Legislators should look better at feasibility of laws from the start

After the Netherlands had to deal with Covid-19 in March 2020, the Dutch government took many support measures in little time that had to compensate enterprises for the extensive economic consequences of the pandemic. The speed with which measures such as the NOW, Tozo and TOFA were developed was unprecedented. Whereas a legislative procedure usually takes over two years, this sometimes took less than two weeks. But how did entrepreneurs experience the feasibility and regulatory pressure of the support measures? How do the measures taken relate to the usual legislative process and the principles of thoroughness that come with that? MPs should take the executive and enforcement test much more seriously, says Professor of Regulatory Governance Judith van Erp. And: if you involve the execution in the legislative process from the start, you get more realistic and more effective regulation.

Researchers with the Utrecht University School of Governance (USG), in collaboration with the consultancy firm Andersson Elffers Felix (AEF) and commissioned by the Adviescollege Toetsing Regeldruk (ATR) analysed the feasibility and regulatory pressure of the Covid-19 support measures, and report on them in the research report Lessen voor lastenluwe regels. (‘Lessons for burden-free rules’). They also draw conclusions regarding the legislative processes in ‘normal’, non-pandemic circumstances in the report – and make recommendations.

Supporting measures for entrepreneurs

The researchers have looked at a number of supporting measures for entrepreneurs, including the Noodmaatregel Overbrugging Werkgelegenheid (NOW) (Emergency measure for bridging employment), the Tijdelijke overbruggingsregeling zelfstandig ondernemers (Tozo) (Temporary bridging measure for independent entrepreneurs) and the Tijdelijke Overbruggingsregeling voor Flexibele Arbeidskrachten (TOFA) (Temporary bridging measure for flexible employees). Besides literature and document studies, they also conducted interviews and focus groups with for instance  legislation lawyers, employees of executive organisations and entrepreneurs from various sectors, including independent contractors.

Whereas the feasibility and enforceability seem to be top priorities in the support measures, these often receive insufficient attention in the regular legislative procedures, according to the Adviescollege Toetsing Regeldruk (Dutch Advisory Board on Regulatory Burden). What are the researchers' conclusions?

From fast support to supplementary conditions

For the arrangement of the Covid-19 support measures, effectiveness and enforceability had top priority. As many entrepreneurs as possible had to receive support as easily and fast as possible, research-team member Leonie Heres explains. That initially resulted in well-feasible rules and lower regulatory pressure for large groups of entrepreneurs than with standard grant measures.

The fact that government support for entrepreneurs came quickly and was generous, was taken as recognition of their problems by the entrepreneurs the researchers interviewed. The proactive attitude of municipalities and other parties to actively support entrepreneurs seems to have benefited trust in government.

Experiencing justice was an important motivation for additional conditions

As the pandemic progressed, other interests – effectiveness and thoroughness – got more priority. The need for more customisation arose, because certain categories of entrepreneurs were left behind. That made the rules more complicated. Politics also gradually paid more attention to the prevention of abuse and improper use of the measures, which resulted in a stronger call for efficient use of the resources and legitimacy testing. The researchers noticed that experiencing justice was an important motivation for additional conditions. For instance, the ban on allocating bonuses as a condition for NOW support was added to the arrangement based on a motion from the Dutch House of Representatives.

Another example is the introduction of the partner test to the Tozo arrangement. As new conditions also have to be checked, this has resulted in more regulatory pressure for entrepreneurs.

We can't always say that we can implement rules in just one weekend, because the process has to be more thorough. Because if the error rate remains high for a long time, that also affects trust in the government.

Less regulatory pressure, and inspections for rightful allocation are contradictory to some degree. Therefore, it is not very easy to reduce regulatory pressure in ‘standard situations’. Because these other interests are also very important. A higher error rate was accepted in order to be able to act quickly, Leonie Heres says. But you really can't just copy that to a standard situation. We can't always say that we can implement rules in just one weekend, because the process has to be more thorough. Because if the error rate remains high for a long time, that also affects trust in the government.

Execution should be involved in the legislative process from the start

Still, the research also provided insights to reduce the experienced regulatory pressure. These involve matters such as: a central office for multiple arrangements, more attention for the proportionality of inspections, proactive provision of services that is also provided in the final phase of the arrangements and, more generally, the attempt to better connect with the entrepreneurial practice.

For the arrangement of the support measures, execution was the leading principle, and representatives of executive organisations and enterprises were already represented in the design phase. That is a unlike the standard situation, in which consultation only takes place after the design phase. People involved in the legislative process appreciated the broad(er) attention for the enforceability of laws, and are very positive about the effectiveness of the measures and the speed with which entrepreneurs were supported.

MPs should take the executive and enforcement test much more seriously.

Still, the researchers observe that a part of the formal consultation seems to have been overlooked, and not just when it comes to the support measures. MPs should take the executive and enforcement test (the mandatory UHT) much more seriously, Judith van Erp says, regarding this. It wouldn't be enforceable otherwise. If you keep wanting to adjust rules, add new rules or grant exceptions, regulations become very complicated as a whole and more difficult to execute for administrative organisations and entrepreneurs. If you involve the execution in the legislative process from the start, you get more realistic and more effective regulations. People may have gotten used to it, but you really can handle that differently.

It stands out that intermediate increases of rules and inspections for entrepreneurs seem to result in experiencing a bigger regulatory pressure than regulatory pressure that is known from the start. Entrepreneurs who participated in the research accept that they will lose time and energy while applying for and wrapping up support measures. But they were surprised by a growing regulatory pressure, by changes and by the accountability process. Apparently, it matters whether or not they are aware in advance that the regulatory pressure can vary from phase to phase and that they are aware of what they are in for.

Lessons for the future

Based on their study, the researchers draw conclusions for the future from the legislative process involved with Covid-19 support measures:
 

• Involving executive organisations in the arrangement of laws and regulations makes for policy that is better to enforce.
   
• The fine-tuning between regulations also provides a better view on regulatory pressure resulting from compiling and combining regulations by multiple departments. It is advisable to consider the user's perspective on which combinations of regulations are common and fine-tune them with other departments.
   
• Legislators and legislative lawyers can also take into account that the enforcement might have to be upscaled unexpectedly while drafting laws and regulations in non-crisis situations, and also take the expected lifespan and phasing of measures into account.
   

For regulations in which civilians and entrepreneurs are entitled to certain forms of government support, it is advisable to work with various scenarios regarding the scale of the use.

Research Team

The core research team consisted of: Sander Geurts (AEF), Dr. Hilke Grootelaar (AEF), Jonas van Leeuwen (AEF), Dr. Leonie Heres (Utrecht University School of Governance), Prof. Dr. Judith van Erp (Utrecht University School of Governance).

More information / the full report

Would you like to know more about this research? Please contact Judith van Erp: j.g.vanerp@uu.nl.

The full report Lessen voor lastenluwe regels – Onderzoek naar de werkbaarheid en regeldruk van de Covid-19-steunmaatregelen (‘Lessons for burden-free rules. Research into the feasibility and regulatory pressure of the Covid-19 support measures’) can be found here (in Dutch):