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Temporary increase in government grants to municipalities

Country of implementation
Sweden
General short description of the innovation
In order to counteract the effects of the financial crisis beginning in the fall of 2008, and safeguard welfare services local government received temporary government grants in 2010 (17 billion SEK). In addition to the contributions, a permanent increase in the level of 5 billion was made fr.om 2011 and another temporary increase in 2011 with 3 billion.
Target group
Total Population
Policy Field
  • social
Type of Policy
  • public
Duration of the policy
Temporary and permanent
Scope of innovation
  • Scope: both
  • Budgets: The financial crisis in 2008 had major implications for the global economy as well as for the Swedish economy. The local gov-ernment sector was affected mostly by decreasing tax revenue due to the fall in employment and rise in unemployment in 2009. The Swedish central government provided a total of 20 billion SEK in temporary grants to the local government sector (municipalities and county councils) in 2010 ? 2011. Of this total, 17 billion SEK was designated to be spent in 2010 and 3 billion SEK to be spent in 2011 (The National Institute for Economic Research (NIER) 2012).
  • Number of intended beneficiaries: 289 municipalities
  • Spatial coverage: national
General description of (intended) objectives and strategies
The intention with the grants was to prevent cutbacks in the employment sector and thus to discourage local governments to act pro-cyclically and deepen the recession even further
Nature of the innovation-short-term perspective
short term
Nature of the innovation-long-term perspective
and long term
Type of ideal-typical strategy for the innovation
  • others
Type of innovation
  • retrenchment or expansion of an existing/earlier policy
New outputs
    Clarification of intended mechanisms, outputs and outcomes (optional)
    cont from above / / Consumption and employment: The NIER makes the assessment, on the basis of a survey conducted by the Swedish Agency for Public Management that the temporary grants led to an increase in local government consumption in 2010. In particular, expenditure on intermediate consumption increased substantially. / / Taken together, the temporary grants are estimated to have saved about 8 500 jobs in the local government sector in 2010. Employment was not affected in 2011 because the 3 billion SEK in grants paid is not judged to have affected consumption, the reason being that local governments would otherwise have raised taxes. The long run level of employment is not affected by the temporary government grants. /
    Intended target group
    municipalities
    Actors involved in policy-making/implementation and/or evaluation
    • central state
    • municipal government
    Intended output
    • others (Expected were worsened public finances in a weak economic environment. However, the local government sector ended up with a remarkably large surplus in 2010 amounting to 18 billion SEK. This surplus was achieved partly because local authorities were surprised by a stronger than expected macro-economic development, and partly because of the temporary grants. The latter is primarily due to the fact that more than half of the grants were announced in autumn of 2009, and could therefore not be included in the regular budget for 2010. Only part of the grants was therefore used for consumption and investments in 2010.)
    Did the innovation have any outcome related to job quantity?
    The temporary grants are estimated to have saved about 8 500 jobs in the local government sector in 2010. Employment was not affected in 2011 because the 3 billion SEK in grants paid is not judged to have affected consumption, the reason being that local governments would otherwise have raised taxes. The long run level of employment is not affected by the temporary government grants
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