Almost a decade after the OECD reviewed the better regulation practices in 15 EU countries, this report presents an up-to-date analysis of the use of core regulatory policy tools across all 28 EU Member States and the European Union. In 2017, both the European Union and EU Member States show a strong overall political commitment to regulatory reform. All EU Member States have adopted regulatory policies promoting government-wide regulatory reform, covering various areas of regulatory governance. Regulatory policy in the European Union progressed under the better regulation agenda, which played a crucial role in shaping the current Commission’s regulatory processes.

For the first time, the OECD has assessed stakeholder engagement, regulatory impact assessment (RIA), and ex post evaluation systematically across all EU countries and the European Union, drawing on its composite indicators of regulatory policy and governance. EU countries have, on average, invested less across the three assessed areas than non EU countries. The difference is particularly striking for the area of ex post evaluation, indicating that EU Member States have yet to develop effective systems to review existing regulations. While therefore more progress is needed, many EU countries have significantly improved their regulatory management practices over the last decade. For instance, substantive investments have been made by EU Member States to seek input on draft laws from affected parties, especially via electronic communication. Furthermore, nearly all EU Member States have embedded RIA as a core part of their regulatory management toolkit. Although the European Union as an institution scores favourably compared to most of the Member States, the implementation of regulatory management tools can still be improved by all.

EU countries do not usually facilitate the early engagement of their citizens in the European Commission’s regulatory proposals. The Commission uses a range of different tools to engage with stakeholders at various points during policy development. EU countries and their citizens thus have opportunities to participate, provide evidence, and improve EU laws, including at early stages of their development. Many member countries, however, do not sufficiently inform their stakeholders of these opportunities to provide input. Instead, most stakeholder engagement with EU laws occurs after the Commission has made a regulatory decision via individual transposition procedures. At this stage, the focus of consultation is generally on the implementation of EU directives, rather than on their expected societal impacts. To ensure that EU laws benefit fully from stakeholder consultation, Member States should provide better evidence and information during regulatory design to complement the existing practices of the European Commission.

Where Member States’ regulatory practices are poor, the potential benefits of EU laws will be reduced. For example, if EU laws are implemented in a piecemeal manner, the resulting regulatory burdens will be higher than they should be, hampering investment and reducing competition, as well as posing a risk to the single market. Where EU countries include additional regulatory measures in excess of those provided in EU laws, it is important that these measure be subject to appropriate consultation and impact assessment as part of their design, to ensure that the anticipated gains from EU laws are realised.

With respect to domestic law-making in Member States, stakeholder engagement often takes place too late in the policy development process to be of real value. Perhaps more striking is that, in some Member States, stakeholder engagement is still not sufficiently broad. The vast majority of EU countries have heavily invested in the establishment of online government portals to better communicate with affected parties when developing laws. While praiseworthy, these investments are not yielding their full potential benefits. For example, stakeholders are generally not informed by policy makers about how they have helped to shape and, ultimately, improve regulatory proposals. This may lead to disenchantment among stakeholders, and possibly to the rejection of laws, and to diminishing voluntary compliance and engagement in future stakeholder consultations. Greater accountability for the results of consultation is not only needed in EU countries but also in OECD countries more broadly, the 2018 Regulatory Policy Outlook found.

Many EU countries are also not reaping the full benefits of using regulatory impact assessment to aid domestic law-making. They do not systematically assess alternatives to the proposed regulatory option, and where a triage procedure exists, it tends to focus on the cost to business only when determining a proposal’s potential impact and the corresponding level of assessment required. The RIA process still begins only after regulatory proposals are developed and decided upon by governments. Furthermore, there is no real incentive to change practices, as there are little or no consequences to producing poor quality RIAs. Despite its instrumental role, oversight is still one of the least developed features of regulatory policy in many EU countries.

All EU countries and the European Union itself remain more adept at making laws than at ensuring they continue to deliver benefits to communities. Laws are not systematically subject to ex post evaluations in almost all EU countries, creating a risk that obsolete laws remain in force. This represents a substantive waste of resources to the economy: to governments, in terms of unnecessary inspections and enforcement; to businesses, in terms of excessive regulatory burdens; and to citizens, in terms of reduced choice, increased prices, and exposure to potential risks when regulations do not keep pace with societal changes. Where ex post evaluations are conducted, they tend to be unstructured, and do not systematically allow for public consultation or impact analysis. Worse still, ex post evaluations do not systematically assess whether regulatory goals have been achieved—something of vital importance for establishing whether laws remain appropriate. These findings are in line with the findings for OECD countries.

The better regulation agendas of EU countries and of the European Union need constant attention – a ‘set and forget’ model does not work, just as it does not work for laws themselves. Countries need to strengthen their regulatory processes and the institutions involved. At a time of fiscal stringency and heightened global uncertainty, regulatory policy remains a key government tool for ensuring the safety and well-being of citizens while stimulating innovation and economic growth and prosperity. Despite some improvements, much work remains to be done to reap the rewards of better regulation.