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The cost of the Lisbon Treaty to British businesses

BfB Briefing Note 2

It is currently unclear how Britains relationship with the EU will change when David

Cameron sits down with the other EU member states to renegotiate our membership of the

EU and agree proposals for reform. Some have argued for the EU to revert to something

akin to the common market that was approved by the British people in 1975. Others havecalled for opt outs from the Social Chapter or the more centralising provisions of the

Maastricht Treaty. Yet, in the Lisbon Treaty there exists a readily available set of rules and

regulations that were opposed by the most senior members of the current Government at

the time of the Treatys accession, which could provide an indicative guide to some of the

areas where change will be sought.

David Cameron said in 2009 that the problems we are facing today will now be made

worse by the ratification of the Lisbon Treaty.1 In January, George Osborne called for

modifications to the changes made to voting rights by the Lisbon Treaty, to protect the UKs

financial industry.2

And Environment Secretary Owen Paterson has raised concerns aboutLisbon granting the Eurozone a permanent ability to outvote the UK on key decisions.3

Using Government data, it is now possible to assess the cost of the Lisbon Treaty over its

first four years by analysing Impact Assessments for the rules and regulations stemming

from the Lisbon Treaty. By assessing the financial impact of these laws, we can calculate the

on-going cost to British businesses of a Treaty that was, and remains, unpopular in the UK.

Our research finds:

Since the Lisbon Treaty was enacted on 1 December 2009, EU regulation stemmingfrom, or modified by, the Lisbon Treaty has cost UK businesses to date 14.1 billion(gross) or 12.2 billion (net). This amounts to a current annual cost of 6.6 billion

(gross) or 6.1 billion (net). These costs are on-going.

The final cost to UK business of laws that can be directly attributed to theLisbon Treatywill amount to a total cost of 98.9 billion (gross) or 96.5 billion (net).

1D Cameron, EU statement, 4 Nov 2009 found at 2G. Osborne, Speech on Europe (London, 15 January 2014) https://www.gov.uk/Government/speeches/extracts-from-the-chancellors-

speech-on-europe3Tory Eurosceptics gear up for a fight on regaining powers from EU, The Guardian, 7 December 2011,

http://www.theguardian.com/business/2011/dec/07/tory-right-eu-european-union


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To arrange broadcast interviews or for more information, please contact:

Dylan Sharpe

Campaign Director, Business for Britain

[email protected] 28 00 41

Background

The Lisbon Treaty was an amending Treaty that was signed on 13 December 2007 and came

into force on 1 December 2009. It made significant changes to the Treaty of European Union

(TEU or Treaty of Maastricht) and the Treaty on the Functioning on the European Union

(TFEU, Treaty of Rome or Treaty Establishing the European (Economic) Community). These

changes amount to a significant expansion of the EUs powers, by increasing explicitly thenumber of areas the EU can legislate on, clarifying what areas the EU has competence over

and also making important institutional changes. In the words of the EU itself:

There is increasing support for the EU to work together on issues that affect us

all, such as climate change [and] energy security improvements delivered by

the Treaty would include giving the EU the means to tackle today's challenges in

today's world.4

As a result of securing these new powers via the Lisbon Treaty, the EU has begun to pass a

host of new rules and regulations that have significantly increased the costs faced by British

businesses.

Controversy surrounding the Lisbon Treaty

At the time of the Lisbon Treatys ratification, there was a great deal of controversy over the

decision of the British Government not to hold a referendum. Polls conducted at the time

had estimated that around 88 per cent of voters supported a referendum, and many felt

cheated as the then Prime Minister, Tony Blair, had promised a public vote on the European

Constitution, but neither he nor his successor, Gordon Brown, would go on to offer a vote

on the Lisbon Treaty.5This was seen as duplicitous, as pointed out at the time by the well-

respected think tank Open Europe, who found in a side-by-side comparison of the two texts

that 96% of the original European Constitution appeared in the Lisbon Treaty.6

While it was clear at the time that the Lisbon Treaty would increase the remit of the EU,

many commentators instead focussed on the institutional changes rather than this

expansion of power. Voices that highlighted the expansion of the EUs power, such as

Andrew Duff MEP, were not given due attention, despite his telling the House of Lords:

4European Union Lisbon Treaty information site found at 5Polls suggest 88% want EU vote, BBC News, 2 March 2008, found at , see alsoBlair confirms EU constitution poll, BBC News, found at 6L. Mullally, Director of Open Europe, quoted at
mailto:[email protected]:[email protected]:[email protected]


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[The] new Treaty will much enhance the Unions capacity to act by increasing

the efficiency and effectiveness of the institutions and decision-making

mechanisms. Armed with the Treaty, the EU will be able to face its new global

challenges and address the issues which matter most to citizens such as

climate change, energy security, international terrorism, cross-border crime,

asylum and immigration.7

As noted by legal experts, the Lisbon Treaty gave a legal basis to some pre-existing

legislation, particularly laws concerning climate change and the environment.8As noted by

William Hague in January 2008:

As we have repeatedly said from this Dispatch Box, this treatys importance

relies not just in the clear-cut extension of the EUs powers or abolition of

national vetoes but in the processes it sets in train.9

The Lisbon Treaty also firmly established, for the first time, areas where competences wereexclusive (only the EU can pass laws), shared (member states can only act if the EU has

chosen not to), and other areas where the EU may not introduce legally binding acts. While

laws passed before the ratification of the Lisbon Treaty could be (and sometimes were)

found legal via legislative precedent, the right of the EU to pass legislation in these areas

was placed beyond doubt by the modifications introduced by the new Treaty. In the words

of the European Parliament:

The entry into force of the Treaty of Lisbon has put an end to the differing

interpretations of the scope of the principle of subsidiarity by providing a clearer

demarcation of the powers conferred on the Union.10

In short, the Lisbon Treaty both made it possible for the EU to pass legislation in new areas,

and gave some existing laws a clearer legal basis. It also decreased the number of areas

where there had to be unanimity in the council of Ministers (in effect removing the UKs

effective veto in 113 areas). As pointed out by Open Europe:

The Lisbon Treaty represents a huge transfer of powers away from EU member

states In more than 60 areas of policy, countries lose the right to veto

legislation they disagree with.11

From a business perspective, hindsight has shown that the Lisbon Treatys granting to theEU of the right to legislate in different areas has resulted in a new wave of regulation and

red tape. Many were concerned at the time that Lisbon could have an adverse effect on the

Single Market and European competitiveness in general. As Philip Hammond, then Shadow

Chief Secretary to the Treasury, said:

7Memorandum send by Andrew Duff MEP to the House of Lords, found at

8House of Lords European Union Committee, The Treaty of Lisbon: an impact assessment: Volume I, p. 147,February2008, found at

9W. Hague cited in Hansard, vol. 471, col. 7410European Parliament briefing note, The Principle of Subsidiarity, found at


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We want an open and competitive European market, and a strengthening of the

thrust for competition to be the driving force in determining the direction of the

single market. I contend that the Lisbon treaty contains a clear political and

judicial signal that we are moving in a different direction.12

As you will see from the calculations below, the cost of these laws has been substantial.While there are also tangible benefits, it is important to note that these benefits are, very

often, not felt by British business and in several instances will not be felt in full for decades

(in one instance up to 100 years). As David Cameron said at the time of the debate over

whether to vote on Lisbon:

The problems we are facing today will now be made worse by the ratification

of the Lisbon Treaty. In essence these problems boil down to the steady and

unaccountable intrusion of the European Union into nearly every aspect of our

lives.13

Sources and Methodology

These calculations were made using Government Impact Assessments (IAs), official

documents produced by departments to accompany new regulations, stating how far the

specific recommended policy meets the Governments objectives and quantifying the

potential costs and administrative burdens.

However, despite this impressive resource, it is important to note that there are limitations

to using IAs. There has been a noted failure by the Government to place all the IAs in onerepository, and previous attempts to compile such a collection have had notable omissions.

In addition there are also inconsistencies in compiling IAs, both over time and between

departments. It is important to also note that these costs are estimates, though they are

derived from Government assessments and analysis.

IAs suggest a range of different figures in their reports, including minimum cost, maximum

cost and estimated cost. We have used the maximum costs and maximum benefits in this

paper. This study is based on the collection of IAs available on the Gov.uk website and a

detailed search for IAs on environmental and energy policy over the last five years on

various departmental websites and the National Archives. While we recognise that thismight mean that not all relevant IAs have been selected, it should account for the vast

majority of relevant laws, and include the most expensive and intrusive regulations,

however we recognise that due to these limitations our final figures may under-estimate the

cost of regulation stemming from the Lisbon Treaty.

There are a number of laws that have been passed by the EU in the lead up to the passage

of the Lisbon Treaty that were seen as operating outside of the EUs legal framework or

lacking a clear legal basis. At the time, campaign groups complained that the EU was

12P. Hammond cited in Hansard, vol. 471, col. 99413D Cameron, EU statement, 4 Nov 2009 found at


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engaged in power grabs despite the fact that the Lisbon Treaty is not legally in force. 14

European Commission documents have admitted that, when it came to energy at the very

least the Lisbon Treaty supplies the EU with new power to develop energy saving policies

based on its specific new energy chapter. Whereas until recently, the European Treaties did

not explicitly recognize such an EU competence, thus energy policies had to be adopted

more indirectly.15In short, these laws derived their purpose and eventual legal basis from

the Lisbon Treaty despite the fact that they were introduced before the Treaty was enacted

on 1 December 2009.

In light of this fact, to determine the cost of Lisbon Treaty regulation, we studied the

available IAs on all laws that were passed on or after 1/1/2009 (the initial date that the

Lisbon Treaty was supposed to come into play before being delayed following the first Irish

referendum) and laws that came into force after 13/12/2007 (the date the Lisbon Treaty

was signed and the European political leaders had expressed their approval of the EUs

mandate in this area). All of the regulations and directives passed during this period wereanalysed to determine if they had: (i) an impact on British business; and (ii) stemmed

either initially or eventuallyfrom changes the Lisbon Treaty made to the EUs legal base.

Our methodology for determining if a regulation or directive stemmed from Lisbon or

applied to British business can be found in the Appendix. Only laws that met these two

criteria were accepted.

It is important to also note that all of the EU laws cited do not affect all businesses in the

same way. Some laws clearly only have an impact on certain industries. It should also be

noted that different IAs can look at the same EU directive from various different

perspectives (multiple IAs since 2008 have looked at the impact of the Energy ProductsDirective for example). This, however, is not a disadvantage. In fact adding together multiple

IAs on the same regulation gives a better cumulative idea of the cost of that regulation. This

approach allows us to get a better estimate of the costs/benefits that stem from each rule

and regulation. The costs and benefits are extracted from the option on the IA chosen by

the British Government as the right course of action (as stated in the IA or on the

Governments own websites).

Impact Assessments provide a one off cost/benefit of a regulation on the year of its

introduction, plus an annual cost and benefit. To quantify the cost of the laws that Lisbon

has introduced, Business for Britain added the annual costs of each law for each year that

the Lisbon Treaty formed the legal basis of that law, as well as any one off costs, so long as

those costs were incurred after Lisbon formed the regulations legal basis. For the sake of

simplicity, annual costs are recorded from the start of 2010 onwards and it is assumed that

the one-off cost is paid in one lump sum. (For example, if a law was passed in 2008 but

derived its eventual legal basis from Lisbon, then the one off cost incurred in 2008was

not counted, nor was the annual cost for 2008 or 2009. Instead the annual costs and annual

benefits were counted for 2010, 2011, 2012 and 2013. A law passed in 2013 by contrast

14The Bruges Group, Euro-Creep, found at 15European Commission, Study of the costs and benefits of the Action Plan for Energy Efficiency of the European Union, found at


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would both include the one off cost and the annual cost and annual benefit for just 2013.)

The same methodology was used to calculate the final cost of a law from the point Lisbon

formed the legal base (e.g. for a law introduced in 2008 the final cost from the IA would be

taken and then the one-off costs and the annual costs for 2008 and 2009 would be

deducted from it)

Costs and benefits on IAs are usually broken down to show exactly what amount of money is

going to, or from, British businesses. This allows us to move beyond the top line figures and

to identify the exact costs and benefits to British business specifically. When this breakdown

occurs, we recorded the total cost/benefit directly relating to business. Benefits and costs

would only be counted if the IA explicitly stated the contributor/beneficiary was British

business. It wasnt counted if the IA explicitly stated that the cost/benefit was going to

another sector of the society (e.g. the public sector). Benefits identified by the IA as going to

British business were deducted from the costs to reach a net cost for British business for

each IA.

In a few instances the IA does not specify the exact amount of the costs or benefits which

will be attributed to business, however because the Research Team deliberately excluded

IAs that clearly didnt impact British business, the overall cost and benefit estimates are still

accurate indicators of the financial impact of these regulations on British business. It is also

worth pointing out that there are sometimes some variations in where the information is

placed on a sheet, despite the standard layout that IAs have. When no information is

provided on the number of years annual costs will be paid for, this is recorded as on-going.

We do not attempt to quantify the cost of EU regulation in relation to UK regulation or to

gauge the relative effectiveness of UK compared to EU regulation. It is possible that, had the

EU not introduced these laws then the UK would have chosen to legislate in these areas

anyway, and it is also possible that the EU would have introduced similar laws without the

Lisbon Treaty, relying on former directives or a generous reading of the former Treaties.

However the Research Team only used the actual figures provided by the IAs. What is clear

is that the regulations that were passed were introduced with Lisbons modificationsto the

legal base in mind, and there are clear connections between these laws and the changes

that the Lisbon Treaty made to the TFEU and TEU.

The authors emphasise that Business for Britain does not doubt the need for sensible

regulation, and the need for measures to protect the environment. However it questions

whether the laws that have been introduced, enabled by the Lisbon Treaty, are the best

laws for protecting the environment, and whether these specific laws are worth the large

costs that have been imposed on firms. This briefing note does not subjectively differentiate

between spurious and necessary regulation, it objectively uses government figures to

present a cost/benefit analysis.


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Table 1: Impact Assessments

Reg. No. Impact Assessment Directive/regulation Link to Lisbon

1

Impact Assessment of Euro 5

and 6 Light Duty Vehicle

Emission Standards

Regulation (EC) No

715/2007 (Enacted

2009)

In addition to establishing climate change as a shared competence between the EU and the

member states, the Lisbon Treaty introduced an explicit acknowledgement that the EU had a

right to legislate in the field of climate change. The European Commission has stated that the

legal basis to deal with air pollution stems from Articles 191 and 192 of the TFEU, stating that

"The right for the Union to act [in addressing climate change] is set out in Articles 191 and 192 of

the Treaty on the Functioning of the European Union (TFEU) which in Article 191 explicitly refers

to the objective of combating climate change as part of the Union policy on the environment."16The EU cites Regulation (EC) No 715/2007 as a policy for dealing with climate change.17

2The EU Climate and Energy

Package (extended title)

EU Climate and Energy

Package and EU

emissions trading system

(Enacted 2013)


member states, the Lisbon Treaty introduced an expl icit acknowledgement that the EU had a


legal basis to deal with air pollution stems from Articles 191 and 192 of the TFEU. The EU has

also argued that "The right for the Union to act [in addressing climate change] is set out in

Articles 191 and 192 of the Treaty on the Functioning of the European Union (TFEU) which in

Article 191 explicitly refers to the objective of combating climate change as part of the Union

policy on the environment."18

16COMMISSION STAFF WORKING PAPER IMPACT ASSESSMENT Review of Regulation (EC) No 842/2006 on certain fluorinated greenhouse gases Accompanying the document Proposal for a REGULATION OF THE

EUROPEAN PARLIAMENT AND THE COUNCIL on fluorinated greenhouse gases, found at 17EUR-Lex summary of climate change legislation found at 18COMMISSION STAFF WORKING PAPER IMPACT ASSESSMENT Review of Regulation (EC) No 842/2006 on certain fluorinated greenhouse gases Accompanying the document Proposal for a REGULATION OF THE

EUROPEAN PARLIAMENT AND THE COUNCIL on fluorinated greenhouse gases, found at


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3

The Motor Fuel (Road Vehicle

and Mobile Machinery)

Greenhouse Gas Emissions

Reporting Regulations 201219

Directive 2011/63/EU

(enacted 2013)









4

The Environmental Permitting

(England and Wales)

(Amendment) (No. 2)

Regulations 2011


(Enacted 2013)

Directive is subject to modifications via Article 290 TFEU (a new article that the Lisbon Treaty

introduced) and legal basis is Article 192 TFEU (which was modified by the Lisbon Treaty).

5

Impact Assessment of The

Motor Vehicles (Replacement

of Catalytic Converters and

Pollution Control Devices)

Regulations 2009

Directive 2007/46/EC

(Enacted 2009, amended

2011)

Changes introduced in Lisbon provided the EU with a new legal basis to deal with environmental

waste and climate change. The EU has adapted 2007/46/EC (Regulation No 510/2011), using

Article 192 TFEU as the legal basis.

19Approach 6 is recommended.20COMMISSION STAFF WORKING PAPER IMPACT ASSESSMENT Review of Regulation (EC) No 842/2006 on certain fluorinated greenhouse gases Accompanying the document Proposal for a REGULATION OF THE



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6The Waste (England and Wales)

Regulations 2011


(Enacted 2011)









7

Consultation Document on

Implementation of EU Batteries

and Accumulators Directive

(2006/66/EC) in the UK

Batteries and

accumulators Directive,


(Enacted 2010)

Article 169 TFEU modifies Article 153 EC while Article 4(f) TFEU establishes consumer protection

as am area of shared competence. This provides a new legal basis for consumer rights. In

addition Lisbon gave Consumer Protection greater signifi cance. The European Parliament has

stated that this "act must be based on a single legal basis, namely Article 192(1) TFEU.22

8

Impact Assessment of

Implementation of Internal

Market Provisions of Batteries

and Accumulators Directive

(2006/66/EC)

Batteries and

accumulators Directive,


(Enacted 2008)

Article 169 TFEU modifies Article 153 EC while Article 4(f) TFEU establishes consumer protection

as am area of shared competence. This provides a new legal basis for consumer right s. In

addition Lisbon gave Consumer Protection greater significance. The European Parliament has

stated that the "act must be based on a single legal basis, namely Article 192(1) TFEU." 23Also

amended to be aligned with Articles 290 and 291 TFEU.24

9

Implementation of Article 5 of

the Energy End Use and Energy

Services Directive

Energy Services Directive

(Directive 2006/32/EC)

(Enacted 2008)

Lisbon modified Article 4 of the TFEU so as to make it clear that energy policy is a shared

competence between the EU and the member states. In addi tion the Treaty also makes it clear

that energy is to be understood within the context of the internal market (Article 194 TFEU) The

European Parliament has referred to Article 194 is the legal basis of the Di rective when

discussing future amendments or changes to this law.25


EUROPEAN PARLIAMENT AND THE COUNCIL on fluorinated greenhouse gases, found at 22European Parliament Committee on legal affairs, found at < http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//NONSGML+COMPARL+PE-514.653+01+DOC+PDF+V0//EN&language=EN>23European Parliament Committee on legal affairs, found at < http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//NONSGML+COMPARL+PE-514.653+01+DOC+PDF+V0//EN&language=EN>24 Directive 2013/56/EU found at 25Draft proposal found at


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10Provision of historic

consumption on Energy Bills

Energy Services Directive

(Directive 2006/32/EC)

(Enacted 2009)




European Parliament has referred to Article 194 is the legal basis of the Directive when

discussing future amendments or changes to this law.

11

Vehicle Type Approval and

implementation of Directive

2007/46/EC


Amended by

Commission regulation

No 195/2013 (Enacted

2009)

Amendments make clear directive is to reduce CO2 emissions. Lisbon establishing climate

change as a shared competence between the EU and the member states, the Lisbon Treaty

introduced an explicit acknowledgement that the EU had a right to legislate in the field of

climate change The European Commission has stated that the legal basis to deal wi th air

pollution stems from Articles 191 and 192 of the TFEU. The EU has also argued that "The right for

the Union to act [in addressing climate change] is set out in Articles 191 and 192 of the Treaty

on the Functioning of the European Union (TFEU) which in Article 191 explicitly refers to the

objective of combating climate change as part of the Union policy on the environment."26

12

Increasing the fees for entering

Energy Performance

Certificates and Related

Documents onto the Energy

Performance Certificate

Registers


(Enacted 2013)


competence between the EU and the member states. In addition the Treaty also makes it clear

that energy is to be understood within the context of the internal market. Legal basis is Article

194 TFEU.




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Impact Assessment of EuP

Implementing Measure for

External Power Supplies

Energy use Products

Directive, Directive

2005/32/EC (Enacted

2010)




European Commission has stated "The Lisbon Treaty ... supplies the EU with new power to

develop energy savings policies based on its specific new energy chapter. Whereas until recently,

the European Treaties did not explicitly recognize such an EU competence, thus energy policies

had to be adopted more indirectly, under various and different provisions of the EC Treaty"27

14

Recast of the Energy

Performance of Buildings

Regulations

Directive 2010/31/EU(Enacted 2012)



that energy is to be understood within the context of the internal market (Article 194 TFEU)

15EuP Implementing Measures for

Simple Set Top Boxes

Energy use Products


2005/32/EC (Enacted

2010)








The European Parliament states that Article 191 is the legal basis for Directive 2005/32/EC 29

27European Commission, Study of the costs and benefits of the Action Plan for Energy Efficiency of the European Union, found at 28European Commission, Study of the costs and benefits of the Action P lan for Energy Efficiency of the European Union, found at 29European Parliament factsheet found at < http://www.europarl.europa.eu/aboutparliament/en/displayFtu.html?ftuId=FTU_5.4.8.html>


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16


Implementing Measures for

Tertiary Lighting

Energy use Products


2005/32/EC (Enacted

2009)



that energy is to be understood within the context of the internal market (Article 194 TFEU). The






17


Implementing Measures for

non-directional household

lamps

Energy use Products


2005/32/EC (Enacted

2009)



that energy is to be understood within the context of the internal market (Article 194 TFEU). The






18

Impact Assessment of the

implementation of the Energy

Products Directive (EPD) on

private pleasure boats


(Enacted 2013)


competence between the EU and the member states. In addition the Treaty also makes it clear

that energy is to be understood within the context of the internal market. Legal basis is Article

194 TFEU34

30European Commission, Study of the costs and benefits of the Action Plan for Energy Efficiency of the European Union, found at 31European Parliament factsheet found at < http://www.europarl.europa.eu/aboutparliament/en/displayFtu.html?ftuId=FTU_5.4.8.html>32European Commission, Study of the costs and benefits of the Action P lan for Energy Efficiency of the European Union, found at 33European Parliament factsheet found at < http://www.europarl.europa.eu/aboutparliament/en/displayFtu.html?ftuId=FTU_5.4.8.html>34Directive 2010/31/EU found at


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19


implementation of the Energy

Products Directive (EPD) on

private pleasure flying

Energy Products

Directive (EPD) Directive

2003/96/EC (On-going

modifications)



that energy is to be understood within the context of the internal market (Article 194 TFEU)

20


implementation of Directive

2006/43/EU - Statutory Audit

Directive


(On-going modifications)

Lisbon added a reference stating that one of the EU's duties was ensuring that competition is

not distorted in a Protocol on the internal market and competition. The European Commission

has stated that modifications are needed, under which Lisbon Treaty offers the legal basis for

this regulation.35

35European Commission, Proposal for Directive amending Directive 2006/43/EC found at


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Table 2: The cost of the Lisbon Treaty to British businesses

Reg. No.

One-off cost to

British

business

Average annual cost to British

business

Final cost to

British business

Final cost to British

business (discounting

all pre-Lisbon costs)

Total cost to British business

so far (since Lisbon changed

legal basis)

Net cost to British

business so far

1 0 1,849m (On-going annual cost) 55,484m 53,635m 7,396m 7,396m

2 0 3,000m (8 yr annual cost) 20,600m 20,600m 3,000m 3,000m

3 315m 1,509m (18 yr annual cost) 18,627m 18,627m 1,824m 1,824m

4 1,127m 105m (15 yr annual cost) 2,131m 2,131m 1,232m 1,232m

5 13.95m 97.886m (17 yr annual cost)36 1,215.06m 1,005.29m 293.66m 293.66m

6 51m 3.9m (10 yr annual cost) 80.65m 80.65m 62.7m 62.7m

7 5.4m37 9.9m (9 yr annual cost) 72m38 72m 39.6m 39.6m

8 0 8m (10 yr annual cost) 63m 47m 32m 32m

36Costs determined by adding up individual costs to businesses listed in IA37Initial costs are down to communication and are not counted 38Deducting all administrative costs (3.5 million)


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Reg. No.

One-off cost to

British

business


business

Final cost to

British business






legal basis)

Net cost to British

business so far

9 278.05 7.96m (On-going annual cost) 367.27m 73.3m 31.84m 31.84m

10 9.4m 100,000 (5 yr annual cost) 10m 9.9m 9.8m 9.8m

11 0 8.94m (11 yr annual cost) 75.5m 39.74m 8.94m 8.94m

12 0 730,000 (10 yr annual cost) 19.47m 19.47m 7,300 730,000

13 n/a 7.7m (13 yr annual cost) 67m 67m 30.8m -9.6m39

14 60,000 410,000 (10 yr annual cost) 4.16m 4.16m40 470,000 -17.53m41

15 67.935m 12.95 (13 yr annual cost) 112.629m 112.629m 119.735m -160.324m42

39IA also claims that there have been benefits to business since Lisbon Treaty came into force (annual benefit of 4,527,000,000 over three years) Final benefit to British business will be 88,000,000 after thirteen

years (86,156,000 after discounting all benefits incurred before Lisbon)40Calculated for British business by adding all annual costs for business and one off costs for business41IA also claims that there have been benefits to business since Lisbon Treaty came into force (annual benefit of 18,000,000 over two years) Final benefit to British business will be 180,000,000 after ten years.42IA also claims that there have been benefits to business since Lisbon Treaty came into force (annual benefit of 70,014,884 over four years). Final benefit to British business will be 591,700,000 after thirteen

years.


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Reg. No.

One-off cost to

British

business


business

Final cost to

British business






legal basis)

Net cost to British

business so far

16 0 16m43(13 yr annual cost) 142m44 126m45 0 -588m46

17 0 59m47(11 yr annual cost) 512m48 453m49 0 -932m50

18 0 1.5m (On-going annual cost) On-going On-going On-going TBC

19 0 65,00051(On-going annual cost) On-going On-going On-going TBC

20 50,000 0 50,000 0 0 TBC

Total 1,862,445,000 6,662,631,20352 98,916,622,700 96,511,970,30053 14,082,273,512 12,223,813,96754

43IA states that the cost to manufacturers is negligiblenot used in final calculations, however IA notes costs will be transferred to consumers.44IA states that the cost to manufacturers is negligiblenot used in final calculations.45IA states that the cost to manufacturers is negligiblenot used in final calculations.46IA also claims that there have been benefits to business since Lisbon Treaty came into force (annual benefit of 147,000,000 over four years). Final benefit to British business will be 1,280,000,000 after thirteenyears.47IA states that the cost to manufacturers is negligible not used in final calculations, however IA notes costs will be transferred to consumers.48IA states that the cost to manufacturers is negligible not used in final calculations49IA states that the cost to manufacturers is negligible not used in final calculations50IA also claims that there have been benefits to business since Lisbon Treaty came into force (annual benefit of 233,000,000 over four years) Final benefit to British business will be 1,701,000,000 after eleven

years.51IA states that costs going to HMRC. Costs to suppliers not specified.52Average annual benefits to British business is 1,987,114,88453Final benefits to British business(discounting all pre-Lisbon costs) is 3,805,446,00054Total benefits to British business so far (discounting all pre-Lisbon costs) is 1,858,459,536


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Appendix

The Lisbon Treaty clearly spelled out which powers belonged to the European Union and

which powers belonged to the member states. It divided policy areas into exclusive and

shared competences, and all European laws passed since 2009 affecting the policy areasnamed in Articles 3 and 4 can be seen as deriving their legal basis from the Lisbon Treaty.

However, such an approach is open to debate. While the right of the EU to legislate in these

areas was clarified by the Lisbon Treaty, as the House of Lords noted at the time, in some

ways this was merely confirming the status quo for many areas. There are notable areas

where the EUs powers were not increased by the Lisbon Treaty. Health and safety, for

example, had already been legislated for in the Treaties before Lisbon, while in other areas

the changes Lisbon introduced such as the Charter of Fundamental Rights were not

applicable in the UK.

The Research Team compiled all IAs for all EU rules and regulations on policy areas that

were listed in Article 3 and Article 4 TFEU. However, while all of these IAs do derive, to a

greater or lesser extent, some legitimacy from the Lisbon Treaty and the clarification that

that Treaty gave to the EUs right to legislate in these areas, the Research Team decided to

focus on the policy areas where Lisbon introduced a notable transfer of power to the EU;

transfers of power that went above and beyond a mere clarification of the status quo.

In order to makes sure that there was no bias or subjectivity in determining which policyareas saw a notable transfer of power, the Research Team analysed impact assessments of

the Lisbon Treaty that were conducted between 2007 and 2009. Two of these studies were

used in forming this report: The Foreign Offices(FCOs)assessment and the House of Lords

Impact Assessment. If these reports either (i) concluded that the EUs remit had expanded

or (ii) included detailed testimony highlighting how the EUs role could increase, then these

were used. Using this methodology, the following areas were highlighted as policy areas

over which the EUs influence increased as a direct result of the Lisbon Treaty:

Climate changeThe Lisbon Treaty for the first time explicitly mentioned climate change as a shared

competence between the EU and the member statesthe first explicit acknowledgement of

the EUs right to legislate in this field by changing what is now Article 191 TFEU. While the

right of the EU to take action on environmental affairs had been established for a number of

years, the addition of climate change was a notable expansion. As the House of Lords

noted at the time:

Climate change is explicitly mentioned in the Treaties for the first time. Union

policy on the environment should contribute to the pursuit of a number of


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objectives, one of which will henceforth be the promotion of measures at

international level to combat climate change.55

The British Government was clear that this was a big change, stating that climate change

was being recognised as an important strategic challenge and as a specific objective of EUpolicy56and the FCO noted at the time the Lisbon Treaty added [EU] focus on combating

climate change.57The EU also stated: With the Treaty of Lisbon, combating climate change

on an international level becomes a specific objective of EU environmental policy.58Since

the Lisbon Treaty was enacted the EU has stated:

The right for the Union to act in this field is set out in Articles 191 and 192 of the

Treaty on the Functioning of the European Union (TFEU) which in Article 191

explicitly refers to the objective of combating climate change as part of the

Union policy on the environment."

59

Testimonies given to the House of Lords at the time suggested that this new clause would

not have a large impact, as the EU had already legislated on areas concerning climate

changethe EU has had a scheme for greenhouse gas emissions since 2003 however, this

claim has been challenged by legal authorities. ClientEarth has stated The expressed

recognition of climate change could justify the use of environmental legal basis for

legislation on climate and energy issues.60Notably, after the final approval of Lisbon a new

Commissioner for Climate Action was established and the Commission would, from this

point onwards, start to justify their laws by references to the new Article 191 TFEU.61

EnergyThe Treaty of Lisbon modified Article 194 TFEU, changing and expanding the EUs legal basis

when it comes to Energy. The EUs powers over energy are, according to the FCO, new.62

It gave the EU more explicit control over energy policy, modifying Article 4 of the TFEU so as

to make it clear that energy policy is a shared competence between the EU and the member

states. In addition the Treaty also made it clear that energy is to be understood within the

context of the internal market, placed energy policy is under the ordinary legislative

procedure, with the Union tasked with ensuring the functioning and security of energy


56Evidence to the House of Lords, found at < http://www.publications.parliament.uk/pa/ld200708/ldselect/ldeucom/62/8011602.htm>57FCO,A comparative table of the current EC and EU Treaties as amended by the Treaty of Lisbon, January 2008, found at

58Europa.eu, Treaty of Lisbon, found at 59Commission Staff Working Paper, Impact Assessment, Review of Regulation (EC) No 842/2006) on certain fluorinated greenhouse gases,

7 November 2012, found at < http://ec.europa.eu/clima/policies/f-gas/legislation/docs/swd_2012_364_en.pdf>60ClientEarth legal briefing, The impact of the Lisbon Treaty on climate and energy policy an environmental perspective, January 2010 p.7

http://www.clientearth.org/reports/clientearth-briefing-lisbon-treaty-impact-on-climate-and-energy-policy.pdf61European Parliament, Fact Sheets on the European Union: Climate Change and the Environment, found at

62FCO,A comparative table of the current EC and EU Treaties as amended by the Treaty of Lisbon, January 2008, found at
http://www.publications.parliament.uk/pa/ld200708/ldselect/ldeucom/62/62.pdfhttp://www.publications.parliament.uk/pa/ld200708/ldselect/ldeucom/62/62.pdf


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supply in the Union, promoting energy efficiency and renewable energy among other things.

It had been noted to the House of Lords Committee that certain laws passed before Lisbon

on energy had lacked a specific legal basis.63

EnvironmentEnvironmental regulation was broadly similar to existing mechanisms in the TEC as noted

by the FCO at the time of signing the environmental clauses were In substance the same

as [the] TEC.64However, the new Article 194 firmly established energy policy in terms of

protecting the environment. It was noted by the House of Lords at the time of ratification

that the new provisions on energy expanded the EUs legal basis on energy policy in

particular over areas dealing with environmental damage. The EU has also started to

introduce laws affecting waste management using Article 192 as a legal basis.65

Internal MarketWhile at first glance it may seem that the Lisbon Treaty changed little (Articles 101103 of

the TFEU are the same as Articles 8183 of the former TEC) there were important subtle

changes. The FCO noted the new measures which stated that EU action must if necessary

be taken under the Treaties to ensure undistorted competition within the internal

market.66 It was agreed to include a reference to ensuring that competition is not

distorted in a Protocol on the internal market and competition, thus modifying the text in

the pre-existing TEC by removing that reference to free and undistorted competition,something that Lord Leach of Fairford warned at the time could change the legal base and

could result in new avenues for legislation.67

Medical productsThe Lisbon Treatys changes to Article 168 allow measures to be brought forward regarding

the harmonisation of standards of quality and safety in medicinal products and devices. The

FCO noticed that this change extends the scope and focus of EU activities68

All relevant IAs were thus filtered so that only EU regulations affecting one or more of these

give areas were listed. The list was then narrowed down even further to show only laws

which met one of the following criteria:



65 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2013:329:0005:0009:EN:PDF66FCO,A comparative table of the current EC and EU Treaties as amended by the Treaty of Lisbon, January 2008, found at


http://www.publications.parliament.uk/pa/ld200708/ldselect/ldeucom/62/62.pdfhttp://www.publications.parliament.uk/pa/ld200708/ldselect/ldeucom/62/62.pdfhttp://www.publications.parliament.uk/pa/ld200708/ldselect/ldeucom/62/62.pdfhttp://www.publications.parliament.uk/pa/ld200708/ldselect/ldeucom/62/62.pdf


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i) Stems from an article which was modified by Lisbon (i.e. Articles in the TFEUthat have not been classed as unchanged by the FCO in their assessment)

ii) Justified by an EU organisation or senior official, who cited one of the articleslisted above as a legal basis for the laweven if the law had been introduced

before Lisbon came into force.

iii) Had been updated by new laws or regulations which derived their legal basisfrom the changes the Lisbon Treaty made to the TFEU or has upcoming

amendments which cite the above changes as a legal basis. For these laws

costs would only be counted from the year that the amendments were

enforced.

If a rule and regulation passed through all of these hurdles it was deemed to have either

stemmed from, or been modified by the Lisbon Treaty. To then determine if the remaining

regulations/directives had an impact on British business the following questions were asked

of each:

Does it make specific and explicit demands on British businesses? Does it alter European grants or subsidies? Does it either add new, or alter pre-existing, product or service safety laws? Does it alter copyright in the European Union? Does it change advertising law? Does it alter the freedom of movement for goods or freedom of movement of

persons?

Does it make demands on companies for data registration/transparency? Does it alter or expand consumer rights/consumer protection laws? Does it alter or expand employee protection laws? Does it alter the functioning of the Common Agricultural Policy, Common

Fisheries Policy or the Common Commercial Policy?

Does it alter company requirements when it comes to wastemanagement/disposal?

Does it have the scope to affect corporate taxation? Does it affect trading relations with non-EU countries? (e.g. by altering tariff

rates or introducing new anti-dumping policies)

Does it put additional obligations on a company? (e.g. changing notificationrequirements or changing financial transaction laws)

Does it apply new requirements on companies to protect the environment? (e.g.reduce emissions)

Does it change certification procedures? Does it explicitly set out to alter prices/alter the market? Does it alter laws when it comes to the transportation of goods or services? Does it alter the enforcement/responsibility of enforcement for pre-existing

laws?

If the answer to any of these was yes the regulation was deemed to have an impact on

British business.