Communication from the Commission on an EU common methodology for assessing administrative costs imposed by legislation {SEC(2005)1329}
Date: 2005-10-21
Institutions: European Commission
Subjects: EU Member State, EU law, administrative expenditure, application of EU law, data transmission

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 21.10.2005 
COM(2005) 518 final 

COMMUNICATION FROM THE COMMISSION 

on an EU common methodology for assessing administrative costs imposed by legislation 

{SEC(2005)1329} 

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COMMUNICATION FROM THE COMMISSION 

on an EU common methodology for assessing administrative costs imposed by legislation 

The European Council of 22 and 23 March 2005 requested “the Commission and the Council 
to  consider  a  common  methodology  for  measuring  administrative  burdens  with  the  aim  of 
reaching an agreement by the end of 2005”. It stressed that “agreement should take advantage 
of the results of the Commission's pilot projects” and that “initiatives taken in the context of 
improving the regulatory environment must not themselves turn into administrative burdens.” 
(Point 24, Presidency conclusions). 

The  present  Communication  outlines  an  EU  common  methodology  and  proposes  next  steps 
for its introduction. The proposed model is based on the findings of the pilot phase launched 
in early April and presented in the Staff Working document in Annex1. 

1. 

ADMINISTRATIVE BURDEN AND BETTER REGULATION 

Modern society would function poorly without legislation and a functioning court system. By 
setting rights and obligations, laws protect citizens, customers, workers and businesses against 
abuses,  negligence  and  unethical  behaviour.  In  the  particular  case  of  enterprises,  they  are  a 
precondition for fair competition and hence for competitiveness. This is the raison d’être of a 
large part of EU legislation, introduced to correct market failures and ensure a level playing 
field at continental level.  

That  protection  can  often  only  be  secured  through  obligations  to  provide  information  and 
report on the application of legislative norms. Administrative obligations should therefore not 
be  presented  as  mere  ‘red  tape’,  a  term  normally  reserved  for  needlessly  time-consuming, 
excessively complicated or useless procedures2. Nor should EU administrative obligations be 
presented as a mere cost factor, as it often replaces 25 different national legislations and thus 
decreases  operating  costs  at  EU  level.  On  many  issues,  European  business  associations 
themselves have continued to ask for targeted harmonisation of rules as the best way forward 
in term of simplification. Moreover information requirements such as conformity testing and 
certification  also  provide  crucial  indication  on  the  boundaries  of  business  liability  and 
remediation,  which  is  not  negligible  viewed  against  the  background  of  what  is  sometimes 
described  as  a  growing  “compensation  culture”.  Insofar  as  more  liberty  entails  more 
responsibility, the suppression of certain legal obligations could result in bigger judicial and 
arbitration costs.  

Without  questioning  the  need  for  public  authorities  to  pursue  policy  objectives  through  EU 
legislation, there is however scope for considering more carefully its design at all stages of the 
legislative procedure and implementation by Member States. Regulatory reform is needed in 

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Staff Working Document, Developing an EU common methodology for assessing administrative costs 
imposed by EU legislation - Report on the Pilot Phase (April– September 2005), SEC(2005) 1329.  
Examples  such  as  the  obligation  to  publish  annual  accounts  or  to  present  cars  for  annual  inspection 
illustrate clearly how indispensable administrative obligations can be. 

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order  to  adapt  to  changes  inside  and  outside  the  Union.  Administrative  obligations  are  no 
exception.  

To this end and in the framework of the Better Regulation initiatives (due regard being had to 
the desirability of maintaining a stable corpus of legislation), the Commission has called for 
regular review of existing administrative obligations at EU and Member States levels and for 
taking  into  account  the  overall  benefits  and  costs  when  preparing  new  legislation  and 
simplifying existing one3. Regulatory costs, of which administrative obligations are just one 
element,  must  be  analysed  in  a  broad  context,  encompassing  the  economic,  social  and 
environmental costs and benefits of regulation. Regular review and integrated analysis should 
be considered by all as key components of Better Regulation. 

2. 

QUANTIFICATION OF ADMINISTRATIVE BURDEN IN THE EU – THE STATE OF PLAY  

The EC Treaty provides that the Commission should “take duly into account the need for any 
burden,  whether  financial  or  administrative,  falling  upon  the  Community,  national 
governments,  local  authorities,  economic  operators  and  citizens  to  be  minimised  and 
proportionate  to  the  objective  to  be  achieved”  (Point  9  -  Protocol  on  the  application  of  the 
principles of subsidiarity and proportionality).  

In order to comply with the proportionality principle, the Commission already appraises the 
impact  of  proposed  measures  in  term  of  administrative  burden  and  evaluates  it  when 
simplifying existing legislation, but does not have a single quantitative approach for doing so. 
Analysis  needs  to  follow  basic  rules,  but  will  naturally  differ  from  case  to  case  not  least 
because the methodologies for obtaining data need to differ from case to case. 

Some  efforts  to  minimise  administrative  burden  have  not  involved  quantification.  In  those 
cases,  complaints  and  suggestions  from  targeted  groups  are  gathered  through  public 
consultation; a high level group of experts then reviews the regulatory framework and makes 
recommendations for simplification4.  

In  its  16  March  2005  Communication  on  Better  Regulation  for  Growth  and  Jobs,  the 
Commission,  underlying  that  weighting  the  costs  of  public  action  was  not  fundamentally 
"anti-regulation",  announced  its  intention  to  make  further  progress  on  the  issue  and  explore 
the  possibility  of  developing  a  common  approach  at  EU  level  (COM(2005)97).  The  Staff 
Working  Document  annexed  to  the  Communication  outlined  a  possible  approach  and 
launched the pilot phase underpinning the present Communication5.  

The need for further progress was also underlined by the European Council and the Council 
on various occasions, as well as by the Council Presidency6. The European Parliament, among 
other things, is preparing an own-initiative report on minimising administrative costs imposed 
by EU legislation. 

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COM(2005)24. 
See  for  instance  the  work  on  the  cumulative  regulatory  burden  put  on  the  automotive  sector 
(http://europa.eu.int/comm/enterprise/automotive/pagesbackground/competitiveness/cars21.htm).  
‘Minimising administrative costs imposed by legislation’, SEC(2005)175. 
In particular, administrative burden figures prominently in the Joint Statement “Advancing regulatory 
reform  in  Europe”  signed  on  7  December  2004  by  the  six  Member  States  successively  holding  the 
presidency of the Council from 2004 to 2006 (Ireland, the Netherlands, Luxembourg, the UK, Finland 
and Austria). 

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As  for  Member  States,  a  growing  number  of  them  are  showing  interest  in  quantifying  the 
costs  of  administrative  burden.  There  is  a  clear  convergence  towards  the so-called  Standard 
Cost  Model  (SCM).  The  Model,  first  introduced  in  the  Netherlands  in  2002,  has  been 
designed as a tool to measure the progress of administrative burden reduction programmes at 
national level. It consists of a detailed assessment of individual pieces of legislation, mainly 
based on direct interviews of enterprises and expert judgments (a micro assessment approach). 
Data  on  the  time  and  labour  costs  needed  to  comply  with  each  information  requirement 
imposed  by  a  legislative  act,  as  well  as  on  the  number  of  entities  concerned  have  to  be 
compiled. 

Two Member States, the Netherlands and Denmark, have assessed their entire legislation in 
force and are now assessing systematically all new measures. The UK and the Czech Republic 
are  preparing  to  follow  suit  with  their  own  baseline  measurement.  At  least  seven  other 
Member States have taken some steps by testing the SCM or are planning to do so in one or 
two sectors. One Member State, Germany, is an observer in the informal network set up by 
SCM  users  and  testers.  The  informal  network  has  been  turned  into  an  international  steering 
group in London on 19 September 2005. 

On the other hand, as of October 2005, thirteen other Member States do not appear to quantify 
administrative costs or envisage it on a test basis. Some have even indicated that they prefer 
focusing their efforts on concrete simplification measures instead.  

3. 

FEASIBILITY OF AN EU COMMON METHODOLOGY 

Assessing  the  findings  of  the  pilot  phase  and  the  study  of  quantification  efforts  at  Member 
State level is to a certain extent like deciding whether the glass is half full or half empty. For 
example,  a  number  of  methodological  points  could  not  be  fully  addressed  and  there  were 
problems with the availability and accuracy of basic data. 

The Commission opts for the optimistic line and concludes positively on feasibility of an EU 
common  methodology,  broadly  speaking.  This  positive  conclusion,  however,  depends  on 
several  conditions,  namely  that  (1)  all  EU  Institutions  and  Member  States  use  the  same 
definition, core equation and reporting sheet when assessing administrative costs at EU level; 
(2) the EU common methodology is applied in a proportionate manner, (3) that more Member 
States coming from all parts of the Union are willing to contribute and (4) adequate level of 
staffing  and  financial  resources  are  available  within  the  Commission  for  assessment  and 
evaluation. 

The EU common methodology must be applied in a proportionate manner. It should only be 
applied when the scale of the administrative obligations imposed by an EU act justifies it and 
the effort of assessment should remain proportionate to the scale of the administrative costs 
imposed by the legislation. Besides, adequate flexibility must be allowed when filling in the 
common reporting sheet. 

As  for  the  number  and  the  distribution  of  contributing  Member  States,  evidence  gathered 
through pilot projects suggests that they do not as yet provide a sufficient basis for assessing 
costs at EU level. Ideally, a majority of Member States should be willing and able to provide 
data (it is difficult to be more specific on the necessary critical mass because that is likely to 
vary  from  sector  to  sector).  Whilst  Member  States  should  be  encouraged  to  contribute,  the 

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Commission will of course retain responsibility for judging the costs of its proposals on the 
basis of its assessment of available evidence7.  

A minimalist approach would only require that contributing Member States to provide data in 
a standardised manner on the labour costs, time and number of operators affected by an EU 
(proposed) measure and its transposition into national legislation. Member States  would not 
necessarily  have  to  apply  the  EU  common  methodology  to  assess  their  purely  national 
legislation. The coexistence of very different methodologies at national and EU level would 
however  increase  significantly  the  overall  assessment  costs  for  Member  States  in  terms  of 
losses8.  Convergence  between  national  and  EU 
duplication  and  other  efficiency 
methodologies would moreover ensure easy interoperability among databases and would offer 
greater economies of scale in term of data collection. 

The EU common methodology would gain from clarification on a number of technical issues 
listed  in  the  Staff  Working  Document  in  Annex  (section  4.1).  Optimisation  efforts  however 
should  not  be  considered  as  a  prerequisite  for  the  introduction  of  a  common  methodology. 
Embarking on a learning by doing process would even help to solve these issues.  

4. 

THE ADDED-VALUE OF AN EU COMMON METHODOLOGY 

On  the  basis  of  the  findings  of  the  pilot  phase  and  the  study  of  quantification  efforts  at 
Member State level, and although considerable optimisation work remains to be done, notably 
at Member States' level, the Commission concludes that: 

(1) 

(2) 

(3) 

(4) 

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specific cost-based quantification helps in assessing measures from the point of view 
of those affected and taking into account the distributional effects of a measure; 

specific cost-based quantification contributes to regulatory transparency (quantifying 
costs helps to make trade-offs more transparent, provided that the benefits including 
longer term benefits are also investigated);  

specific cost-based quantification often provides a relevant indicator in particular for 
prioritising  simplification  work  and  monitoring  progress  in  reducing  administrative 
burdens,  provided  that  figures  are  put  in  proper  perspective  and  methodological 
limitations properly highlighted;  

quantification facilitates communication (communicating on simplification efforts is 
more effective when quantified results are provided; this is particularly true for the 
Union because, many EU measures being technical, their titles often mean very little 
for the wide public);  

To do otherwise could create significant difficulties, especially for ex-ante assessments where Member 
States  may  not  have  the  same  understanding  of  the  proposal,  not  have  decided  on  how  to  specify 
administrative procedures or have no data, and could not be expected to provide estimates in a timely 
manner as the proposal is re-shaped during its development phase. 
The coexistence of – incompatible – methodologies at EU and national level would increase assessment 
costs  for  the  following  reasons.  Member  States  using  a  different  definition  or  a  different  method  of 
quantification  would  not  have  at  hand  the  data  required  for  EU-wide  assessment,  obliging  them  to 
organise specific data collection. Sharing the same definition and the same approach to quantification 
means that new comers can assess administrative burden in their country by building on existing data in 
similar countries. 

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(5) 

(6) 

an EU common methodology would facilitate the comparison of performance and the 
identification of best practices; 

an EU common methodology would ensure that national data can be easily added up 
in view of assessing individual acts and/or cumulative burden at sectoral level. 

There would therefore be net added value provided that an EU common methodology would 
not be at the expense of analysis of other impacts. 

5. 

OUTLINE  OF  AN  EU  COMMON  METHODOLOGY  FOR  ASSESSING  ADMINISTRATIVE 
COSTS IMPOSED BY LEGISLATION 

A  common  methodology  does  not  mean  having  no  flexibility  at  EU  or  national  level.  A 
methodology  is  made  of  several  building  blocks.  In  order  to  have  an  EU  common 
methodology, some must be used by all, others can be optional. EU institutions and Member 
States  should  remain  free  to  introduce  specific  features  in  their  methodology  for  assessing 
administrative burden imposed by legislation as long as the resulting figures (1) can be easily 
compared  and  (2)  can  be  easily  and  reliably  added  up  in  view  of  assessment  of  cumulative 
burdens.  This  is  in  particular  true  for  data  collection  methods.  The  outline  presented  in  the 
Staff Working in Annex further elaborates on other optional or flexible elements that need to 
be preserved. 

However, as already mentioned, the Commission considers that there can be no EU common 
methodology  without  the  three  following  building  blocks:  a  common  definition,  a  common 
core  equation  and  a  common  reporting  sheet.  The  pilot  phase  has  tentatively  confirmed  the 
adequacy of the definition, core equation and reporting sheet presented in the Staff Working 
Document in Annex.  

Assessing net administrative costs as proposed by the Commission (new costs imposed by an 
act  minus  costs  suppressed  by  the  same  act  be  it  at  EU  or  Member  State  level)  seems 
preferable for a number of reasons. It would clearly show the extent of simplification efforts 
and dispel the impression that an EU obligation automatically means ‘new’ costs. Moreover, 
it would be consistent with the Commission’s impact assessment guidelines and national RIA 
(Regulatory  Impact  Assessment)  manuals,  as  well  as  being  in  line  with  the  first  OECD 
guiding principle for regulatory quality and performance. Finally a net cost approach would 
have  a  clear  advantage  for  those  Member  States  which  assess  administrative  burden 
systematically.  First,  with  net  figures,  there  is  no  need  to  go  through  costly  periodical 
assessment of the entire legislation into force. Secondly, consolidated figures can be produced 
at any time which means that progress can be monitored on an ongoing basis (no need to wait 
for  the  general  stocktaking  exercise  to  know  how  total  administrative  burden  evolved  since 
the initial baseline measurement). 

As  the  proposed  EU  model  is  building  for  a  large  part  on  the  Standard  Cost  Model, 
adjustment costs for users and testers would be minimal. 

It should be possible to add other common elements to simplify the assessment and enhance 
the comparison and addition of data. This needs to be further studied with the Council and the 
Member States.  

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6. 

NEXT STEPS  

For the short term, the Commission: 

(1) 

intends  to  include  the  methodological  building  blocks  tentatively  validated  by  the 
pilot phase (i.e. the common definition, the common core equation and the common 
reporting  sheet),  in  the  Commission’s  impact  assessment  guidelines  and  evaluation 
guidelines, with actual implementation and use being subject to  

(a) 

(b) 

the principle of proportionate analysis, the Commission retaining responsibility 
for judging the costs of its proposals; 

the availability of sufficient, reliable and representative data, compatible with 
the  EU  common  methodology.  In  this  context  Member  States  are  invited  to 
provide such data as appropriate; 

(c) 

the availability of an adequate level of staffing and financial resources 

(2) 

invites the Member States, meeting within the Council, to reach an agreement with 
the  Commission  on  a  common  methodology,  building  on  the  results  of  the 
Commission’s pilot phase;  

For the longer term, the Commission proposes: 

(3) 

(4) 

(5) 

(6) 

to  examine,  with  the  help  of  the  high  level  group  of  national  experts  on  better 
regulation, how to solve pending methodological issues; 

drafting of an EU operational manual in consultation with Member States;  

exploring, on a test basis, whether the EU  common methodology can meaningfully 
be used o assess cumulative burden at sectoral level; 

to  open  inter-institutional  negotiations  with  a  view  to  including  the  future  EU 
common methodology in the Inter-Institutional Agreement on Better Law-making. 

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