Public procurement should become the driver of new technology developments and the main vehicle for economic recovery, Malcolm Harbour MEP, the new head of the European Parliament’s internal market committee, told EURACTIV in an interview.
Malcolm Harbour is a UK Conservative MEP and chair of the European Parliament’s internal market and consumer protection (IMCO) committee. He is the European Conservatives and Reformists (ECR) group’s only committee chair.
How did the first session of the new European Parliament go for the European Conservatives and Reformists, your new group?
I am the only member of the ECR group to have a committee chair, which I am very privileged to have, and of course it is one of the key legislative committees in consumer and economic policy. Part of my task within the group is to help weld our team into a very cohesive and effective force in all the legislative committees.
We’ve got some very good and very experienced people in the new group, who come from some very interesting backgrounds: business, academic and public service.
Who are you thinking of?
People like our Hungarian colleague Lajos Bokros – who is a professor of economics, Vicky Ford, Kay Swinburne and Julie Girling, ladies who have a lot of business experience. Ashley Fox is also a new member. So we have got a good team. We have some fresh faces. So we have to start working together, and that’s important.
As a small group we have to perform at committee [level], and for small groups there are plenty of opportunities to be effective at committee. We need good coordinators, good shadow rapporteurs, in all the key dossiers. So within the group I have a sort-of leadership role there, which I will carry out.
What is your perception of the internal market and consumer protection (IMCO) committee? Much of the committee’s work will be about implementing existing directives, but there are also very hot dossiers like financial services. The Commission has just proposed two new directives, one on financial supervision and the other one on alternative investment.
The lead responsibility for the proposed new directives you have mentioned will continue to be the economic and monetary affairs committee. Our role on financial services dossiers is primarily on consumer financial services dossiers.
Obviously we have been involved in aspects of consumer finance, notably we did the Consumer Credit Directive; retail financial services – we gave an opinion on that; on mortgage finance – we gave an opinion on that in enhanced cooperation.
We have done some own initiative reports on consumer credit and responsible lending, and I suspect that that’s an area I will continue to pursue very strongly, because it remains quite a controversial issue. A lot of people have attributed responsibility for the economic crisis that we have had to irresponsible lending to consumers.
In order to make responsible lending a reality there needs to be regulation. How do you see the framework for that?
Well, I think the first question to ask is, ‘Is it something that needs to be a European competence?’ because at the moment there is not a huge amount of consumer credit crossing borders.
The Consumer Credit Directive is already intended to facilitate cross-border lending, and I think the framework provisions that have been put in the Consumer Credit Directive have so far proved to be OK, and member states are now transposing that legislation. For example, the UK government has just introduced some consumer credit provisions.
In that area we will obviously be keeping an eye on that as a first provision. We will see whether there is a case for any harmonised European law, because the problem with that is actually getting the right balance.
If you introduced some harmonised law in the area of responsible lending – which maybe requires quite fundamental changes in law in member states, and really only a relatively small number of consumers benefit from that, as essentially they are already protected by existing law, and there is not a lot of cross-border trade – then it is not necessarily a very popular thing to do with member states, nor is it necessarily a good way to use legislative time.
We need to be focusing on the things where we are going to get real consumer benefits by having harmonised systems at European level, and particularly in areas where there are an increasing amount of cross-border transactions, which we want to encourage. That’s the core of the consumer rights proposals on the table.
The Commission is very keen, and we support them in trying to improve the climate for business, particularly smaller business in dealing with consumers across borders. Under the provisions of the Rome Convention, a company has to essentially comply with 27 different sets of consumer law in different countries, and allow consumers to have their rights, which they are entirely justified to have, in different countries. This is the idea of the Consumer Credit Directive.
Whether it achieves that or not in its present form, or whether it is targeting the right thing or not: this is the aspect that we are looking at. Of course, we started the process of looking at it under Arlene McCarthy’s leadership, because we decided not to rush and do a first reading, but to do a proper analysis of the Commission strategy, and to take a look at their impact assessment.
That has thrown up a lot of interesting issues, and the British House of Lords select committee has just produced a report that we have to take a look at. One of my first priorities will be to discuss with the coordinators of the political groups how they want to move forward with this dossier.
What’s your idea of moving it forward?
Well, I am the chairman, so it’s up to the political groups overall.
As a leader?
My task is to lead the process and get it to work satisfactorily. I remain worried that this dossier does not add enough value for the complexity that is involved. I wonder whether it is also not ambitious enough, because I think there are some areas that could be included in this, things like package travel, and the Commission is already consulting on looking at areas like digital products, where there is a critical amount of cross-border traffic.
The question we need to put to the Commission is, ‘Should we be pressing ahead with this at this stage?’ What do we need to give it to give it added value? How do we achieve the benefits of business harmonising without undermining the existing consumer rights in different countries, which consumer associations are very worried about. Can we achieve that balance? I think that’s question one.
If we can achieve that then we can move forward, and we should move forward. Then on the other hand if we can’t, then we should look at some alternative strategies.
I have not finally decided, I must say, because I have looked with interest at the results of the hearings, and the work that Arlene McCarthy has done on the working document. I am not at this stage giving the Commission’s package my unreserved support. We are going to have a serious look at the strategy behind it.
Taking a broader perspective, the process has convinced me how important it is for the parliamentary committees to really take a proper look at the Commission’s impact assessment of any proposal that comes before them, because this dossier is a very good example. If the strategy is not right and you are not happy with the strategy, then no amount of amendments to the Commission’s proposal will make the strategy right. There is no point in tinkering around with the detail unless the core proposal is focused properly.
One of the things I hope the committee will agree to is that we should ask the rapporteurs, certainly on all major dossiers, that when we have a first exchange of views on a proposal, part of that exchange of views will be for the rapporteur to present his or her perspective on the impact assessment, and to say whether, in his or her view, the proposal is strategically sound, and the impact assessment has been properly done. That would save a lot of time later on and we would get a better quality of scrutiny to do that.
If the Commission felt that its impact assessment was going to get much more public visibility and debate, then we would get much better impact assessments. So I think it is a win-win for everybody.
Is that a way of changing the way you are going to work? Is it a way of organising the work of the committee on dossiers?
I do not think you need to change the way the work is done fundamentally. It is just encouraging the rapporteurs to do that as part of the normal process. The rapporteurs’ task is essentially to produce a report on behalf of the committee, and to manage the whole of the dossier – the amendments to the votes, etc. Someone from the staff of the committee will be allocated to do that. This will be something that I will suggest because it is not a formal part of the procedure.
But I will suggest that, at a first exchange of views, we should have a chance to hear the rapporteurs’ and the shadow rapporteurs’ views on the impact assessment as a first part of the process.
In other words, I will just put that in at the beginning, because I don’t think it will necessarily prolong the process, since will then the amendments will tend to be a bit more focused as a result of that.
I sometimes feel people express disagreement with the strategy of a proposal, but then do not criticise the impact assessment, and then we have amendments coming in from all sorts of directions, and as a result you come up with amendments that do not necessarily improve the quality of the legislation. We have a task to improve the quality of the legislation.
What are the other dossiers that are on your plate that you are going to prioritise?
There are quite a number of other detailed technical dossiers that are coming through at the moment. We will continue to get a steady stream of dossiers around single market areas – I mean, textiles is one we have at the moment, and there will be different product directives.
In terms of the really big strategic dossiers, you are right in saying at the moment we don’t have any on the horizon. Therefore, an early priority for the committee will obviously be to continue our work in monitoring the Services Directive’s implementation, which is due on 28 December.
Secondly, we will also be monitoring carefully the implementation of the goods package, which is very strongly complementary to that.
Thirdly, the whole area of enforcement of consumer rights and consumer acquis: the commissioner has put forward a number of working papers, and I think that is an area where we could consider an early initiative report about enforcement of consumer law and so on.
Then I think there is clearly work to be done on the monitoring and operation of other crucial internal market dossiers; one being public procurement. We did a report on using procurement to stimulate innovation. There are other aspects about how well public procurement is working, and whether there is changes needed. That is something we may want to take a look at earlier, and again it depends on the priorities the coordinators agree to.
Similarly, the mutual recognition of professional qualifications is another building block here, particularly because with the increasing development of cross-border services that we hope will result from the implementation, and a lot of those will involve professional services being delivered cross-border, the important complementary work is the mutual recognition of qualifications. So we will need to look at that as well. There is going to be a lot of work in all of those areas.
The other thing that has been an important part of our work over the last five years has been our international work. Increasingly we are dealing with consumer product safety issues, the product safety of imported products, and more alignment of single market regulation in key markets.
The single market initiative is one of the partners in the transatlantic legislative dialogue, as are a number of committees, particularly economic and monetary affairs. We would definitely want to continue with that.
Similarly we’ve been doing a lot of work on product safety issues, and we went to China last year, which was an important visit, which is about toy safety. But it is not just toy safety that is of concern here. Again that is a sort of monitoring role.
If the Lisbon Treaty is ratified and implemented, how do think that will change the committee’s work? Are there any big changes that you see?
I am not so sure I see so many big changes for us, because Lisbon has not really changed much for us. If the Lisbon Treaty is ratified, in terms of the co-decision dossiers and so on, there is not a great deal of change as far as I can see.
One thing that is new, which I shall mention, which is going to play a far more important part of our work over the next five years, is the full impact of the comitology decisions on the regulatory procedure with scrutiny, because the legislation is now being steadily transposed, and the technical working committees that are implementing the technical provisions of this legislation are now starting to get to work.
That means that there are now a whole load of decisions that will come through to the responsible committees, which we then have to monitor and ensure that the implementing provisions are not undermining the political intention of the proposal. And obviously interested parties may well want to come to the Parliament to say, ‘the internal committee implementing this is going much too far, this wasn’t what you intended’.
Now we have got an idea of the scale of the workload on that, but that is something where we are going to have to look at our procedures of working in the committee, and maybe allocating a number of members of the committee to groups of dossiers, because there are a lot of dossiers, and that’s going to be a completely new element of work I think.
I suspect we will be one of the lead committees on that, because we deal with so much legislation that does have technical implementing measures. That will be a challenge. I suspect that we will have to develop some new procedures for handling that. Also to make it transparent and interesting to the press and to outside observers, because it can sound very dry.
Do you think a temporary committee on the economic crisis will affect your work in any way?
We should definitely have an impact on it. But I would say the direction of our work, and the committees’ work historically, has been completely aligned with the way we should be using the single market to respond to the economic crisis. The last thing we want in reviving the European economy is to resort to protectionism.
We actually want to release the power of the internal market in a more fundamental way, in terms of encouraging more people to take advantage of it, to create new jobs and provide more opportunity for innovation. That is why the single market for services is so important, because what is happening on the ground is that the requirement to screen all the member states’ legislation, and remove the provisions that discriminate against service providers from other countries, is also causing countries to repeal legislation that had also placed restrictions on their own internal businesses. So it is actually improving the business climate significantly for entrepreneurs.
The other thing that it is doing is […] implementing the requirement to provide single points of contact for business to find out about the procedures they need to follow to establish new businesses. Again that significantly improves the internal flow of information within a country, because business organisations are saying, ‘well look, if you don’t improve the internal services we have for business, business coming in from outside the country will have better information than we do’. So we are starting to see the impact of that, and this availability of information is going to have a really significant effect, particularly on small enterprises.
When I was in Prague in January for a very interesting seminar that the Czech government promoted about the implementation of the Services Directive, there were a lot of officials from national governments who were leading the implementation, and talked about it.
There were two interesting things about it. One, there was a sense of competition there that people are really engaged with this process. They found it very challenging and stimulating, but also they are using new technologies that are indispensable in making this information available, and also it is going to be multi-lingual.
For example, if you want to establish a restaurant in Portugal, you can now go onto the Portuguese government’s website, and in English, you can see all the requirements you need to comply with to start a restaurant in Portugal, and you can do that from wherever you are. So if you are Portuguese and live in Lithuania and feel like going back to Portugal to open a restaurant, you can do all your research online, and then you go straight there and do it. These are all very practical things.
Is it also interactive? Are users able to ask questions and get answers?
Yes, as far as I know, there is a facility to ask questions. There are also facilities to complete the formalities as well – complete the business registration, register employees and set up tax accounts. It allows you to do it as quickly as possible.
All these exciting developments, these are the things to actually respond to a crisis. There will be many people who will lose jobs in some, let us say, traditional industries, who perhaps would see a career as a small entrepreneur as a next step. They have very good, well-developed skills. They have been at a big company. They perhaps want to turn their hand to running their own business. They are the sort of people we should be encouraging. That is one of my responses.
The other issue is the whole issue about public procurement, which is underused as a vehicle for economic recovery. Particularly we have to encourage public buyers, who are buying infrastructure, energy solutions and so on, to be much more ambitious in using that investment to encourage new technologies, and new business.
For example, if you were going to replace a heating plant in a hospital, you might choose to come up with a much more advanced energy policy than just going and buying a simple, off-the-shelf piece of equipment. What is needed is for the buyers to be prepared to specify the outcome that they want, which is right at the limit and beyond of existing technology, and then go out to tender for some solutions.
For example, I saw an interesting example in Holland. In Holland, they have to invest a lot of money inspecting all the dykes for their integrity and security. So they put out a tender to see if there would be alternative solutions for doing this by using different sorts of technology. It might involve satellite mapping, or communications on the ground using sensors, or whatever, and they received four or five completely different solutions, and then chose a solution, which I think will be developed further.
But what is interesting in that process is the companies who have the first development funding have, in many cases, gone on and sold their ideas to somebody else, because they may not have been perfectly suited to monitoring the dykes, but they are actually quite good at monitoring street lighting or whatever.
So what you have done is you have used public capital to energise businesses to produce new ideas. You help fund the development stage to get that idea moving forward, they can then take that and develop it into a salable product. These are the sort of practical things that we should be doing in response to a recession.
It is surprising that you should be so vocal on this issue?
We did the report already, which was my own initiative report.
The thing about committees is that a committee has a sense of ownership about projects it has worked on, which we should encourage, because we are partly responsible for that. We want to see how it is being implemented, and we want to follow it through. We want to help resolve problems if there are aspects that have not worked.
Guy Verhofstadt has proposed having a single European financial supervision authority. He wrote book about it, he is pushing for it, and he says unless we do that, the single market for financial services will be completely disintegrated.
I did not see the evidence for that. I will wait to see his evidence for it. I think it is entirely against the way we have been working, in terms of sector-based regulation.
I am not so familiar with financial services; I am much more familiar with telecoms, for example. Which I think is another really important industry to get the regulation right – where it is clear we want to have consistent regulation from country to country.
But what is equally clear, and it is true from financial services and for telecoms, is that in every single country, the market is in a completely different stage of development. In some cases, you have countries with major international players and lots of exporters, and in other cases, you have much less developed markets.
You can deal with that most effectively if you want to have coordinated regulation by having a framework of regulations at a European level, which is implemented by independent regulators in each country, close to the marketplace.
The clever thing is to try and get the balance right to make sure the regulators are behaving consistently within that framework; that the regulators are properly resourced are able to do the market analysis, and are able to have the powers to intervene as appropriate in the market, but working on a common basis.
This is the de Larosière report’s proposal.
Yes, and I am absolutely behind that.
First of all, I think the telecoms strategy is the right one. As you know, we have had big arguments with the Commission, the Parliament had big arguments on this with the Commission, because the Commission actually wanted to have more centralised power over telecoms, and we turned them down.
Now, why Parliament should think financial services are different, and why Mr Verhofstadt should think that they are different, I am not at all clear. I don’t think there is a demonstratable difference there. But it is getting that balance of power right.
The Commission and the member states certainly think that the Commission should have powers to ensure that there is an internal consistency in that structure, but also ensure that the basic principles of the regulation are preserved. In other words, it is based on competition, and it based on minimum regulation. It has a strong element of consumer protection, and transparency in this case. In the case of telecoms, to ensure that offers are properly explained, and that you deal with anti-competitive behaviour. In a way you have exactly similar issues with financial services.