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April 30, 2008

Deloitte firms team up on EU regulation

Deloitte firms team up on EU regulation

Deloitte member firms have joined a consortium to assist the European Union and member states to reduce the business costs of complying with European legislation. Deloitte engagement partner Richard Doherty speaks to IAB about the project.

The European Commission plans to slash one-quarter of the business compliance costs of existing EU regulation by 2012. This ambitious strategy is a key pillar of the EU’s Better Regulation programme, which aims to eliminate unnecessary barriers and burdens on European business.

A consortium, comprised of experts from Deloitte member firms across Europe and consultancies Capgemini and Ramboll Management, has been tasked by the EC to identify opportunities to cut costs in three key aspects of the project. These include measuring the business costs that arise from EU legislation, identifying opportunities to reduce the administrative burden and helping regulators communicate activities about the project.

The global network’s lead client partner for EU institutions, Richard Doherty, is the engagement partner on the project. The Deloitte Belgium partner tells IAB the programme will be run by a core team drawn from the three organisations. The core will consist of between 40 and 50 people of whom 15 to 20 will come from Deloitte. There will be an additional circle of part-time support and other expert roles. In each of the 27 EU member states, there will also be teams drawn from the three consortium members.

“The workload at national level will depend in the end on the number of items of legislation that are covered by the programme,” Doherty explains. “Given the tight time frame, if we’ve got a large number of pieces of legislation we’re going to have to put a large number of people on in each country.”

Deloitte staff for the project will be drawn from audit, risk services, tax, legal and consulting. “The scope of the work to be done and the subject matter of the work we’re doing requires skills from all of those different areas. The lead is in consulting but we need very much the input from the other colleagues,” Doherty says.

Discussions about forming the consortium began well before the EU issued a public tender for the 18-month programme. Doherty says the consortium members had all previously worked with government and business in individual EU member states to develop ideas for reducing the burden of regulation legislation. “We were, as it were, watching the European programme,” he explains. “We had started discussions with the other companies in advance of [the EU announcement] in order to ensure that we could create the consortium effectively, because we knew that it would be a highly competitive process.”

The EU-wide project has been inspired by several individual member states already involved in initiatives to reduce the administrative burden of regulation. The EU hopes to identify and align best practices across the region. The incentive behind the project is to make the EU more globally competitive by reducing the cost of business. In addition to appointing the consortium, the EC also plans to launch a website where companies and individuals can post their ideas for reducing the administrative burden.

The consortium will be active in all 27 European member states and will develop solutions to specific issues identified at member state level and on a European scale.

Doherty says the task for the consortium in the year ahead “will be measuring in each country the current cost and burden that these laws represent for businesses”. He continues: “Once we have that burden estimated, we can be much clearer about which areas are more burdensome than others. What we’re looking at is both generic laws affecting all businesses in the areas of say company law, of employment conditions, VAT, statistics, and what is called cohesion or regional policy and public procurement; and then in terms of laws affecting particular sectors, we’re looking at financial services, fisheries, transport, the food industry, agriculture and pharmaceuticals.”

Doherty explains there are potentially hundreds of rules and procedures at national level that may have to be changed in order to implement the recommendations the consortium will offer. “Before that’s all discussed, agreed and implemented, it will inevitably take some time,” he admits.

Despite Deloitte’s experience in assisting EU member states find ways to reduce the administrative burden, Doherty is reluctant to reveal any quick fixes. “Anything that we come up with has to be discussed with the member states and the commission and even if we propose something, they might not agree,” he explains. “We will not wait until the very end of the project to make proposals, we will be making proposals right throughout the process… it’s [then] up to our clients to look at what we propose and if they agree with it, obviously they will take it forward.”

The project will run for 18 months and is predicted to finish by the end of 2008. This is in time for the European Council to launch implementation of the proposals in early 2009.

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