Public services and territorial cohesion: let’s put core European values at the centre again

By Judith Clifton, Daniel Díaz-Fuentes and Marcos Fernández-Gutiérrez
Department of Economics, University of Cantabria (Spain)

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Social, territorial and economic cohesion, explicitly incorporated into the Treaty of Lisbon, are (or, at least, are expected to be) objectives at the core of the European project.

From the beginning, European integration incorporated strong concerns about social cohesion, which reflected the aims of achieving a combination of an advanced economic and social model, which has become paradigmatic at the global level. As the Union became larger and more heterogeneous, it also incorporated the aim of territorial cohesion. But, what is “territorial cohesion”?

As defined in the Territorial Agenda of the EU (2011), territorial cohesion is “a set of principles for harmonious, balanced, efficient, sustainable territorial development. It enables equal opportunities for citizens and enterprises, wherever they are located”. Territorial cohesion reinforces the principle of solidarity which has traditionally characterized the European project, giving it an additional spatial perspective.

At present, in a context where the European integration project is being called into question, it is a good moment to reflect on its core values. Are we ensuring social and territorial cohesion are inserted into the core of the European agenda?

One of the best elements to evaluate this are the so-called public infrastructure services (or, following the European terminology, Services of General Economic Interest, SGEI), whose role in terms of social and territorial cohesion is crucial. This evaluation is, precisely, what we do in our paper “Public Infrastructure Services in the European Union: Challenges for Territorial Cohesion”, recently published in Regional Studies, and available here.

Public infrastructure services (such as energy, water, telecommunications, postal services, transport and, also, banking services –see Molyneux, 2017-) are defined as “public” because of their essential functions as regards the public or general interest (Van de Walle, 2009). For this reason, in Europe, these services are not only subject to the rules of the market, but also to public service obligations (for instance, to guarantee universal access, or affordable prices).

These services, as recognised in the Charter of Fundamental Rights of the European Union, play an essential role in the objectives of territorial cohesion: they are key for regional competitiveness, equity and balance, as well as for economic development and sustainability of rural communities.

The provision of public infrastructure services may differ among territories, and this is not a problem per se. However, a core objective of territorial cohesion is that this does not disadvantage citizens due to their place of residence (Molle, 2007; Fassmann et al., 2015). From this approach, we evaluate the provision of these services in the EU from a territorial perspective, considering two dimensions: differences among regions and differences between urban and rural areas. We evaluate whether residents are disadvantaged as regards public services provision by, first, exploring the territorial determinants of expenditure on these services, using national Household Budget Surveys. Then, we contrast this evidence with the territorial differences in citizens’ satisfaction with services’ accessibility and affordability, obtained from the last Eurobarometer dedicated to evaluate public infrastructure services from the citizens’ perspective (EC, 2007).

The kind of information which provides this Eurobarometer (which is analysed in detail in our paper) is briefly described in figures 1 and 2 below.

Figure 1 shows the percentage of European citizens which state they enjoy easy access to each of the services under analysis. Here, we differentiate between residents in rural areas or villages (according to citizens’ self-definition, 33.1% of the sample at the EU level) and residents in large towns or cities.

The services can be divided in three groups. First, for three services access is universal or nearly universal, and differences between rural and urban areas are small: electricity, water and fixed telephony. Second, in other three services (postal services, banking services and mobile telephony) access is nearly universal, but there are remarkable differences between urban and rural areas (where accessibility is limited to 83-87%). Finally, for other three services access is far from universality, and they show large differences between urban and rural areas: these are local transport, gas and the internet.

Figure 2 reproduces the same analysis, but focusing on affordability: which percentage of European citizens state the price of each service is affordable, in urban and in rural areas. As observed, the highest gaps between urban and rural areas are found, again, for local transport and gas (around 14% in both cases) and the internet (around 9%). The difference in the case of the other services ranges between 1.9% for postal services and 5.8% for fixed and mobile telephony.

Figure 1. Percentage of citizens who state they can easily access each public service, in rural and urban areas (EU-25). In brackets, gap between urban and rural areas

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Source: authors’ elaboration based on Special Eurobarometer 260 on Services of General Interest (EC, 2007)

Figure 2. Percentage of citizens who state the price of each public service is affordable, in rural and urban areas (EU-25). In brackets, gap between urban and rural areas

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Source: authors’ elaboration based on Special Eurobarometer 260 on Services of General Interest (EC, 2007)

As illustrated above, and as explained in detail in the paper, our analysis finds there are deep territorial differences in the use of certain basic public services in the EU, which reflect significant disadvantages for residents in vulnerable territories (such as rural areas, or peripheral, less-populated or poorer regions). As public infrastructure service provision requires supply networks, accessibility problems may arise in areas where geographic isolation or lower population density makes provision less profitable. Also, affordability problems may affect areas of lower profitability if services provision is completely left to the market forces, and residents in these areas have to bear the extra costs.

Traditionally, the state (in the cases of electricity, fixed telephony, postal services), or local communities (water provision is, in many countries, managed at the local level based on local natural resources) had a strong role in solving these market failures, and preventing the appearance of remarkable territorial differences, as it is still observable in current data.

But over the last few decades, EU countries have progressively diminished their attention to social and territorial objectives in services provision, showing an increasing confidence in market mechanisms to achieve socially desirable results. This has led, in vulnerable territories, to notable problems of accessibility and affordability of new services such as the internet (or, more recently, internet in the mobile phone), or to increasing problems of this kind in traditional services such as banking services.

Not only the national governments, but also the European Union itself is abandoning these issues. A striking proof of this abandonment is the fact that the last Eurobarometer which evaluated the provision of public infrastructure services from the citizen perspective is from 2007 (using data from 2006… 12 years ago!).

At present, it is impossible to update this analysis, which we carry out in this paper, simply because there are no new data which includes this information for a broad range of public infrastructure services. This is not trivial: it reflects that the European project is progressively leaving behind its concerns on public services, citizens’ rights and social and territorial cohesion, once at the core of the European social model. And if a project abandons its roots, its foundations (that is, the reasons which made it desirable by European citizens), the logical consequence is the drop in citizens’ support to the project, and the crisis of the project itself. What we see now, in sum.

To face increasing criticisms, scepticism or, in the best case, indifference about European integration, why don´t we return to its roots? Why we do not put again social and territorial cohesion, together with economic development, at the core of the European project?

This is the argument of our paper, focusing on the issue of public infrastructure services. What we found is a challenge for policy makers, but also for academics: the fact that new approaches are needed if we aim to evaluate policies from the citizen perspective (something we have progressively omitted to do in Europe).

At present, we are precisely analysing this issue in a Jean Monnet project, where a group of academics and our students reflect on the European project from the perspective of citizens.

If we want to reinforce the European project, and citizens’ support of it, why we do not start by looking at citizens? Why we do not put at the core of the project what do citizens think and expect from Europe?

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References

Clifton, J.; Díaz-Fuentes, D. and Fernández-Gutiérrez, M. (2016): “Public Infrastructure Services in the European Union: Challenges for Territorial Cohesion”. Regional Studies, vol. 50(2), pp. 358-373.

European Commission (EC) (2007): Eurobarometer 260: Consumers opinions on Services of General Interest. European Commission, Brussels.

European Union (EU) (2011): Territorial Agenda of the European Union 2020: Towards and Inclusive, Smart and Sustainable Europe of Diverse Regions (available at: http://www.eu2011.hu).

Fassmann, H.; Rauhut, D.; Marques da Costa, E. and Humer, A. (eds.) (2015): Services of General Interest – European Perspectives and National Insights. Vienna: V&R Verlag.

Molle, W. (2007): European Cohesion Policy. Routledge, Abingdon.

Molyneux, P. (2017): “Are banks public utilities? Evidence from Europe”. Journal of Economic Policy Reform, vol. 20(3), pp. 199-213.

Van de Walle, S. (2009): “When is a service an essential public service?”. Annals of Public and Cooperative Economics, vol. 80(4), pp. 521-545.

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