Action programme for reducing administrative burdens in the EU

Background

In the context of the renewed Lisbon Strategy, refocused on growth and jobs, the Commission has launched a comprehensive strategy on better regulation to ensure that the regulatory framework in the EU contributes to achieving growth and jobs, while continuing to take into account the social and environmental objectives and the benefits for citizens and national administrations. The EU's Better Regulation policy is aimed at simplifying and improving existing regulation in order to enhance the design of new regulations and reinforce rule compliance and effectiveness in line with the EU proportionality principle.

Following the first strategic review of the Better Regulation initiative in November 2006, the Commission proposed to reinforce the initiative with a far-reaching set of actions, including the launch of an ambitious joint strategy with the Member States to reduce the administrative burden on companies from existing regulation by 25% by 2012. It is estimated that a reduction in the administrative burden of a quarter could lead to an increase of 1.4 % in EU GDP [109 KB] . The resulting Action Programme was launched in January 2007.

The Commission will achieve this target by presenting proposals for legislative changes and practical measures aiming at cutting red tape. Final results will be reported to the Spring 2012 European Council taking into consideration all reduction measures entered into force up to 31 December 2011.

More information about the Better Regulation initiative can be found on the Secretariat-General's site.

The Action Programme on Administrative Burden Reduction is financed under the Competitiveness and InnovationFramework Programme (CIP) which aims to encourage the competitiveness of European enterprises.

Objective and timeline

In January 2007, the Commission presented an ambitious Action Programme aimed at reducing administrative burdens on businesses in the EU by 25% by 2012. The Action Programme was endorsed by the Spring European Council in March 2007 [212 KB] . The Council specifically agreed to the joint reduction target and invited Member States to "set national targets of comparable ambition".
The Action Programme demonstrates in concrete terms the way in which the Commission intends to work with Member States and stakeholders towards the 2012 milestone. Its aim is to measure costs imposed by information obligations (IOs) on business and suppress unnecessary requirements. This will improve the efficiency of legislation without jeopardising the purpose of the legislation in question.

A key part of the Action Programme consists of a large-scale measurement of administrative burdens in 2007-08, to be followed by major simplification proposals. However, in order to produce concrete results in the short term, the Action Programme also includes immediate measures that are likely to generate significant benefits through technical changes in existing rules. Because of the nature of the changes required, these measures can be adopted fairly quickly. They are therefore called 'Fast Track Actions' (FTA).

It is the Commission's intention to continue presenting reduction proposals along two pathways: technical changes should follow fast track procedures where the legislators are asked to agree to assign priority to a swift adoption. At the same time, more substantial changes will be included in the Simplification Rolling Programme .

Figure 1. Timeline Action Programme

Fast Track Actions

The Action Programme includes the fast track actions for immediate measures that are likely to generate benefits through relatively minor changes to existing rules. A first package of 10 fast track actions [18 KB] was announced by the Commission in January 2007 with estimated savings of EUR 1.3 billion for EU businesses. By the end of 2008, eight fast track actions have been adopted and the rest are under discussion.

Examples of successfully adopted measures are:

• removing the requirement of costly expert reports: the stockholders should now decide whether they need written reports in case of mergers and divisions. This simplification applies to more than 600 000 companies across Europe; especially SMEs will mostly make use of the exemptions, saving in average EUR 3 500 for each report;
• simplifying reporting obligations for farmers regarding energy crops: it is now possible to replace the obligatory lodging of a security by the operators with another system offering equivalent assurance for the sound financial control of the system;
• easing the paper work for receiving export refunds for agricultural products: the previous requirement to deliver a copy of a customs document in order to receive refunds paid can now be replaced with IT generated information;
• simplifying statistics obligations on the information society: statistical obligations have been reduced by greatly simplifying the questionnaires. As a result businesses will be met with fewer, more targeted questions;
• removing unnecessary requirements for small fishing vessels.

2008: Second Package of fast track actions

In March 2008, the Commission presented a list of 11 new fast track actions [46 KB] . Unnecessary administrative burdens were identified on the basis of internal reviews and suggestions received from stakeholders and Member States' experts.

The newly established High Level Group of Independent Stakeholders on Administrative Burdens expressed general support for the 2008 FTA package and called for the European Parliament and the European Council to introduce new procedures for the quick adoption of simplification proposals. For details see 2008 Fast Track Actions to reduce administrative burdens in the European Union [140 KB] .

Baseline measurement

In the Action Programme, priority is given to 42 legal acts [27 KB] grouped in 13 areas and estimated to account for over 80% of administrative burdens of EU origin. The priority areas were selected based on a 2006 pilot study [2 MB] and include areas such as agriculture, company law, cohesion policy, financial services, statistics, food safety, tax law, and transport.

In January 2009, the scope of the Action Programme was extended to another 30 legal acts (see annex 9 [20 KB] of the January 2009 Communication).

All information obligations in the 72 legal acts and their national transposition acts have been identified. The resulting costs imposed on businesses have been measured. The Commission - following the example of most of the Member States embarking on a similar exercise - has hired a consortium composed of the consultant companies Capgemini, Deloitte and Ramboll Management to assist in this measurement programme. The methodology used for the measurement is based on the so-called ' EU Standard Cost Model', inspired by different variants of the Standard Cost Model (SCM) currently used in a number of Member States.

The aim then is to identify obsolete or repetitive information obligations which should be clearly distinguished from legislative design features consistent with or necessary for achieving the benefits of legislation. Abolishing such information obligations will improve the effectiveness of legislation without jeopardising the purpose of the legislation in question.

Figure 2. Project overview - Modules and calendar

Step 1. Mapping of Information Obligations (modules 1 and 2)

As a first step, the Information Obligations in 42 legal acts [27 KB] within the selected priority areas have been mapped. The twin focus was on IOs stemming directly from EU legislation and on those stemming from the national implementation of EU legislation.

Step 2. Measuring Administrative Costs caused by IO (module 3 and 4)

In this phase, the consultants interviewed businesses throughout the EU to assess the amount of time and money they spent as a result of the previously mapped requirements. For this purpose the EU Standard Cost Model was used.

Several Member States have already started initiatives to reduce the burden on business and citizens, with some impressive results. For example, the Belgian State Secretary for Administrative Simplification has executed the so-called Kafka initiative on administrative burden reduction. In Denmark, the update for the Parliamentary year 2005/2006 shows that the administrative burdens facing Danish businesses have been reduced by almost 10 per cent compared to 2001. The reduction is a result of the systematic simplification work carried out by the Danish ministries.

Step 3. Developing proposals for reducing Administrative Burdens (module 5)

In the third step of the project, the focus was on developing implementable reduction proposals. A key aspect for the success of this phase was to collect stakeholders' suggestions for reductions.

The Commission is currently analysing these suggestions and adopting executive measures or developing legislative proposals as appropriate.

This will lead to proposals being tabled throughout the programme. Wherever possible, and in line with its 2006-10 e-Commission strategy as well as with its i-2010 strategy for e-Governments in Europe, the Commission will pursue the reduction of administrative burdens by promoting the use of information and communication technologies.

This part of the programme was supplemented by the EU Conference on Cutting Red Tape which was held 20 June 2008 in Brussels, the national events which have been organised in most of the Member States, and the ongoing online consultation.

Summary of work done

The EU baseline measurement has been completed in October 2009 on the basis inter alia of external contracted studies. All EU information obligations concerned have been identified and described ("mapped"), as has been their transposition into national legislation, and corresponding administrative costs have been measured. This work has been conducted in cooperation with the "Single Points of Contact" (SPOC), national correspondents of the Commission appointed by the members of the High Level Group of National Regulatory Experts

The results of the mapping of the IOs stemming directly from EU legislation can be found in the Priority Areas. The studies used to assess the burdens imposed by these EU IOs and the national measures implementing or transposing them are available on the " Externally contracted studies" page. The reduction recommendations presented by the consultants are available on the same page together with an estimate of their impact.

Progress report and way ahead

On 28 January 2009, the Commission presented its progress report [58 KB] on the implementation of the Action Programme as part of the third strategic review of better regulation. The report focuses on the achievements in mapping and measuring administrative costs, achievements in reducing administrative burdens, the preparation of sectoral reduction contributions and the need for coordinated efforts at EU and national level. In the closing section this report, the Commission invited Member States to, inter alia, conclude their national baseline measurement by the end of 2010 at the latest, with a view to implementing their national reduction target by 2012 at the latest. Where necessary, Member States are to take full advantage of the starter kit [insert link to Starter Kit page] developed by the Commission.

The EU Standard Cost Model

In October 2005, the Commission proposed a common EU methodology for measuring administrative costs imposed by legislation - both existing and planned legislation. This methodology is based on the different variants of Standard Cost Models applied in a large number of Member States (for more detailed information on SCM developments, see the SCM network website).

The benefits of the EU Standard Cost Model include:

• bringing clarity about possible differences in procedures followed by the EU institutions and different Member States;
• facilitating cross-country or cross-policy area comparisons, benchmarking, and the development of best practices;
• offering economies of scale in terms of data collection and validation.
• How are administrative costs calculated?
• Administrative costs are measured on the basis of the average cost of the required action (Price) multiplied by the total number of actions performed per year (Quantity).
• Price: The price per activity will be generally estimated by multiplying a tariff (based on average labour cost per hour including prorated overheads) and the time required per action. Where appropriate, other types of cost, such as the cost of equipment or supplies, will be taken into account.
• Quantity: The quantity will be calculated as the frequency of required actions multiplied by the number of entities concerned.

Multiplying these elements gives the basic SCM formula:

∑ P x Q

where P (for Price) = Tariff x Time
and Q (for Quantity) = Number of entities concerned x Frequency

An operational manual for applying the EU model has been integrated in the Commission's Impact Assessment Guidelines [598 KB] , and Annex 10 [915 KB] of these Guidelines.