Vermindering administratieve lasten: EU-pilot start in Nederland en Denemarken (en)

In response to the June 2006 European Council conclusions and within the competitiveness framework of the re-launched Lisbon agenda, in early 2007 the Commission will launch a major Action Programme to measure administrative costs and reduce administrative burdens generated by existing legislation in the EU.

The Commission paper sets out a possible road map for achieving a cut of 25% in administrative burden, based on a partnership between the EU Institutions and the Member States. A common methodology for measuring costs in agreed priority areas and common principles for reducing these burdens are at the heart of this approach. Progress would be monitored through agreed partial targets as well as intermediary targets.

The plan will build on the previous experience developed by four Member States (UK, NL, DK and CZ) that have already set reduction targets after completing large baseline measurements. There are presently only four Member States which have fully measured administrative costs. However, an assessment based on an extrapolation of Dutch data suggests that administrative costs may amount to circa 3.5% of GDP in the EU.

Administrative costs are important since businesses across the EU are required to spend considerable amounts of time filling in forms and reporting on a wide range of issues. By reducing unnecessary reporting requirements company employees can spend more time on core business activities which may reduce production costs and allow additional investment and innovation activities to materialise, which in turn should improve productivity and overall competitiveness.

Administrative costs by Member State in share of GDP

Based on Kox (2005): Intra-EU differences in regulation-caused administrative burden for companies. CPB Memorandum 136. CPB, The Hague. BL combines Belgium and Luxembourg; RE combines the Baltic Member States, Malta and Cyprus; EU-25 figures are GDP-weighted averages

In 2004 the CPB, the Dutch Bureau for Economic Policy Analysis, estimated that reducing the administrative costs by 25 % would eventually lead to an increase in EU GDP of 1.6%. Recent work carried out by the Commission services, building up on CPB estimates, indicates that a 25% administrative cost reduction may yield significant benefits of up to 1.5%- or some €150 billion- in the level of GDP.

GDP effects by 2025 of a 25% reduction in administrative costs

Administrative costs mean the costs incurred by enterprises, the voluntary sector, public authorities and citizens in meeting legal obligations to provide information on their activities (or production), either to public authorities or to private parties. They are different from compliance costs which stem from the generic requirements of the legislation, such as costs induced by the development of new products, or processes that meet new social and environmental standards.

An important distinction must be made between information that would be collected by businesses even in the absence of the legislation and information that would not be collected without the legal provisions. The former are called administrative costs; the latter administrative burdens. The Commission's Better regulation strategy is aimed at measuring administrative costs and reducing administrative burdens. Administrative cost reduction measures are limited to streamlining information requirements and do not affect the basic design of the underlying legislation. This suggests that simplification measures to reduce administrative costs are developed more easily than measures aimed at changing the nature or the scope of the underlying legislation.

Given their nature and in light of experiences in Member States which have developed administrative cost reduction programmes, these reduction measures should be relatively straightforward to decide and implement. Such measures are therefore fundamentally different from deregulation initiatives. Administrative requirements can be further broken down into information obligations (IOs). This can best be explained as follows: a piece of legislation may contain requirements for submitting information (i.e. submitting a certificate of conformity to a public authority, on a regular basis). Each specific requirement in the legislation is defined as an IO.

In addition, a distinction must be made between information that would be collected by businesses even in the absence of the legislation and information that would not be collected without the legal provisions. The former are called administrative costs; the latter administrative burdens.

Part of the Better regulation strategy is aimed at measuring administrative costs and reducing administrative burdens.

EU, transposition of EU law or Member States: Who is responsible for administrative burden?

Only three baseline measurements carried out by Member States allow the breakdown of costs into categories A, B and C as identified below. Data from the Dutch and Danish measurements suggest that a minor part of the cost originate from transposition and implementation measures, while substantial costs are related to national and international obligations. The UK data are not yet fully available, but will be published shortly; however, the data, shared with the Commission to facilitate the piloting, seem to underline the importance of national obligations. It is evident that a considerable amount of costs originate at national level, which calls for a strong national commitment, alongside the Commission efforts, to improve the business climate.

Source: Denmark and Netherlands baseline measurement

The next steps

The European Commission envisages a number of steps in its Strategic Review of Better Regulation in the European Union. These include the presentation in early 2007, an action programme to reduce administrative burdens on the basis of consultation results on this Commission working document and the Strategic Review of Better Regulation to which it is attached. This Action Programme will also contain proposals for immediately taking action as regards the "low hanging fruits" (identified initiatives that are ripe for action).

It also envisages that the spring 2007 European Council could, on this basis, take the following decisions:

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  Set an overall target for reducing administrative burdens in the EU;
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  Agree the priority areas for costs measurement and burdens reduction;
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  Endorse the methodology for measurement proposed in the Action Programme, and,
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  Agree the list of "low hanging fruits" for immediate action.

The benefits of such an approach could be very significant, but the resources needed to undertake these efforts should not be underestimated. Firm commitment will, therefore, be essential to deliver the results.

Member States should, in the meanwhile, take similar actions at national level and should deliver on clear commitments to administrative burden reduction during the same period. Progress in such efforts should be reported in the National Reform Programmes and will be evaluated in the context of the Annual Progress Reports to the Spring European Council.

Comments and suggestions on the approach outlined in a Commission staff working document are eagerly sought. All interested parties are invited to contribute. On the basis of this consultation, the Commission will finalise its proposal for an Action Programme for measuring administrative costs and reducing administrative burdens in the EU due to be presented in early 2007.

More information: See the Commission working paper Measuring administrative costs and reducing administrative burdens in the European Union

http://ec.europa.eu/enterprise/regulation/better_regulation/index_en.htm