In the early 1990’s the Swedish municipalities were exposed to an extensive pressure due to waning legitimacy and the increasing cost of service provision. At the same time Sweden suffered an economic crisis. The unemployment rate rose and public finances deteriorated rapidly and the providers of public services experienced a decline in legitimacy. The consequence was an increased pressure on the public sector to make its services more efficient by lowering the cost.
Of major importance to the organisation and development of the municipalities were two changes in 1992. First, non-socialist parties won parliamentary elections. Second there was institutional change in the form of a new Swedish Local Government Act (1991:900). The new Local Government Act came into force in 1st January 1992 and made it possible for municipalities to organise their activities in alternative ways. This gave room to those who wanted to introduce major changes in the entire “paradigm” of public management (e.g. Fölster, 1993). Thus, at the beginning of the last decade of the 20th century, the public sector in general and the municipalities in particular were exposed to extensive pressures to change the governance and control of their activities.
Cuts in expenditure in the early 1990s
The inclusive organisational changes and the cuts in expenditure that were carried out in the early 1990s gave way to massive criticism from the municipalities themselves, that protested that they were not able to fulfil their mission, and from large citizen groups, maintaining that the municipal services had lost in quality and quantity (Hansson, Mattisson, Hellström and Tagesson, 1997; Hansson and Lind, 1999; Rombach, 1997). Even politicians were critical and in the election of 1994 the balance shifted in favour of the socialist parties in many municipalities that were not as adamant in recommending market influenced tools. Researchers presented indirect criticism in concluding that changes made so far had not attained the desired effects (see Hellström, 2002; Mattisson, 2000). Subsequently there was a need for something new in the Swedish municipalities.
Demands on a balanced budget with the new millenium
The Swedish municipalities still had a difficult financial situation. Year 2000 the National government implemented the demand on a balanced budget. This put high pressure on many municipalities which severe from structural factors such as declining population and as a response a national delegation initiated a programme to help municipalities to save money and balanced their budgets during 2000-2002. After more than three years of work the National government also made some major changes, under the name of Good resource management in municipalities and county counties, in the new local government act and the act of local government accounting (1997:614). The changes were implemented for the budget year and fiscal year of 2005. In short the new law stipulated tighter control to meet the demand of a yearly budget in balance. The municipalities needed to formulate goals, measureable measures and guiding principals for good resource management. The law also stipulated the need of action plans to repair negative annual results over a three year period. The most extreme ideas of how to impose market orientated management tools on municipal organisations faded out under this period. Focus was on tight budget control with a growing interest for developing goals and measures to meet the demand of the new law.
Major ideology shift with the election in 2006
An alliance of four non-socialist parties won the parliamentary elections 2006. Lowering the tax burden to handle the unemployment rate and stimulate people to work was one major ideology shift behind the new National government. The idea of finding new market solutions for the provision of local government services also started to grow again. The possibility for the inhabitant to make choices between different providers was a driving ideological force. Some County Councils started to implement the right to establish new providers of primary care 2007 and 2008 (Anell, 2008). Private providers of primary care had the possibility to establish care if they fulfill the standard and requirement stipulated by the County Councils. The possibilities for inhabitants to make choices were also behind the law of System for Freedom of choice (2008:962) who was implemented 2009. The law regulated how the municipalities and county council should act if the want to expose their own services in health- and social care to competition. Changes in the act of Health and hospital care made this reform obligatory for County Councils from 2010, but it is voluntary for the municipalities.
Since the new law of Good resource management there has been an ongoing work for developing goals and measurement in the sector. This work was further stimulated with a national benchmarking project initiated by the Department of Finance and SALAR in 2007. Almost 200 municipalities where engaged in creating and implementing new service measures for a broad span of municipal services (Knutsson, Ramberg and Tagesson, 2011). First of January 2010 a new database, Kolada, with more than 2000 measures was introduced to further stimulate efforts to benchmark and make comparisons. Further, so called Open comparisons have been used in both health care and social care since 2006.
Future demands on development
Still the municipalities are working under financial pressure. Many municipalities were saved from negative results 2009 by a temporary central government grant to handle the recession 2008 and 2009. Both the grant and cost-cutting strategies were needed to handle the economic situation in the municipal sector in 2009 and 2010. The effect of driving forces such as an aging population, accelerating urbanizing, medical and technical development indicates that the local government has to continue to struggle with their existence, operation and legitimacy in the future. The need of further research is important.