Monitoring Local Government Financial Sustainability: A Dutch-English Comparison

Monitoring of local public finance is an essential part of fiscal regulation, although national approaches interact with political and economic environments. England and the Netherlands provide telling similarities and differences in their local government contexts and approaches to such indicators. After a brief discussion of theoretical issues, this chapter compares the use of financial sustainability indicators (FSIs) in Dutch and English local government. It reviews the history, current use, bodies involved, the indicators themselves, and approaches to monitoring. In England, a long history of central oversight of local government, focused upon performance, came to an end in 2010. Ever since, there has been no systematic FSI monitoring, as central government has not implemented its own model, the NAO has not been legitimated, and the local government sector itself has only recently started focusing on financial resilience. The Netherlands has traditionally placed its focus with respect to FSI monitoring on fiscal rules, which are monitored at the regional level of the provinces. More than in England, the Dutch local government association has supported the development of FSIs whilst local government reporting on FSIs is mandatory. Finally, we show how different fiscal rules and governmental characteristics have resulted in contrasting developments of indicators and monitoring.