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Internal Market in Services (EUC Report)

My Lords, I am grateful to my noble friend. At all events, services have become much more important than the trade in goods and employ more people, which is a very different position from when the Treaty of Rome was signed. Since cross-border trade in services amounts only to 20 per cent of intra-European Union trade, it is natural that some anxieties should be felt widely about the consequences of opening up the balance to competition. I well remember, as will many noble Lords, the anxieties expressed by some parts of British industry in 1973 about joining the European Union. Indeed, some of their specific worries were absolutely justified; some businesses vanished, but others took their place. I remember, too, quite how dismissive some of our European Union colleagues were about these worries, and we should be careful not to dismiss realistic anxieties out of hand but explore them painstakingly, as our report did. At a philosophical level, I suggest that there is a difference between the provision of goods and the provision of services, which may also account for some of the opposition to some of the liberalisation to which we have all in principle assented. To take the consumer’s view, if you find that you have bought an unsatisfactory product, manufactured in the European Union but outside your own state, you will usually be able to get compensation or a new one in a fairly straightforward way. The defective kettle springs to mind. If you have bought a defective service, a bad haircut, a poorly executed plumbing job, redress is not straightforward even if the perpetrators are in the same state, and not at all straightforward if they are in the area on a temporary basis. A United Kingdom consumer, for example, may be very glad to see a Polish plumber, but may reasonably feel that, if the service is unsatisfactory, redress could be difficult to seek in Poland. At the risk of wearying your Lordships by straying into the wilder realms of marketing theory, there is also a much greater emotional charge tied up in the commissioning of a service than in buying a material good. A consumer may feel annoyed by the manufacture of a defective kettle and disgruntled with the shop that sold it to him, but that is a much lower emotional charge than the feelings aroused by a poor plumbing service or a rotten haircut. A defective service is perceived as a personal injury, in the way that a piece of defective goods is not—and that is not unreasonable. In short, services are not the same as goods, and it is natural for consumers to want to access them easily from people whose training and background they understand and who are close at hand so they can be got at if the service is defective. Training requirements and wage levels vary enormously in the enormously enlarged European Union, and it is to be expected that highly paid people who have undergone long trainings and apprenticeships should be anxious about any provision that seems to equate them with much lower-paid workers trained to less demanding standards. While all those reactions are natural, without opening up the provision for services there can only be a very limited market for any of us, and the risks of stagnation and a vicious circle of job losses and a reduction in consumer choice can be the only result, as other noble Lords have warned. That was always understood by the founders of the European Union. In conclusion, I believe that while objections to the services directive do not stand up to objective consideration, as our report concludes, we need to respect the anxieties that lie behind them. We are attempting this reform against a background of slow growth and unemployment in several European Union countries, and it is always easier to do these things in a flood tide rather than on a falling one. Opening up of the market in services is always going to be more difficult than opening up the market in goods, which must be why we have been so slow to do so. It is difficult and threatening, and debate cannot move as quickly forwards if we treat dissenters as Luddite protectionists. At the same time, we need to pass and ensure the execution of this directive, resisting the demands for the large parts of the service sector to be exempted or for progress to continue on the present painfully slow basis of harmonisation by sector. If we continue in that way, in the new world that has come to pass we shall find that many of the services that we need can no longer be afforded by any of us.