Select Committee on European Union Sixth Report


166.  Clearly, for some people, or in some circumstances, choosing a supplier who comes from another Member State will be a matter of concern. Just as with any new choice, for example choosing a new domestic electricity supplier in the circumstance where you have never previously had that choice (or never exercised it), consumers may be wary. A few scare stories in the press may be enough to dissuade others from trying out new suppliers in this way. The same may well operate for businesses also (as in the famous adage "No one ever got fired for choosing IBM"). Unnecessary caution could stifle the growth in cross-border supply of services.

167.  It should also be borne in mind that no-one will be forced to buy services from a business established in another Member State but providing its services on a temporary basis in another Member State. It will be a matter of consumer choice for the consumer. Such service providers will inevitably have to work harder to persuade customers that it offers a good quality, reliable service and value for money. Critics of the draft Directive sometimes appear to give neither consumers or service providers too much credit for rational behaviour and enterprise.

168.  Problems might arise in the area of poor work, or inadequate safety procedures or even simple lack of knowledge. What does the draft Directive propose in order to address such problems?

169.  Article 26 deals with information provision to service recipients. Member States are charged with making information available on name, address, registration and authorisation particulars, professional titles, VAT registration, etc. The information may be supplied by the provider, or through other means. The Member State is also required to ensure that some details, such as service features, price, etc are also supplied. Articles 27 and 28 relate to professional insurance, guarantees and after-sales guarantees. Where particular risks to health or safety arise, Member States are required to ensure that providers are covered by professional indemnity insurance.

170.  As regards quality, "Member States shall, … take accompanying measures to encourage providers to take action on a voluntary basis in order to ensure the quality of service provision …" (Article 31). Member States are also enjoined to give each other mutual assistance in respect of points of contact, speedy supply of requested information, confirmation that a supplier is established and exercising its activities in a lawful manner, etc. (Article 35). In particular it should be noted that Member States are responsible for supervising their suppliers who are operating temporarily in another Member State under the Country of Origin Principle.

171.  Nevertheless, significant concerns remain. In evidence, whilst some welcomed the idea of "single points of contact", several were concerned that the proposal would become an additional tier of bureaucracy, complicating the administrative procedures. There was significant concern that there would be no, or inadequate, supervision of enterprises operating in another Member State on a temporary basis, and further that this would have an impact upon high quality suppliers who would be tarred with the brush of "cowboy" operators.

172.  We put these concerns to the Minister. We asked "how you currently think the Mutual Assistance Framework would work". The Minister's response emphasised the preliminary nature of the Commission's thinking on this subject, along with the need to ensure that any solution did not lead to more bureaucracy. He also pointed to the SOLVIT tool[47], something raised by others, in particular Mr Harbour (Q 424) in discussion. The Minister asserted that "the information necessary [for provision of Mutual Assistance by the UK] largely exists within the Government or regulatory sphere …" (DTI supplementary written evidence).

173.  We further enquired as to how the UK Government would know whether and when a UK-established business is undertaking "temporary" activities in another Member State. The evidence that we received on this point was not sufficiently specific to allow us to understand fully how the UK Government planned to address this issue (DTI supplementary written evidence).

174.  The United Kingdom may be less prepared in this area than other Member States, by nature of the general business surveillance regime. In Member States where there is considerable regulation of service activity and providers, regulatory authorities are likely to have a clear picture of the set of providers and some further information about, or at least indicators of, their competency. In such Member States, the problem may be more the consolidation and simplification of this information where it is requested in different ways across various levels of bureaucracy (central, local, etc), so as to comply with the "single point of contact" requirement.

175.  In the United Kingdom, for better or worse, a less regulated regime operates. No Governmental body (we believe) keeps a list of hairdressers or plumbers, for example[48]. If this is so, a response coming from another Member State as to a particular operator engaging in hairdressing there on a temporary basis may find limited information is forthcoming from the Single Point of Contact or from a mutual assistance provision (the DTI?) in the UK. Much depends upon how these matters are organised and much will need to be done to support UK SMEs seeking to export their services within the EU. We are doubtful that the changes the United Kingdom may need to make in registering or providing information on service businesses that wish to trade in other Member States on a temporary basis has been fully grasped.

176.  More generally, it is clear to us that the mechanism of Mutual Assistance at present lacks an incentive structure on Member States that would make it work effectively and swiftly. If the Service Directive is to have an impact, it is necessary that greater attention is paid to these important issues of confidence-building.

177.  In this respect, we welcome the concern of the Committee on the Internal Market and Consumer Protection of the European Market (e.g. Recital 38) to ensure that adequate supervision of service providers is effected. However, we are at the same time anxious to avoid issues of over-regulation and of possible bias against providers from another Member State. Therefore, it is not clear to us that their proposed solution of supervision by the country of destination is necessarily the best approach.

178.  More generally, we view this area as one of the rather under-explored aspects of the draft Directive.  

47 Back

48   Of course, CORGI has a list of plumbers authorised to do gas-fitting. But there are many non-CORGI providers of plumbing services. Back

previous page contents next page

House of Lords home page Parliament home page House of Commons home page search page enquiries index

© Parliamentary copyright 2005