Provision of Services Regulations 2009

My Lords, the regulations before the Committee today implement the EU services directive into UK law. The regulations concern both the provision and the regulation of services. They are therefore relevant to service providers and to authorities with a supervisory or regulatory role in relation to services—termed "competent authorities". The directive represents a great step forward for the internal market in bringing down barriers to business in the EU and is a major achievement of better regulation across the EU. Although the freedom to provide services and the freedom of establishment are already set out in the treaty establishing the European Community, services businesses trying to set up or trade in the internal market have still faced unnecessary obstacles. Some countries have imposed rules discriminating against businesses from abroad. Businesses have also had to apply for different licences for each country or region in which they want to operate. These obstacles have meant that some businesses, particularly small and medium-sized enterprises without the ability to pay local experts, have been unable to market their services abroad or have found it uneconomic to do so. Trade in services accounts for only 24 per cent of the trade in the internal market, even though services account for 70 per cent of EU GDP. As noble Lords will no doubt be aware, the directive covers around two-thirds of the service sector as a whole. The directive excludes some services industries, such as financial services, healthcare, gambling and transport. This is due to the fact that EU legislation exists in some of those excluded areas already and that liberalisation was seen as undesirable for others. However, the directive still represents the horizontal piece of legislation that we were striving for. Details on scope are in Part 1 of the regulations. The directive, which these regulations will put into UK law, has been incorporated into the EEA agreement. The regulations therefore apply in relation to the EEA states of Iceland, Liechtenstein and Norway, as well as the 27 EU member states. There are four main elements to the directive, and thus to the regulations, which I will outline in the order in which they appear in the regulations. First, Part 2 of the regulations concerns the quality of services provided to recipients. To increase recipients’ confidence in buying services from abroad, all service businesses will have to provide consumers with certain information about the business and the service in question. The requirements are simple and should not present a burden for UK businesses as we anticipate that most of them will already be doing this as common practice. We hope that consumers will benefit from increased quality, competition and choice, and that this will result in a wider customer base for businesses offering services. Secondly, Parts 3, 4, and 5 of the regulations set out legal requirements on competent authorities regarding their regulation and supervision of service providers and recipients. These provisions reflect the requirement in the directive that all such authorities across the EU remove unjustified, disproportionate or discriminatory legislative and administrative barriers to providing services. These could include requiring a prospective service provider to register with an authority or to establish premises in a particular country, in the absence of an adequate policy rationale. Part 6 of the regulations places several other requirements on competent authorities that will benefit both service providers and recipients. For example, authorities must recognise equivalent documentation and equivalent professional liability insurance from service providers and recipients from other member states. Thirdly, the directive requires each member state to set up a point of single contact, which is termed the "electronic assistance facility" in the regulations and is provided for in Part 8. The electronic assistance facility will be a web portal where businesses can find the information they need about operating in the UK and apply online for any necessary licences or authorisations that are in the scope of the directive. Other states are establishing similar facilities. This will greatly simplify the current situation where businesses have to spend time and money finding information from different places, often having to visit the relevant competent authority in the country where they wish to operate. In future they will be able to apply for and receive authorisation online. This is a good opportunity for me to thank local councils and other competent authorities for their hard work in screening their processes and laws and preparing for the point of single contact. It has been a huge task, so my thanks go to them for their commitment. The fourth element is enhanced co-operation between regulators across the EU, which is provided for in Part 9 of the regulations. Competent authorities will be able to communicate with each other through a secure web-based system called the Internal Market Information system, which my department is establishing now. Part 9 of the regulations requires authorities to provide information through the system to their counterparts in other countries regarding whether a service provider is duly authorised and other relevant matters. This will take the burden off the service provider to provide documentation repeatedly to different authorities. The system is also intended to ensure proper regulatory supervision of service providers and the services they provide across EU borders. Effective implementation of the services directive across the EU is estimated to be worth about £4 billion to £6 billion per year to the UK economy, and about €30 billion per year to the EU economy. Member states must implement the services directive by 28 December of this year. The Provision of Services Regulations will also come into force on that date, and will apply to the whole of the UK. The devolved Administrations are amending their own legislation where necessary so that it complies with the directive. I hope that noble Lords will agree that this is great news for UK businesses whether they want to export their services to Europe, purchase services from providers in other member states or take advantage of the streamlined processes here in the UK. The increased opportunities are also there for foreign businesses to invest in the UK, all of which in turn is great news for the UK economy. I beg to move.