WRITTEN QUESTION E-1140/01

by Giles Chichester (PPE-DE) to the Commission

(10 April 2001)

Subject: Impact assessments

Does the Commission believe it has a satisfactory basis for making cost impact assessments on all legislative proposals that will affect business and industry? If not, what research is being undertaken into possible methodologies and when will this research yield results? Does the Commission agree such assessments should be undertaken by independent experts with commercial experience rather than the Commission itself?

Answer given by Mr Liikanen on behalf of the Commission

(8 June 2001)

As the Honourable Member is aware, the Commission developed a system for business impact assessment (BIA) already in 1986. Following the revision of the system in 1990 into its current form, it was decided that a business impact assessment should be an obligatory attachment to legislative proposals with significant impact on business.

The business impact assessment obliges the Commission to answer a number of questions related to the likely impact a legislative proposal may have on business, including what business will have to do to comply with it. In order to answer this question, it is recommended (in the existing BIA guidelines) that quantitative estimates be elaborated for the expected compliance costs and administrative burdens that a proposal may impose on business.

Although the business impact assessment system has, over the years, proven to be a useful tool for assessing the impact of legislation on business, including cost impact, certain shortcomings of the system have also become evident over the years.

Against this background, the Commission launched the BIA Pilot Project in September 2000. It will run to February 2002, with preliminary conclusions to be drawn in the autumn of 2001. The aim of the BIA Pilot Project is to streamline and strengthen the business impact assessment methodology and techniques.

One of the key elements being examined is the need for a more systematic approach towards economic analysis as a tool for assessing the quantitative impacts (costs and benefits) of legislative proposals. The benefits and limits of different kinds of economic analysis, such as cost-benefit analysis, cost-effectiveness analysis and compliance cost analysis, are being investigated.

The BIA Pilot Project draws upon the practical experiences of a selected number of legislative proposals underway in the Commission, for which different kinds of economic studies have been launched. Moreover, research that is being undertaken includes the review of relevant literature and good practices in Community and Organisation for economic co-operation and development (OECD) Member States. To this end, the Commission also launched in February 2001 a project under its Best procedure on Business Impact Assessment in Member States in order to take account of good practices and lessons learned regarding two main elements of impact analysis, namely, economic impact analysis and external consultation. A preliminary report will be presented at a Workshop on 26 June 2001, to which the Parliament will be invited.

The research undertaken within the framework of the BIA Pilot Project is fully in line with the Commission's interim report to the Stockholm European Council on improving and simplifying the regulatory environment(1). This report was the Commission's initial response to the request of the Lisbon European Council last spring to set out by 2001 a strategy for further co-ordinated action to simplify the regulatory environment and sets out the main principles for improving and simplifying the regulatory environment in the Community. One of the principles to which the Commission intends to adhere is to carry out wide-ranging consultations and impact assessments before bringing forward any proposal. These impact assessments should be comprehensive, objective and transparent and should include both qualitative and quantitative analysis.

Building upon the principles outlined in the Stockholm interim report, the Commission will present a more detailed action plan for improving and simplifying the regulatory environment to the Laeken European Council at the end of this year, which will also take account of the recommendations set out in the upcoming White Paper on European Governance.

Regarding the issue of whether impact assessments should be undertaken by independent experts or the Commission itself, the Commission is of the opinion that final impact assessments of legislative proposals should be carried out in-house. However, input from various external experts (e.g. scientific, technical, commercial, economic, social and environmental) is needed for specific issues as well as for data collection (e.g. compliance costs for business). This viewpoint is in accordance with experiences from impact assessment systems in several OECD countries, such as the United Kingdom and the United States.

The Commission is highly committed to assess the costs and benefits of proposed regulatory measures (to the extent possible) on all the parties concerned, including business. Moreover, it believes that such assessments could favourably look at costs and benefits of various levels of stringency of proposed regulatory measures, since such information could be useful throughout the decision-making process. Indeed, regulatory quality and simplification at Community level is an issue of common concern, which requires joint commitment from all Union institutions.

(1) COM(2001) 130 final.