Only after laws have entered into force can governments assess their full effects and their impacts on the society. Many of the features of an economy or society of relevance to particular regulations will change over time, so even regulations that are fit for purpose may become outdated over time. To ensure that regulations remain appropriate, countries should regularly review their stock of existing regulations. Ex post evaluation of regulations however remains relatively undeveloped among OECD members and many EU countries. This chapter assesses the use of ex post evaluations across all EU Member States and the European Union. It discusses how EU countries use different approaches to ex post evaluation as well as whether EU Member States have a sound methodology for ex post evaluation in place. It concludes by providing information on the entities that typically prepare ex post evaluations, as well as how stakeholders can be involved.
Better Regulation Practices across the European Union
Chapter 4. Ex post review of laws and regulations 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
The stock of laws and regulations has grown rapidly in most countries. However not all regulations will have been rigorously assessed, and even where they have, not all effects can be known with certainty in advance. Moreover, many of the features of an economy or society of relevance to particular regulations will change over time. In some circumstances, the formal processes of ex post impact analysis may be more effective than ex ante analysis at informing ongoing policy debate. This is likely to be the case for example, if regulations have been developed under pressure to implement a rapid response (OECD, 2018[1]).
The 2012 OECD Recommendation on Regulatory Policy and Governance therefore calls on governments to “[c]onduct systematic programme reviews of the stock of significant regulation against clearly defined policy goals, including consideration of costs and benefits, to ensure that regulations remain up to date, cost justified, cost effective and consistent, and deliver the intended policy objectives.” (OECD, 2012[2]).
Ex post assessments of regulatory performance should have symmetry with ex ante assessments: through verifying that stated objectives have actually been met, determining whether there have been any unforeseen or unintended consequences, and considering whether alternative approaches could have done better. Reviews that in additional also encompass proposals for change and revisit the original regulatory objective and its ongoing appropriateness or legitimacy are particularly useful to improve the stock of regulations (OECD, Forthcoming[3]).
This chapter presents a systematic and up-to-date assessment of requirements and practices in place for conducting ex post assessments for primary laws and subordinate regulation across all 28 EU Member States and the European Commission. The section below summarises the key findings. The second section provides a snapshot of country’s systems based on the iREG composite indicator on ex post evaluation. The third section discusses the use of different approaches to ex post evaluation including programmed reviews, ad hoc reviews and stock management approaches by EU Member States. The section on methodology of ex post evaluation looks at whether key elements of a sound methodology for ex post evaluation are in place in Member States. Finally, the section on conducting ex post evaluation in practice provides practical information on who typically prepares ex post evaluations and is involved in the process. The section on effectiveness of ex post evaluation gives an overview of evaluations conducted on whether ex post evaluation systems function well in practice.
Key findings
The majority of EU Member States lacks a systematic approach towards conducting ex post evaluation of individual regulations: Less than one fifth of Member States systematically assess whether laws and regulations achieve their policy goals as expected. When policy makers are required to identify actual costs and benefits, this usually applies only to some evaluations in selected policy areas.
Only the United Kingdom systematically compares the effects of existing regulations to alternative options. This indicates that Member States do not consider ex post evaluation as an opportunity to look beyond the effects of the chosen regulatory option and revisit whether other options might be more effective or efficient in achieving regulatory goals.
Over the last decades, efforts to review the stock of existing regulations have been largely driven by the motivation to reduce regulatory burden. This focus has largely remained in the centre of ex post review approaches. While almost all Member States have conducted reviews focusing on administrative burdens, only a quarter of EU Member States made use of in-depth reviews to assess a wider range of impacts and the cumulative effect of regulations in a particular policy area to inform more far-reaching reforms.
The European Commission employs a range of review approaches, combining systematic evaluations of individual regulations with in-depth reviews of specific policy sectors. Through the “evaluate first” principle, the Commission has committed to evaluate all regulations before making a new proposal in a related area. Since the 2015 Better Regulation Package, major ex post evaluations and reviews are subject to quality control by the Regulatory Scrutiny Board, contributing to strengthened oversight of ex post evaluations.
While almost all EU Member States provide guidance on ex ante assessments, only half do so for ex post evaluation. Yet, a sound methodological framework is an integral part of a functioning ex post evaluation system to ensure that ex post evaluations meet their purpose and are of sufficient quality to inform reforms.
In the majority of EU Member States, ex post evaluations are conducted by the department responsible for developing the regulation. Only in a small minority of EU countries, bodies and committees outside the government are responsible for conducting ex post evaluations. External or independent review processes might however, be particularly useful the more ‘sensitive’ a regulation is and the more significant its economic or social impacts.
EU Member States generally value the input of stakeholders to review the impact of existing regulation: three quarters of EU Member States have ongoing mechanisms in place by which the public can provide recommendations to modify regulations and engage stakeholder when conducting ex post evaluation. In most countries however this is only possible for selected policy areas. Additionally, EU countries could more frequently publish ex post evaluation reports online to ensure the transparency of the results of evaluation activities: this is currently only done by less than half of all Member States.
Assessments of the effectiveness of ex post evaluations systems have been undertaken in only five EU Member States. Where such reviews have been conducted, they provided valuable insights how existing ex post evaluation systems in EU Member States can be improved. EU Member States would benefit from reviewing evaluation practices in their jurisdiction to address the existing deficiencies.
General trends across the EU
A review of a number of EU Member States almost ten years ago found that many Member States have invested in initiatives targeting the reduction of regulatory burden and a simplification of the stock of existing regulations. However, ex post evaluation of the effectiveness and efficiency of individual regulations tends to be ad hoc and approaches often remain unsystematic (OECD, 2010[4]). These findings are still valid today.
Despite the high potential benefits in reforming the stock of regulations, in 2018, ex post evaluation is still an underdeveloped practice in most EU Member States (Figure 4.1) and far less common than ex ante assessment: This generally mirrors the state of ex post evaluation across the OECD (OECD, 2018[5]). However, EU Member States show an even weaker level of integration of ex post evaluation into their regulatory management systems than OECD countries in general. Compared to ex ante evaluation, there is generally more variation across EU Member States. Countries such as Croatia, Cyprus, Greece, Latvia and Romania have not yet developed systematic approaches towards ex post evaluations. On the other hand, there are also a few countries where ex post evaluations are systematically conducted, such as Germany and the United Kingdom. Italy recently strengthened its ex post evaluation system by introducing a new set of procedures for ex post evaluation and reforming its institutional settings. However, the majority of EU Member States has integrated some aspects of ex post evaluation into their regulatory management system, but either lacks a systematic adoption or a sound methodological framework for conducting ex post evaluation. Assessments often only focus on administrative burdens and not on whether laws and regulations have achieved their objectives.
Figure 4.1. Composite indicators: Ex post evaluation of primary laws, 2018
Notes: Data for 2015 is based on the 34 countries that were OECD members in 2014 and the European Union, which included 21 of the current 28 EU Member States. The OECD average is based on the 34 member countries at the time of the survey. 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 Surveys 2014 and 2017, http://oe.cd/ireg.
Requirements and practices relating to subordinate regulations are generally slightly less frequently in place than those relating to primary laws (Figure 4.2). However, differences are overall not as substantial as for example in the area of ex ante impact assessment. This indicates that where pronounced systems for ex post evaluation are in place, these would largely also apply to subordinate regulations. EU Member States in which particular differences between requirements and practices regarding primary laws and those regarding subordinate regulation exist include Estonia, Finland and Poland. Overall, ex post evaluation systems are less pronounced in “newer” EU Member States. Out of 13 Member States that joined the EU since its enlargement in 2004, only Estonia, Poland (for primary laws) and Lithuania have an ex post evaluation system in place on a level higher than the EU Member State average. However, also a number of EU countries with longer membership still do not systematically conducting ex post evaluation.
Figure 4.2. Composite indicators: Ex post evaluation of subordinate regulations, 2018
Notes: Data for 2015 is based on the 34 countries that were OECD members in 2014 and the European Union, which included 21 of the current 28 EU Member States. The OECD average is based on the 34 member countries at the time of the survey. 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 Surveys 2014 and 2017, http://oe.cd/ireg.
The European Commission has a more advanced system for reviewing existing regulation in place, compared to most of the EU Member States. Evaluations of individual regulations, including programmed and ad hoc evaluations, are complemented by reviews of multiple regulations. With regards to the latter, the Commission conducts so-called ‘fitness checks’ to assess the performance of a group of interlinked regulations to identify gaps, overlaps, inconsistencies, administrative burden and cumulative impacts in particular regulatory areas. These approaches are underpinned by a relatively developed methodology and mandatory stakeholder engagement for conducting ex post evaluation. Additionally, the European Commission established the Regulatory Fitness and Performance programme (REFIT) in 2012, which aimed at making EU-laws simpler, and at reducing regulatory costs. Recently, the European Commission also strengthened oversight and quality control of ex post evaluation: Since 2015, the Regulatory Scrutiny Board has been responsible for reviewing and providing opinions on the quality of ex post evaluations of major regulations (European Commission, 2015[6]).
The systematic adoption of ex post evaluation as a regulatory management tool generally shows a lot of variation across EU Member States. This reflects the fact that relatively few EU Member States have adopted requirements to systematically conduct periodic ex post evaluations (see section Approaches to ex post evaluation ). Similarly, most EU Member States have yet to establish a sound methodology for ex post evaluation, including provisions for cost‑benefit analysis and the achievement of goals (see section Methodology of ex post evaluation). By contrast, most EU Member States already have specific mechanisms in place to gather recommendations from stakeholders to modify existing regulations as well as to involve stakeholder when conducting evaluations. In most EU countries, stakeholder engagement during ex post evaluations is however only possible for selected policy areas (see section Conducting ex post evaluation in practice – the organisational context). Mirroring the findings in the other areas examined in this survey, oversight and quality control of ex post evaluations is generally the weakest dimension across EU Member States (see Chapter 1).
Approaches to ex post evaluation in the EU and EU Member States
A “portfolio” of approaches to the ex post review of regulation will generally be needed. In broad terms, such approaches range from programmed reviews, to reviews initiated on an ad hoc basis, or as part of ongoing ‘management’ processes (see Box 4.1). Reviews can be thought of as conceptually broader than evaluations, as they generally encompass proposals for change and may need to revisit the original regulatory objective and its ongoing appropriateness or legitimacy. For example, an evaluation of a regulation intended to restrict competition may find that it had achieved its goal, but the approach itself may no longer be accepted as being in the public interest. In other words, while reviews will need to call on evaluation techniques, they have a broader role to play.
Box 4.1. Various approaches and methodologies to regulatory reviews
The approaches employed for reviews of regulations, like regulations themselves, need to be fit for purpose. The broad approaches to review are generally classified according to different points in time; whereas the various tools or methodologies employed, whilst individually distinct, may share some characteristics both within and across review approaches.
Programmed reviews – tend to focus on the performance of regulations at a specific point in time, or when a clearly defined situation arises:
For regulations or laws with potentially important impacts on society or the economy, particularly those containing innovative features or where their effectiveness is uncertain, it is desirable to embed review requirements in the legislative/regulatory framework itself.
Sunset requirements provide a useful ‘failsafe’ mechanism to ensure the entire stock of subordinate regulation remains fit for purpose over time.
Post-implementation reviews within a shorter timeframe (e.g. 1-2 years) are relevant to situations in which an ex ante regulatory assessment was deemed inadequate (by an oversight body for example), or a regulation was introduced despite known deficiencies or downside risks.
Ad hoc reviews – tend to take place as the need arises:
Public stocktakes of regulation provide a periodic opportunity to identify current problem areas in specific sectors or the economy as a whole.
Principle-based reviews can employ a screening criterion or principle to allow a specific focus on certain performance issues or impacts of concern.
In depth public reviews are appropriate for major regulatory regimes that involve significant complexities or interactions, or that are highly contentious, or both.
Cross-jurisdictional reviews of regulation can be a useful mechanism for identifying improvements based on comparisons of jurisdictions that have similar policy frameworks and objectives.
Ongoing stock management – do not tend to take place at a specified point in time, and are part of general regulatory ‘housekeeping’:
There need to be mechanisms in place that enable ‘on the ground’ learnings within enforcement bodies about a regulation’s performance to be conveyed as a matter of course to areas of government with policy responsibility.
Regulatory offset rules (such as one-in one-out) and burden reduction targets or quotas need to include a requirement that regulations slated for removal if still ‘active’, first undergo some form of assessment as to their worth.
Review methods should themselves be reviewed periodically to ensure that they too remain fit for purpose.
Source: OECD (Forthcoming), Best Practice Principles for Regulatory Policy: Reviewing the Stock of Regulation, OECD Publishing, Paris.
The timing, scope, and review methodologies of the three approaches will likely change across review types, as well as within them. Such a tailored approach helps to ensure that affected parties have adequate opportunity to provide input, and so as to ensure that review resources are appropriately targeted to policy areas with the largest societal impacts. For example, under programmed reviews, embedded reviews tend to be selective and focus on policy areas with large or uncertain impacts—whereas sunsetting is generally a process that ensures holistic review of all regulations, irrespective of the magnitude of impacts.
Given the different focusses of these reviews, it may also be the case that they adopt different review methodologies. For instance, a law may include an embedded review requirement, but could potentially at any time be subject to an ad hoc review. As a result, a certain amount of overlap may be present between the types of reviews, their timing and scope, and the methodologies selected.
Programmed reviews and review requirements
Only five EU Member States as well as the European Commission have reported to have frequently conducted ex post evaluation in the past three years. Ex post evaluation in EU Member States are often triggered on an ad hoc basis and often result out of political considerations (Figure 4.3).
Figure 4.3. Triggers of ex post evaluation of primary laws in 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.
In order to achieve and sustain good regulatory outcomes over time, it is fundamental that regulatory policy systems explicitly incorporate provisions for ex post review along with ex ante assessment. Such requirements can in time also help to “foster a deeper ‘culture of evaluation’ within government, enhancing administrative capability and raising the standard of evaluations themselves” (OECD, Forthcoming[3]).
Out of 28 EU Member States, only 14 countries have provisions for mandatory periodic evaluation of existing primary laws in place, while 11 countries do so for subordinate regulations (Figure 4.4). This largely confirms the general picture across OECD members: only 26% systematically require periodic ex post evaluation for existing primary laws and 21% for subordinate regulations (OECD, 2018[5]). In most of the 14 EU countries, requirements only apply to primary laws in specific policy areas. Only Austria, Denmark, Germany, Hungary, Italy, the Netherlands and the United Kingdom have a requirement in place to conduct periodic ex post evaluation systematically across all policy areas.
Figure 4.4. Requirements to conduct periodic ex post evaluations
Note: Data is based on 28 EU Member States.
Source: Indicators of Regulatory Policy and Governance Surveys 2017, http://oe.cd/ireg.
The European Commission has committed itself to the “evaluate first” principle, requiring that in principle, all regulations should be evaluated before making a new proposal in a related area (Box 4.2).
Box 4.2. The European Commission's “evaluate first principle”
The European Commission is arguably one of the most vocal advocates of the new course given to ex post evaluation of regulation. It has introduced the so-called “evaluating first principle”, according to which the Commission commits “(…) [not to] examine proposals in areas of existing legislation until the regulatory mapping and appropriate subsequent evaluation work has been conducted.” (EC, 2012).
The commitment was announced in the Political Guidelines that President Barroso publicly issued in 2009, at the outset of his second term in office (Barroso, 2009) as well as in various public speeches. The commitment to the principle was renewed as part of the 2015 Better Regulation Package and readdressed in its recent 2017 Better Regulation Communication (EC, 2017).
The principle is expected to help the Commission, in the short to mid-term, to re-allocate the services’ resources according to priority axes, raising at the same time the relative importance of ex post evaluation within the policy cycle. The evaluating first principle, if systematically applied, has clear repercussions on the re-organisation of the planning phase of evaluations.
Source: Allio, L. (2015), “Ex post evaluation of regulation: An overview of the notion and of international practices”, in Regulatory Policy in Perspective: A Reader’s Companion to the OECD Regulatory Policy Outlook 2015, OECD Publishing, Paris; European Commission (2012), EU Regulatory Fitness, COM(2012) 746 final of 12 December; Barroso, J.M. (2009), Political Guidelines for the Next Commission, http://ec.europa.eu/commission_2010-2014/president/pdf/press_20090903_en.pdf (accessed August 2018); European Commission (2017): Completing the Better Regulation Agenda: Better solutions for better results, COM(2017) 651 final, https://ec.europa.eu/info/sites/info/files/completing-the-better-regulation-agenda-better-solutions-for-better-results_en.pdf (accessed August 2018).
Embedding a review directly in the legislation through review or sunsetting clauses makes it more likely that a review will take place. This is the case in less than half of the EU Member States (Table 4.1). Where clauses are used, they do not necessarily cover the most significant regulations. In the United Kingdom, a statutory review is required for all subordinate regulations where those regulations affect either business or a voluntary or community body. The review report must set out the objectives to be achieved, assess the extent to which they have been achieved, and assess whether those objectives remain appropriate (Government of the United Kingdom, 2015[7]). With regards to EU-made laws, the 2016 Interinstitutional agreement between the European Parliament, the Council and the Commission further promoted the systematic inclusion of evaluation clauses into EU legislation (European Parliament, Council of the European Union, European Commission, 2016[8]).
Table 4.1. Review requirements in EU Member States and the European Union
Source: Indicators of Regulatory Policy and Governance Survey 2017, http://oe.cd/ireg.
Similar to the ex ante assessment of regulations, a threshold with objective criteria to identify when and how to conduct ex post evaluation can help to channel resources effectively to the most significant regulations and improve transparency. Out of 28 EU Member States, only five currently rely on threshold tests (Table 4.2). The OECD 2012 Recommendation specifies in that regard that, “reviews should preferably be scheduled to assess all significant regulation systematically over time and priority should be given to identifying ineffective regulation and regulation with significant economic impacts on users and/or impact on risk management” (OECD, 2012[2]).
This implies that the threshold tests should cover a sufficiently large range of impacts and not be limited to direct costs to business or citizens as is the case in some Member States.
Table 4.2. Thresholds used for ex post evaluation in EU Member States
Source: Indicators of Regulatory Policy and Governance Survey 2017, http://oe.cd/ireg.
Ad hoc reviews of the stock of regulations
Broader reviews of the stock of regulations in specific sectors or the economy as a whole provide an opportunity to identify areas for improvement, review policy objectives concerning a specific policy area or assess the cumulative impact and interactions between multiple regulations. The vast majority of Member States have undertaken one or more so-called principle-based reviews, focussing on a specific type of impact. More in-depth reviews focussing on a larger set of impacts and the complexities of interactions in a specific policy area are much less common despite their high potential benefits for structural reform. Less than one fifth of countries have undertaken a cross‑jurisdictional review identifying improvements based on comparisons with jurisdictions having similar policy objectives (Figure 4.5).
Principle-based reviews in EU Member States over the last decade have mostly focused on identifying administrative burden to determine which regulations in specific sectors, policy areas or the economy as a whole warrant review or potential reform. Half of EU Member States have also reviewed impediments to competition in specific sectors or the economy as a whole. Principle-based reviews using other screening criteria such as compliance costs, compliance with international instruments or risk are less commonly conducted.
When it comes to major areas of regulation with wide-ranging effects, where gains from a reform are likely to be significant, more in-depth reviews are useful to achieve a full understanding of the regulatory issues and developing options for reform (OECD, Forthcoming[3]). These reviews remain scarce among EU Member States. Among OECD members, in-depth reviews are more prevalent: around 40% of OECD countries have conducted in-depth reviews, with an increasing number in recent years (OECD, 2018[5]). The French Court of Auditors for example conducted an in-depth review on policies and regulations concerning social housing access for disadvantaged people. Investigating six diverse local districts, it concluded in 2017 that the current policy was overly focused on new constructions. As a result, the government launched a housing plan in September 2017 emphasising mobility and transparency besides the construction of new social housing (Cour des Comptes, 2017[9]). The European Commission had established the concept of ‘fitness checks’ to evaluate specific regulatory areas more in-depth. Fitness checks have been scaled up following the launch of the REFIT programme in 2012, which is aimed at assessing administrative burden in the EU (OECD, 2015[10]). In recent years, the Commission has conducted a number of fitness checks evaluating the regulatory framework covering specific sectors or policy areas, such as for consumer law.
Figure 4.5. Ad hoc reviews of the stock of regulation/legislation conducted in the last 12 years
Note: Data is based on 28 EU Member States
Source: Indicators of Regulatory Policy and Governance Survey 2017, http://oe.cd/ireg.
Considering that all EU Member States are exposed to the same EU acquis communautaire and consequently share a considerable amount of content of regulations and political objectives as defined in the EU treaties, reviews based on comparisons across countries or regions can be particularly useful in the EU context. However, only a small minority of countries conducted reviews of this kind in the last 12 years. Conducting cross-jurisdictional reviews more frequently could help countries to identify opportunities for improvement in specific areas, address inconsistencies between jurisdictions and identify gold plating in the implementation of EU-law (see Box 4.3)
Box 4.3. Comparing regulatory processes and outcomes across EU Member States
In Denmark, the EU Implementation Council can initiate so-called “neighbour checks”, i.e. reviews of methods used to implement EU legislation in other Member States with the aim to identify best practices (see Chapter 1, Box 1.2). In 2016, the Danish Ministry of Energy, Utilities and Climate compared the transposition of the Energy Efficiency Directive in Denmark with the implementation in Sweden, Finland, Germany and the United Kingdom. The report identified, inter alia, inconsistencies with regards to the definition of large enterprises subject to mandatory energy audits, which have been subsequently clarified by the European Commission.
In 2013, the Netherlands carried out a comparative study comparing regulatory burden to SME’s in the bakery sector across selected EU Member States. The evaluation compared the impact of the regulatory frameworks in the Netherlands, Lithuania, Spain and Ireland. The assessment included the effects of EU directives, EU regulations and national laws and regulations. The purpose of the comparison was to assess whether significant differences exist in the implementation of national and EU legislation resulting in regulatory burden and to provide recommendations how to achieve significant reductions for the particular sector. The review identified opportunities for improvement in national as well as EU legislation. For instance, the report concluded that the use of exemptions and lighter regimes for SME bakeries in EU legislation can reduce regulatory burdens and improve the economic viability of these businesses.
Italy compared in 2016 its notification requirements for food business operators with those in France, Spain and the United Kingdom. The review revealed cases of gold plating: in particular, some information required to be provided to the public administration in notification forms for the registration of food businesses was identified as redundant or not required by legislation. As a result of the review, Italy revised and standardised the notification requirements in line with practices in other European countries.
Source: Indicators of Regulatory Policy and Governance Surveys 2017; SIRA Consulting (2013), The CAR-Methodology applied to SME bakeries and a Scoping Comparison of Regulatory Burden in four EU Member States: Final report, study commissioned by the Dutch Ministry of Economic Affairs, Netherlands; Implementeringsrådet (2018), “Oversigt anbefalinger nabotjek”, https://star.dk/media/6417/oversigt-implementeringsraadets-anbefalinger-og-iu-svar-nabotjek.pdf (accessed September 2018).
Ongoing stock management
Governments are increasingly trying to limit the flow of regulatory costs stemming from new regulations and reduce the existing regulatory stock. One of the approaches that has been gaining ground in the last five years is offsetting new regulations by reducing the existing ones (Trnka and Thuerer, 2019[11]). While not strictly forms of evaluation in themselves, regulatory offsetting approaches such as stock-flow linkage rules or net regulatory burden reduction targets can provide a strong motivation for regulators to evaluate the worth of regulations in place. However, they need to be applied cautiously and it is important to consider both costs and benefits of a regulation before changes to regulations are made (OECD, Forthcoming[3]).
The use of stock-flow linkage rules, i.e. requirements to remove or rationalise existing regulation when introducing new regulations (e.g. one-in one out rule), is not yet widespread among EU Member States. Currently, only ten Member States have formalised stock-flow linkage rules in place, requiring removal of existing regulations when introducing new ones or to reduce ‘red tape burdens’ by certain amounts annually. This includes a great variety of approaches among EU Member States (see Box 4.4). Out of the countries having employed regulatory offsetting approaches, only France, Germany and the United Kingdom have conducted independent evaluations of the efficiency and effectiveness of these programmes, indicating that there is still a lack of knowledge how such requirements affect the regulatory process and regulatory outcomes.
Box 4.4. Approaches to regulatory offsetting in selected EU Member States
While the core idea of regulatory policy as promoted by the OECD has always been based on juxtaposing costs and benefits stemming from regulations in order to reach a conclusion as to the desirability of regulation, many OECD countries have added other regulatory management tools and techniques focusing on measuring and reducing regulatory costs in isolation.
The offsetting approach has its roots in setting net quantitative targets for reducing administrative (or later compliance/regulatory) costs, pioneered in the Netherlands in the 1990s with introducing a method to quantify administrative burdens in monetary terms – the Standard Cost Model – accompanied with a government commitment to reduce administrative burdens by 25% within five years (OECD, 2010).
The United Kingdom was the first OECD and EU country introducing an “One-In, One-Out” policy as an official government policy in 2011. The programme was deemed so successful that the Government decided to go further and double the offsetting by introducing the “One-In, Two-Out” approach. In 2015, the approach was even strengthened so every pound of newly created regulatory costs must be offset by a reduction of 3 pounds (“One-In, Three-Out”).
France established a regulatory offsetting policy in 2013. The “gel de la réglementation” requires departments to both offset the increase in costs to businesses and to remove (or, if not possible, simplify) an existing regulation when a new one is enacted. Costs to local governments and citizens are also considered. The policy was replaced by a two-for-one policy (“maîtrise du flux des textes réglementaires”) in 2017. The offsetting obligation was doubled with the intent to impose greater control of the flow and reduce the stock of regulatory texts.
In Germany, the “one-in, one-out” rule was introduced by the Government through its decision in 2015 as part of its “Bureaucracy Reduction and Better Regulation” agenda. With the start of the programme in 2006, the German Government set a goal “to cut measurably the costs of bureaucracy … and to avoid new information obligations.” While the concept of measuring compliance costs was adopted in 2011, the council of ministers stated in June 2014 that the Government’s “aim is to reduce the existing compliance costs”.
More recently, Spain introduced their version of regulatory offsetting and Finland has completed a pilot project testing a one-in, one-out policy.
While the scope of these approaches differs between all countries, the United Kingdom, Germany and Spain excluded regulations implementing EU legislation from the offsetting obligation.
Source: Trnka, D. and Y. Thuerer (2019), “One-In, X-Out: Regulatory offsetting in selected OECD countries”, OECD Regulatory Policy Working Papers, No. 11, OECD Publishing, Paris, https://dx.doi.org/10.1787/67d71764-en; OECD (2010), Why is Administrative Simplification So Complicated? Looking Beyond 2010, Cutting Red Tape Series, OECD Publishing, Paris, https://doi.org/10.1787/9789264089754-en.
Methodology of ex post evaluation
Ex post evaluation can entail a wide range of criteria and methodological approaches. However, some common features to be considered in an evaluation framework can be identified (OECD, 2018[1]):
Relevance – Do the policy goals cover the key problems at hand?
Effectiveness – Was the policy effective in achieving the intended outcomes? Have there been perverse/negative effects?
Efficiency – Is the regulation the most cost-effective solution to a given issue? Have there been any unintended consequences?
Alternatives – What are the potential alternatives to the regulation, including regulatory or non-regulatory options?
Coherence – Is the regulation coherent with existing regulations?
Standards and guidance for conducting ex post evaluation
Evaluations of laws and regulations, like regulations themselves, need to be underpinned by a sound methodological framework. Setting quality standards for ex post evaluations and providing guidance to regulators can ensure both developing and maintaining sufficient expertise in the public administration as well as to ensure quality control of externally conducted evaluations.
The survey data reveal that about half of all EU Member States provide methodological guidance documents to regulators that conduct ex post evaluations (Figure 4.6). This includes those countries that systematically require a periodic review of existing regulations. However, countries such as Belgium, France, Poland and Sweden have published guidance documents, despite no formal requirement to systematically conduct ex post evaluations. A third of EU Member States have invested in developing standardised evaluation techniques such as scientific and statistical methods, which are required to be used when existing regulations are evaluated.
The European Commission has put a strong focus on strengthening and refining its guidance and methodology for conducting ex post evaluations, most recently with the latest revision of the Better Regulation Guidelines and Toolbox in 2017. These documents include a set of required minimum evaluation criteria to be fulfilled when conducting ex post evaluations (European Commission, 2017[12]).
Figure 4.6. Guidance and standardised evaluation techniques available
Note: Data is based on 28 EU Member States.
Source: Indicators of Regulatory Policy and Governance Survey 2017, http://oe.cd/ireg.
Assessing the effectiveness and efficiency of regulations
In order to effectively review and provide recommendations to improve existing laws, it is important to determine if the regulatory framework achieved its desired objectives, if the law was implemented efficiently and effectively, and to what extent any (unexpected) impacts of the regulatory intervention were properly addressed (Allio, 2015[13]; OECD, Forthcoming[3]).
Only five EU Member States and the European Commission require a systematic assessment of the underlying policy goals of existing regulations (Figure 4.7). This includes Austria, Denmark (for primary laws), Germany, Italy and the United Kingdom. This is somewhat unsurprising considering that only a few countries are required to systematically define a process and the methodology to assess the achievement of the regulation’s goals when developing regulations (see Chapter 3).
Similarly, very few EU Member States systematically compare the actual impacts of regulations against the baseline scenario of expected impacts identified ex ante. Such a baseline assessment can be particularly useful to establish an initial picture against which the expected and actual effects can be measured. Systematically comparing the impact of the existing regulation against alterative options is rare in EU countries. This indicates that most Member States do not consider ex post evaluations as an opportunity to look beyond the effects of the chosen regulatory option and revisit whether other options might be more effective or efficient in achieving regulatory goals. Finally, EU Member States do not systematically extend the scope of ex post evaluations beyond the individual regulation under scrutiny to identify and address regulatory inconsistencies and overlaps between regulations or comparable international instruments.
Figure 4.7. Core elements of ex post evaluation
Note: Data is based on 28 EU Member States.
Source: Indicators of Regulatory Policy and Governance Survey 2017, http://oe.cd/ireg.
The European Commission has enshrined its assessment criteria for ex post evaluation, including an assessment whether the underlying policy goals of regulation have been achieved, in its Better Regulation Guidelines (see Box 4.5).
Box 4.5. Assessment criteria for evaluating EU legislation
According to the Better Regulation Guidelines of the European Commission, all evaluations and fitness checks of EU regulatory initiatives are required to assess a set of evaluation principles. These evaluation principles form the key questions every evaluation has to answer and can be extended if necessary:
1. Effectiveness: The evaluation should analyse the progress made towards achieving the objectives of the intervention, looking for evidence of why, whether or how these changes are linked to the EU intervention.
2. Efficiency: The evaluation should always look closely at both the costs and benefits of the EU intervention as they accrue to different stakeholders, identifying what factors are driving these costs/benefits and how these factors relate to the EU intervention.
3. Relevance: The evaluation must look at the objectives of the EU intervention being evaluated and see how well they (still) match the (current) needs and problems.
4. Coherence: The evaluation should look at how well the intervention works: i) internally and ii) with other EU interventions.
5. EU added value: The evaluation should consider arguments about the value resulting from EU interventions that is additional to the value that would have resulted from interventions initiated at regional or national levels by both public authorities and the private sector.
Source: European Commission (2017), “EU Better Regulation Toolbox”, https://ec.europa.eu/info/better-regulation-toolbox_en (accessed August 2018).
Consideration of costs and benefits
Just as a well-designed (RIA) seeks to assess the likely net benefits of a new regulation, ex post reviews “ideally need to determine the extent to which these have been realised in practice” (OECD, Forthcoming[3]). However, identifying costs and benefits of a regulation during ex post evaluations remains sporadic and on an ad-hoc basis in EU Member States. Overall, the survey results substantiate the impression that there is a gap between requirements to identify and assess costs and benefits during the development phase of a regulation (see Chapter 3) and the ex post review of existing regulations.
Across EU Member States, around half of the countries include an assessment of costs in ex post evaluation, with a similar number of countries requiring an assessment of benefits (Figure 4.8). However, when required, it is mostly on a non-systematic basis for selected policy areas. All evaluations of EU legislation by the European Commission are required to identify both costs and benefits of a regulation as part of assessing the efficiency of regulation (see Box 4.5).
Figure 4.8. Requirements to assess and quantify costs and benefits
Note: Data is based on 28 EU Member States.
Source: Indicators of Regulatory Policy and Governance Survey 2017, http://oe.cd/ireg.
Conducting ex post evaluation in practice – the organisational context
Who prepares ex post evaluation?
In the majority of EU Member States, evaluations are conducted by the department responsible for developing the regulation. Depending on the complexity and sensitivity of the reviewed area however, there are different rationales for deploying either internal or external resources for conducting ex post evaluations. For many regulations, evaluations are indeed best conducted within the department or ministry having policy responsibility, given the familiarity with developments over the life of a regulation and the ability to draw on relevant skills and undertake reviews at relatively low cost. The employment of external consultants can be useful in supplementing government expertise, particularly when specialised skills are called for. The rational for an arm’s-length’ or independent review process might be particularly present the more “sensitive” a regulation and the more significant its economic or social impacts (OECD, Forthcoming[3]).
In most of the EU Member States, ex post evaluations for primary laws are prepared by the official or department responsible for developing the regulation. Approximately a third of Member States also delegates ex post evaluations to private-sector consultants or academics (Figure 4.9). Given that in almost three quarters of Member States, evaluations are conducted by regulators in the public administration, providing and developing more and better methodological guidance for these regulators gains even more importance.
Figure 4.9. Bodies responsible for preparing ex post evaluation
Note: Data is based on 28 EU Member States.
Source: Indicators of Regulatory Policy and Governance Survey 2017, http://oe.cd/ireg.
A surprising finding from the survey data is that in only few EU Member States, ex post evaluations are carried out by bodies outside the executive. In only around a quarter of Member States, evaluations are conducted by a standing body, a unit in the parliament or legislature or a group or committee outside government. Where the legislature is involved in conducting ex post evaluations, it can play a crucial role in institutionalising ex post evaluation into the regulatory cycle (see Box 4.6).
With regards to ex post evaluation conducted by the European Commission, the Commission’s better regulation guidance, applicable since 2015, requires that an evaluation be carried out by the lead Directorate‑General (DG). The lead DG can outsource part of the work to consultants or academics to support the evaluation. The responsibility for setting the scope of the evaluation, the evaluation questions and the final report, however, remains with the DG. Outside of the European Commission, the European Parliamentary Research Service’s Directorate for Impact Assessment and European Added Value has developed capacities to conduct ex post evaluation of existing regulations (European Parliamentary Research Service (EPRS), 2018[14]). Notably, the research service can provide parliamentary committees with ex post reviews of the implementation of specific existing EU laws or policies.
Box 4.6. Ex post evaluation by national parliaments in Belgium and the United Kingdom
In Belgium, the Parliamentary Committee for Legislative Monitoring is charged with evaluating laws that have been enacted for at least three years. It has to identify possible implementation difficulties (due to complexity, loops, incoherence, vagueness, contradictions) and assess how the law has effectively responded to its initial objective.
Requests can be sent by a large number of stakeholders (any administration in charge of implementing law; any authority in charge of law enforcement; any natural or legal person; and deputies and senators). The work of the committee is also to be fed by reports from the Court of Cassation and tribunals on difficulties encountered with laws and from the decisions of the Constitutional Court.
In the parliament of the United Kingdom, all laws are considered by committees for post legislative scrutiny since 2008 although only a small minority is chosen for a detailed inquiry and report. Ex post evaluation have traditionally been undertaken by experts in the Library of the Houses of Commons and Lords and, since 2002, by a designated Scrutiny Unit that takes on scrutiny and evaluation functions (UK Parliament website). Up to 20 staff strong, the Unit carries out evaluations upon initiative of the chairs of the committees while nonetheless abiding with the principles of political impartiality and objectivity.
The Unit assists and co-ordinates the work of legislative scrutiny by first providing a briefing for the committee that presenting basic sources for analyses. This briefing will enable the Committee to come to a judgment as to whether to hold a full and more detailed inquiry. If that is the case, the Unit, along with the designated Committee staff plans and undertakes a programme of research and evaluation to support the committee’s inquiry. The Unit assist with the organisation of hearings, interviews as well as online consultations to gather evidence for affected parties and experts but also provides direct statistical or financial information.
One main area of post evaluation work relates to that Departmental Annual Reports, which outline to parliament and the public how each government department is organised, what it is spending its money on, what it is trying to achieve and how it is performing. Scrutinising these reports is one of the core tasks of departmental select committees, with the collaboration of the Scrutiny Unit.
Source: Allio, L. (2015), “Ex post evaluation of regulation: An overview of the notion and of international practices”, in Regulatory Policy in Perspective: A Reader’s Companion to the OECD Regulatory Policy Outlook 2015, OECD Publishing, Paris; UK Parliament website, “Scrutiny Unit”, www.parliament.uk/scrutiny (accessed August 2018); OECD (2012), Evaluating Laws and Regulations: The Case of the Chilean Chamber of Deputies, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264176263-en, p. 31ff and Annex B.
Transparency and stakeholder engagement
EU Member States use a variety of mechanisms to involve stakeholders in the review of existing legislation and enhance the transparency of the review process. Stakeholder engagement can be particularly useful in ex post evaluation to provide input how regulations are working “on the ground” and can be a possible channel for regulators to prompt feedback from those parties affected by a regulation. Stakeholders can be involved both in the process of identifying areas that may require reform as well as during the actual review process.
The vast majority of EU Members engage stakeholders in ex post evaluations of regulations (Figure 4.10). Similar to the practices in the OECD overall (OECD, 2018[5]), this is mostly done on an ad-hoc basis for some policy areas rather than more consistently across all policy areas in EU Member States. Engagement ex post is overall less frequent than stakeholder engagement when drafting new regulations (see Chapter 2). EU Member States which have made a commitment to more systematically engage stakeholders in ex post evaluations include Estonia, Italy, Luxemburg, Sweden and the United Kingdom.
With regards to ensuring transparency of the ex post evaluation system, more EU Member States could also make the final evaluation available to stakeholders and the wider public. Lack of information about the outcome of past reviews can reduce the future willingness of stakeholders to participate in the process.
Figure 4.10. Stakeholder engagement and transparency of ex post evaluation
Note: Data is based on 28 EU Member States.
Source: Indicators of Regulatory Policy and Governance Survey 2017, http://oe.cd/ireg.
Apart from engaging stakeholders directly in the review of existing regulations, the majority of EU Member States also have different ongoing mechanisms in place by which the public can provide feedback and make recommendations to modify existing regulations (see Box 4.7). These mechanisms range from electronic mailboxes, which are the most frequently used mechanism to provide feedback, to modifications of regulations triggered through an ombudsman or petitions for reconsideration.
Box 4.7. Involving stakeholders to identify regulator burden of existing regulations: Denmark’s Business Forum for Better Regulation
The Business Forum for Better Regulation was launched by the Danish Minister for Business and Growth in 2012. It aims to ensure the renewal of business regulation in close dialogue with the business community by identifying those areas that businesses perceive as the most burdensome, and propose simplification measures. These could include changing rules, introducing new processes or shortening processing times. Besides administrative burdens, the Forum’s definition of burdens also includes compliance costs in a broader sense as well as adaptation costs (“one-off” costs related to adapting to new and changed regulation).
Members of the Business Forum include industry and labour organisations, businesses, as well as experts with expertise in simplification. Members are invited by the Ministry for Business and Growth either in their personal capacity or as a representative of an organisation. The Business Forum meets three times a year to decide which proposals to send to the government. So far, the proposals covered 13 themes, ranging from “The employment of foreign workers” to “Barriers for growth”. Interested parties can furthermore submit proposals for potential simplifications through the Business Forum’s website. Information on meetings and the resulting initiatives is published online.
Proposals from the Business Forum are subject to a “comply or explain” principle. This means that the government is committed to either implement the proposed initiatives or to justify why initiatives are not implemented. As of October 2016, 603 proposals were sent to Government, of which so far 191 were fully and 189 partially implemented. The cumulated annual burden reduction of some initiatives has been estimated at 790 million Danish crowns. Information on the progress of the implementation of all proposals is available through a dedicated website. The results are updated three times a year on www.enklereregler.dk. The Business Forum publishes annual reports on its activities. The Danish Minister for Business and Growth also sends annual reports on the activities of the Business Forum to the Danish parliament.
Source: OECD Publishing, Paris; OECD (2016), Pilot database on stakeholder engagement practices in regulatory policy: first set of practice examples; www.enklereregler.dk.
The European Commission itself has recently strengthened the involvement of stakeholders in the review of existing regulation and introduced a two‑stage consultation process, similar to the consultation during the development of regulations (see Chapter 2). First, an evaluation roadmap describing the context, purpose and scope of the evaluation is published online in the early stage of the development of an ex post evaluation for stakeholder feedback for four weeks. Following this initial feedback period, open public consultations on the main elements of all evaluations are mandatory during the development of ex post evaluations for 12 weeks. Further, drawing partially on good practices in EU Member States such as the Danish Business Forum or the UK Red Tape Challenge (OECD, 2016[15]), a REFIT Platform was introduced, bringing together representatives of the Commission, Member States and non-government stakeholders. Members of the platform, which are separated into the “government group” and the “stakeholder group”, collect and assess suggestions for regulatory burden reduction from Member States and stakeholders and forward potentially promising proposals to the Commission (European Commission, 2015[16]).
Effectiveness of ex post evaluation
Information on how the ex post evaluation system works in practice is crucial to assess whether it is implemented correctly and achieves its objective of identifying and assessing whether regulations remain appropriate. Given that most EU Member States have yet to develop effective systems to review existing regulations, assessments of ex post evaluations are particularly valuable to identify areas for improvement and reform. This information can provide a useful benchmark to improve the compliance of regulators with requirements to conduct ex post evaluations. However, reports on the functioning of ex post evaluation systems in practice are far less frequent than reports with regards to the performance of the RIA system. This is not surprising given that few countries undertake ex post evaluation on a systematic basis.
Only five out of 28 EU Member States have indicated to report on the effectiveness of the ex post evaluation system, out of which three do so regularly (see Chapter 1). Published reports have provided valuable insights into the gaps of existing practices and in identifying areas for improvement. Austria, for example, publishes annual reports on the ex post evaluation system (“Wirkungsorientierte Folgenabschätzung”). These reports provide an overview of the annual activities of ministries with regards to ex post evaluation as well as insights into the performance of the ex post system as a whole. A finding from the 2017 annual report was that ex post evaluations overall still need to more systematically identify potential areas for improvement when regulations are evaluated (BMöDS, 2018[17]). In France, reports on the ex post evaluation system have been published on an ad-hoc basis. In 2017, the Secretariat-General for Government Modernisation (SGMAP) has commissioned an external evaluation of the public policy evaluation system initiated in 2013. The reported noted, inter alia, that stakeholders could be more actively involved when evaluations are conducted (KPMG/ Quadrant Conseil, 2017[18]).
Information on the performance of the ex post evaluation system of the European Commission are published in the annual report of the Regulatory Scrutiny Board (RSB). The RSB reviews ex post evaluations and fitness checks on major regulations and can provide a negative opinion if an evaluation does not comply with the guidance for evaluations. Based on the findings from its opinions, the RSB raised a number of issues for improvement in its 2017 annual report, such as efforts to collect the necessary information and data as well as the validity of conclusions in evaluation reports. The report also critically reflected the RSB’s review process, noting that the scrutiny often comes too late in the process and it was sometimes not possible for the Commission’s services to fully integrate the Board’s recommendations (Regulatory Scrutiny Board, 2018[19]). In addition, the European Court of Auditors has recently reviewed the ex post evaluation system of the European Commission. The audit noted positively the frequent use of review clauses, “mandating the Commission and/or the Member States to carry out some form of ex post review on the whole or part of the piece of legislation” (European Court of Auditors, 2018[20]). However, it also identified the lack of common inter‑institutional definitions regarding review clauses (European Court of Auditors, 2018[20]).
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