Oulu, Finland’s 7th largest city, lies on the same latitude as Iceland, the southern tip of Greenland and Fairbanks, Alaska. It is however in central Finland and there’s an awfully long way you can travel north.

Students across the country are celebrating penkkarit marking their graduation from school with processions through the towns involving music, playing tricks on your old school and the throwing of sweets to the watching crowds. This ceremony is about a hundred years old and goes back to the time when the few students who expected to go on to higher education would have to go to Helsinki for their matriculation exams and their departure was a major event. These days, students from across the country expect the same degree of education wherever they happen to live in the country, and like other public services, it’s provided to a high standard to all Finns.

However, the delivery, and particularly the cost, of providing high quality public services is coming under intense scrutiny as the pan European recession bites. Just like at home, the structure of local government is under review as a way of saving costs. And, just like at home, the debate is about whether to achieve the reductions by way of a top down re-organisation or more organically through a series of local mergers and co-operative working.

Before 2009, Finland had around 440 local authorities, a total which has dropped by about a hundred through local mergers. The governmental working group has said it wants to see a reduction to 70 regional governments serving populations of around 150,000 as a way of addressing high levels of debt in some localities. Opponents fear that access to services will be jeopardised by such a move, and before you rush to compare sizes with the UK, remember that up here in Lapland, population densities struggle to reach 2 people per square kilometre. From the point of view of Helsinki taxpayers, they may feel reluctant to keep on subsidising their northern neighbours in the same way as before. The Association of Finnish Regional Authorities have made points which I remember making myself in the English context, namely that it is very difficult indeed to predict savings which might be made from mergers given the inevitable short term costs and the problems inherent in modelling five, ten or twenty years hence.

Finland has its share of economic woes. In 2000, there was a trade surplus of 13b euros; last year there was a 3.6b euro deficit. The coalition government involves the Social Democratic Party, who are unsurprisingly reluctant to support pension reforms which would move the retirement age to 63, and a high profile banker, Bjorn Wahlroos, is arguing that unemployment benefits are too high to give an incentive to work. There are calls for de-regulation of the labour market and selling off of Government stakes in assets such as Finnair.

* Baroness Ros Scott is a Liberal Democrat member of the House of Lords, a former Party President and now President of the Association of Liberal Democrat Councillors.