OECD report recognises Brussels challenges on structures, finance and housing

The Organisation for Economic Cooperation and Development (OECD) presented its Metropolitan Review of the Brussels-Capital Region on Tuesday in the hemicycle of the Brussels Parliament in the presence of experts and Brussels Secretary of State for International Relations Ans Persoons, Brussels Minister for the Budget Sven Gatz, Brussels Minister for Local Government Bernard Clerfayt, and Brussels Secretary of State for Housing Nawal Ben Hamou. The report proposed important conclusions and recommendations in the areas of institutional structure, public finance and housing.

"This Metropolitan Review by the OECD identifies a number of policy challenges that I and my predecessor Pascal Smet have raised for more than two decades. The OECD confirms that the current administrative organisation has a negative impact on economic growth, urban development, administrative transparency and efficiency, and the financial capacity of our region. There is a need for a new pact for Brussels in which we dare to question our existing structures without bias. We should be guided by what works better in similar metropolitan areas in the OECD. The recommendations formulated already help us on our way. Considering a reformed city region with local districts, activating and investing in the Metropolitan Community, and the urgent need for an inclusive and soft densification of our city are good and clear examples. " says Ans Persoons, Brussels Secretary of State for Urbanism and International Relations.

The OECD experts prepared a voluminous 280-page document. The OECD's screening provides a comprehensive assessment of the region's urban development trends, the challenges it faces and its opportunities and strengths compared to other metropolitan regions. In doing so, the OECD makes an in-depth diagnosis of the Region's challenges in terms of urban development, governance and public finances, while also making a number of policy recommendations.

FINANCE

Diagnosis:

There is a structural loss of wealth produced in Brussels by people who work in Brussels but do not live there. This imbalance is unsustainable for regional finances, primarily from the metropolitan area around Brussels (the Brussels periphery).
In terms of the Region's spending pattern, there is also a growing imbalance. Over the last decade, the expenditure pattern has increased sharply in terms of transfers to the municipalities and community commissions and staff costs, together accounting for 64 per cent of expenditure. This is, of course, partly due to the 6th reform of the state. This leaves fewer resources for real policy implementation.
Brussels' financial situation is associated with Brussels' governance issue, especially administrative duplication and ailing local governments.

The OECD calls for additional funding for Brussels from the federal government, which, in a context of strong population growth, must continue to invest in Brussels' capital functions and infrastructure.

Recommendations

Reduce the internal administrative burden and the duplicate structures.
Externally, there should be compensation for capital functions, based on objective indicators to calculate those additional transfers.
A real conference, set up by the federal government, is called for to resolve the issue of additional funding. There should also be a metropolitan fund that would release specific resources for projects with a distinctly metropolitan character (e.g. studies, planning tools, infrastructure works, etc.).

"The OECD report confirms the underfunding of Brussels, which both my predecessor Guy Vanhengel and I have denounced on several occasions. Until now, our analysis always landed on deaf ears. Perhaps this report will be the push needed to lift it from this press conference to the political agenda. If the OECD report gets the resonance it deserves, I am certainly open to an unbiased debate on it." says Sven Gatz, Brussels Minister responsible for Finance & Budget.

INSTITUTIONAL STRUCTURE

Diagnosis:

The Brussels Capital Region is 'overcrowded' institutionally and also highly fragmented. The accumulation of multiple layers of government at different scales has clouded the allocation of powers, often making it difficult to design and implement effective policy interventions in housing, mobility and other infrastructure investments. There is an institutional lasagna that makes the allocation of powers unclear.
The large autonomy of municipalities and the interweaving of powers creates difficulties. Municipalities, which vary widely among themselves, can each decide what they consider to be of municipal interest, which can lead to conflicts over the division of responsibilities and ultimately hamper accountability.
The lack of clarity within competences can lead to failure to take policy action and a lack of transparency and accountability. In situations where competences are shared, which is the case for several functions in the Brussels Capital Region, the ambiguity of the division of competences can encourage " shedding behaviour " where different institutions sharing a responsibility fail to fulfil their obligations.
Brussels was tailored to two communities, while today it has become multicultural and multilingual.
The complexity of Brussels leads to negative consequences for economic performance. Fragmentation is especially detrimental to growth in and around urban areas. The lack of a metropolitan governance structure for the Brussels metropolitan area prevents Brussels from fully exploiting its economic potential.

Paradoxically, despite the wide range of institutions involved in policy-making in the Brussels Capital Region, there is no governance arrangement at metropolitan level.

Recommendations:

Simplification and reforms are needed to distribute competences transparently. A systematic review of powers and a concerted effort are needed to draft clear legislation on who is responsible for each sub-function.
To promote policy coherence, some responsibilities that have a regional scope could be regionalised. This transfer would eliminate administrative overlap and could increase policy coherence by having only 1 instead of 19 different legislative actors. Transferring certain powers to other levels of government should be considered.
The OECD advocates transferring CCC powers to the Brussels Capital Region.
The 19 CPASs should come under a unified management of the Brussels Capital Region.
A merger of the Conference of Mayors and Brulocalis is needed.
Mergers of municipalities can be considered after a conclusive agreement among municipalities and a rigorous study.The metropolitan community, as established

"The OECD report points to the need for better collaboration between municipalities and the Region, but also for a strengthening of the financial resources of municipalities in the face of the shifting of burdens in recent years (Covid crisis, childcare crisis, etc.). This is precisely what I was aiming for when I set up R+19, a platform for consultation between the municipalities and the Region, and a reform of the General Allocation to the Municipalities. These two projects did not meet with the approval of my government colleagues. Finally, I deplore the fact that this report does not present a more detailed analysis of the regional democratic deficit, the state of the Region's finances or its linguistic constraints. Transferring powers from the municipalities to the Region, as the report recommends, cannot be done without encompassing all the regional constraints, which is cruelly lacking here". says Bernard Clerfayt, Brussels Minister responsible for Local Authorities .

HOUSING

Diagnosis:

The Brussels region is facing an acute housing crisis.
Because of a lack of affordable housing and the high cost of living, there is a risk of urban flight.
Prices are rising too fast. Real median flat prices have almost tripled between 1996 and 2020, rising by 170%. This is a much faster rise than the OECD average, where real house prices rose by just under 50 per cent over the same period.
40 per cent of the lowest-income households have access to only 10 per cent of the housing market. As many as 61 per cent of Brussels residents are in the rental market.
In terms of affordable housing, there is an imbalance within the distribution across all municipalities.
There is a lack of capacity to implement the Regional Zoning Plan.
The management of social housing is still too complex.

Recommendations:

The number of social housing units must triple. The OECD links this to the distribution of social housing throughout the Region, as some municipalities are lagging far behind in achieving the target of 15 per cent social housing on their territory. The OECD therefore proposes to oblige lagging municipalities to achieve this target or to make them financially responsible for it.
A review of the building permit procedure is needed to make it more efficient. For example, by concentrating authorisation procedures more strongly at regional level.
Urban planning at metropolitan level is needed to combat urban sprawl. Brussels must further densify, in a socially inclusive way. The "soft densification" model of the second crown is provided in this regard.
The bodies responsible for housing in the Brussels Capital Region should cooperate better and possibly merge.

"The OECD recognises that it is essential to enable low-income households to access affordable housing. However, as in other European cities, in recent years social housing policy has had to contend with the "NIMBY" phenomenon, with residents living in the vicinity of certain regional sites blocking projects during the consultation process.As part of the Emergency Housing Plan, my colleague Ans Persoons and I have already introduced fast-track procedures for issuing permits for the construction of social housing. We need to go further and faster. I'm in favour of a single permit for the whole of the Region for the construction of social housing, following the example of Hamburg in Germany, which would enable harmonised planning throughout the region.» explains Nawal Ben Hamou, Brussels State Secretary responsible for Housing.

Nils Quintelier

Woordvoerder, Kabinet Staatssecretaris Ans Persoons

Mathieu Nguyen

Porte-Parole, Cabinet Secrétaire d'Etat Nawal Ben Hamou

Pauline Lorbat

Porte-Parole, Cabinet Ministre Bernard Clerfayt

Amil Djellal

Cabinet Ministre Sven Gatz