" A step backwards for transparency"

The bulk of the cost of regulations in both the UK and Europe stem from the European Union, as we've showed in our extensive research on the subject. But this isn't even the end of the story.

Many key decisions on the actual substance of EU laws and regulations are being taken during an uber-opaque process called “Comitology”. As we've noted before, Comitology involves special committees consisting of Commission and national experts deciding on how EU legislation should be implemented - usually behind closed doors - after the proposal has been agreed by national governments and the European Parliament.

The Lisbon Treaty - the document, if you remember, that would lead to more transparency in Europe - is introducing new rules for the Comitology procedure, effective from 1 March 2011. The new rules were meant to improve and simplify the system, but are now universally acknowledged to have made the situation even worse (we explain why here).

Political consultant Daniel Guégen, who is one of the foremost experts on this topic, makes the slightly worrying observation that as a result of the reform, power in Brussels “is shifting from the political level to the bureaucratic level.”

Even the European Commission concurs. Mario-Paulo Tenreiro, who is responsible for institutional questions at the Secretariat General of the European Commission (exciting job), says:

I must admit that for the general public the new rules are a step back for transparency...Hundreds of thousands of decisions will be taken by these Treaty articles every year.

Apart from the complexity and opaqueness of the new rules, Euractiv reports that the reforms are also causing legal uncertainty. According to Wolfgang Heusel, director of the Academy of European Law (ERA), this means that "courts will have to have the last word" on how EU legislation should be implemented.

Does this matter? Absolutely! As much as 50% of the actual substance of all EU rules is decided during the comitology stage after the law has already been agreed by Ministers and MEPs, according to Dutch academic research. So we're not talking about fixing little details.

Are the Coalition and other governments around Europe keeping up? We fear not.

Ahead of the last General Election, Ken Clarke (then Shadow Business Minister, now Justice Secretary) managed to give an entire key note speech on regulation and how to improve it, without mentioning the EU once.

Il faut le faire, as the French say.

If the EU did satellites, they'd probably be...Part II

Back in October we estimated, based on leaked reports from a couple of European governments, that the EU's mismanaged Galileo project - aimed at creating a global satellite navigation system – was way over budget (and possibly ten years behind schedule).

We said that the EU Commission was under-estimating the deployment cost of the project and would in fact need an extra €1.5 billion to €1.7 billion, on top of the existing €3.4 billion, to keep the party going. In addition, we noted that the annual operational cost of Galileo could be in the area of €750 million.

Following our investigation and other reports in the media, the EU Commission hit back (as it usually does) with Industry Commissioner Antonio Tajani himself denying - with a straight face - that the project was over budget in any way. In his words:

I don't know where these figures come from

Tajani described the estimates as "exorbitant" and "unimaginable", and insisted that the deployment budget (which is only part of the cost) remained at €3.4 billion.

Well, we're forced to admit, it turns out that our estimates weren't quite correct.

In fact, as Mr. Tajani and the Commission finally admitted today, the Galileo project needs not another €1.5-1.7 billion as we claimed, but an extra €1.9 billion of taxpayers’ cash to cover the booming deployment cost. At the same time, the Commission now puts the annual operation cost at €800 million (not €750 million as we foolishly thought).

We do apologise to the Commission for having misrepresented the cost of the project.

But what's going on here? Either Tajani lied to taxpayers back in October or he displayed extraordinary incompetence. We're not sure what's worse.

And it turns out that the leaked estimates were more or less spot-on (we're now eagerly awaiting Tajani's appearance on the Commission's euromyths list for spreading 'half-truths', 'rumours' etc.)

Just to reiterate how badly managed this project has been from the very start. According to our under-estimates from October, the total cost of Galileo from start to completion, and then running it over a 20 year period, is a staggering €22.2 billion – a cost which will be borne entirely by taxpayers and which now has to be revised upwards yet again.

Under the original estimates (from 2000) this cost would have been €7.7 billion, of which only €2.6 billion was to be borne by taxpayers and the rest by private investors (the private investors pulled out in 2007, citing lack of commercial prospects). The project has been beset with delays and cost over-runs at every single stage of its history.

Perhaps it should come as no surprise, then, that even people who are benefitting from the project are raising doubts. According to American diplomatic cables, released by WikiLeaks (first revealed last week by Norwegian paper Aftenposten), Berry Smutny, the CEO of OHB Technology, a company that has a £475 million contract to build 14 Galileo satellites, is claimed to have said:

I think Galileo is a stupid idea that primarily serves French interests.

Ouch.

Mr Smutny also told US officials that in "his opinion the final cost [for the deployment cost] will balloon to around" €10 billion before all is said and done.

It's not getting any better.

Tajani is now asking European governments to cough up yet more cash to cover the shortfall. Sensibly, the UK Government is saying No - and will probably be joined by several other Governments. And they are right. Not a single penny more should be given to the Galileo project until we see a final, robust analysis of what the project will finally cost relative to the benefits it will generate.

Of course, Tajani is keen to point out that the satellite is expected to bring €90 billion to the European economy over 20 years. This has been revised down radically from the Commission's ridiculous original estimate of €275 billion per year in revenues worldwide by 2020 (in addition to the equally delusional 3 billion users and the creation of 150,000 new jobs).

Forgive us for not quite trusting Tajani on this one.

Say what you see

Strong stuff coming out of the Lib Dem conference in Bournemouth today... Hat-tip Spectator Coffee House Blog.

Chris Davies MEP gets worked up over the issue of politicians fiddling their expenses:

"I hate the dirty, cheating b******s, who have taken every opportunity to fill their private pockets with public money. I despise them for dragging down the reputation of my Parliament and all its members. I want them exposed. I want them punished. I want them thrown out."

We don't know exactly who he's referring to but in the past he has singled out disgraced ex-Conservative MEP Den Dover, who apparently still owes the taxpayer £500,000 in "unduly paid expenses", saying that some people see him as "no better than a thief".

Davies' comments are a useful reminder that the problem of MEPs and their expenses is still to be resolved. Since July MEPs have been governed by a new Members' Statute, governing rules on expenses and allowances for MEPs, which offers some very small improvements.

For instance, whereas in the past, MEPs did not have to produce a single receipt for the more than £360,000 available to them every year in allowances (on top of their salary), MEPs must now produce receipts for one chunk of that, which is their travel expenses (although the rules now state that all travel can be by business class). As well as that, MEPs' staff in Brussels are now directly employed, and paid for, by the European Parliament.

MEPs may also no longer employ direct family members (although if they were already working for them in July, they may carry on working for them).

But office expenses and the daily subsistence allowance are still available without receipts - effectively leaving huge amounts of money going straight into MEPs' pockets every year, with no check on how that your money is being spent.

Outrageously, as recently as March this year, MEPs voted to exempt documents which detail how much they are claiming in expenses, and what they are claiming for, from public information requests.

Full credit to Chris Davies - he is one of avery few MEPs who has consistently encouraged and voted in favour of greater transparency in the European Parliament (he voted against exempting documents relating to MEPs' expenses, along with about a quarter of UK MEPs).

Just like at Westminster, the Brussels (and Strasbourg) system needs root-and-branch reform, as we've spelled out before.