On the European Union regulatory fitness and subsidiarity and proportionality – report on Better Law-Making covering 2023 and 2024

–having regard to the report by Mario Draghi of 9 September 2024 entitled ‘The future of European Competitiveness – A Competitiveness Strategy for Europe’ (the Draghi report),

–having regard to the report by Enrico Letta of April 2024 entitled ‘Much more than a Market’ (the Letta report),

–having regard to Rule 55 of its Rules of Procedure,

–having regard to the report of the Committee on Legal Affairs (A10-0000/2025),

A.whereas, in accordance with Article 5 TEU, the limits of EU competences are governed by the principle of conferral; whereas the use of EU competences is governed by the principles of subsidiarity and proportionality;

B.whereas better law-making is a shared responsibility between the EU institutions and the Member States, requiring a commitment to transparency, proportionality and accountability;

C.whereas national parliaments are the natural guardians of the principle of subsidiarity and play a crucial role in ensuring compliance with the principles of subsidiarity and proportionality through interparliamentary dialogue and the Early Warning System, which allows national parliaments and/or chambers to submit a reasoned opinion if they believe a legislative proposal does not respect the principle of subsidiarity;

D.whereas excessive regulatory burdens hinder the competitiveness, innovation and growth of EU companies, with particularly detrimental effects on small and medium-sized enterprises (SMEs);

E.whereas gold-plating practices undermine not only the uniform application of EU legislation but also citizens’ trust in the EU, and create excessive burdens;

F.whereas the ‘one in, two out’ principle should not be understood as a numerical target for legislative acts, but rather as a cost-based mechanism aimed at achieving a tangible net reduction in regulatory costs; whereas the focus must remain on the total administrative, compliance and implementation costs imposed on businesses, ensuring that any new obligations are balanced by the double removal or simplification of current rules of equivalent cost;

Subsidiarity and proportionality

1.Recalls that, under the principles of subsidiarity and proportionality enshrined in Article 5 TEU, the EU has an obligation to legislate only where and to the extent necessary; recalls that the aim of this obligation is to legislate as closely as possible to the citizens of the EU, including both individuals and businesses;

2.Notes that in 2023, national parliaments submitted 22 reasoned opinions, a third less than in 2022, in line with the long-term downward trend in the number of reasoned opinions; notes that there was also an increase in the participation of national parliaments in the wider political dialogue with the Commission, representing an increase of over 10 % compared to 2022;

3.Notes that, in addition to the subsidiarity control mechanism established by Protocol No 2, the Commission put in place a political dialogue in 2006, through which 402 opinions were submitted in 2023; notes, furthermore, that in those submissions, national parliaments focused on the 2023 Commission work programme;

4.Notes that 2024 marked 15 years since the entry into force and application of the Treaty of Lisbon, which introduced higher levels of parliamentary scrutiny and democratic accountability in the EU, notably through the principles of subsidiarity and proportionality;

5.Notes that 2024 was also a transition year between two Commission terms, during which the intensity of national parliamentary scrutiny typically decreases; notes that this was also the case in 2024, during which national parliaments submitted 252 opinions, of which 14 were reasoned opinions; notes that although this is a considerable decrease compared to 2023, it is not unusual for a transition year and was a more modest decrease compared to the previous transition year, 2019;

6.Notes that in 2024, the very first action was brought before the Court of Justice of the European Union by a chamber of a national parliament requesting the annulment of a legislative act on the grounds that it exceeded the EU’s competences and breached the principle of subsidiarity; notes, furthermore, that in 2024, the Court of Justice of the European Union annulled a provision of a regulation added during the legislative negotiations on the grounds that there was insufficient information to assess and unequivocally establish its proportionality; reaffirms, in the light of the foregoing, that the principles of subsidiarity and proportionality remain essential to the EU’s legitimacy and calls for closer cooperation and enhanced structured dialogue with national parliaments;

Better law-making

7.Underlines that, despite progress made under the better regulation agenda, EU legislation still generates excessive regulatory burden;

8.Considers that in order to achieve the objectives of the better regulation agenda, the quality and use of impact assessments need to be improved; highlights, in particular, the problem that impact assessments only focus on legislative proposals as submitted and are often not properly evaluated after they have been enacted or implemented;

9.Stresses that all major legislative and policy initiatives should be accompanied by a cost-benefit analysis; considers such analyses indispensable for evidence-based policymaking and for maintaining citizens’ and businesses’ trust in EU legislation; is of the opinion that in situations where no impact assessment is drafted, a cost-benefit analysis must be prepared at a later stage and accompany the proposal;

10.Recognises that current mechanisms, meant to control legislative burden, such as the ‘one in, one out’ approach, struggle to function effectively as a result of the lack of proper ex-post evaluations of the actual cost of legislation; further considers that the lack of efficient mechanisms for removing outdated or redundant measures constitutes a serious shortcoming;

11.Calls on the Commission to further step up efforts to reduce regulatory obligations for citizens and businesses; considers the current ‘one in, one out’ approach insufficient in this regard; calls, therefore, for the establishment of a ‘one in, two out’ approach in order to truly ease regulatory burden, rather than just maintaining the regulatory status quo; takes the position that the establishment of a ‘one in, two out’ approach should include a clear methodology and an independent monitoring mechanism to achieve a net reduction in regulatory costs; calls for the role of the Regulatory Scrutiny Board to be strengthened in this regard;

12.Takes the view that, in cases where the Regulatory Scrutiny Board issues a negative opinion on an impact assessment, particularly when significant competitiveness concerns are identified, Parliament should be properly and timely informed to review whether to proceed with the proposal or reject it;

13.Notes that the Commission’s annual burden survey plays a central role in tracking progress on burden reduction; stresses, however, that greater transparency is needed regarding the calculation and methodology used to measure costs and cumulative effects, in order to ensure accountability and comparability across policy areas;

14.Notes that reporting obligations often generate considerable administrative costs for companies, in particular SMEs; takes the view that such obligations should be recognised as a service of general interest; calls, therefore, on the Commission to assess the feasibility of establishing mechanisms through which companies could receive financial compensation for mandatory reporting tasks; invites the Commission to present a report identifying the types of reporting obligations for which such compensation schemes could be appropriate;

Regulatory fitness and better law-making for competitiveness

15.Recalls that the Draghi report underlined simplifying rules as one of the three overarching goals for a renewed European partnership7; further recalls that, similarly, the Letta report stresses that regulations should facilitate, rather than hinder, economic activity and innovation within the single market8;

16.Welcomes the introduction, in 2023, of the new SME and competitiveness check, which has become a mandatory annex to impact assessments; welcomes the pledge by the President of the Commission Ursula von der Leyen that this new SME and competitiveness check will help avoid regulatory burdens while maintaining high standards; notes that actions must now follow words;

17.Reiterates the importance of the ‘Think Small First’ principle as a cornerstone of better regulation, ensuring that the needs and capacities of SMEs are systematically considered at every stage of the policy cycle, from design to implementation and evaluation;

18.Welcomes the Commission’s pledge to reduce reporting obligations by 25 %, but stresses that this target must be more ambitious; welcomes, therefore, the inclusion of a 35 % reduction in administrative costs and reporting for SMEs; recalls, moreover, that reporting obligations constitute only a small fraction of the total regulatory burden, which also includes administrative, implementation and compliance costs; notes that the Commission’s 25 % target should therefore be viewed within the broader objective of reducing overall costs and complexities; calls, accordingly, for a more ambitious approach, aiming for a 30 % reduction in all regulatory costs and a 35 % reduction in regulatory costs for SMEs and scaleups;

19.Stresses that there is great potential in digital tools and AI-based solutions to help simplify compliance and reduce regulatory costs; considers that the potential power of digital tools to deliver better and faster solutions in this regard needs to be further explored;

20.Warns against the persistent problem of gold-plating by the Member States in the transposition of directives; urges the Member States to refrain from such gold-plating practices and calls on the Commission to identify and publish instances of such practices in its annual implementation reports;

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21.Instructs its President to forward this resolution to the Council and the Commission.