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.

Open Europe publishes 50 new examples of EU waste

Today, the EU's accountants – the European Court of Auditors (ECA) – have published their annual report on the EU’s budget. The ECA has refused to give the EU’s accounts a clean bill of health for the 15th year in a row, owing to fraud and mismanagement in the budget. Like last year, the auditors did sign off the Commission’s own accounts, saying that they accurately represented how much money was raised and spent.

Although the ECA’s report is about the management of the accounts, the occasion represents an opportunity to take stock of the EU budget as a whole. Because while mismanagement of the accounts continues to be problematic, arguably the most important issue is the fact that the EU budget is hugely wasteful and irrational in terms of what the money is actually spent on, and where the money is spent.

The budget is dominated by two failing policies which even the current UK Government is essentially opposed to: the Common Agricultural Policy, and the so-called Structural Funds. The sheer size and complexity of these two top-down spending programmes means the EU's budget is wide open to waste and mismanagement, regardless of whether the blame lays with the Commission or the member states. The budget therefore represents extremely bad value for taxpayers' money.

To illustrate this, Open Europe has produced a list of 50 new examples of EU waste. The list is by no means comprehensive, but designed to show the types of peculiar projects on which EU money has been wasted in the past. They give a light-hearted illustration of what is wrong with the EU budget, and the need for fundamental reform.

Open Europe Research Director Mats Persson said:

"The Commission tries to put the blame for fraud and waste on the member states, but the real problem is the EU budget itself. The EU’s spending programmes are overly complex, irrational and hopelessly out of date. Until they are subject to root-and-branch reforms, or scrapped altogether, waste and fraud will continue.

"Too often, EU money is wasted on inefficient projects which are based on unrealistic expectations or for which there is no real demand. Because of the way the EU’s spending schemes are set up, bizarre or wasteful projects can receive funding which never would have received money if subject only to national spending priorities. Unfortunately, the focus of the EU budget is to get the money out of the door, not to spend the money wisely.

“Surely, in a recession, we can think of better ways to spend £100 billon a year?"

To read Open Europe’s 50 new examples of EU waste see here:

Here are the top five examples of EU waste:

• €173,000 for a luxury golf resort €173,274 in EU funds were given to the luxury golf resort, Monte da Quinta Club, in the Algarve, Portugal, where guests can choose between “the comfort of a villa with garden and private pool, or be dazzled by deluxe suites”. There is also a luxury spa, health club, several restaurants and bars, shops and a hairdresser.

• €2,500 for Chairman of Porsche’s hunting retreat Wolfgang Porsche, supervisory board Chairman of Porsche, received €2,500 in EU rural development funds for a small estate in Bavaria, Germany, where he goes hunting in his free time.

• €100,000 for a luxury Spanish hotel chain €99,877 in EU funds for 2009 alone were granted to Tils Curt, a chain of luxury restaurants and hotels across Spain, established in 1880. The funds were given as part of the Regional Development Fund.

• ‘Donkeypedia’: the blogging donkey As part of the EU’s €7 million ‘Year of Intercultural Dialogue’ initiative, the European Commission ran an art education project called “Donkeypedia”, in which a donkey travels through the Netherlands, and primary school children meet and greet the donkey. The aim of the project was

"creating a reflection of all European identities. What are the similarities, what are the differences? What is it that makes Europe as unique as it is? Donkeypedia will try to make this feeling tangible by interacting and in dialogue with its surroundings while walking a European route through several countries and collecting data to support this image."

The donkey, named Asino, also maintained a blog throughout the walk. One entry reads:

"We started really early today, Cristian slept in a bed in a house. It was a crazy morning waking up. I was under a chestnut tree sleeping in sand, when I opened my eyes there were animals all looking at me. I was embarrassed! Now I understand a little how people from different cultures may feel in the Netherlands."

• €80,000 for a Swedish ‘virtual city’ in Second LifeIn early 2008, Sweden’s third largest city, Malmo, was given an EU grant worth 800,000 Swedish kronor (€80,000), to create a virtual version of itself in 'Second Life' ­- a virtual fantasy world inhabited by computer-generated residents. The project was an attempt to reach out to young people and envisioned some of Malmo’s most famous buildings - such as its library and university - to be mirrored in Second Life. In addition, the project included plans for a virtual 'citizens' office', in which City officials could do their work and meet with those inhabitants of Malmö who were active in Second Life (the number of Malmo residents active on Second Life is thought to be very small).

In May 2009, Malmo was launched as a 'virtual city'. By then, the budget had been busted – and the project had been subject to massive criticism, as Second Life was no longer regarded as the future of social media – particularly not amongst young people. One of the politicians involved in the project said:

"Malmö wants to be at the forefront of IT, but we’re aware that Second Life is probably not at the absolute forefront anymore."

Joakim Jardenberg, of Swedish IT company Mindpark, added that he thought the project was a 'bizarre joke' at first.

"Second Life has never been particularly popular in Sweden. Facebook would have been a better tool"

. In March 2010 the project will be evaluated. If virtual Malmo does not have enough visitors by then, the project will be shut down.