The cost of the Lisbon Treaty to British businesses
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The cost of the Lisbon Treaty to British businesses
BfB Briefing Note 2
It is currently unclear how Britain’s 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 have
called 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 Treaty’s 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 UK’s
financial industry.2 And Environment Secretary Owen Paterson has raised concerns about
Lisbon 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 stemming
from, 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 the Lisbon Treaty
will amount to a total cost of £98.9 billion (gross) or £96.5 billion (net).
1
D Cameron, EU statement, 4 Nov 2009 found at
2 G. Osborne, “Speech on Europe” (London, 15 January 2014) https://www.gov.uk/Government/speeches/extracts-from-the-chancellors-
speech-on-europe
3 Tory 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
1To arrange broadcast interviews or for more information, please contact:
Dylan Sharpe
Campaign Director, Business for Britain
dylan.sharpe@forbritain.org
07538 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 EU’s powers, by increasing explicitly the
number 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 Treaty’s 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.5 This 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 EU’s power, such as
Andrew Duff MEP, were not given due attention, despite his telling the House of Lords:
4 European Union Lisbon Treaty information site found at
5 Polls suggest 88% want EU vote, BBC News, 2 March 2008, found at , see also
‘Blair confirms EU constitution poll’, BBC News, found at
6
L. Mullally, Director of Open Europe, quoted at
2“[The] new Treaty will much enhance the Union’s 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.8 As noted by
William Hague in January 2008:
“As we have repeatedly said from this Dispatch Box, this treaty’s importance
relies not just in the clear-cut extension of the EU’s 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 were
“exclusive” (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 UK’s
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 Treaty’s granting to the
EU 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:
7 Memorandum send by Andrew Duff MEP to the House of Lords, found at
8
House of Lords European Union Committee, The Treaty of Lisbon: an impact assessment: Volume I, p. 147, February 2008, found at
9 W. Hague cited in Hansard, vol. 471, col. 74
10 European Parliament briefing note, The Principle of Subsidiarity, found at“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 Government’s 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 one
repository, 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 this
might 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 EU’s legal framework – or
lacking a clear ‘legal basis’. At the time, campaign groups complained that the EU was
12 P. Hammond cited in Hansard, vol. 471, col. 994
13
D Cameron, EU statement, 4 Nov 2009 found at
4engaged 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.”15 In 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 EU’s
mandate in this area). All of the regulations and directives passed during this period were
analysed to determine if they had: (i) an impact on British business; and (ii) stemmed –
either initially or eventually – from changes the Lisbon Treaty made to the EU’s ‘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 Products
Directive 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
Government’s 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 regulation’s 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 2008 – was
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
5would 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 wasn’t 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 didn’t 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 Lisbon’s modifications to 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.
6Table 1: Impact Assessments
Reg. No. Impact Assessment Directive/regulation Link to Lisbon
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
Impact Assessment of Euro 5 Regulation (EC) No
legal basis to deal with air pollution stems from Articles 191 and 192 of the TFEU, stating that
1 and 6 Light Duty Vehicle 715/2007 (Enacted
"The right for the Union to act [in addressing climate change] is set out in Articles 191 and 192 of
Emission Standards 2009)
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." 16
The EU cites Regulation (EC) No 715/2007 as a policy for dealing with climate change.17
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
EU Climate and Energy right to legislate in the field of climate change. The European Commission has stated that the
The EU Climate and Energy Package and EU legal basis to deal with air pollution stems from Articles 191 and 192 of the TFEU. The EU has
2
Package (extended title) emissions trading system also argued that "The right for the Union to act [in addressing climate change] is set out in
(Enacted 2013) 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
16 COMMISSION 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
17 EUR-Lex summary of climate change legislation found at
18 COMMISSION 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
7In addition to establishing climate change as a shared competence between the EU and the
The Motor Fuel (Road Vehicle member states, the Lisbon Treaty introduced an explicit acknowledgement that the EU had a
and Mobile Machinery) right to legislate in the field of climate change. The European Commission has stated that the
Directive 2011/63/EU legal basis to deal with air pollution stems from Articles 191 and 192 of the TFEU. The EU has
3 Greenhouse Gas Emissions
(enacted 2013) also argued that "The right for the Union to act [in addressing climate change] is set out in
Reporting Regulations 201219 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."20
The Environmental Permitting
(England and Wales) Directive is subject to modifications via Article 290 TFEU (a new article that the Lisbon Treaty
Directive 2010/75/EU
4 (Amendment) (No. 2) introduced) and legal basis is Article 192 TFEU (which was modified by the Lisbon Treaty).
(Enacted 2013)
Regulations 2011
Impact Assessment of The
Motor Vehicles (Replacement Directive 2007/46/EC Changes introduced in Lisbon provided the EU with a new legal basis to deal with environmental
5 of Catalytic Converters and (Enacted 2009, amended waste and climate change. The EU has adapted 2007/46/EC (Regulation No 510/2011), using
Pollution Control Devices) 2011) Article 192 TFEU as the legal basis.
Regulations 2009
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
EUROPEAN PARLIAMENT AND THE COUNCIL on fluorinated greenhouse gases, found at
8In 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
The Waste (England and Wales) Directive 2008/98/EC legal basis to deal with air pollution stems from Articles 191 and 192 of the TFEU. The EU has
6
Regulations 2011 (Enacted 2011) 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."21
Consultation Document on Batteries and Article 169 TFEU modifies Article 153 EC while Article 4(f) TFEU establishes consumer protection
Implementation of EU Batteries accumulators Directive, as am area of shared competence. This provides a new legal basis for consumer rights. In
7
and Accumulators Directive Directive 2006/66/EC addition Lisbon gave Consumer Protection greater significance. The European Parliament has
(2006/66/EC) in the UK (Enacted 2010) stated that this "act… must be based on a single legal basis, namely Article 192(1) TFEU.”22
Impact Assessment of Article 169 TFEU modifies Article 153 EC while Article 4(f) TFEU establishes consumer protection
Batteries and
Implementation of Internal as am area of shared competence. This provides a new legal basis for consumer rights. In
accumulators Directive,
8 Market Provisions of Batteries addition Lisbon gave Consumer Protection greater significance. The European Parliament has
Directive 2006/66/EC
and Accumulators Directive stated that the "act… must be based on a single legal basis, namely Article 192(1) TFEU." 23 Also
(Enacted 2008)
(2006/66/EC) amended to be aligned with Articles 290 and 291 TFEU.24
Lisbon modified Article 4 of the TFEU so as to make it clear that energy policy is a shared
Implementation of Article 5 of Energy Services Directive competence between the EU and the member states. In addition the Treaty also makes it clear
9 the Energy End Use and Energy (Directive 2006/32/EC) that energy is to be understood within the context of the internal market (Article 194 TFEU) The
Services Directive (Enacted 2008) European Parliament has referred to Article 194 is the legal basis of the Directive when
discussing future amendments or changes to this law.25
21
COMMISSION 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
22 European 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>
23 European 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
25 Draft proposal found at
9Lisbon modified Article 4 of the TFEU so as to make it clear that energy policy is a shared
Energy Services Directive competence between the EU and the member states. In addition the Treaty also makes it clear
Provision of historic
10 (Directive 2006/32/EC) that energy is to be understood within the context of the internal market (Article 194 TFEU) The
consumption on Energy Bills
(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.
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
Directive 2007/46/EC
introduced an explicit acknowledgement that the EU had a right to legislate in the field of
Vehicle Type Approval and Amended by
climate change The European Commission has stated that the legal basis to deal with air
11 implementation of Directive Commission regulation
pollution stems from Articles 191 and 192 of the TFEU. The EU has also argued that "The right for
2007/46/EC No 195/2013 (Enacted
the Union to act [in addressing climate change] is set out in Articles 191 and 192 of the Treaty
2009)
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
Increasing the fees for entering
Energy Performance Lisbon modified Article 4 of the TFEU so as to make it clear that energy policy is a shared
Certificates and Related Directive 2010/31/EU competence between the EU and the member states. In addition the Treaty also makes it clear
12
Documents onto the Energy (Enacted 2013) that energy is to be understood within the context of the internal market. Legal basis is Article
Performance Certificate 194 TFEU.
Registers
26COMMISSION 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
10Lisbon 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 addition the Treaty also makes it clear
Energy use Products
Impact Assessment of EuP that energy is to be understood within the context of the internal market (Article 194 TFEU) The
Directive, Directive
13 Implementing Measure for European Commission has stated "The Lisbon Treaty ... supplies the EU with new power to
2005/32/EC (Enacted
External Power Supplies develop energy savings policies based on its specific new energy chapter. Whereas until recently,
2010)
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
Recast of the Energy Lisbon modified Article 4 of the TFEU so as to make it clear that energy policy is a shared
Directive 2010/31/EU
14 Performance of Buildings competence between the EU and the member states. In addition the Treaty also makes it clear
(Enacted 2012)
Regulations that energy is to be understood within the context of the internal market (Article 194 TFEU)
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 addition the Treaty also makes it clear
Energy use Products that energy is to be understood within the context of the internal market (Article 194 TFEU) The
EuP Implementing Measures for Directive, Directive European Commission has stated "The Lisbon Treaty ... supplies the EU with new power to
15
Simple Set Top Boxes 2005/32/EC (Enacted develop energy savings policies based on its specific new energy chapter. Whereas until recently,
2010) 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" 28
The European Parliament states that Article 191 is the legal basis for Directive 2005/32/EC29
27 European Commission, Study of the costs and benefits of the Action Plan for Energy Efficiency of the European Union, found at
28 European Commission, Study of the costs and benefits of the Action Plan for Energy Efficiency of the European Union, found at
29 European Parliament factsheet found at < http://www.europarl.europa.eu/aboutparliament/en/displayFtu.html?ftuId=FTU_5.4.8.html>
11Lisbon 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 addition the Treaty also makes it clear
Energy use Products that energy is to be understood within the context of the internal market (Article 194 TFEU). The
Impact Assessment of EuP
Directive, Directive European Commission has stated "The Lisbon Treaty ... supplies the EU with new power to
16 Implementing Measures for
2005/32/EC (Enacted develop energy savings policies based on its specific new energy chapter. Whereas until recently,
Tertiary Lighting
2009) 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"30
The European Parliament states that Article 191 is the legal basis for Directive 2005/32/EC31
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 addition the Treaty also makes it clear
Impact Assessment of EuP Energy use Products that energy is to be understood within the context of the internal market (Article 194 TFEU). The
Implementing Measures for Directive, Directive European Commission has stated "The Lisbon Treaty ... supplies the EU with new power to
17
non-directional household 2005/32/EC (Enacted develop energy savings policies based on its specific new energy chapter. Whereas until recently,
lamps 2009) 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" 32
The European Parliament states that Article 191 is the legal basis for Directive 2005/32/EC33
Impact Assessment of the Lisbon modified Article 4 of the TFEU so as to make it clear that energy policy is a shared
implementation of the Energy Directive 2010/31/EU competence between the EU and the member states. In addition the Treaty also makes it clear
18
Products Directive (EPD) on (Enacted 2013) that energy is to be understood within the context of the internal market. Legal basis is Article
private pleasure boats 194 TFEU34
30 European Commission, Study of the costs and benefits of the Action Plan for Energy Efficiency of the European Union, found at
31 European Parliament factsheet found at < http://www.europarl.europa.eu/aboutparliament/en/displayFtu.html?ftuId=FTU_5.4.8.html>
32 European Commission, Study of the costs and benefits of the Action Plan for Energy Efficiency of the European Union, found at
33 European Parliament factsheet found at < http://www.europarl.europa.eu/aboutparliament/en/displayFtu.html?ftuId=FTU_5.4.8.html>
34 Directive 2010/31/EU found at
12Impact Assessment of the Energy Products
Lisbon modified Article 4 of the TFEU so as to make it clear that energy policy is a shared
implementation of the Energy Directive (EPD) Directive
19 competence between the EU and the member states. In addition the Treaty also makes it clear
Products Directive (EPD) on 2003/96/EC (On-going
that energy is to be understood within the context of the internal market (Article 194 TFEU)
private pleasure flying modifications)
Impact Assessment of the Lisbon added a reference stating that one of the EU's duties was “ensuring that competition is
implementation of Directive Directive 2006/43/EC not distorted” in a Protocol on the internal market and competition. The European Commission
20
2006/43/EU - Statutory Audit (On-going modifications) has stated that modifications are needed, under which Lisbon Treaty offers the legal basis for
Directive this regulation.35
35 European Commission, Proposal for Directive amending Directive 2006/43/EC found at
13Table 2: The cost of the Lisbon Treaty to British businesses
One-off cost to Final cost to British Total cost to British business
Average annual cost to British Final cost to Net cost to British
Reg. No. British business (discounting so far (since Lisbon changed
business British business business so far
business all pre-Lisbon costs) legal basis)
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
36 Costs determined by adding up individual costs to businesses listed in IA
37 Initial costs are down to “communication” and are not counted
38 Deducting all “administrative costs” (£3.5 million)
14One-off cost to Final cost to British Total cost to British business
Average annual cost to British Final cost to Net cost to British
Reg. No. British business (discounting so far (since Lisbon changed
business British business business so far
business all pre-Lisbon costs) legal basis)
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
39
IA 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)
40 Calculated for British business by adding all annual costs for business and one off costs for business
41 IA 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.
42 IA 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.
15One-off cost to Final cost to British Total cost to British business
Average annual cost to British Final cost to Net cost to British
Reg. No. British business (discounting so far (since Lisbon changed
business British business business so far
business all pre-Lisbon costs) legal basis)
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
43 IA states that the cost to manufacturers is “negligible” – not used in final calculations, however IA notes costs will be transferred to consumers.
44 IA states that the cost to manufacturers is “negligible” – not used in final calculations.
45 IA states that the cost to manufacturers is “negligible” – not used in final calculations.
46 IA 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 thirteen
years.
47 IA states that the cost to manufacturers is “negligible” – not used in final calculations, however IA notes costs will be transferred to consumers.
48 IA states that the cost to manufacturers is “negligible” – not used in final calculations
49 IA states that the cost to manufacturers is “negligible” – not used in final calculations
50
IA 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.
51 IA states that costs going to HMRC. Costs to suppliers not specified.
52 Average annual benefits to British business is £1,987,114,884
53 Final benefits to British business(discounting all pre-Lisbon costs) is £3,805,446,000
54 Total benefits to British business so far (discounting all pre-Lisbon costs) is £1,858,459,536
16Appendix
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 areas
named 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 EU’s 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 EU’s 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 policy
areas 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 Office’s (FCO’s) assessment and the House of Lords
Impact Assessment. If these reports either (i) concluded that the EU’s remit had expanded
or (ii) included detailed testimony highlighting how the EU’s role could increase, then these
were used. Using this methodology, the following areas were highlighted as policy areas
over which the EU’s influence increased as a direct result of the Lisbon Treaty:
Climate change
The Lisbon Treaty for the first time explicitly mentioned climate change as a shared
competence between the EU and the member states – the first explicit acknowledgement of
the EU’s 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
17objectives, 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 EU
policy”56 and the FCO noted at the time the Lisbon Treaty “added [EU] focus on combating
climate change.”57 The EU also stated: “With the Treaty of Lisbon, combating climate change
on an international level becomes a specific objective of EU environmental policy.”58 Since
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
change – the 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.”60 Notably, 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
Energy
The Treaty of Lisbon modified Article 194 TFEU, changing and expanding the EU’s legal basis
when it comes to Energy. The EU’s 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
55 House of Lords European Union Committee, The Treaty of Lisbon: an impact assessment: Volume I, p. 225, February 2008, found at
56
Evidence to the House of Lords, found at < http://www.publications.parliament.uk/pa/ld200708/ldselect/ldeucom/62/8011602.htm>
57 FCO, A comparative table of the current EC and EU Treaties as amended by the Treaty of Lisbon, January 2008, found at
58 Europa.eu, Treaty of Lisbon, found at
59 Commission 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>
60 ClientEarth 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.pdf
61 European Parliament, Fact Sheets on the European Union: Climate Change and the Environment, found at
62 FCO, A comparative table of the current EC and EU Treaties as amended by the Treaty of Lisbon, January 2008, found at
18supply 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
Environment
Environmental 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.”64 However, 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 EU’s 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 Market
While at first glance it may seem that the Lisbon Treaty changed little (Articles 101–103 of
the TFEU are the same as Articles 81–83 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 products
The Lisbon Treaty’s 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 activities”68
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:
63 House of Lords European Union Committee, The Treaty of Lisbon: an impact assessment: Volume I, p. 221, February 2008, found at
64 FCO, A comparative table of the current EC and EU Treaties as amended by the Treaty of Lisbon, January 2008, found at
65 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2013:329:0005:0009:EN:PDF
66 FCO, A comparative table of the current EC and EU Treaties as amended by the Treaty of Lisbon, January 2008, found at
67 House of Lords European Union Committee, The Treaty of Lisbon: an impact assessment: Volume I, p. 218, February 2008, found at
68 FCO, A comparative table of the current EC and EU Treaties as amended by the Treaty of Lisbon, January 2008, found at
19i) Stems from an article which was modified by Lisbon (i.e. Articles in the TFEU
that 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 articles
listed above as a legal basis for the law – even if the law had been introduced
before Lisbon came into force.
iii) Had been updated by new laws or regulations which derived their legal basis
from 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 waste
management/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 notification
requirements 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.
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