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Monday, December 21, 2009

The top 100 most costly EU regulations

Open Europe has today published a list of the top 100 most costly EU regulations, detailing the annual cost of the laws, the cumulative cost of them by 2020, and the article base in the Lisbon Treaty for each regulation . We estimate that these laws will in total cost the UK economy a staggering £184 billion by 2020. To put that figure in context: for the same amount, the UK Government could abolish the country's entire budget deficit and still leave the Exchequer with some £6 bn. All cost estimates are based on the UK Government's own impact assessments so the figures are instructive.

The top four items on the list account for almost £97 billion - or 53% - of the total cost of the 100 regulations by 2020. Looking at these four laws clearly illustrates the enormous, and often overlooked, potential for the UK economy to save money by making a few key regulations less burdensome. Notably, cutting down the costs of these regulations could happen without any of the stated benefits being lost in the process.

1) The Working Time Directive, to cost the UK economy £32.8 bn by 2020: This Directive has been widely criticised for being overprescriptive, impractical and generally out of touch with reality - particularly as it applies to the NHS. Merely changing the on-call time and compensatory rest rules entailed in the WTD could save the UK's public sector millions - if not billions - of punds every year.

2) The EU's Climate Action and Renewable Energy Package, to cost the UK economy £28.2 bn by 2020: As we've argued before, the EU could find a much more cost-effective way to achieve carbon emission reduction by setting overall targets, and then allowing for individual member states to decide for themselves how best to reach them (as opposed to the current micromanaging approach). This would hurt the economy less and provide a more credible alternative to follow for countries outside Europe.

3) Energy Perfomance Certificates for buildings, a.k.a Home Information Packs, to cost the UK economy £20.2 bn by 2020. Again, this cannot possibly be described as the most cost-effective way to achieve reductions in carbon emissions from the residential sector.

4) The Temporary Agencey Workers Directive, to be implemented in 2011 and set to cost the UK economy £15.6 bn by 2020: When he was Business Secretary, John Hutton warned that this Directive could consign "literally thousands of people to benefit dependency" (this was in 2007, before Gordon Brown was outnegotiated in a horsetrading deal involving the UK's opt-out from the EU's 48 hour working week. The Government is now trying to defend the Directive).

Making these laws less burdensome or tailor them to better fit the UK is not easy - but it certainly isn't impossible. Neither is avoiding repeats of these laws. But this does require a far tougher and smarter approach to EU regulations/negotiations than that employed by the current government. See here for our ideas on what such an approach should entail (chapter 5).

An excellent place to start would be for an incoming UK government to opt out altogether from the articles in the EU treaties which give rise to EU's social legislation (articles 151 to 161 as amended by the Lisbon Treaty). With correspondng domestic reforms, this could instantly reduce much of the cost stemming from, for instance, the Working Time Directive and the Temporary Workers Directive.

At a time when every penny is needed to close a massive public deficit, surely cutting the cost of regulation should be a top priority for the next government?


Separabit said...

The biggest single problem is the mind set of the UK politicians and Civil Servants. Having spent 40 years in the CS and implemented a number of E U regs I know that "we" always go over the top, perhaps try to do the job too well dotting i and crossing ts, and sneak in "desired" admin and operational matter under the guise of EU Regs. We need to stand back and accept these Regns in the same way as the French et al - "for the guidance of wise men and the instruction of fools.". or even simply say NO, and let Brussels worry about it .

Allan M said...

"While fighting climate change is vital, the package does not represent the most cost effective way to cut carbon emissions."

This is insanity. Fighting climate change is like fighting the Periodic Table. It always has; it always will; and what we do doesn't ammount to the proverbial "hill o' beans."

Where have you been since this thing disintegrated?

Anonymous said...

Can we really believe that an incoming government of ANY shade will have the courage to take a critical look at EU regulations and their effect on this country?
We need statesmen not just self-serving politicians.

Anonymous said...

There is no chance of ever getting rid of these regulations now that the corruption ridden democratically deficient eussr has its constitution, because it has handed all the power to govern to the unelected bunch of failed politicians, and lightweights like ashton, known as the commission. All three major parties are in league to ensure that we will never again have control of our own country.

Godfrey Bloom MEP said...

I am a big supporter of your cause but beware, support for climate alarmist rubbish brings into question the standard of all your research which is usually sound. Incidentally 2 points only some MEPs earn £86,000, I am not one of them, nor are UKIP MEPs Derek Clark and Gerard Batten.

Open Europe blog team said...

Thanks Godfrey.

The point is that neither CAREP nor the Energy Performance for Buildings Directive are cost-effective ways to go about the stated aim of the EU to reduce carbon emissions. We're simply holding the EU to its own standards.

On your second point - not exactly sure what you mean or if you're addressing a claim made by us...? Are you saying that you've chosen to stay on the old, lower salary system for MEPs which applied before June's elections? In that case, you should be congratulated.