Test Implementation Presentation of report to the ITRE committee

Barriers and Best Practices in SME Test Implementation − Presentation of report to the ITRE committee Claus Frelle-Petersen | Brussels | 22 November 2...
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Barriers and Best Practices in SME Test Implementation − Presentation of report to the ITRE committee Claus Frelle-Petersen | Brussels | 22 November 2011

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Agenda 1. Key messages 2. The use of the test 3. Barriers and challenges 4. The four recommendations 5. Questions and answers

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Claus Frelle-Petersen | Brussels | 22 November 2011

Key messages

Key messages to you The implementation of the SME test can be improved >Only 15 Member States and the EC apply an SME test or similar test > Uneven and ad hoc application of the test in Member States >The EC services apply the test, but also lack consistency

However, one set of guidelines and one way of testing will not fit all >A ”starter group” of Member States needs to get ”basic” policies fixed first >A ”follower group” of Member States must establish procedures and improve consistency >An ”advanced group” of Member States must work on compliance and ”culture”

The study recommends >Better implementation through a differentiated approach, also at national level >Make the test mandatory and adopt guidelines with specific requirements >Support implementation through training, training certain control measures, help desks etc. >Don’t make the SME test a stand alone test

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Claus Frelle-Petersen | Brussels | 22 November 2011

Agenda 1. Key messages 2. The use of the test 3. Barriers and challenges 4. The four recommendations 5. Questions and answers

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Claus Frelle-Petersen | Brussels | 22 November 2011

The use of the SME test

What is the SME test all about? A four step pre-legislative procedure….

Consultation with SME representatives

Preliminary assessment

Measurement of impacts

… that can help policy makers Consider who will be affected and the alternatives Strike a balance between conflicting goals Improve quality of legislation

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Claus Frelle-Petersen | Brussels | 22 November 2011

Assessment of alternative or mitigating measures

The use of the SME test

21 Member States say they use a test, but fewer actually use it… … but only 15 Member States use it always or often 50%

21 Member States say they use a test….

10 MS

40% 30%

6 Member States do not use a test

5 MS

5 MS

20% 10%

1 MS

0% Always

Often

On an ad hoc basis

Never

In 11 Member States the test is performed 20+ times 60% 21 Member States use a test

11 MS

50% 40% 30%

5 MS

20% 10%

0 MS

4 MS

1 MS

0% 20 or more

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Claus Frelle-Petersen | Brussels | 22 November 2011

11-19

6-10

1-5

0

The use of the SME test

Most Member States¹ and the EC have a set of guidelines in place - but guidelines allow for variation Fully standardised across all services

Template and guidelines in place,, but not mandatory

EU Guidelines

EC

Finland² Malta Romania Slovakia²

National guidelines

Denmark UK Latvia Luxembourg

Irland France Netherlands Spain Sweden

No guidelines

4 (+1)

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¹: The Member States that use an SME test or similar test ²: Use both EU and national guidelines

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Claus Frelle-Petersen | Brussels | 22 November 2011

Each service design their own SME test

Other

4 (+1)

Germany Lithuania Slovenia

12

Austria Bulgaria Hungary

Italy Poland

5

3

5

21¹ (+1)

The use of the SME test

As a consequence of ”soft guidelines” the use of measures varies

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Test measure

Number of Member States that ”always” or ”in most cases”/”often” use the measure

Consultations of SMEs

16 Member States

Quantification of effects

12 Member States

Mitigating measures

16 Member States

Quality check of test

12 Member States

Claus Frelle-Petersen | Brussels | 22 November 2011

The use of the SME test

Overall picture: Great variety in consistency and sophistication

The advanced group The follower group The starter group

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Claus Frelle-Petersen | Brussels | 22 November 2011

Agenda 1. Key messages 2. The use of the test 3. Barriers and challenges 4. The four recommendations 5. Questions and answers

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Claus Frelle-Petersen | Brussels | 22 November 2011

Barriers and challenges

Overview of barriers and challenges in the three groups Barriers

“Starter group”

“Follower group”

Political and administrative barriers



No political decision on how to prepare new legislation and use the SME test



Organisational and procedural barriers



No or weak • institutional structure in place to support the SME test •

Barriers in practical use • of test

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Division of authority on business regulation between administrative levels

Claus Frelle-Petersen | Brussels | 22 November 2011

“Advanced group”

Lack of political understanding of the value of the SME test Inconsistent application of SME test



Lack of compliance with guidelines



Lack of data to quantify costs of new regulation

No fixed procedure for how to carry out the SME test



Barriers and challenges

What they told us… about lack of policy and organisation

From interviews with Member States in the ”starter group”:

”There is no clear commitment from the competent institutions at national and regional levels to carry out an effective SME test.” Source: Interviews Italy

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Claus Frelle-Petersen | Brussels | 22 November 2011

“Organisational structure behind the SME test is not yet existing”

Source: Interviews Romania

Barriers and challenges

What they told us… about guidelines

From interviews with Member States in the ”follower ” group”: ”There are guidelines which each ministry has to follow, but in practice this does not always happen.” “It is sometimes a challenge to have civil servants in other ministries than the Ministry of Economy to adopt the SME test. Other ministries don’t understand the contribution of the SME test.” Source: Interviews Latvia

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Claus Frelle-Petersen | Brussels | 22 November 2011

“The government very often say that a new regulation has no effect on SMEs, and that it is therefore not necessary to carry out an SME test. How they determine that the new regulation has no effect on SMEs is voodoo.” “We need political will on the governmental level – not on the administrative level. A political commitment to the SME test must come first, guidelines will then follow.” Source: Interviews Austria

Barriers and challenges

What they told us… about compliance

From interviews with Member States in the ”advanced ” group”:

“The guidelines for the impact assessment are good, but ministries have a certain autonomy within the guidelines to decide how to carry out the test, which is sometimes reflected in the quality of the tests.”

Source: Interviews Denmark

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Claus Frelle-Petersen | Brussels | 22 November 2011

“Not every government department takes the SME test seriously. The SME test is something which has to be done, but not something which is done with full enthusiasm ...There is no doubt that those ministries that are closer to business probably take the test more seriously... than smaller government departments which are not as close to business.” Source: Interviews United Kingdom

Barriers and challenges

Barriers in the EC services’ use of the test

Key observations about the EC services’ use of the SME test • The test is used and advanced measures are applied

“The quality of the SME test varies from DG to DG, since different DGs have different sensibilities as regards SMEs. Still, the overall quality has improved over the last years.”

Source: Interview with official DG Enterprises

• New inter-service measures and a quality control system are in place • The exact content and reporting is decided on a case by case basis • Proper information is often lacking

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Claus Frelle-Petersen | Brussels | 22 November 2011

“The guidelines are a ‘shopping list” Source: Interview with UEAPME

The test is a... “black box” .... Source: Interview with Eurochambres

Barriers and challenges

A closer look at 22 EC IA reports from 2010 revealed variation in use and content of the SME test Number of IA reports investigated

Step 1: Consultations (with SME rep.)

Step 2: Preliminary assessment

Step 3: Measurement of impacts

Step 4: Assessment of mitigating measures

Report containing specific SME sectoon

22¹

22 (6)

20

17

4

12

Note: 2010 IA reports from DG Enterprise, DG Internal Market and Services, DG Economic and Financial Affairs, DG Competition, DG Environment

Consultations involve only in a minority of cases SME representatives Preliminary assessment are mostly conducted; conducted but readers are not informed Great variation in the actual impact assessment; assessment often magnitude is not clear Few examples of analysis of mitigating measures; may point to a problem Insufficient reporting of the SME test in the IA reports

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Claus Frelle-Petersen | Brussels | 22 November 2011

Our conclusions regarding the ECs use of the SME test Current guidelines allow for too much variation in the use of the test Lack of proper presentation of the tests is a problem The availability of data is a real challenge

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Claus Frelle-Petersen | Brussels | 22 November 2011

Agenda 1. Key messages 2. The use of the test 3. Barriers and challenges 4. The four recommendations 5. Questions and answers

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Claus Frelle-Petersen | Brussels | 22 November 2011

The recommmendations

Best practice steps in moving forward the SME test implementation

Political framework of better regulation • Clear policy stance

Guidelines and procedures

Culture of better regulation

• Mandatory guidelines with specific requirements

• Help desk and expert assistance

• Transparent procedures

• Inter-service cooperation

• Institutional framework • Measurable goals • ”Independent” control mechanisms

Quality of data needed to conduct SME tests

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Claus Frelle-Petersen | Brussels | 22 November 2011

The recommmendations

The four recommentations Recommendations

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Implications

1. Improve implementation of the test in government services

• •

Continue to push for progress at EU level Different challenges at Member State level require a national as well as an EU agenda

2. The test should be mandatory, transparent and involve quantification



Develop guidelines by specifying requirements for each steps, including quantification

3. A more ambitious ”systemic” approach is needed to succeed



Establish e.g. help desk, training activities, a control mechanism, and use road maps and other communication tools

4. The test should not stand alone



Integrate the SME test in a wider impact assessment

Claus Frelle-Petersen | Brussels | 22 November 2011

Agenda 1. Key messages 2. The use of the test 3. Barriers and challenges 4. The four recommendations 5. Questions and answers

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Claus Frelle-Petersen | Brussels | 22 November 2011

Thank you! you

Contact Contact: Claus Frelle-Petersen Petersen Copenhagen Economics [email protected]

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Claus Frelle-Petersen | Brussels | 22 November 2011

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