Denmark: Historic Copenhagen budget leaves Social Democrats out in the cold

First published at Rosa Luxemburg Stiftung on October 17.

On September 9, the 2023 budget for the City of Copenhagen was agreed in historic circumstances. For the first time in a century, Denmark’s Social Democratic Party – which has long treated Copenhagen as its crown jewel – was outside the deal. Instead, radical left party Enhedslisten (the “Red-Green Alliance”) took the lead in budget negotiations, delivering robust funding for social welfare and the climate, with support from parties of the centre, right and even far-right.

In November 2021 municipal elections, Enhedslisten eclipsed the Social Democrats in Copenhagen for the first time, taking a quarter of the vote. In the negotiations that followed, however, the Social Democrats held on to the coveted position of Lord Mayor thanks to support from the right-wing parties. Enhedslisten took responsibility for the Technical and Environmental, and Social Affairs, portfolios instead.

But in negotiations for the first budget since that vote, the Social Democrats, along with the Socialist People’s Party (or “Green Left”, as it now wants to be known internationally), found themselves outside the room, as their budget proposal failed to win support. Instead, Enhedslisten brokered a budget agreement that secured significant climate and welfare spending while bridging the political divide.

Rather controversially, Enhedslisten’s budget agreement was built on the support, not only of the political centre, but of parties of the right and even the extreme right, with the Danish People’s Party and even more radical Nye Borgelige (the “New Right”) both participating in negotiations and signing up to the agreement.

Being cut out of the budget is yet another massive defeat for Lord Mayor Sophie Hæstorp Andersen and the Social Democrats in Copenhagen, but what does the deal mean for Enhedslisten, and for the broader political situation in Denmark, where early elections will be held on 1 November?

Duroyan Fertl spoke to Line Barfod, a former Enhedslisten MP and the current Mayor for Technical and Environmental affairs on Copenhagen Council.

The new 2023 budget agreement is a pretty big departure from the norm, and has left quite a few people scratching their heads. Why did Enhedslisten make a deal with parties of the centre and right, rather than with what many would consider your more natural allies on the left wing, the Social Democrats or Socialist People’s Party?

This is the first time ever in Copenhagen that the Lord Mayor, a social democrat, is not part of the budget, but we had thought the whole way through negotiations that we would make a budget with the Social Democrats. However, after four days of negotiations they still hadn’t delivered anything on climate, and only very little on welfare – both issues that we had said from the start were our key areas. This was particularly the case on the matter of the climate crisis – we simply couldn’t agree the budget unless we had agreement on something that really made a difference for the climate. Copenhagen also has some big social welfare problem, that we needed to secure more money for.

So, after four days, we were frustrated, and many of the other parties were frustrated too, because they couldn’t see anything in the budget for them either. We started talking to the other parties, and we found out that together we could actually make a deal, one that secured something important on the climate, something on welfare, and even something for the right-wing parties, who got a minimal tax cut.

Something not dissimilar happened last year on Bornholm, where Enhedslisten sided with several right-wing parties against the Social Democrats and Liberals. Do these agreements signal a broader shift in Enhedslisten’s approach towards the Social Democrats? Are they “just another party” to work with among others?

Partly it’s a question of dealing with them on a case-by-case basis, as local politics is different to national politics, and is different from one municipality to another. But it’s also because Enhedslisten has been working for many years to be treated as a party in our own right. We are not just a party that tries to pull the Social Democrats to the left: we have our own rights and agendas, and we try to get as much of our politics made reality as we can. If we can get this with the Social Democrats that’s fine; if we can get it with the other parties, that’s also fine. We don’t have to wait for the Social Democrats – like anyone else they have to come up with a reasonable proposal.

The budget agreement also includes the Danish People’s Party and Nye Borgerlige (the so-called “New Right”), both of them parties that are considered to be on the extreme right. What is Enhedslisten’s approach towards these far-right parties?

In Enhedslisten, we decided about 30 years ago when the Danish People’s Party came into parliament that our approach would be to argue against their politics, because many of the people who vote for these right-wing parties are not themselves racist. They vote for these parties because they feel that no-one talks for them. These voters experience great problems in their everyday life, and we in the left wing have failed to be able to talk to them.

We have to be a lot better at identifying their problems, at talking to them, and hopefully at getting them also to be part of our party, but until we have success with this, many of them will vote for these right-wing parties because they are able to talk in a way that the voters understand, and they talk about the voters’ problems and so on.

So, we try to expose what these parties actually vote for in parliament, and also in local councils, which is often against the interests of their voters. They often vote in favour of cutting support for the elderly, cutting social welfare, and so on, and that’s what we try to argue about.

Then of course we also argue against their right-wing policies on refugees and migrants, but we don’t have the same approach as for instance in Sweden, where there is a policy of not working with the far-right.

However, it’s also important to note that the Danish right-wing parties – both Danish People’s Party and Nye Borgerlige – don’t have old Nazis or fascists like similar parties have in some countries. That would make it a very different matter for us.

Looking now at the deal itself, the funding agreed for climate and biodiversity in the new budget is fifteen-times what the Social Democrats had initially proposed. This is a very welcome move, but is it an increase on previous budgets?

No. The amount has been a little different from year to year, but for many years there has been a substantial investment in climate in Copenhagen. However, we simply couldn’t be part of the budget proposed this year by the Social Democrats, because there was almost nothing in it on addressing the climate crisis! So, this budget is basically a continuation of the previous approach to climate spending, although with some new things included.

What are the priority areas for this climate funding?

Some of the climate spending in the budget is for making a new 2035 climate plan. Some years ago, Copenhagen Council decided on a 2025 climate plan, which was actually just dropped earlier this year. This is also just around the corner, so we have been working on a new climate plan for 2035, and we have secured financing for that plan in this budget.

In the new plan, Copenhagen has set a goal of being carbon negative by 2035. In order to do this, we will have to reduce the emissions, not only of the municipality itself, but also of all the citizens and businesses in Copenhagen. This is a huge task, that starts with working out how exactly to do it, as there is no international experience or model on how to measure the carbon footprint of a city today and to reduce it to zero by 2035.

We have also been working on a number of other plans, such as increasing car sharing in Copenhagen, increasing the number of electric cars, and increasing the amount of solar power we produce and use. All three of these plans were financed by this budget. We also secured funding to halve the number of parking spaces in Copenhagen’s old city centre and to drastically reduce car traffic in the area.

The budget also contains a lot of funding for welfare and social spending, but it is a compromise with several pro free market and liberal parties. Did Enhedslisten get everything it wanted from the deal, or are there areas still outstanding?

Oh, we still need a lot more money for social welfare, but we got the most important parts of it secured, so we won’t have to make cut backs to welfare. In fact, we even got a small improvement. Social welfare, not only in Copenhagen but in all the municipalities in Denmark, is very badly underfunded. We have big problems, especially for people with handicaps or disabilities, who need social help. Some of them need a good place to live, and so on, and that is something we still don’t have enough money for.

You mentioned that one aspect of the budget deal is a small income tax cut, something that has led to a lot of criticism, especially from the Social Democrats. How do you reconcile this aspect with what is largely a left-wing, progressive budget?

We have the problem in Denmark that the EU rules on budgets have been incorporated and implemented in such a way that there is a maximum of how much money you can use in the municipalities. In Copenhagen each year there is between half a billion and one billion Danish kroner of income from the municipality that we cannot use. We are not allowed to use it, so we just make the savings of the municipality bigger and bigger – we now have savings of about 17 billion kroner.

So, we couldn’t use the money anyway, and it’s not a very big tax cut – it’s the smallest we could possibly make according to the rules, only 0.1%. It will give the average inhabitant of Copenhagen about 200 DKK a year. That’s not very much, but in the current situation, for those who have very little, everything is a little help.

The rules of the municipalities are so absurd that since we have made this tax cut, the other municipalities, who lack the income to secure funding for social welfare, are now allowed to increase their own tax. Because the rules are made so that all the municipalities – when looked at as a whole – should have the same amount of income from tax every year. So, if one municipality makes a tax cut, then other municipalities can increase their taxes, and because Copenhagen is so big compared to other municipalities, when we make such a minimal tax cut, several other municipalities can increase their own taxes and secure their welfare spending.

So, rather than being a right-wing policy, it’s almost an act of solidarity with smaller, less well-off municipalities?

Exactly. We have meetings twice a year of everyone in Enhedslisten who sits on a city council or regional council, and at our last meeting in August we actually debated the problems faced by some municipalities who wanted to raise their tax. We discussed the possibility that those municipalities that had the capacity should actually make a tax cut. So, while we didn’t go into the Copenhagen budget negotiations with plans for making this tax cut, it was nevertheless always a possibility for us, because we knew that it could actually help some other municipalities.

More broadly, what do you see as the biggest challenges facing Copenhagen at the moment? What are Enhedslisten’s priorities on council?

Of course, the climate crisis is the biggest challenge, and in Copenhagen, we have a special responsibility. We are one of the richest cities in the world, a part of the Global North which is most responsible for the climate crisis, while the effects will mostly be on the people living in the Global South. So, we have to do everything we can to find new solutions, to hopefully inspire other cities and companies to find new solutions and technology that can be used in other parts of the world. So that’s our biggest challenge and our highest priority.

Social welfare is also a very high priory for us, especially in these times of crisis when people can’t get enough money for food. The problem here is that the national laws won’t allow us to give more money to the people who need it. So, we do what we can, but a big part of achieving meaningful change depends on decisions of the national parliament. Of course, Enhedslisten is fighting there for more money for social welfare as well.

Then we have the energy crisis, which is closely related to the climate crisis and to the war in Ukraine. We are working to find solutions, including producing a lot more solar power, but again we need the laws to be changed in national parliament. Through a company owned by the municipality, we have many wind turbines around Copenhagen and in other parts of the country, to increase the share of wind energy. We are also trying to reduce energy use, including by cooperating with the private companies who own the buildings in Copenhagen. We are looking at both existing buildings and at the new ones currently being built – which use a lot of energy – in order to reduce their energy use.

I understand that housing is also a major issue in Copenhagen?

Housing is a big problem in Copenhagen as it is in many other cities, because it has been mostly the market deciding what was built over the past 30 years, resulting in the construction of many expensive apartments. Instead of this, we want apartments that are affordable for those who actually work in our city and for their children. We have so far achieved an agreement between the municipalities and the state that in the areas owned by a company called By & Havn (“City & Harbour”) – a company that is actually owned by the municipality and the state – we will now be able to build 40 percent public housing. This is an increase from the normal 25 percent which can normally be demanded of private land owners.

However, while we can decide the kind of housing that is built in Copenhagen, we can’t decide the rent that is charged, which is decided at a national level. Fortunately, a deal has just been agreed at that level in the national parliament about putting a cap on the worst increases in rent.

Many of the things you have mentioned seem dependent on change at the national level. Denmark will vote in a national election on 1 November: do you think that the Copenhagen budget will have an impact on the election campaign?

I hope very much it will have an impact, particularly in Copenhagen, where every fourth voter cast a vote for Enhedslisten last November. Hopefully they will vote for us again, and many more people will do so as well, because they have seen that we can actually use the power we have been entrusted with. This can also be an important point in the national campaign, where we can show that as a party we can use the power we receive from the voters, that we don’t just sit in the corner and say we’re against this and this and this. We can and will use this power to achieve results.
Line Barfod is the Mayor of Technical and Environmental Affairs on Copenhagen City Council and a member of Enhedslisten (the Red-Green Alliance). She was a member of the Folketing (Danish Parliament) between 2001-2011.