星空传媒

Over the past month we have had a storm of European politics. In particular, there has been the issue of the European Constitution, still to go through numerous hoops and needing to be ratified unanimously by the member states.

Part of it, but not much mentioned in the press, are the objectives of the European Union to combat social exclusion and achieve balanced economic growth with a social market economy. More buried away still, and unpopular with the British government, is the charter of fundamental rights, which includes the specific right to assistance with housing.

Those are the high-profile areas, for now, but the housing sector needs to keep its eye on three other developing areas: reform of the structural funds, debate on what a "social market economy" means and VAT.

The future of the European structural funds, which primarily support the poorer areas of Europe, is inextricably linked with the 10 candidate countries expecting to join the EU in May 2004. The UK pays 拢2.5bn a year to the EU and receives back 拢1.4bn in regional assistance through these funds. Areas that have less than 75% of average EU gross domestic product are eligible for Objective 1 funds, the largest pot.

Merseyside, for example, expects to receive more than 拢840m in European grants over the seven years and has a target of 57,000 jobs created and more than 12,000 business start-ups as a result. The money is not available for bricks and mortar but several Merseyside housing associations are using European funds for employment and training schemes.

When the EU has 25 members, it is expected that almost all the new countries and regions will meet the Objective 1 criteria while many of the existing areas will have raised their GDP and no longer be eligible (in the UK, only Cornwall is likely still to be eligible). The commission is likely to propose a substantial increase in the funds budget.

In a consultation document published this March, A modern regional policy for the United Kingdom, the British government proposes a very different approach. It argues that all regional assistance in member states with more than 90% of the average EU gross national product per capita equated for purchasing power should be funded nationally and not through the structural funds, except perhaps for some limited transitional support.

The EC may propose that all housing works expenditure and rents have a lower rate of VAT

These wealthier nations would then also reduce their contribution to the EU, while devolving decision-taking on regional spending to the most effective level and avoiding Brussels administration.

The government has committed to compensating areas such as Merseyside so that they would not lose out against such transitional grants that they might otherwise have received. Less certain is how some of the European Social Fund programmes that support non-Objective 1 areas would be matched.

Turning to the issue of the social market economy, the European Commission has long been concerned with the complex interrelationship between the market and public service obligations. "Services of general economic interest" has described sectors with an economic structure affected by markets, such as telecoms, transport and power supplies, where the state also requires commitments to the public to be kept. Articles in the EU treaty give primacy to "public service mission" over European competition and market rules.

A new debate has started with the publication of a green paper on services of general interest, which covers wider public services such as health and education. It is concerned with the scope of community action, while recognising national competencies, and will have particular focus on standards of good governance and regulation. Should housing be included? The European Liaison Committee for Cooperative and Social Housing (CECODHAS) is preparing a response to the paper which is likely to press for consideration of social housing, in order to avoid difficulties by default.

As far as VAT is concerned, the commission periodically tries to gain greater European consistency but this requires unanimous support from member countries. Expect a new attempt to be launched this summer, with the aim of rationalising the lower-rate regimes for VAT across all member states.

At present, housing provided as part of social policy may benefit from lower rates, but there is considerable variety of interpretation of this phrase. If rents are taxed at present, it must be at the higher rate used by the country.