Services of general interest - what does the jargon mean?

Convoluted jargon conceals an important attempt to exempt social services from EU rules on the internal market

"Services of general interest" is Euro-speak for services established for reasons of public policy. A "general interest" is expressed wherever policy decisions are made to take account of the implications for government, citizens or the public. The term is drawn from the Treaty of Rome; which refers to "services of general economic interest" or SGEIs. These, the European Commission has explained, "are different from ordinary services in that public authorities consider that they need to be provided even where the market may not have sufficient incentives to do so".

The principle of a single internal market depended on the development of liberalisation across Europe. In an era, when governments were engaged in a wide range of economic activity - including the ownership of car firms, tobacco, energy production and banks - the Treaty of Rome committed member states to reducing the role of the state in economic production. That commitment was never meant to extend to every form of government activity. There were clearly cases where government was legitimately providing services as a matter of public policy. For example - investment in the infrastructure, policing or health care. Article 90 includes the proviso that SGEIs were to be subject to rules governing competition, so long as this did not frustrate their purpose.

The commission has always emphasised that the rules in the treaty apply only to services of economic interest. The SGEIs were "market services which the member states subject to specific public service obligations by virtue of a general interest criterion". And the provision seemed to be aimed mainly at public utilities: telecommunications, postal services, transport, electricity and broadcasting. It was assumed that social and public services, like health care or policing, would not be affected by the rules governing the internal market. But, these are also areas where commercial providers operate. If, as the 2003 green paper suggested "any activity consisting in offering goods and services on a given market is an economic activity" - then health, education or pensions might all be thought of as SGEIs. The Altmark judgment, also in 2003, identified a series of conditions to permit specific exemptions. These included: a public service obligation, a transparent procedure, proportionate action and provision of compensation or subsidy only to meet costs.

Despite those exemptions - the establishment of an economic norm implied that traditional public services like police or prisons, and social services like education or employability training could be commodified and marketised. And so, they too had to be opened up to the private sector. The first line of defence has been to distinguish SGEIs from "non-economic services of general interest", another term to make the heart sink. The term appears in protocol 26 of the Lisbon treaty: "The provisions of the treaties do not affect in any way the competence of member states to provide, commission and organise non-economic services of general interest." There has been a confusing series of court judgments about 'non-economic' activity. There are apparently activities linked to the "prerogatives" of the state. Examples include policing, aviation control, prisons, railway infrastructure and measures to protect the environment. There are also "purely social" activities such as compulsory insurance and education. In the absence of any clear guiding principle, the commission's conclusion seems to be that the distinction between economic and non-economic services all depends on context. We are supposed to know it when we see it.

This is not a very satisfactory resolution, and it has prompted a second line of defence: the development of a category of "social services of general interest" or SSGIs. The characteristic features of SSGIs are that they are solidaristic or redistributive, not for profit, protective and have an "asymmetric" relationship between producer and consumer - requiring finance from a third party. They will often be specific to a culture or local context and they may be personalised. The SSGIs include social security, which in much of Europe also means health care insurance as well as a range of services intended to "facilitate social inclusion and safeguard fundamental rights" - such as advice, rehabilitation, employability, personal social services and social housing. Education is explicitly not covered, but the same rationale seems to apply there.

Separating out the social services makes some sense, but it remains to be seen if the strategy will be effective. Several previous court decisions have declared some SSGIs to be "economic". The judgments cover - for example - medical care in hospitals, emergency transport, subsidies to low-rent housing and the provision of community infrastructure like parks. The commission acknowledges that the "vast majority of services can be considered as 'economic activities' within the meaning of EC treaty rules on the internal market". That implies that the rules can still be used to demand the commodification of long-established public services.

Paul Spicker is professor of public policy at the Robert Gordon University in Aberdeen, Scotland