EUROPOLITICS EU rethinks role of social housing

The European affairs daily Friday 16 December 2011 Supplement to N° 4328 39th year www.europolitics.info  Friday 16 December 2011 N° 4328 EUROPOLITICS

Contents of Supplement to N° 4328

Editorial may fall victim to negotiations...... 12 under “businesslike principle”...... 23 EU gradually recognises Governance: EU steps in Private sector’s point of view: key role of social housing...... 3 to prevent housing bubbles...... 13 Reserving social housing for Regional policy: Structural Funds: the most needy...... 24 State of play: More and more favourable rules...... 14 Interview with László Andor, Cultural and social patchwork State aid: Rules more flexible commissioner for employment, ‘Social housing’: A term that covers a but definition challenged...... 16 social affairs and inclusion: range of approaches...... 4 Interview with Joaquin Almunia, “EU rules already largely take Interview with Vit Vanicek, competition commissioner: into account the specific nature president of CECODHAS “Commission has not of social services” ...... 25 Housing Europe: “The ideal model defined Dutch social housing”...... 18 is decent housing affordable to all”...... 6 Public procurement/Concessions: New challenges, Social housing favours more flexibility....19 new perspectives A puzzle gradually solved Court to rule on definition Interview with Thierry Repentin, Introduction: Problems of social housing...... 20 president of USH: “Social housing divided and rules relaxed...... 7 more integrated into EU policies Social services of general interest: Arbitration of EU judges than ten years ago”...... 26 SSGI talks making headway...... 8 Three questions to MEP Sophie State aid: Social housing Social enterprises: Executive finally In’t Veld: “Blaming the Commission not only sector concerned...... 27 recognises specific traits ...... 9 is pure Brussels bashing”...... 21 Interview with Laurette Onkelinx, Interview with Freek Ossel, Belgian minister for social affairs: Amsterdam alderman for housing: “We weren’t aiming for the Moon, Commission’s decision but even so”...... 10 hinders social mix...... 22 Taxation: Uncertainties Interview with Kurt Eliasson, about reduced VAT rates...... 11 CEO of Swedish Association Energy efficiency directive: of Public Housing Companies Social housing refurbishment (SABO): Sweden: Social housing

Coordinated by Sophie Petitjean

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Editorial

EU gradually recognises key role of social housing The economic crisis hitting numerous coun- tours of certain social housing SGEIs have recently tries in the European Union with various degrees been brought into question by stakeholders in the of severity, bringing with it unemployment, social private real estate sector who felt themselves to be instability, poverty, indeed misery, casts a harsh negatively impacted. One area of contention that has light on the homelessness crisis and the tough living only emerged recently relates to the fact that ‘social conditions of the poorly housed, and, by extension, housing’ SGEIs only targeted people and families in makes clear the role of ‘social housing’ both in precarious or fragile situations, their weak finances humanising modern society and providing it with having kept them out of the ‘normal’ housing market. stability. In this way, the economic crisis has made This was crystallised when claims and voluntary noti- clear once again the responsibility owed by public fications from the financial compensation schemes authorities and by ‘social landlords’, those bodies were made to the European Commission regarding By Marc Meyer that assume the responsibility, in accordance with tasks that have a broader general interest missions, the Article 34 of the European Charter of Fundamen- end point of which is generally social mixing aimed at tal Rights, for providing “social and housing assis- preventing ‘social housing ghettos’. tance so as to ensure a decent existence for all those Stakeholders in the real estate sector having for- who lack sufficient resources, in accordance with mally brought a case, the Commission was forced the rules laid down by Union law and national laws to take a position. It decided in favour of schemes and practices”. targeting certain social groups, thereby calling into Recent and expected changes in EU legislation and question the other approaches of ‘social housing’ regulations, as well as European case law, bear wit- SGEIs. Certain states, supported by social housing ness to the already greatly increased attention being bodies, perceived this approach as an encroach- paid, compared to the recent past, by European deci- ment on their prerogatives with regard to the defini- sion makers to services of general economic interest tion of ‘their’ SGEIs. Such a dispute led Sweden to (SGEIs) and, in particular, to social SGEIs. exclude social housing from the category of SGEI. Thus, the mechanisms for controlling the finan- Another, involving the authorities in the Nether- cial compensation granted by public authorities to lands, led to an ‘arbitration’ request being made to these ‘social landlords’ for carrying out their task, the EU Court of Justice. The latter called for the such as constraints imposed in relation to govern- settling of a sensitive debate, in which each side ment contracts, have been gradually and oppor- was passing the buck, but irrespective of the judge- tunely eased. This trend seems likely to continue ment, it will have the merit of clarifying the respon- and is indicative of the awareness of the need to sibilities of both the EU executive and the member remove obstacles, legislative and otherwise, to the states and put an end to the legal uncertainty in accomplishment of these social aims of vital public which ‘social housing’ and private real estate interest, to the benefit of numerous isolated indi- developers find themselves. viduals and households and families who struggle More generally, the scope of matters related to to obtain decent housing. social housing also seems to be growing wider, all However, unlike other social SGEIs, social housing the more so since the Commission, to protect the is deeply embedded in the economic fabric and, as eurozone from any further turmoil, is working on a a result, it often comes into competition, if not con- system for monitoring housing markets with a view flict, with the interests of the private real estate sector. to preventing the formation of ‘real estate bubbles’, The Lisbon Treaty has brought with it vital recogni- the dangers of which are clear to see. A praisewor- tion of the role of public authorities and of member thy initiative in itself, but one that risks, if precau- states to define the outline of, and the model for, tions are not taken, creating added complexity, if supporting financially their SGEIs and to coordinate not added handicaps, in respect of the development them, taking into account individual cultural norms of social housing, which is so vital in these times of and national policies. And yet, the national con- great economic difficulty. n

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State of play ‘Social housing’: A term that covers a range of approaches

By Sophie Petitjean age of social rental housing. Greece has Netherlands and Sweden; 2. a ‘gener- no social rental housing but offers low- alist’ approach characterised by the The concept of social housing varies cost housing for sale. The same is true setting of income ceilings and priority widely from one member state to the next, in Spain, where 82% of residents own criteria for access to social housing; this as evidenced by the different terms used their dwelling. In these countries, the approa ch is implemented in Germany, by states: ‘housing at moderate rent’ in concept of social housing refers primar- Austria, Belgium, Spain, Finland, France, ‘not-for-profit housing’ in Den- ily to social measures to facilitate home France, Greece, Italy, Luxembourg, mark and ‘people’s housing’ in Austria, to ownership. Poland, Portugal, the Czech Republic give a few examples. This heterogeneity, and Slovenia; 3. and a ‘residual’ or tar- which results from the different national Common core elements geted approach, in which social hous- histories and cultures as well as the Given this wide range of situations, ing targets the neediest. This concept absence of a common framework at Euro- CECODHAS Housing Europe, the is applied in Bulgaria, Cyprus, Estonia, pean level, also concerns the principal European federation of social, coopera- Hungary, Ireland, Latvia, Lithuania, characteristics of social housing, namely tive and public housing, defines finan- Malta, Romania, the United Kingdom its financing, target population, allocation cial affordability and the existence of and Slovakia. criteria, ambitions, management mode, rules for the allocation of dwellings and so on. as the two elements that constitute Sector’s economic weight the core common features of social Due to national characteristics, it is Overview housing in the EU. very difficult to evaluate the economic Generally speaking, there are three Three different approaches can be scope of the social housing sector categories of available housing: low- identified in the EU in terms of the in Europe. Low-cost rental housing cost rental housing, private rental hous- target public: 1. a ‘universal’ approach accounts for more than 50% of the ing and privately owned housing. in which social housing is open to the rental market in certain member states While the public powers were behind entire population, as in Denmark, the (the Netherlands, Austria, the United the strong growth in housing after World War Two, today’s market tends to be dominated by private players: limited- Privately owned housing profit or not-for-profit companies, and Social rental housing associations. According to Jesus Leal, professor of urban sociology in Madrid, Private rental housing public sector housing organisations are Number social rental Sweden widespread in France, Belgium, Italy, dwellings per 1,000 inhabitants Poland, Finland and Sweden. They United Kingdom operate primarily at local or interme- diate level (France and Italy) or, more Denmark rarely, at national level (Luxembourg, Northern Ireland and Portugal). Social rental housing (as opposed to the sale sector, which does not build Ireland up housing stock) is particularly well- the netherlands developed in the Netherlands, where it accounts for 32% of overall housing. Austria, Denmark, the United King- dom, Sweden, France and Finland Germany also have a highly developed public and social housing sector. The German model is relatively atypical in that the France social rental sector is limited in time and in terms of its percentage of total Portugal housing (only 6%). At the opposite end Spain of the spectrum are the Southern Euro- pean countries and most of the states of Central and Eastern Europe – apart from the Czech Republic and Poland Italy – which have an extremely low percent- www.europolitics.info Sold by subscription only © reproduction strictly prohibited in any language EUROPOLITICS N° 4328 Friday 16 December 2011 

Kingdom and the Eastern European and financial crisis has only made peans spend an average of more than countries, which do not have a well- matters worse. According to Union one fifth of their income (22.9%) on developed rental sector) but makes up sociale pour l’habitat (USH), severe housing. In 2009, 17.8% of the Euro- only a marginal part of the market in budget cuts in Portugal, for example, pean population lived in overcrowded others. dwellings and 6% suffered from severe The different European federations housing deprivation. nevertheless evidence certain economic This heterogeneity results In spite of these failings and this pre- clout. The EU representation of Union from the different national cariousness, the European Union cur- sociale pour l’habitat, for example, histories and cultures as rently only “recognises and respects the speaks on behalf of 800 social housing right to social and housing assistance bodies that own and manage 4.2 mil- well as the absence of a so as to ensure a decent existence for lion housing units in France. Accord- common framework at all those who lack sufficient resources,” ing to their figures, this corresponds to European level as stated in Article 34 of its Charter of 450,000 households accommodated Fundamental Rights. It considers that each year, 11,000 volunteer managers each member state must determine the and a total of 70,000 employees. The scope of social housing “in accordance Austrian federation of limited-profit have brought housing programmes to with its traditions, culture and state housing associations (GBV) represents an abrupt halt, interrupted the pay- intervention”. “The Commission’s role 191 housing suppliers across the country ment of public funds for projects under is limited to checking the absence of (99 cooperatives and 91 capital compa- way and caused banks to withdraw clear errors in the classification of ser- nies), which are responsible for renting supplemental financing. vice of general economic interest,” said 522,000 housing units and managing Other examples: the budget for pro- Social Affairs Commissioner László 240,000 owner-occupied dwellings and moting new social housing in Eng- Andor in mid-2010, in response to crit- 35,000 municipal dwellings. land has been slashed by 63%, and in ics. Many stakeholders denounce the Despite these figures, the supply of Scotland the budget for social housing Commission’s lack of ambition, which social housing generally fails to keep investment has been cut by 40%. leads to legal vagueness for providers of up with demand. And the economic According to recent statistics, Euro- social services. n

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Interview with Vit Vanicek, president of CECODHAS Housing Europe “The ideal model is decent housing affordable to all”

By Sophie Petitjean certain level of affordability. In Central and the austerity measures adopted by many Eastern European countries there are no member states and affecting all our mem- CECODHAS Housing Europe, the feder- clear rules concerning social housing. bers. Whether on the cut of housing bene- ation of public, cooperative and social hous- fits (UK, France); or by taxing social hous- ing, is concerned about recent budget cuts ing enterprises (NL, FR) and mostly by that threaten the social housing sector. For stopping all new housing projects (SP, IT). the organisation’s President, Vit Vanicek, it The main problem is how these budget is essential to offer decent housing to all citi- cuts are decreasing the capacity of social zens at an affordable price even if this means housing providers to supply more housing providing housing allocations to the most when indeed the waiting lists are growing. vulnerable households to help them pay We identify two roads: first, work with the their rent if it is too high. The organisation, Commission and the Parliament on their which represents 43 national and regional country recommendations within the new federations in 19 member states, defends a ‘European semester’. The scoreboard of model that provides adequate housing to all macroeconomic imbalances agreed by citizens. It is counting on the EU’s country- EU institutions imposes on member states specific recommendations and the future that housing prices should not increase financial instruments to permit social land- more than 6% a year. Well, this will not lords to continue to play this role, at a time be possible if affordable housing supply when waiting lists continue to grow. is not boosted. In addition, our sector is employment intensive, for rehabilitation © DR What are the main components of an Vanicek: “Europe is definitely more a facilitator than a barrier” programmes for example, €1 invested in efficient social housing model? the retrofit of housing generates €1.22 An efficient social housing model offers an of public revenue. So we need to advocate adequate housing solution to all citizens. A What is the role of the EU in such diver- and convince the EU institutions that not perfect one would eradicate housing exclu- sity? Do you consider it as a facilitator or all public spending shall be cut. The second sion from its more severe forms - overcrowd- a barrier? road we have decided to work on is to look ing or housing deprivation. It would also Indeed, the concept of social housing varies, at financial instruments, whether EU or play a role in stabilising housing markets and it is precisely why I would not consider global, that we could mobilise to invest in and making housing sustainable in the long a European framework relevant. Because the sector. This work looks at many different term. I think the Austrian model is comply- the market does not deliver decent and options, like mobilising Structural Funds, ing with the main goals I have just described, affordable housing for all, public authorities the EIB… based on incentives to all housing market intervene, but the way they do, the scope of players. The social housing sector in Aus- the activities the finance to impact the hous- Do you support the idea of using the tria is diversified, with private non-for-profit, ing market is depending on national and housing market as an indicator to control public and cooperative actors, depending of regional context. About the role of the EU, macroeconomic stability? the local situation. The financing mecha- since the publication of the proposals for the Yes, it is a necessary first step. The housing nism is interesting because it is a ‘closed future Structural Funds 2014-2020, Europe and the financial markets are linked and we bottle’ financial channel where people can is definitely more a facilitator than a barrier. need to have a very close look at the way save money in housing banks, which will The proposal includes housing as eligible they evolve. That housing prices are key to issue social housing bonds. It gives to your specially with an earmarking for energy macroeconomic stability is not contested saving a direct impact on improving local efficiency refurbishment projects, but also by any economist. Housing expenditures housing markets. The Nordic countries are recognise that it is a needed social infrastruc- in households have never been so high and also a good model, which provide generous ture. Furthermore, it calls for Community they reduce the capacity to consume other housing benefit and where housing provid- lead approaches to develop local areas. The goods. Housing is an asset for homeown- ers are in a market playing field. entire proposed framework is just the right ers but can also be transformed into nega- In general, the more universal the systems way to look at local development and social tive equity when market crashes become are, the best. Not because they are open to cohesion. a major social issue. Affordability of hous- all, in reality priority criteria always apply ing would be a better indicator, however, and allocation processes are well defined, What are the main problems faced by your to include in the scoreboard than housing but because it happens in countries with federations on the ground and that Europe prices only. And we want to contribute to a strong social protection system. Indeed, could solve? the analysis of the policies needed to reach what is necessary is to be able to maintain a Currently THE common concern is this objective. n

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Introduction Problems divided and rules relaxed

By Sophie Mosca with the legislative proposal on energy rules and the internal market and falls efficiency and for regional policy for under the control of DG Competition. Social housing, despite falling under everything covered by the European missions of general interest defined exclu- Regional Development Fund (ERDF). Questions sively by member states, is being assigned Since 2009, thermal renovation of social The legislative framework exonerates an increasing role by different EU poli- housing and access to housing for disad- players in the social housing sector from cies, particularly in the fight against vantaged persons are eligible for ERDF notifying the Commission about these exclusion, social and territorial cohesion funding, which in turn has led to a signif- state aids and while DG Competition and the fight against climate change. icant decrease in the energy bills of these in the ‘Almunia package’ (announced This corresponds to the aims of “a social households. Moreover, this trend looks for 20 December) intends to introduce market economy” clearly reaffirmed in set to continue for the new 2014-2020 more flexibility by abandoning the the Lisbon Treaty and takes on greater budget programming period and fulfill restrictive definition of this social ser- importance in the context of a crisis. the obligations envisaged in the proposal vice in the 2005 regulations, it never- Players in the social housing sector are for a directive on energy efficiency of 3% theless calls into question, on the basis therefore closely concerned by EU initia- annual renovations of social housing (see of complaints and via the control of the tives. They keep the EU initiatives under separate articles). manifest qualification error, the perim- close check to ensure that their specific eter of their action. This has provoked needs are catered for and their activities Restrictions an outcry from social housing organisa- are not hindered. They have also been Courses of action open to social hous- tions, within the Parliament, the Com- able to take advantage of certain clauses, ing bodies and their contractual relations mittee of the Regions and the Economic or specific funds allocated under these with their economic partners are also and Social Committee, and even from EU policies with the aim of reducing the governed by EU public procurement reg- some member states. An appeal is costs of rented households. ulations, legislation applicable to public- also currently pending before the EU In the absence of a housing policy public cooperation or to concessions, as tribunal (see separate articles). at EU level, subjects which concern many domains are under revision by DG This explosion of dossiers requires inten- social housing at the top level are spread Internal Market. The challenge facing sive legislation and policy monitoring by between several of the Commission’s them is to maintain the current level of social housing organisations and some all- directorates-general (DGs), between dif- flexibility while excluding certain restric- round lobbying to draw attention to the ferent European Parliament commit- tions by means of dispensatory measures specific nature of the sector, which private tees, between different Council of Min- to account for the specific management promoters contest vigorously as being the isters’ services, the EU Committee of requirements (see separate article). source of distortion of competition. Social the Regions or the Economic and Social Specific characteristics that need to housing has important political conse- Committee (EESC). be defended on a financial level are quences at both national and EU level, also spread out over different services. particularly during the financial crisis Significant progress The sensitive question of maintaining where it acts as a buffer. In this respect, One would have expected these sub- reduced VAT rates for social housing, the proposals from DG Economic and jects to be driven by the Directorate- questioned by certain member states, is Financial Affairs for reinforced economic General for Social Affairs and yet while being dealt with by DG Taxation and Cus- governance in the eurozone[to be veri- it acknowledges the specific nature of toms, which is currently preparing VAT fied] also include a clause on the specific businesses with social vocations it is legislative proposals for 2012. monitoring of the housing market. currently focused on the publication of Initiatives impacting on the credit The fact that there is no coordination a communication on social entrepre- market, such as the future directive on between the different services dealing neurship (in collaboration with the DG property lending, intended to standardise with social housing results in regret- for the Internal Market), rejecting the the methods of calculating interest rates, table inconsistencies despite claims by implementation of a legal framework or the directive implementing the pru- the Commission that it keeps a check on specifically for social services of general dential rules in banking fall under DG these inconsistencies within the College interest. In practice, the most significant Internal Market and Financial Services of Commissioners (see interview with progress in the housing sector has been (see separate article). Commissioner Andor). achieved by other DGs, frequently due to Finally, the ‘heaviest’ dossier in finance Most surprising is the fact that no the personal involvement of certain com- terms impacts on the EU’s competition “impact assessment” has been carried missioners anxious to protect the specific policy: it concerns state aid for services of out for these characteristics (economic nature of the sector. general economic interest (SGEI), includ- weight, funding, etc), so dominant in As a result, the DGs concerned with ing social housing (see separate article). In the different EU policies. An oversight, energy performance are those respon- this respect, public aid for social housing which has been the subject of repeated sible for energy and climate action is considered as exempt from competition demands from the sector. n

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Social services of general interest SSGI talks making headway

By Sophie Petitjean recognising the specificities of social started a single reflection process within services of general interest. the Commission (see separate articles), Faced with the prospect of fragmenta- even if its attempts did not reach a con- tion (see page 7), the idea of recognis- Various pressures crete conclusion. The work of the Forum ing the specificities of services of general Backed by the Committee of the on Social Services of General Interest interest “for the purposes of social pro- Regions, the European Parliament has generated 15 recommendations but tection, social and territorial cohesion, has adopted several non-binding reso- the content of these was largely watered national solidarity and the implemen- lutions calling for the specificities of down due to pressure from representa- tation of fundamental rights,” such as social services of general interest to be tives of the UK, Sweden and the Nether- social housing, has gradually emerged recognised. For example, the report by lands and the conclusions adopted after- from European discussions. It was even Irish MEP Proinsias De Rossa (S&D), wards by the Employment and Social one of the work priorities for the Belgian adopted in July 2011, invites the Com- Affairs Council, in December 2010, authorities during their Presidency of mission to come up with a common have suffered the same fate. the Council of the European Union, in definition of services of general inter- Broadly speaking, the SSGI Forum’s the second half of 2010. est “that is acceptable” and to recognise recommendations call on the Parlia- The term ‘social services of general the responsibility of member states and ment, the Council and the Commission interest’, which is nowhere to be seen local authorities in the organisation, to: 1. recognise social services of general in the EU treaties, appeared for the first funding and provision of social services interest; 2. consider the SSGI Forum as time in 2004 in a white paper on services of general interest. It is also calling for an investment in the future; 3. create an of general interest published by the Euro- the establishment of a multilateral, environment that favours the quality and pean Commission. It covers a concept high-level working group that is “open, performance of social services of gen- that was then to be further clarified in flexible, transparent, broadly representa- eral interest; 4. put in place a European two Commission communications, one tive of stakeholders and focusing on the quality volunteer framework for social published in 2006 specifically devoted implementation of reforms”. services; 5. have a multisectoral, cross- to social services of general interest and The more recent (November 2011) cutting approach and at several levels; the other in 2007 about services of gen- resolution by German MEP Peter 6. recognise the need to have common eral interest. These reference texts lead Simon (S&D) on state aid for services of rules; 7. clarify the principles of check- one to define social services of general general economic interest states that the ing state aid; 8. adapt the rules of the interest as covering both legal or com- particular mission and nature of social ‘Altmark-SSGI package’ applicable to plementary social protection regimes as services of general interest must be pro- providers of social services of general well as services considered as essential tected and clearly defined and therefore interest and local authorities; 9. review due to the role in prevention and cohe- calls on the Commission to assess the the modalities for the calculation of sion that they play. However, while the most efficient way to reach this objec- overcompensations of public service in 2006 communication recognises the tive “by taking account of the possibility the framework of checking state aid; 10. organisational characteristics of these of sectoral regulation”. recognise the need for legal and politi- social services (ie the principle of soli- Belgium also called, throughout its cal clarification; 11. set up an interin- darity, personalisation, the absence of a Presidency of the Council of the EU, stitutional and inter-branch dialogue on profit-seeking goal, citizen capacity, cul- for a specific approach in favour of social services of general interest; 12. set tural and local anchoring, the asymetric social services of general interest and up a legal instrument suited to social relationship), the second one completely for the establishment of a special group services of general interest; 13. promote abandons any idea of specific treatment for ongoing dialogue on this issue (see alternatives to public contract tendering for social services of general interest. interview with Laurette Onkelinx). procedures for the provision of social ser- “The Commission decided not to For this purpose, it organised, on 26 vices of general interest; 14. strengthen open a Pandora’s box for member states, and 27 October 2010, the third forum the social aspect and orientation of who would take advantage of this oppor- on social services of general interest in public tenders; and 15. prioritise quality tunity to ask for the exercise of their the presence of Commissioners László as a main criterion and social inclusion social competences to be excluded from Andor (employment, social affairs and as a main objective. As for the conclu- the scope of the treay,” said lawyer and inclusion) and Joaquin Almunia (com- sions of employment and social affairs lecturer Stéphane Rodrigues. Nonethe- petition) as well as a representative of ministers, they are restricted to inviting less, the calls for a clear legal framework their colleague, Michel Barnier (single the Commission to provide them with for social services of general interest market and services), and then submit- more precise information on the appli- have not died down. The European Par- ted a series of conclusions on social ser- cation of the EU regulation to social ser- liament, the Committee of the Regions vices of general interest for the approval vices of general interest and to proceed and some member states have increased of EU member state ministers. to an assessment of this application to the number of initiatives in favour of Thanks to these initiatives, Belgium improve legal certainty. n www.europolitics.info Sold by subscription only © reproduction strictly prohibited in any language EUROPOLITICS N° 4328 Friday 16 December 2011 

Social enterprises Executive finally recognises specific traits

By Sophie Petitjean companies “whose main objective is to communication invites stakeholders to have a social impact rather than make a begin reflecting on the eventual need for Until now, the European Commis- profit for their owners or shareholders”. European status for other forms of social sion has categorically refused to adopt a It can mean “businesses providing social enterprise, such as non profit-making single definition of ‘social housing’ and services and/or goods and services to associations and/or a possible common to recognise its specific characteristics. vulnerable persons (access to housing, European statute for social enterprises. However, in the last few months it seems health care, assistance for elderly or dis- to be showing greater flexibility regard- abled persons, inclusion of vulnerable Information problem ing the social sector. On 25 October, groups, child care, access to employment At the Third Forum on Social Services it adopted a communication entitled and training, dependency management, of General Interest, which took place on 26-27 October 2010 in Brussels, the European Commission said that the problems encountered by public services with a social aim resulted “more from a lack of information that the current rules”. Therefore, at the end of 2010, the Commission published a guide on social services of general interest1. This document, which updates a 2007 document, provides guid- ance for member states on fund- ing services of general interest while respecting state aid rules. The Commission clearly shows that these rules do not mean imposing a particular model of public services, but rather ensur- ing that funding does not exceed

© DR necessary levels. The guide also The Commission’s communication demonstrates a revolutionary change in approach responds to the questions raised ‘Social business initiative: Creating a etc); and/or businesses with a method of by several stakeholders concerning the favourable climate for social enterprises, production of goods or services with a allocation of services of general inter- key stakeholders in the social economy social objective (social and professional est to external service providers and the and innovation’. This communication integration via access to employment for method of calculation of the compensa- demonstrates a revolutionary change people disadvantaged in particular by tion due to these providers. in approach; previously, the Commis- insufficient qualifications or social or Simultaneously, the Social Protec- sion had never concerned itself with this professional problems leading to exclu- tion Committee published a ‘Volun- sector, or come up with any concrete sion and marginalisation) but whose tary European quality framework for proposals to support its development. activity may be outside the realm of the social services’, which establishes qual- While the communication does not provision of social goods or services”. ity standards based on the following include any legal proposals, it does give Next, the Commission suggests 11 key general principles: availability, acces- recognition and visibility to social enter- actions, including the simplification of sibility, affordability, personalisation, prises on Community territory, via three the application of rules on state aid for general nature, continuity and the pri- key objectives: 1. facilitating the access social services and local services, and the oritisation of results. This ‘framework’ of social enterprises to private fund- creation of a European legal framework also introduces quality principles for the ing; 2. improving the visibility of social for joint investment funds. Furthermore, relationship between service providers entrepreneurship; and 3. improving the it foresees the introduction, from 2014 and users, as well as quality standards legal environment. onwards, of an explicit investment prior- for relations between service providers, ity for ‘social enterprises’ in the rules on public authorities, social partners and Eleven key actions before 2012 the European Social Fund (ESF) and other stakeholders. n The communication, a joint effort the European Regional Development from DGs Internal Market, Employ- Fund (ERDF) in order to provide a clear (1) The document is available at ment and Enterprise, begins with a legal basis (see separate articles). ec.europa.eu/services_general_interest/docs/ definition of social enterprises as being From a long-term perspective, the guide_eu_rules_procurement_en.pdf

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Interview with Laurette Onkelinx, Belgian minister for social affairs “We weren’t aiming for the Moon, but even so”

By Sophie Petitjean very concrete options on the adapta- tion from notification has been extended tion of public procurement rules but to social services other than housing (and During its EU Presidency, in the latter also concerning state aid and freedom to hospitals), the concepts refer to a very half of 2010, Belgium pressed for a broad provide services. minimalist interpretation of what consti- concept of ‘social services’ covering the tutes a social service of general interest: entire population. A year later, the those reserved to target groups and for time has come to take stock: although essential needs (are there any non-essen- she would have liked “to go further,” tial needs in the social sector in Europe Belgian Minister for Social Affairs and with the crisis?), although Belgium has Public Health Laurette Onkelinx says always defended a broad concept of real progress was made, including the social services, available to the entire conclusions adopted by the European population. Union’s Council of Ministers and the 15 recommendations of the Forum Belgium has long pressed for the on Social Services of General Interest introduction of a framework regula- (SSGIs). tion on social services of general inter- est. What should its main components SSGIs were one of Belgium’s priori- be? ties when it held the EU Presidency It is true that, ideally, a regulatory during the latter half of 2010. What approach can be a partial response did you wish to obtain and why? to a social issue, since it permits the Players who carry out general interest application of similar principles and missions on the ground are confronted mechanisms across Europe. Without with a labyrinth of rules and interpreta- prejudice to a collective response to

tions that does not make their task any © CE this subject, I think that this framework easier. Today, a national or regional Onkelinx: “I would have liked to go further” regulation could contain a legal defini- subsidy does not exist under EU law: it is tion of SSGI, the rights of users of these state aid unless it complies with various What concrete results did you obtain? services, the rights of member states and extremely complex rules that in fact are First, I think that we raised the level of communities to determine the organisa- applied very little in practice. This affects the debate with the Third Forum on tion and financing of these services, for them directly: financing, the way they SSGIs, which drew up 15 clear recom- example the level of social coverage, are selected or not by the public authori- mendations. Next, the Council adopted the universal scope or target groups. ties, competition from profit-making conclusions on the subject. Although We might also imagine the setting of a operators and so on1. I would have liked to go further, these European quality threshold based on During our six-month Presidency, we conclusions at least take the debate for- the voluntary quality framework, spe- weren’t aiming for the Moon considering ward, which was not so easy considering cific provisions on the non-market sector the Council’s political configuration, but the barriers we faced. compared to market activities, justify- we hoped for a strong reassertion by the Stock-taking has to be done intelligently ing differences of treatment, but also Council of the importance of SSGIs, a and over the longer term, analysing arrangements for cooperation between European recognition of quality through whether we were able to influence, for public authorities and non-market play- a European framework as well as an invi- example, the agenda of the other Euro- ers, acceptable restrictions to free move- tation to adapt current internal market pean Union institutions. I think that there ment, exemption of social services from rules to recognise fully the specificity are signs pointing in this direction. For state aid rules or certain aid thresholds. of SSGIs: the general interest mission, example, the European Parliament’s own- This framework regulation could also service to the community, cohesion and initiative report on SSGIs includes many contain an approach encouraging the the solidarity they offer. What Belgium of the options suggested by the Belgian positive promotion of these services, seeks is a positive approach that enables Presidency and Commissioner Almunia which are of crucial importance during the public authorities to continue to has begun to take the reality of social ser- crisis periods and it could identify best provide and regulate these services, to vices into account. In connection with practices for European citizens. n ensure their quality and accessibility the latter, Belgium has not yet officially with requirements, for example, in terms announced its position but my services (1) The Belgian authorities are preparing an of qualification and number of persons. have a mixed reaction concerning social web-documentary illustrating the problems We drafted conclusions that presented services in particular: while the exemp- relating to social services of general interest

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Taxation Uncertainties about reduced VAT rates

By Tanguy Verhoosel VAT rate or an exemption under the VAT must be respected because, in the absence Directive”. of a European social housing policy and Will plans for an overhaul of the Euro- The Commission includes this idea in harmonisation of aid in this sector, the sub- pean value added tax (VAT) system being its communication on the future of VAT, sidiarity principle applies: each member concocted by the European Commission published on 6 December. It also calls state must remain free to determine its own limit member states’ opportunities to set for “the abolition of those reduced rates social choices, its intervention priorities and reduced VAT rates for the construction, which constitute an obstacle to the proper its public aid mechanisms. “Reduced rates delivery, transformation and renovation of functioning of the internal market,” but contribute to the achievement of the tasks social housing? Some fear this prospect may does not present a list. assigned to social housing bodies as services be in the works and are preparing for it, yet of general economic interest,” as laid down politically it seems hard to imagine that the How will the European in the EU treaty, argues Union sociale pour 27 are ready for such a revolution. l’habitat. In its green paper of 1 December 2010 Commission manoeuvre The association is also opposed to the on ‘The future of VAT’, a system it hopes to when it presents its introduction of VAT on household rents, make “simpler, more robust and efficient,” legislative proposals, arguing that it is not justified because it the European Commission mentions the would add further pressure on the least patchwork of reduced rates applied by the theoretically in 2012? favoured persons. It is clear that the share of 27 – in the field of social housing they range rent in the household budget rises with the from 0% in the United Kingdom to 25% in Stakeholders are preparing for battle. level of poverty. Sweden – but adds that this diversity “does In its contribution to the Commission’s In this general context, how will the not seem to disrupt the single market”. It green paper, Union sociale pour l’habitat, European Commission manoeuvre when nevertheless raises certain questions. To which represents some 800 social housing it presents its legislative proposals, theoreti- simplify the system, would it be advisable to bodies in France, expresses its opposition to cally in 2012? It is not likely to be insensi- abolish reduced rates purely and simply, to any change in the current scheme. tive to developments in the EU, where the establish a European database of the goods It campaigns for the continued use of drive to increase fiscal revenues is racing full and services concerned in the different reduced rates (even if they are dissimilar) steam ahead. Italy, for example, has decided member states or to draw up “a compulsory for social housing. Their abolition or the to abolish the reduced rate applied to social and uniformly applied reduced VAT rates application of a compulsory uniform rate housing, while France has opted to raise list in the European Union”? at European level is not justified, argues it from 5.5% to 7%. But will the executive In a resolution adopted on 13 October the association. On the one hand, the pres- take the step of initiating a Copernican revo- 2011, the European Parliament opts clearly ent situation does not affect the working lution, which would have to be approved for the latter option. It urges the Commission of the single market because, by defini- unanimously by the 27 and would par- “to submit, by the end of 2013, a report com- tion, the provision of housing is a service ticularly affect a sector that provides large prising a binding list of common goods and that cannot be relocated. On the other, numbers of jobs, during this period of high services […] that are eligible for a reduced member states’ “trustee and social” choices unemployment? n

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Energy efficiency directive Social housing refurbishment may fall victim to negotiations

By Tamás Kugyela Czech Republic commented, at the as its number one priority, is an ardent 24 November Energy Council meet- supporter. While a final agreement on the Euro- ing, that the targets were not cost-effi- The original recommendation would pean Union’s common energy effi- cient. Britain complained earlier that make the 3% renovation target applica- ciency policy could come as late ble only to public buildings with as summer 2012, current nego- a total useful floor area of above tiations suggest that social hous- 250 m2. The latest Council ing is likely to fall out of the working document, responding scope of EU-wide compulsory to member states’ comments, measures. A strong point of the would raise this threshold to draft directive is the obligation 500 m2. Another demand con- to renovate, in an energy-effi- cerns exemptions for historically cient manner, 3% of the total important buildings. Even the useful floor area of public build- first version could lead to hous- ings every year is sought to be ing associations being exempted amended by member states so from these obligations, given that it only apply to the largest that the living space is often state-owned edifices. smaller in social housing, as The proposal for a directive the European Economic and on energy efficiency was pub- Social Committee points out. lished on 23 June and its major In its opinion published on 26 requirements include commit- October, the consultative body ting energy suppliers to achieve suggests that energy efficiency 1.5% savings in the annual con- targets should also have a social sumption of their customers, a objective, “establishing mea- 3% annual renovation rate for sures to help reduce the energy the public sector, and a call to bills of poorer households develop high efficiency co-gen- through incentives to upgrade eration and district heating and the energy performance of their cooling (CHP-DHC). However, homes”. it fails to introduce a bind- This view coincides with the ing energy efficiency target for current standpoint of the Euro- member states, notably a 20% pean Parliament’s Committee © Belpress savings goal enshrined in the The EESC suggests that energy efficiency targets should also have a social on Energy (ITRE), which is ‘Europe 2020’ strategy; a move objective considering an amendment pro- many environmentalists believe will the building renovation proposals were posing that member states should adopt blunt the whole scheme. “likely to result in considerable extra “a proactive policy in supporting deep Although the document grants con- expenditure for member states,” while refurbishment done in particular in siderable flexibility to member states in the Netherlands opposes any binding the social housing sector.” In general, conceiving their own energy efficiency targets whatsoever. On the other hand, the report, drafted by Claude Turmes action plans, many countries are eager Italy and France back the plan with (Greens-EFA, Luxembourg), aims to to reduce compulsory targets and/or minor changes; Denmark, whose 2012 strengthen the original document and narrow their scope. Finland and the spring EU Presidency takes on the topic may call for binding national energy savings targets to be made part of the directive. The issue is highly contested: Turmes: 6% renovation rate would be more relevant the report has received approximately Speaking at a conference, on 10 October, EP rapporteur Claude Turmes argued that 1,800 amendments so far. The commit- more ambition is needed on social housing renovation in the EU. With electricity tee vote, which will give the mandate prices per kWh constantly increasing in the next decades, wider actions are needed to the rapporteur to start negotiations now. With a 3% rate, it would take 33 years to finish the refurbishment: twice this with the Council, is scheduled for 24 would be more relevant. Turmes emphasised the importance of deep renovation January 2012. which last longer and generate savings much quicker, especially in poorer regions. Prior to that, the Polish Presidency He pointed to the example of France, where a market has already emerged for energy will prepare a new draft text, which will efficiency investments. be discussed in a working group before the end of the year. n www.europolitics.info Sold by subscription only © reproduction strictly prohibited in any language EUROPOLITICS N° 4328 Friday 16 December 2011 13

Governance EU steps in to prevent housing bubbles

By Sarah Collins other warning signs - such as high credit home ownership through 100% mortgages growth or private sector debt - appear at and tax relief, and suggests instead a focus The European Commission is prepar- the same time. This report will look at the on rentals and shared ownership. ing to step up surveillance of housing factors driving house price growth, which This is where other EU regulations markets in an attempt to prevent the kind EU sources say will include social housing. come into play, with the bloc attempting of crash that sent the Irish government “Social housing is not usually - if ever - a to crack down on lax lending practices and begging for aid from the EU and IMF source of a bubble, and in any event its role asking banks to boost high-quality capital to bail out banks heavily exposed to the evolves slowly over time, but it is one factor reserves. The Directive on mortgage credit property market. In the pipeline are a in shaping overall developments in housing places stringent requirements on lenders series of proposals on mortgage credit and markets,” said one source, who did not wish to investigate the creditworthiness of their capital requirements, but beginning on to be named because the plans are still in clients when offering loans, potentially 13 December, the Commission will also the early stages. “The Commission needs increasing costs and workload for housing begin monitoring house prices, part of an to understand social housing developments associations, who say they should either agreement to increase scrutiny on macro- in member states if we are to be in a posi- be exempt from the rules or be allowed to economic policies that could leak to other tion to have a full picture of factors driving offer larger mortgages at favourable inter- countries, causing strains across the EU. house prices in each country.” est rates under a special ‘social clause’. Price movements will also be examined Meanwhile, an overhaul of the CRD4 is in Scoreboard by banks under a provision in the new train, which gives national regulators the It will do this via an ‘imbalances score- Directive on capital requirements (CRD4). power to set higher risk weights for mort- board’, where levels of debt, investment, It is still unclear exactly how the scoreboard gage assets and forces lenders to hold only wages and house prices, amongst other and any subsequent recommendations to ‘highly liquid’ assets, still to be defined things, will be reviewed over time. An alert address imbalances will affect social hous- by the European Banking Authority. The will be flagged if prices rise more than 6% ing, although in its latest quarterly report directive also sets limits on mortgage lend- year on year, which could prompt an in- on the eurozone, the European Com- ing, which cannot exceed a percentage of depth investigation by the Commission if mission comes down against encouraging the losses incurred each year. n

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Regional policy Structural Funds: More and more favourable rules

By Isabelle Smets ways this is a consequence of the finan- low-income households, it ultimately left cial crisis and the ‘European economic it to member states to define the eligible From the point of view of the Struc- recovery plan’ adopted in 2008 with a housing categories. tural Funds there is no doubt: EU legisla- particular focus on improving energy The results in several member states tion over the past two years has evolved efficiency in buildings. In concrete have been positive. France is a frequently very favourably for the funding of social terms, this meant that member states mentioned example. In a report transmit- housing. And this trend is expected to were invited to reshuffle operational ted, on 18 May 2011, to the president of continue during the next programming Structural Funds programmes in order the European Commission, the Union period (2014-2020). to allocate a bigger share to investments sociale pour l’habitat (USH – Union for In 2007, however, when the regulations into energy efficiency, notably in dealing Social Housing) said that these measures relating to the Structural Funds for the with social housing. In making its pro- had generated, in less than 22 months, 2007-2013 period were introduced, the posal, the Commission emphasised that more than a billion euro of investment in possibilities for EU co-financing were at it presented a way to increase Europe’s social housing in France. “50,000 house- their lowest. It was not possible to finance potential for “sustainable growth” to pro- holds with modest incomes will benefit in investments in the housing sector except mote its competitiveness, to improve its a tangible manner form these measures by significant reduction in their heating bills,” wrote Thierry Repentin, president of USH, to José Manuel Barroso. And provided the programming remains constant, he calcu- lates that more than 100,000 households will receive sup- port from the European Union by 31 December 2012. The reduction in heating bills for the households in ques- tion is estimated to be 40%, the equivalent of an annual increase in purchasing power of between €306 and €1,000 per household. Applied to 50,000 households, the esti- mated increase in purchasing power would be between €18 million and €54 million per year. It’s a fact: the report given to the Commission shows that

© DR French regions have made The future cohesion policy 2014-2020 will allow regions to develop more ambitious thermal renovation and social housing projects huge changes to their opera- tional programmes to be able in the ‘new’ EU member states with such knowledge and know-how in the energy to benefit from this measure. The funding strict conditions imposed that new ini- efficiency domain and to show solidarity which they could then claim had already tiatives were often discouraged. But the with low-revenue households in the crisis been 97% allocated (this sum calculated rules have evolved with time. period. excluding the overseas regions) and The new rules, however, specify a many regions had already obtained the 2009 a pivotal year maximum ceiling on how much member maximum 4% ceiling. Projects supported The changes came in 2009 when the states can invest: 4% maximum of the by the ERDF already represented a total EU institutions adopted an amendment total contribution of the ERDF. Using investment of €1.013 billion on 1 March to the European Regional Development this funding, public authorities are able, 2011, seven times the amount ERDF Fund (ERDF) regulation allowing all for example, to finance the installation committed. “ERDF was therefore fully member states to invest money from the of double glazing, roof isolation, boiler active in its role as lever in the mobilisa- Structural Funds in renovating houses replacement, etc. Although the Commis- tion of co-financing,” claimed the USH, for better energy consumption. In some sion’s intention was to specifically target and the target of improved energy per- www.europolitics.info Sold by subscription only © reproduction strictly prohibited in any language EUROPOLITICS N° 4328 Friday 16 December 2011 15

formance has been achieved. “Based on second half of 2008, that carried the dos- to renew 3% of social housing every year a survey of the energy labels before and sier. It was a priority for France and for from 2014 (proposal for a directive on after the thermal renovations in projects that reason many projects were already in energy efficiency). supported by the ERDF, we notice that the pipeline just waiting for the green light And to top it all – promoting energy high energy consumption social housing from the European Commission. efficiency in the housing sector is explic- in the E, F and G categories has almost itly mentioned as one of the ERDF’s disappeared,” says the report. Confirmation in 2014 investment priorities within the frame- Success has also been registered in the Nevertheless, bad timing will no longer work of the objective of moving towards a United Kingdom. The latest figures pub- be a valid excuse after 2014 since in the low-carbon emission economy. In terms lished by CECODHAS, the European proposal for the new programming period of the funding that will be allocated there federation of social, cooperative and budget, presented in October 2011, the is reason to be optimistic because now public housing, indicate that 70% of the Commission confirmed the eligibility there is mention of a floor rather than a funding theoretically available has been of housing expenditure in all member ceiling. allocated. states. It also increased the ceilings previ- In the more developed regions of the These are not the only two member states ously imposed on funding in this sector. EU it is no less than 20% of ERDF fund- which have been able to reprogramme Exit the 4% cap on thermal renovation. ing – minimum – which is expected to their funding but they are the two countries The sector is delighted “The future cohe- be allocated to projects aimed at a low- where it has been most successful. In other sion policy 2014-2020 will thus allow carbon emission economy. This is sig- members states the results have been some- regions to develop more ambitious ther- nificantly lower in less developed regions what mixed. This is generally explained mal renovation and social housing proj- – 6% minimum – but 6% of a financial by the complexity of the approach, which ects,” announced the USH. And this is package that is in other ways larger than has discouraged many operators, explained in line with the Commission’s proposal those of the more developed regions. n the USH – and also the timing. For many member states it proved to be very difficult to change the rules halfway through the pro- Marginalised communities gramme, ie the money had been allocated Another amendment to the ERDF regulation, introduced in 2010, targets more elsewhere and reprogramming it for hous- specifically housing in the marginalised communities, notably the Roma. ing would have meant taking it away from It allows for the funding of renovation projects, in all member states, of the commu- other projects. “This was a real problem for nal sections of multi-family homes or the renovation and changes to the use of public regions that had already pre-selected their buildings intended for low-income households. projects,” confirmed Julien Dijol, policy This includes, for example, converting buildings belonging to local authorities into coordinator at CECODHAS. So why did social housing. As with housing expenditure allowed in the ‘new’ member states, not France experience these problems? governments are limited to providing a maximum of 3% of the ERDF contribution for “Because France anticipated the change in concerned operational programs or 2% of the total ERDF contribution. legislation.” According to Dijol, the French It has been agreed that these interventions in the housing of marginalised communi- government was behind these measures ties should be seen as part of an integrated approach, which includes other actions, from the start and in fact it was the French such as education, health, employment and ‘desegregation’. Presidency of the European Union, in the

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State aid Rules more flexible but definition challenged

By Sophie Mosca arrangements are necessary and pro- new housing, the Monti-Kroes package portionate to proper accomplishment dispenses them from the notification The European Commission’s proposal of the general interest mission of social obligation provided they meet the fol- for revision of state aid rules on services housing, under certain conditions they lowing restrictive definition: undertak- of general economic interest (SGEI) for can be judged compatible with EU law ings in charge of social housing “provid- 2012 introduces less binding provisions pursuant to Articles 14 and 106.2 of ing housing for disadvantaged citizens for social housing and reconsiders the the Treaty on the Functioning of the or socially less advantaged groups, restrictive scope of earlier measures. European Union (TFEU). which due to solvability constraints On the other hand, DG Competition’s are unable to obtain housing at market decision making practices call into ques- conditions”. tion the boundaries of the public service Social housing is a mission carried out by social housing general interest objective Definition bodies, although the definition of social since it addresses a This restrictive definition of the housing remains the exclusive compe- scope, seen as the heritage of a liberal tence of member states. This interfer- fundamental right approach, nevertheless has the con- ence poses a fundamental problem: how - access to housing - sequence of excluding social housing far does the Commission’s control go? recognised in the Charter having an objective of social diversity or a ‘universalist’ aim, as described by Lau- Diversity of aid of Fundamental Rights rent Ghékiere, representative of Union It is a given at EU level that social sociale pour l’habitat, which groups housing is a general interest objective These public service compensations nearly 800 French social housing under- since it addresses a fundamental right come within the realm of co-financing takings. - access to housing - recognised in the practices between national, regional and Competition Commissioner Joaquin Charter of Fundamental Rights. It thus local levels and their amounts vary in Almunia reversed this trend with the belongs to the category of SGEI. terms of the target public and the nature revision of these rules he began upon his Social housing associations address of specific needs. Some are “directly arrival at DG Competition, in February this need by making up for the market’s defined on the basis of calculating an 2010. The new version of the rules is set inability to cover the right to housing of equilibrium rent or a loss of income to be unveiled on 20 December 2011. the neediest citizens. Within the frame- linked to a social pricing scale, whereas Almunia abandons the 2005 restrictive work of their public service mission they some aid is granted to cover all or part definition of social housing in the draft are bound by the rules applicable to of the additional costs incurred by the decision on notification of SGEI. and state aid for SGEIs. These bodies have social constraints in terms of tenure of integrates it in a broader category of ser- obligations in terms of social prices (rent households with specific needs,” explains vices that satisfy “essential social needs”. ceiling) and the grant of housing units CECODHAS Housing Europe, which Moreover, he maintains the exemption (according to arrangements determined represents 43 national federations in 19 of notification without threshold condi- in each member state), which bring about member states. tions for social housing by extending it to costs (lower revenues and management The rules on state aid to SGEIs, these other social services. As for certain costs related to unpaid bills, for exam- spelled out in 2005 in the wake of the social services that do not correspond to ple). Public aid compensates for these Court of Justice Altmark ruling (Case C- this definition but are managed by social public service obligations and specific 280/00), are made up of three texts that housing bodies, such as city planning in costs and can consist of reductions on the form what is known as the ‘Altmark’ or the Netherlands, they would be part of price of public land, fiscal exemptions, ‘Monti-Kroes’ package. They establish the so-called de minimis draft regula- guarantees, subsidies, etc. the conditions in which compensation tion, which lays out specific criteria for The following table gives an overview granted to an association or undertaking turnover, sum of aid [...] below which of the types of financing for social hous- charged with providing a public service the aid could be exempt from notifica- ing in 2005 (based on EU data for 15 is considered compatible, without the tion given the low impact they have on member states). It reveals the diversity of obligation of prior notification to the exchanges in the EU. public interventions, which represent a Commission, but also the cases where On the other hand, the decision sizeable share of the financing of social compensation not coming within this making practices of the Commission’s housing bodies. scope may nevertheless be authorised. DG Competition, which through its These various forms of aid obviously Given the limited risk of distortions of monitoring of the absence of “obvious procure an economic advantage for the competition due to the territorial nature error” in the classification of an SGEI beneficiary and thus prove contrary to of the activities of these social housing called into question the Swedish model the principle of ‘undistorted competi- bodies and the reinvestment of profits of social housing following complaints tion’ in the single market. But if these from rents and sales in the provision of received in 2002, led Sweden to decide, www.europolitics.info Sold by subscription only © reproduction strictly prohibited in any language EUROPOLITICS N° 4328 Friday 16 December 2011 17

in 2007, to liberalise social housing. tiations between the Dutch authorities intervene through voluntary notification The Swedish authorities removed social and the Commission, which mobilised and complaints, which required its anal- housing from the category of SGEI by both social and non-social (or private) ysis by virtue of its duty to control the revoking authorisation for municipal housing stakeholders and the EU insti- absence of obvious error of classification bodies previously responsible for this tutions. Housing foundations backed of an SGEI (see interview below). service. Since 1 January 2010, housing by other European ‘colleagues’ and pri- aid must be notified systematically and vate developers brought two actions for More flexibility is therefore limited in time and capped annulment of the Commission’s deci- The European Parliament adopted, with reference to a maximum aid inten- sion before the Court of Justice. The on 15 November, by a large majority sity determined by regional maps drawn court was also asked about a similar case (488 to 134 with 17 abstentions) a res- up by the Commission (see separate by a Belgian court. The ECJ is expected olution drafted by Peter Simon (S&D, articles). to rule in 2012 (see separate articles). Germany) that “asserts emphatically In 2002, the Netherlands, whose Commissioner Almunia has stated that public services must be of high qual- rules are also based on a broad con- with respect to these Swedish and Dutch ity and accessible to all sections of the cept of social housing, received a simi- cases that the Commission did not take population”. It highlights MEPs’ con- lar response from DG Competition. A the initiative to undermine the defini- cerns over “the restrictive stance taken controversy followed over the income tion of social housing public service in by the Commission, which in relation to thresholds introduced following nego- these countries, but that it was asked to state aid for social housing associations classifies the services provided by such Social housing co-financing in the EU associations as social services of general Public Loans with Public Grants Land access Tax exemption Low rate VAT Private funds Shareholders interest (SSGI) only if they are reserved authorities low interest guarantee for socially disadvantaged persons or Federal • • • groups, this restrictive interpretation Belgium Regional • • • • • • Local • • • • • • being at odds with the higher goal of fos- National • • • • tering an appropriate social mix and uni- Denmark Local • • • • versal access”. Françoise Castex (S&D, Federal • France) welcomes this position, noting Germany Länder • • • • that it “demonstrates the progress of the Local • • • • EP’s debates on this subject, thanks to National • • • two years of work by the Public Services Spain Autonomies • Local • • Intergroup” that she chairs. Estonia All * • • • • For the Committee of the Regions, National • • • the definition proposed in the Almunia Finland Local • • • • package is a source of confusion. In its National • • • • • • • • opinion on this reform, adopted on 12 Regional • France October on the basis of the report by Departemental • • Karl-Heinz Lambertz (PES, Belgium), Local • • • • • National • • • • the CoR recommends a return to the Greece Local definition of social services contained National • • • • • in the Services Directive. Taking a Ireland Local bolder stance than the EP, the CoR National • • • also endorses another demand of social Italy Regional • • • housing associations, namely that the Local • • • reinvestment of profits in social housing National • • • • • Luxembourg Local • in the financing of new SGEI must be National • • taken into account, with a view to easing Netherlands Regional • the Commission’s control. Local • • This question added to tension in the Federal debate over the Almunia package. Cer- Austria Länder • • • tain member states rejected what they Local • • see as an attempt by the EU executive to Poland All * • • • National • • • • • • interfere in their prerogatives in terms of Portugal Local • • • • defining public services. National • • • • During the final weeks of consulta- Sweden Local • • • tion, November 2011, they obtained National • • the postponement, until spring 2012, of United Regional • • Kingdom measures on the regulation introducing Local • • de minimis rules. n

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Interview with Joaquin Almunia, competition commissioner “Commission has not defined Dutch social housing”

By Sophie Mosca vices at better prices. This efficiency incen- the definition of a public service for social tive already exists in the transport sector. housing in the Netherlands is a matter for The new legislative package on state aid its national authorities. It was not the Com- for services of general economic interest Why introduce a threshold of 10,000 mission which established this definition, (SGEI), which will replace the ‘Altmark inhabitants in the de minimis rule it was the Dutch government – in a subsid- package’, is expected in the last days of exempting small public services from iarity exercise under the treaty. The Dutch December - except for the de minimis regu- notification? lation, for which a proposal is foreseen for Fo l l o w i n g April 2012. In this interview, the Commis- consultation sioner for Competition, Joaquin Almunia, with member explains the Commission’s aims in revising states, SGEI this package, particularly social housing providers and measures. He gives his views on the general networks of framework of the package, expanding on a local authori- discussion started in a previous interview ties, it was with Europolitics, as well as covering the decided that subject of social housing. a community of 10,000 What are the Commission’s aims in inhabitants revising the Altmark package? has the capac- Six years have passed since the Commis- ity to provide © CE sion adopted the Altmark package on the the neces- Almunia: “We want to protect the existence of these SGEIs” control of aid for SGEIs. Based on prac- sary accounts tical experience of this system, and the documents certifying the accounts of the authorities fixed a threshold limiting access views of member states, service provid- service in question, under transparency to social housing to those with annual ers and users, the Commission judged it conditions which allow us to see how revenue of under €33,000, not the Com- timely to carry out a review of this pack- public money is being managed. We are mission; this was my response to a Dutch age. We want to protect the existence not asking for much, and the procedure minister who asked me what I thought of of these SGEIs, and establish simpler, should be quick if the right information is this threshold. I am not a Dutch politician, clearer rules, which also take into account provided. but when there is a complaint against a the efficiency of services for citizens. Nev- national system for public services, in this ertheless, we must distinguish between Why is investment aid not taken into case for social housing, it is my responsibil- services which, given their nature or account in the calculation of over-com- ity as competition commissioner to exam- small size, do not impact the market, and pensation, since hospitals and social ine whether the system conforms to rules those which can cause competition distor- housing are by their very nature linked to on state aid for SGEIs. tion. For the first, we propose establishing such funding? more favourable de minimis rules. Public The rules will consider state aid for the Doesn’t this lead to extreme situations, aid of less than €150,000 will no longer duration of the contract between the gov- such as that of Sweden, which has taken be subject to controls. Regarding the larg- ernment and the SGEI provider, rather social housing away from public services est SGEIs; all those of a social nature will than on an annual basis, so as to bring long- in order not to have to change its broad be exempt from notification, and the cur- term investments into the picture. Expen- definition of social housing? rent definition of social nature – which diture that is staggered over time will thus This is a debate for each individual member includes social housing and hospitals be better distributed. state. Some countries have very broad and – will be broadened. For SGEIs likely to ambitious social housing policies, thanks to have an impact on the market, we clarify You propose eliminating the restrictive their economic capacity. Others do not, for the fourth criterion of the Altmark judge- definition of social housing in the current political or economic reasons. It is not up ment: the evaluation of the level of com- package. Is this aimed at defusing con- to the Commission to provide a definition pensation based on an analysis of the costs troversy over the Commission’s decision of social housing policy. It is the Commis- of an average, well-managed and suitably regarding Dutch social housing? sion’s responsibility, when it receives a vol- equipped company. However, the Court I cannot discuss a Court of Justice case, but untary notification or complaint, to check of Justice will always have the final say. what I can say is that while this case has compatibility with the rules it is in charge We have a third objective; to reward provid- been very time-consuming for my services of applying, and with the qualification of ers of successful SGEI which offer better ser- and caused a great deal of debate, in fact an SGEI, the absence of ‘obvious error’. n

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Public procurement/Concessions Social housing favours more flexibility

By Sophie Mosca terms of price are limited. to mobilise the European Parliament These organisations also maintain that as co-legislator to obtain the explicit In the context of general restrictions pooling resources or sharing them with exclusion of these public-public on public finances in Europe, social local authorities reduces management cooperation. housing organisations are required, costs and improves the effectiveness and more than ever, to keep a tight control quality of the public service. Recognised public procurement on spending. In order to achieve the by the EU Court of Justice as “public The other approach adopted by social mission of public service with which bodies,” they argue that since they are housing organisations is to target the they have been charged they are never- not likely to impact on the economy, this relaxation of public procurement rules. theless subjected by EU directives relat- mutual sharing of basic administrative They already benefit from special condi- ing to public procurement to obligations services (accounting, human resources, tions for complicated land development such as advertising, competition and training, legal and litigation services, operations involving different players respect for equal treatment of partners communication, financial management, and sophisticated presentations but are - all of which are costly. Also as part of computer services, etc) or expertise for asking for more changes: on the one the modernisation of the 204 directives complicated presentations should be hand, a substitution of the existing pre- (2004/17/EC on public procurement considered as public-public cooperation emptive checks by retrospective checks procedures for public works contracts and therefore not subject to public pro- for fair competition and at the initia- and 2004/18/EC for public service con- curement rules. tive of the buyer (ie theirs), and on the tracts) launched by the Commission In the Teckal judgement (C-107/98), other hand an increase to the €249,000 and which is expected to result in pro- the EU Court of Justice delivered a threshold below which the directive on posals, on 20 December, these organi- verdict on the “in-house” procedure public procurement service contracts sations have been highlighting the spe- accepting that certain public works or passed by contracting authorities other cific nature of their sector in order to service contracts signed between public than “central government authorities” have the laws relaxed. They responded bodies can be excluded from public does not apply. But according to recent in a similar fashion to the directive on procurement rules if, on the one hand statements by Michel Barnier, the com- concession contracts, expected on the the body executing the contract is con- missioner responsible for the internal same date, insofar as they are either trolled by a public entity (as it would market and financial services, this sub- bidders in public procurement calls for do for its own services) and, on the ject is not on the agenda. offers or adjudicators for example when other hand, the executing body does maintaining their buildings. most of its work with its partner. After Concessions having refused the “in house” qualifi- When it comes to concession con- Priority public-public partnerships cation due to the presence of private tracts, social actors are not very keen on The new public procurement direc- capital in the contracting body (Stadt stricter EU legislation since the exist- tives should be better suited to respond Halle (C-26/03) and Austria (C-480/06) ing legislation gives them the flexibility to economic evolutions, satisfy the judgements), the court recently added that they lack with public procurement objectives of a ‘social market economy’ an extra nuance to this position in the rules. and ‘sustainability’ (stipulated, one in name of “considerations and require- They feel that there is no need for the Lisbon Treaty and the other in the ments relating to the pursuit of objec- specific rules for concessions which ‘Europe 2020’ strategy), clarify the fron- tives in the public interest” (Commis- could potentially contradict the national tiers between service and public works sion-Germany, C-480/06). A better framework in certain member states markets and lastly improve legal cer- perspective for the social housing where this type of contract is widespread tainty of actors in the line of case law of sector in which most major players have (France, Italy Germany, etc). They fear the EU Court of Justice. access to private capital except that the that excessive restrictions or complexi- The social housing sector would like Commission does not intend to include ties might put authorities off using this the texts to be adapted to take into this case law in the directives which are tool. They are also fighting for public- account its specific nature starting with expected to be adopted by the end of private partnerships to be excluded a reduction in the inherent waiting peri- 2011 and enter into force in 2013. The from the scope of this future directive ods in current procedures, which cause Commission feels that it is not stable or for more relaxed measures similar to delays in making housing available to the in the absence of any precise litigation the exemption already included in the intended beneficiaries, thus depriving related to social actors partly “using” public procurement directives. them of rental income. Moreover, only private funds. The latter seem therefore At the very least the future directive a small number of companies respond to be condemned to living in a ‘grey should guarantee the necessary flexibil- to the calls for tender by social housing area’ hoping that a litigation case does ity for this type of operation to fulfil its organisations. This means that competi- not come and turn the situation against mission and to be adapted to the specific tion is minimal and the profit margins in them. The only other option would be realities of each member state. n

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Court to rule on definition of social housing

By Sophie Mosca erlanse Gemeenten, BNG). It considered month are still considered as social hous- that these measures introduced overcom- ing. Housing stock not targeting the dis- The European Commission has brought pensation with respect to the public ser- advantaged population must be placed on into question the relevance of a national vice mission vested in the foundations that the open market. definition of the public service of provid- manage social housing, which makes up This agreement was sealed by a decision ing social housing in response to questions 32% of total housing stock. The executive dated 15 December 2009 (C/2009/9963) raised by member states wishing to notify a considered this scheme to be incompati- concerning existing aid as well as new state aid scheme for this sector and in con- ble with EU state aid rules because it does measures in support of social housing nection with complaints for distortions of competition. As the guardian of state aid rules, the executive has the duty to control whethere there is any “manifest error” of classification of a public service of general economic interest (SGEI) and has thus assessed the compatibility with EU rules of national definitions of social housing public services. The Dutch case crystal- lised the opposition between proponents of an open concept of such a service and those defending a more category-based approach, where social housing is reserved to least favoured persons. The Commis- sion’s response in favour of the latter has created a climate of legal uncertainty. The EU General Court has been asked to rule on this sensitive debate that calls into ques- tions the limits of the control exercised by The EU General Court has been asked to rule on this sensitive debate that calls into questions the limits of the control the Commission’s Directorate-General exercised by the Commission’s Directorate-General for Competition for Competition. Preliminary questions not target “socially disadvantaged persons” undertakings in declining urban regions, submitted to the EU Court of Justice by and does not introduce clear separate which were approved. a Belgian court have also been raised with accounting between the public service reference to this case. activities and the more commercial activi- Challenges ties of social housing bodies. The Commission’s decision was chal- Dutch definition under review In this context, in 2007, IVBN, an asso- lenged in three separate actions for annul- The Commission, asked by several states ciation of institutional investors, lodged a ment before the General Court: the first through voluntary notification to rule on complaint against the Dutch system, argu- was lodged on 1 April 2010 by the BNG the compatibility of their social housing ing that it gave rise to a distortion of compe- to object to measures concerning it, the system with state aid rules for SGEIs, first tition on the market of well-to-do renters. second on 29 April 2010 by a group of 133 endorsed, in 2001, systems targeting disad- The complaint sparked things off because Dutch social housing foundations defend- vantaged populations, like those in Ireland the position defended was in full agree- ing the initial objective of fostering a social and the United Kingdom providing aid to ment with the EU executive’s approach. mix, and the third by the IVBN, in reaction facilitate ownership. After a preliminary investigation, the Com- to corrective measures it considered insuf- The question became more problem- mission concluded that the Dutch support ficient to ensure fair competition (Cases atic when the Commission had to rule measures for this sector were incompatible T-151/10, T-202/10 and T-201/10). on models based on wide access with an with EU law, arguing that since the ser- The first case was removed from the reg- objective of fostering a social mix, like the vices are accessible to well-to-do persons, ister after clarifications with respect to the Swedish and Dutch models. they no longer qualify as a public service bank’s missions. In the second, the Dutch Based on a notification by the Nether- mission of general interest. The decision social housing foundations maintain in lands in the early 2000s, the Commission was followed by a negotiation between the substance that the Commission exceeded expressed reservations, in July 2005, about Commission and the government to deter- its competence by imposing on the Neth- state support for social housing undertak- mine an income ceiling, €33,000 per year, erlands a new definition of social housing ings composed of: 1. state guarantees; 2. above which access to social housing in in line with its views and erred in decid- public financing; 3. availability of munici- this state would be refused, save for a mar- ing that a member state must define the pal land at below market prices; and 4. ginal share of 10% of total housing stock. service of general economic interest on loans from a municipal bank (Bank Ned- Dwellings with a rent of less than €648 per the basis of an income threshold. They www.europolitics.info Sold by subscription only © reproduction strictly prohibited in any language EUROPOLITICS N° 4328 Friday 16 December 2011 21

also challenge the Commission’s request analysis with regard to the obligation for Flemish housing minister obliging private for an exhaustive list of buildings catego- social housing foundations to set a rent promoters who apply for a building or sub- rised as social property, which means that below the ceiling of €648 set by the law division permit for any project with more those not included no longer fall within and argue that the definition of the target than 50 flats or ten individual houses to the category of services of general eco- group for social housing provision is provide 20% of the land to social hous- nomic interest. The Commission is also unsubstantiated and incorrect. ing bodies or to sell certain dwellings at deemed to have erred in its assessment The private investors argue that the capped prices to social rental associations, of certain types of aid and was errone- EU executive failed to obtain sufficient or to pay them compensation of €50,000 ous and negligent in concluding that the safeguards against overcompensation and for each dwelling not provided. letting of social housing to persons with failed to address their complaint concern- The private promoters behind the com- a relatively high income is part of the ing aid provided by the housing invest- plaint consider that the order establishing public service mission of social housing ment fund (Woningsinvesteringsfonds) this obligation runs counter to EU state corporations. The applicants also claim and the Nederlandse Waterschapsbank. aid rules because it was not notified to that the EU executive failed to examine They also seek an “objective limit on the the Commission. They refer clearly to the whether there is a “manifest error” in the construction costs of housing that is to be decision on the Netherlands and argue definition of services of general economic funded by aid” and argue it committed a pro- that the properties they must make avail- interest contained in the current Nether- cedural error by failing to initiate the formal able to Belgian social housing associations lands system of social housing funding. It investigation procedure, thus depriving them are meant for “a wide range of private indi- is also accused of erring in law by failing of the right to make their views heard. viduals” and not a specific target popula- to distinguish between the definition of a tion. They also consider that the executive service of general economic interest and Belgian case order infringes the Services Directive, the manner in which it is financed. The Belgian Constitutional Court freedom of establishment and the princi- For the private investors, on the other referred a case on a similar subject to the ple of freedom to provide services since it hand, the decision does not go far enough EU Court of Justice, in April 2011. The obliges them to provide a service that will on either existing or planned aid. On the 12 questions raised aim to establish the not be beneficial to them, but will be for former, they dispute the Commission’s compatibility of an executive order by the the social sector. n

Three questions to MEP Sophie In’t Veld “Blaming the Commission is pure Brussels bashing”

By Florence Martin and €43,000 approximately, it is near It is for the Dutch government to decide to impossible to find affordable hous- on the organisation and financing of Sophie In’t Veld (ALDE, Netherlands) ing in the private sector. But this prob- the social housing sector. The Commis- was rapporteur, in 2005, on a sion merely verifies for mani- non-legislative parliamentary fest errors or violations of the resolution on state aid in the treaty rules. The Commission form of public service com- does not decide, nor does it pensation. She presents here impose any specific solutions. her opinion on the case in the Blaming the European Com- Netherlands, the results of the mission is pure Brussels bash- 2009 decision on the incomes ing, and distracts from the real limit and the role the Euro- problems and the need for pean Commission should play tough reforms of the housing with regard to state aid. sector.

Do you think the 2009 deci- What should be the priorities sion agreed between the of the Dutch government?

European Commission and © DR Rather than calling for wid- the Dutch government is In’t Veld: “The housing market in the Netherlands is profoundly distorted” ening the scope for subsi- satisfying? lem is a result of the sick Dutch hous- dised housing, it should be the high- The problem is that the housing market ing market, not of any decision of the est priority to sanitise the Dutch in the Netherlands is profoundly dis- European Commission. housing market. Subsidies should be torted. Both renting and buying are progressively reduced and redirected heavily subsidised, pushing up prices. What should then be the role of the more towards people and less towards For the income group between €33,000 European Union? institutions. n

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Interview with Freek Ossel, Amsterdam alderman for housing Commission’s decision hinders social mix

By Florence Martin by the EU regulation. The construction be reduced, and vice versa. Finally, the of dwellings offering a mix of cheap ‘Koopgarant’ scheme allows buyers to Freek Ossel explains to Europolitics and medium-priced rental properties is purchase certain accommodation from the philosophy of the Dutch policy on hampered. Corporations are forced to a housing corporation with a discount. social housing and the consequences split the cheap section and the medium- of the 2009 decision A total of 133 Dutch on income limits in social housing foun- Amsterdam. dations sought the EU Court of Justice’s After 100 years of annulment of the social housing in Commission’s deci- Amsterdam, what is sion of 15 December your assessment of the 2009. The govern- situation with regard ment is urged by the to social mix? parliament to reopen Amsterdam has been negotiations with striving to become the Commission for an ‘undivided city’ an increased income for many years. A city limit. Do you support with mixed neighbour- those initiatives? hoods: a blend of poor We certainly do sup- and wealthy, young port these initiatives. and old, where people However, it may not be

on low incomes are © DR necessary to increase Ossel: “We applaud the Commission for providing member states the freedom to decide themselves which still able to live in the groups are eligible for social housing” the income limit for desirable neighbourhoods. While a priced section and hence secure a the whole of the Netherlands. In most socio-economic disparity still exists, more expensive loan. This means that cases, market prices will be relatively the ‘undivided city’ policy has been hardly any properties are being built in low in areas of population decline. successful so far. Corporations have the middle segment, neither by other For areas where there are shortages, always played an essential role by market parties. in Amsterdam for instance, property allocating rental accommodation to prices in the liberalised segment will various income groups and by facili- Too rich to benefit from social housing, become too high for people with an tating urban renewal in less desirable too poor for the private market - what is income above €33,614. So if the limit districts further away from the city planned for them? is raised to €43,000 in those areas, we centre, such as Noord, Nieuw-West Approximately 45,000 Amsterdam- can continue to guarantee a beneficial and Zuidoost. mers are on low to medium incomes, mix of low and higher incomes. ie annual income between €33,614 Is social mix threatened by the EU def- and €43,000. With a huge demand for Is the broader definition of social hous- inition of public service and the rules housing, rental prices in Amsterdam ing as drafted in the recent legislative on incomes’ limit? are on the rise, beyond the protected proposal from the European Commis- I believe so. Some 90% of rental prop- rental limit of €652. The monthly sion on state aid for services of general erties costing less than €652 per month rental price of such accommodation economic interest a possibility to solve have to be allocated to people on low often exceeds €1,000. To assist them, the dispute? incomes (under €33,614 per year). This we want to offer housings of upper We applaud the Commission for provid- will result in a high concentration of rents between €652 and €800. We are ing member states the freedom to decide low-income tenants occupying hous- also discussing with the Amsterdam themselves which groups are eligible for ing corporation properties. And in the Tenants’ Association the possibility of social housing. It would certainly help long term, to ‘homogenised’ neigh- flexible rental. A market-related rental us enormously if the Dutch state and/or bourhoods and segregation. Alongside price could be set for a property, but the relevant minister use this freedom mixed neighbourhoods, we want to corporations would offer discounts to set a higher income limit or differ- offer Amsterdammers the chance to to households that are unable to pay entiated limits. We can then continue find a suitable property for each phase the full price. If the tenant’s income to apply our ‘undivided city’ policy to of their lives. This is currently hindered increases, the level of discount would Amsterdam. n

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Interview with Kurt Eliasson, CEO of Swedish Association of Public Housing Companies (SABO) Sweden: Social housing under “businesslike principle”

By Florence Martin same rent, according to the ‘utility value’ that the public housing companies have to principle. maximise profits. The EU concept of social housing does not create difficulties in countries that target the The Swedish government decided to stop Will households access social housing at least advantaged, like Ireland, where 80% the financial subventions. What is the the same rental prices? of residents own their housing. In Sweden, impact of this decision for the housing There is no immediate effect on rental on the other hand, the universal approach sector? levels but rents are expected to be gradu- to managing the social hous- ally more differentiated: rents ing sector, which accounts for will increase more rapidly in 22% of all housing, has led attractive residential areas and authorities to make a radical a little, if at all, in less attractive choice. The European Prop- areas. erty Federation (EPF) lodged a The rent setting system has also complaint with the European been adjusted to be compat- Commission, in July 2002, ible with EU rules. In Sweden, disputing the practice of allo- rents are set in negotiations cating state aid to house more between the landlord and the well-to-do people. The Swedish Tenants’ Union. This nego- government decided, in spring tiation system is maintained, 2007, to abolish public service but with a major change: the compensation for municipal public housing companies housing companies in order to cease to have a normative role maintain its universal access. in these comparisons. This was The law that entered into force supposed to hold back rent on 1 January 2011 liberalises increases in the private sector. © DR the public housing sector but is Eliasson: “This is a new concept in the Swedish law, the exact meaning is still under From now on, comparisons are only partially applied to date. debate” instead to be made with nego- The phasing out of state subsidies for hous- tiated rents in any comparable apartments There is a universal conception of the ing construction began already in the early – private or public. This seemingly implies access to social housing in Sweden. What 1990s. Following the European Property a new scope for higher rents but the out- are its main specificities? Federation’s complaint to the Commis- come depends on the relative strength The corresponding sector for social hous- sion, after state inquiry and much debate, of the Tenants’ Union and the landlords, ing in Sweden is called ‘allmännyttan”, the Swedish parliament passed a new law. respectively. And one has to bear in mind which means ‘public utility’ or ‘for the The Municipal Housing Companies Act that the Tenants’ Union in Sweden is a benefit of all’. The housing companies establishes their objective and ground very powerful institution with more than are owned by the local authorities whose rules. half a million members. goal is to provide housing for all, regard- Public housing companies must then less of gender, age, origin or incomes. The promote public benefit and the supply of If a future EU legislation on state aid dwellings are normally allocated by time housing in the municipality for all kinds of for services of general economic interest on a waiting list. Tenants must afford the people. To do so, they operate under ‘busi- includes a broader definition of social rent, possibly thanks to a housing allow- nesslike principles’. This is a new concept housing, would you consider revising your ance, but, to avoid stigmatisation of the in the Swedish law, the exact meaning is decision on compensations? sector, there is no upper income limit to be still under debate. But it should imply that We would consider using the new scope, eligible. there is no direct support, either from the but this would in fact not necessarily mean In practice, wealthy people are not the government or from the local authorities, revising the decision. Already in the new usual residents, but on the other hand no favorable loans, no special advantages law it is stated that subsidies which are com- many middle-income households live in in taxation or whatsoever. They should not patible with EU rules could well occur. public housing. For the Swedish popula- apply the ‘cost-price principle’ any longer, With a broader scope for compensation tion, there is no strongly pronounced sepa- but instead apply correct pricing, includ- for SGEI within the housing sector, this ration between private and public rental ing a certain profit margin. Municipalities might be part of a solution when it comes housing, all the more so since rents do not should then require a market-based rate to providing public housing on declining differ a lot. This is because dwellings of of return on investments, based on indus- markets, where it is not possible to provide equal ‘utility value’ should have about the try practice and risk. But it does not mean affordable housing on market terms. n

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Private sector’s point of view Reserving social housing for the most needy

By Florence Martin in relation to the income of tenants and MacBrien, director-general of EPF, the size of the family. The ELO criti- judges would therefore be able to fix In defining public services for social cises situations where a couple is given rents according to the amounts charged housing by the ‘disadvantaged’ status “accommodation of 200 m2 to house a by social housing companies. of those who request this housing, the family with four children, but stays there “The public sector sets index amounts European Commission has opted for once the children have left”. The allo- for rents, while benefiting from sub- a ‘residual’ approach, which gives the cation of social housing should become sidies,” he complains. According to advantage to private operators within more fluid, says the ELO. MacBrien, the issue of unfair competi- the real estate sector. Reserving access The ELO also praises the German tion should have been dealt with at the to social housing only for the most model, where all landlords limit rents European level, since “for the last fifteen underprivileged people also allows the for the most disadvantaged tenants, years, landlords have been investing private sector to capture the wealthier while benefiting from subsidies or tax outside national borders, and citizens of end of the rentals market; this is the nub exemptions. This aid is temporary, other member states are also discrimi- of the disagreement between private and since it is received for the duration of nated against”. public operators. the time it takes to pay off the property - The Netherlands If some of the share of social housing – between 12 and 20 years, depending In 2007, after failing to convince the is allocated to tenants with sufficient on the Länder. Public subsidies are Dutch parliament, IVBN, the Associa- income to access the commercial market, supposed to fill the gap between these tion of Institutional Property Investors private operators say they will suffer from reduced rent levels and the normal cost in the Netherlands, lodged a complaint competition distortion, since the public of rental on the commercial market. with the European Commission. sector benefits from financial compensa- Subsidies are reduced each year, while According to Frank van Blokland, tion from public services. According to rents are gradually increased until director of IVBN, social housing com- the subsidiarity principle, each member they reach the normal level of the panies were “engaged in commercial state is able to decide on its own crite- commercial market. activities which were far removed from ria for granting access to social housing, However, CECODHAS, the Euro- their original purpose” and they had and granting universal access to social pean federation of social housing, says branched out into “profit-making activi- housing is often defended with the argu- the problem with this system is that not ties,” such as investing in commercial ment that it promotes social diversity. enough affordable housing is available. structures. Van Blokland also believes it However, the private sector responds to Filiep Loosveldt from the EUPC sug- is not possible to clearly define the activ- this argument by quoting the principle gests subsidising demand rather than ities for which social housing companies of equal treatment. supply. Aid would therefore be allo- benefit from subsidies. He adds: “The The European Landowners’ Organisa- cated to disadvantaged tenants, rather government has clearly not been able to tion (ELO) says “we must not hide behind than landlords, in order to help them to give a satisfactory response to the Com- arguments for social diversity in order to pay the rent or repay a mortgage. They mission.” He contests whether it is still cover up competition distortion”. For would also be able to choose whether possible to rent 10% of social housing to the ELO, it is even more important to to opt for public or private housing. the wealthiest sector of the population - provide decent, affordable housing for Loosveldt adds that the provision of those earning more than €33,000 a year. the most disadvantaged people because aid could be “made subject to quality On the other hand, since the maximum it allows the risk of debt “to be spread criteria for the accommodation”. The rent for social housing has been fixed at across the community, rather than being UEPC says this system would be more €650, IVBN fears that rents will be kept the sole burden of individual landlords”. efficient, as it would put an end to long artificially low – despite the fact that To satisfy the remaining demand, the waiting lists. social housing accounts for 2.3 million European Union of Developers and out of three million properties on the Builders (EUPC) also calls for an end to Why appeal? rental market. the public sector monopoly. Compensa- - Sweden In reality, no-one was satisfied with this tion for public service should be granted It was the Swedish principle of ‘util- agreement. A collective of 133 Dutch to all real estate operators, whether ity value’ which prompted the European social housing foundations and IVBN private or public, the EUPC believes. Property Federation to lodge an appeal lodged an appeal for annulation with with the European Commission, in July the Court of Justice. The Dutch parlia- Solutions 2002, bringing the issue onto the Euro- ment also protested, calling for negotia- Private real estate operators say greater pean stage for the first time. According tions to be re-opened, and the Socialist ‘mobility’ is required when it comes to to this principle, lodgings of the same Party even threatened the interior minis- the allocation of social housing; in other utility value should be rented at the ter with a vote of no confidence on the words, housing should not be allocated same price. In cases of conflict between extremely sensitive question of income for life, but instead, its use should evolve tenants and landlords, explains Michael thresholds. n www.europolitics.info Sold by subscription only © reproduction strictly prohibited in any language EUROPOLITICS N° 4328 Friday 16 December 2011 25

Interview with László Andor, commissioner for employment, social affairs and inclusion “EU rules already largely take into account the specific nature of social services”

By Sophie Petitjean been recommended to develop com- Monti-Kroes package), clarifying and prehensive homeless strategies beyond simplifying the circumstances in which Social housing is a competence of the provision of simply temporary crisis a grant of aid for the financing of services national or regional governments, but accommodation to more comprehen- of general economic interest (SGEI) by certain decisions in this sector are more sive progression policies designed to public authorities in the member states or less influenced by European policies. help people move on to supported and/ could be compatible with the treaty. László Andor, commissioner for employ- or permanent accommodation. The Services Directive, which applies to ment and social affairs, has pointed out Other EU policy areas also touch on certain social services, contains a number on a number of occasions that he con- housing, for example, EU rules on state of provisions which allow member states siders social housing to be an important aid for services of general interest and to take into account the specificities of tool in combating insecurity. He notes the VAT Directive. social services of general interest. that the goal of bringing 20 million Moreover, public authorities enjoy con- people out of poverty by 2020 is one of Our analysis shows a certain frag- siderable latitude in the social services the EU’s key priorities and that it is his mentation of EU policy (for example sector as only certain provisions of the role to ensure that its influence is posi- encourage public-public partnerships directive on public procurement as well tive. The commissioner adds that this versus competition). Why don’t you as the treaty principles of transparency preoccupation is reflected in recent EU coordinate the topic, as it is part of and non-discrimination apply to con- legislative initiatives, whether the Struc- your portfolio? tracts on social services. That is why we tural Funds or state aid rules. Yet in spite Social housing is a complex issue, which believe that there is no need for a spe- of this favourable approach, Andor still involves different areas, under the remit cific EU legal framework on SSGI. refuses to consider a specific framework of different commissioners. The deci- However, in order to further adapt the for social services. sions are taken by the members of the EU rules to the specificities of social European Commission collectively. services, the Commission is currently Europe is facing a social housing crisis That’s how we make sure policies in reviewing - after having carried out because of a growing demand and a various relevant areas (such as innova- extensive public consultations - the decrease in funding. How does the tion, urban development, cohesion) are state aid and public procurement rules. European Commission comprehend coherent and each area is carefully con- In this debate I am trying to ensure, for the problem? sidered. On top of that, the European instance, that social considerations can The financial crisis is strongly linked to Parliament and the Committee of the be used as award criteria, or that the a housing crisis. Imbalances in the hous- Regions have been actively involved in price is not the sole criterion for the ing sector are partly causes and partly designing and implementing a more choice of a service provider. consequences of the financial turbu- coherent approach together. lence. It’s clear that housing policy falls Are you planning to set up a high- within the remit of national or regional The Committee of the Regions and level working group to find solutions governments, but some decisions can the European Parliament have already to the problems that the SSGI is faced be influenced by European policy. called on the EU, on a number of occa- with, as requested by the European First of all, the Commission has pro- sions, to recognise the specific features Parliament in July (De Rossa report)? posed an increase in the percentage of social services of general interest, to The Commission has undertaken thor- of European Social Fund (ESF) allo- no avail. What explains this refusal? ough consultations on the reform of cations for social inclusion from 13% The overwhelming majority of EU both state aid and public procurement currently to over 20% after 2013. And member states categorise social housing rules. However, this dialogue should the rules for the Regional Development as a general economic interest and EU respect the different roles of the institu- Fund (ERDF) were modified in 2010 to rules already largely take into account tions involved. That’s why we believe allow all 27 member states to invest in the specific nature of social services. In it would be better to use existing struc- housing for marginalised communities particular, the treaty ensures that the tures, including the Social Protection in rural and urban areas. specific mission of general interest is Committee (SPC), to continue discus- At EU level, we are also taking action taken into account when applying the sions with stakeholders rather than in the field of homelessness, especially treaty rules. creating a new multi-stakeholder high- through the exchange of good prac- As regards state aid rules, the Commis- level working group that brings together tices and recommendations to member sion adopted a package of measures in MEPs, various commissioners, the states. For example, member states have 2005 (known as the SGEI package or Council and the stakeholders. n

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Interview with Thierry Repentin, president of USH “Social housing more integrated into EU policies than ten years ago”

By Sophie Petitjean What I note in particular is the closer and question of the democratic deficit, which closer interconnection between what goes characterises this type of European deci- The Union sociale pour l’habitat (USH, on in the territories and what goes on in sion in the absence of a legislative reference or Social Housing Association), which brings Brussels. That signals a higher and higher framework. The issue of the opportunity of together some 800 French social housing degree of European integration. The two a legislative framework specifically for social bodies, has had a permanent representation crises which we are faced with today, the services of general interest therefore remains in Brussels for ten years. And the situation open from this point of view. I fully share has moved on considerably since 2001, the vision of Vladimir Spidla, the former according to the organisation’s President, employment and social affairs commis- Thierry Repentin. He notes that this issue sioner, that we will get there sooner or is increasingly taken account of in Com- later. It is a matter of political maturity in a munity policies. He points out that the complex and particularly sensitive issue. crisis will have to confront the supply of housing and its financial accessibility with What are the other big challenges to be new challenges which the EU will have to surmounted for social housing? respond to. The USH advocates a social We are faced with a concrete major issue: © CE housing model that is geared to people in Repentin: “The debt crisis calls for new structural responses to to respond to growing needs for affordable need who have difficulties accessing decent growing needs in terms of affordable housing” housing for European citizens faced with housing at an affordable price. And it wants market crisis and the crisis of states and the economic crisis and the rise in unem- to do this while avoiding the social specialisa- their debt, strengthen this interconnec- ployment and exclusion while we ourselves tion of some blocks of flats, districts or territo- tion between what happens locally and in are directly hit by budgetary austerity mea- ries and by preserving a mix of social groups Europe, including in the very definition of sures and the reduction of public funds and social cohesion. social housing and its role faced with the allocated for social housing. The debt crisis failure of housing markets. calls for new structural responses to growing After ten years in Brussels, how would you needs in terms of affordable housing. The describe the change in European debates The recent European Commission deci- regulation of housing markets is a necessary on social housing? sions regarding the Netherlands and step faced with the disastrous consequences What surprised me the most is, on the one Sweden did not please the USH. What of housing cycles and the ‘bubble’ phe- hand, the speed of change and the impact role should the EU play in your view? nomena for the stability of the eurozone of EU law on social housing - I’m thinking In our view, as a European competition but, above all, for households with modest in particular about single market and state authority, the Commission is not competent income. The consolidation of specific cir- aid rules - and, on the other, the gradual to define the missions given to social hous- cuits of financing for social housing is also emergence of social housing in Commu- ing bodies by national or regional legislators necessary faced with the withdrawal of the nity policies, especially those relating to eco- in advance, unilaterally and without demo- banks and the volatility of interest rates. nomic and social cohesion and to combat- cratic checks. I doubt whether the Council Europe can act very concretely by promot- ting climate change. The leveraging effect and the European Parliament, if they had ing, for example, new financial instruments of these policies on territories, through the had to take a position, would have followed based on ‘solidarity’ and by organising European Regional Development Fund the Commission in its analysis of the public better macroeconomic surveillance of these (ERDF) and the European Social Fund, service of social housing and its area of ‘housing bubbles’. has been real since the implementation of intervention in the market. We are also facing new issues. Here, we the recovery plan presented by President These two issues refer back to collective could cite the fight against ‘energy pov- Barroso in 2008. preferences anchored locally that only the erty’, which is growing, and the need to Reduced VAT rates, leaving social housing Community co-legislators are able to inte- renew the pool of social housing that exists out of the Services Directive, exempting grate. In any case, this decision making to strengthen its energy performance but notification of state aid in favour of bodies practice has affected the fundamentals of also ageing populations, the adaptation of with moderate rent housing, the eligibil- social housing: housing people in need housing and the development of new ser- ity of heating renovation for social housing with a mix of social groups while respect- vices for dependents, access to housing for and access to housing for disadvantaged ing public service obligations (the financial young people who are the first victims of the groups to ERDF funding are all examples accessibility of housing, rules and allocation crisis and of being left out of the job market. of our full and total involvement in the procedures in terms of priority of access and Here, too, Europe can play a role as a Community legislative process. security of tenure of housing). It poses the driving force. n

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State aid Social housing not only sector concerned

By Florence Martin Hospitals and social housing have been referred a similar case to the Commission in faced with the same types of questions, when 2006, arguing that the hospitalisation insur- Other general interest social services that federations of private profit-making clinics in ance policies offered by ‘mutuelles’ constitute interact in one way or another with the pri- France and Germany, arguing unfair compe- unfair competition. The Commission pointed vate sector give rise to questions similar to tition, complained to the European Commis- out that these entities were in fact dispensed those facing the social housing sector. For sion over aid to the public sector. The execu- from prior authorisation but ordered the Bel- example, hospitals wonder whether they tive dismissed their complaint, referring, as gian state to restore sound competition, to the are in the same boat in relation to subsidies reported by Pascal Garel, director-general of displeasure of mutuelles, which consider that received as compensation for public service. the European Hospital and Healthcare Fed- their hospitalisation insurance is based on a They are automatically exempted from the eration, to a “misunderstanding”The of how the centrepiece different philosophy. Negotiations opened obligation of notifying compensation to the system operates. We havebetween the two parties details and the Belgian gov- EUROPOLITICSTHE EUROPEAN AFFAIRS DAILY European Commission, with no financial In Belgium, Assuralia, the professionalof EUernment news resulted, in 2008, in a solution that thresholds. association of private insurance companies, was passed into law on 26 April 2010. n

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