Many countries are debating the effectiveness of devolving governing responsibilities to cities. There is increasing recognition that many citizen-facing responsibilities, such as kindergartens, schools, elderly care, unemployment benefits, skills and job training, refugee shelter, and the integration of immigrants take place in cities under the management of municipalities. However, the fiscal capacity of cities to provide these services varies widely in different countries. For instance, continental European cities collect and allocate 50% of all taxes on average (Danmarks Statistik, 2012). In contrast, in the UK, despite the City Deals implemented since 2012 to increase the governing power of municipalities, UK cities only collect 5% of taxes (UK Parliament, 2018). UK Municipal expenditures extending beyond the revenue generated from their 5% tax share are financed through national government allocations that usually come with stipulations. Many cities struggle with a lack of the political and fiscal power necessary to provide the level of services they are obliged to deliver; there is often a schism between municipal obligations and the capacity of cities to fulfil them.
This report presents how Denmark devolved power to municipalities in a successful and replicable manner. Successful devolution in Denmark is largely due to the institutional innovation of KL - Local Government Denmark (KL - Kommunernes Landsforening). This report explores KL - Local Government Denmark’s strategies, while investigating how municipalities gain from increased devolution of political and fiscal power through organising for increased self-governance at local and national levels. The centrepiece of this investigation revolves around how KL - Local Government Denmark is instrumental in accruing power in municipalities and working on behalf of cities at the national level.