Documents considered by the Committee on 24 November - European Scrutiny Committee Contents

11 Smart regulation in the European Union



COM(10) 543

Commission Communication: Smart Regulation in the European Union

Legal base
Document originated8 October 2010
Deposited in Parliament14 October 2010
DepartmentBusiness, Innovation and Skills
Basis of considerationEM of 28 October 2010
Previous Committee ReportNone, but see footnotes
To be discussed in CouncilNo further consideration proposed
Committee's assessmentPolitically important
Committee's decisionCleared


11.1 The better regulation agenda comprises three different strands. In the case of new legislation, Commission proposals are now accompanied by impact assessments, which seek to justify the course of action suggested, and to provide an analysis of the various costs and benefits: in the case of existing measures, it involves both a Rolling Simplification Programme (where consideration is given to reducing the volume of legislation through re-casts, codification and consolidation, and the withdrawal of obsolete measures) and steps to reduce the burden imposed by those measures remaining in existence.

11.2 In the latter case, the Commission put forward in January 2007 an Action Plan,[30] suggesting ways in which the administrative burden could be reduced by 25% by 2012. In essence, it proposed that the administrative burden resulting from EU legislation and its transposition should be measured using a Standard Cost Model, and appropriate proposals drawn up in 13 priority areas[31] accounting for the "vast bulk" of the burden arising from EU law. In addition, the Commission identified ten fast track items, which it said could result in a fairly swift reduction of €1.3 billion, to which special priority should be given.

11.3 This Plan was endorsed by the European Council, and our predecessors subsequently drew to the attention of the House a number of progress reports provided by the Commission, including its Third Strategic Review of Better Regulation,[32] in which it had said that it would present Sectoral Reduction Plans for all 13 priority areas, and propose before the end of its mandate additional measures in order to achieve the 25% target in 2012. It duly sought to do this in a Communication[33] in October 2009, and to provide an over-view of what has been achieved so far.

11.4 That document said that an EU baseline measurement of the administrative burdens stemming from Community legislation and from related national measures had been completed, and that this was estimated to be €123.8 billion at the start of 2005. It also found that a very high proportion of these burdens stemmed from two policy areas (taxation and company law), thus vindicating the decision to concentrate on key priority areas; that information obligations generally impose a proportionately higher burden on small and medium-sized enterprises; that the degree to which businesses find those obligations irritating very often had no relationship to the burdens imposed; and that nearly one-third of burdens were because of "gold-plating" by Member States and the inefficiency of their administrative procedures.

11.5 The Commission then assessed the progress made towards reaching the 2012 target, and said that major steps had already been taken since 2005, with possible reductions going far beyond 25% having already been identified. These included measures already put in place or proposed, which could involve a reduction of €7.6 billion; measures proposed and pending adoption, which could add €30.7 billion; and preparatory work which could lead to an additional 31 measures with a reduction of €2.1 billion: together, these could amount to €40.4 billion, equivalent to 33% of the total estimated burdens, with some being addressed exclusively at EU level, and others requiring joint action with Member States.

The current document

11.6 The Commission now says that the recent economic and financial problems have confirmed that regulation has a positive and necessary role to play in the operation of markets, but that there is a need to address incomplete, ineffective and underperforming regulatory measures, and to limit the burden on business to what is strictly necessary. It says that it believes that it is now time to step up a gear, and for better regulation to become smart regulation embracing the whole policy cycle, and it accordingly sought in the current document to outline what this will mean in practice (and how it will be achieved).


11.7 The Commission suggests that its investment in impact assessments is paying off in terms of the quality of new measures, but that it is the existing body of legislation which creates the greatest benefits and costs, and that smart regulation policy will therefore attach greater importance to evaluating its functioning and effectiveness.

Improving the stock of EU legislation

11.8 The Commission recalls the substantial benefits which have arisen already from the Simplification Programme, and says that these must continue at both EU and national levels in order to complete that Programme by 2012. However, it adds that a broader approach, taking account of all factors which determine the efficiency and effectiveness of legislation, is needed, and it says that it is therefore merging its efforts to reduce administrative burdens with those to simplify legislation, and to mainstream this into its approach to managing the existing stock of legislation. It says that a key tool will be ex post evaluation, which should become an integral part of smart regulation, thereby improving the quality of policy-making and helping to identify new opportunities to simplify legislation and reduce administrative burdens. However, it cautions that evaluation of individual initiatives is not always sufficient, and that a more strategic view, involving comprehensive evaluations of the kind carried out in the "Health Check" of the Common Agricultural Policy, is often required in order to identify the cumulative effect of legislation.

11.9 In particular, the Commission suggests that this will involve:

  • ensuring that all significant proposals for new or revised legislation are based on an evaluation of what is already in place;
  • carrying out "fitness checks" launched in 2010 in relation to the environment, transport, employment/social policy and industrial policy, and extending this to other areas in 2011;
  • finalising the administrative burden programme by 2012, and using the experience gained from this in the evaluation and policy-making process;
  • improving consultation websites for stakeholders;
  • inviting Member States wherever possible to waive obligations for small and medium sized enterprises.

Ensuring the quality of new legislation

11.10 The Commission says that its Impact Assessment Board (IAB) has been a key element in providing independent quality control of its impact assessments, and that, in a recent Special Report, the European Court of Auditors has confirmed that this constitutes good practice, has been helpful to the Council and European Parliament in considering proposals, and has validated the Commission's integrated approach to such assessments. It also refers to the improvements which the Court has suggested, and says that:

  • it will seek a positive opinion from the IAB before a proposal can be put forward for a decision by the Commission;
  • it will publish roadmaps for all proposals likely to have significant impacts;
  • it has developed specific guidance for assessing social impacts;
  • it will reinforce the assessment of the impact of fundamental rights, in order to reflect the new legal status of the relevant EU Charter;
  • it will continue efforts to improve the quantification of benefits and costs when possible.

Improving implementation of legislation

11.11 The Commission says that, whilst Member States are primarily responsible for implementation, it works closely with them, both in adopting measures to assist in this process and in accelerating infringement proceedings. It says that it will:

  • strengthen the analysis of transposition, implementation and enforcement in ex post evaluations;
  • further develop the use of Implementation Plans for new EU legislation, and request Member States to be more transparent on how their national law transposes Directives;
  • improve the efficiency of the EU Pilot which seeks to provide answers to questions on EU law;
  • explore how to improve SOLVIT[34] and promote it further to SMEs.

Making legislation clearer and more accessible

11.12 The Commission says that it intends to scrutinise all new legislative proposals to ensure that they are set out in simple language, and that it will continue to codify, recast and consolidate existing texts and to repeal obsolete provisions. Also, it will seek to improve electronic access to the full body of EU legislation through a new EUR-Lex portal.


European Parliament, Council and advisory bodies

11.13 The Commission notes that the European Parliament and Council have a key role in delivering smart regulation, both in adopting more rapidly proposals aimed at simplification and reducing the administrative burden, and in providing more often impact assessments for any substantive amendments they suggest. The Commission also considers that the European Economic and Social Committee and the Committee of the Regions can make an important input to the preparation of impact assessments.

Member States

11.14 The Commission says that action at EU level is not in itself sufficient, and that smart regulation must also be implemented at national level, not least in certain key fields (such as company law and taxation) where most legislation is national in origin. It notes that, under the Lisbon Treaty, national parliaments contribute to ensuring a higher quality of EU legislation by checking the application of the subsidiarity principle, but it observes that, whilst some Member States have made progress in reducing the administrative burden, few have in place a system as wide-ranging as that of the Commission itself. It also points out that:

  • the Court of Auditors has suggested that national impact assessments could usefully complement those done by the Commission, and help Member States with transposition and enforcement issues;
  • where Member States avail themselves of the provision in the Lisbon Treaty allowing them to present proposals relating to judicial cooperation in criminal matters and police cooperation, these should be accompanied by impact assessments;
  • Member States should involve stakeholders when discussing measures to implement or transpose EU legislation.


11.15 The Commission says that consultation is an essential element of smart regulation, and that, although stakeholders appreciate its efforts in this area, many have asked for longer, and more accessible, consultation periods.. It points out that the current 8 week consultation period is often only one part of a longer process, but that it will nevertheless:

  • increase the public consultation process to 12 weeks as from 2012;
  • carry out a review of its consultation policy in 2011, so as to explore how to improve the quality of consultation documents; make better use on Internet-based tools; make best use of consultation channels in Member States; and make better use the consultation process to collect data and evidence for impact assessments.

The Government's view

11.16 In his Explanatory Memorandum of 28 October 2010, the Minister of State for Business and Enterprise at the Department for Business, Innovation and Skills (Mr Mark Prisk) points out that the publication of this Communication follows an extensive strategy of UK influence, including a joint report with Denmark and the Netherlands in March 2010, and a contribution to the Commission's consultation on smart regulation at the end of June 2010. He says that the Government welcomes the Commission's latest plans to reduce the regulatory burden on business, and that the proposed extension of the minimum consultation period from 8 to 12 weeks in 2012 is one example of a substantial improvement resulting from UK lobbying, which will enable smaller businesses and individual citizens to feed into policy-making. However, whilst the Government recognises the encouraging progress which has been made in the Communication, it is also keen to see the Commission keep its promises on smart regulation, and it will therefore continue to engage positively with the EU institutions and other Members States to shape the delivery of these commitments, with the intention of embedding more evidence-based policy making throughout the EU institutions.


11.17 In common with earlier documents on this subject, this Communication seeks to take forward the welcome aim of simplifying EU legislation, and the way in which this is implemented by Member States. As such, it is of obvious interest, and, whilst we are content to clear it, we think it right to draw it to the attention of the House.

30   (28354) 5924/07: see HC 41-xi (2006-07), chapter 6 (28 February 2007). Back

31   Agriculture, annual accounts/company law, cohesion policy, environment, financial services, fisheries, food safety, pharmaceuticals, public procurement, statistics, taxation/customs, transport, working environment/employment relations. Back

32   (30411) 5791/09: see HC 19-xi (2008-09), chapter 9 (18 March 2009). Back

33   (31052) 15019/09: see HC 19-xxxi (2008-09), chapter 8 (11 November 2009). Back

34   This is an on-line problem solving network in which Member States work together to solve without legal proceedings caused by the misapplication of Internal market law by public authorities. Back

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