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Services Directive

Gareth R Thomas MP,  Parliamentary Under-Secretary of State for Trade and Consumer Affairs
London,  14 November 2007

Thank you all for coming today and for your continuing interest in the Services Directive.

I’m very pleased to have this opportunity to tell you about the consultation document which we published last week and to invite your views on our plans for implementing the Directive.

Before I tell you a bit more about our proposals, I’d just like to set the Directive in the context of our wider work on trade policy.

We are committed to securing significant reductions in world trade barriers facing the service sector.

The UK is the world’s second largest exporter of services, so this should result in real benefits to the UK.

But it is important to note that the service sector accounts for an increasing proportion of developing countries’ economies.

Reducing world trade barriers could therefore create real opportunities for developing countries.

We are therefore keen to ensure that the World Trade Organisation take account of the needs and concerns of developing countries.

Going back to the Directive, I’d now like to set out why it is so important for UK businesses.

Whilst the internal market for goods has worked well, there are still many discriminatory barriers to the development of a single market for services across the EU.

We know that some firms wishing to expand into another EU country have faced particular problems.

For example:

• They have found it difficult to obtain information on the formalities required;
• They were required to make excessive financial guarantees, making it difficult for small firms to compete against national industries;
• They were required in some way to ‘prove’ the need for the service, for example by conducting an expensive market assessment, before they were allowed to enter the market; and
• They were hindered by limits on the promotion and advertising of their services.

The Directive addresses these sorts of barriers:

• It requires Member States to abolish discriminatory and burdensome procedures that they cannot justify;
• It makes it easier for companies to find out the rules for doing business in a Member State and to complete the necessary formalities remotely through a Point of Single Contact;
• It introduces new measures to increase the confidence of consumers when buying services from a supplier based in another Member State; and
• It requires regulators to co-operate with their counterparts in other Member States.

Our most recent economic analysis, which is on our website, indicates that if the Directive is implemented effectively throughout the EU, then it will be worth between £4-6bn per year to the UK economy and create up to 80,000 new jobs in the UK.

The Directive covers a wide range of services which should all stand to benefit when it is implemented across Europe.

These include management consultancy; advertising; facilities management, legal advice, estate agents, architects, distributive trades, tourism, leisure services, plumbers and electricians.

The Directive in detail

Since the Directive was agreed late last year, my officials have been busy working out how it can best be implemented here in the UK.

I know that many of you here today have fed into this work, for example by taking part in meetings and workshops, and I would like to thank you for doing so.

I think that we are now at a stage where we can put forward proposals and test them on a more formal basis.
We want to ensure that we implement the Directive in a common-sense, evidence-based way, and we need your involvement in this.

It is the informed input of stakeholders like yourselves that provides the best guarantee that we will come up with workable and productive solutions.

One of the most significant parts of the Directive is the Point of Single Contact.

This should really help firms, especially small firms, wanting to expand into other EU countries.

Take for example a small firm that operates group bus tours and personalised holidays in Scotland.

If they want to expand by setting up as a travel agent in another EU Member State, they would face real difficulties under the current system.

For example they would have to deal with many different authorities at national, regional and local level, all with different procedures and forms.

Once the Directive is in force, they will be able to identify and complete all the necessary authorisation processes through the point of single contact of the country they wish to set up in.

They can do this electronically, without even having to leave their own offices.

All their on-line applications would be clearly identified and they would have a definite time period to receive notification, which would really help in their business planning.

As a result of the study into user requirements which we commissioned earlier this year, and to which many of you contributed, we propose to build an integrated site that provides ‘pro-active and helpful’ signposting to relevant information and is built onto the existing Business Link system.

We also think that the system should signpost useful information on matters such as taxation and labour law that are outside the Directive.

We have no obligation to provide this information under the Directive, but we think many users will find it helpful.

Our instinct is that we should not charge people for accessing the information on the site.

But we are seeking views on this, and in particular on the possibility of charging for additional services.

Because we know that users will want to be confident that the information they obtain from the site is accurate and up-to-date, we propose to introduce a legal obligation on those who supply information for the site to ensure the integrity of the material.

We also want users to know that they are in the right place and are receiving trustworthy information, so we are seeking views as to whether we should introduce national or even EU-wide branding.

Another major aspect of the Directive is the requirement to screen our laws and administrative practices.
If there are any requirements in place that restrict the ability of service providers to provide their services across borders, then they can only be retained if they are non-discriminatory, proportionate and necessary.

This screening work is a huge task, involving many people from across Government, and I’d like to take this chance to thank all those involved.

We’ve not yet completed this work, but our provisional conclusion is that very few changes will need to be made to UK legislation.

I’m pleased that this appears to be where we are heading.
It suggests that all the work we have been doing over recent years to simplify and liberalise our laws and administrative practices is bearing fruit, and that there remains relatively little in the way of unnecessary regulation which we need to tackle.

However, I’m not convinced that we have yet turned over all the stones.

This is where you can help me!

I’d be very keen to hear your views as to whether there are any other legal requirements or administrative practices that you feel place unnecessary burdens or restrictions on service providers, and which should be amended or abolished.

We may conclude that we can tackle the candidates you come up with as part of our implementation work.

But even if we think that they are out of scope of the Directive, your contributions will not be wasted.

The Government has committed itself to a huge programme of simplifying regulation.

We will ensure that your suggestions are fed through to be considered as part of that work.

We will help consumers by making it easier for the bodies which supervise service providers in the UK and in other Member States to talk to one another and co-operate.

We are seeking views as to whether this requires changes to any relevant legislation.

We also propose to establish a national liaison point within BERR to help regulators work together, and are seeking views as to whether similar liaison points should also be established in Scotland, Wales and Northern Ireland.

It is important not to forget consumers.

We will be helping consumers by setting up a ‘consumer portal’ so that users can find out their rights when they receive services from providers established in other Member States.

This should help consumers make informed decisions.

We are seeking views as to where the Consumer Portal should be located.

We also need to require service providers to make available certain information to the users of services.

Although in formal terms this might involve creating new obligations on service providers, we think that most reputable providers will already supply much of this information.

We therefore hope and expect that it will in practice lead to few if any additional burdens for most companies – but again, we seek views on this.

Influencing Other Member States

One of the messages which you have consistently given me and my officials is that the full benefits of the Directive can only be realised if there is consistent implementation across the EU.

Let me assure you that we are working with other EU Member States to develop a common understanding of the issues and to share good practice and ideas.

You can help me do this by letting me know about the barriers you face in other EU Member States, and your impressions of how implementation is proceeding across the EU.

There is already a strong trading relationship between the UK and the Netherlands, and we expect this to develop further once the Directive is in force.

That’s why I’m very pleased to welcome Kersti Vervloet from the Dutch implementation team who will shortly be setting out plans for implementation in the Netherlands.

Consultation process

Our consultation closes on 11 February so we would very much welcome your input by this date – details of how to respond can be found on the BERR website.

I am conscious that this is a rather lengthy consultation document.

However, the Directive itself is lengthy and at times complex, and has significant implications for many organisations.

We have tried to make life easier by signposting as far as possible where information on particular issues can be found, and by providing summary information and asking general as well as specific questions.

You can answer just one question or, if you have lots of stamina, all 61!!

Replies don’t need to be detailed or technical.

As I said earlier, we are particularly interested in your views on whether legislation or administrative practices can be simplified either here or in other Member States

Craig Belsham and Charles Phillips from the implementation team will be setting out our proposals in greater depth in a few minutes.

But in the meantime I would be happy to take questions.

Thank you.