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EU: Regulation

Volume 687: debated on Tuesday 12 December 2006

asked Her Majesty’s Government:

Whether they accept Commissioner Verheugen’s estimate that European Union regulation is costing €600 billion per annum to European Union member states’ economies.

My Lords, this figure is one of a number of recent estimates of the total administrative costs of EU and national legislation, but it is not used by the Government. The Government estimate that the total administrative burden on business, charities and the voluntary sector in England derived from EU legislation is approximately £6.3 billion, or €9.2 billion, per annum. This estimate excludes the costs of EU administrative burdens on financial services, which are not available in this format.

My Lords, I thank the Minister for that Answer. Whatever the exactitude of the figure that has been quoted by Commissioner Verheugen, is it not curious that against the Commission’s intention to reduce the administrative burden in Europe by 25 per cent in the medium term, his concerns about competitiveness in relation to the costs of regulation have met with such hostility? Do the Government consider there to be the right balance between the views of his camp, which, bearing in mind his position, is concerned with competitiveness, and the views of those who consider rules and regulations to be a cohesive factor socially and politically in Europe?

My Lords, I think the noble Viscount will recognise that the Government have worked extremely hard to ensure that Europe takes fair and proportionate regulation seriously. Indeed, we could argue that we have been at the forefront of ensuring that that is the case; but the noble Viscount is right that the balance has to be struck. We think that the balance is about right and that there are many benefits from EU regulation. Given that our economy is one of the most competitive in the world, I think those benefits are clear to all.

My Lords, is this not the follow-up to the Cecchini report, which demonstrated the cost of Europe not having swept away 25 sets of red tape to produce a single market capable of receiving all forms of business and industry? Does my noble friend not agree that the imperative is for all 25 countries of the European Union to establish that market to find jobs and prosperity for the people who live therein?

My Lords, I think we would all recognise that the European Union has brought many benefits and ensured that we have had a successful period of economic growth and prosperity in the United Kingdom. The noble Lord is exactly right to highlight that issue; but we must ensure that we get the balance of regulation right so that those benefits can continue into the future.

My Lords, what are the Government going to do about the problem identified by the Merits Committee of this House in its excellent report on secondary legislation? Even when people agree that European legislation is daft, it is almost impossible to change the secondary legislation because it requires unanimity to put it on to the agenda and to make a change.

My Lords, I thought that the Merits Committee report was very good and that our debate was extremely valuable. That point was well made and was echoed broadly across your Lordships’ House. Clearly, it is an issue to which we will return from time to time. However, I go back to the point that regulation brings many benefits. Our economy is prospering and is very successful. It is about getting the right balance in regulation.

My Lords, I thank the Minister for confirming that Commissioner Verheugen’s figures were putative extrapolations for the long term. The figures that the noble Lord quoted presumably exclude gold-plating by national member states of the European cost figures. Does he agree that, with the 25 per cent reduction that HMG propose in our red tape and bureaucratic costs on business, that, too, reflects on European costs indirectly? How much, for example, are some of the European Union direct costs one-off reflections of the finalisation of the complex single market stages? Does he further agree that our official estimates confirm that the cost of our membership is about £50 per head whereas the benefits in investment and other things are £300?

My Lords, the noble Lord is making a case for effective regulation, with which I entirely agree. We must ensure obviously that we do not have gold-plating. The Davidson report has been widely recognised as providing us with a valuable insight into the allegation that there is excessive gold-plating within the regulatory regime in the UK. I do not think that there is evidence of that, but of course we must be very wary and watchful and ensure that when those examples come forward they are dealt with properly.

My Lords, my noble friend has referred to the economic benefits to the UK from the European single market and the benefits that we have had from the regulations inspired by the European Union. What estimates have been made by the UK Government of those economic benefits and the benefits to public safety of EU regulation? If no estimate has been made, why not?

My Lords, estimates are made of the benefit to the UK economy. It is reckoned that some 3 million UK jobs are related to EU exports and that those jobs generate around £105 billion of British exports each year. There is a clear case and clear evidence that British businesses benefit greatly from our continued involvement in the EU.

My Lords, alongside gold-plating, does the Minister accept that one problem with EU regulation is that the Commission tends to maximise its opportunity to legislate within its competences rather than adopt a light touch? Given that, will he therefore assure us that when the constitution comes back on the agenda the Government will not accept an extension of competences by QMV?

My Lords, I accept that the issue of competences is very important, which is why I spoke earlier about getting the balance right. The noble Lord quite properly raises that issue. But we have to understand that we incorporate EU legislation into our regulatory regime and we have been applauded for the way in which we interpret it. The system is working well. Of course, we can always look for improvement, which is why we aspire to and seek to achieve the 25 per cent figure for reducing the burdens of red tape.

My Lords, by way of underlining Commissioner Verheugen’s point, are Her Majesty's Government aware that the Swiss federal Government have recently estimated that if Switzerland were to join the European Union, it would cost her nine times more—some 5 billion Swiss francs per annum—than her present free trade and other bilateral arrangements with Brussels? Surely, that picture must be the same for EU members, including the United Kingdom.

My Lords, I cannot believe that if we were to withdraw from the European Union, British business would want to go back to a system whereby some 60 million Customs clearance documents were needed every year to ensure that we could export our goods and services to the EU. Does the noble Lord really want to go back to such a system?