EU must deliver regulatory reform


The UK's Presidency of the European Union should focus on reducing the regulatory burden on business of EU regulations and rationalising Europe's shambolic impact assessment polices, a new report argues.

The report, Is EU Regulation good for us? commissioned by the British Chambers of Commerce, has found that nearly all new EU regulations that become law in the UK are implemented without their impact on business being effectively assessed or quantified.

The BCC Report has found that only 0.5 per cent of EU Regulations for the period of 2003/4 were accompanied by a Regulatory Impact Assessment (RIA).

The RIA system was established in 1998 to ensure that all legislation which has an impact on business would receive an RIA before becoming law.

Independently researched by Tim Ambler of London Business School and Francis Chittenden and Chanyeon Hwang of the Manchester Business School, the report looks at EU regulations and the UK and EU Impact Assessment (EIA) systems which are designed to reduce regulatory burdens on business and prevent unnecessary regulation.

It concludes that the system of both EU and national impact assessments has serious design faults and that it will fail to meet its objective of preventing unnecessary regulation unless it is urgently reviewed.

Europe is burdening itself with separate failing impact assessment systems when it desperately needs one that works, the report claims.

With the total cost of regulations introduced on British business since 1998 estimated at £38.9bn - of which 29 per cent in 2003/4 was due to EU regulations - it is not difficult to see the scale of the problem across all EU member states nor how a genuine reform of the regulatory regime could boost GDP and productivity throughout Europe.

BCC Director General, David Frost, said: "These findings show that the systems in place at both EU and UK level to prevent burdensome and unnecessary regulation are both failing.

"The forthcoming EU Presidency is a golden opportunity for the UK government to ensure lasting reform is introduced that will deliver real benefits for business.

"With the EU facing fierce and growing competition from countries such as China and India it is absolutely essential that the impact of future regulation is properly assessed," he added.

The report makes a long list of recommendations to reduce the volume and improve the quality of EU regulations and directives. Central to these is the basic principle that EU regulations that impact business must be clearly identified, while UK RIAs and EU EIAs should be standardised and integrated.

It also demands that regulations be challenged by an independent scrutineer, as in the Netherlands, and so-called 'sunset clauses' be mandatory so that regulations are reviewed, revised or repealed once their effects can be determined.

"Regulation should not be seen as a goal in its own right," the report states.

"Antibiotics are harmful in their own right but we take them to prevent disease. We should not take more than we need and we should desist when the need is past. The objective should not be "better regulation" but "better business""