Should Europe set the rules of the game for public services?

Two MEPs debate Europe's role in services issue

Up until some decades ago, each member state controlled individually its policies, the size of its public sector and the provision of public services to its citizens. The European Union, with the establishment of the common market, created a new reality, allowing the free movement of services and thus affecting the state monopolies offering public services. By creating a parallel network of service provision in domains such as telecommunications, transport and energy, the EU introduced, indirectly, competition for public services. In fact, it allowed some member states openly to consider the ability of the public sector to provide services within the current structure and to incorporate new policies and measures - from public private partnerships in funding to privately run and publicly managed services - in order to increase their efficiency and to achieve their mission, offering high-quality services within the internal market.

It is not the Lisbon Strategy that opened the way for ‘revamping’ public services. The new reality for public services was created in 1987 with the signing of the Single European Act and the support of the then Commission president Jacques Delors, as well as many socialist prime ministers at the time, including the then Greek prime minister Andreas Papandreou.

In the past two years, the EU has been more daring in promoting the opening up of national public services. After the successful examples of sectors such as gas and electricity, postal services and telecoms, the Union moved towards a directive for services in the internal market. But this move triggered a long debate on the inclusion of some public services, raising reactions from vested interests in favour of maintaining the inefficiency of some public services while at the same time safeguarding their own prevailing market position. The confrontation has now moved on within the framework of the services of general interest debate. And I wonder: how will the status quo and the current structure of state monopolies protect citizens’ rights?

Sceptics towards a more ‘open’ approach to public services, whether these are services of general economic interest, social services or even health services, strongly oppose any change to the existing state monopolies in a competitive internal market. They preach that competition may hamper the benefits that public services now offer to all. But is this the truth? Is there really no more potential for more high-quality services that are affordable and accessible to all? Let us see the myths an internal market for public services is being set against:

• "Public services would stop being free for all." Public services were never for free. The delusion hides behind the tax payers’ annual contributions.

• "Public services would stop serving citizens in remote areas or people with special needs." Existing EU legislation has already introduced the principle of ‘universal services’ precisely so that such a mishap will be overcome.

• "Member states would stop providing high-quality public services." Even member states such as the UK and Sweden, with socialist governments, have began revising their policies, as the existing public sector structure has become rigid and inefficient.

At the same time, generalising is not the most, dare I say, efficient method of progressing. There are of course some public services that can only be provided by the state, such as public order. We should not mistake liberalisation with privatisation of the public sector, even though my personal viewpoint is that privatisation could prove beneficial in some cases. What I do believe is that shutting the doors that the internal market has opened could only hamper the member states’ markets and economies and the EU citizens’ right to high-quality services.

I hope that the proposed directive for services in the internal market, as well as the White Paper on Services of General Interest will provide more potential for the debate on the efficiency of public services, and also a proof that the unsubstantiated objections currently prevailing in the opposition are nothing more than a self-pertaining tactic based on ideas and ideologies long surpassed.

• Greek centre-right MEP Kostas Hatzidakis is a substitute member on the Parliament’s internal market and consumer protection committee.

The impact of European internal market and competition rules on the way national, regional and local authorities run public services has become an issue of great public interest, affecting the operation of police services, justice, healthcare, social housing, public transport and much more.

As boundaries shift between publicly and privately run services, and with differences also among member states, conflicts and confusion about which rules apply to which services are now a daily phenomenon, both for companies and for public authorities. Often the European Commission or the European Court of Justice interferes in unpredictable ways, imposing onerous public procurement procedures, prohibiting cross-subsidies, or outlawing public service obligations as barriers to the European single market. Democratically elected politicians in the European Parliament, the Council of Ministers and national parliaments have had no opportunity to set out a clear legal framework to ensure a more predictable and balanced case-law.

The local and regional reaction has been a growing demand for more autonomy - even for a general exemption for public services, or services of general interest, from internal market, state aid and other EU rules. They claim support from the treaty, which assigns to them the role of defining, organising and financing such services. Those on the other side of the debate believe that the market can do everything better and argue for a minimal public role.

My political group, the PES, takes a middle course. We are convinced that market forces alone are not enough but also that public authorities cannot do everything "in house". We see clear advantages in involving and using private companies, but the public interest often requires that they are overseen by a strong regulatory regime, to ensure public safety, environmental and consumer protection etc.

The Commission has ignored calls from the Parliament and the Council to bring forward legislation to clarify the law. That is why the Socialist group in the Parliament has now seized the initiative by drafting our own legal proposal for a directive on services of general interest, designed to provide all stakeholders with greater legal certainty and to clarify rights and responsibilities.

This draft directive does not try to lay down how local services should be run. That remains the job of elected authorities at every level. Nor does it put services beyond reach of existing European internal market and competition rules. It aims to strike a balance between the interests of all - between public authorities, public service providers, private businesses and citizens. It is neutral as between large or small public sectors; between economic sectors; between private or in-house provision of services; and between different national and local choices as to the type and quality of services. It provides simply a set of "rules of the game" within which national, regional and local authorities can operate without undue interference from Brussels.

Our draft should be seen as the start of a public debate. We invite all who share our vision of a Europe that is more than a market, a Europe in which good public services are part of what makes a good society and a Europe in which diversity and local autonomy flourish, to participate in that debate. This debate must be a signal to the Commission that it is time to deliver a legislative proposal which will finally clarify the rules of competition in the field of public services. If the EU can get this issue right, it will offer a powerful example of what a citizens’ Europe can mean in practice.

• Dutch Socialist MEP Ieke van den Burg is a member of the Parliament’s committee on economic and monetary affairs.

Two MEPs debate Europe's role in services issue