not islands) were allowed to retain their municipality status provided that they co-operated with a neighbouring municipality under the same arrangements as for the islands. Recently, the Law on co-operation among smaller municipalities was amended to facilitate co-operation with one or more non-neighbouring municipalities. This amendment was made at the request of municipalities engaged in such co-operation and in close consultation with them and with the LGDK association.

 

The protection of local authority boundaries as laid down in Article 5 of the Charter is guaranteed in Denmark.

Article 6.1
Appropriate administrative structures and resources for the tasks of local authorities - Article ratified

Without prejudice to more general statutory provisions, local authorities shall be able to determine their own internal administrative structures in order to adapt them to local needs and ensure effective management.


Local and regional employees account for 22 % of the whole Danish workforce, totalling 554 906 employees. They are either civil servants (Tjenestemænd) or contract employees (Overenskomstansatte). The latter do not hold any special legal status and their working conditions are governed by general labour law and their particular contracts. On the other hand, civil servants have a special legal status: they enjoy special protection and can only be dismissed under very specific circumstances. Since the 1990s, only the police and the defence forces have recruited staff with civil servant status. There are still a few employees holding this status in the municipalities, but they are increasingly few and far between.

 

The municipalities and regions have a free hand to define their administrative structures, the status of their staff and the arrangements for their training and remuneration. The Law on Local Self-Government contains no rules on municipal administrative structures or staff training. Nor is there any rule limiting the possibility of a local council delegating its responsibilities to municipal staff. In fact, there are very few cases where the local council or mayor are unable to delegate a decision to the administrative staff, the rare exceptions being, for instance, purchase and sale of municipal property.

 

Wages and working conditions for municipal staff are governed by legislation and under agreements concluded by employees’ organisations and the LGDK. All the Danish municipalities have delegated their responsibilities in terms of negotiating with employee organisations to the LGDK. Wages and working conditions for regional staff are similarly governed by legislation and under agreements concluded by employee organisations and the Danish Regions. The five regions have delegated to Danish Regions their responsibilities in terms of negotiation with the employee organisations. Article 67 of the Law on Local Self-Government establishes an administrative council responsible for pronouncing on matters relating to remuneration and working conditions of municipal and regional staff. This council, whose members are appointed by the Ministry of the Economy and the Interior, includes four members from the LGDK, two members from Danske Regioner, one member from the Ministry of the Economy and the Interior and one member from the Ministry of Finance.

 

In connection with training for local councillors, Denmark has an inter-municipal institution known as Local Authority Training and Enhancement, which organises courses for the newly elected councillors.

 

In the rapporteurs’ view, the administrative structures and resources would appear to be appropriate for the tasks performed by Danish local authorities, as required by the Charter.

Article 6.2
Appropriate administrative structures and resources for the tasks of local authorities - Article ratified

The conditions of service of local government employees shall be such as to permit the recruitment of high-quality staff on the basis of merit and competence; to this end adequate training opportunities, remuneration and career prospects shall be provided.


Consult reply indicated at article 6.1

Article 7.1
Conditions under which responsibilities at local level are exercised - Article ratified

The conditions of office of local elected representatives shall provide for free exercise of their functions.


Danish legislation provides for the free exercise of the functions of local elected representatives. In most municipalities, the only elected representatives considered as exercising their functions full-time are the mayors, while other municipal councillors generally devote about fifteen hours per week to their functions. The 2007 local government reform decreased the number of municipal councillors from 4 597 to 2 520. Moreover, since 2007 municipal councils have been required to make public the different types of remuneration paid to their members, including both payments resulting from the exercise of their functions and those received by the persons in question from other sources.

 

According to Article 16 of the Law on Local Self-Government, members of local councils must receive regular remuneration. Mayors, aldermen and regional council chairs receive an allowance corresponding to a full-time occupation; standing committee chairs receive an allowance corresponding to the salary of a part-time employee. The other local and regional council members receive an annual allowance calculated on the basis of the size of the authority in question and the work performed by the committee. Mayors, aldermen and regional council chairs are entitled to a private pension after at least one year in office. Mayors, aldermen, regional council chairs and local council committee chairs are entitled to an allowance for several months after their term of office, calculated on the basis of the length of the latter. Legislation also contains provisions on travel allowances, expenditure relating to a physical disability, etc.

 

The Ministry of the Economy and the Interior establishes the modalities of remuneration. This remuneration is made public, as are the salaries of persons employed by state-owned enterprises to meet the needs of the municipality. The LGDK periodically examines the amount of the remuneration paid, in order to ensure that it has not been devalued by inappropriate indexing mechanisms.

 

The Law on Local Self-Government contains rules geared to preventing any conflict of interest where an individual is both a local councillor and a member of the municipal administration. For instance, a mayor cannot be employed by the municipality or supply it with goods. The mayor and aldermen of a municipality cannot simultaneously chair a regional council. Apart from this restriction, local council members can hold other elective offices such as membership of a regional council or Parliament.

 

The provisions geared to preventing conflicts of interest apply to all elected representatives. The rules on activities incompatible with an elected mandate are set out in the Law on municipal elections. They are in conformity with general Danish legal principles and are generally unobjectionable.

 

The rapporteurs conclude that the conditions for the exercise of responsibilities at the local level set out in Article 7 of the Charter seem generally to be respected in Denmark from both a theoretical and a practical point of view. The rapporteurs heard no criticism in this regard during their visit.

Article 7.2
Conditions under which responsibilities at local level are exercised - Article ratified

They shall allow for appropriate financial compensation for expenses incurred in the exercise of the office in question as well as, where appropriate, compensation for loss of earnings or remuneration for work done and corresponding social welfare protection.


Consult reply indicated at article 7.1

Article 7.3
Conditions under which responsibilities at local level are exercised - Article ratified

Any functions and activities which are deemed incompatible with the holding of local elective office shall be determined by statute or fundamental legal principles.


Consult reply indicated at article 7.1

Article 8.1
Administrative supervision of local authorities' activities - Article ratified

Any administrative supervision of local authorities may only be exercised according to such procedures and in such cases as are provided for by the constitution or by statute.


Administrative supervision of local and regional authorities takes several different forms. First of all, Article 82 of the Constitution provides for State supervision of municipalities, and secondly, Chapters VI and VII of the Law on Local Self-Government set out the rules applicable to such supervision. Furthermore, the municipalities and regions are subject to inspection by the Ombudsman. The highest supervisory body is the Ministry of the Economy and the Interior.

 

Supervision operates at two levels: firstly the Statsforvaltninger (State administrations) provide for devolved central supervision in five cities (one per region); they supervise the legality of decisions taken by municipal and regional councils. The supervision exclusively targets the legality of decisions and legislation on government departments, including regulations adopted by the municipal or regional councils for their own administration. The Statsforvaltninger supervise neither labour regulations nor any fields that can be dealt with by special public bodies.

 

Secondly, the Ministry of the Economy and the Interior supervises the legality of decisions taken by municipalities and regions in the same legal fields as the five Statsforvaltninger. The Ministry is also empowered to annul or modify sanctions ordered by a Statsforvaltning. This role played by the Ministry in “judging” legality has attracted controversy and criticism. It has been suggested that it might be replaced with a kind of administrative court in order to avoid speculation about the reasons behind any controversial or unexpected decisions from the Ministry. Even though the organisation of first-level supervision is to change over the next few years, to involve five agencies working in parallel to the single agency which will be based outside the capital and will be responsible for supervising all municipalities and regions nationwide, the question of ministerial powers has not been mentioned in connection with this change.

 

In accordance with legislation, special supervisory or appeal boards have been set up in a wide variety of fields in order to verify local authority decisions and the execution of their tasks and to consider complaints in this regard.

 

The cases dealt with by the supervisory authority are usually the subject of a consultative declaration in which the authority provides a legal opinion on the case in question. The supervisory authority informs the local council of its responsibilities under current legislation. It can also impose sanctions for decisions taken by a local council or against specific councillors having colluded in an illegal municipal act. The sanctions available are annulment, suspension, fines and actions for damages. According to various interlocutors, the sanctions are very seldom used.

 

The supervisory authority can bring an action for damages against the members of a local or regional council responsible for a loss suffered by the municipality or region as a result of an illegal decision or action.

 

In addition to supervision of legality, auditors must verify the accounts of all local and regional authorities. In the case of most authorities, this role is played by the Local Authority Auditing Service, an inter-municipal body operating under the association of local authorities, or by a private company.

 

The municipalities and regions must therefore transmit their audited accounts to the supervisory board (Statsforvaltning) so that it can verify whether the municipalities’ and regions’ activities are in conformity with current legislation.

 

In June 2007 Parliament adopted a Law amending the Law on local and regional authority audits, in order to confer greater independence on the auditors. The amendment came into force on 1 January 2012.

 

The general provisions of Danish legislation on supervision of local authorities by the higher levels are in conformity with Article 8 of the Charter. Similarly, the supervision as actually effected would seem to comply fully with the aforementioned provision.

Article 8.2
Administrative supervision of local authorities' activities - Article ratified

Any administrative supervision of the activities of the local authorities shall normally aim only at ensuring compliance with the law and with constitutional principles. Administrative supervision may however be exercised with regard to expediency by higher-level authorities in respect of tasks the execution of which is delegated to local authorities.


Consult reply indicated at article 8.1

Article 8.3
Administrative supervision of local authorities' activities - Article ratified

Administrative supervision of local authorities shall be exercised in such a way as to ensure that the intervention of the controlling authority is kept in proportion to the importance of the interests which it is intended to protect.


Consult reply indicated at article 8.1

Article 9.1
Financial resources of local authorities - Article ratified

Local authorities shall be entitled, within national economic policy, to adequate financial resources of their own, of which they may dispose freely within the framework of their powers.


In the area of financial resources and budgets, Danish municipalities enjoy great freedom with regard to their revenues and financial management of their resources. The financial equalisation system in Denmark is based on the size of local authorities’ structural surplus/deficit, i.e. on the difference between the municipality’s revenues calculated on the basis of an average rate of taxation and its spending needs. In the case of the financially weakest municipalities, equalisation thus guarantees certain uniformity in the level and quality of services. Furthermore, the system for allocating the financial resources needed to carry out a public task is based on the “expanded total balance” principle (Det Udvidede Totalbalanceprincip (DUT)), which guarantees a balance between the tasks assigned to municipalities and their financial resources. The “DUT” balance principle means that the state allocates funds to municipalities and regions in line with trends in their expenditure. The operation of the principle is based on the total State grant, which may be increased or reduced depending on whether or not certain responsibilities are delegated to municipalities and regions. The “DUT” principle covers both expenditure and revenue.

 

Where budgets are concerned, Denmark has a budget guarantee system (Budgetgarantien) for local authorities under which the grants awarded to municipalities reflect the cyclical variations in their costs. The aim is to protect municipalities from cyclical expenditure. Hence, the total grant paid to local authorities is adjusted annually in line with the variation in total expenditure, less expenditure meaning a smaller grant. The budget guarantee covers the net expenditure of the worst affected municipalities, thus guaranteeing that the local authorities concerned continue to discharge their responsibilities.

 

The regions do not have financial resources of their own. Their revenues are derived to a large extent from the State and to a lesser extent from the local authorities, as the regions have the right neither to levy taxes nor to borrow from the national capital market. The association of regions regrets that the recently adopted budget law put an end to the debate on granting the regions the right to levy taxes.

 

The financial resources allocated to local authorities for the discharge of their responsibilities are governed by law LBK no. 797 of 27 June 2011 on local and regional finances (Bekendtgørelse af lov om regionernes finansiering). The financing of Denmark’s regions rests on three main pillars: the health sector (which includes hospitals and health insurance), regional development and educational and social institutions. The health sector accounts for roughly 90% of the total budget of regional expenditure. As a matter of principle, the budget earmarked for one of these fields cannot be used in the other two.

 

Regional funding is derived from state grants and local authority contributions. The health sector, for example, is financed by State reimbursements (block grants), State grants and contributions subject to local authority activity.

 

Public deficits have increased (2.7% of GDP in 2009) after several years of surplus. Local authority finances in particular are in deficit. A third of municipalities have balanced their finances by drawing on their reserves, while in the other cases the State has sometimes had to take over financial responsibility and place the local authorities under supervision. After a major shortfall in financing in 2010, some 600 million DKK were reportedly needed to balance the books in 2011.

 

Local authority expenditure is particularly high. In 2010 it accounted for 38% of GDP and 65% of all public spending. The municipalities receive tax revenues (mainly from income, corporation and land tax), State grants and proceeds from services. Income tax is the main source of local authority revenue (over 70%).

 

According to the Ministry of the Economy and the Interior, the budgetary situation of local authorities has been reversed since 2011, going from deficit to surplus. In 2012, the cost of municipal services was 5.3 billion DKK less than the amount budgeted for that year. The 19.5 billion DKK of gross capital expenditure funded from taxation in 2012 was also lower than expected, although the level remains high. 

 

The main state grant represents ¾ of the health sector’s expenditure, which totalled nearly 81.5 billion DKK in 2012. This grant is calculated, on the one hand, from a base amount linked to population size and, on the other, from a number of objective criteria taking account of each region’s spending needs, including the average age of the population and the socio-economic structure.

 

Municipal financing varies from one municipality to another, depending on the size of their population. There is a complex grant and equalisation system designed to offset disparities between municipalities and thus guarantee the discharge of their responsibilities and the delivery of services to citizens.

 

Local authority revenues are derived from taxation, and specifically from the following taxes: income tax; land tax; corporation tax; other taxes and charges.

 

Income tax and land tax are local taxes. Local income tax is collected by the State at the same time as national income tax, whereas land tax is collected directly by the local authorities. The local authorities are free to set the rate of income tax or the rate of tax levy. The local authorities assess land tax according to the value of the land. In municipalities, the municipal council sets the rate of land tax.

 

Tax rates are decided by the municipal councils themselves within the limits laid down by law and defined in the annual negotiations between the Ministry of Finance and the LGDK). The government has significantly tightened these limits several times in the last few years, following the economic crisis of 2008.

 

Some properties can be exempted from land tax, such as private schools, not-for-profit institutions, sports facilities and museums.

 

The system for allocating the financial resources needed to carry out a public task is based on the “expanded total balance” principle, which guarantees a balance between the tasks assigned to municipalities and their financial resources. This principle is known in Danish as Det Udvidede Totalbalanceprincip or DUT, as explained in para. 94. The cost of a new task is calculated initially by the relevant Ministry, and then submitted to the LGDK. If the association disagrees with the calculation, the matter is considered by a group of civil servants and, if necessary by the relevant Minister and the Chair of the LGDK. The sums allocated in this way are calculated on the basis of averages and, consequently, the sum awarded to a given municipality is not always commensurate with local needs. However, local authorities are free to use both the sums allocated via the DUT and their own tax revenues as they wish, which means that the system works properly in practice. The payments due to the regions/local authorities under the DUT, is effected as part of the payout of the grant from the State.

 

Any changes of rules both in form of laws, regulations and circulars and also recommendations and guides can modify the amount of the State’s grants to regions/local authorities. Also judgments from administrative courts or from the ordinary courts creating a new legal situation can modify the existing level of grants. It is thus not the formal basis of a change of regulation, but the real effect that is determinant.

 

A new financial equalisation system was introduced in 2007. Financial equalisation is based on the size of local authorities’ structural surplus/deficit, i.e. on the difference between the municipality’s revenue calculated on the basis of an average rate of taxation and its spending needs. One of the aims of the Danish grant and equalisation system is to reduce the variations in “tax value” observed from one municipality to another. This “tax value” (or tax/service ratio) is defined as the ratio between the volume of expenditure corresponding to the public services provided and the tax levied. The differences in tax/service ratios may be due to the fact that the per capita cost of a given service differs from one municipality to another. To make a concrete assessment of spending needs, several factors have to be taken into account, such as the number of children not yet of school age, the number of children attending school, the number of elderly persons etc. Tax variations may also be explained by differences in the tax base, which reflects the value and revenue potential of the municipality’s landed properties. Without equalisation, there would be very large differences in the tax/service ratio from one municipality to another, i.e. considerable differences in the standard of service, tax pressure or both of these parameters. Hence, a municipality with a broad tax base or low expenditure could set a low rate of taxation and nevertheless be able to offer a high standard of service, whereas a municipality with a narrower tax base or high expenditure would have to set a high rate of taxation in order to able to offer an acceptable standard of service.

 

Local authority budgets are negotiated each year between the association of municipalities and the central government and laid down in an agreement in which the government also takes account of the implications of the economic crisis for local authorities, such as unemployment, youth employment programmes etc. Except for investment in public services or in priority areas of their political programme, local authorities require prior authorisation from the Ministry of the Economy and the Interior to contract loans. If local authority expenditure exceeds the annual budget, the government can impose penalties, such as a reduction in the central government contribution for the following year.

 

The regions cannot make free use of their resources, which are divided into three sections corresponding to their three major areas of responsibility. The regional councils are obliged to respect that division. Because local authority budgets account for a large proportion of public spending, the State’s increasingly strict oversight of local budgets as a result of the crisis is generally well accepted, not only by the Parliament, but also by the population at large.

 

There are legal restrictions relating to investment, borrowings, tax and staff, introduced under agreements concluded freely between the central government and the LGDK and Danske Regioner (Danish Regions).

 

The grants awarded to local authorities are of two types: earmarked grants and block grants. The former are intended to finance specific items of expenditure, while the latter have no specific purpose. Local authorities may also receive grants awarded under the statutory financial equalisation arrangements.

 

One of the aims of the Danish grant and equalisation system is to reduce the variations in “tax value” (or the tax/service ratio). This is the ratio between the standard of service provided and the tax levied.

 

The other sources of revenue consist mainly of charges and duties. The most important of these are: - public services: local authorities provide public services (sewage disposal, waste disposal, gas, electricity, heating and water supply); - private and public nurseries: the cost to parents is laid down by law; - care for the elderly: elderly persons housed by the municipality are required to pay a rent, and also their electricity and heating. 

 

Other revenue is derived from the return on capital and investments, and chiefly from the sale of property and net financial interest.

 

Local authorities have access to the capital market, but in this area they are subject to strict oversight by the State, which monitors local authority investments to ensure that local budgets are consistent with national needs and requirements.

 

The Danish public sector is heavily influenced by methods originating in the private sector (new public management). Local authorities and regions can set up local public enterprises; the State supports all kinds of public-private partnerships. However, there are many limits to be observed when setting up public enterprises: these include rules guaranteeing that local authority and regional tasks remain under the responsibility of local and regional councils and, furthermore, that the rules of competition are complied with.

 

The rapporteurs conclude that Article 9 of the Charter is partially complied with in Denmark. From the standpoint of Article 9 para.2, it would seem that responsibilities in respect of the health sector are prioritised in relation to other responsibilities, in terms of the allocation of resources. As regards Article 9 para.3 of the Charter, the regional level does not have the right to determine the rate of taxes, a fact which is criticised by the Association of Regions. Furthermore, the number of responsibilities assigned to the regions is very small, and their room for manoeuvre is even smaller since they do not have financial resources of their own. The financial equalisation system does not fully satisfy the needs of local authorities and warrants improvement. Lastly, with regard to Article 9 para.8, access by local authorities to the capital market is subject to sometimes strict state oversight.

Article 9.2
Financial resources of local authorities - Article ratified

Local authorities' financial resources shall be commensurate with the responsibilities provided for by the constitution and the law.


Consult reply indicated at article 9.1

Article 9.3
Financial resources of local authorities - Article ratified

Part at least of the financial resources of local authorities shall derive from local taxes and charges of which, within the limits of statute, they have the power to determine the rate.


Consult reply indicated at article 9.1

Article 9.4
Financial resources of local authorities - Article ratified

The financial systems on which resources available to local authorities are based shall be of a sufficiently diversified and buoyant nature to enable them to keep pace as far as practically possible with the real evolution of the cost of carrying out their tasks.


Consult reply indicated at article 9.1

Article 9.5
Financial resources of local authorities - Article ratified

The protection of financially weaker local authorities calls for the institution of financial equalisation procedures or equivalent measures which are designed to correct the effects of the unequal distribution of potential sources of finance and of the financial burden they must support. Such procedures or measures shall not diminish the discretion local authorities may exercise within their own sphere of responsibility.


Consult reply indicated at article 9.1

Article 9.6
Financial resources of local authorities - Article ratified

Local authorities shall be consulted, in an appropriate manner, on the way in which redistributed resources are to be allocated to them.


Consult reply indicated at article 9.1

Article 9.7
Financial resources of local authorities - Article ratified

As far as possible, grants to local authorities shall not be earmarked for the financing of specific projects. The provision of grants shall not remove the basic freedom of local authorities to exercise policy discretion within their own jurisdiction.


Consult reply indicated at article 9.1

Article 9.8
Financial resources of local authorities - Article ratified

For the purpose of borrowing for capital investment, local authorities shall have access to the national capital market within the limits of the law.


Consult reply indicated at article 9.1

Article 10.1
Local authorities' right to associate - Article ratified

Local authorities shall be entitled, in exercising their powers, to co-operate and, within the framework of the law, to form consortia with other local authorities in order to carry out tasks of common interest.


The right of association of local authorities is generally respected in Denmark. It is, however, limited to practical functions. Functions involving administrative decisions on citizens’ rights and obligations cannot be delegated to other public authorities or to private bodies. Under the basic legal principles governing public administration, exceptions to this rule are possible only where specifically provided for by law.

 

Co-operation between two or more municipalities is provided for by law in some fields, such as fire fighting and protection against accidents.

 

It is also possible for local authorities to co-operate with private enterprises in the form of limited-liability companies and, sometimes, under partnerships. Such co-operation activities generally concern the supply of natural gas and electricity, waste collection and disposal services, food hygiene laboratories and public transport.

 

Consortia of local authorities run by a specially set-up body are, despite their independence, public services, even where they are set up as private enterprises under partnerships.

 

The only limit on the possibility of forming an association is the purpose of the association, which must be consistent with the role and responsibilities of local authorities. For example, a Danish municipality does not have the right to join an association campaigning at international level against nuclear power because, in Denmark, this question is outside the sphere of competence of local authorities.

 

The rapporteurs consider that Article 10 of the Charter is complied with in Denmark.

Article 10.2
Local authorities' right to associate - Article ratified

The entitlement of local authorities to belong to an association for the protection and promotion of their common interests and to belong to an international association of local authorities shall be recognised in each State.


Consult reply indicated at article 10.1

Article 10.3
Local authorities' right to associate - Article ratified

Local authorities shall be entitled, under such conditions as may be provided for by the law, to co-operate with their counterparts in other States.


Consult reply indicated at article 10.1

Article 11
Legal protection of local selfgovernment - Article ratified

Local authorities shall have the right of recourse to a judicial remedy in order to secure free exercise of their powers and respect for such principles of local self-government as are enshrined in the constitution or domestic legislation.


Local authorities have a right of recourse to a judicial remedy in order to secure free exercise of their powers and respect for such principles of local self‑government as are enshrined in the constitution or domestic legislation.

 

During its discussion with the Supreme Court, the delegation was able to see that Article 11 is guaranteed in practice. The rapporteurs were told that there is a presumption of compliance with the Charter in Denmark. This rule means that Danish law has to be in conformity with the principles laid down in the Charter. It also means that, in practice, a municipality can allege an infringement of one of its rights on the basis of the text of the Charter itself. It was made clear to the rapporteurs that, in Denmark, the Charter is regarded as a basic text around which domestic law has been built – obviously as regards the local self-government aspects.

 

Legal protection of local self-government is generally guaranteed. However, compared with the number of cases where there is a disagreement, it is rare for a municipality to bring legal proceedings to enforce its rights vis-à-vis the State. In the event of a local authority applying to a court to enforce a right derived from the application of a principle of the Charter, the LGDK supports the local authority in order to draw the court’s attention to the general scope of the case.

Article 12.3
Undertakings - Non ratified

Any Party may, at any later time, notify the Secretary General that it considers itself bound by any paragraphs of this Charter which it has not already accepted under the terms of paragraph 1 of this article. Such undertakings subsequently given shall be deemed to be an integral part of the ratification, acceptance or approval of the Party so notifying, and shall have the same effect as from the first day of the month following the expiration of a period of three months after the date of the receipt of the notification by the Secretary General.


Article 12.2
Undertakings - Non ratified

Each Contracting State, when depositing its instrument of ratification, acceptance or approval, shall notify to the Secretary General of the Council of Europe of the paragraphs selected in accordance with the provisions of paragraph 1 of this article.


Article 12.1
Undertakings - Non ratified

Each Party undertakes to consider itself bound by at least twenty paragraphs of Part I of the Charter, at least ten of which shall be selected from among the following paragraphs:

 

– Article 2,

– Article 3, paragraphs 1 and 2,

– Article 4, paragraphs 1, 2 and 4,

– Article 5,

– Article 7, paragraph 1,

– Article 8, paragraph 2,

– Article 9, paragraphs 1, 2 and 3,

– Article 10, paragraph 1,

– Article 11.


Article 13
Authorities to which the Charter applies - Non ratified

The principles of local self-government contained in the present Charter apply to all the categories of local authorities existing within the territory of the Party. However, each Party may, when depositing its instrument of ratification, acceptance or approval, specify the categories of local or regional authorities to which it intends to confine the scope of the Charter or which it intends to exclude from its scope. It may also include further categories of local or regional authorities within the scope of the Charter by subsequent notification to the Secretary General of the Council of Europe.


ACCESSION

to the Council of Europe

RATIFICATION

of the European Charter of Local Self-Government

CONSTITUTION | NATIONAL LEGISLATION

The principle of local self-government is guaranteed under the Danish Constitution, Article 82 of which reads as follows: “The right of the municipalities to manage their own affairs independently under the supervision of the State shall be laid down by statute”.



30Ratified provision(s)
0Provision(s) with reservation(s)
4 Non ratified articles
16Compliant Provision(s)
14Partially Compliant Articles
0Non-compliant Article