Services Directive threat to social housing

19 April 2005

Services Directive threat to social housing

Similar to the housing associations found in some parts of the UK, Dutch housing corporations, although privatised just over a decade ago, are non-profit foundations obliged to meet a number of exacting statutory obligations. Vital to the provision of affordable housing in the Netherlands, they are now under fire from the European Commission. Kartika Liotard, Member of the European Parliament for the SP, explains.

Dutch non-profit housing corporations are deeply concerned over criticisms by the European Commission of their interpretation of the duty to put contracts above a certain size out to tender across the whole of the EU. What provoked this disquiet was a tender issued by a housing corporation in Vathorst, a new estate at Amersfoort. Because housing corporations, under legislation governing the sector, can still (despite being privately owned) be defined as public bodies, they are obliged to fulfil the conditions laid down in the EU's compulsory tender laws. The Commission sees public-private partnerships as state-run bodies and believes therefore that they fall within the scope of the European tender system.

What the Commission or possibly in the end the European Court is going to do about this is not clear. What is obvious, however, is that co-operation between local authorities and housing corporations now faces an even greater threat: the EU Services Directive. Paragraph 6 of Article 14 of Bolkestein's proposed measure forbids “"the direct or indirect involvement of competing operators, in the granting of authorisations or other decisions of the competent authorities”. This is a far-reaching interdiction. Every agreement between a local housing corporation and a local authority must, according to the Services Directive, be viewed as, by their very nature, an impermissible form of interference with competition, because service providers from other countries can have no possibility of making such an accord. Any such arrangement must, according to the Commission, discriminate against foreign firms – and indeed it must.

But local authorities and corporations need each other, being together responsible for a major part of building production and social housing. It is common for a corporation to be given permission to develop an area in return for certain undertakings to the local authority in relation to the sort of housing the authority wishes to see. Social housing agreements between local authorities and corporations rely to a large extent on mutual advantage. The EU Services Directive would put an end to this form of cooperation. Corporations would be forced increasingly to present themselves as 'ordinary' property developers. According to ‘Bolkestein’ that would be a good thing, because they could then tender for work in any member state of the Union. It is open to question, however, whether a local non-profit housing corporation from, say, Amersfoort would really have much interest in building flats in Prague or Zagreb. Even if one might wish it success in such a venture, this would not alter the fact that the local authority would be left empty-handed, forced to rely entirely on the 'free market' for all of its social housing needs.

This article is translated from a piece which appeared in NRC Handelsblad on 19th April, 2005

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