Saturday, 16 January 2010

Top 100 EU Regulations to Cost UK Economy £184 billion by 2020

Next British Government must tackle EU overregulation
Open Europe recently published a 'Top 100 list' of the most costly EU regulations introduced in the UK since 1998. Based on the UK Government’s own impact assessments, Open Europe estimates that the top 100 existing EU laws will cost the UK economy a staggering £184 billion between 2010 and 2020, even in the unlikely event that no new regulations are be passed during that time period.

For the same amount of money, the UK could abolish its entire budget deficit.

Open Europe finds that while the UK benefits from some of these regulations, many laws originating in Brussels are overly prescriptive and unnecessarily burdensome. An incoming UK Government must take a radical new approach to EU legislation.

Open Europe’s Research Director Mats Persson said:
"Despite some attempts at reform, the cost of EU regulation continues to rise year on year. Some of these regulations might be helpful but far too often the cost of EU rules outweigh the benefits. The UK is facing a massive public deficit, so the Government should be doing everything it can to save money. Targeting even just a few of the most costly EU regulations could save taxpayers and business billions every year.
"There is almost no point in trying to cut regulation without concentrating on EU rules, since 72% of the total cost of UK regulation now originates in Brussels. The next UK Government must take a new, radical approach to cutting red tape, and this means getting smarter and tougher when negotiating in Europe.
To read the full Top 100 list, click here.

The top four most costly EU regulations by 2020 are:
  1. The Working Time Regulations Cost by 2020: £32.8 bn Prescriptive working time rules which have caused massive problems for the UK’s public sector, including compromising NHS patients’ safety, according to a recent Government report.
  2. The Climate Change Act 2008 Cost by 2020: £28.2 bn A slew of new energy targets and rules which will add £130 to £200 a year to the annual domestic energy bill for a family of four in Britain. The package does not represent the most cost effective way to cut carbon emissions.
  3. Energy Performance Certificates for buildings Cost by 2020: £20.2 bn This Directive gave rise to the Home Information Packs, which have been widely criticised by estate agents, chartered surveyors and consumer groups for creating extra costs for home owners while providing little benefit.
  4. Temporary Agency Workers Directive Cost by 2020: £15.6 bn New rules for temporary agency workers, which, according to former Business Secretary John Hutton, could consign “literally thousands of people to benefit dependency“ in the UK.

For more information on Open Europe’s proposals for how to tackle EU overregulation, see here (Chapter 5).

All cost estimates are based on the UK Government’s own impact assessments for regulatory proposals. The sources used to obtain the impact assessments included department websites, command papers produced by the Department for Business every six months, the House of Lords library, and the Office of Public Sector Information website. In a few cases, we also used other sources in order to verify costs and undertake further research on proposals.

Where regulations do not run until 2020, or are not implemented until after 2010, the cost estimates have been adjusted accordingly.

To reflect the fact that impact assessments in different years are likely to present estimated costs and benefits in terms of different years’ prices, estimates have been adjusted for inflation, so that all figures are presented in 2010 prices. The costs have been adjusted using the Treasury’s GDP deflator series, last updated September 2009. Where an impact assessment does not state which year’s prices have been used, it has been assumed that costs and benefits are expressed in terms of prices in the year that the impact assessment was published.

The Present Value (PV) of the cost of regulation in 2020 was calculated using the discount rate of 3.5 percent recommended in the Treasury’s Green Book. Where regulations have not been implemented until November/December of a particular year, those costs have only been counted in the year immediately after the implementation year.

Further information on the methodology used for the 'Top 100 list' can be found in 'Out of control? Measuring a decade of EU regulation' – Annex 1.

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