Select Committee on European Union Fortieth Report


Letter from the Chairman to Stephen Ladyman MP, Minister of State, Department for Transport

  Sub-Committee B considered this document at its meeting on 13 February 2005 and decided to maintain the scrutiny reserve.

  We are greatly concerned about the subsidiarity issue connected with this document. We would like the Government to set out its own views on the subsidiarity issue. What legal advice have you received on this point?

  As you are aware, subsidiarity is an issue in its own right and is not to do with whether the Government or this Committee agree with a policy. It would seem that that distinction is being blurred.

  Your Explanatory Memorandum does not deal with proportionality. What is the Government's view on the proportionality of this Proposal?

  We noted that the UK Government plans to consult in detail with the public sector and with engine and vehicle manufacturers on the appropriateness of the proposals and how the Directive might best be implemented. We think this consultation should not take place until the subsidiarity issue has been resolved—what is your view on this?

15 February 2006

Letter from Stephen Ladyman MP to the Chairman

  Thank you for your letter of 15 February.

  I am sorry that the Explanatory Memorandum appeared to blur the distinction between the Government's view on the policy and the issue of subsidiarity in its own right; that was not my intention.

  Since the Explanatory Memorandum was prepared we have been able to give more consideration to the subsidiarity issue. We have concluded that the Directive proposal may be compliant with the principle of subsidiarity. However this conclusion does depend on the Commission providing us with convincing analysis on how the proposal would create a "critical mass" for demand for EEV vehicles that would not occur if Member States acted alone.

  In order to show that this proposal is not compliant with the principle of subsidiarity, it would be necessary to show that the objectives of the proposal could be sufficiently achieved by Member States or that these objectives could not be better achieved by the EC by reason of the scale or effect of the proposed action.

  The Treaty of Amsterdam gives further guidance on the application of the principle of subsidiarity. In particular, the following guidelines should be used in examining whether the condition above is fulfilled:

    (a)  the proposed legislation has transnational aspects which cannot be satisfactorily regulated by action by Member States;

    (b)  action by Member States alone, or lack of Community action, would either conflict with the objectives of the Treaty or otherwise significantly damage Member States' interests; and

    (c)  action at Community level would produce clear benefit by reason of its scale or effects compared with action at the level of Member States.

  Regarding "a" above, the proposed legislation does have transnational aspects, in that the vehicle market is pan-European. As the proposal would affect the public procurement of vehicles, a further transnational aspect is that. procurement law is set at a European level in order to enhance and maintain the internal market, and any action undertaken on procurement must be consistent with EU procurement rules.

  Turning to "b" above it is doubtful that action at member state level alone would conflict with the Treaty's objectives or significantly damage member state's interests. This could go to show that the proposal does not fulfil the principle of subsidiarity. However, the Commission has argued that the specific objective of creating a market for cleaner vehicles (ie of the EEV standard) requires the economies of scale that could come only from a mass market—the sort that might result from mandatory purchasing of such vehicles by the combined public sectors of the EU. It has explained, in its own Explanatory Memorandum that, in its opinion, action at Member State level would not create a sufficient "critical mass" for industry to invest in cleaner technologies. So according to the Commission the measure could produce clear benefit by reason of scale and effect compared with action at the level of Member States, in compliance with the guideline at "c" above.

  For all that the Commission may have a point here, I think that it is dependent upon its producing very clear analysis in support. The Commission explains that it set the requirement at the minimum level necessary to achieve the objective yet there seems to be no clear justification for fixing at 25 per cent the quota of EEV vehicles that the public sector is to be required by the Directive's provisions to purchase or lease. Nor is there any opportunity cost analysis comparing any expenditure required to implement the directive with other possibly more effective uses. On the other hand, should the Commission back its view up with adequate research data, it seems to me that it could reasonably be argued that the proposal is compliant with the principle of subsidiarity.

  You are right to ask about the proportionality of the measure. My initial view is that the measure may not be proportionate. The Explanatory Memorandum has already identified our concerns that the Proposal might be overtaken by events, given that "Euro V" standards will become mandatory anyway in 2009 and that we hope to be considering proposals from the Commission for "Euro VI" within a year. But at the moment we have a real difficulty in assessing the costs and benefits of the Proposal because of the lack of data on the number and types of vehicle that might be affected in the UK.

  For this reason I intend to start detailed consultation with those that have an interest as soon as possible, informing them of our view on subsidiarity and gathering the information needed to make a proper judgement on overall costs and effectiveness. I will, of course, keep the Committees informed of progress in this matter.

13 March 2006

Letter from the Chairman to Stephen Ladyman MP

  Thank you for your letter of 13 March, replying to my letter of 15 February, which Sub-Committee B considered at its meeting on 27 March 2006.

  We are grateful to you for fully explaining the distinction between the application of the subsidiarity principle and the Government's view as to the desirability of the Clean Vehicles Transport Directive. We note and share your concerns as to the proportionality of this measure. We look forward to hearing of the results of the consultation process when they are available.

29 March 2006

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