How the City of Utrecht achieved major budget savings through innovative service reviews

Objectives

The City of Utrecht (330.000 inhabitants) is the capital and largest city in the Dutch Province of Utrecht. It is located in the eastern corner of the Randstad conurbation, and is the fourth largest city in the Netherlands. The city's recent expansion is a result of a strong focus on innovation, economic development and a new urban dynamism. Utrecht perceives itself as city of knowledge and culture.

Dutch cities operate within a multi-level, multi-party democratic system, in which the mayor is appointed by the King (on recommendation of the local council). Typically, Dutch cities are governed by coalitions. Cities are administrated by a local cabinet, chaired by the non-political mayor. The cabinet consists of aldermen who are appointed by the council. Aldermen are no part of the local council (dual approach). This case study focuses on the period between 2010 and 2014, which is characterised by a coalition of the green party (GroenLinks), social-democrats (PvdA) and social-liberals (D66). Each party provided two aldermen, representing almost two-thirds of the seats on the council.

When the coalition government in Utrecht took office in 2010 it was faced with centrally-imposed austerity. Initially, the cabinet was only willing to cut 10% of the discretionary budget within eight years.

A comprehensive service review, including a review of the corporate structure, was introduced:

“The review should focus both on the effectiveness and efficiency of the local administration and its activities. Saving opportunities, for example, may be found in the reduction of managers and staff, closing front-offices or merging departments. We also focus on reducing the level of hiring external staff. Regarding activities, overlying policies, effectiveness of policy, possibilities of privatisation and reducing the number of programmes should be studied.”
(Coalition programme ‘Green, Open, Social’ 2010:28)

After finishing the coalition programme the need to make even deeper cuts became evident. The initial reduction target of €50m in eight years was adjusted multiple times. The final agreed target consisted of a durable budget reduction of €55m from 2014 onwards, so that budget cuts had to be identified which would be sustainable into the longer term, not just one-year one-off changes. To uncover budgetary possibilities the council had given a clear objective to the responsible alderman:

“The review, together with the reduction of hiring external staff and the core-task analysis has to reveal a savings potential for the administration and its policies, growing from €5m in 2011 up to €55m from 2014 onwards.”
(Concluding Report Review Director 2011:3)

Table 1: Budgetary challenge per year

  * One-off cuts, to be achieved in this year only,
** Sustainable cuts, to be achieved this year and every following year