Small and medium-sized towns (SMST) have often been overlooked by both policymakers and academia. They can get caught in the middle between urban development policy and rural development policy. However, their role as ‘anchors’ of territorial cohesion has increased the focus on their development and capacity building, also within the regional policy sphere. This blog summarises key findings from the EoRPA Report “The Rise of the Small Town: Policies for Small and Medium-sized Towns”, looking at policies for SMST across Europe.
What are small and medium-sized towns and why do they matter?
Although the definition of SMST is complex and varied, this report focuses on municipalities between 5,000-50,000 inhabitants, which is the dominant settlement type in large parts of Europe. Nevertheless, some research identified a “systematic attention gap” for SMST, which are perceived to be too small to be of interest to the metropolitan community and too urban for the rural community.
However, over the past few years, the EU has increasingly acknowledged the role of SMST. These are needed to allow properly using the potential of rural areas, as stipulated in the Long-term vision for rural areas up to 2040 (2021), play an important role in the Territorial Agenda 2030, showcased in the Pilot Action ‘Small Places Matter’ (2021-23) and are understood as ‘anchor points’ for development in the 8th Cohesion Report (2022).
The increased policy interest manifests itself also in concrete activities at EU level. The European Commission’s Joint Research Centre published a Policy Atlas of Sustainable Urban Development for Small Urban Areas (JRC) in 2023, suggesting policies to ‘turn the tide’: re-activating places for people; re-discovering uniqueness; re-connecting with nature; re-inventing smart public services and re-imaging governance and partnerships. An ESPON Policy Brief on the Role of SMST in Territorial Development and Cohesion from 2024 asks for integrated and place-based policy interventions in the fields of diversification and smart specialisation, provision of services and cooperation with functional areas.
How do European countries support SMST to fulfil their potential roles?
The important role of SMST is not always translated into dedicated policies but support is often addressed within wider policy approaches (regional, urban, spatial planning, fiscal equalisation). However, there are also many examples of dedicated support mechanisms including measures supporting investment, networking and capacity building.
- Investive measures can focus on town centre development (Scotland), wider regeneration (United Kingdom) including support not just for economic growth but also wider quality of life (Poland, France). EU Cohesion Policy also offers a range of options for investive support for SMST.
- Networking measures encourage cooperation and partnership, recognising the benefit of knowledge exchange, especially peer-to-peer. The support of targeted thematic networks has become more common (Finland, Germany, Poland, France).
- A strong focus can be seen on capacity-building measures which is a recognition of the particular challenges faced by SMST in having sufficient capacity to act. This is critical in order to mobilise people and resources, navigate uncertainty and ‘punch above their weight’ in policy and project implementation (Germany, Poland, Netherlands, Norway, France).
We can see a strong focus on capacity-building, which is a recognition of capacity as a key bottleneck in the development of SMST. At the same time, traditional investment, e.g. in infrastructure, continues to play an important role, but investments are not carried out in isolation. In fact, we can see that in most cases, different approaches are combined, i.e. several countries target more than one dimension, e.g. by combining investment with networking, or networking with capacity-building activities. This is done either through separate tools or as part of the same framework. In France, the Small Towns of Tomorrow initiative even combines all three dimensions – investment, networking and capacity-building – under the same umbrella. We can see this also at EU level, where Cohesion Policy investments, URBACT networking and European Urban Initiative (EUI) capacity-building are all linked.
What are the main challenges for SMST policies to be effective?
The implementation of policies for SMST fact several challenges, some of which are linked to their specific characteristics, such as their size and related limited capacities and funding.
Insufficient capacities. The key challenge is insufficient capacities in SMST. This expresses itself in two ways: quantitatively and qualitatively. First, many SMST have very few human resources, especially outside of the SMST’s core tasks. In practice, this means that many SMST have limited or no staff time available to engage with policy measures, prepare proposals in competitive bidding processes, oversee projects etc. (Austria, Germany, United Kingdom). Second, there are issues related to having the appropriate expertise to implement complex projects that would be supported by policy measures. As raised by German SMST, the high administrative demands associated with the submission and processing of applications present many potential beneficiaries with almost insurmountable hurdles. These challenges are especially problematic as, similar to the challenge of funding, the SMST most in need are likely those experiencing the greatest capacity issues.
Limited funding. The challenges related to the lack of funding include the funding available for policy measures, but also limited own funding available in SMST. In Finland, while the regional cities programme has been generally evaluated as successful there is limited or a lack of earmarked funding for measures supporting SMSTs. In many countries, including Austria, Germany and the United Kingdom, constrained municipal budgets are limiting the scope for SMST to participate in measures requiring co-funding. This is particularly problematic, as some of the SMST most in need (e.g. some at the forefront of the UK’s levelling up agenda) are also those experiencing the biggest financial problems.
Governance arrangements. In the light of complex and country-specific governance arrangements, there is a need for governance models that involve SMST to a greater extent. This has been raised in Italy and the Netherlands. In the latter, SMST networks have been calling for a stronger recognition as valuable partners, something that has been recently acknowledged by the “Progress Report Action Agenda Strong Governance 2023-24”. Some countries face limited willingness to cooperate amongst local authorities (e.g. Austria) and the challenge of fragmented governance structures, e.g. Switzerland with its strong municipalities and cantons. This complicates cohesive policy implementation and requires improved coordination and strategic alignment.
Insufficient focus and lack of competitive elements. Some policies suffer from a lack of territorial focus in targeting the SMST most in need. There can be a redistribution logic over a competitiveness logic, resulting in broad territorial coverage. This has been experienced, for example, in Portugal, where Cohesion Policy-funded measures for SMST are designed to cover the whole territory. Associated risks are a homogeneous mobilisation of public policies, i.e. different territories making very similar choices of priorities instead of developing genuine place-based solutions. SMST measures are not always compatible with the diversity of socio-economic realities if all municipalities are being supported equally, whereas objectively, they are not equal. Some countries have used procedures to identify the territories/SMST most in need (e.g. Poland) or distinguish between different types of SMST (e.g. Germany by differentiating between central and peripheral regions). Still, there is a reluctance to use positive discrimination and make choices.
Lack of evaluation evidence. There is not only a limited amount of evaluation evidence of how more general regional policies support SMST, but there is even less evaluation evidence for specific policies for SMST. While this is understandable due their comparatively recent launch, it poses a challenge to tailoring effective support measures for SMST. Nevertheless, there are a limited number of recent evaluation examples, e.g. from Finland and Poland. In Finland, the Regional City Programme was evaluated in 2024, emphasising the value of the networking activities but also noting the difficulties in measuring longer-term impacts of the activities or the durability of the networks. In Poland, there are ongoing evaluations of the various initiatives noted above, including an assessment of the Centre for Advisory Support that highlights the complexity of finding the optimal form of cooperation in the targeted territories. There is also some evaluation evidence coming from the EU context, where 2014-20 Cohesion Policy support for the territorial dimension was evaluated. However, this was not specifically targeted at SMST.
Stefan Kah, Knowledge Exchange and Research Fellow, European Policies Research Centre, The University of Strathclyde, Glasgow, United Kingdom.