A recent European Commission report pulls no punches when it suggests that much more data is required to ensure that all relevant regulatory costs and benefits are taken into account when any new policy initiatives are being examined. https://ec.europa.eu/info/publications/report-rsb-sg-jrc-working-group-quantification-commission-impact-assessments-and-evaluations_en The report follows up on work undertaken by the Regulatory Scrutiny Board (2016 Annual Report) which noted inadequate quantification of new initiatives.
Work of the Regulatory Scrutiny Board
The Regulatory Scrutiny Board does excellent work in scrutinising all impact assessments and a selection of evaluations undertaken by the different sections of the European Commission –see 2017 Annual Report- https://ec.europa.eu/info/publications/regulatory-scrutiny-board-annual-report-2017_en
Table 1 shows 2017 activity in comparison with earlier years. This embraced 53 impact assessments and 17 separate evaluations. After the initial reading, the Board gave negative opinions to 43 per cent of the 53 cases examined. All impact assessments and some of the evaluations that did not pass scrutiny the first time were revised and resubmitted to the Board for a second review. Almost all resubmissions in 2017 then received positive Board assessments.
Follow-up Work on Quantification
The recent report on ‘Quantification in Commission Impact Assessments and Evaluations’ was undertaken by an EU Working Group. It was composed of representatives from the Regulatory Scrutiny Board; the European Commission’s Secretariat General and the Joint Research Centre. The Group’s Report draws on the findings of the Regulatory Scrutiny Board’s scrutiny and evaluation of legislative initiatives (notably in 2017), as well as inputs from the Joint Research Centre on methodological and quantification matters.
For this blog, only the results for the Impact Assessments are included. Broadly the results for the Evaluations examined by the EU Working Group Report are similar, namely more data on costs and benefits are sought.
Table 2 shows that the quantification of the Impact Assessments for 2017 is mostly partial rather than full. Full quantification of benefits was only found in only 24 percent of the cases, and full quantification of regulatory costs in 31 percent of the cases. The full quantification of other costs was as follows:
- Compliance costs, 37 per cent;
- Enforcement costs, 18 per cent, and
- Administrative costs, 15 per cent.
Table 2 : EU Impact Assessments; Quantification of Cost and benefits, 2017
Ways to Improve Quantification
The EU Working Group suggested three ways to improve quantification:
- Better data;
- Improved methods and
- Greater transparency and communications.
As regards better data, the report suggests – “…a stricter application of the Better Regulation Guidelines and a more demanding scrutiny of the monitoring and evaluation sections of the impact assessments …[and] a more strategic approach to primary data collection and the management and use of available data (both within the Commission and in the Member States) is also warranted”.
In the case of improved methods, the report notes that the Joint Research Centre has expressed readiness to provide support through an active participation in inter-service support groups and in the upstream meetings organized by the Regulatory Scrutiny Board; the European Commission’s Secretariat General and interested Services of the European Commission. Specifically, the report suggests that – “…such support could include assistance for the design of common baselines or the application of multi-criteria analyses, as well as advice on appropriate data or on sensitivity analyses designed to reflect uncertainties associated with the preferred policy options”.
Finally, as regards greater transparency and communications, the report notes that Regulatory Scrutiny Board and the European Commission’s Secretariat General have already taken steps to increase the visibility of the quantification efforts and give their outcomes more prominence.
This EU report certainly pulls no punches; it notes that serious efforts are needed within the European Commission in order to ensure that all relevant regulatory costs and benefits are taken into account when new policy initiatives are being examined. At the same time the report admits that – “ Quantification remains challenging, is not always feasible and sometimes disproportionately costly”. But there are signs of progress in the scope and quality of costs/benefits measurement, notably in impact assessments. Further improvements calls on the different bodies to make their contribution. In the case of the Regulatory Scrutiny Board it is evident that it is willing to further strengthen its scrutiny of quantification efforts. Moreover, the European Commission’s Secretariat General is expected to provide enhanced guidance and training for those engaged in quantification. Finally, the Joint Research Centre has expressed readiness to advise upfront on methodological and data issues. It is clear that the combined efforts of the different players is required if the impact of the different policy proposals coming forward are to be comprehensively quantified.
Tom Ferris is a Consultant Economist specialising in Better Regulation. He lectures on a number of PAI courses and contributes blogs regularly to PAI. He was formerly the Senior Economist at the Department of Transport.