Finally, a common language. The debate in Europe on the Services of General Interest (SGIs) is making progress, and this is important, as it relates to an essential part of the European social model, although its significance is not always clear for public option. Recent developments helped towards the mutual understanding of opposing ideas, towards European solutions combining the recognition of these services, and the need for competition and efficiency. In the late 1980s, dialogue was still impossible. It was only in 1993 that Jacques Delors was able to see an opportunity to start to talk "far from past quarrels and tensions". Today, the language is a common one (at least between rational and intellectually open people). The language isn't important? Save it for the builders of the Tower of Babel! In this column of 10 February, I said that most of the proponents of SGIs today admit the need for competition between suppliers of these services and openness of national markets, in order to protect users. Mario Monti, European Commissioner whose institutional function is, as we know, to guarantee free competition, has just declared (our translation): "our State aid policy takes account of the fact that services of general economic interest constitute a pillar of social cohesion in the Union as a whole. It is our firm intention to create the proper environment to consolidate this fundamental role."
This double recognition (of competition and the opening of the markets on the one hand, the central role of SGIs for the European social model on the other) didn't come from nowhere; it is the result of one of the most arduous debates Europe has been faced with, because the starting positions were opposed. As I have just said, at the time of the initial efforts by Jacques Delors and Karel Van Miert, the words of one were incomprehensible to the neighbour, and the term "public services" had to be replaced by "SGI" (and SGEI, the extra "e" standing for "economic", to distinguish between education and health on the one hand, and electricity, telephones and trains on the other). Today, there is concurrence on the main principles, which seemed impossible twenty years ago.
Ideological and political difficulties. Ideologically speaking, in some Member States and especially France, public services were an essential part of the organisation of the State, and of national identity itself; elsewhere, there wasn't even a definition with which to identify it. The economic difficulty lay in the impracticality of supplying SGEIs to all citizens in full respect of the rules for free competition and applying the principle of cost pricing. "Universal service" implies that SGEIs are available to all citizens at a uniform price. A stamp for a letter costs the same whether the letter is going to the next street or hundreds of kilometres away, or to an isolated mountain village; but the real cost of the service is radically different depending on the situation. The same is true of the railways: the ticket price is set by kilometre, but the cost of the infrastructure is a hundred or a thousand times more if the train goes through tunnels or over suspension bridges up in the mountains, than if it goes through open country. Similarly, for electricity, the price of the kilowatt is the same, but the cost isn't; same for water. In a regime of integral competition and "cost pricing", private providers would multiply supply of the easiest services to provide; but who would be able to take on the cost of tunnelling under the Alps in full respect of the uniform rail price per kilometre?
Accessibility to essential services for all citizens has been the basic criterion since these services came into being nearly two centuries ago. Even before universal suffrage, a sense of State, of general interest and equality of citizens made political decision-makers aware of the need to allow all the population to benefit from the railways and from electricity, the telephone and the postal service, even in the furthest-flung corners of their country. This mission reflected the pride and honour of modern State, although their definition and functioning were not the same in each case.
Abuses and inefficiency. How, however, can we deny that this mission has gradually broken down in some cases? In some Member States, public service became synonymous with inefficiency, wastage and corruption. The Commission's investigations showed an uncomfortable truth. Here, a completely inefficient postal service; there, rail companies gobbling up enormous sums with their mania for grandeur and lax administration; very often in telecomms and often in electricity, monopolies with abusive pricing to the detriment of users and business. Not to mention political deviations which are sometimes staggering: bodies controlled by the State used as instruments of corruption, or dishing out bonuses to political parties or people. The Union world also takes a share of the responsibility. Even today, we are seeing strikes and interruptions to services to uphold retirement at 55 (gained when work duration and conditions were radically different), although all European social and economic policy is going towards extending active life. The recent letter from the Heads of Government of the three big countries of the Union (of which two are socialist) affirms: "we must concentrate on the appropriate measures to persuade people to remain active for longer". Do we want to create two categories of citizens, one encouraged to delay retirement age, the other allowed to retire at 55? Does the permanent drop in rail traffic, which is considerably higher in France than elsewhere (see our bulletin of 20 February, p.17) bear no relation to certain Union behaviour?
The ineffectuality of some public services, the occasionally abusive tariffs and the absence of competition were often a burden for the economy and a cause for insufficient competitiveness.
State "compensation" is recognised. I feel it appropriate to point out the social and political significance of SGIs, and at the same time, the weight of gaps or the past departures of suppliers, to justify my initial assertion that the changes have been essentially positive. Competition was brought in, national markets are open or are gradually opening up, service suppliers are adapting to the new legal environment. At the same time, the Court of Justice and the European legislator have recognised that State aid to offset the costs of public services are lawful and, in some cases, should not even be considered aid. Certainly, a lot remains to be done on framework and practice, and the differences which subsist are not small ones. But the basis of the European solution is there, and is reflected in:
- the Commission's "Green Paper" of last year (even if it failed to raise the question of whether cross-cutting rules defining a general framework should and could be established):
- the rulings of the Court of Justice, especially the Altmark ruling which legalises State aid whilst establishing conditions for granting them legally;
- the resolution approved on 14 January by the European Parliament on the basis of the Herzog report, which notably asked the Commission to give its position in April on a "European legal framework" for SGIs (see this column of 10 February).
The main questions still outstanding. With no claims of exhaustiveness, here are the two most obvious and topical of the outstanding issues:
1. Does the European Commission have the right to define the criteria for the legality of State aid and how to interpret the Altmark ruling itself, under the procedure of article 86 paragraph 3 of the Treaty? Parliament has asked for legal texts on this to be put to the legislative procedure of codecision (Commission proposal, Parliament and Council decision). Mario Monti showed his willingness to collaborate by suggesting to the Commission, which agreed, to open consultation with the Member States, the Parliament, the Economic and Social Committee, and the Committee of the Regions on the draft texts prepared by his services. This was an important gesture, but one which does not raise the legal question. The Commission thinks it cannot and should not give up the competencies conferred upon it by the Treaty. Rapporteur Philippe Herzog, on the other hand, thinks that the Commission would be committing an "abuse of power" by laying down rules and definitions; it is competent to apply them, but it is up to the legislator (EP and Council) to adopt them in the first place, on the basis, obviously, of the proposal by the Commission itself.
2. On the content of the two texts the Commission has just submitted for consultation (one allowing subsidies to certain categories of SGEI, the other defining the new framework for large funding), positions have become much closer, and the consultation (accompanied by the publication of drafts in the OJ to allow all interested parties to comment) is due to start. Thus:
- the draft decision defining allowable aid got the nod from the rapporteur (see our bulletin of 20 February, page 10), because: a) council housing benefits, as do hospitals, from the automatic authorisation of aid, independent of the sum; b) the level of "small funding", which is also automatically allowed, has not been set, and will depend on the results of consultations. Compensation considered lawful will not have to be notified to the Commission;
- the working document on the new framework for "large-scale funding" has been put to consultation. This framework is urgently needed, says the Commission, to reinforce the legal security of the companies themselves. The Altmark ruling contains criteria and conditions which the Commission feels few SGI suppliers fulfil. An interpretative text is therefore indispensable. But the question of who must adopt it remains open.
(F.R.)