In the European Union (EU), regulatory policy was advanced under the better regulation agenda, which played a crucial role in shaping the current Commission’s regulatory processes. At the same time, many EU Member States recognised better regulation as an important part of an effective public governance. This chapter explores the history and recent developments of the EU better regulation agenda and presents an overview of the 2018 Indicators of Regulatory Policy and Governance results for all EU Member States and the European Union. It also covers the application of individual EU Member States’ regulatory management tools to EU‑made laws and regulations. It concludes by providing information on the institutional setup for regulatory oversight and different oversight functions currently carried out across EU Member States.
Better Regulation Practices across the European Union
Chapter 1. Better regulation and institutional oversight across the European Union
Abstract
Note by Turkey: The information in this document with reference to “Cyprus” relates to the southern part of the Island. There is no single authority representing both Turkish and Greek Cypriot people on the Island. Turkey recognises the Turkish Republic of Northern Cyprus (TRNC). Until a lasting and equitable solution is found within the context of the United Nations, Turkey shall preserve its position concerning the “Cyprus issue”.
Note by all the European Union Member States of the OECD and the European Union: The Republic of Cyprus is recognised by all members of the United Nations with the exception of Turkey. The information in this document relates to the area under the effective control of the Government of the Republic of Cyprus.
Introduction
Regulating represents a central part of government activity that affects all areas of business and citizen’s lives. It is therefore a crucial determinant of any society’s welfare. When done well, regulations can improve societal wellbeing, improve business competition, and enhance environmental outcomes. When done poorly, regulation unnecessarily increases burdens on both business and regulators, and can unduly put citizen’s lives at risk. Regulatory policy is centrally important to ensure governments make laws that improve citizens’ welfare.
The recently released OECD Regulatory Policy Outlook 2018 found that OECD member countries continue to invest in regulatory policy. That said, it was also highlighted that much room for improvement remains in both the design and application of countries’ regulatory management policies (OECD, 2018[1]). A number of synergies exist between this report – which focuses exclusively on the European Union Member States and the European Union – and the Outlook. The principal one is that the same regulatory management tools are assessed on a consistent basis, allowing for the comparison of results. Separately, this report builds on previous OECD research which examined the regulatory management practices of 15 EU Member States, prior to the latest EU accession rounds (OECD, 2009[2]). In particular, this report assesses individual EU Member States’ requirements and procedures in relation to the negotiation and transposition of EU directives and regulations.
Both the OECD and the European Union have long-recognised the potential of regulatory policy (OECD, 1995[3]; European Commission, 2002[4]). Decades of research at the OECD culminated in the 2012 OECD Recommendation on Regulatory Policy and Governance, which set the normative framework to measure regulatory performance in member countries (OECD, 2012[5]). Regulatory policy in the European Union was advanced under the better regulation agenda, which played a crucial role in shaping the current Commission’s regulatory processes (European Commission, 2015[6]). The OECD Recommendation and the EU better regulation agenda share the same objectives, approaches and key principles. Both have a particularly strong focus on regulatory oversight, stakeholder engagement, regulatory impact assessment (RIA), and ex post evaluation, as critical pillars of regulatory quality.
The analysis in this report is based on the OECD indicators of Regulatory Policy and Governance (iREG) survey. The iREG survey results in the construction of composite indicators relating to the three assessed areas of stakeholder engagement, RIA, and ex post evaluation. This report extends the iREG survey to include all EU Member States for the first time. The survey scope and indicators design are discussed in the accompanying reader’s guide to help provide context about the results.
This report assesses EU Member States’ regulatory management policies across the above areas, and is structured as follows:
The remainder of this chapter explores the history and recent developments of the EU better regulation agenda and presents an overview of the composite indicator results. It also presents important information about the application of individual Member State’s regulatory management tools to EU‑made laws and regulations. It concludes by explaining the importance of regulatory oversight in the EU context, and provides information on the institutional setup for regulatory oversight and different oversight functions currently carried out across EU Member States. Building on the findings of EU Member States’ oversight of regulatory management tools, the tools’ effectiveness are then discussed in the chapters that follow.
Transparency and open participation in the regulatory process are of fundamental importance to the acceptance of and compliance with regulations. With that in mind, Chapter 2 of this report examines the regulatory requirements and implementation of stakeholder engagement practices across the EU Member States on their own regulatory proposals, as well as those of the European Commission.
Impact assessment is at the centre of providing an evidence base of the expected economic, social, and environmental impacts of regulatory proposals. The requirement to undertake RIA in EU Member States is analysed in Chapter 3 of this report. It also includes a discussion of the application of individual Member State’s RIA requirements to regulatory proposals of the European Commission.
Reviews of existing regulations help to ensure that they remain appropriate over time. Chapter 4 discusses the requirements and different agents involved in ex post evaluations across EU Member States.
Chapter 5 provides a two-page profile for all EU Member States and the European Union. The profiles offer an overview of regulatory practices and the institutional setup for regulatory oversight. The profile also provides information on the use of regulatory management tools for EU-made laws in each Member State.
Key findings
Both the European Union and EU Member States show a strong overall political commitment to regulatory reform. Beginning in the 2000s and recently reinforced through the Better Regulation Package and the 2016 Interinstitutional Agreement, the European Commission, the European Parliament and the Council recognised stakeholder engagement, RIA and ex post evaluation as core elements to improve regulatory quality. All EU Member States currently have adopted regulatory policies promoting government‑wide regulatory reform, covering various areas of regulatory governance. While policies covering RIA, consultation as well as administrative simplification and burden reductions are prevalent in almost all Member States, ex post evaluation is less common.
Despite considerable overlap between memberships, the EU 28 have on average invested less across the areas of stakeholder engagement, RIA, and ex post evaluation for both primary and subordinate laws, compared with the OECD average. The difference is particularly striking for the area of ex post evaluation, indicating that EU Member States are yet to develop effective systems to review existing regulations. The European Union scores higher than most of the EU countries across all three areas.
EU Member States do not currently avail themselves of the opportunity to influence European Commission draft laws when they are introduced into the Council through formal stakeholder engagement or RIA requirements at the negotiation stage. For example, the majority of EU countries does not use RIA to underpin their suggested amendments with evidence on regulatory impacts on the level of the individual Member States, resulting from a regulatory proposal of the European Commission.
Individual Member States generally apply their own regulatory management tools in transposing EU directives, which are subject to standard domestic law-making procedures. Almost all EU countries have requirements in place to conduct stakeholder engagement and RIA to inform the transposition of EU directives in their specific national implementation context.
Regulatory oversight is a critical component of effective regulatory frameworks to foster the implementation of regulatory policy in practice. Despite its instrumental role, oversight is still one of the least developed features of regulatory policy across the EU. While all EU countries have established a body that is responsible for the promotion of regulatory policy as well as monitoring and reporting on regulatory reform in general, oversight is still patchy, and focuses heavily on the scrutiny of Regulatory Impact Assessment (RIA) while neglecting other relevant elements of regulatory policy.
Institutional arrangements to embed regulatory oversight capacity are diverse. A majority of regulatory oversight bodies in EU countries are located within the executive. Bodies outside the executive, however, also engage in regulatory oversight. The past 20 years have seen a surge in “arm’s length” regulatory oversight bodies across Europe. Their institutional setup provides safeguards from government interference in their regulatory oversight activities, but they remain connected and accountable to government, e.g. through a secretariat that is embedded in their sponsoring institution. As the ultimate authority approving legislation, parliaments also have a crucial role to play in regulatory policy and oversight. Contrary to its eminent place in the legislative process, parliaments are not very involved in regulatory oversight across the EU.
Regulatory policy in the EU and EU Member States
Regulatory policy in the European Union
Regulatory policy in the EU has been developed under the banner of better regulation. The introduction of the EU’s better regulation agenda in its current form dates back to the early 2000s. In the early stages, the European Commission’s better regulation agenda was strongly underpinned by the rationale to simplify and improve the quality of EU legislation (European Commission, 2002[4]) as well as to strengthen the competitiveness of the European economies (European Commission, 2005[7]). The European Commission also recommended that EU Member States “establish national better regulation strategies and, in particular, impact assessment systems for the integrated assessment of economic, social and environmental impacts, along with the supporting structures adapted to their national circumstances” (European Commission, 2005[7]). Central pillars of the EU’s better regulation agenda include:
The design of a standardised process to consult external stakeholders and the public throughout the development of the Commission’s regulatory proposals (see Chapter 2)
The introduction of a mandatory ex ante impact assessment procedure during the development of all major EU regulatory initiatives (see Chapter 3)
The promotion of the systematic use of ex post evaluations to review existing regulations (see Chapter 4), as well as a comprehensive program to simplify the stock of regulations (REFIT programme)
Beyond the elements covered in this report, the Commission’s better regulation approach also emphasises more EU-specific aspects. In particular, strengthening subsidiarity and proportionality of EU legislation has been a central element of recent better regulation initiatives (European Commission, 2017[8]).
With its 2015 Better Regulation Package, further refined in 2017, the Commission renewed its political commitment towards the central elements of its better regulation policy, whilst introducing significant changes to its regulatory framework. The Package included new guidelines for conducting consultations, impact assessments, and ex post evaluations. Other changes included reforms to the Commission’s oversight mechanism for scrutinising RIA and ex post evaluations (European Commission, 2015[6]).
While the European Commission is solely responsible for initiating EU legislation, the co-legislators, i.e. the Council of the EU comprised of Member States’ representatives and the European Parliament, negotiate and adopt final proposals through legislative procedures. All three institutions have increasingly sought to develop a common approach towards better regulation. This led to the adoption of Interinstitutional-Agreements recognising the importance of public stakeholder consultation, ex post evaluation of existing legislation and impact assessments to improve the quality of EU legislation (European Parliament, Council of the European Union, European Commission, 2016[9]). The co-legislators, specifically the European Parliament and to a lesser extent the Council, have also initiated their own approaches towards the application of regulatory management.
Regulatory policy in the EU Member States
A previous OECD review of better regulation policies among 15 EU Member States almost a decade ago has shown that better regulation is a concept that “is recognised as an important part of effective public governance” by governments and external stakeholders (OECD, 2009[2]). The drivers to initiate better regulation strategies, however, varied from country to country. For instance, economic growth, competitiveness and the needs of businesses have been prominent reasons for engaging in better regulation policies. In other EU Member States, justifications for better regulation initiatives have also been associated with societal goals such as sustaining quality public services and to reduce societal burdens (OECD, 2009[2]).
The survey results confirm that EU Member States currently display, at least in principle, a strong political commitment towards regulatory policy. All EU countries report that they have adopted regulatory policies promoting government-wide regulatory reform or regulatory quality (Figure 1.1).
The EU countries’ better regulation policies have a number of similarities with the regulatory management tools examined in this report. For instance, all EU Member States have a policy in place covering the area of ex ante impact assessment, and in almost all EU countries, regulatory policies cover government transparency and consultation. Ex post evaluation of regulations, however, is less common (22 Member States).
Figure 1.1. Areas covered in regulatory policy across EU Member States
Note: Data is based on 28 EU Member States.
Source: Indicators of Regulatory Policy and Governance Survey 2017, http://oe.cd/ireg.
The composite indicator scores of the iREG survey show that EU Member States have put systems in place to conduct stakeholder engagement and to a lesser extent RIA, but that ex post evaluation systems are not currently commonplace (Figure 1.2). Further information about the construction of the composite indicators is available in the reader’s guide and Annex B.
An important finding is that despite considerable overlap between memberships, the EU 28 average composite indicators scores are lower across all areas for both primary and subordinate laws, compared with the OECD average. The difference is particularly striking for the area of ex post evaluation, indicating that EU Member States are yet to develop effective systems to review existing regulations. The European Union scores substantively higher than the EU 28 average across all three assessed areas. Composite indicator scores for each EU Member State are presented in the detailed chapters on stakeholder engagement, RIA, and ex post evaluation, respectively.
It should however be noted that three assessed areas do not constitute the entire better regulation framework. EU Member States’ regulatory policies also cover a number of other areas to varying degrees. For instance, 27 Member States have adopted elements of administrative simplification and burden reduction strategies. Policies covering intra-governmental co-ordination (24 Member States) and regulatory oversight (21 Member States) are also relatively widespread. Similarly to the OECD overall (OECD, 2015[10]), regulatory policies dedicated to the implementation stage of regulations, i.e. on compliance and enforcement and performance-based regulation tend to be less common.
Figure 1.2. Composite indicator scores, EU 28 averages, 2018
Notes: The OECD average is based on the 34 countries that were OECD members in 2014, which included 21 of the current 28 EU Member States. Data for 2018 includes the remaining EU Member States of Bulgaria, Croatia, Cyprus, Malta and Romania. The more regulatory practices as advocated in the 2012 Recommendation a country has implemented, the higher its iREG score.
Source: Indicators of Regulatory Policy and Governance Survey 2017, http://oe.cd/ireg.
Regulatory management at the interface between EU Member States and the European Union
The regulatory management systems of the EU institutions and the EU Member States need to be mutually reinforcing in order to operate effectively and efficiently. This is prefaced on the fact that regulatory policies emanating from the EU naturally tend to affect Member States. Anticipated economic benefits at the EU level could easily dissipate where regulatory management systems are weak in individual Member States. This risk is clearly recognised by the European Commission: “The European Union can deliver on its policies only if the Member States apply and implement EU law correctly and without undue delay” (European Commission, 2018[11]).
The EU legal framework contains different types of binding acts and subordinate regulations. The forms of these acts have different implications for the implementation of EU legislation at the Member State level. Both EU regulations and EU directives are subject to formal negotiation procedures; but only EU directives are additionally subject to transposition requirements (Box 1.1).
Box 1.1. The main types of EU legislative acts and subordinate regulations
Two main types of EU legislative acts are regulations and directives. Both the nature of and processes for these laws have important differences. The differences are relevant to the regulatory management tools that individual Member States employ when implementing these laws.
EU regulations are directly applicable in all Member States and binding in their entirety. Regulations are used most commonly where it is important to achieve a uniform implementation of a policy intervention such as in the internal market or the governance of mergers. They leave individual Member States limited scope to determine how they implement these laws. EU directives on the other hand, afford Member States considerable latitude to choose the method and form of implementation. They are binding on the Member States to which they are addressed in respect of the result to be achieved but the specific form and methods are left to national authorities to decide.
The main types of EU subordinate regulations are delegated acts and implementing acts. In the legislative acts they adopt, the European Parliament and the Council can empower the Commission to adopt acts to supplement or amend non-essential parts of EU legislative acts (in case of delegated acts) or where uniform conditions for implementing legally binding acts are needed (in case of implementing acts). Both delegated and implementing acts may take the form of either regulations, directives or decisions.
The European Commission’s regulatory process for developing proposals for legislative acts and delegated and implementing acts involves both stakeholder consultation and impact assessment (see Chapters 2 and 3). Once a proposal for a legislative act has been made, the regulation or directive (as the case may be) is subject to the legislative process, where amendments can be negotiated and the EU law then finalised. Delegated and implementing acts are not subject to the legislative process per se. However, delegated acts only enter into force if the European Parliament and the Council have no objections. Additionally, both delegated and implementing acts are usually prepared in consultation with a committee or an expert group comprised of representatives from EU countries.
EU regulations take effect in individual Member States once they enter into force. EU directives are subject to an additional transposition procedure. Transposition is the process that individual Member States undertake to incorporate EU directives into national laws. The European Commission checks the legal accuracy of transposition in individual Member States and has the power to commence enforcement proceedings where transposition processes are unduly delayed.
Source: Indicators of Regulatory Policy and Governance Surveys 2017; Website of the European Commission, https://ec.europa.eu/info/law/law-making-process/types-eu-law_en (accessed September 2018); Better Regulation Toolbox, https://ec.europa.eu/info/better-regulation-toolbox_en (accessed September 2018).
The requirements of EU countries to conduct stakeholder engagement and RIA on regulatory proposals of the European Commission are the subject of Chapters 2 and 3, respectively. The discussion below relates to the stage after the Commission has made a regulatory decision, and a draft law passes through the European Parliament and Council. After it becomes an EU law, it is then implemented by individual Member States.
Results from the iREG survey and its extension to all EU Member States indicate that countries generally do not require the use of regulatory management tools to assist them in forming a negotiation position on EU legislative acts (Figure 1.3). However, requirements to conduct stakeholder engagement and/or RIA on EU directives at the transposition stage are far more commonplace (see Chapters 2 and 3 for more details).
Figure 1.3. EU Member States’ requirements to conduct stakeholder engagement and RIA on EU-made laws
Note: Data is based on 28 EU Member States.
Source: Indicators of Regulatory Policy and Governance Survey 2017, http://oe.cd/ireg.
The negotiation phase presents a strong opportunity for Member States to directly amend European Commission proposals (as introduced to Council and the European Parliament) before they become EU legislative acts. This has the potential to lead to substantial changes to a Commission’s proposal. Stakeholders can engage with regulatory decisions of the Commission directly themselves or indirectly via their respective Member State. With the former, the Commission allows stakeholders to comment on draft legislative proposals and the accompanying final impact assessments after the approval by the College of Commissioners. With regards to the latter, in a complementary manner, stakeholders can contact their Member State who can then present the views on the stakeholders’ behalf to the Council.
Despite the complementariness however, results from the iREG survey show that less than half of the EU Member States require either stakeholder engagement or RIA to be conducted at this stage; and of those only Estonia, Finland, Hungary, Italy, Poland, the Slovak Republic, and Slovenia require both. This implies that affected parties cannot directly present their views to their Member State, and have their views heard at the EU level, outside of the Commission’s formal processes. Since the original impact assessment of the Commission does not necessarily include an identification of the impacts on individual countries, it means the expected individual Member State impacts may not have been identified or assessed through a domestic impact assessment process. The Council and the European Parliament have, at least in principle, committed themselves to carry out impact assessments in relation to substantial amendments of the Commission's regulatory proposals. Nevertheless, even when such an assessment is carried out, amendments which are put and passed may not be adequately assessed by individual Member States, which may lessen the expected benefits (and/or raise the expected costs) of EU legislative acts for individual countries. These findings raise the issue of how both EU Member States and the EU institutions can better complement the use of each other’s regulatory management tools while at the same time avoiding unnecessary duplication or overlap.
The fact that EU Member States generally require the use of regulatory management tools when transposing EU directives is unsurprising. Firstly, by design, EU directives are implemented at the Member State level, and as such are generally subject to the same requirements as any other domestic law (see Chapters 2 and 3). Secondly, the flexibility afforded strongly implies that there are multiple ways to implement EU directives. As there are a potential number of means to achieve the regulatory goal, both RIA and stakeholder engagement are useful tools that governments can avail themselves of to identify the best implementation solution.
Individual Member State governments can assist policy makers to undertake transposition processes on a more consistent basis. In the United Kingdom for instance, bespoke guidance is available to assist ministries in the transposition process of EU directives (Department of Business, Energy & Industrial Strategy (UK), 2018[12]).
Regulatory oversight across the EU
Regulatory oversight is a critical component of effective regulatory frameworks that provides important impulses for the implementation of regulatory policy in practice (OECD, 2018[1]). The 2012 Recommendation recognises this important role of regulatory oversight. It outlines a wide range of institutional oversight functions and tasks to promote high quality evidence-based decision making and enhance the impact of regulatory policy. These tasks and functions include: quality control; examining the potential for regulation to be more effective; contributing to the systematic improvement of the application of regulatory policy; co‑ordination; and training and guidance (see Table 1.1).
Table 1.1. Regulatory oversight functions and key tasks
Source: OECD (2018), Regulatory Policy Outlook 2018, OECD Publishing, Paris.
In line with results for OECD countries, oversight and quality control is the least developed component of the composite indicators in EU Member States. Results from the iREG survey illustrate that oversight and quality control has been established to a lesser extent than the systematic adoption, methodology or transparency of stakeholder engagement, RIA and ex post evaluation among EU Members. Oversight and quality control of ex post evaluation is particularly weak (Figure 1.4). This mirrors the situation in OECD countries, although on average, OECD countries score slightly higher in all four areas.
Figure 1.4. Category scores of iREG indicators for EU Member States
Note: Scores represent the average of primary laws and subordinate regulations. The maximum score for each regulatory policy tool is one, and the maximum aggregate score is 3. Data is based on 28 EU Member States.
Source: Indicators of Regulatory Policy and Governance Survey 2017, http://oe.cd/ireg.
Regulatory oversight functions carried out in EU countries
Like all OECD countries, all EU Member States have established some oversight capacity (Figure 1.5). In particular, all EU countries report to have established at least one body that is responsible for the promotion of regulatory policy as well as monitoring and reporting on regulatory reform and regulatory quality and for the quality control of RIA. Most EU members have a body responsible for legal quality, administrative simplification/burden reduction, stakeholder engagement and overall legal quality. Bodies that have responsibility for overseeing and promoting ex post evaluation and international regulatory co-operation are much less widespread across the EU. Beyond these functions, EU Member States have also institutional arrangements in place to oversee other elements of regulatory policy that are not systematically covered in the OECD iREG survey, such as the transposition of EU law (see Box 1.2).
Figure 1.5. Elements of regulatory policy covered by the oversight body
Note: Data is based on 28 EU Member States.
Source: Indicators of Regulatory Policy and Governance Survey 2017, http://oe.cd/ireg.
Box 1.2. Oversight of the implementation of EU law in Denmark
In 2015, the Danish government set up a new oversight arrangement with the aim to ensure a systematic and uniform approach towards the implementation of EU legislation across government and to avoid additional burdens for businesses through the transposition of EU directives.
The Inter-Ministerial EU Implementation Committee examines all national legislative proposals deriving from business-oriented EU legislation to ensure that the new legislation follows five principles for implementation. These principles include, inter alia, provisions to avoid burdens for businesses stemming from the transposition of EU directives and an implementation going beyond the minimum requirements set in EU legislation. The committee is comprised of eight ministers and situated in the Ministry of Employment.
As part of the development of legislation implementing business-oriented EU legislation, all ministries need to submit an implementation schedule to the secretariat of the Committee, explaining whether the five principles have been followed. If a draft law is not in compliance with the five principles, the matter is put before the Inter-Ministerial Committee, which can approve or reject measures going beyond what is required as part of implementing EU legislation.
The external EU Implementation Council advises the Committee in its efforts to prevent unnecessary costs for business in implementing new EU legislation. The Council is comprised of 11 Members from business, consumer, employer and employee organisations. It is supported by a secretariat situated in the Danish Agency for Labour Market and Recruitment, which is an agency under the Ministry of Employment. The Council exercises three tasks:
1. In case the Council identifies burdensome future EU legislation, it can advise the government through the Inter-Ministerial EU Implementation Committee to lobby proactively already at the development-stage of EU legislation.
2. The Council advises ministries on the transposition of new EU legislation. As part of this task, all ministries are required to submit an implementation plan to the Council within 4 weeks of the adoption of the directive in Brussels, indicating the planned process and method of implementation. The Council sends recommendations to the ministries on this basis, which are subsequently discussed in the Implementation Committee.
3. It can suggest to the Inter-Ministerial EU Implementation Committee to conduct a “neighbour check”, i.e. the ministry shall examine best practices in other Member States and check the existing implementation against methods used in other Member States in order to identify simplification opportunities for businesses. For example, as a result of such a “neighbour check” the Danish Maritime Authority decided in 2016 to phase out 33 shipping rules to reduce economic burden to Danish businesses.
Source: Indicators of Regulatory Policy and Governance Survey 2017, Website of the Danish Inter-Ministerial EU Implementation Committee https://bm.dk/arbejdsomraader/aktuelle-fokusomraader/regeringens-eu-implementeringsudvalg/ (accessed August 2018).
Quality control of regulatory management tools
Quality control is one of the key regulatory oversight functions outlined in the 2012 Recommendation. Countries use a variety of different mechanisms to carry out quality control of regulatory management tools. They range from providing advice and feedback during the application of the tools, to issuing a formal opinion on their quality that is either kept confidential or made publicly available, to a “sanctioning” or “gatekeeper” function that can stop a regulation from proceeding to the next step in the legislative process if the quality of the tool is deemed inadequate. This sanctioning function can usually be overturned by a specific decision of the competent authority to acknowledge the negative opinion and overturn it. In some cases, a positive opinion is required for a draft regulation or evaluation to proceed and the sanctioning function cannot be overturned.
In line with results at the OECD level, EU Member States’ efforts to scrutinise the quality of regulatory management tools is heavily focused on RIA. EU members have invested in mechanisms to scrutinise the quality of RIAs, but few bodies can ask for deficient RIAs to be revised (Figure 1.6). Almost 80% of EU countries (22 out of 28) have established a body outside the ministry sponsoring the regulation that is responsible for reviewing the quality of accompanying RIAs. However, in only about a third of EU countries (10) this body can return a RIA for revision in case it deems that the RIA quality is insufficient. On the European level, the European Commission’s Regulatory Scrutiny Board can return inadequate RIAs for revision.
Figure 1.6. Quality control of RIA
Note: Data is based on 28 EU Member States.
Source: Indicators of Regulatory Policy and Governance Survey 2017, http://oe.cd/ireg.
Comparable to the situation across the OECD, quality control of stakeholder engagement processes is much less widespread (Figure 1.7). Less than a third of EU countries use judicial review or scrutiny by an oversight body to ensure that comments received during consultations are taken into account for finalising a regulation. Oversight bodies that are responsible for oversight of stakeholder engagement are frequently, but not in all cases, the same bodies that are responsible for RIA quality control. On the European level, the European Commission’s Regulatory Scrutiny Board, which scrutinises the quality of RIAs, also scrutinises the quality of stakeholder engagement processes.
Figure 1.7. Quality control of stakeholder engagement processes
Note: Data is based on 28 EU Member States.
Source: Indicators of Regulatory Policy and Governance Survey 2017, http://oe.cd/ireg.
Systematic quality control of ex post evaluations is rare among EU countries, just as it is rare among the OECD membership (Figure 1.8). Nine EU countries report to have a quality control system for ex post evaluations. Quality control is usually carried out by a body reviewing the evaluations. In almost all cases, this responsibility is assigned to the same body that is in charge of RIA quality control. At the European Commission, the Regulatory Scrutiny Board scrutinises selected ex post evaluations.
Figure 1.8. Quality control of ex post evaluations
Note: Data is based on 28 EU Member States.
Source: Indicators of Regulatory Policy and Governance Survey 2017, http://oe.cd/ireg.
Evaluation of regulatory management tools
Evaluating the performance of regulatory management tools is crucial to understand if existing regulatory policy frameworks achieve their goals and to identify areas for improvement. This has been recognised in Principle 6 of the 2012 Recommendation, which calls for countries to “regularly publish reports on the performance of regulatory policy and reform programmes [including] information on how regulatory tools such as Regulatory Impact Assessment (RIA), public consultation practices and reviews of existing regulations are functioning in practice” (OECD, 2012[5]). Building on the Recommendation, the OECD has developed methodological guidance for countries on how to assess the functioning of their regulatory management tools (OECD, 2014[13]).
Evaluations of regulatory management tools provide a “reality check” that shows if they are implemented effectively and if they have the intended impact on regulatory quality. Evaluations of regulatory policy also help target limited resources for reform where they are most needed, and can serve as benchmark for ministries and agencies to enhance their use of regulatory management tools. Finally, performance information on regulatory policy also provides a lever to communicate progress on regulatory reform and garner political support for regulatory policy.
EU Member States currently do not evaluate their use of regulatory management tools on a systematic basis to capitalise on the important benefits of such an evaluation. Reports on the performance of regulatory management tools focus largely on RIA and are often conducted ad hoc (Figure 1.9). Half of all EU countries have published at least an ad hoc report on the performance of the RIA system and how it functions in practice in the last ten years. Ten EU countries undertake regular evaluation efforts to gauge the performance of their RIA systems (see Chapter 3). In contrast, only a handful of EU countries have published performance reports on consultation practices or ex post evaluations (see Chapters 2 and 4).
The European Commission is currently undertaking a review of its better regulation agenda in the form of a public stocktaking exercise, focussing on RIA, stakeholder engagement and ex post evaluation. The review is expected to contribute the development of the current regulatory framework by identifying strengths and gaps in existing practices and to develop suggestions for improvement. The stocktaking exercise is forecast to conclude in 2019.
Figure 1.9. Performance reports on regulatory management tools
Note: Data is based on 28 EU Member States
Source: Indicators of Regulatory Policy and Governance Survey 2017, http://oe.cd/ireg.
Actors of regulatory oversight in EU countries
Institutional arrangements to embed regulatory oversight capacity are manifold. The 2018 Regulatory Policy Outlook (OECD, 2018[1]) finds that the institutional setup for regulatory policy is heterogeneous across different jurisdictions. In OECD countries, responsibilities for different oversight functions are often split between several bodies. The picture for the European Union looks very similar: Most EU countries report to have more than one oversight body, and bodies split responsibilities for different oversight functions.
A majority of regulatory oversight bodies in EU countries are units or departments within the executive, i.e. at the centre of government or a line ministry. However, dedicated arm’s length bodies or bodies outside the executive, such as parliamentary bodies, supreme audit institutions or bodies that are part of the judiciary also play a significant role in regulatory oversight. Again, the situation in EU Member States reflects the picture across the OECD membership.
In EU countries, capacity for regulatory oversight within the executive is most frequently located at the centre of government (Figure 1.10). More than three quarters of EU countries have assigned responsibility for regulatory oversight to one or more bodies located at the centre of government. In about half of all EU Member States, the centre of government shares oversight responsibilities with one or several line ministries, capitalising on these ministries’ specific expertise in economic or administrative matters.
Figure 1.10. Location of oversight capacity within the executive of EU countries
Note: Data is based on 28 EU Member States.
Source: Indicators of Regulatory Policy and Governance Survey 2017, http://oe.cd/ireg.
The emergence of arm’s length regulatory oversight in the European Union
A new trend towards the creation of “arm’s length” regulatory oversight bodies has emerged in Europe over the past twenty years. Complementary to the establishment of regulatory oversight capacity within the executive, these bodies are not subject to the direction on individual decisions by executive government, but could be supported by officials who are located within a ministry or have its own staff. To shed light on the activities, characteristics and governance arrangements of these new kinds of oversight bodies, the OECD developed case studies in co-operation with eight European arm’s length regulatory oversight bodies to compare their common features and differences (OECD, 2018[14]). They include bodies in six EU Member States, Norway, as well as the European Union Regulatory Scrutiny Board (see Table 1.2).
Table 1.2. European “arm’s length” regulatory oversight bodies
Source: OECD (2018), Case studies of RegWatchEurope regulatory oversight bodies and of the European Regulatory Scrutiny Board, OECD Publishing, Paris.
European arm’s length bodies differ in their institutional setup and capacities, but share a range of governance features that differentiate them from more “traditional” actors of regulatory oversight like units at the centre of government or in line ministries. Their institutional setup and resources provide safeguards from outside interference in their regulatory oversight activities. At the same time, these bodies remain connected and accountable to their sponsoring government institutions, as for example their board members are appointed by government or their secretariats are embedded in their sponsoring institution.
In line with their mandate, European arm’s length bodies are all responsible for the quality control of regulatory management tools, although the scope and focus of their RIA scrutiny varies. For example, some of the bodies only scrutinise RIAs for selected proposals, often due to resource constraints, and some bodies focus on examining impacts on business or the costs of regulation only.
As is the case for most regulatory oversight bodies in the European Union, most of the eight arm’s length bodies have advisory powers for the scrutiny of RIA quality and cannot return RIAs for revision if they consider their quality as insufficient. The exceptions are the European Commission’s RSB and the United Kingdom’s RPC. If these bodies issue a negative opinion on a RIA, it must be revised and resubmitted.
The emergence of arm’s length regulatory oversight bodies in Europe reflects the institutional dynamism in the area of regulatory oversight on an international level. Across the OECD, many countries have established oversight bodies with less traditional features, such as arm’s length bodies, or mixed bodies involving representatives from the government, the legislative branch and/or civil society (academia, business, or other). While the case studies on European arm’s length bodies provides highly relevant insights into the functioning of these bodies, further analytical work on the characteristics of these and other oversight bodies may be helpful to better understand their modus operandi and relationship with government, parliament and civil society.
The role of parliaments in regulatory oversight
Parliaments have a crucial role to play in regulatory policy and oversight (OECD, 2015[10]). As the ultimate authority to approve legislation, they are predisposed to carry out oversight of the application of better regulation principles for new and amended laws. Parliaments are also one of the main initiators of legislation, and can amend legislative proposals brought forward by the executive. On average, about 16% of national laws adopted in the period between 2014 and 2016 have been initiated by parliament across the EU membership. In part due to variations in political systems, the share of laws initiated by parliament varies significantly across EU Member States: While almost 60% of laws are initiated by parliament in Bulgaria, and around 40% in the Czech Republic and Poland, no laws initiated by parliament have been adopted between 2014 and 2016 in Greece and Sweden (see Annex A).
Contrary to its eminent place in the legislative process, parliaments are not very involved in regulatory oversight across the EU (Figure 1.11). This is in line with findings for the OECD membership. Only very few EU countries report to have a parliamentary body responsible for scrutinising the quality of individual RIAs. These parliamentary committees usually verify the existence of RIAs accompanying legislative proposals and use the information contained in RIAs in their deliberations. Six EU countries report to have a parliamentary body that is responsible for reviewing the overall RIA framework. For example, the French “Comité d’évaluation et de contrôle des politiques publiques” published a report examining different tools used within the French government to evaluate public policies, including the status quo of the use of RIAs (Comité d'évaluation et de contrôle des politiques publiques (CEC), 2018[15]). Parliaments in a number of EU countries also engage in ex post evaluation efforts to ensure legislation remains fit for purpose (see e.g. (OECD, 2012[16]) and Chapter 4).
Figure 1.11. Parliamentary oversight of RIA
Note: Data is based on 28 EU Member States.
Source: Indicators of Regulatory Policy and Governance Survey 2017, http://oe.cd/ireg.
The European Parliament carries out quality control of European Commission impact assessments and conducts ex post evaluation of existing regulation (European Parliamentary Research Service (EPRS), 2018[17]). The European Parliamentary Research Service’s Directorate for Impact Assessment and European Added Value prepares initial appraisals of all impact assessments prepared by the European Commission for consideration by parliamentary committees, and provides other services such as complementary impact assessments or impact assessments on parliamentary amendments to legislative proposals. The Directorate also provides appraisals of the implementation of existing EU legislation for all proposals that update the existing legal framework. In addition, parliamentary committees may request more detailed implementation assessments of specific existing EU laws or policies or other analyses on implementation issues.
References
[15] Comité d'évaluation et de contrôle des politiques publiques (CEC) (2018), Rapport d’information sur l’évaluation des dispositifs d’évaluation des politiques publiques, http://www.assemblee-nationale.fr/15/pdf/rap-info/i0771.pdf (accessed on August 2018).
[12] Department of Business, Energy & Industrial Strategy (UK) (2018), Transposition guidance: how to implement European directives effectively, https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/682752/eu-transposition-guidance.pdf.
[11] European Commission (2018), Monitoring the Application of Union Law: 2017 Annual Report, https://ec.europa.eu/info/sites/info/files/report-2017-annual-report-monitoring-application-eu-law.pdf.
[8] European Commission (2017), Completing the Better Regulation Agenda: Better solutions for better results, https://ec.europa.eu/info/sites/info/files/completing-the-better-regulation-agenda-better-solutions-for-better-results_en.pdf (accessed on September 2018).
[6] European Commission (2015), Better regulation for better results - An EU agenda, http://ec.europa.eu/smart-regulation/better_regulation/documents/com_2015_215_en.pdf (accessed on September 2018).
[7] European Commission (2005), Better Regulation for Growth and Jobs in the European Union, https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52005DC0097&from=EN (accessed on September 2018).
[4] European Commission (2002), European governance - A white paper, https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:52001DC0428 (accessed on September 2018).
[9] European Parliament, Council of the European Union, European Commission (2016), Interinstitutional Agreement between the European Parliament, the Council of the European Union and the European Commission on Better Law-Making, https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.L_.2016.123.01.0001.01.ENG (accessed on September 2018).
[17] European Parliamentary Research Service (EPRS) (2018), Impact Assessment and European Added Value, http://www.europarl.europa.eu/EPRS/EPRS-Impact-Assessment-European-Added-Value-presentation.pdf.
[14] OECD (2018), Case Studies of RegWatchEurope regulatory oversight bodies and of the European Union Regulatory Scrutiny Board, OECD Publishing, Paris.
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[10] OECD (2015), OECD Regulatory Policy Outlook 2015, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264238770-en.
[13] OECD (2014), OECD Framework for Regulatory Policy Evaluation, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264214453-en.
[16] OECD (2012), Evaluating Laws and Regulations: The Case of the Chilean Chamber of Deputies, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264176263-en.
[5] OECD (2012), Recommendation of the Council on Regulatory Policy and Governance, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264209022-en.
[2] OECD (2009), Better Regulation in Europe: An OECD Assessment of Regulatory Capacity in the 15 Original Member States of the EU, General perspectives from the first reviews, http://www.oecd.org/gov/regulatory-policy/44983092.pdf (accessed on September 2018).
[3] OECD (1995), OECD Recommendation on Improving the Quality of Government Regulation, OECD Publishing, Paris, http://acts.oecd.org/instruments/showinstrumentview.aspx?instrumentid=128&instrumentpid=124&lang=en&book=false.