A race to the top, middle or bottom? The consequences of decentralisation in Germany

A race to the top, middle or bottom? The consequences of decentralisation in Germany

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The upsurge in interest in decentralisation in recent years is by no means unique to the UK: there has been an international trend towards greater decentralisation from the level of the nation state in recent decades. Marks et al (2008), in a major study of constitutional reforms since 1950 across 42 countries, found that some 342 of those reforms strengthened regional authority, compared to just 42 that weakened it. Decentralisation is sometimes considered a potential means of, in Alfred Stepan’s phrase, ‘holding together’ states that might otherwise drift apart (Stepan 1999) – Ukraine being a topical example of this. Another earlier example from closer to home is the creation of the Scottish parliament in the 1990s, the rationale for which was to reduce pressure for independence – a flawed rationale, as it turned out. However, in other scenarios – as with the current cross-party consensus in favour of stronger city-regions in England – pressure for decentralisation instead stems from the belief that it can lead to better policy outcomes. Recent work by IPPR North suggests that there could be substantial economic gains from such decentralisation, as well as improvements in the quality of public services, as greater local and regional autonomy could allow innovation to flourish (Cox et al 2014).

A race to the top, middle or bottom? The consequences of decentralisation in Germany

Nonetheless, such transfers of power away from the national level are by no means uncontentious. Advocates of decentralisation claim that it makes possible policies that are better tailored to their contexts (whether in terms of local circumstances or public opinion); greater capacity for experimentation, innovation and lesson-drawing; and also (more controversially) the limiting of state activity and a check on central power. Opponents of decentralisation, by contrast, are fearful either of policy incoherence or – more problematically still – downward pressure on levels of service provision or entitlement, regulation and taxation, as a result of states competing with each other in order to remain competitive. It therefore seems worthwhile to examine specific cases in which power has been passed downwards from the national level.

This paper looks at the impact of Germany’s 2006 federalism reforms, which did indeed transfer certain competencies from the level of the nation state to the regions, or Länder (singular: Land). It starts by briefly examining the literature on the possible impacts of a decision to decentralise, and then sketches the German context and the nature of these 2006 reforms. It then examines the changes that have occurred since power was transferred in three areas of policy: prisons, the regulation of care homes, and pay and conditions for Beamte, an employment category including most public servants. It finds only limited evidence of ‘races to the bottom’, and rather more evidence of upward pressure on standards. It also uncovers some support for cooperation between regions, even where this is no longer legally required. Together, these findings give cause for scepticism about grand claims that decentralisation will lead to a ‘race to the bottom’. Among other factors, the likely policy response to decentralisation depends to a large extent on the policy area in question, and on what the budgetary impact of policy variation would be.