Parliament demands clarity on public services

Parliament tells the Commission to clearly distinguish services of ‘general interest’ from services of ‘general economic interest’ and to adopt legal rules accordingly.

Guaranteeing high-quality public services such as good schools and hospitals, clean water, safe public transport systems and reliable energy supplies is not only essential for improving EU citizens’ quality of life, it is also an essential component of the EU’s Lisbon strategy. 

Indeed, good public services can help to overcome social exclusion, strengthen territorial cohesion and improve the functioning of Europe’s internal market, thereby reinforcing our competitiveness. 

Sceptics of a more open approach to public services believe that relying on market forces alone will not suffice to guarantee services that are high-quality and accessible to all. They fear that subjecting public services to public procurement rules will lead to a race to the bottom with private providers seeking to cut costs, rather than invest in quality. 

The idea behind the report, initiated by Socialist MEP Bernhard Rapkay, is that a strict regulatory framework – defining common safety, consumer protection and environmental standards for all SGIs – is necessary in order to ensure that the public interest is safeguarded. 

Up to now, the Commission has resisted calls for cross-sectoral legislation on SGIs because it says that traditions and sensitive areas vary in each member state. 

The compromise report adopted by the Parliament’s Economic Committee also goes in this direction, rejecting Rapkay’s idea of establishing common rules for all SGIs, saying this is an issue for national, regional and local authorities. 

The report nevertheless called on the Commission to adopt “appropriate legislative initiatives” and requests specific directives on social services and healthcare. 

Finally, the report also clarifies funding rules for public services. 

Bernhard Rapkay, PSE Group member and rapporteur on this dossier said: “A legal framework for public services is long overdue. It is unacceptable for the ECJ to have to rule on a case-by-case basis whenever breaches of competition law occur.” 

“As a result of its flip-flopping in a legal vacuum, Europe is putting high-quality public services at risk.” 

“We are not proposing that any such legal framework should be carved in stone... What we all want is for our rubbish to be collected in the morning without having to wait for a judgement from Luxembourg on whether the right firm has been appointed to do the job,” he said. 

EPP-ED Spokesman Gunnar Hökmark welcomed the fact that the Economic Committee rejected the call for a general framework directive, saying this was “an important achievement”. 

“It is in the interest of consumers, taxpayers and employees that services of general interest can be open to competition, entrepreneurship and freedom of choice. The achievements of the internal market in areas such as telecoms and airlines are examples of how European economies, citizens and taxpayers have benefited from competition and development at the same time as new jobs have emerged in these areas," he said. 

Sophie in ´t Veld, ALDE member and shadow rapporteur, said: "This is a clear signal to the Commission not to come forward with a framework directive. Brussels does not need to define public services or decide on the way they are organised and financed. Leave that to the local authorities and Member States. If the application of market rules creates problems for the provision of public services, targeted solutions in the form of sectoral arrangements are preferable." 

With the gradual completion of the internal market, an increasing number of services that had previously been managed by public authorities are being opened up, bringing them under EU internal market and competition rules. 

While the liberalisation of sectors such as gas and electricity, postal services and telecoms has generally been accepted as a means to improve the quality of service and to lower prices for consumers, opinions are divided about the benefits of opening up other public services, such as healthcare, social housing and public transport. 

Under the compromise agreement on the services directive (see EURACTIV 31 May 2006), Member States agreed to facilitate cross-border competition by guaranteeing the 'freedom to provide services' across borders for all services except those that are of ‘non-economic general interest’. 

This raised a debate about which services should be considered of economic interest or simply of general interest and of how the latter should be treated. Current EU law gives no clear guidance on how to distinguish between services of general economic interest, services of general interest and other services – which means that it is not clear, in individual cases, whether and to what extent EU rules on the single market apply. Because there is no legal framework covering services of general interest (SGIs), any conflicts of interest or breaches of competition law are dealt with on an ad hoc basis by the EU’s Court of Justice. 

An own-initiative report put forward by the European Socialist Group called on the Commission to clarify the situation and adopt general rules guaranteeing that the liberalisation of SGIs will not negatively affect citizens. 

Political groups within the Parliament’s Economic Affairs Committee, on 12 September 2006, reached an agreement on this report, setting out what they believe to be the right legal framework. 

  • 26th April 2006: Commission adopted a Communication in which it says it will work towards clarifying 'social services of general interest'. A plan should be presented in November. 
  • 5 September 2006: College of Commissioners decides to establish an EU framework on healthcare services. A Communication is expected shortly. 
  • November 2006: 2nd reading of the services directive in Parliament and Council 

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