The EU Institutions have understood for a long time now9 the equation that “Legislation means more costs for enterprises”. At the same time, the approach of the European Commission (“Commission”) to law reflects another equation relating to European integration: “More legislation means more integration”.
The Commission’s May 2015 “Better Regulation for Better Results”10 programme is one more step in a long process to make the EU more efficient and more in tune with the needs of business and of citizens. In this article we look at the evolution of the assessment of Regulation in the EU. In the next article (page 9) we ask whether it is going in the right direction.
The debate on the Regulatory Quality of the legislation in Europe (not only in the EU) was started by the OECD11 when it defined the concept of Regulatory Impact Assessment (RIA). In the OECD approach, RIA offers the means to improve regulatory decision-‐making and practice and involves a systematic appraisal of the costs and benefits associated with a proposed new regulation as well as the evaluation of the performance of existing regulation. So far, the adoption of RIA, as a part of the “Better regulation”, has been confined mainly to OECD countries.
Following a White Paper on Governance12 and a Report from an Expert Group13 both issued in 2001, the Commission adopted a range of regulatory reform measures in 2002, including Guidelines on the assessment of the impact of regulations 14 . After a new Commission Communication in March 2005,15 these guidelines were revised in 2005 and updated again in 2006.16 Impact Assessment is now required for all regulatory proposals on the Commission Work Programme. In addition, the Commission is pressing for simplification of existing laws (through consolidation, codification and repeal), reduction of administrative costs (“cutting red tape”), and consultation with those affected by regulatory policies.
The EU Member States17 are likewise adopting programmes of Better Regulation, some predating and pushing the Commission’s efforts, and others in turn spurred by the Commission.
After 2006, the Commission proposed a new instrument, changing the general approach on Better Regulation: Smart Regulation means delivering EU policies and laws that bring the greatest possible benefits to people and businesses in the most effective way. It is a continuous process, not a one off operation. Ensuring that EU legislation is “fit for purpose” is essential for putting Europe back on track towards more growth and jobs.
A “synthesis” of the Commission dated 2010 shows the evolution of the Better Regulation to Smart Regulation:18 pushing the Regulatory Policy Agenda a step further, in three steps:
- Better Regulation focused on delivering good quality policy proposals-‐new proposals;
- Smart Regulation focuses on closing the policy gap – investing more in policy evaluation and simplification;
- And bringing in other actors.
Describing the results of the Impact Assessment during the last 10 years, the Commission stressed that:
- More than 500 Impact Assessment were carried out since 2003;
- Using an integrated approach: economic, social and environmental aspects checked;
- And were setting up detailed information about forthcoming initiatives
Simplification is an important part of the Smart Regulation priority and of Better Regulation in general. Tangible results in reducing red tape and simplifying the existing law was summarised by the Commission as follows:
- More than 150 simplification Proposals since 2005: repeal of out-‐dated provisions, codification, making the lives of users easier;
- When adopted by the Council and Parliament measures proposed by the Commission will cut red tape by more 30%;
- Allowing Member States to exempt micro-‐ entities from EU accounting directives alone would benefit 5.4 million companies.
Following this analysis the Commission launched a New Initiative named REFIT – EU Regulatory Fitness and Performance Programme (2013-‐ 2014) 19 for completing the Better and Smart Regulation with a definitive instrument for the reduction of the overall administrative burden.20 REFIT identifies burdens, inconsistencies, gaps and ineffective measures.
To guarantee EU Regulatory quality, EU legislation, and the national rules that implement it, must be managed in a manner that ensures it continues to efficiently achieve its public objectives. Regulatory frameworks must be fit for purpose and remain so as problems evolve, new solutions emerge and political priorities change. To this end, the Commission makes the identification of unnecessary costs and areas for the improvement of performance an integral and permanent part of its policy-‐making and programming across all areas of EU competence.21
On 17 December 2014, the Commission adopted its Work Programme for 2015. In this context, the Commission confirmed all REFIT actions planned for implementation during 2015. A number of pending legislative proposals from previous Commissions were withdrawn on 7 March 2015. Some do not match the new Commission's political priorities. In other cases, the Commission remains committed to the objectives but will propose new, better ways of achieving them.
The 2015 Better Regulation Agenda
On 19 May 2015, the Commission adopted its Better Regulation Agenda.22 It is hoped that this comprehensive package of reforms covering the entire policy cycle will boost openness and transparency in the EU decision-‐making process, improve the quality of new laws through better impact assessments of draft legislation and amendments, and promote constant and consistent review of existing EU laws, so that EU policies achieve their objectives in the most effective and efficient way.
The Better Regulation Package will be directly implemented by the Commission in its own preparation and evaluation of legislation and through cooperation with the European Parliament and Council. To this end, the Commission will now enter negotiations with the Parliament and Council over a new Inter-‐ institutional Agreement on Better Law-‐making.
- More Transparency and Consultation
The Commission will open up its policy making process to further public scrutiny and input, with a web portal where initiatives can be tracked and new public consultations when we are evaluating existing policies or assessing possible new proposals. There will also be new opportunities for stakeholder comments throughout the entire policy lifecycle, from the initial Roadmap to the final Commission proposal. After the Commission has adopted a proposal, any citizen or stakeholder will have 8 weeks to provide feedback or suggestions which will feed into the legislative debate before Parliament and Council.
This transparent approach will also apply to secondary legislation, in the form of delegated and implementing acts. For the first time, draft measures which amend or supplement existing legislation, or which set out specific technical provisions, will be made public 4 weeks before adoption. This will allow for stakeholder comments prior to their adoption by the Commission or Member State experts.
- Keeping existing laws under review
The Regulatory Fitness and Performance Programme (REFIT), which assesses the existing stock of EU legislation to make it more effective and efficient without compromising policy objectives, will be strengthened. It will become more targeted, looking at the most serious sources of inefficiency and unnecessary burden, and will also quantify the costs and benefits of actions wherever possible. The Commission is already working actively to reduce burdens in areas such as VAT, public procurement, business statistics and chemicals; comprehensive evaluations in other fields are also under way. REFIT will now become a fundamental part of the Commission's Annual Work Programme and of the Commission's political dialogue with the other institutions.
The Commission will establish a permanent and inclusive platform for dialogue with stakeholders and Member States on how to improve EU laws in the context of REFIT. The REFIT Platform will bring together high-‐level experts from business, civil society, social partners, the Economic and Social Committee, the Committee of Regions and Member States. It will collect suggestions from the ground for reducing regulatory and administrative burden and bring forward concrete ideas. The Commission will react to all of them and systematically explain how it intends to follow up. The Commission is also renewing its commitment to listen to the views of any stakeholder at any time, via an online tool called “Lighten the Load – Have Your Say”.
- Better impact assessments and quality control
The Commission is strengthening its approach to impact assessment and evaluations to improve the evidence base which underpins all legislative proposals, without prejudice to political decisions. In particular, the Commission's Impact Assessment Board -‐ operating since 2006 -‐ will be transformed into an independent Regulatory Scrutiny Board. Its members will have a more independent status and half of them will be recruited from outside the Commission. The board will have an expanded role in checking the quality of impact assessments of new proposals as well as fitness checks and evaluations of existing legislation.
The Commission also proposes that impact assessments are conducted throughout the legislative process, not just when the Commission prepares its proposal. The Commission calls on the Parliament and Council to carry out impact assessments of any substantial amendments they propose during the legislative process. An ad hoc and independent technical panel can be set up upon request of the Parliament, Council or Commission to analyse whether an amended proposal is practical to implement, creates understandable rights and obligations for the interested parties, and avoids disproportionate costs. Its assessment should be finalised and made public within a reasonable amount of time to inform the political decision-‐making process.
- A New IIA for a shared commitment by EU institutions
Better regulation can only work if it is a shared commitment of the Commission, Council and European Parliament. For this reason part of the package is a proposal for a new IIA on Better Law-‐ Making to the Parliament and Council, aiming for agreement before the end of 2015. The draft new IIA proposes: a common commitment to the REFIT programme; impact assessment throughout the legislative process; continuous monitoring of the performance of EU regulation and more thorough evaluations; coordinated annual and multi-‐annual planning, including consultation on the Commission Work Programme; greater transparency on trilateral negotiations; and joint efforts to reduce unjustified “gold-‐plating” of EU legislation by Member States.