Council of European Municipalities and Regions (CEMR)
European section of United Cities and Local Governments


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Local and regional governments as employers

Public services - 22.10.2004

Services of general interest : CEMR worried by Commission's and Parliament's approach
CEMR secretary general Jeremy Smith voiced his concern at the Commission's and the European Parliament approach on services of general interest (SGIs).
 
Speaking at the "Action priorities on SGIs" conference held in Brussels on 21 October 2004, Jeremy Smith called the use of the term SGIs "problematic". Too many different types of services and too many different situations are packed into one single conceptual box, he said. It is essential to distinguish between public services and SGIs. Public services are services which are the public responsibility of local, regional or national government, whether delivered directly, by public-private partnership (PPP) or by contracts with private companies. Whereas the term "SGIs" must be used only where public service obligations are placed on a private third party, for instance telecoms or electricity.
 
CEMR secretary general welcomed the fact that the Monti package (on compensation for public services) excludes public undertakings from the notification duties of the state aids regime if their turnover and compensation are with defined limits. However, he argued that compensation (amount of money paid by a local authority to a private company who is obliged to provide a service at a loss) should be accepted provided it is pure compensation and not an indirect subvention (in which case this would fall under the state aids package).
 
We have concerns about the approach taken by the European Parliament's rapporteur, Sophie In't Veld, in her working document on this issue, added Jeremy Smith. We disagree with her when she says that the difference between SGIs and SGEIs (services of general economic interest) is only of moderate importance. These are two different types of services. She is wrong to say that "state aid in the form of compensation constitutes an exception to the European competition rules", and she is equally wrong when she claims that public hospitals could enter to compete with private services in the same field".
 
Jeremy Smith concluded his intervention explaining that CEMR believes that the current debates are being cut up into different segments (SGIs, PPPs, public procurement, Monti package...). He called for a debate that puts all these pieces together and allocates a clear space for local and regional authorities to decide for themselves how to deliver local services before finalising the question of what kind of legislation we need.
 
 
CEMR's response to the Monti package (on compensation for public services)
 
The "Action priorities on SGIs" conference was organised by Confrontations Europe
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