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3rd Dec 2022

Small businesses could save €41bn on EU red tape

  • Small businesses should be exempted from EU regulation "wherever possible" - expert group (Photo: Flickr.com)

Small businesses should be exempted "wherever possible" from EU law, according to an expert group tasked with slashing red tape.

The recommendations, which would exempt small firms from a raft of EU laws aimed at improving health and safety or social policy, are contained in a non-binding report by the High Level Group on Administrative Burdens.

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Chaired by Edmund Stoiber, the conservative former first minister of Bavaria, the report will be unveiled on Tuesday (October 14) by European Commission chief Jose Manuel Barroso. The 15-member group was set up in 2007 and advises the EU executive on how to reduce the bloc's regulatory burden.

The political objective of regulation has become "predominant whilst any resulting bureaucratic burdens were rarely taken into consideration", says the Stoiber report.

It estimates that its proposals would save businesses €41 billion per year.

The group also urges governments not to go beyond the provisions in an EU law when transposing it into national legislation, saying that a third of unnecessary costs on business are caused by "gold plating".

"SMEs and micro-businesses should be exempted from EU obligations as far as this is possible," it notes.

The report calls on the EU to establish a new body to scrutinise the impact assessments of commission proposals, and to “assess the evidence base for and the costs and benefits of” future regulation.

It would also set up a red tape Ombudsman.

But the paper has been publicly disowned by four members of the panel, who represent trade unions, consumer and environmental groups, and who drafted a minority opinion.

Focusing on exemptions "is the wrong approach, and would deprive policy making of much of its effectiveness," they say, adding that new targets for reducing regulation would be "shortsighted as it reduces the range of tools that policy makers have to address as well as unresolved problems."

Reducing red tape on business has become a mantra for governments and the EU executive in recent years.

Last autumn, a task force appointed by UK prime minister David Cameron made 30 recommendations to reform or scrap EU rules. It said that exempting small firms from health and safety reporting requirements would save €2.7 billion.

It also called for small businesses to have special treatment when applying legislation on maternity leave and temporary agency workers.

Meanwhile, Frans Timmermans, the Dutch commissioner-designate, has been appointed specifically to promote "better regulation".

Legislation regulating the use of chemicals, known as Reach, has been cited as the most burdensome EU law by small businesses, along with rules on maternity leave and temporary workers.

The EU's executive arm previously said it has already cut 5,590 rules and reduced the bureaucratic burden on firms by €32 billion since 2005. It also launched its Refit initiative, aimed at streamlining the EU's rule book, last year.

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UK prime minister David Cameron has praised the European Commission's commitment to slashing red-tape on businesses saying there had been a "sea change in thinking" by Brussels.

Barroso backs major anti-red tape scheme

EU businesses could save up to €40 billion a year in administrative costs out of their total annual burden of €360 billion, if the EU adopted proposals tabled by a European Commission advisory group.

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New EU laws will have to get the green light from an independent scrutiny panel to make sure they don't impose unnecessary burdens on businesses, a leaked document says.

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