5 Regulatory fitness
| Committee's assessment
| Politically important |
| Committee's decision | Cleared from scrutiny
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| Document details | Commission Communication on the State of play on regulatory fitness
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| Legal base | —
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| Department | Business, Innovation and Skills
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Summary and Committee's conclusions
5.1 Although the Commission believes that EU legislation is essential
to achieve the objectives of the Treaties, it also recognises
the need to ensure that it is not unnecessarily burdensome, and
it accordingly launched in December 2012 a Regulatory Fitness
and Performance Programme (REFIT), which aimed to identify initiatives
which will result in significant regulatory cost reduction or
simplification.
5.2 When it reviewed in October 2013 the progress
which had been made so far, it also said that it would keep track
of the regulatory fitness of proposals, and publish its findings
in an annual REFIT scoreboard, and it has now produced this further
Communication summarising the progress of the REFIT programme,
and identifying possible future steps. It has also provided an
update on other aspects of the Commission's smart regulation agenda
— including Impact Assessments, evaluations and stakeholder
consultations — and discusses how EU institutions, Member
States and stakeholders could better work together on regulatory
fitness. The Communication is accompanied by a Staff Working Document,
which comprises the first REFIT scoreboard.
5.3 The regulatory Fitness Programme (REFIT) is
an important means of identifying measures which will lead to
regulatory simplification and to a reduction in costs for business,
and we are therefore drawing this Communication (and the accompanying
REFIT scoreboard) to the attention of the House. However, we do
not on this occasion believe that the documents raise any issues
requiring further consideration, and we are accordingly clearing
them.
Full details of the documents: Commission
Communication: Regulatory Fitness and Performance Programme (REFIT):
State of play and outlook: (36147), 10648/14,
+ ADD 1, COM(14) 368.
Background
5.4 Although the Commission believes that EU legislation
is essential to achieve the objectives of the Treaties, it also
recognises the need to ensure that it is not unnecessarily burdensome,
and it accordingly put forward in October 2010 a Communication[3]
on smart regulation, followed in December 2012 by a further Communication[4]
launching a Regulatory Fitness and Performance Programme (REFIT),
which aimed to identify, assess, adopt and monitor the implementation
of initiatives which will result in significant regulatory cost
reduction or simplification.
5.5 It subsequently sought in October 2013[5]
to review the progress which had been made so far, and to set
out the next steps, and it also said that it would keep track
of the regulatory fitness of proposals, and publish its findings
in an annual REFIT scoreboard. As we felt this was a timely moment
for the House to consider some of the issues involved, we decided
in our Report of 23 October 2013 to recommend the document for
debate in European Committee C. That debate duly took place on
7 January 2014.
The current document
5.6 The Commission has now produced this further
Communication reviewing the progress of the REFIT programme, and
identifying possible future steps. It also provides an update
on other aspects of the Commission's smart regulation agenda —
including Impact Assessments, evaluations and stakeholder consultations
— and discusses how EU institutions, Member States and stakeholders
could better work together on regulatory fitness. It is accompanied
by a Staff Working Document, which comprises the first REFIT scoreboard.
Work to date on REFIT
5.7 The Commission says that its October 2013 Communication
set out an ambitious agenda, with more than 100 actions being
identified, half of these aimed at simplifying and reducing the
regulatory burden of existing legislation, whilst the rest were
fitness checks and evaluations designed to assess the effectiveness
of EU regulation and to assess the potential for future burden
reduction initiatives.
Progress of previously announced actions
5.8 The Commission says that it regards a swift and
thorough implementation of REFIT as a priority, and that considerable
progress has been made in the preparation of proposals, their
adoption by the European Parliament and Council, and their implementation
by Member States. It identifies the following steps taken by the
various parties involved:
· Action
taken by the Commission itself
It says that most of the legislative proposals identified
in the October 2013 Communication are planned for adoption in
2014, with important simplifications for businesses (such as a
standard EU VAT declaration and an improved European small claims
procedure) having been proposed to the co-legislators. It adds
that, following consultation with the European Parliament and
Council, the Commission approved the withdrawal of 53 pending
proposals, including all nine announced in its October 2013 REFIT
Communication (and covering such areas as the simplification of
VAT obligations, the statute of a European private company, and
the protection of soil), and that it decided not to present a
number of proposals on which it had been working. In addition,
it has commenced fitness checks and evaluations across several
policy areas, including waste, the protection of birds and habitats,
passenger ship safety, and General Food Law; and, in line with
the Think Small First principle, it has where appropriate taken
action to apply exemptions or lighter regimes for SMEs and micro-businesses
(for example, in reducing registration and authorisation fees),
with additional initiatives being taken to better use the internet
to simplify and improve the implementation of regulatory requirements
in areas such as food information for consumers.
· Action
taken by the Council and European Parliament
The Communication gives examples of proposals adopted
by the European Parliament and Council since October 2013 —
including the recognition of professional qualifications, public
procurement, the introduction of digital tachographs, and simplified
prospectus and disclosure requirements relating to the internal
market for securities — which the Commission anticipates
will bring substantial savings, particularly to SMEs. However,
it explains that some savings — notably on waste shipment,
environmental impact assessment, and common rules for calculating
the corporate tax base— have not been delivered due to a
lack of support or delay on the part of the co-legislators, whilst
some Member States have not taken full advantage when implementing
measures in areas such as combatting late payments, company accounting
requirements, the collection of statistics, and simplification
of VAT obligations.
· Action
taken by Member States
The Communication notes that, as up to one-third
of the administrative burden linked to EU legislation stems from
national implementing measures, Member States have an important
responsibility to take full advantage of simplification and burden
reduction measures, but that there are significant examples in
areas such as food safety, road freight transport, company accounting,
and the provision of food information to consumers, where they
have failed to do so, or have added burdens through related national
regulation. The Commission says it will monitor implementation
of these and other REFIT actions and report on this in the 2015
scoreboard, and it also highlights its Administrative Burden Reduction
Plus (ABR+) programme, under which it is examining implementation
of measures undertaken in the 2007-2012 period.
The future of REFIT
5.9 The Commission describes REFIT as a continuous
rolling programme to ensure EU legislation remains fit for purpose.
It says that it is considering 10 new initiatives for simplification
and burden reduction (including identity and travel documents,
business statistics, an extended one-stop-shop for VAT, and the
development on an EU VAT web portal); 34 further fitness checks
and evaluations; seven repeals of legislation in areas such as
energy labelling, transport rates, environmental reporting, and
police and judicial cooperation; and the withdrawal of five legislative
proposals (including those on investor compensation schemes, aviation
security charges, pregnant workers, compensation for oil pollution
damage, and exemptions for micro-businesses from certain food
hygiene provisions). This would be subject to all proposed new
measures being confirmed in the Commission Work Programme for
2015.
Recent developments on the smart regulation agenda.
5.10 The Communication notes that REFIT is part of
the Commission's wider smart regulation policy, which also includes
impact assessment, stakeholder consultation, and evaluation, and
that the Commission is committed to further strengthening these,
and to a stronger focus on the assessment of the costs and benefits
of regulation and reductions in reporting requirements.
5.11 More specifically, it says that, in order to
facilitate the quick identification of impact assessment
results, it has introduced a two-page summary sheet, and is committed
to updating further guidance following a forthcoming consultation;
that it is currently considering the results of its consultation
earlier this year on ex-post evaluation, and will produce
new guidelines, including reference to Fitness Checks; that it
plans to strengthen its stakeholder consultation processes,
by consulting stakeholders before issuing new internal guidelines,
and improving the use of consultation in fitness checks and evaluations;
that it will address the challenges arising on the measurement
of regulatory costs and benefits (including costs derived
from amendments by the co-legislators, the implementation choices
of Member States, gaps between ex ante and ex post evaluation,
and the variable quality and availability of data); and that reviews
need to be carried out at national, regional and local levels
to discover where reporting requirements exceed those set
out in EU legislation.
Shared goals
5.12 The Commission welcomes the interest and support
of Member States and other stakeholders in implementing REFIT,
as well as emphasising the importance of continued cooperation,
and says that it intends to propose a new High Level Group to
accompany future work in the coming months, to replace the existing
two groups.
5.13 The Communication concludes by stressing the
need for a firm political requirement to regulatory fitness at
all levels; the role played by the Impact Assessment Board, and
by the Council and European Parliament, in considering legislative
proposals; both the importance — and limitations —
of quantifying costs and benefits; the need for legal certainty,
and for careful consideration of the costs of change; and role
which those directly affected by legislation can play in detecting
unnecessary burdens, and hence the importance of consultation.
The Government's view
5.14 In his Explanatory Memorandum of 1 July 2014,
the Minister of State for Business and Energy (Michael Fallon)
says that the Government has engaged extensively with the Commission
on better regulation issues since 2010, and that, working with
other Member States, it has pressed for a reduction in unnecessary
regulatory burdens, especially for SMEs. He therefore welcomes
REFIT as a step towards reducing the burden of European regulation
on business and eliminating barriers to growth, and in particular
the fact it delivers five of the recommendations of the Prime
Minister's Business Taskforce; suggests that consideration could
be given to the withdrawal of the proposal to revise the Pregnant
Workers Directive (which is no longer acceptable to the UK following
amendments by the European Parliament); withdraws proposals for
a Soil Framework Directive and an Access to Justice in Environmental
Matters Directive (which would have introduced substantial and
unnecessary costs for UK businesses, and, in the latter case,
undermined the principle of subsidiarity); and has proposed a
raft of fitness checks and evaluations.
5.15 On the other hand, he believes that REFIT must
go further and faster in order to quickly and substantively reduce
the EU regulatory burden on business, and is disappointed that
the Communication rejects independent scrutiny of Commission Impact
Assessments, and does not discuss steps to improve consultation
in this area; continues to focus on administrative burdens, without
also considering the compliance cost of EU regulation, and does
not set a target for overall EU burden reduction; records slow
progress on a number of previously announced fitness checks, and
in addressing several of the most burdensome pieces of EU legislation
identified by SMEs; and continues to signal that the Commission
does not intend to address UK and other Member States' concerns
about the potential burdens and appropriateness of a number of
key proposals, including the proposed General Data Protection
Regulation, and the proposed Common Consolidated Corporate Tax
Base Directive (which the Government believes would not only be
burdensome, but also likely to be in breach of the subsidiarity
principle). He says that the Government will continue to press
the Commission on these concerns.
Previous Committee Reports
None.
3 (32067) 14421/10: Ninth Report HC 428-ix (2010-11)
chapter 11 (24 November 2010). Back
4
(34557) 17784/13: Twenty-seventh Report HC 86-xxvii (2012-13),
chapter 7 (16 January 2013). Back
5
(35346) 13920/13: Nineteenth Report HC 83-xviii (2013-14), chapter 2
(23 October 2013). Back
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