Impact Assessments in the EU: room for improvement? - European Union Committee Contents

Examination of Witnesses (Questions 100 - 119)


Ian Lucas

  Q100  Lord Bradshaw: You are the second person who has sat there in the last month who has cast doubt on the way the British Government puts a lot of emphasis on cost-benefit analysis and other countries in Europe do not. Have you any idea of the proportion of countries which hold out the cost-benefit analysis as a sort of totem and how many people do not? Are we in a very big minority?

  Ian Lucas: I cannot give you a proportionate approach, because I think it will differ in different individual cases, but I do not think we are in the majority in this. I think that is the furthest I can go.

  Q101  Lord Dykes: I see that, quite unusually, you speak German.

  Ian Lucas: Ein bisschen!

  Q102  Lord Dykes: I wondered if you had had a chance to discuss with German colleagues the Wirkungsabschätzung, the impact assessments, and the way they use them?

  Ian Lucas: Strangely, I did meet with Eckart von Klaeden, who is the new minister in Germany (who was appointed, I think, last month) earlier this month. I did not specifically discuss with him impact assessments, but I did discuss working more closely with the Germans in terms of the Better Regulation Agenda as a whole. Certainly, we regard impact assessments as very important within the UK. We had a very constructive meeting and we talked about perhaps organising a seminar together to talk about better regulation and, as part of that, we would want to be talking about impact assessments and the progress we might be able to make within the European Union. We are always seeking to attract friends.

  Q103  Lord James of Blackheath: Minister, we have been getting some reports coming to us that the focus both of the UK and some other Member States on administrative burden reductions is disintegrating the logic of integrated IAs. Does that ring any bells with you?

  Ian Lucas: It rings bells with me. I do not accept it. I think that administrative burden reductions are very, very important. When I talk to business and many other individuals within the UK, when they think about the stock of regulation they think very, very hard and make strong representations to me about the importance of administrative burden reductions, and I think that it is important that is in my mind when I am looking at the issue of regulation. I think it is in my mind but it does not dominate what I do.

  Q104  Lord James of Blackheath: I think I am hearing you say you disagree with the thrust of the question. So why do you think we have been getting such strong representations along those lines? What is the misapprehension that is being given?

  Ian Lucas: I think it is the misapprehension that that dominates the approach that we have to regulation, because I think what we want to do is improve the regulations brought forward. With regulations we, therefore, look at cost-benefit analyses, we also look at environmental, social and economic impacts of regulation. We do have a broad consideration of the various impacts of regulation, but, as far as existing regulation is concerned, we are conscious of the representations that we get from business, for example, about administrative burden, and that is important. We want to try and reduce burdens for business as far as we can.

  Q105  Lord James of Blackheath: Do you think it is possible that people are reporting what they expect to see rather than the reality that they find?

  Ian Lucas: I do not quite understand the question.

  Q106  Lord James of Blackheath: I am wondering whether people are projecting their belief in what might be happening rather than reporting on the firm evidence of what they have seen?

  Ian Lucas: Do you mean the bit that is representative of organisations from business?

  Q107  Lord James of Blackheath: I only put it that way because you are quite at variance with some of the reports that we have had, so I am just trying to find out why we may have had such different reports.

  Ian Lucas: For example, we asked for evidence of regulations with which business was dissatisfied recently. The Institute of Directors came forward with 300 regulations, or something approaching that[3]—I speak from memory—asking us why these particular regulations were in place. Some of them, because we carry a broad approach to the regulations, we regarded as necessary and defensible, and we said so, but with a number of them we took on board what the IoD had to say and actually were acting on them. A number of them we were actually acting to limit the regulatory impact already. So we have an approach to regulation that is broader than narrow cost-benefit economic impacts but we do regard reducing administrative burdens as very important.

  Q108  Lord James of Blackheath: That is very helpful as background to what may still be something of a conundrum for us, but, moving on, the Commission has recently published a Communication on the action programme for reducing administrative burdens. What is your assessment of the Commission's progress in meeting the target of a 25 per cent reduction in administrative burdens by 2012?

  Ian Lucas: Firstly, we greatly welcome the Commission Communication, because I think that shows the extent of the culture change within the Commission, the fact that such a challenging target is being pursued. But it is very challenging and it is going to be very difficult to achieve. I also think that it will be some time before businesses within the European Union will actually feel the benefit of the proposals, because the Commission alone cannot deliver the target; there has to be a buy-in by the Parliament and by the Council too. The steps forward that the Commission have made in recent years have begun to be taken on board by the European Parliament but perhaps less so by the Council, and I think that the progress that the European Union will make will be constrained by the lack of buy-in right across the board.

  Q109  Lord James of Blackheath: Thank you for that. I think that goes to some part of the answer to the final bit of the question here, but there is one bit I will ask you. If, indeed, the Government's claim that they have been working to promote the benefits of better regulation with the MEPs and Member States' representatives in the Council, as I think you are referring there, could you give us an account of the actions that you have been undertaking in this respect of support?

  Ian Lucas: As I mentioned earlier, I personally have met with the German Better Regulation Minister to discuss with him our Better Regulation Agenda in the UK and how we can meet with the Germans and discuss the way that we are going to take matters forward. My colleague, Lord Davis, has met with several key German and UK committee chairs, including Sharon Bowles, who heads up the Economic and Monetary Affairs Committee, and Herbert Reul, who chairs the Industry Research and Energy Committee, and better regulation featured prominently in those discussions; and I am going to the European Parliament in the New Year to promote this agenda too. I also understand that we have contact at official level with UK and German committee chairs and their assistants.

  Q110  Lord James of Blackheath: Beyond the early New Year, what are the other major objectives that you have coming?

  Ian Lucas: As far as better regulation is concerned?

  Q111  Lord James of Blackheath: Yes, so far as this process.

  Ian Lucas: What I would like to be doing is trying to broaden the focus of impact assessments and trying to extend the idea of the Commission producing impact assessments. For example, as regards any proposal being brought forward by the European Parliament or the Council, to try and embrace impact assessments from them too so that we have a more informed assessment.

  Lord James of Blackheath: Thank you, Minister. That is very helpful.

  Q112  Lord Plumb: I think my question follows closely the question you have just been answering from Lord James. You used the phrase earlier to Lord Whitty when you said, "Government takes the rap when developing legislation", and I would suggest none more so than with SMEs. It is the SMEs who perhaps are more critical of general legislation because they find it more difficult to get to grips with it, whilst there are people in perhaps larger companies who can the better cope. But in this, of course, dealing with the Commission, it is supposed by the test that is already set by the Commission for the SMEs to encourage the Commission to think small first when developing that legislation. Do you think that is so? Do you think they are doing that and does it adequately reflect in the impact assessment?

  Ian Lucas: I feel very strongly about this small business aspect, because I used to run a high street solicitor's firm as a sole practitioner in Oswestry in Shropshire and I am very conscious of the wide burdens imposed on small enterprises of all sorts. Therefore, I think the fact of the SME test is a very positive step forward. It is very early to assess it as far the EU is concerned, but we were encouraged by the Commission actually adopting a proposal to exempt micro-enterprises from more complex EU accounting requirements, which we strongly support, and we are also lobbying ourselves, the UK Government, to mitigate the disproportionate cost of regulation on SMEs. So we think it is now on the agenda in a way that it has not been before, and it is a very powerful tool in terms of having it there to use in argument as far as taking positions with other Member States is concerned. We are early in the process as far as the impacts of that are concerned, and I cannot come up at this stage with concrete examples of what it has been able to achieve, but I think it is very prominently on our own agenda and the recognition by the EU institutions of its importance will be helpful in putting the case forward from now on.

  Q113  Lord Plumb: I think a lot of people would welcome that answer, but at the same time they would immediately come back and say, "We will believe it when we see it", because they have heard this so many times over recent years. The other question that concerns them is they say—it may not be true but nevertheless they say—"We obey the law but does every other country? Does the same impact assessment apply in all other countries?" If you can explain to them that other countries do obey the law, or at least give them that satisfaction, that may help at the same time, of course, as reducing the amount of legislation and the impact that that legislation has on their business.

  Ian Lucas: I think there is a perception, which I hear in my surgeries, that we abide by these regulations and other countries do not. It is a difficult trick for me to pull to say that other countries do not abide by EU regulations. I am sure that they would say that they do and that they do enforce them. But I think the fact that this is now on the agenda as far as respecting the position of smaller enterprises and the fact that the European Commission has adopted a proposal to exempt micro businesses—all of that is positive as far as smaller businesses are concerned. You can be assured that I want (to use that dreadful phrase) a level playing field as far as the EU is concerned, because we want to be able to compete with all other Member States on an equal footing and I do not want anything in place that is going to prevent UK business from doing that.

  Q114  Lord Rowe-Beddoe: Following on, if I may, on this whole question of SMEs, actually Lord Plumb dealt with the question of perception, but, in general, I was greatly encouraged by your written responses because I think that you were highlighting areas that are of great concern to the SME sector. At least we have heard that in evidence. The previous evidence that we have heard argued, for example, that the EU consultations are too complex for SMEs—that is something which came through—as well as they are too high level for individual stakeholders to engage with. What are your comments to that?

  Ian Lucas: I probably agree with that, but that is too short an answer. I agree. I was talking about engagement earlier on. One of the real dangers of any proposed legislation is when it really adversely affects a particular business. It is very difficult for a small business to keep abreast of what all the proposals that are going around are from legislative bodies, whether they be the Welsh Assembly Government, whether they be the UK Government, or whether they be the European Union. I think that the representative organisations do a very good job in this respect—people like the Federation of Small Businesses and the Institute of Directors—and they try to keep an eye on matters, and it is important that we make that as easy a process as we can for them. I think that in government what we need to be pressing for is as early highlighting of any legislation, or draft legislation preferably, that comes forward as possible. We need to have a close relationship with those representative organisations and we need to encourage them to shout out loud if there is something on the horizon, even, that is going to cause difficulty or needs to be looked at in a different way. I also think that we need to be as accessible as we possibly can to business directly. We have tried to do that through organisations like the Better Regulation Executive and using the website routes as far as we possibly can, but I think more business needs to be aware of the existence of that and the fact that they can contact government.

  Q115  Lord Rowe-Beddoe: Thank you. The other thing is, again, in support generally of what you wrote—and you used the disagreeable phrase of the level playing field—there does seem to be an enormous lack of joined-up thinking between the three parts of the European Union—the Council, the Commission and the Parliament—where you are getting all this conflict, in fact. However, I have got a last question. How could the system be improved in so much as the cost of producing data that is required at times during this consultation period is something, we have heard, which discourages SMEs from participating? How can we address that and what are the UK's comments?

  Ian Lucas: I think, firstly, one of the difficulties is that the consultation period that the EU uses is very short. It is only eight weeks, which is shorter than you normally use at the UK government level, and is a very demanding deadline for a small business that is particularly affected by a proposal to actually respond to, devote the attention to and then submit information to. So I think that we need to think about extending that. We think the SME envoy from the EU has a role in this and really needs to promote the importance of engagement between smaller business and the European Union: because I suspect that it is a much more difficult task for a smaller business to engage with the behemoth that is the European Union than perhaps some of the larger organisations and multinational companies. We have got a small firms consultation database, and we do use the Better Regulation Executive website and encourage contact as far as we possibly can with any proposals. I am a great believer in draft legislation as well. I think it is important that any ideas that are coming forward should be put forward in draft, if at all possible, and that maximum consultation takes place, because the more consultation that takes place the better for legislation at the end of the day.

  Lord Rowe-Beddoe: Thank you.

  Q116  Lord Dykes: We are dealing with a system of the separation of powers, which is new for British citizens but is very familiar to Americans, and sometimes the Americans understand those processes more than many citizens in European countries. Can I turn your attention briefly, Minister, to the Inter-institutional Agreement, which does provide that there should be impact assessments done on the significant amendments to legislation by both the Council and the Parliament, particularly when it is a major change, or a fairly major change at least, suggested in the proposed draft legislation. We are disturbed to learn that that is not apparently happening as much as we might have expected. What is the Government's view about that, and is there anything that might be done to alleviate that problem?

  Ian Lucas: We think it is hugely important, because if impact assessments are to work, then, clearly, the assessments have to be made on the proposal that is actually going to be implemented. It is no use having an impact assessment on an original proposal that is then going to be amended substantially and is, therefore, implemented an on entirely different basis to the calculation on which the impact assessment was made. So we think it is very important indeed that this should develop. The European Parliament has begun to do some work in this area, and we would like to see the Commission, perhaps, play a role in this. I think that was highlighted in some of your earlier evidence. There might be a slight degree of scepticism about the impartiality of the Commission in this in that the suggestion may be made—certainly not by me—that they might try to defend their earlier position rather than give informed advice on an amendment, but I am not sure that that is a particularly valid criticism. I think that it would be very helpful for there to be a developing culture, not just in the European Parliament, but also in the Council for any significant amendments that are proposed at that stage to be supported by impact assessments.

  Q117  Lord Dykes: Would there be a danger that, if the Commission did do that off its own bat, as it were, that would be regarded as slightly ultra vires to say the least? Although everyone is getting entry around the Lisbon Treaty procedures now, that will only unfold as time passes, basically, and we are only just starting. So should the Commission intervene with further assistance on IAs if the EP requests it, or if the Council does as well, but mainly the EP, I suppose, or should it just do it off its own bat anyway?

  Ian Lucas: The Commission is developing some expertise in producing the impact assessments. I do not think that capacity is particularly there within the European Parliament as yet. I am not sure whether the individual Member States would be seen as sufficiently impartial to be able to produce their own impact assessments, although I think that is better than having no impact assessment, quite frankly. So I think the source of the impact assessment is perhaps less important than the fact of the impact assessment. Initially, at least, we should have the information to try to have a more considered and informed debate about substantive amendments.

  Q118  Lord Dykes: Would it be legitimate for a national impact assessment, both from a government or a national parliament, to be made on the basis of representations from one or more trade associations or lobby groups and just taken as evidence of a problem which the government or parliament would then pass on, or should it examine the arguments itself before doing that?

  Ian Lucas: I think we must examine the arguments. I do not think any government should be simply relying on a lobby briefing in order to make a proposal.

  Q119  Lord Dykes: After all, those groups can always lobby direct to the European Parliament, as will happen more and more now.

  Ian Lucas: Yes.

3   The actual figure is 269 Back

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