Memorandum by Open Europe
The recommendations and conclusions in this
submission are based on Open Europe's "Out of Control? Measuring
a decade of EU regulation", published in February 2009.
The report was based on information derived from over 2,000 Impact
Assessments produced by the UK Government between 1998 and
2008, and was arguably the most comprehensive study ever undertaken
of the cost and flow of EU regulations introduced in the past
Based on these findings, combined with additional
quantitative and qualitative research, as well as interviews with
people involved in "better regulation" agendas around
the EU, Open Europe also assessed the EU's Better Regulation Agenda
and gave various proposals for how the Agenda can be improved.
The evidence submitted is in effect a summary
of that report, which also addresses the specific points raised
in the Committee's call for evidence.
We estimate the cumulative cost of regulations
introduced in the UK between 1998 and 2008 at £148.2 billion.
Of this cost, £106.6 billion, or 71.9 per cent,
had its origin in the EU.
The annual cost of regulation introduced
since 1998 has gone from £16.5 billion in 2005 to
£28.7 billion in 2008an increase of 74 per
cent. The EU proportion of the average annual cost of regulations
is 71.6 per cent, although the proportion differs from year
to year. In 2008 alone, EU legislation dating from 1998 cost
the UK economy £18.5 billionup from £12.2 billion
in 2005 when the Commission launched its Better Regulation
This illustrates the importance of getting the
EU's Better Regulation Agenda right. It also illustrates that
while there have been some positive steps taken in the EU to simplify
and cut back on existing regulations, the Commission has failed
in addressing the flow and cost of new regulations, which continue
to impose unnecessary burdens on businesses and the wider economy.
To address this failure, a radical new approach
to regulatory reform is needed both at the EU level and the national
level. This approach should inter alia include:
A new commitment in the EU to the idea of better
and less regulation; an independent and powerful European
Impact Assessment Board capable of stopping proposals which have
not been properly quantified; better targeted and quantified European
Impact Assessments; a simple majority in the Council for scrapping
proposals, and "1 in, 1 out" regulatory
budgets in the Commission.
Meanwhile, the link between the EU's and the
UK's better regulation agendas needs to be radically improved.
In particular, the UK Government must turn both its Impact Assessments
and future regulatory budgets into bargaining tools at the EU
level, and push harder for new, sweeping improvements of the EU's
Better Regulation Agenda, possibly by using its contribution to
the EU budget as negotiation leverage.
1. THE COST
OF EU REGULATION
Based on the analysis of over 2,000 Impact
Assessments (IAs), the research makes two main types of cost estimates:
(a) The cumulative cost of regulations between
1998 and 2008
(b) The annual cost of regulations between 1998 and
1.1 The cost of regulation is going up
year on year: Since the UK launched its "Regulatory Reform
Agenda" in 2005, the annual cost of regulation has gone from
£16.5 billion in 2005 to £28.7 billion
in 2008an increase of 74 per cent. Meanwhile, the
estimated cumulative cost of regulations introduced in
the UK between 1998 and 2008 is £148.2 billion.
This is the equivalent of 10 per cent of GDP.
1.2 EU legislation is responsible for
72 per cent of the cost of regulations in the UK: Of
the cumulative cost of regulations introduced over the past decade,
£106.6 billion, or 71.9 per cent, had its origin
in the EU. Similarly, the EU proportion of the average annual
cost of regulations is 71.6 per cent. Overall, the cost of
EU legislation has gone up steadily year-on-year over the past
decade. In 2008 alone, EU legislation dating from 1998 cost
the UK economy £18.5 billionup from £12.2 billion
1.3 EU labour market laws account for
21 per cent of the total cost of UK regulations: Labour
market legislation introduced over the past 10 years has
cost the UK economy £45 billion. 67 per cent of
this£31 billioncame from the EU. This
means that 21 per cent of the overall cost of new regulations
introduced in the UK between 1998 and 2008 can be sourced
to the EU's labour market laws alone. The costliest labour market
law by far is the EU's Working Time Directive, costing between
£3.4 billion and £3.9 billion every year.
Meanwhile, EU health and safety legislation
coming into force in the last decade has cost the UK £6.4 billion.
EU agricultural regulations have cost British farmers over £2 billion,
and the EU food labelling requirements have cost the UK £1.7 billion
over the last 10 years.
Among UK Government departments, BIS (formerly
BERR) is the main facilitator of regulation in the UK. In 2008 alone,
the department accounted for regulatory costs to the economy of
£12.8 billion (for regulations introduced since 1998)45 per
cent of the total cost of regulation in that year. This was roughly
£4 billion more than in 2007or a 45 per
cent increase. Over the past 10 years, 72.7 per cent
of the average annual cost of the regulation imposed by BIS stemmed
from Brussels. For some departments, such as the Food Standards
Agency, DEFRA and the HSE, more than 90 per cent of the cost
of arising from regulations has its origin in EU legislation.
1.4 EU regulations cost the EU 1.4 trillion:
We also extrapolated our UK results to reach a cost estimate for
the EU as a whole. The cumulative cost of regulation introduced
between 1998 and 2008 for all 27 EU member states
is 1.4 trillion. Of this, 66 per cent, or 928 billion,
is EU-sourced. Since the Commission launched its "Better
Regulation Agenda" in 2005, the annual cost of EU legislation
across the bloc has gone from 108 billion to over 161 billionan
increase of 50 per cent. However, due to the uncertainties
involved in these kind of extrapolations, these figures should
be treated with some caution.
1.5 Conclusions drawn from these figures:
(1) The EU's Better Regulation Agenda is failing
to curb the increasing flow of new regulations impacting on business
and the wider economy, and without reform, the cost of regulations
will continue to increase year on year.
(2) Secondly, the fact that a very high proportion
of that cost is coming from regulations negotiated not at Whitehall
and Westminster but in Brussels and Strasbourg, shows that any
regulatory reform agenda in the UK which does not focus primarily
on curbing the flow of EU regulations will continue to fail.
2. THE EU'S
2.1 Some improvements have taken place
as a result of the Commission's "Better Regulation Agenda":
Although there are clear problems with the EU's administrative
burden reduction targetsfor example with the baseline measurementit
marked a break with the past in that "better regulation"
is now tied to a specific, quantifiable target. By virtue of being
quantifiable and open for all to see, these targets do increase
transparency and leave more room for scrutiny of regulatorsalthough
still falling well short of what we would consider satisfactory
levels of scrutiny.
2.2 Commissioner Verheugen has been a
positive influence: Commissioner Verheugen has broken with
the past by emphasising the need to change entrenched attitudes
within the Commission's Directorates-General, by criticising the
idea of European integration as a process driven by Commission
legislation. In 2006 he accused some Commission officials
of failing to adapt to "a new political culture", and
said: "There is a view that the more regulations you have,
the more rules you have, the more Europe you have, I don't share
This "cultural change" within the EU must continue.
2.3 But is the overall situation really
improving? While there have been some progress in the efforts
to cut or simplify existing legislation in the EU, the European
Commission and the member states have largely failed to curb the
cost and flow of new regulations, as illustrated by our figures.
This is a major shortcoming, as new regulations usually are more
problematic for businesses than existing ones, since the flow
of regulations forces businesses to continually adjust and develop
new compliance strategies.
2.4 EU initiatives that are presented
as "deregulation" too often appear to be of limited
value for businesses: For instance, counting deregulation
in the number of pages axed from the acquis communautaire is
hardly a meaningful exercise.
The Commission claims to have removed thousands of pages from
the acquis since the Better Regulation Agenda was launchedcalling
it a "radical simplification".
But this does not tell us anything about the content of the removed
pages, nor if the content had an actual impact on businesses in
the first place.
Similarly, removing obsolete directives is unlikely
to make any difference on the ground. In the Commission's 2008 progress
report on the better regulation initiative, removing such acts
was identified as one of the achievements.
But if these acts are obsolete or "no longer have real effect",
removing them cannot be seen as "deregulation", since
they had no actual impact in the first place.
Likewise the Commission's efforts to scrap pending
proposals have so far had negligible impact. For instance, when
the Commission undertook this exercise for the first time in September
2005, it announced it had withdrawn 68 bills.
However, 27 of these were more than five years old and looked
unlikely to be adopted anyway, and 22 of them concerned the
association agreements signed with the then 10 new member
statesbills which all became defunct when the states joined
Removing pending proposals could potentially prove effective in
stemming the flow of regulation, but the responsibility for making
sure that meaningful pending proposals were axed would
probably need to fall to some independent body.
2.5 Ambiguity over what "better
regulation" means: Most importantly, there is still ambiguity
over the central objective of the EU's Better Regulation Agenda.
"Better regulation" as a term is meaningless, because
it can mean all things to all people. The Commission's Impact
Assessments, the first filter that EU laws face, exemplify this
confusion. There needs to be a clear message from bottom to top
that regulation should be pursued only when it has been shown
to be absolutely necessary and that the benefits outweigh the
costs to businesses and individuals. The emphasis must be put
on result, not process.
3. EUROPEAN IMPACT
3.1 So far, European Impact Assessments
(EIAs) have had very limited impact on the final outcome of EU
Because of their lack of consistency and varying quality, EIAs
were not used in our calculations of the impact of EU regulations.
EIAs are also produced for far fewer proposals than in the UK.
In the five years since their introduction in 2003, there have
been only 413 EIAs.
EIAs almost never lead to proposals
being dropped: Since the introduction of EIAs in 2003, we
have identified only three cases where an EIA has actually led
to a proposal being aborted.
Even in these cases it is unclear to what extent this was due
to the IA itself or some other reason.
The Commission's Impact Assessment
Board lacks autonomy and teeth: One of the main problems with
the EU's IA system is that the IAB is lacking the mandate to take
action. For each EIA produced, the IAB gives an "opinion".
The IAB has often been quite critical of the EIA system. In its
2007 report, for instance, the IAB identified several problems.
Most importantly, it stated:
"In a number of cases, there was a bias
in the definition of options towards the preferred option, often
leading to an analysis of options that was too much focussed on
the preferred option while other options should have been explored
in greater detail."
However, even where the Board finds that the
EIA is presenting the Commission proposal in a biased manner,
its opinion is not binding in any way, making its real impact
In addition, IAB membersCommission officialsare
appointed personally by the President of the Commission, stripping
the Board of the vital independence it would need to seriously
pick up the fight against the steady stream of new regulations.
EIAs have a bias towards the preferred
option: As the IAB has concluded, EIAs often draw biased conclusions
in favour of the option the Commission has proposed.
EIAs are never updated during negotiations
to reflect changes in the proposal: EIAs are almost never
updated to reflect amendments made during the often lengthy negotiations
in the European Parliament and the Council, making EIAs of limited
use once they've left the Commission.
"Subsidiarity" is only considered
in 50 per cent of cases: In a 2007 study the OECD
found that less than 50 per cent of EIAs considered a proposal's
compatibility with the EU's much-vaunted "subsidiarity"
principlethe idea that the EU does not take action unless
it is more effective than action taken at national, regional or
This means that in more than half of cases, EIAs are failing to
properly evaluate genuine policy alternatives, including, crucially,
the "do nothing" option.
Poor quantification of costs and benefits:
Costs and benefits have, until recently, rarely been quantified
in EIAs, and are still shaky in many cases. Consistent methods
for comparing costs and benefits over time are also lacking.
Consultation and transparency are
often absent: According to its own guidelines, when the Commission
carries out the EIA, it is supposed to consult business and give
them enough time to give feed-back on the proposal that is being
assessed. However, this does not always happen. To make matters
worse, draft EIAs are not publicly available, making it difficult
to find out which of the stakeholders' views have been properly
Many costly regulations are not subject
to EIAs: The Commission's IA guidelines are ambiguous about
which proposals should undergo an EIA at all. The Commission's
draft 2008 IA guidelines state that "usually" any
item contained in its Work Programme ought to be subject to an
This is arbitrary as many costly proposals are not included in
the Work Programme.
Many intangible proposals are subject
to EIAs: Because of the arbitrary selection process, many
EIAs simply add no value to policy-making. For example, the EIA
on the Commission's 2005 proposal on "EU strategy for
Arica" included the policy objective "peace and security".
It was estimated that completing the EIA and Communication for
this proposal took the equivalent of seven man-months.
This is a terrible waste of the Commission's resources.
EIAs are difficult to read: According
to the Commission's own guidelines, "any non-specialist should
be able to follow the argumentation and understand the positive
and negative impacts of each of the options considered in the
In reality, EIAs are extremely difficult to read, poorly structured,
and often exceed the recommended length. It is actually laughable
to suggest that non-specialists and members of the general public
should be able to understand them.
4. EU REGULATORY
4.1 Our findings on the cost and flow of
regulations, and analysis of the EU regulatory reform agenda,
illustrate the need for a radically different approach to tackling
the problem of burdensome red tape. This involves both reform
within the EU institutions, as well as a new approach to
EU regulations from national governments. As is often the way
in the EU, it will fall to the larger member states to push for
reform. The UK is well placed to take a leading role.
4.2 Cultural change: a commitment to
less as well as "better" regulation: Our results
show that the primary objective of the Commission must be to reduce
the flow of regulationwhich in practice means a new, clear
commitment to "less regulation". However, our results
also show that it is the cost of regulation that imposes
the biggest burden, not the number of regulations per se.
This means that a new commitment to less regulation must imply
less cost. As well as stemming the flow, meaningful deregulation
also means simplifying and scrapping the most costly existing
regulations rather than just "codifying" or consolidating
them to make them clearer.
4.3 An independent and powerful European
Impact Assessment Board: The European Impact Assessments leave
a lot to be desired. However, no amount of improvements will make
a difference if there is no independent watchdog in place to ensure
that the cost-benefit analysis has a real impact on the final
decision. This is one of the key lessons from the UK's experience
with IAs. The UK produces some of the most sophisticated IAs in
the world, and yet regulation is still increasing.
An independent IA Board should be established
with the power to veto legislative proposals if its accompanying
EIA does not meet the required standards. In other words, the
Board should be given the mandate to play "ping-pong"
with the Commission over regulatory proposals. If the EIA process
is to be taken seriously by businesses and member state governments,
there must be an enforceable minimum standard. The fact that the
quality of many final EIAs continues to fall short, and that study
after study continues to point out similar issues, suggests that
the current IA Board does not have the political clout, nor the
time and resources required to raise the standard of EIAs to any
meaningful level. There is also a case for expanding an independent
IA Board's remit to all the EU institutions rather than just the
Commission in an advisory capacity for Parliament and Council
amendments. In turn, the Board could then be charged with updating
EIAs as the proposals change during the course of negotiation.
4.6 A simple majority for scrapping proposals:
One of the main problems with trying to achieve regulatory reform
at EU level is that changing existing EU law involves opening
up the whole negotiation process from the beginning, just as if
a new law was being created. In practice, member state governments
should be able to present a case for EU legislation to be scrapped
if it is deemed too costly or best enforced at the national level.
If 50 per cent or more of member state governments in the
Council vote in favour of scrapping a particular piece of legislation,
then it should be abolished. This should apply to existing as
well as all new legislation.
4.7 A robust subsidiarity test: All
Commission proposals should undergo a thorough subsidiarity test
to evaluate whether the policy could be better enforced at the
national or local level. The need for EU legislation should be
justified and the "do nothing" option considered in
all cases. The IAB should possess the authority to veto proposals
that do not do so. The first step would be to legally define subsidiarity,
and give examples of what it does and does not entail.
4.8 Allowing one quarter of national
Parliaments to kill off a proposal: If a quarter of national
Parliaments object to an EU proposal, then the proposal should
be scrapped. National Parliaments must be given enough time to
actually receive and scrutinise the proposal, to vote on it, and
to register their dissatisfaction and find allies in other countries.
Recess periods should be accounted forso an 18 week
window should be allowed.
4.9 A reversed infringement procedure:
The EU could also introduce a reversed infringement procedure,
whereby national Governments or Parliaments could block any proposal
that does not respect a newly toughened up legal definition of
the subsidiarity principle. Should a proposal get through, Governments
or Parliaments should be able to take the Commission to the European
Court of Justice for failing to respect subsidiarity as legally
defined. Currently, the Commission can take member states to court
for failure to transpose Directives. EU grievance procedures should
become more of a two-way street, forcing the Commission to be
far more rigorous in its consideration of the "subsidiarity
test" when drawing up new proposals.
4.10 Improved EIAs: There are many
ways in which EIAs could be improved. However, as said, these
will count for very little unless the IABor some other
independent scrutiniseris given the mandate to ensure that
EIAs are properly used. In combination with such a body, EIAs
could help to stem the flow of regulation if the following improvements
Clearer objectives. EIAs
should be specifically focused on an overall objective of less
Quantification of all economic
costs and benefits. This should include a standard template
for discounting future costs of regulations, and clear presentation
of these future costs. The Council and European Parliament should
refuse to consider any proposal that does not have a quantified
More consultation and transparency.
Draft EIAs and the IA Board's opinion on them should be
published so that everyone can see who was consulted and whose
opinion was taken into account when the Commission formulated
Clearer presentation of findings.
EIAs should have a clear 1 or 2 page summary,
with a table summarising all the costs and benefits. The template
which the UK Government introduced for IAs in March 2008 shows
that it is possible to summarise the findings of an impact assessment
on 1 or 2 pages.
More EIAs and better selection
processes. There must be clearer criteria about what kinds
of proposals should be subject to assessmentwith a view
to making them compulsory for a much greater number of proposals.
There should be a threshold for which proposals are subject to
IAs, eg proposals with a minimum impact of 30 million
across the EU. The IA Board should be responsible for assessing
whether the proposal falls under the threshold, and then decide
the extent of the IA required.
Greater use of EIAs by the European
Parliament and Council. The European Parliament and the
Council are not currently making use of EIAs when negotiating
proposals. Both institutions should produce an IA for any significant
amendments to legislation. Alternatively, a newly independent
IAB as described above could be made responsible for updating
EIAs throughout the negotiation process.
4.11 A "guillotine mechanism"
for Commission proposals: Commission proposals should be given
an expiry date. If a proposal has not been adopted within a given
legislative timeframe, the proposal should be scrapped and started
again in a new legislative session. This is described by former
German President Roman Herzog as the "discontinuity principle,"
and is a system currently employed in Germany.
The EU institutions would no longer have to deal with legislative
proposals that have been in the pipeline for a number of years,
and it would also force the Commission to prioritise its proposals,
allowing it to concentrate on the areas where it can add value.
4.12 Sunset clauses for EU legislation:
An often repeated idea is the "sunset" clausewhereby
legislation is reviewed after a given time period. Sunset clauses
should be compulsory at the EU level so that EU regulations can
be reviewed in the light of experience and evidence.
4.12 "1 in, 1 out"EU
regulatory budgets: If the EIA system were improved, with
an independent board to scrutinise it, there is no reason why
EU Commission departments (DGs) should not adopt a "1 in,
1 out" system for regulations. Given the very
high proportion of regulatory costs coming from the EU, it would
make more sense for the UK to push for regulatory budgets at EU
level first, and then to subsequently introduce them in the UK.
4.13 Sourcing new proposals: In order
to avoid the disproportionate influence of interest groups in
EU legislation it should be made more transparent who exactly
is responsible for a given legislative proposal. As Commissioner
Gunter Verheugen has suggested:
"I think we should also do more to create
transparency at the beginning of the process. I would like to
know if there is new proposal on the table coming from my colleagues
who has asked for that. Start your document with a paragraph saying
who has asked for that piece of legislation."
4.14 Common commencements dates for EU
regulation: The EU should introduce Common Commencement Dates
for regulationslike those in place in the UK. These are
fixed dates occurring twice a year, when new regulations come
into force, helping businesses to cope and keep track of changes
5. BETTER LINKAGE
5.1 Making the link between the UK's regulatory
reform agenda and the EU's better regulation agenda is vital.
The UK's reform agenda is ambitious. However, because of the large
proportion of regulation stemming from the EU, the UK is losing
control of it.
5.2 UK ministers sometimes sign off on
EU proposals despite the costs outweighing the benefits: In
2007 the Minister of Transport Stephen Ladyman, for instance,
approved an Impact Assessment which showed that the estimated
costs of an EU Directive were £400 million a year while
the benefits were £18.5 million a year. This encapsulates
the UK Government's weak approach to negotiations on EU legislation.
There is clearly an enormous problem if IAs
are being signed off on proposals where the cost so clearly outweighs
the benefits. This illustrates the need for the UK Government
to focus its attention more clearly on Brussels, if its regulatory
reform agenda and its system of IAs are to function effectively.
Arguably the most serious shortcoming of UK IAs, is their failure
to impact on regulations that are being agreed in the EU. This
is in no small part due to timing and targeting.
Government guidelines state that:
"In the earliest stages of policy development,
it is particularly important that policy-makers should use Impact
Assessment to help them understand and define the policy challenge
and to analyse the case for Government intervention."
But in practice, IAs are often produced mid-way
through the EU policymaking process, and sometimes far too late
to actually have an impact on the resulting piece of legislation.
For example, in some cases, the Government's consultation with
businesses is launched only one month prior to the due date for
a decision in Brusselsand sometimes even after the proposal
has already been approved.
Moreover, our research has found that when IAs are prepared on
the basis of an original EU proposal, they are not always updated
to allow for new developments in the policymaking process.
For example, the Temporary Agency Workers Directive,
finally agreed on 19 November 2008, was never subject to
an updated IA during the negotiations to accommodate changing
circumstances, despite the fact that five years of negotiations
took place following the UK's original 2003 IA, which estimated
the cost to business from the new law at a staggering £637 million
a year. These problems clearly limit the power of UK IAsand
the UK Governmentto play a significant role in the consultation,
formulation and negotiation of EU policies.
The Government recently announced that it was
committed to "intensive engagement with the EU institutions
promote the better regulation agenda."
But despite this claim, the Government is not nearly as engaged
as it could be. The following, more radical approach could go
some way to helping to stem the flow of regulations.
5.3 Using IAs and regulatory budgets
as bargaining tools: BIS provides an "instruction manual"
on how to use Impact Assessments in EU negotiations. It instructs
civil servants to lobby "other Member States to win support
for the UK position". This is the right approach. However,
the evidence we have collected suggests that the UK Government
has not used its bargaining power stemming from its Regulatory
Reform Agenda nearly enough.
Negotiation theory holds that in the interaction
between domestic and international (EU) politics, governments
strengthen their bargaining power if they can convince their negotiation
partners that their mandate from voters and business at home is
very restrictedand that they are ready to stick to that
This is exactly how the UK Government should approach EU negotiations
in the pursuit of better regulation. The UK Government has two
main tools at its disposalImpact Assessments and regulatory
budgets, given that such budgets will be established in the future.
5.3.1 Impact Assessments: First,
the quantification of costs and benefits of regulation has vastly
improved in UK IAsalthough the costs are probably still
underestimates. The scope for using IAs in EU negotiations has
therefore widened. The UK Government could use its comparative
advantage with IAs in several different ways. It could:
Refuse to negotiate EU proposals for
which the Commission has not quantified costs and benefits, but
where the UK has, and where the costs are shown to outweigh the
Require proposals where the UK IA and
the EIA show different estimates to be subject to further assessment
before it can be taken forward in the European Council. An example
of when estimates differ is "Phase 2 of the European
Pedestrian Protection directive", which is currently in the
process of being negotiated. The UK IA put the cost estimate substantially
higher than the EIA did.
5.3.2 For the most costly proposals, a more
drastic approach should be taken. Where the UK Government is faced
with a possible defeat over a key proposaleither imminent
or long-termit should not be afraid to use a robust IA
to "build up its defence." But this must be combined
with a clear message: Due to the high costs potentially imposed
by the proposed regulation, the UK Government lacks the mandate
from voters and business at home to sign up to the proposal. The
robust findings in the IA will be there for everyone to see.
And example of where this kind of strategy should
be used is with the opt-out from the 48-hour maximum working week,
entailed in the Working Time Directive, which the European Parliament
almost managed to scrap earlier this year. In fact, extraordinarily,
a BERR official told Open Europe that an IA had never been produced
on the cost of the loss of the opt-out because "no one expected
the opt-out to come up for negotiation."
The opt-out could well again come up for negotiations
before long. This is a clear case of where the Government should
have produced a robust IA, and take it to Brussels, arguing that
it simply cannot accept proposals for which there is little support
at home, and for which the estimated costs are so high. A similar
strategy could have been pursued with the Agency Workers Directive.
5.4 Regulatory budgets: A similar
principle should apply to regulatory budgets. If UK regulatory
budgets in future are to reflect realities on the ground they
will need to effectively incorporate regulations coming from the
EU, which account for the majority of the cost. Rather than merely
factoring in the cost of EU regulations to the domestic regulatory
budget, budgets should also be used at an early stage in the EU
EU legislation should have to meet the same
stringent criteria as domestic legislation. The UK Government
should give its negotiators the authority to reject proposals
that do not meet its priorities and threaten to break its own
Without this function UK regulatory budgets
will only ever have a very limited impact on reducing the flow
of regulation. As with IAs, ministers must make clear that they
simply do not have the mandate to sign up to a proposal that will
break their departmental budget.
5.5 A more assertive approach at an earlier
stage in negotiations: The UK Government's guidelines on using
an Impact Assessment in EU negotiations recommend that UK policy-makers
should be involved in EU-level policy-making not only once a proposal
leaves the Commission but also while it is being formulated inside
the Commission. They state that:
"If requested to do so by the Commission,
you should consider sharing UK data on the likely impact of a
proposal. In cases where you think that the Commission is not
sufficiently aware of the impact of a potential proposal on the
UK, you should consider taking the initiative to lobby the Commission
directly to consider UK data."
The Commission's so-called Roadmaps, which outline
Commission proposals for the coming 12 to 18 months
and their likely impacts, ought to act as an early warning system
to the Government of what proposals are in the pipeline. This
would allow the Government to provide the Commission with evidence
of the impact of the proposal. Even at this stage, policy-makers
should indicate that a costly proposal simply will not be accepted
in the light of hard evidence. The earlier this dialogue is opened
5.6 On-going UK impact assessment and
consultation throughout the EU decision-making process: UK
IA and consultation need to be used throughout the EU negotiation
process, to account for changes that take place at different stagesincluding
changes made by the Parliament or the Council, especially given
that neither of these can currently be relied upon to produce
their own IAs. It is not acceptable, for instance, that the Temporary
Agency Workers Directive was never subject to an updated IA, despite
the original IA estimating the cost to the UK at £637 million.
5.7 EU-Commission style audit trails:
One of the simplest reforms the UK Government could pursue is
to publish proper "audit trails" for each new legislative
proposal. This would inject instant transparency and help businesses,
MPs and others track what is going on with a proposal throughout
the often lengthy decision-making process.
5.8 Source any proposal laid before the
Parliament: Ministers should be made to clarify on Bills and
SIs whether or not the legislation is derived from the EU. This
will make the origin of UK regulation more transparent and serve
to improve the debate about the role of the EU in initiating UK
legislation, among MPs as well as the general public.
5.9 The nuclear option: refusing to agree
an EU budget deal without reform: The UK is in a powerful
position to push for reform at EU levelparticularly where
regulation is concerned. In order to set the wheels in motion,
the UK Government should draw up clear proposals for a radical
shake-up of the EU's "Better Regulation Agenda", calling
for new commitments to less regulation, and to the idea
that state interference can only be justified with conclusive
evidence that the benefits of any such interference outweigh costs
that have been clearly quantified. It could also propose some
of the ideas we explore above. The UK Government should take a
tough line and present this ideal to its EU partners, using its
veto over negotiations on the Financial Frameworkthe EU's
multi-annual budgetto help focus minds. The UK is in a
better position than most to hold budget negotiations hostage,
since it is one of the biggest net contributors to the EU.
In addition, there's a huge need to bolster
the scrutiny of EU proposals in Westminsterand so promote
better regulation in the EU. However, we will not touch on our
proposal for reform of the UK Parliament's scrutiny system in
29 September 2009
10 See Open Europe, "Out of Control? Measuring
a decade of EU regulation" http://www.openeurope.org.uk/research/outofcontrol.pdf Back
Calculated assuming that UK GDP in 2008 was £1,461,301,000,000,
see Eurostat http://epp.eurostat.ec.europa.eu/portal/page?_pageid=0,1136173,0_45570701&_dad=portal&_schema=PORTAL Back
In the original report, Open Europe used the Government's original
estimate of the cost of the WTD, which was put at £2.1 billionn
(in 2008 prices). However, Open Europe has since revised
the cost of the WTD, by using a later Government cost estimate
and by adding the cost arising from subsequent amendments, such
as those imposed through the ECJ's Jaeger and SiMAP cases. After
these adjustments, we estimate the annual cost of the WTD in the
UK at between £3.5 and £3.9 billion, see Open
Europe, "Time's Up! The case against the EU's 48-hour working
week", see http://www.openeurope.org.uk/research/wtdoptout2.pdf Back
For more details see: OECD, "Economic Survey of the European
Union 2007", 20 September 2007. Back
Financial Times, "Uphill battle against Brussels bureaucracy",
10 October 2006. Back
Jacques Pelkmans made these observations during a conference hosted
by the Centre for European Policy Studies, "European Network
for Better Regulation, Final Conference", Brussels, 11 December
European Commission, "Radical simplification of EU law: 5,000 pages
of Official Journal removed", MEMO/08/62, 30 January,
European Commission, "A 2nd strategic review of Better Regulation
in the European Union", COM(2008)32, 30 January 2008,
p 3. Back
European Commission, "Better regulation: Commission intends
to withdraw one third of screened proposals", IP/05/1189,
27 September 2005. Back
Open Europe, "Less Regulation: 4 ways to cut the burden
of EU red tape", November 2005, p 12. Back
For a critique of EIAs, see The Evaluation Partnership Limited,
"Evaluation of the Commission's Impact Assessment System
Final Report", April 2007, p 8. Back
For the number of EIAs between 2003 and 2007, see Andrea
Renda, "Advancing the EU better regulation agenda: selected
challenges for Europe", Centre for European Studies, (draft
at 07 September 2008), p 7; Commission website consulted
for number of IAs in 2008, see http://ec.europa.eu/governance/impact/practice_en.htm Back
These are: "Proposals aiming to modernise and reinforce the
organisational framework for inland waterway transport in Europe"
in 2008; "Directive on the cross-border transfer of registered
office" and "Proportionality between Capital and Control
in Listed Companies" in 2007. Back
See the Commission's website, http://ec.europa.eu/governance/impact/practice_en.htm,
viewed on 13 January 2008. Back
Impact Assessment Board, Report for the year 2007, SEC(2008) 120,
30 January 2007. Back
For a discussion in this issues, see Craig Robertson, "Impact
Assessment in the European Union", eipascope, 2/2008 (European
Institute of Public Administration), 2008, p 19. Back
OECD, "OECD Economic Survey: European Union", 2007,
p 107. Back
A 2007 evaluation found that "while only about 40 per
cent of IAs monetised some costs of the proposal in 2003, almost
80 per cent of IAs monetised some costs of the proposal in
2007", see Caroline Cecot, Robert Hahn, Andrea Renda, and
Lorna Schrefler, "An Evaluation pf the Quality of Impact
Assessment in the European Union with Lessons for the U.S. and
the EU", AEI-Brookings Joint Center for Regulatory Studies,
December 2007, p 8. Back
For the Commisison's guidelines, see European Commission, COM(2002)704,
11 December 2002. Back
European Commission, "Impact Assessment Guidelines [Draft
version]", (27.05.08), p 4. Back
European Commission, SEC(2005)1255, Oct 2005. Back
The Evaluation Partnership, "Evaluation of the Commission's
Impact Assessment System Final Report", April 2007, Annexes
to the Report, p 97. Back
European Commission, SEC(2005)791, 15 June 2005. Back
As proposed, for example, in John Tate & Greg Clark, "Reversing
the Drivers of Regulation: The European Union", Policy Unit,
Conservative Research Department, 2005, p 51. Back
As proposed in Andrea Renda, "Advancing the EU better regulation
agenda: selected challenges for Europe", Centre for European
Studies, (draft at 7 September 2008), p 43. Back
Welt am Sonntag, "An article on the EU constitution",
14 January 2007. Back
Address to the Better Regulation 2008 Conference, EUX.TV,
15 September 2008 http://www.eux.tv/article.aspx?articleId=20421 Back
There is a clear mismatch between our findings and the Government's
claims to have cut down the administrative cost and burden of
regulations in the last few years. In December 2008, the Government
said that the administrative burden had been cut by £1.9 billion
compared to the 2005 baseline measure. Back
Final Regulatory Impact Assessment, "Early Availability of
Sulphur Free Fuels" (European Directive 2003/17/EC), see
p 18 in http://www.opsi.gov.uk/si/si2007/em/uksiem_20071608_en.pdf Back
BERR, "Impact Assessment Guidance", p.2 http://www.berr.gov.uk/files/file44544.pdf Back
See "Progress dates for EU Directives" in Ambler et
al. "The British Regulatory System", British Chamber
of Commerce, March 2008, p 25. Back
See: Ambler et al. "The British Regulatory System",
British Chamber of Commerce, March 2008, p 24. Back
HM Government/Better Regulation Executive, "Making your life
simpler: simplification plans-a summary", December 2008,
p 45. Back
See for example: Putnam, Robert D, "Diplomacy and Domestic
Politics: The Logic of Two-Level Games" International Organization,
Vol 42, No 3. Summer, 1988, pp 427-460. Back
For an example of such a proposal, see the IA for European Directive
on the Statutory Audit of Annual And Consolidated Accounts (2006/43/EC)
on which the Commission did not produce an EIA: http://www.opsi.gov.uk/si/si2007/em/uksiem_20073494_en.pdf Back
Compare UK IA to the EIA, see http://www.dft.gov.uk/consultations/closed/protectroadusers/impactassessment.pdf,
respectively http://ec.europa.eu/governance/impact/docs/ia_2007/sec_2007_1244_en.pdf Back
Telephone conversation with a BERR representative on 15 December
Department for Business, Enterprise and Regulatory Reform, "Using
an Impact Assessment in EU Negotiations", available at, http://www.berr.gov.uk/whatwedo/bre/policy/scrutinising-new-regulations/preparing-impact-assessments/toolkit/page44278.html Back