12 May 2006
Most social services should be opened up to free market competition, the European Commission has ruled.
The EC statement, Social services of general interest in the European Union, issued on April 26, has sparked fears about the ability of public authorities to regulate privaste providers on quality grounds.
It also undermines its concession last month in agreeing to remove health and social services from its controversial services directive.
Dominic Rawles, European Union policy and public affairs officer at the Local Government Association, told Public Finance that the commission's communication attempted to 'draw a line in the sand' over which public services had to abide by EU rules on free market competition between member states.
'But social services are on the wrong side of that line,' he said. 'It should be primarily a member state decision whether social services are subject to EU competition laws.
'These are core public services – care for the elderly and other vulnerable people – and it should be for individual countries to decide how these are financed and provided.'
Instead, the commission has now stated that it views 'almost all' social services as 'economic activities' and therefore as subject to the 1992 Maastricht Treaty, which establishes the principle of free trade between EU member states.
Rawles said this means that public bodies seeking to contract social services from the voluntary or private sector – as with the majority of residential care services in the UK – will have to abide by EU procurement laws.
National standards stipulating staff qualifications and service quality, as well as market entry regulations, would also be liable to legal challenge as 'discriminatory'.
'A French care home operator wanting to start in the UK could say “under the treaty, care is an economic service, and I've got a right to free movement, unobstructed, with no discrimination and mutual recognition [of my national qualifications and standards]”.'
The commission's decision last month to remove health and social care from its services directive was welcomed by unions and public authorities, who were concerned that their inclusion in the directive actively promoting an EU market in services would prompt a 'race to the bottom' in quality.
But Rawles said the latest communication from the commission contradicted that move.
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