EU Afghanistan Cooperation Agreement on Partnership and Development - European Scrutiny Contents

12 Single Market Strategy

Committee's assessment Politically important
Committee's decisionCleared from scrutiny; further information requested; drawn to the attention of the Business, Innovation and Skills Committee and Culture, Media and Sport Committee
Document detailsCommission Communication on Upgrading the Single Market: more opportunities for people and businesses
Legal base
DepartmentBusiness, Innovation and Skills
Document Numbers(37237), 13370/15 + ADDs 1-4 COM(15) 550

Summary and Committee's conclusions

12.1 In October 2015, the Commission published its strategy for upgrading the Single Market ("Single Market Strategy" (SMS)), one of the priorities of the Juncker Commission. It proposes a mix of legislative and non-legislative initiatives to be tabled over the course of 2016 and 2017, which are grouped into the following three areas:

·  creating additional opportunities for consumers, professionals and businesses;

·  encouraging and enabling the modernisation and innovation that Europe needs; and

·  ensuring practical benefits for people in their daily lives.

12.2 The Parliamentary Under-Secretary of State at the Department for Business, Innovation and Skills (Baroness Neville-Rolfe) supports the SMS and considers that the Commission's priorities (including on services and better implementation and enforcement of Single Market rules) broadly reflect UK priorities.

12.3 Our previous Report, listed at the end of this chapter, sets out the detail of the SMS and the Government's position on it.

12.4 When we considered the SMS for the first time on 9 December 2015, we noted the intent of the package, aimed at improving the competitiveness of the EU, by removing remaining barriers to trade (particularly in services) and focusing on better implementation and enforcement of legislation. Given the far-reaching nature of legislative proposals expected in this area, we drew it to the attention of the Business, Innovation and Skills Committee and Culture, Media and Sport Committee and sought clarification from the Minister on a number of aspects of the SMS, including on what the Government was doing to address potential challenges in implementing such a wide ranging and ambitious strategy. In particular, whether:

·  the risks of potential duplication with other strategies (notably the Digital Single Market Strategy (DSMS)) are being addressed (ensuring a coordinated approach in line with better regulation principles);

·  enough is being done to ensure transparency of the policy formulation process and ensure that all stakeholders (and not just businesses) interests are being reflected (ensuring stakeholder engagement); and

·  the proposed compliance and enforcement tools, including the proposed 'services passport' are likely to get the necessary buy-in from Member States and not impose disproportionate burdens on businesses (ensuring better implementation and enforcement).

12.5 We thank the Minister for the comprehensive responses she had provided on each of the questions above. We reproduce the substance of this letter for ease of reference below, but draw attention to the following points.


12.6 We welcome the Minister's efforts to ensure that the different SMS initiatives "are implemented with pace and a high level of ambition", particularly in areas such as services, and that the Government is working to ensure that forthcoming Commission proposals adhere to better regulation principles.

12.7 We continue to regard it as imperative that proposals brought forward under the SMS and other single market related workstreams (such as the DSMS) complement and do not duplicate each other. While we take note of the Minister's comments on how the SMS and DSMS are complementary and differ in important respects, we highlight that 'offline' and digital or 'online' initiatives cannot be regarded separately. For example, the recent Commission proposal on consumer contract rights for the online sale of goods (presented under its DSMS) may have profound implications for 'offline' sales.[73]

12.8 We therefore welcome the Commission's intention to bring forward one single proposal to end unjustified geoblocking (that covers both the initiatives announced in the DSM package as well as the SMS), and urge the Minister to continue in her efforts to ensure that other cross-cutting proposals (for example on IPR enforcement, which also feature in both the SMS and DSMS) are coordinated effectively.


12.9 We welcome the Minister's efforts in increasing transparency in and accessibility to the policy formulation process for all stakeholders (not just businesses), by holding roundtable discussions, increasing stakeholders' awareness of the vast array of Commission public consultations and publishing Government's responses to such consultations online.


12.10 In response to the Committee's concerns on whether Member States' administrations will have the capacity to deliver proposals such as a 'services passport', which may be quite complex to implement in practice, or whether proposed market information/collection tools to help the Commission enforce the rules will secure 'buy-in' from other Member States and may place additional and/or disproportionate burdens on companies, the Minister:

·  reiterates the importance of "being 'smarter' with enforcement", underlining the work that the Government is doing to ensure that forthcoming proposals, including the 'services passport' and Single Market Information Tool (which would enable monitoring and facilitating enforcement of single market rules), meet better regulation principles;

·  notes widespread support amongst Member States on better implementation and enforcement; and

·  emphasises the Government's ongoing role in supporting the Commission and other Member States in this area, including by providing "expertise on running an effective SOLVIT portal".

12.11 Given the fundamental importance of the proposed 'services passport' and Single Market Information Tool, and acknowledging the implementation challenges ahead (both from a technical and political perspective), we request that the Minister provide regular progress updates on this 'better implementation and enforcement' strand (also see paragraphs 12.13 and 12.14 below).


12.12 We welcome the Minister's commitment to keep the Committee updated on forthcoming individual legislative proposals, including on geoblocking and a services passport, over the course of this year.

12.13 As highlighted in our previous Report, in scrutinising individual measures put forward by the Commission, we will pay particular attention to whether the policy proposals are evidence based, necessary and proportionate (in line with the Commission's better regulation principles), and the extent to which they reflect the Government's priorities.

12.14 We ask the Minister to provide us not only with regular updates on individual legislative proposals early on in (ahead of formal adoption of proposals by the Commission), and throughout, the legislative process, but to put each proposal in context as they come forward (for example how it fits in with the broader implementation of the SMS and DSMS). This wider context is particularly important given the fundamental role that effective implementation of this strategy and the DSMS are expected to play in ensuring wider reform in and competitiveness of the EU (as reflected in the European Council Conclusions of 18 and 19 February).

12.15 On the basis that the Committee receives timely, regular and comprehensive progress updates from the Minister on implementation of the SMS, and in order to focus attention on imminent legislative proposals, we now clear this Commission Communication from scrutiny. We draw the Minister's letter and our conclusions to the attention of the Business, Innovation and Skills Committee and the Culture, Media and Sport Committee.

Full details of the documents: Commission Communication on Upgrading the Single Market: more opportunities for people and businesses: (37237), 13370/15 + ADDs 1-4 COM(15) 550.


12.16 The detail of the SMS is set out in the Committee's previous Report, listed at the end of this chapter.

The Minister's letter of 11 February 2016

12.17 The Minister's detailed responses to each of the Committee's questions are summarised (and also reproduced in their entirety for ease of reference) below.


12.18 In response to the Committee's request that the Minister provide a clearer indication of how initiatives proposed under the SMS should be sequenced or proceed in conjunction with other Single Market related work streams and what is being done to minimise any risks of duplication (in particularly with DSMS initiatives), the Minister notes the complementarity of the various Commission workstreams, points out differences between the SMS and DSMS, and stresses that she is continuing to call for a coordinated approach to cross-cutting strategies, which she considers is reflected by leading Commissioners on the SMS and DSMS being present at the recent informal Competitiveness Council in January:

    "As noted in your report, some of the initiatives brought forward in the Commission's Market Strategy (SMS) build on and complement other work streams on the Single Market, notably the Digital Single Market strategy (DSM: published in May last year) but also other strategies such as the Capital Markets Union package (published in October last year). The Government welcomes these different strategies as we believe that together they can make a real difference to deepening the Single Market and thus to the EU's overall competitiveness.

    "We believe that whilst these strategies do build on and complement each other it is also important to recognise the differences between them. The initiatives set out in the DSM package, for example, are largely about facilitating the emergence of a new market and new technologies: The challenges faced by the DSM are very different from the ones faced by the traditional Single Market. I therefore believe that whilst there are some overlaps in both strategies they need to be treated as different initiatives.

    "We are continuing our engagement with the Commission, including feeding into their various public consultations, to make sure that the different initiatives are implemented with pace and a high level of ambition — this is in particular important on UK priority areas such as the services passport. We are also urging the Commission to make sure that any proposals adopted have a firm evidence base, are necessary and proportionate, and adhere to better regulation principles.

    "Furthermore, we will continue to call on the Commission to ensure that they take a coordinated approach to the proposals which cut across different strategies. We would not want to see wasteful duplication. There is strong evidence that the Commission recognises the need for taking a coordinated approach and to avoid duplication. The attendance of Vice-President Jyrki Katainen (Jobs, Growth, Investment and Competitiveness) as well as both Commissioner Elzbieta Bienkowska (the lead Commissioner on the SMS) and Vice-President Andrus Ansip (who is responsible for the DSM) at the Informal Competitiveness Council at the end of January is a strong signal that the Commission is coordinating efforts across different instruments and strategies. Furthermore, on the initiative to end unjustified geoblocking, which touches upon both the DSM package and the SMS, the Commission will bring forward, by the middle of this year, one single proposal which covers both the initiatives announced in the DSM package as well as the SMS.

    "However, whilst we will continue to push the Commission for pace and ambition as well as a coordinated approach on both the DSM and the SMS, we also need to recognise that the initiatives set out in both strategies are subject to the Commission's internal procedures, including impact assessments to comply with better regulation principles. This means that, at least to a degree, the timeframes for seeing concrete proposals will always remain uncertain."


12.19 The Committee previously noted that in view of the proliferation of public consultations already underway for the DSMS and expected under the SMS, there is a risk that smaller stakeholders (such as SMEs or consumers) may find it difficult to navigate or feed into such consultations, and asked the Minister to set out what the Government is doing to ensure that all stakeholders' interests (including wider civil society as well as businesses) are adequately reflected in any legislative proposals brought forward.

12.20 The Minister states that she recognises the importance of stakeholder engagement across the board, and sets out the actions she has taken to help ensure transparency of the 'policy formulation process', through roundtable discussions and the publication of Government's responses to public consultations online:

    "It is important to ensure that our stakeholders' interests are adequately reflected in any legislative proposals brought by the Commission. To help stakeholders engage with the issues within the consultations I held a series of roundtable discussions with representatives from different business organisations (e.g. digital start-ups, retailers, professional businesses services and the construction sector) to seek their views on the Government's priorities on the digital agenda and our Single Market agenda more widely.

    "The Government has continued to work with interested stakeholders (such as tech associations, small business associations, consumer rights groups, and competition authorities) on the consultations launched thus far under the DSM strategy. We have also used social media to raise awareness of these consultations and to encourage stakeholders to participate in the process. Furthermore, we have published all the UK consultation responses online for stakeholders to access easily and to make the policy formulation process more transparent.

    "In order to support the Commission's efforts to consult stakeholders my officials and I will continue to regularly highlight to stakeholders opportunities when they become available; such as the recently published public consultation on improving the service notification procedure."


12.21 The Committee noted in its previous Report that the SMS's focus on better implementation and enforcement of existing legislation, intended to support the wider better regulation agenda (of better and more streamlined legislation). It did, however, raise concerns as to whether:

·  Member States' administrations will have the capacity to deliver proposals such as a 'services passport', which may be quite complex to implement in practice, or 'buy-in' and resources to work with the Commission to monitor compliance with and enforce the rules (noting for example, that the effectiveness of existing informal 'dispute resolution' channels such as SOLVIT varies across the Member States' network); and

·  The proposed market information/collection tools to help the Commission enforce the rules may place additional and/or disproportionate burdens on companies.

12.22 The Minister responds as follows:

    "As noted in my Explanatory Memorandum, better implementation and enforcement of already existing Single Market rules is a priority for the Government - one of the reasons why the Single Market has, so far, failed to achieve its full potential is due to many existing rules having been poorly implemented and enforced (e.g. the Services Directive). I therefore welcome and strongly support the focus of enforcement in the Strategy; in particular the emphasis on being 'smarter' with enforcement i.e. by tackling the most economically significant barriers. As Commission President Juncker has said, we should be big on the big things and small on the small things.

    "There is general agreement amongst Member States that existing Single Market rules are not implemented and enforced as effectively as they should be. I am therefore confident that Member States will recognise the need for making available the necessary resources to work with the Commission to ensure effective monitoring, and hence implementation, of Single Market rules. The Government will also continue to work with the Commission as well as with other Member States to offer our support and help in this area, including our expertise on running an effective SOLVIT portal.

    "I have noted the Commission's intention to develop a Single Market Information Tool, which would enable them to collect information from selected market players. The Government believes that the Commission plays an important role in monitoring and facilitating enforcement of single market rules. However, we will carefully look at this proposal as it is developed in more detail to analyse how effective it will be in practice and to ensure it does not impose a disproportionate burden on business.

    "The creation of a services passport is something the UK called for in order to make it easier for businesses to access the single market, and I welcome the Commission's announcement in the Single Market Strategy that they will bring forward such a proposal. The details of both the scope and functioning of the passport are still being developed which makes it difficult to assess the delivery of the passport in practice. We are expecting to see more details on the proposal following the Commission's public consultation on the passport which will be published in the coming months. The consultation will give Member States and other stakeholders the opportunity to consider and comment on different policy and delivery options, thereby ensuring that the passport is designed in a way which minimises the administrative burden on both Member States' administrations and on businesses as well as increasing the chances of a successful implementation of the passport across different Member States."


12.23 The Committee further noted in its previous Report the importance of being provided with regular updates on SMS actions, particularly given the Minister's intention for the Commission's commitments to be delivered rapidly.

12.24 The Minister updates the Committee on proposals that the Commission is likely to bring forward this year, including "on some of the Government's priority areas such as the services passport, guidance on how existing EU law applies to the collaborative economy, and legislative and enforcement action to end the unjustified treatment of consumers based on their geographic location".

12.25 She expects Council Conclusions on the SMS to be adopted at the next Competitiveness Council on 29 February. She notes that the Council Conclusions will set out the importance of speedy and ambitious implementation of the actions set out in the strategy. She "strongly supports" the focus on SMEs, services, and implementation and enforcement of rules, as these reflect Government priorities to improve the functioning of the Single Market:

    "SMEs and start-ups: The conclusions will underline the difficulties faced by SMEs when trying to scale up across the Single Market and stress the importance of innovation and improved access to finance.

    "Services (including the creation of a services passport): The conclusions will highlight the need to reduce barriers to improve the competitiveness of the European services market.

    "Implementation and enforcement of existing rules: The conclusions will call on Member States to put more effort into the effective implementation and enforcement of Single Market rules."

12.26 The Minister notes that other actions set out in the SMS will be launched in 2017 and that the "Government will continue to engage with the Commission to influence the proposals they are going to bring forward; ensuring these reflect UK priorities, have a firm evidence base, and are necessary and proportionate".

12.27 She commits to providing the Committee with regular updates on the progress of individual proposals as they come forward.

Previous Committee Reports

Thirteenth Report 342-xiii (2015-16), chapter 1 (9 December 2015).

73   See Report chapter: Digital Single Market: Consumer contract rights for the online sale of goods, Twenty-Third Report 342-xxii (2015-16), chapter 5 (10 February 2016). Back

previous page contents next page

© Parliamentary copyright 2016
Prepared 2 March 2016