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European Standing Committee C Debates

Services of General Interest

European Standing Committee C

Wednesday 1 December 2004

[Mr. Jonathan Sayeed in the Chair]

Services of General Interest

[Relevant Document: European Community Document No. 9206/04.]

4 pm

The Minister for Trade and Investment (Mr. Douglas Alexander): I welcome this opportunity to debate the European Commission's White Paper, Green Paper and public consultation report on services of general interest. It may assist the Committee if I briefly run through the chronology of those documents.

In May 2003, the Commission adopted a Green Paper on services of general interest, which launched a public consultation on how best to promote the provision of high-quality services of general interest in the European Union. The Green Paper invited comments on the EU's overall role in defining the public service objectives of services of general interest and on the way in which such services are organised, financed and evaluated. It included the idea of developing a common set of obligations at Community level and asked whether a general Community framework for services of general interest was desirable.

In the White Paper published in May 2004, which draws on the Commission's report on the consultation of March 2004, the Commission draws some conclusions about the debate so far. It says that it will aim to

    ''ensure that the European Union continues to make a positive contribution to the development of services of general interest as part of the European model, while respecting the diversity of traditions, structures and situations that exists in the Member States.''

On the desirability of a Community framework, the White Paper concludes that it is not yet appropriate to submit a proposal for a framework directive. The Commission states, however, that it intends to re-examine the issue once the constitutional treaty enters into force.

The Government are committed to the delivery of high-quality public services, and we have therefore welcomed the debate on the respective roles to be played by the EU and the national authorities. At a European level, the United Kingdom has continued to recognise the valuable work undertaken by the European Commission in policing the single market and competition rules, which apply to economic services as defined in the treaty and interpreted by the Council, and the work undertaken by the EU as a whole in setting common public service obligations in the context of market-opening measures in the utilities and transport sectors.

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Services of general interest should deliver the best deal for their customers and other stakeholders. Indeed, we emphasised in our response to the Green Paper that the public reform agenda in the United Kingdom seeks to ensure the development of high-quality services of general interest for our citizens. That approach is based on a number of principles. First, the job of the Government and the devolved Administrations is to set national standards that are designed to ensure that citizens have the right to high-quality services wherever they live. Secondly, those standards are best delivered by devolving responsibility to the front line. Thirdly, more flexibility is required for public service organisations to deliver the diversity of service provision needed to respond to the wide range of consumer and customer aspirations. Lastly, public services need to offer expanding choice.

In the Commission's Green Paper, the key question was whether

    ''a general Community framework for services of general interest is desirable''.

We responded to the consultation by emphasising that the difference between the services offered to citizens in member states and in the sectors themselves means that we are unconvinced of the value that would be added by a horizontal framework directive on services of general interest. It is difficult to define common principles with respect to concepts such as affordability, which unite the different services of general economic interest. Furthermore, sector-specific regulation continues to provide a more satisfactory approach than the horizontal framework directive on services of general interest.

For that reason, while we welcome the Commission's statement that it does not consider it appropriate to submit a proposal at this point, we acknowledge that the added value of the horizontal framework, as compared with the sector-specific approach followed so far, has not been demonstrated. Nevertheless, we shall ensure that we keep in close touch with the Commission on the subject.

The Chairman: We now have until 5 o'clock for questions to the Minister. I remind hon. Members that questions should be asked one at a time. There will be ample opportunity for individual hon. Members to ask more than one question.

Mr. Graham Brady (Altrincham and Sale, West) (Con): I am grateful to have this opportunity to discuss an issue that is extremely important for a swathe of the economy, including private sector interests and, potentially, public service providers. The Minister and I do not always agree by any means, but I am pleased to say that I endorse the view that he has set out and which the Minister for Industry and the Regions set out in a letter to the Chairman of the European Scrutiny Committee on 29 March 2004. In that letter, she said:

    ''the Government does not support a Framework Directive. The Green Paper did not make a proven case for one, the variety of SGIs is such that provisions of a common directive would either have to be so vague as to have no material effect, or risk cutting across current sector-specific regulation, and a Directive would

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    limit the flexibility of the EU Member States and regions to develop innovative delivery of public services and to conduct further market opening measures''—

[Interruption.] Hon. Members should contain themselves.

The Chairman: Order. I remind hon. Members that this is an opportunity for questions, not debate.

Mr. Brady: I am very grateful for your help, Mr. Sayeed, and your strictures. I have many questions to ask.

Given the Minister's assurances and those of the Minister for Industry and the Regions, to which I have referred, will he comment on the views expressed by the Assembly of European Regions in its statement on 28 November? Will he explain the implications of a horizontal directive for Community law provisions concerning the big network sectors, which the assembly said has been tried and proven? Does he share its view that a general framework of Community law for services of general interest is

    ''neither possible, from the point of EU competences, nor sensible, considering the diversity of the services''?

The Chairman: I thank the hon. Gentleman. He has said enough for one question.

Mr. Alexander: I shall endeavour to keep my answer briefer than the question. As for what the hon. Gentleman said about the Assembly of European Regions, it must make clear its points. I wish merely to reiterate what I said in my introductory remarks: we remain convinced that the sectoral approach is the correct way to advance and make progress. The suggested aspiration of achieving a horizontal degree of legal certainty is not one that we are convinced of at this stage.

Tony Cunningham (Workington) (Lab): As the Minister knows, next year the United Kingdom will have the presidency of the G8 and the European Union. Will the proposals have an impact on international trade, especially with regard to UK policy on the development of Africa and the third world, given that Africa, in particular, will be at the top of the agenda for the G8 and the European Union?

Mr. Alexander: I am grateful to my hon. Friend for asking that question. As the Committee will know, given my responsibilities for trade investment and foreign affairs, that subject is close to my heart.

The matters under discussion bear directly on the internal market, and in that sense, there is no direct read-across at first glance, but I wish to make a couple more points. We are discussing a single market comprising about 480 million people. Clearly, there is everything to be gained for Britain's prosperity not only by aspiring to higher growth and productivity in the European Union, but by ensuring that greater prosperity in the single market does not exclude the capacity for effective trading relationships not only with Africa, but with the Caribbean and other developing countries.

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In that regard, I was greatly heartened by the article in The Guardian this morning by the former Member of Hartlepool, who made clear his determination as the new European Trade Commissioner to advance a pro-poor agenda, as he described it. I certainly concur with him that one of the greatest challenges of the 21st century is to make sure that we not only continue our work on aid and development, but continue our efforts to ensure that the Doha development round delivers for the countries involved in the way that my hon. Friend the Member for Workington (Tony Cunningham) described.

Richard Younger-Ross (Teignbridge) (LD): In his response to the Opposition spokesman, the Minister said that it was appropriate to stick to a sector-by-sector approach. Does he agree that no additional powers are required by the European Union in the area of general services?

Mr. Alexander: In the first instance, it might be of assistance to the Committee if I clarified some definitions. When I came to the brief on these matters, I had to be clear about the meaning of the term ''services of general interest'', which I take to be the basis of the hon. Gentleman's question. We must recognise that that term cannot be found in the European Union treaty, but is derived in Community practice from the term ''services of general economic interest'', which is used in the treaty. It is broader than the latter term, and covers both market and non-market services that the public authorities class as being of general interest and subject to specific obligations.

The wording gives the Commission the power to bring forward proposals in that area to establish principles and set conditions on which the operation of services of general economic interest should be based, but that is subject to very important safeguards, which we support. Most notably, they include the recognition of the competence of member states to provide, commission and fund such services. As such, the terms of the constitutional treaty in that area are consistent with the approach that the British Government have adopted to date both in advancing the case that significant progress has been made by a sectoral approach and remaining unconvinced that there is merit in the more horizontal approach that was mooted in some of the discussion papers.


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