Catherine Day Secretary-General of the European Commission Javier Solana Secretary-General of the Council of the European Union Klaus Welle Secretary-General of the European Parliament
Brussels, 28 April 2009
Dear Madam, Dear Sirs, As part of the Czech Presidency’s ongoing commitment to the Better Regulation agenda and the Prague Declaration, the Presidency co-hosted a meeting with Czech and EU business representative organisations on 28 April to discuss the use of Impact Assessments by the Commission, the Council and the European Parliament. Further to that meeting, this letter represents the common views of EUROCHAMBRES and UEAPME. Firstly, we acknowledge the steps taken by the Commission – particularly under the direction of President Barroso and Vice-President Verheugen – towards embedding the impact assessment process within its functions, most notably through the recently published revised guidelines and the establishment and commendable engagement with the Impact Assessment Board. We hope these will prove to be significant milestones in the Commission’s efforts to improve the methods through which evidence for new EU proposals is gathered, taken into account and used to support both Council and European Parliament negotiations. Inevitably there is more to do, not just by the Commission, but also by the Council and European Parliament, a fact that is made more apparent when one refers back to commitments in the December 2003 Inter-Institutional Agreement on Better Lawmaking. In particular, both the Parliament and Council must consult Commission impact assessments from the start of discussions and, critically, take into account impact assessments throughout negotiations, conducting further analysis of costs and benefits where significant amendments to proposals are tabled. The aim of impact assessments is the improvement of policy initiatives, so there should be evidence of proposals changing as negotiations progress in the light of information provided by the impact assessments. However, there has so far been little such evidence within Council or the European Parliament. Steps must be taken to ensure that this improves by providing the required support and means for Presidencies and Parliament Rapporteurs to request that further analysis is undertaken as a routine part of negotiations when it is considered necessary.
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Accordingly, we call for a number of key steps to be taken. We believe that these measures which we hope will help provide a framework for action over the next year – during the Swedish and Spanish Presidencies – particularly by the new Commission, but also the Council and the incoming European Parliament. We would like to see a significant strengthening and further embedding of the use of thorough impact assessments – especially if a proposal imposes or reduces a cost on business, particularly SMEs. In parallel, we would like to see the engagement of business stakeholders throughout the life-cycle of negotiations of proposals across all three institutions. Commitment from the Commission, from the Secretary-General on behalf of the Council, and from the Secretary-General on behalf of the European Parliament to make progress in these areas will send a clear message to business that the EU institutions are working hard to ensure that decisions which have an impact on them are measured and proportionate, particularly during this period of considerable economic uncertainty. We expect a strong commitment from the new Commission, Parliament and future Presidencies to support businesses, especially SMEs, through a more robust impact assessment process. Yours faithfully, Arnaldo Abruzzini Andrea Benassi
Secretary General, EUROCHAMBRES
Secretary General, UEAPME
CC Vice-President Verheugen Françoise Le Bail (SME Envoy)
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Steps for strengthening the impact assessment process Strengthening the process for gathering data on the impacts on SMEs. Impact assessments should, fundamentally, focus on the work and needs of the overwhelming majority of businesses: SMEs. Further improvements are needed in the way data is gathered to determine the impact on SMEs. In response to calls for evidence from the Commission (whether to support the preparation of draft impact assessments or for full consultations on proposals) SME associations lack the resources to collect data across a representative sample group and provision should be made to support this effort. Steps should be taken by the Commission, or by a unit or agency acting on behalf of the Commission, to ensure that specific criteria are followed in the collation of data from the SME community. For example, size of statistical samples, broad participation by SME associations, impartial and independent management of the data collection process, and extending assessments to determine burdens such as technical capacity or potential impact on personal lives for micro-enterprises. Data should be made available to SME associations especially as impact assessments reach their first draft and are submitted to the Impact Assessment Board. Systematic use of the SME Test. Where a proposal imposes or reduces a cost on business there must be a robust application of the SME Test and compliance with the criteria set out in the Small Business Act. This should be adopted at the road map stage and continued as an integral part of the impact assessment process including for the analysis of the impact of significant amendments proposed by the Council and the European Parliament. The format of all impact assessments must reflect the expected impact on small businesses and set out policy options for mitigating these burdens, including the rationale behind the policy choice. Impact Assessments must clearly demonstrate that they have been prepared in accordance with the ‘Think Small First’ principle, with the SME Test annexed to the impact assessment. Rules for the application of impact assessments. Action needs to be taken by the Commission to ensure that there is a rigorous compliance to clear criteria and rules for when impact assessments are required. For example, there should be a mandatory requirement that any proposal that imposes or reduces a cost on business must be accompanied by an impact assessment. Some recent proposals, for example, the Proposal on Amendments to the VAT Directive as regards the Rules on Invoicing, which will have a significant impact on business have not been subject to an impact assessment. More needs to be done to help businesses to be certain about when an impact assessment will be guaranteed and to fulfil the Commission’s commitment to extend the application of impact assessments beyond the annual work programme, as well as for non-legislative proposals with significant potential impact, including comitology items.
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Earliest consideration of policy options. Roadmaps provide businesses with their first opportunities to see the Commission’s outline proposals and the likely timing for their development. In particular, they allow businesses the opportunity to understand the options that will be considered and to prepare for upcoming engagement and consultations. It is, therefore, essential that roadmaps are well publicised and that they include comprehensive information on each of the analytical steps of an impact assessment, as well as the timing and the justification of EU action. Improved transparency – publishing draft impact assessments. To help business engage more effectively in the formulation of new or revised policy, impact assessments should be published much earlier in their development, preferably in draft to give businesses the opportunity to offer views ahead of the final publication of a proposal and the main consultation process. Additionally, there needs to be much better promotion of the channels through which business representatives can access draft impact assessments. For example, such organisations should be able to sign up for free e-mail alerts when a roadmap or impact assessment changes. Standard format for all impact assessments. Further improvement is needed in the use of, and adherence to, standard templates. Executive summaries should also respect rigorous template guidelines and always comply with Commission guidelines for translation into all EU working languages. Without exception, all impact assessments and executive summaries must show evidence of what type of EU measure is required and why, clearly presenting alternatives to legislative action, including a ‘do nothing’ option. They must also clearly present quantitative figures for the costs (ideally monetised costs), benefits and administrative burdens of the different policy options and justify those burdens. If the impact falls on business, the SME Test must be annexed to the impact assessment, confirming the anticipated impacts on small businesses (those smaller than 50 employees) and what is being to done to minimise them, together with the rationale for action. Final drafts of impact assessments must properly reflect the evidence gathered from business in the preliminary stages. Accessibility. Impact assessments and executive summaries often contain a lot of very detailed information necessary for thoroughly informing policy makers and politicians in their deliberations. However, they must be prepared so as to be accessible to a wider public audience, too. To facilitate this there could be considerable benefit in the preparation of a short cover sheet to present key costs and benefits analysis, and main summary points. Similarly, impact assessments must be transparent: they must be explicit about all of the sources of data that have been collected and considered, which themselves should be available.
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Routine consideration of impact assessments by the Council and the European Parliament. Presidencies should systematically begin negotiations on all new dossiers in all Council working group formulations by providing delegations with the opportunity to thoroughly examine the impact assessment that accompanies a proposal and a review of the opinions of the Impact Assessment Board. This process could be facilitated by the Secretariat General, for example by encouraging successive incoming Presidencies to follow this best practice and by organising training and providing tools to help working group chairs to understand this responsibility. Furthermore, Member States have the responsibility to ensure that there is an improved awareness among delegations in all Council working groups that a preliminary and thorough consideration of the Impact Assessment, or assessment of impacts on significant amendments, is a necessary step in negotiations. Where impact assessments are considered by delegations to be lacking or inadequate, the Council should be ready to make a formal request to the Commission for further improvement before all negotiations can continue. Similarly, the Secretary-General for the European Parliament should support all Parliament rapporteurs in taking the same steps within EP committees and commission further work - including consulting with business stakeholders - if the committee consider it necessary. Increased use of cost-benefit analysis by Council and Parliament on their significant amendments to proposals. It is notable that despite commitments to assess the impact of substantial amendments to proposals, there is little evidence of this actually happening in either the Council or the European Parliament. Whilst a thorough Commission impact assessment should provide evidence for most policy options, it is of considerable concern that this is not always the case. Accordingly, where the Council and Parliament consider tabling further significant amendments to proposals, there should be agreement by both that these must also be assessed for their impact. The Secretary-General for the Council, and the Secretary-General to the European Parliament should take steps to ensure that it possible to support the Presidency or rapporteur to pursue requests for further cost-benefit analysis to be conducted, or, if necessary, a revised impact assessment should to be prepared. Reinforcing institutional support and monitoring throughout the impact assessment life-cycle. The Commission’s Impact Assessment Board appears to be having a positive effect. This could be enhanced by involving senior officials from the Council and Parliament in the Impact Assessment Board in some capacity. Among other benefits, this would pave the way to a more constructive attitude to Commission impact assessments and to the completion of additional impact assessments on substantial amendments by the Council and Parliament. Furthermore, subject to the right impartial appointment procedure, there could be value in appointing representatives of the SME community, as well as a representative of the SME Envoy’s office.
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The Commission’s own internal impact assessment guidelines should be rolled out to the Council and Parliament. This should be supported by the provision of advice, training and guidance to officials in all three institutions and extended to, for example, support to Presidency working group chairs and Parliament rapporteurs for the handling of impact assessments during negotiations. Such support may be externalised, with options including the creation of a new body, or integrating it into the activities of the European Court of Auditors. Building on the Commission’s self-evaluation of the impact assessment guidelines, an independent annual review of the handling of impact assessments and cost-benefit analysis by the Commission, Council and European Parliament should be published. Improved commitment by Member States to conduct their own impact assessments. While there has been an increase in the number of Member States carrying out their own impact assessments on Commission proposals, more commitment to action at the national level is required. Member States should be routinely bringing their own evidence of impact to Council working groups throughout the life-cycle of negotiations as well as making their impact assessments fully accessible to the public. Longer consultation periods. In addition to these points, we also wish to comment on consultation periods and underline that these are still not long enough. The timetable for the development of an impact assessment and final proposal should take into account that in order to gather representative preliminary evidence from businesses in the drafting stages of an impact assessment, extensive consultation is required. There have been consistent, ongoing, calls from the business community to the Commission to extend consultation periods yet they remain too short. The current consultation guidance for a minimum of eight weeks should be extended to twelve weeks, or sixteen weeks as recommended by the Mandelkern Group in 2001. Eight weeks is simply not enough for European associations to gather a representative range of views from their members, particularly from small businesses.
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