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(The homepage for this consultation is on DEFRA’s website. The deadline for submission is 26 May 2009.)

Introduction

1. This document seeks your views on the way in which Defra and the Devolved Administrations of Northern Ireland, Scotland and Wales propose to transpose1 the Infrastructure for Spatial Information in the European Community (INSPIRE) Directive 2007/2/EC (the “Directive”) into UK law.

2. INSPIRE is about electronic spatial data and services for environmental information. It aims to create a European Spatial Data Infrastructure, based on Member States’ infrastructures, to improve the interoperability of spatial information. These data and services will be delivered through initiatives across Europe, for example, the provision of a European Inspire geo-portal.

3. Developing this initiative will require negotiation and adoption at a pan European level of a range of implementing rules covering for example metadata, data specifications, network services, data and data service sharing, monitoring and reporting requirements. This work has begun but will continue beyond the transposition of the parent Directive. The adoption of new implementing rules may require further UK regulation and a preliminary timetable based on the latest available information is set out in Annex 3.

4. In implementing this Directive there will be a duty placed on all public authorities. However INSPIRE does not require the collection of new data sets and so for those public authorities already publishing environmental data this may be very much ‘business as usual’ but the overall impact will need to be assessed by all public authorities on a case by case basis. The implementation of this Directive may also create efficiencies through opportunities for better collaboration and faster access to data.

5. The scope of this Directive is very wide but is focused on the Environment for which Defra has the cross government policy lead. Defra, with the support of all relevant Government Departments and the Devolved Administrations, is coordinating this consultation and future management of this Directive. Separate Geographic Information Strategies and activities for place-related information in the Devolved Administrations are already in place. The impact of INSPIRE on these is currently being assessed, as well as their contribution to the overall implementation of the Directive by the UK.

6. The Directive has already been adopted and is therefore no longer open for debate. This consultation is about the transposition of that Directive and concerns the policy principles to be used when undertaking the detailed drafting of the transposition Statutory Instrument (SI). Defra, with the agreement of the Northern Ireland and Welsh Assemblies, is preparing to transpose this Directive in England, Wales and Northern Ireland. It is proposed that complementary regulations will be prepared by the Scottish Government. This joint consultation will inform the making of both sets of Regulations.

7. Annex 1 describes how we propose to apply the policy principles – see paragraph 12 – in developing the SIs. Many of the provisions in the Directive are straightforward and have the support of those stakeholders involved in the detailed negotiations that have already taken place. There are discrete questions set out in the main body of this document that seek your views in areas where the UK has some discretion.

8. In line with normal regulatory practice we have developed a draft impact assessment for the UK which can be found as a separate document on the Defra website. The impact assessment seeks to estimate the costs and benefits of the transposition for the UK as a whole. The main body of this document contains questions on the impact assessment and invites views on any other issues raised by this consultation.

Transposing the INSPIRE Directive

9. This section briefly explains the organisations we have involved in developing our proposals so far and the policy principles we have used in that process. Annex 1 contains details of how we propose to undertake this transposition.

Stakeholder involvement

10. Defra has involved all major central government departments, representatives of local government and other public authority stakeholders in discussions throughout the negotiation of the Directive and there is a cross-government working group and a transposition project board advising on the latest stages of this process. These activities have included all the Devolved Administrations. Those organisations and government departments consulted so far are listed in Annex 4.

11. Defra has also taken part in a range of outreach activities to engage a wide community of stakeholders, including presentations at annual EC events on geospatial information systems, the annual conference of the Association of Geographic Information; and attendance at technical meetings such as the Digital National Framework programme8.

Policy Principles

12. The following policy principles have formed the basis for preparing the transposition:

13. Annex 1 sets out the detailed proposals for the transposition which as explained above will result initially in two SIs. In simple terms these will set out obligations on public authorities to:

14. There are also obligations on Member States to, for example, facilitate the process of data sharing between its public authorities, between the public authorities of other Member States and provide the European Commission with monitoring reports and information. For the UK, Defra and the Devolved Administrations are proposing to create a Coordination Unit to bring all this work together see paragraphs 31 - 34 of Annex 1.

Impact Assessment

15. A draft Impact Assessment for the UK has been prepared in line with Government good practice. It summarises the available evidence on costs and benefits and other impacts and can be found at http://www.defra.gov.uk/corporate/consult/inspire/index.htm. At earlier stages in the development of the Directive, a Community-wide Impact Assessment was undertaken. The UK also developed an assessment of the Directive’s final proposals. In looking at transposition, two options have been considered: a business as usual (do nothing) approach and an implementation option reflecting the proposals in this consultation document. In summary the impact assessment concludes that the benefits of implementation outweigh the costs, although further work needs be done to develop this assessment. As part of the consultation process you are invited to provide us with evidence to help in that development.

Costs

16. It is believed that the provision of the underpinning infrastructure for INSPIRE can be accommodated within current planned expenditure under business as usual conditions and that future investments and activities will be aligned with the emerging technical standards and implementing rules. The assessment shows that one-off costs of implementation over 10 years are estimated to be some GBP55 - GBP60m for the UK.

Benefits

17. Implementation of the Directive is expected to result in substantial benefits. At this stage it is difficult to provide precise estimates as to their quantum and timing given that many of the implementing rules have yet to be agreed. Nevertheless, the assessment shows that the average annual benefits of implementation, excluding one off benefits, are estimated to be some GBP70 - GBP130m across the UK

How the Directive fits with the UK’s Location Strategy and Spatial Data Infrastructure

18. Implementation of the INSPIRE Directive is a component part of the wider UK Location Strategy, which has wide cross-government and Devolved Administration support. Because of this relationship, implementation will be through a joint work programme which will cover the “environmental” requirements of INSPIRE and requirements for other policy areas that are also covered in the wider Strategy. This work programme will be governed by a Location Council made up of senior government officials and chaired by Defra. Ancillary governance and stakeholder groups will be established to work out the details of implementation and ensure key interests are considered. The programme has been given the working title of the UK Spatial Data Infrastructure Programme. This will also build on the contribution that will be made by the Devolved Administration GI Strategies/SDIs

19. Details of the implementation will emerge as the programme progresses. The programme will need to consider amongst other things:

20. The proposed actions of the joint programme will seek to maximise the potential and business benefit of exploiting spatial information through enhanced knowledge of what data is available, the use of common reference data, a common infrastructure of standards, technology, and business relationships and the development of appropriate skills.

Consultation Questions

Transposition

21. We have set out in Annex 1 our approach to transposition to give you an understanding of what the SIs will contain. In line with our first policy principle (paragraph 12) we have made extensive use of the definitions contained in the Directive. In particular:

(1) Annex 1 Paragraph 2. We propose on grounds of consistency to adopt the definitions of ‘public authority’ already used in the Environmental Information Regulations (EIR) and Environmental Information (Scotland) Regulations (EIR(Scotland)), rather than the definition in the INSPIRE Directive. We would welcome your views.

Derogations

(2a) Annex 1 Paragraph 9(c)(i) concerns the limit we propose to put on the application of INSPIRE to local authorities. The Directive generally applies to public authorities but by way of derogation10 covers the lowest level of government only if there are national laws or regulations requiring the collection of spatial data sets. We intend to limit the scope of this SIs so that they apply only to District Councils or above in England and their equivalents in Northern Ireland, Scotland and Wales; and then only in circumstances in which such local authorities are legally required to collect or disseminate spatial data sets. We would welcome your views.

(2b) Annex 1 Paragraph 25 sets out the derogations on the provision of Network Services. For example, public access to spatial data sets and discovery services may be limited where this would adversely affect international relations, public security or national defence. The Directive proposes wider limitations for public access to spatial data sets and view, download, transformation services and services allowing spatial data services to be invoked which are also set out in paragraph 25. We propose to adopt these when drafting the SIs and would welcome your views.

(2c) Annex 1 Paragraph 29 sets out the derogations on data access and sharing between public authorities when this would compromise the course of justice, public security, national defence or international relations. We propose to adopt these when drafting the SIs and would welcome your views.

(3) We would like to hear from you if you have any other issues about the way we propose to transpose this Directive or the content of the SIs

Impact Assessment

(4) We would welcome from you detailed information about the costs and benefits of INSPIRE and in particular how information about costs and benefits might be collected following transposition.

Other Issues

(5) Are there any other matters in this Consultation Document on which you would like to comment?

Annex 1: Transposition of the Directive in the UK

Definitions

What organisations are covered?

1. The Directive covers spatial data and services relating to environmental information provided by ‘public authorities’, or delivered on their behalf by other organisations. ‘Third parties’, who are not public authorities, to whom the INSPIRE network has been made available, are also within scope.

2. ‘Public authorities’ are defined in the Directive. However they have already defined in UK regulation from previous Directives14 and so as an aid to consistency and general public understanding we propose to adopt the existing legal definitions – see Appendix 1- when transposing the Directive into the SI.

3. ‘Third parties’ are defined in the Directive as meaning ‘any natural or legal person other than a public authority’.

4. Public authorities will be obliged to produce and keep up to date ‘metadata’ (see paragraph 6); to ensure ‘interoperability’ (see paragraph 7) and where practical harmonisation of ‘spatial data sets’ (see paragraphs 9 - 11) and ‘services’ (see paragraph 12), provide network services (see paragraph 15) and adopt measures for sharing spatial data sets and services (see paragraphs starting at 28). These obligations, other than sharing data sets and services, will apply also to third parties joining INSPIRE.

What spatial information and services are covered?

5. The Directive does not require the collection of new spatial data16 but it includes the elements of ‘infrastructure for spatial information’, each of which is separately defined (see below). It includes: ‘metadata, spatial data sets and spatial data services; network services and technologies; agreements on sharing, access and use; and coordination and monitoring mechanisms, processes and procedures, established, operated or made available in accordance with the Directive’.

6. ‘Metadata’ is defined in the Directive as meaning ‘information describing spatial data sets and spatial data services and making it possible to discover, inventory and use them’. Metadata also includes information on the conformity of spatial data sets with the implementing rules; conditions applying to access to and use of spatial data sets and services and where applicable, corresponding fees; quality and validity of spatial data sets; the public authorities responsible for the establishment, maintenance and distribution of spatial data sets and services; and limitations on public access and the reasons for such limitations. Assessing the completeness and quality of such metadata will be a matter for the co-ordination unit described in paragraph 32 below.

7. ‘Interoperability’ means ‘the possibility for spatial data sets to be combined and for services to interact, without repetitive manual intervention, in such a way that the result is coherent and the added value of the data sets and services is enhanced’. Consultees should note that the SIs will say nothing more about interoperability (Article 7) until implementing rules are adopted by the EC22.

8. ‘Spatial data’ are defined in the Directive as meaning ‘any data with a direct or indirect reference to a specific location or geographical area’.

9. A ‘spatial data set’ is defined in the Directive as meaning: ‘an identifiable collection of spatial data’. Spatial data sets are also defined in the Directive as fulfilling a number of conditions:
(a) they relate to an area where the UK has and/or exercises jurisdictional rights;
(b) they are in electronic format;
(c) they are held by or on behalf of any of the following:

(i) a public authority, having been produced or received by a public authority, or being managed or updated by that authority and falling within the scope of its public tasks;
Consultees will wish to note that in the case of local authorities, we intend to limit the scope of this condition to apply only to District Councils or above in England and their equivalents in Northern Ireland, Scotland and Wales; and only then in circumstances in which such local authorities are legally required to collect or disseminate spatial data sets.
(ii) a third party to whom the INSPIRE network has been made available;

(d) they relate to one or more of the themes listed in Annexes I, II or III of the Directive.

10. Consultees will wish to note that the Directive requires that a public authority can only take action over spatial data sets in which a third party holds the intellectual property rights with the consent of that third party.

11. The Directive also recognises that multiple copies of the same spatial data set may exist and that it should apply only to the reference (source) version from which copies have been derived.

12. A ‘spatial object’ is defined in the Directive to mean ‘an abstract representation of a real-world phenomenon related to a specific location or geographical area’.

13. ‘Spatial data services’ are defined in the Directive to mean ‘the operations which may be performed, by invoking a computer application, on the spatial data contained in spatial

14. The Directive sets out a timetable for the creation of metadata for existing data sets and services. In the case of spatial data sets corresponding to the themes listed in Annex I and II of the Directive [see page 25] it is no later than 2 years after the implementing rules are adopted by the EC; and no later than 5 years for themes listed in Annex III [see pages 25 - 26]. The Metadata Regulations No 1205/200833 came into effect on 24 December 2008, hence the metadata service for the data sets corresponding to themes in Annex I and II must be available by 24 December 2010.

Network Services

15. The Directive describes ‘network services’ for the spatial data sets and services for which metadata have been created34. Such services will be provided by public authorities and those third parties to whom the network has been made available. Implementing rules for network services are being developed by the EC and, once they are completed, we will consider whether the SIs will need to be amended in the future. A number of derogations are set down in the Directive and our proposals for these are contained in paragraph 25 below.

16. Network services include:
(a) discovery services making it possible for the public to search free of charge, for spatial data sets and services on the basis of the content of the corresponding metadata and to display the content of the metadata;
(b) view services making it possible, as a minimum, to display, navigate, zoom in/out, pan, or overlay viewable spatial data sets and to display legend information and any relevant content of metadata;
(c) download services, enabling copies of spatial data sets, or parts of such sets, to be downloaded and, where practicable, accessed directly;
(d) transformation services, enabling spatial data sets to be transformed into a standard meeting appropriate standards with a view to achieving interoperability;
(e) services allowing spatial data services to be invoked. [This could involve for example, chaining services from different organisations together to produce a totally new service.]

17. As a minimum, the following combination of search criteria will be adopted for discovery services:
(i) keywords;
(ii) classification of spatial data and services;
(iii) the quality and validity of spatial data sets;
(iv) geographical location;
(v) conditions applying to the access to and use of spatial data sets and services;
(vi) the public authorities responsible for the establishment, management, maintenance and distribution of spatial data sets and services

18. Compatible with Government policy on charging, the Directive provides that view services shall generally be available to the public free of charge37 but that public authorities may apply charges where such charges secure the maintenance of spatial data sets and corresponding data services, especially in cases involving very large volumes of frequently updated data38. The new SIs will give individual public authorities the discretion to exercise this derogation. Where charges are made e-commerce services must be available39 and charges must not exceed the costs of maintaining spatial data sets and services. We do not propose to prescribe what is meant by ‘very large volumes of frequently used data’ in the SIs.

19. Article 14(3) of the Directive states that the data made available through view services may be in a form preventing re-use for commercial purposes. However there is a balance to be struck and this provision should be interpreted in a way that implies a presumption in favour of public access. This may be an issue on which the proposed Co-ordination Unit – see below - issues guidance.

20. The new SIs will require that where charges are levied for download services e-commerce services shall be available.

21. The Directive says that transformation services shall be combined with discovery, view, download and services allowing spatial data services to be invoked in such a way as to enable all services to be operated in conformity with the interoperability implementing rules.

22. The new SIs will require that where charges are levied for download or transformation services, e-commerce services shall be available.

23. The Directive says that the network services shall take into account relevant user requirements and be easy to use, available to the public and accessible via the Internet or any other appropriate means of telecommunication. The SIs will set out these principles but given the rich diversity of user and technical issues involved this will in due course be supplemented by detailed guidance from the Co-ordination Unit.

24. The new SIs created by this transposition should also be seen against the backdrop of the existing framework for information sharing. In particular:

25. The Directive proposes that public access to spatial data sets and services through discovery services may be limited where this would adversely affect international relations, public security or national defence44. Similarly, public access to spatial data sets and view, download, transformation services and services allowing spatial data services to be invoked, together with any associated e-commerce services may be limited where such access would:

26. The Directive goes on to say that the grounds for limiting access shall be interpreted in a restrictive way, taking account of the public interest served by providing access; and this shall not generally limit access to information on emissions into the environment46.

27. These provisions are broadly consistent with those already contained in the EIR and EIR (Scotland) and we intend to take advantage of these derogations.

Data access and sharing

28. The Directive will facilitate the publication and sharing of data between public authorities. The Directive will enable public authorities to gain access to spatial data sets and services for the purposes of public tasks that may have an impact on the environment. Data sharing will be open similarly to other Member States and EU institutions; and the sharing of spatial data sets and services will also be open on a reciprocal and equivalent basis to international bodies to which the UK is a party

29. The Directive allows current arrangements to continue whereby public authorities48 supply, at a charge or under licence, other public authorities or EU institutions with spatial data sets and services Where charges are made these shall be kept to the minimum to ensure the necessary quality and supply of data sets and services and a reasonable return on investment. Data sets and services shall be provided free of charge to institutions and bodies to fulfil Community reporting obligations

30. The Directive provides for limits on the sharing of data when this would compromise the course of justice, public security, national defence or international relations and we would propose to include these limits in the SIs.

Monitoring and Reporting - a unit to co-ordinate implementation of the SIs on a UK basis

31. This section describes what we are proposing to do by creating a Co-ordination Unit to address the UK’s reporting and monitoring requirements of the Directive.

32. The Directive places a number of responsibilities on Member States to coordinate and report outcomes to the EC. Defra has considered alternative arrangements but in conjunction with the Devolved Administrations proposes that the ‘UK Spatial Data Infrastructure Co-ordination Unit’ will have responsibility for monitoring and reporting on prescribed matters to the EC50. An overview of the Unit’s functions would be to:

(a) Co-ordinate implementation and ongoing operations;

(b) Operate a UK portal including metadata registration service;

(c) Act as contact point for the European Commission;

(d) Compile and submit monitoring reports to the EC, and make them publicly available;

(e) Co-ordinate UK representation to EC working groups;

(f) Collate material on costs and benefits to the UK of the implementing rules;

(g) Ensure compliance with Directive56, working with/through the Devolved Administrations where appropriate;

(h) Provide central communications, marketing and guidance;

(i) Promote skills development.

33. Central communications, marketing and skills development are central to realising the benefits from the central coordination unit and these costs have been factored into the Impact Assessment.

34. A key function of this unit, working closely with the Devolved Administrations, will be to ensure effective compliance with the new Regulations. Beyond its scope are access compliance under the EIR and EIR(Scotland) (the granting of access to and supply of spatial information). These will continue to be the responsibility of the Information Commissioners in England/Wales/Northern Ireland and in Scotland; and re-use compliance (agreement to grant licences, licensing terms and fees) will continue to be the responsibility of the Office of Public Sector Information. Access and re-use compliance are governed by existing powers.

Annex 2, 3 and 4 - Link to consultation PDF

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COMMISSION OF THE EUROPEAN COMMUNITIES
Brussels,
COM(2008) 464/3
2008/xxxx (CNS)

Proposal for a
EUROPEAN PARLIAMENT AND COUNCIL DIRECTIVE
amending Directive 2006/116/EC of the European Parliament an of the Council on the
term of protection of copyright and certain related rights
(presented by the Commission)

{SEC(2008) 2287}
{SEC(2008) 2288}

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EXPLANATORY MEMORANDUM

1. CONTEXT OF THE PROPOSAL

Grounds for and objectives of the proposal

The proposal aims to improve the social situation of performers, and in particular sessions musicians, taking into account that performers are increasingly outliving the existing 50 year period of protection for their performances.

The large scale production of phonograms is essentially a phenomenon that commenced in the 1950s. If nothing is done, over the next 10 years an increasing amount of performances recorded and released between 1957 and 1967 will lose protection. Once their performance fixed in a phonogram is no longer protected, around 7000 performers in any of the big Member States and a correspondingly smaller number in the smaller Member States will lose all of their income that derives from contractual royalties and statutory remuneration claims from broadcasting and public communication of their performances in bars and discotheques.

This affects featured performers (those who receive contractual royalties) but especially the thousands of anonymous session musicians (those who do not receive royalties and rely solely on statutory remuneration claims) who contributed to phonograms in the late fifties and sixties and have assigned their exclusive rights to the phonogram producer against a flat fee payment (’buy out’). Their ’single equitable remuneration’ payments for broadcasting and communication to the public, which are never assigned to the phonogram producer, would cease.

In addition, the proposal also seeks to introduce a uniform way of calculating the term of protection that applies to a musical composition with words which contains the contributions of several authors. For example, a musical piece, for instance pop music or an opera, often includes lyrics (or a libretto) and a musical score. In different Member States, such co-written musical compositions are either classified as a single work of joint authorship with a unitary term of protection, running from the death of the last surviving co-author or as separate works with separate terms running from the death of each contributing author.

This means that in some Member States (1), a musical composition with words will be protected until 70 years after the last contributing author dies, while in other Member States (2), each contribution will lose protection 70 years after its author dies. These discrepancies in term that apply to one musical composition lead to difficulties in administering copyright in co-written works across the Community. It also leads to difficulties in cross-border distribution of royalties for exploitation that occurs in different Member States.

General context

The social situation of performers

The current employment status and conditions for the average European performer are not very rewarding. Only famous performers, so-called featured artists that have signed a royalty- bearing contract with a major record label, are able to make a living from their profession. For instance, in the UK, in 2001, only 5% of performers earned over 10000 GBP annually. Moreover, between 77 and 89.5% of all income distributed to performers goes to the top 20% of

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performers (3). Economists have shown that the great discrepancies between the low earning of the majority of little-known performers and the significant earnings of “superstar” performers are endemic to the music industry (4).

Moreover, the social situation of performers is not very secure. It is difficult for performers to find sufficient employment and most need other jobs to supplement their incomes5. Overall, only 5% of performers actually make a living from their profession - all the others have to seek parallel employment.

Performers usually transfer their most economically significant exclusive copyrights to record companies via contract. In most cases, individual performers have little bargaining power (6). When signing a contract with a phonogram producer, performers are generally willing to accept the contract they are offered because the reputation and exposure gained by signing with a record label gives them the possibility of reaching a broad audience. Consequently, it is difficult for performers to negotiate which type of contract or which level of remuneration they will obtain. Session musicians, i.e., musicians that are hired on an ad hoc basis to play for a recording ’session’, cannot negotiate at all, they have to transfer their copyrights ‘in perpetuity’ against a one off payment.

Contractual relations between record companies and performing artists vary greatly but typically fall into two categories: (7)

The deduction of a variety of record producers’ costs from the royalty payments can also significantly undermine the remuneration of performers. These deductions are often formulated in technical terms and included in complex legal documents (9). In practice, after the various contractual deductions (for costs borne by the producers such as music videos, promotion, master costs), the average percentage of royalties actually received by performers can be lower. Moreover, as most performers’ sound recordings do not sell enough copies for

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the record company to recoup its initial investment (only 1 in 8 CDs is profitable)10, royalty payments are often not paid out at all.

However, performers also receive revenue from other sources. They receive income from collecting societies which administer so-called secondary remuneration claims. There are three principal sources: (1) equitable remuneration for broadcasting and communication to the public, (2) private copying levies and (3) equitable remuneration for the transfer of the performers’ rental right. All of these sources are commonly referred to as ’secondary’ sources of income and are paid to performers directly through their collecting societies. These payments are not affected by their contractual arrangements with the record companies.

Many European performers (musicians or singers) start their career in their early 20’s. That means that when the current 50 year protection ends, they will be in their 70’s and likely to live well into their 80’s and 90’s (average life expectancy in the EU is 75 years for men and 81 years for women). As a result, performers face an income gap at the end of their lifetimes, as they lose royalty payments from record companies as well as remuneration due for the broadcasting or public performance of their sound recordings. For session musicians, who play background music, and lesser known artists, that means that broadcasting and public performance income decreases when they are at the most vulnerable period of their lives, i.e. when they are approaching retirement. Once copyright protection expires, they will also lose out on potential revenue when their early performances are sold on the Internet.

Moreover, when their rights expire performers are exposed to potentially objectionable uses of their performance which are harmful to their name or reputation. Performers are also at a disadvantage as compared to authors whose works are protected until 70 years after their death. This could be seen as unfair since performers are nowadays not only just as necessary as authors but also more identifiable with the commercial success of a sound recording.

The economic challenges faced by phonogram producers

As regards producers of phonograms, the principal challenges they face are the evaporation of the CD markets and the insufficient replacement revenue from online sales. The latter is due to peer-to-peer piracy. The EU recorded music industry has suffered a decline in record sales: sales of music CDs peaked in 2000 and have been falling at an average rate of 6% ever since (11). Estimates for the future show a continued decrease in physical album sales from $12.1bn in 2006 to $10.3bn by 2010 (12). Since 2001, the total European market for recorded music has lost 22% of its value (13).

Revenues in general and profits in particular have decreased, largely due to increased piracy. In January 2006 the music trade publication Billboard indicated that, worldwide, there were 350 million legal downloads for the whole year of 2005, but that there were also 250 million illegal downloads per week. The music industry indicates that approximately a third of all CDs bought in 2005 in the world were pirated - a total of 1.2 billion CDs. EMI’s expenditure on anti-piracy and protection of IP for 2006 was in excess of 10m GBP.

Due to losses in revenue, Universal’s total number of employees which in 2003 amounted to 12,000 was down to 7600 in 200614. After an initial reduction in employees in 2006, EMI also

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announced a second reduction of 2000 jobs (about one third of its work force) in January 200815. EMI indicated in addition an intention to be more selective with its artist partnerships despite a significant reduction in its artist roster already in 2006 (16). EMI has also been reducing its advertising expenditure (17).

In these circumstances, the European record industry faces the challenge of keeping up the steady revenue stream necessary to invest in new talent. Record companies claim that they invest around 17% of their revenues in the development of new talent, i.e. to sign new talent, promote untried talent and produce innovative recordings. Therefore, a longer term of protection would generate additional income to help finance new talent and would allow record companies to better spread the risk in developing new talent. Due to uncertain returns (only one in eight sound recordings is successful) and so-called ‘information asymmetries’ such revenue is often not available on capital markets.

Co-written musical works

Music is overwhelmingly co-written. For example, regarding opera, there are often different authors to the music and to the lyrics. Moreover, in musical genres such as jazz, rock and pop music, the creative process is often collaborative in nature.

An analysis of the most popular French songs for the period 1919-2005 shows that 77 % of those songs are co-written. A similar analysis of the most popular songs in the UK for the period 1912-2003 shows that 61% of those songs are co-written.18 Regarding newly created works, another survey sampling around 2000 newly registered works with SGAE the Spanish collective rights management society, in 2005-2006, reveals that over 60% of such works are co-written (19).

The opera “Peleas et Melisande” illustrates how the different methods of calculating the term for co-written musical compositions results in different terms of protection for this composition across different Member States. Debussy, the composer, died in 1919, while Maeterlinck, the librettist, died much later in 1946. In those Member States that apply a unitary term (e.g., France, Portugal, Spain, Greece, Lithuania) the entire opera remains protected up to the year 2016 (life of the last surviving author, Maeterlinck plus seventy years). In those countries that consider the music and the libretto as two distinct works (e.g., United Kingdom, Netherlands, Austria, Poland, Slovenia) or two works that can be exploited separately (e.g., Czech Republic, Hungary, Germany) the protection of the music expired in 1989 while only the words (the libretto) remain protected until 2016.

Other examples include: Johann Strauss’ operetta ‘The Gipsy Baron’ (20); the song ‘Fascination (Love in the afternoon)’, music by Fermo D. Marchetti (died 1940) and lyrics by Maurice de F\351raudy (died 1932); the song ‘When Irish Eyes Are Smiling’, music by Ernest R. Ball (died 1927) and lyrics by Chauncey Olcott (died 1932) and George Graff, Jr. (died 1973).

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In the latter example, in those Member States that apply a unitary term, the entire song “When Irish eyes are smiling” would be protected until 2043. In those countries that consider the music and the lyrics as distinct works or apt for separate exploitation, the protection for the music expired in 1997 while only the lyrics would be protected until 2043.

Existing provisions in the area of the proposal

The terms of protection for copyright and related rights were harmonised by Directive 93/98/EEC which was subsequently codified by Directive 2006/116/EC. The codification did not entail any substantive changes to the Directive. The term of protection for performers and phonogram producers is set out at 50 years after publication in these Directives whereas the current proposal would extend that protection to 95 years after publication. The current Directive contains no specific rules on co-written musical compositions with words.

Consistency with the other policies and objectives of the Union

This proposal is in line with the objectives of the EU to promote social welfare and inclusion. Performers, and especially session musicians, are among the poorest earners in Europe, despite their considerable contribution to Europe’s vibrant cultural diversity. In addition, the sound record industry that promotes European performers and produces in European studios faces significant challenges which undermine its competitiveness: rampant online piracy in many parts of the Community has lead to significant losses. The ability of the music industry to finance new talent and adapt to dematerialised distribution appears severely undermined.

2. CONSULTATION OF INTERESTED PARTIES AND IMPACT ASSESSMENT

Consultation of interested parties

Consultation methods, main sectors targeted and general profile of respondents

In the context of the Review of the EC legal framework in the field of copyright and related rights, a Commission Staff Working Paper was published on 19 July 2004. Interested parties were invited to submit their comments by 31 October 2004. Of the 139 contributions received, 76 position papers commented on Directive 93/98/EC harmonising the term of protection of copyright and certain related rights.

During 2006-2007, Commission services had meetings with a variety of stakeholders on a bilateral basis to discuss relevant issues in more detail. A questionnaire was prepared by the Commission and distributed to major stakeholders in the framework of these bilateral discussions. More or less detailed responses were received from performers’ associations and the recording industry.

Summary of responses and how they have been taken into account

Responses in favour of term extension came from performers’ associations, the recording industry, collecting societies, music publishers, performing artists and music managers. Those against term extension were telecoms, libraries, consumers and public domain companies. The arguments of those against term extension were addressed in the analysis of impacts of the various options.

Collection and use of expertise

There was no need for external expertise.

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Impact assessment

The impact assessment (available at http://ec.europa.eu/internal_market/copyright/term- protection/term-protection_en.htm) presents a total of seven options and discusses six of them. The options analysed were: (1) do nothing, (2) extend the term of protection to ‘life or 50 years’ for performers only, (3) extend the term of protection to 95 years for performers and phonogram producers, (4) promote performers’ moral rights, (5) introduce a ‘use it or lose it’ clause in sound recording contracts and (6) establish a fund dedicated to session musicians.

All options are assessed against the following six operational objectives: (1) gradually align authors’ and performers’ protection; (2) incrementally increase the remuneration of performers; (3) diminish the discrepancies in protection between the EU and US; (4) incrementally increase A&R resources, i.e., the development of new talent; (5) ensure availability of music at reasonable prices; and (6) encourage digitisation of back catalogue.

The IA concludes that ‘doing nothing’ is not an advisable option. If nothing is done, thousands of European performers whose performances were recorded in the late fifties and sixties would lose all of their contractual royalty income or statutory remuneration for broadcasting and communication to the public over the next ten years. This would have considerable social and cultural impacts. Equally, the sound recording industry would be obliged to cut down on the creation of new sound recordings in Europe. Production might have to be tailored to US tastes where a longer term of protection prevails.

The IA considers the impact of options not involving the term of performers’ and record producers’ rights (Options 3a, b, c and d).

Option 3a (unwaivable right to equitable remuneration for online sales) appears promising, but at this stage premature. It is unclear who would pay for this additional statutory remuneration claim and it is hard to estimate the financial benefit it would bring. Option 3b (the strengthening of moral rights), has no financial impact on performers and record producers and would thus not make an incremental contribution to performers’ remuneration.

Option 3c, the ‘use it or lose it’ clause, would be beneficial to performers by allowing them to make sure their performances are available on the market. This could positively impact on their remuneration and also foster availability of previously unused repertoire. On the other hand, this option, if applied in isolation, might be considered as an undue regulatory interference in the sanctity of ongoing contracts. Option 3d, the fund to be set up by phonogram producers, would be very beneficial for session musicians who transferred all their exclusive rights as part of their initial ‘buy out’ contracts. Record producers, however, would have to set aside at least 20% of the additional revenue generated by the sale of those phonograms they choose to commercially exploit during the term extension. The impact assessment does show, however, that the expected profits in the extended term would suffice to finance the 20% set aside in favour of session musicians (see below).

Options involving a term extension (2a “life or 50 years” and 2b “95 years for performers and record producers”) seem to be rather more suitable in contributing towards the six policy objectives. Both options 2a and 2b bring financial benefits to performers and would thus allow more performers to dedicate more time to their artistic activities.

Option 2a, by linking the term to the life of a performer, would contribute to aligning the legal protection of performers and authors. It would reflect the personal nature of performers’ artistic contributions and recognise that performers are as essential as authors to bringing music to the public. It would also allow performers to object to derogatory uses of their works during their lifetime. But linking the term of protection to the lifetime of performers would create complex situations when a sound track comprises contributions by several performers. Rules would then need to be established on how to determine whose death triggers the term of
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protection. This would be, as the continued uncertainty on the term applicable to co-written works demonstrates, entail a significant administrative burden. In addition, Option 2a would not increase the A&R resources available to record producers.

Option 2b would increase the pool of A&R resources available to phonogram record producers and could thus have an additional positive impact on cultural diversity. The IA also demonstrates that the benefits of a term extension are not necessarily skewed in favour of famous featured performers. While featured performers certainly earn the bulk of the copyright royalties that are negotiated with the record companies, all performers, be it featured artists or session musicians, are entitled to so-called ’secondary’ income sources, such as single equitable remuneration when the sound recording incorporating their performances is broadcast or performed in public. A term extension would ensure that these income sources do not cease during the performer’s lifetime. Even incremental increases in income are used by performers to buy more time to devote to their artistic careers, and to spend less time on part time employment. Moreover, for the thousands of anonymous session musicians who were at the peak of their careers in the late fifties and sixties, ’single equitable remuneration’ for the broadcasting of their recordings is often the only source of income left from their artistic career.

In addition to ensuring the increased availability of A&R, option 2b is also easier to implement than option 2a, because it does not link the term of protection to the, sometimes very different lifetimes of individual co-performers but to a uniform date, i.e., the publication of the phonogram that contains the performance.

On the other hand, the impact on users would be minimal. This is true in relation to statutory remuneration claims and for the sale of CDs:

Other studies have been considered in analysing the impact of copyright or related rights on prices. Most of them focus on books. However, even in this category, either no overall price difference is found between the samples of books in- or out-of-copyright, or, the impact of copyright on the price is extremely model-dependant and therefore the estimates obtained cannot be seen as very robust. Given the lack of widely accepted models and the length of the time span, it is fair to say that there is no clear evidence that prices will increase due to term extension.

Overall, the extended term should have a positive impact on consumer choice and cultural diversity. In the long run, this is because a term extension will benefit cultural diversity by ensuring the availability of resources to fund and develop new talent. In the short to medium term, a term extension provides record companies with an incentive to digitise and market their back catalogue of old recordings. It is already clear that internet distribution offers unique opportunities to market an unprecedented quantity of sound recordings.

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The impact on so-called public domain producers would be minimal. While those companies could that they have to wait longer to produce phonograms in which the performers and phonogram producers’ rights have expired, the works performed in a phonogram would not lose protection once the term of protection for the phonogram expires. This is because the work performed on a phonogram remains protected for the life of the author (songwriter and composer) who wrote the work. As authors’ rights last for the life of the songwriter or the composer plus seventy years, copyright protection for a musical work can last for between 140 and 160 years. It is therefore wrong to say that a performance fixed in a phonogram is in the ‘public domain’ once the protection for performers and phonogram producers lapses.

A ‘use it or lose it’ clause in contracts between performers and their producer would be beneficial for performers as it would mean that they would be in a better position to ensure their creative output reaches the public, should the phonogram producer decide not to publish or otherwise offer older sound phonograms to the public.

Option b, strengthening and harmonising the moral rights of performers, would bring some non-pecuniary benefits to performers, by allowing them to restrict objectionable uses of their performances. However, the strengthening of moral rights has no financial impact on performers and record producers and would thus not make an incremental contribution to performers’ remuneration.

The creation of a fund for session musicians would be beneficial to that group and would ensure that they are included in the financial benefits of a term extension, which they would otherwise be largely excluded from under their “buy out” contracts. The fund’s impact on session musicians would be positive, as the average performer’ additional annual revenues during a 45-year term would rise from between 47 Euros and 737 Euros to between 130 Euros and 2065 Euros,
i.e., would almost triple (21).

The impact on record producers would be negative, but should be considered against the benefits of the term extension. In the course of a 45 year term extension, the benefits of the extension of term for record producers would be reduced from 758 million Euros to 607 million Euros (high end estimate) or from 39 million Euros to 31 million Euros (low end estimate). Consequently, this would also reduce the additional revenue available for A&R from 129 million Euros to 103 Euros million (high end estimate) or from 6.7 million Euros to 5.3 million Euros (low end estimate). The IA analyses the cost structure of a CD and concludes that there will remain incentives for producers to market sound recordings during the extended term and still make a profit of approximately 17%.

3. LEGAL ELEMENTS OF THE PROPOSAL

Summary of the proposed action

The proposal is to extend the term of protection for performers and phonogram producers to from 50 years to 95 years. In order to achieve the right balance between the benefits to record companies and featured artists and the genuine social needs of sessions musicians, the proposal contains certain accompanying measures such as establishing a fund for session musicians, introducing ‘use it or lose it’ clauses in contracts between performers and phonogram producers and a ‘clean slate’ for contracts in the extended period beyond the initial 50 years. This proposal would introduce amendments to Directive 2006/116/EC.

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Legal basis

Articles 47(2), 55 and 95 of the EC Treaty

Subsidiarity principle

The proposal falls under the exclusive competence of the Community. The reason why the Community has ‘exclusive competence’ in this area is because the existing legislation, as contained in Directive 2006/116/EC (the Directive) provides full harmonisation. The Directive provides for minimum and maximum harmonisation concurrently. This means that Member States may neither provide for shorter or for longer terms of protection than those prescribed by the Directive (recital 2). The subsidiarity principle therefore does not apply.

Proportionality principle

The proposal complies with the proportionality principle for the following reason(s). The above mentioned operational objectives: (1) gradually align authors’ and performers’ protection; (2) incrementally increase the remuneration of performers; (3) diminish the discrepancies in protection between the EU and US; (4) incrementally increase A&R resources, i.e., the development of new talent; (5) ensure availability of music at reasonable prices; and (6) encourage digitisation of back catalogue, can best be achieved by changes to the performers’ and producers term of protection. Although other social measures in favour of performers are often mentioned (subsidies, inclusion in social security schemes), such measures have rarely materialised and the status and livelihood of creators is usually linked to royalties and remuneration payments that stem from copyright. A term-based proposal would thus increase income for performers.

Within the term based approaches, the approach based on a term that is triggered by a uniform event, such as publication of a phonogram is clearly preferable to a term based on the individual life of a performer. Linking the term of protection of performers to their individual life would lead to increased legislative burdens for Member States and considerable legal uncertainty as to the determination of the event that triggers the term. This is because of difficulties in relation to establish a uniform trigger point in cases of co-performances. Co- performances are the norm, i.e. performances by a band, an orchestra or a featured artists accompanied by session musicians. There are currently no rules providing for the calculation of the term of protection in such cases, because the event which triggers the current term of protection is the publication of the performance. If the event triggering the term of protection is the death of a performer, then, when several performers contribute to a recording or performance, the issue would arise whose death triggers the term. In cases of several co- performers it would seem appropriate to calculate the term from the death of the last surviving performer. However, there are currently no Community rules on this matter. The analogy with the term of copyright protection of co-written works is of limited assistance, as there are no Community rules on the calculation of the term of protection for co-written works either.

The proposal to extend the term of protection for performers and phonogram producers would mean a numerical change (substituting 50 by 95) to the current national legislation on related rights found in the EU Member States. The accompanying measures leave flexibility to MS on how to apply them and the administrative burden falls more on the phonogram producers and collecting societies.

The change in national copyright laws would be minimal and there would be no financial burden on any public authorities. Empirical studies also show that the price of sound recordings that are out of copyright is not lower than that of sound recordings in copyright. A recent study by Price Waterhouse Coopers finds no clear evidence that records in which the

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related rights have expired are systematically sold at lower prices than records which are still protected.

Phonogram producers will have to each contribute to a fund and collecting societies will have to administer these revenues. However, their administrative burden inherent in setting aside 20% of revenues that are generated with the sales of phonograms containing performances by session musicians during the extended term would be offset by the advantages session musicians will enjoy through term extension. The level of the fund strikes a balance between the need to generate and appreciable incremental increase in the revenues of session musicians and the need to ensure that phonogram producers still derive sufficient profits from sales to have an incentive to market phonograms in the extended term.

A simple model calculation in the IA shows that a 20% share would strike the right balance between the profitability of phonograms that are exploited in the extended term and the creation of a tangible added benefit for performers. This calculation attempts to measure the impact that a revenue-based fund would have on record labels’ profit margin in the years after term extension.

Average self-declared overall company-wide operating margin of the phonogram majors (EBITA/revenue) in 2007 is 9.1% (EMI 3.3% - Universal 12.8% - Warner 14% - BMG 6.2%). As mentioned above, according to IFPI, only one CD in eight is profitable.

If only 1 in 8 CDs is profitable and the average profit rate is 9.1%, this one profitable CD must be generating a profit margin that is high enough to compensate for seven unprofitable CDs and still produce an aggregate profit of 9.1%.

On this basis, one can venture a guess at the profitability of the one successful CD by comparing its profit margin with that of the remaining seven CDs. Assuming that: 5 CDs (”b” through “f” in the example) break even (profit = 0), which is extremely optimistic and 2 CDs (”g” and “h”) make a loss (for “g” the loss is 30; for “h” the loss is 40); then the successful CD “a” has to make a substantial profit. In our example the profit margin is 60%.

As phonogram producers will focus on reissuing the “premium” CDs during the extended term, i.e., those with very high profit margins, a revenue-based fund (setting aside 20% of revenue achieved with the premium CDs) would mean that 20% of the revenue attributed to CD “a”, 250 (i.e., 50) would be set aside for performers. Therefore, even after taking into account the fund, the phonogram producers’ profit margin in the extended term would still be 100/250=40%.

(TABLE NOT REPRODUCED HERE)

As mentioned above, a fund based on setting aside 20% of revenue that is generated by phonograms in the extended term would triple the benefit that individual performers derive from an extension of term.

The proposed remedy on musical compositions with words is the least intrusive instrument to achieve a uniform term for musical compositions.

The effect of this proposed new Article 1(7) would be that, only for the purpose of calculating its term of protection, a musical composition with words would be treated as if it were a work

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of joint authorship, whether or not this composition with words would qualify as a work of joint authorship under national rules.

This approach is in line with the subsidiarity principle. It would leave intact Member States discretion to determine what work constitutes a work of joint authorship. On the other hand, it introduces a minimum level of harmonisation, so that the term of all musical compositions with words which contain two or more separate contributions would be calculated in a uniform way.

Choice of instruments

The proposed instrument is a Directive. Other means would not be adequate since the term of protection was already harmonised via a Directive, the only possibility to extend this term is to amend the said Directive.

4. BUDGETARY IMPLICATION

The proposal has no implication for the Community budget.

5. ADDITIONAL INFORMATION

European Economic Area

The proposed act concerns an EEA matter and should therefore extend to the European Economic Area.

Detailed explanation of the proposal

Article 1 amends the existing Articles 3(1) and 3(2) of Directive 2006/116 which governs the term of protection applicable to performances (Article 3(1)) and phonograms (Article 3(2)). The existing term of 50 years would be extended for both the phonogram and the performance embodied therein to 95 years.

The text provides that if a phonogram is lawfully published or communicated to the public within 50 years of its fixation, the rights shall expire 95 years after publication or communication to the public. If a performance is embodied in a phonogram which is lawfully published or communicated to the public within 50 years of its fixation, the rights shall expire 95 years after publication or communication to the public

The newly proposed Article 10a would introduce a series of measures accompanying the term extension while Article 10(5) would contain the rules on which phonograms and performances are affected by the proposal.

The aim of the measures contained in Article 10a is largely to ensure that featured and non- featured performers whose performances are fixed in a phonogram effectively benefit from the proposed term extension.

Article 10a (3), (4) and (5) envisage to remedy the situation that session musicians (musicians that do not enjoy recurring contractual royalty payments), upon entering into a contractual relationship with a phonogram producer, often have to transfer their exclusive rights of reproduction, distribution and ‘making available’ to the phonogram producers. Session musicians transfer their exclusive rights against a one-off payment (’buy out’). The proposed remedy for the ‘buy out’ is that session musicians will obtain a claim to receive a yearly payment from a dedicated fund. In order to fund these payments, phonogram producers are under an obligation to set aside, at least once a year, at least 20 percent of the revenues from the exclusive rights of distribution, rental, reproduction and ‘making available’

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of phonograms which, in the absence of term extension, would no longer be protected under Article 3. In order to ensure the most granular possible level of distribution to session musicians, Member States may require that distribution of these monies is entrusted to collecting societies representing performers.

Producers’ revenues deriving from single equitable remuneration for broadcasting and communication to the public and fair compensation for private copying shall not be included in the revenues to be set aside in favour of session musicians, as these secondary claims are never transferred to phonogram producers. Moreover, producer’s revenues deriving from the rental of phonograms shall not be included, as performers still benefit from an unwaiverable right to equitable remuneration from such exploitation, under Article 5 of Directive 2006/115/EC .

Article 10a (6) provides for a statutory ‘use it or lose it’ clause. Therefore, if a phonogram producer does not publish a phonogram, which, but for the term extension, would be in the public domain, the rights in the fixation of the performance shall, upon his request, revert to the performer and the rights in the phonogram shall expire. Further, if after one year subsequent to the term extension, neither the phonogram producer nor the performer made the phonogram available to the public, the rights in the phonogram and the rights in the fixation of the performance shall expire.

For the purposes of the ‘use it or lose it’ clause, publication of a phonogram means the offering of copies of the phonogram to the public, with the consent of the right holder, and provided that copies are offered to the public in reasonable quantity. Publication would also comprise otherwise commercial exploitation of a phonogram, such as making the phonogram available to online retailers.

A further purpose of the clause is to ensure that phonograms which neither the phonogram producer nor the performers wish to exploit are not ‘locked up’. This also means that orphan phonograms, for which neither the phonogram producer nor the performers can be identified or found, will benefit from the clause because such orphan phonograms will not be exploited by either the producer or the performer. All types of phonograms which are not exploited would thus be available for public use.

This clause has the purpose of allowing performers whose performances fixed in a phonogram are no longer published by the original phonogram producer after the initial 50 year term to regain control over their performance and make it available to the public themselves. On the other hand, the producers’ right should expire in order to ensure that the performers’ efforts to make their performances available as widely as possible are not hindered.

This initiative proposes that the term extension apply to performances and sound recordings whose initial term of protection of 50 years has not expired at the date of adoption of the amended Directive. It will not retroactively extend to performances that had already fallen into the public domain by this date. This criterion is simple to apply and is an approach already used in Directive 2001/29/EC.

The new Article 1(7) is introduced to apply a uniform method of calculating the term of protection of musical compositions with words. Article 1(7) is modelled on the existing Article 2, which provides a method for calculating the term of protection for cinematographic or audiovisual works. Under Article 1(7), when a musical composition is published with lyrics, the term of protection shall be calculated from the death of the last surviving person: the author of the lyrics or the composer of the music.

Article 2

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Article 2 of the amending Directive provides for the rules on transposition of the amending Directive.

Article 3

Article 3 of the amending Directive relates to the date of entry into force of the amending Directive.

Article 4

Article 4 of the amending Directive indicates that the amending Directive is addressed to Member States.

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2008/xxxx (CNS)

Proposal for a

EUROPEAN PARLIAMENT AND COUNCIL DIRECTIVE

amending Directive 2006/116/EC of the European Parliament and of the Council on the term of protection of copyright and related rights

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 47(2), 55 and 95 thereof,

Having regard to the proposal from the Commission (22),

Having regard to the opinion of the European Parliament (23),

Having regard to the opinion of the European Economic and Social Committee (24),

Having regard to the opinion of the Committee of the Regions (25),

Whereas:

(1) Under Directive 2006/116/EC of 12 December 2006 on the term of protection of copyright and certain related rights (26), the term of protection for performers and producers of phonograms is 50 years.

(2) In the case of performers this period starts with the performance or, when the fixation of their performance is published or communicated to the public within 50 years after
the performance is made, 50 years from the first such publication or the first such communication to the public, whichever is the earliest.

(3) For phonogram producers the period starts with the fixation of the phonogram or from its publication within 50 years after fixation, or, if not published, from its communication to the public within 50 years after fixation.

(4) The socially recognised importance of the creative contribution of performers needs to be reflected in a level of protection that acknowledges their creative and artistic contributions.

(5) Performers generally start their careers young and the current term of protection of 50 years with regard to performances fixed in phonograms and for phonograms often does not protect their performances during their entire lifetime. Therefore, performers face an income gap at the end of their lifetimes. They are also often not able to rely on their rights to prevent or restrict objectionable uses of their performances that occur during their lifetimes.

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(6) The revenues derived from the exclusive rights of reproduction and making available, as provided for in Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society27, as well as fair compensation for reproductions for private use within the meaning of that Directive, and from the exclusive rights of distribution and rental within the meaning of Directive 2006/115/EC of the European Parliament and of the Council of 12 December 2006 on rental right and lending right and on certain rights related to copyright in the field of intellectual property28 should be available to performers for at least their lifetime.

(7) The term of protection for fixations of performances and for phonograms should therefore be extended to 95 years after publication of the phonogram and the performance fixed therein. If the phonogram or the performance fixed in a phonogram has not been published within the first 50 years, then the term of protection should run for 95 years from the first communication to the public.

(8) Upon entering into a contractual relationship with a phonogram producer, performers normally have to transfer to the phonogram producers their exclusive rights of reproduction, distribution, rental and making available of fixations of their performances. In exchange, performers are paid an advance on royalties and enjoy payments only once the phonogram producer has recouped the initial advance and made any contractually defined deductions. Performers who play in the background and do not appear in the credits (”non-featured performers”) usually transfer their exclusive rights against a one-off payment (non recurring remuneration).

(9) For the sake of legal certainty it should be provided that in the absence of clear indications to the contrary, a contractual transfer or assignment of rights in the fixation of the performance concluded before the date by which Member States are to adopt measures implementing the directive shall continue to produce its effects for the extended term.

(10) In order to ensure that performers who have transferred their exclusive rights to phonogram producers before the extension of the term of protection actually benefit from that extension, a series of accompanying transitional measures should be introduced. These measures should apply to contracts between performers and phonogram producers which actually continue to produce their effects for the extended term.

(11) A first accompanying transitional measure should be that phonogram producers are under an obligation to set aside, at least once a year, at least 20 percent of the revenues from the exclusive rights of distribution, reproduction and making available of phonograms which, in the absence of the extension of the term of protection as a result of lawful publication or lawful communication, would be in the public domain.

(12) The first transitional accompanying measure should not entail a disproportionate administrative burden on small and medium sized phonogram producers. Therefore, Member States shall be free to exempt certain phonogram producers who are deemed small and medium by reason of the annual revenue achieved with the commercial exploitations of phonograms.

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(13) Those monies should be reserved solely for the benefit of performers whose performances are fixed in a phonogram and who have transferred their rights to the phonogram producer against a one-off payment. The monies set aside in this manner should be distributed to non-featured performers at least once a year on an individual basis. Member States may require that distribution of those monies is entrusted to collecting societies representing performers. When the distribution of those monies is entrusted to collecting societies, national rules on non-distributable revenues may be applied.

(14) However, Article 5 of Directive 2006/115 on rental right and lending right and on certain rights related to copyright in the field of intellectual property already grants performers an unwaivable right to equitable remuneration for the rental, inter alia, of phonograms. Likewise, in contractual practice performers do not usually transfer to phonogram producers their rights to claim a single equitable remuneration for broadcasting and communication to the public under Article 8(2) of Directive 2006/115/EC and to fair compensation for reproductions for private use under Article 5(2)(b) of Directive 2001/29/EC. Therefore, in the calculation of the overall amount to be dedicated by a phonogram producer to payments of the supplementary remuneration, no account should be taken of revenues which the phonogram producer has derived from the rental of phonograms and from a single equitable remuneration for broadcasting and communication to the public and fair compensation for private copying should.

(15) A second accompanying transitional measure should be that the rights in the fixation of the performance should revert to the performer if a phonogram producer refrains from offering for sale in sufficient quantity copies of a phonogram which, but for the term extension, would be in the public domain or from making such a phonogram available to the public. As a consequence, the rights of the phonogram producer in the phonogram should expire, in order to avoid a situation in which these rights would coexist with those of the performer in the fixation of the performance whilst the latter rights are no longer transferred or assigned to the phonogram producer.

(16) This accompanying measure should also ensure that a phonogram is no longer protected once it is not made available to the public after a certain period of time following the term extension, because rightholders do not exploit it or because the phonogram producer or the performers cannot be located or identified. If, upon reversion, the performer has had a reasonable period of time to make available to the public the phonogram which, but for the term extension, would be no longer protected, the phonogram is not made available to the public, the rights in the phonogram and in the fixation of the performance should expire.

(17) Since the objectives of the proposed accompanying measures cannot be sufficiently achieved by the Member States, as national measures in that field would either lead to distortion of the conditions of competition or affect the scope of exclusive rights of the phonogram producer which are defined by Community legislation and can therefore, be better achieved at Community level, the Community may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty. In accordance with the principle of proportionality, as set out in that Article, this directive does not go beyond what is necessary in order to achieve those objectives.

(18) In certain Member States, musical compositions with words are applied a single term of protection, calculated from the death of the last surviving author, while in other Member States, separate terms of protection apply for music and lyrics. Musical

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compositions with words are overwhelmingly co-written. For example, regarding opera, there are often different authors to the music and to the lyrics. Moreover, in musical genres such as jazz, rock and pop music, the creative process is often collaborative in nature.

(19) Consequently, the harmonisation of the term of protection in musical compositions with words is incomplete, giving rise to impediments to the free movement of goods and services, such as cross-border collective management services.

(20) Directive 2006/116/EC should therefore be amended accordingly.

HAVE ADOPTED THIS DIRECTIVE:

Article 1

Directive 2006/116/EC is amended as follows:

(1) The second sentence of Article 3(1) is replaced by the following:
“However, - if a fixation of the performance otherwise than in a phonograph is lawfully published or lawfully communicated to the public within this period, the rights shall expire 50 years from the date of the first such publication or the first such communication to the public, whichever is the earlier, - if a fixation of the performance in a phonograph is lawfully published or lawfully communicated to the public within this period, the rights shall expire 95 years from the date of the first such publication or the first such communication to the public, whichever is the earlier.”

(2) In the second and third sentence of Article 3(2) the cipher “50″ is replaced by the cipher “95″

(3) In Article 10 the following paragraph 5 is inserted:
“5. Article 3 (1) and (2) in their version as amended by Directive [// insert: Nr. of the amending directive] shall continue to apply only to fixations of performances and phonograms in regard of which the performer and the phonogram producer are still protected, by virtue of these provisions, on [insert date before which Member States are to transpose the amending directive, as mentioned in Article 2 below].”

(4) The following Article 10 a is inserted:
“Article 10a
Transitional measures relating to the transposition of directive [// insert: Nr. of the amending directive] 1. In the absence of clear indications to the contrary, a contract, concluded before [insert date before which Member States are to transpose the amending directive, as mentioned in Article 2 below], whereby a performer has transferred or assigned his rights in the fixation of his performance to a phonogram producer (hereinafter: a “contract on transfer or assignment”), shall be deemed to continue to produce its effects beyond the moment at which, by virtue of Article 3 (1) and (2) in their version before amendment by Directive [// insert: Nr. of this amending directive], the performer and the phonogram producer would be no longer protected in regard of, respectively, the fixation of the performance and the phonogram.

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2. Paragraphs 3 to 6 of this article shall apply to contracts on transfer or assignment which continue to produce their effects beyond the moment at which, by virtue of Article 3 (1) and (2) in their version before amendment by Directive [// insert: Nr. of this amending directive]/EC, the performer and the phonogram producer would be no longer protected in regard of, respectively, the fixation of the performance and the phonogram.

3. Where a contract on transfer or assignment gives the performer a right to claim a non recurring remuneration, the performer shall have the right to obtain an annual supplementary remuneration from the phonogram producer for each full year in which, by virtue of Article 3 (1) and (2) in its version before amendment by Directive [// insert: Nr. of this amending directive]/EC, the performer and the phonogram producer would be no longer protected in regard of, respectively, the fixation of the performance and the phonogram.

4. The overall amount to be dedicated by a phonogram producer to payments of the supplementary remuneration referred to in paragraph 3 shall correspond to at least 20 percent of the revenues which he has derived, during the year preceding that for which the said remuneration is paid, from the reproduction, distribution and making available of those phonograms in regard of which, by virtue of Article 3 (1) and (2) in their version before amendment by Directive [// insert: Nr. of this amending directive]/EC, the performer and the phonogram producer would be no longer protected on 31 December of the said year.

Member States may provide that a phonogram producer whose total annual revenue, during the year preceding that for which the said remuneration is paid, does not exceed a minimum threshold of 2 million Euros, shall not be obliged to dedicate at least 20 percent of the revenues which he has derived, during the year preceding that for which the said remuneration is paid, from the reproduction, distribution and making available of those phonograms in regard of which, by virtue of Article 3 (1) and (2) in their version before amendment by Directive [// insert: Nr. of this amending directive]/EC, the performer and the phonogram producer would be no longer protected on 31 December of the said year.

5. Member States may regulate whether and to what extent administration by collecting societies of the right to obtain an annual supplementary remuneration referred to in paragraph 3 may be imposed.

6. If, after the moment at which, by virtue of Article 3 (1) and (2) in their version before amendment by Directive [// insert: Nr. of this amending directive]/EC, the performer and the phonogram producer would be no longer protected in regard of, respectively, the fixation of the performance and the phonogram, the phonogram producer ceases to offer copies of the phonogram for sale in sufficient quantity or to make it available to the public, by wire or wireless means, in such a way that members of the public may access them from a place ant at a time individually chosen by them, the performer may terminate the contract on transfer or assignment. Where a phonogram contains the fixation of the performances of a plurality of performers, they may terminate their contracts on transfer or assignment only jointly. If the contract on transfer or assignment is terminated pursuant to sentences 1 or 2, the rights of the phonogram producer in the phonogram shall expire.

If, one year after the moment at which, by virtue of Article 3 (1) and (2) in their version before amendment by Directive [// insert: Nr. of this amending directive]/EC, the performer and the phonogram producer would be no longer

PAGE 20

protected in regard of, respectively, the fixation of the performance and the phonogram, the phonogram is not made available to the public, by wire or wireless means, in such a way that members of the public may access them from a place and at a time individually chosen by them, the rights of the phonogram producer in the phonogram and the rights of the performers in relation to the fixation of their performance shall expire. ”

(5) The following Article 1(7) is inserted:
“The term of protection of a musical composition with words shall expire 70 years after the death of the last of the following persons to survive, whether or not these persons are designated as co-authors: the author of the lyrics and the composer of the music”

Article 2Transposition

1. Member States shall adopt and publish, by at the latest, the laws, regulations and administrative provisions necessary to comply with this Directive. They shall forthwith communicate to the Commission the text of those provisions and a correlation table between those provisions and this Directive. They shall apply those provisions from […].

When Member States adopt those provisions, they shall contain a reference to this Directive or be accompanied by such a reference on the occasion of their official publication. Member States shall determine how such reference is to be made.

2. Member States shall communicate to the Commission the text of the main provisions of national law which they adopt in the field covered by this Directive.

Article 3

This Directive shall enter into force on the day following that of its publication in the Official Journal of the European Union.

Article 4

This Directive is addressed to the Member States.
Done at Brussels,
For the European Parliament For the Council
The President The President

FOOTNOTES

(1) Belgium, Bulgaria, Estonia, France, Greece, Italy (for operas), Latvia, Lithuania, Portugal, Spain,
Slovakia.

(2) Austria, Cyprus, Czech Republic, Denmark, Germany, Finland, Hungary, Ireland, Italy (except for
operas), Luxembourg, Malta, the Netherlands, Poland, Romania, Slovenia, Sweden, and the UK.

(3) AEPO study \u2013 “Performers’ Rights in European Legislation: Situation and Elements for Improvement.”,
July 2007, p. 89

(4) For a survey of economic “superstar theories”, see R. Towse, “Creativity, Incentive and Reward”
(2000), pp. 99-108.

(5) FIM \u2013 EP Hearing 31.1.2006 and meeting in Commission offices on 16 March 2006. For example,
Luciano Pavarotti and Sting were initially teachers and Elton John worked in the packaging department
of a record company.

(6) In several instances courts have intervened to cast aside excessively harsh agreements, noting in
particular the “immense inequality in bargaining power, negotiation ability, understanding and
representation” between artists and professionals of the entertainment industries”, Silvertone Records
Limited v. Mountfield and Others, [1993] EMLR 152.

(7) Adapted from contribution from Naxos to Commission questionnaire \u2013 May 2006.

(8) CIPIL Study, p.36.

(9) This has led courts to conclude that artists such as the “Stone Roses” rock band or Elton John were
insufficiently aware of the sometimes excessive deductions operated from the basis for calculating
royalties, see Silvertone Records Limited v. Mountfield and Others, [1993] EMLR 152.

(10) Comment from IFPI.

(11) “Back to the Digital Future: The Role of Copyrights in Sustaining Creativity and Diversity in the Music
Industry”, page 3, April 2006, Professor Joseph Lampel, Cass Business School, London.

(12) Figures from PricewaterhouseCoopers, Financial Times, 6 July 2006.

(13) Article from the Times, 14 February 2007.

(14) Interview with IFPI - and John Kennedy - on 29/3/2006 in Copyright Unit of DG MARKT.

(15) International Herald Tribune, The Associated Press, January 14, 2008

(16) EMI response to Gowers Review, 2006. EMI’s workforce was reduced by a third to 6,000 persons.

(17) Advertising expenditure by music industry dropped by 25% in 2002 and 7% in 2003. The four music
majors are in the top 100 spenders on advertising and 2 of them are in the top 20. (”Evolution of the
recorded music industry value chain”, anonymous report) p. 13.

(18) Figures provided by the International Confederation of Music Publishers (ICMP).

(19) GESAC, September 2006.

(20) Johann Strauss died in 1899, while one of the authors of the libretto, Leo Stein, died in 1921. The music
was in the public domain in Germany in 1929, while the text was protected until 1991. In Belgium, the
entire operetta was protected until 1981, and in Italy, until the end of 1977.

(21) As the fund would be drawn from the income of record companies, the revenues of featured artists
would not be adversely affected. The overall impact for performers would thus be positive.

(22) OJ C , , p. .

(23) OJ C , , p. .

(24) OJ C , , p. .

(25) OJ C , , p. .

(26) OJ L 372, 27.12.2006, p. 12.

(27) OJ L 167, 22.6.2001, p.10.

(28) OJ L 376, 27.12.2006, p. 28.

TO ADD YOUR OWN COMMENT OR VIEW OTHER COMMENTS, CLICK ON THE BLUE BAR. THIS SERVICE IS IN BETA - PLEASE ALSO FEEDBACK ON BUGS AND SUGGESTED FUNCTIONS.

BASIC INFORMATION

Basic information regarding this consultation

To: Anyone with an interest in responding to government consultation exercises, from those who regularly respond to the Government’s consultations to those who might be interested in doing so. These might include business organisations, voluntary and charitable sector organisations, campaigning bodies, trades unions, citizens, etc.

Duration: From 14/06/2007 to 28/09/2007

Enquiries to: Ian Ascough, 020 7276 2175 or

Consultation.Policy@cabinet-office.x.gsi.gov.uk

How to respond: In writing: Cabinet Office, 4th Floor, 22 Whitehall, London SW1A 2WH
By email: Consultation.Policy@cabinet-office.x.gsi.gov.uk

Additional ways to feed in your views: This consultation exercise is accompanied by an online discussion space which can be found via http://www.consultations.gov.uk

The Cabinet Office will also organise regional events where the future of Government consultation policy will be discussed. If you are interested in participating in such events, please contact Ian Ascough via the address or phone number above.

Government response: The Government will publish a response to this consultation exercise by 30/11/2007 t http://www.cabinetoffice.gov.uk/regulation/

FOREWORD

Foreword by Hilary Armstrong MP, Minister for the Cabinet Office and Social Exclusion

Consultation helps. It helps public bodies make better-informed decisions on matters of policy. It helps them improve public-service delivery. And it helps improve the accountability of these bodies to the public, to business and to civil society. Government is most credible when it listens and shows that it is listening to the customers of public services, the country’s experts, businesses, charities and NGOs and those who are most directly affected by the Government’s actions.

There are many ways in which Government can listen and learn effectively, from informal contacts with interested parties to formal policy forums. And in recent years, many departments have gone the extra mile, using online tools, regional events, citizens’ juries, and so on. Through the many available communication channels, Ministers and officials in Government departments have broadened their engagement with stakeholders, fostering a more inclusive approach to policymaking and improving the evidence on which proposals are grounded.

The Consultation Code has been in place since 2001 and has spread best practice across Government, facilitating effective stakeholder engagement in relation to formal, written consultations. This paper looks to the future of consultation policy; it asks how Government can improve its consultation work so that we truly get to hear the views of those who use public services, those who might be affected by changes to policy or new legislation, and the country’s experts. Please use this opportunity to tell us about your experiences of Government consultations, how consultation exercises could be improved and how we can ensure that the views of all those who should have a say in future
policies are heard. I look forward to hearing from you.

Executive summary

This consultation exercise, aimed at those with an interest in how the Government currently consults, forms the centre-piece of a review of consultation policy. It follows discussions within Government and with a number of external organisations with regard to how consultation exercises can be improved. This consultation exercise is intended to seek evidence on this topic from a wider range of stakeholders to help in the design of an updated consultation policy which will lead to better consultation practices across Government.

Consultation is an integral part of policy development whereby the Government seeks evidence, validates existing evidence and exposes preliminary policy analysis and options to scrutiny. The Government’s current policy on consultation is set out in the Code of Practice on
Consultation (or see p26 of this document for the six criteria of the Code. This sets out the criteria for carrying out formal, written Government consultations. Observance of these criteria is monitored by Consultation Coordinators in departments and the Cabinet Office reports annually on observance of the first criterion of the Code – the “12-week criterion”.

This consultation document is in two parts. The first part discusses how Government currently consults and how this can be improved upon. It asks questions about what the principles for Government consultations should be and how fulfilment of these principles should be monitored. It also explores the relationship between consultation and impact assessment and discusses how departments should consult. Issues including awareness-raising, Government responses to consultations and consultation fatigue are also addressed.

In the second part of this consultation document three options for consultation policy are presented. These options have been designed to address, to varying degrees, some of the issues addressed in the first part of the document. They are intended to stimulate discussion and should not be regarded as an exhaustive list. Combinations of various elements from each option might also make for an improved consultation policy.

1 INTRODUCTION

Why are we carrying out this consultation?

1.1 This exercise is the centre-piece of a review of Government consultation policy.

1.2 Public engagement, including effective consultation on policy development and service design, is key to a healthy democracy. Moreover, by exposing preliminary policy analysis and options to scrutiny and listening carefully to the views of stakeholders, the Government can build up a broad evidence-base which allows for effective and efficient policymaking. Good consultations which truly reach those concerned, lead to better policies and reduce the risks of policies failing to meet their objectives and of unintended consequences.

1.3 The Code of Practice on Consultation, setting out how Government departments should consult, is now firmly embedded across Government. However, observance of the criteria in the Code is not an end in itself. It is now time to review the Code and to consider ways of supplementing or replacing the existing criteria so as to improve the quality and effectiveness of Government consultations and ultimately improve policy design.

1.4 The aim of this consultation, therefore, is to hear the views of those who regularly respond to Government consultations and those who may feel that Government consultations do not sufficiently engage them. The written consultation is being supplemented with consultation events across the country and an online discussion.
Taken together, these will help the Government bring its consultation policy up to date.

1.5 While the Code of Practice has achieved a lot since it was first introduced in 2001, it is not perfect. It has, for example, been argued that a 12-week, written consultation is sometimes, on its own, not enough; may
sometimes be superfluous to requirements; and is not always the most effective way of getting views from those who might be affected by what is being discussed or proposed. The Code does not fully address these issues. A consultation on a technical issue affecting only a small number of large companies is very different from one, for example, on schools policy where teachers, parents and children might need to be consulted. Again, the Code does not address such issues. In short, the most appropriate medium and the optimum amount of time required by potential respondents will depend on the policy area and on the stakeholders – something which is not reflected in current policy. These and other issues are addressed in this paper.

Scope of this consultation

1.6 It is important at the outset to set some parameters to the debate.

1.7 First, the Government is committed to maintaining a central consultation policy and does not plan to open this point up for discussion. Such a policy, undoubtedly, plays an essential role in maintaining a healthy democracy where public engagement is encouraged and enabled, and also helps bring about better public services and a better regulatory environment. The Cabinet Office is, however, open-minded at this stage as to the form this consultation policy should take in the future and wants to stimulate an open and broad debate on this matter.

1.8 Second, the Government’s current policy on consultation does not amount to a commitment to consult on everything and this will remain the case in future, irrespective of any changes made to the Government’s consultation policy as a result of this consultation exercise. It is right and reasonable that the Government sometimes takes policy decisions without any consultation: how and when the Government consults will depend on the circumstances in each case and, on some occasions, consultation will not be considered appropriate. For example, one would not expect the Government to launch a consultation on a policy that had been a manifesto commitment. However, further down the line, effective implementation will often depend on consultation with affected parties.

1.9 Third, it is the Government’s intention that Ministers will retain the discretion in future, irrespective of the outcome of this review, to consult but to consider it inappropriate or unnecessary to follow all of the best practice criteria.

1.10 Through discussions within Government and through various informal meetings with business associations and third sector organisations, the Cabinet Office has already heard many views on how Government currently consults; where there is room for improvement and the role that central policies and guidance might play in this. Also, the Government’s Office of the Third Sector has recently sought views formally on how Government can best listen to and work with the sector (see case study 6). This consultation seeks further evidence, building on what has already been learned, to feed into the design of a renewed cross-Government consultation
policy. We are asking for views on current practice and on three options for a revised consultation policy. These are intended to stimulate debate. However, respondents need not feel restricted by the structure of this paper or by the questions – views on other matters relating to Government consultations are also welcome.

Definitions

1.11 In addition to setting out the scope of this paper it is important to define some of the terms used in this document.

1.12 Consultation is generally considered to be a form of engagement that is appropriate when the policy process is already underway and there is an intention to make changes or deliver specific outcomes. It
therefore does not invite an open debate on very broad areas of public policy, nor does it empower those who participate with the final decision. However, things are not always clear-cut and there are cases where it may make sense to carry out some other types of public engagement, as well as consultation as part of one exercise. Some of the case studies in this document illustrate this and annex 2 discusses public engagement further.

1.13 Consultation should generally be seen as an integral part of policy development: consultations are an opportunity to seek evidence, validate existing evidence and expose preliminary policy analysis and options to scrutiny, so as to help the development of effective, efficient and proportionate solutions to a particular
issue.

1.14 Consultations are generally aimed at “stakeholders”. For the purposes of this exercise, the term is used in a wide sense, meaning those outside of central Government with an interest in the topics under discussion. These may be organisations or associations, companies or individuals who take an interest in, or who might be affected by the new policy, the policy change or the proposed legislation. In many cases, members of the public are interested in Government consultations even if they might not be directly or immediately affected by the topics under discussion. Getting involved in Government consultations can lead to deeper levels of engagement and the Government maintaining a relationship with those who want to remain involved in specific policy areas.

1.15 A fuller definition of the terms “consultation”, “public engagement” and “stakeholder” as well as some international examples of definitions can be found in annex 2.

What happens next?

1.16 This consultation exercise will be accompanied by an online discussion forum and by workshops. These will provide additional opportunities to discuss the issues addressed in this document and thereby supplement our evidence-gathering. If you would be interested in attending a workshop, please get in touch with the Cabinet Office using the contact details at the beginning of this document.

1.17 Following the close of this consultation, the Cabinet Office will analyse carefully all the responses received (formal written responses, online discussions and points made at events), and by 30 November 2007 on the Cabinet Office website publish a summary of the responses and state how these views are being taken on board in the design of an updated consultation policy.

2. Current Policy

2.1 The Code of Practice on Consultation was first published in November 2000 and outlined minimum standards for central Government departments and any of their agencies when they are carrying out national, written consultation exercises. A revised Code was published in January 2004 and came into force on 1 April 2004;
the accompanying guidance on the Code of Practice was also re-issued. The current Code is now firmly embedded in the practices of Government departments (see below).

2.2 The Code contains six criteria which apply to all public consultations. Departure from the Code requires clearance from the responsible Minister.5 The reasons for the deviation should be set out in the consultation document.

2.3 The first of the Code’s six criteria is perhaps the best known: departments should “Consult widely throughout the [policy development] process, allowing a minimum of 12 weeks for written consultation at
least once during the development of the policy”. This criterion is widely observed across Government. The Code does however acknowledge that, at times, it will not be possible for a consultation to last 12 weeks, e.g. when timetables are dictated by EU or other international processes or where there is a health and safety or
security dimension dictating fast action (criterion 1.5).

2.4 Stakeholders who regularly respond to Government consultations have argued that they generally need at least 12 weeks within which to provide their responses. Representative organisations, in particular, have suggested that they rely on the minimum period in order to confer with their membership and then draft a considered, detailed response to Government consultations. Meanwhile, some other stakeholder organisations have suggested that for certain consultations 12 weeks, e.g. on detailed, technical matters, is too long a period as this can delay what for these stakeholders can be important changes or updates in policy.

Question 1: Do you think the Government’s Code of Practice has led to an improvement in the way the Government consults and to improved policy outcomes?
Please illustrate your answer with any concrete examples you may have.

Question 2: Are 12 weeks generally the right amount of time for the formal, written element of Government consultations to last? Do you think that there are circumstances where a shorter or longer duration may be more appropriate?

Monitoring observance of the Code’s criteria

2.5 Under the current policy, departments are required to nominate Consultation Coordinators. These are officials who help policy teams with their consultations; raise awareness of the Consultation Code; help spread best practice; and monitor their department’s own effectiveness at consultation. In the majority of cases, Consultation Coordinators work in departmental Better Regulation Units or in Communications Teams. The onus is therefore, by and large, on departments to monitor their observance of the criteria and on policy teams to explain to the Consultation Coordinator any departures from the Code.

2.6 Departments are required to provide information regarding their consultations in the Better Regulation section of their annual departmental reports. The Cabinet Office produces annual reports on the whole of
central Government’s performance in relation to the Code (“Assessments of Performance”). These reports focus on the 12-week criterion but also highlight examples of best practice from the year. This information is provided to the Cabinet Office by departmental Consultation Coordinators. According to the report on consultations launched during 2005, the Government carried out 583 formal consultations, 80% of which lasted at least 12 weeks (the period for which departments should consult at least once during their policy development). The report on Government consultations launched in 2006 was not available at the time of going
to print. However, indications show that around 75% of these consultations lasted at least 12 weeks.

2.7 The Government considers this system of devolving responsibility and accountability to departments, with a lesser role for central compilation of key statistics and promotion of best practice by the Cabinet Office, to be a proportionate approach for the current policy on consultation. However, views on this are invited especially in regard to spreading best practice and promoting innovative and effective consultation.

Question 3: Is the system for monitoring and promoting performance of departments in relation to the criteria
in the current Code of Practice on Consultation right? What improvements could be made?

Consultation and Impact Assessment

2.8 Many consultation documents relate to or include an Impact Assessment. Impact Assessment is a continuous process to help the policymaker understand the various consequences of possible and actual
Government interventions in the public, private and third sectors. Impact Assessment is also a tool to enable the Government to weigh and present the relevant evidence on the effects of such interventions. Impact
Assessments are generally applicable to all Government interventions affecting the private sector, the third sector and public services, regardless of source (domestic or international). The link between Impact
Assessment and consultation is therefore essential in improving the Government’s understanding, and allowing stakeholders to challenge the Government’s understanding, of the impact of its proposals. The Government believes that publishing Impact Assessments as part of consultation exercises has improved the quality both of public consultations and of impact assessments themselves.

2.9 However, the Government believes that Impact Assessments and the way they are used alongside public consultations could be improved. The Government has introduced a new template for Impact Assessments and new guidance, with the intention of improving the analytical quality and quantification of Impact Assessments,
and of presenting key data in a more open and accessible fashion.

2.10 The recent reforms of Impact Assessment should improve the quality of public consultations on Impact Assessments, not least because stakeholders will be able to form a more immediate view of the quality and sufficiency of the analysis underpinning the consultation options. The new guidance on Impact Assessment stresses the importance of conducting informal and formal pre-consultation and consultation as the Impact Assessment is developed.

2.11 The Government is open to further ideas about how to improve the link between consultation and Impact Assessment. Should there, for example, be a stated policy for departments to seek input from key stakeholders at the time an Impact Assessment is being put together and policy options are being generated? Would it be
helpful to require or encourage departments to ask specific questions in their consultation documents about the quality of the accompanying Impact Assessments? How can the link between Impact Assessment and consultation be improved?

Question 4: Is the new approach to Impact Assessment sufficient to improve public consultation on the evidence base for Government policy-making? How could consultation policy improve consultation on Impact Assessments?

Consulting for the right reasons at the right time

2.12 There is a concern among some stakeholders that the Code’s list of criteria and emphasis on written consultation can lead to grudging compliance and a tendency to go through the motions, without policymakers having a genuine desire to listen and respond to stakeholders’ views.

2.13 Concerns have also been expressed that consultation sometimes take place at a relatively advanced stage of policy formulation, limiting a department’s room for manoeuvre and reducing the likely impact of stakeholders’ comments. The Code of Practice does not offer clear guidance to departments on the stage at
which formal consultation should happen. In part, this reflects the difficulty of defining appropriate criteria to cover a multitude of different circumstances; in part, it acknowledges the need to allow Ministers and policymakers the latitude to exercise their discretion, according to the particular issue with which they are faced. The Government does not believe that it is desirable to formulate rules on this point but would welcome views on whether it might be possible to identify and share good practice.

2.14 In other cases, consultation takes place at various stages throughout the policy development process, consulting first on the high-level topics, then consulting on options and finally consulting to seek input on
implementation of the chosen option. Different methods of seeking input can be more or less effective/appropriate depending on when in the policy development process input is being sought. Some stakeholders see this staged approach as best practice while others see it as contributing to consultation fatigue (see page 15).

2.15 At times, the Government has also broken down consultations on big issues into “bitesized chunks”. While at first sight this may seem sensible, there are potential negative aspects to this practice which some stakeholders have pointed out to the Cabinet Office. For example, this can obscure the totality of the costs, benefits and impacts associated with a particular proposal. Also, it might be thought that this approach suits the Government department’s resources rather than the users’ needs.

Question 5: When in the policy development process do you think the Government should consult stakeholders? Please cite any relevant examples when you feel you have been consulted at the right or wrong time.

7

Case Study 1: Consultation Guidelines in the Republic of Ireland
The Government of the Republic of Ireland has guidelines for consultation called “Reaching Out” which are intended for use by Government departments, public bodies and any other organisations that may wish to consult with stakeholders. These guidelines include advice on planning, methods of consultation and analysis of responses. They also contain a list of questions that officials should ask themselves when planning a consultation:

Case Study 2: Consultation Policy and Practice in Sweden
In Sweden, the requirement to consult is enshrined in law: the 1974 Instrument of Government, one of the four fundamental laws on which the Swedish Constitution is based, states in Chapter 7, article 2, that “In preparing Government business the necessary information and opinions shall be obtained from the public authorities concerned. Organisations and private persons shall be afforded an opportunity to express an opinion as necessary.”

When extensive analysis is required before a proposal can be drafted, the Government may choose to appoint a special group, known officially as a Committee of Inquiry. These committees normally consist of relevant authorities, NGOs and other interest groups and political parties and it is not unusual for there to be up to 200 Committees in existence at any one time.

After a Committee’s report has been submitted to the responsible Minister, its contents are referred to the relevant authorities and to the public for consideration. They are given the opportunity to express their views on the conclusions of the inquiry before the Government formulates a legislative proposal.

3. Effective Consultation

How best to seek stakeholder input?

3.1 A concern expressed to the Cabinet Office prior to the launch of this consultation is that the Code of Practice, because of its strong focus on written consultations, may sometimes act as blinkers for policy teams.
Although the Code and accompanying guidance do discuss the limitations of written consultations for reaching certain groups, such as those whose voices are seldom heard in policy debates, and emphasise the value of other forms of consultation in reaching such groups, the six headline criteria of the Code do not cover this issue. It is, therefore, possible to abide by the spirit of the Code without carrying out any form of consultation prior to the written consultation and without supplementing the written consultation with any other kind of stakeholder engagement.

3.2 Moreover, the Code does not fully reflect the fact that an alternative form of consultation may, at times, be manifestly more relevant to the matter under consideration and those potentially affected by the proposals than a formal, written consultation exercise. Departments undertaking innovative forms of consultation get no credit for doing so under the current policy.

3.3 However, many departments do already supplement their written consultations with other means of seeking views on their policy proposals, clearly designing their activities around stakeholders, e.g. holding events to
discuss the issues at a level and in a locality suitable to the target audience. Some departments have internal guidance on this and provide staff with information on various methods that have been successfully used in the past, e.g. online consultations, focus groups and citizens’ juries.

Case Study 3: Defra asks stakeholders how they want to be consulted The Department for Environment, Food and Rural Affairs (Defra) piloted the use of surveys on consultation with animal health and welfare stakeholder organisations in the spring of 2006.10 The aim was to listen to stakeholder organisations not just about the issues on which Defra consults but also about the way Defra informs and consults them. The surveys were designed to encourage constructive suggestions. A summary of the survey results and proposed actions in response to these was sent to respondents so that they could check their preferences were registered.

Case Study 4: Your health, your care, your say, Department of Health
The “Your health, your care, your say” consultation,11 which closed on 4 November 2005, set out to improve community health and social care services for everyone. The recommendations put forward by the public and health care professionals during the consultation helped shape the resulting White Paper entitled “Our health, our care, our say” of January 2006.

The programme involved healthcare professionals and the public, including the homeless, people with learning difficulties and teenagers who are often not heard in consultation exercises. A number of events took place as part of the consultation process at which between 50 and 100 people had the chance to give their views on what they wanted from health and social care services in their everyday lives. Deliberative events aimed to involve people in the big decisions that affect their lives.

They were used to talk about issues where members of the public may not have had a great deal of knowledge or information. These events gave people the chance to exchange ideas on important issues with each other and with people working in those services. Anyone who could not attend one of the listening events but wanted to contribute was able to do so online.

The events and the online survey gave more than 100,000 people the chance to put forward their
ideas.

Case Study 5: Her Majesty’s Revenue and Customs’ “Consultative Forums”

HMRC also consult with customers and their representatives through a number of consultative forums. These forums provide an opportunity for HMRC to consult with its customers on a wide range of issues. HMRC have reviewed the working of these forums and have considered their effectiveness, their customer focus and their relevance. As part of the review they have spoken to many people who attend these forums to find out their views and opinions.

HMRC have reviewed the terms of reference of all of the forums and have ensured that there is a streamlined structure with clear reporting lines. As part of the recently introduced HMRC Consultation Framework, HMRC have committed to reviewing the terms of reference of these forums every two years.

As a result of the review HMRC have also recently announced some changes to the arrangements, which they believe will improve the communication and accountabilities around the various consultative forums. HMRC now publish the full list of standing forums on the HMRC website as well as a brief description of the purpose of the various forums and all agendas and meeting notes.

Question 6: Do you think that more emphasis should be placed on alternative or supplementary approaches to consultation in a revised consultation policy? What supplementary approach or approaches would work best for you/your organisation?

Awareness-raising

3.4 Criterion 3 of the Consultation Code is “Ensure that your consultation is clear, concise and widely accessible”. Sub-point 3.4 states that “Efforts should be made to bring the consultation to the attention of all
interested parties. As well as using the internet you should consider publicising the consultation in ways most appropriate for the groups you wish to reach.”

3.5 In the run-up to this consultation, one representative association told us of their surprise at having been left off the distribution list of a recent consultation exercise, for which they considered themselves a key stakeholder. This body did, nevertheless, become aware of the consultation in good time as they regularly visited the websites of the Government departments active in their sphere of interest. There are many angles to this issue. Policy teams in departments need to have a clear understanding of who their stakeholders are and to engage with them, particularly when launching a consultation. These stakeholders also need to keep
Government informed when contact details change. Some departments have dedicated staff members to own the relationship with key stakeholders and so are regularly in touch with these people.

3.6 Government departments usually have, on their websites, an area dedicated to their consultation exercises where current and recent consultation documents can be downloaded. The Cabinet Office Better Regulation Executive website provides links to these. This page replaced in 2006 a Consultation Index which provided links to most on-going consultations. The decision was taken to end this service as it was not comprehensive and was not providing value for money. The DTI’s Small Business Service does provide an index, including summaries, of all the consultations that it thinks will be of interest to small and medium-sized enterprises. The idea of similar services, run by representative organisations or by Government, for other sectors could also be considered or encouraged, e.g. by the National Council for Voluntary Organisations or the Trades Union Congress. Alternatively, a private enterprise might offer a valuable service along these lines by indexing consultations of interest to certain groups of stakeholders.

Question 7: How do you generally become aware of Government consultations and how would you like to learn about upcoming and current Government consultations?

Reporting back to stakeholders following consultations

3.7 One of the perceived strengths of the current Code is that departments should report back within three months of the close of consultation exercises on the issues raised by respondents, the impact on policy
and the next steps in the policy development process. This serves several purposes such as ensuring Government departments take seriously the responses received, and aiding transparency and stakeholder confidence.

3.8 However, prior to the launch of this consultation exercise, business and third sector organisations complained that often they are unaware of Government responses to consultations that they have participated
in and that the responses they have seen are sometimes of poor quality. The Code of Practice does not offer much guidance on what these responses should look like or how they should be distributed or published. The guidance accompanying the Code goes into more detail but is not very prescriptive. On the consultation pages of most departmental websites, Government’s responses to closed consultations can be downloaded but perhaps this is not enough.

Question 8: How do you rate the feedback you have seen from Government departments following consultations
and what improvements or changes would you like to see in relation to reporting back?

Consultation fatigue

3.9 Central Government and its agencies currently launch around 600 consultations each year covering a very wide range of topics. The number of formal, written consultations per department varies greatly across Government. Larger departments such as the Department for Environment, Food and Rural Affairs and the Department for Trade and Industry launch many more consultations than smaller departments.

3.10 In the run-up to the launch of this consultation, organisations representing the private sector and the third sector raised the issue of consultation fatigue. These organisations stated that it was impossible or very expensive (as external assistance had to be bought in) to provide responses to all the written consultations produced by the Government that touched on areas of interest to them.

3.11 Part of the solution to this issue might be better coordination within and between Government departments. Working together could mean that departments would have a better understanding of the
existing relationships between other departments and organisations and groups. Greater coordination could then lead to some consultations being merged when they cover similar issues and are aimed at similar stakeholder groups.

3.12 Another way of reducing consultation fatigue might be to change the current emphasis on written consultations and, where appropriate, to adopt other procedures for listening to the views of, and garnering evidence from, stakeholders.

3.13 Consultation fatigue may also be attributable to poor design of consultations and weak Government responses to consultations.

Case Study 6: Consultation of the third sector
In Budget 2006, the Government announced a review of the future role of the third sector in social and economic regeneration in England to inform outcomes of the 2007 Comprehensive Spending Review.16 HM Treasury and the Cabinet Office in collaboration with the third sector carried out the largest ever consultation with the sector. It was designed to get ideas from all parts of the sector and especially from small, community-based organisations. Contributions were summarised in the interim report on the review published on 6 December 2006 as part of the Pre-Budget Report.

Nine regional events were attended by Ministers and 83 sub-regional events were held across England. These events were attended by people from many small, local community based-groups, charities, social enterprises, faith groups, and equalities organisations representing women, black and ethnic minority groups, disabled groups and Lesbian, Gay, Bisexual and Transgender communities. These listening events were held in both urban and rural areas, and there were themed events for particular sub-sections to ensure that all parts of this diverse sector had a chance to make their voices heard.

Parallel to this exercise, the Government also received over 250 written consultation responses.

In November 2006, Compact Voice awarded a commendation for excellence to HM Treasury and Cabinet Office for the consultation process. The second stage of the review consisted of an online dialogue and a series of round-table events with respondents from the first stage who were particularly expert or keen to be involved. The final outcomes of the review will be informed by both stages of the review and will be published as part of the conclusion of the Comprehensive Spending Review.

Question 9: Is “consultation fatigue” an issue for you? If so, why is this and how do you think this issue could be overcome?

Case Study 7: Your Voice in Europe
“Your Voice in Europe” is a European Commission website providing a variety of interactive tools such as online consultations and chat-rooms which allow citizens to contribute to the policymaking process in Europe. All consultations from any part of the European Commission are now supposed to be available through this service and the Commission states that over 10 000 citizens and businesses use this web portal every day.

Other Issues

Question 10:
Please feel free to give us any other views you may have about the effectiveness of current consultation policy, the future of consultation policy, the case studies in this paper and other examples from the UK or elsewhere.

5. Options

5.1 Over the next few pages you will find three possible options for an updated consultation policy. These have been designed to address, to varying degrees, some of the analysis offered above and comments made, over recent months, to the Cabinet Office about Government consultations.

5.2 Preliminary work suggests that there is no need to publish an Impact Assessment alongside this consultation document. None of the options would impose costs on the private or third sectors, and the costs on the public sector are expected to be minimal. For information about other impact tests, see Annex 3.

5.3 The three options are intended to stimulate discussion and should not be regarded as an exhaustive list. Combinations of various elements from each option might also make for an improved consultation policy.

5.4 This consultation exercise is very much an open discussion where all options are open for consideration within the scope set out at the beginning of the document (chapter 1). Please, therefore, do not feel restricted to the three options set out in this document – we would be most interested to hear other ideas for an updated Government consultation policy.

5.5 Please share with us your views on these options, in particular:

Question 11: Do you think any of these options would make for a good consultation policy? If so, which option and what changes could be made to improve it?

Question 12: Are you content with the Government’s preliminary analysis that the options identified in the
consultation document would not impose costs on the private or third sectors?

Option 1 Written consultation plus one other method

Introduction

5.6 This option is based around the current Code of Practice on Consultation but with a new criterion on supplementing all written consultation exercises with at least one other form of consultation. The decision as
to which form or forms of consultation to use would rest with the Minister in the Government department and this supplementary consultation would have to be appropriate for the stakeholders. In the written consultation document the department or agency would state what other consultative activity it was planning and why it had chosen this supplementary method. As is currently the case, a departure from the policy would require an
explanation.

5.7 In many instances, the Government already supplements its written consultations with other methods and some departments have their own internal guidance on this.

Reasoning

5.8 The thinking behind this option is that written consultation may not always be sufficient for certain stakeholders and an additional form of consultation would allow their views to be heard.

In practice

5.9 With such a policy, departments may decide to issue internal guidance on the best methods for particular groups of stakeholders. If the proposals under consideration could affect more than one stakeholder group, and the best way of reaching these two groups differed, then departments may consider running more than one additional form of consultation.

5.10 Additional forms of consultation could include stakeholder workshops, public meetings, citizens’ juries, expert panels, online forums, etc. The Cabinet Office would facilitate the sharing of best practice across Government and provide guidance regarding the effectiveness of supplementary forms of consultation for different stakeholder groups.

5.11 Government consultations are available online. Making available hard copies and online versions of the same Consultation Document would not meet the goal of having a written consultation plus one other form.

Possible pros

5.11

Possible cons

5.12

Option 2 A Code of Practice with a fast-track procedure

Introduction

5.13 This option consists of a set of criteria largely similar to the current Code but with the possibility, in clearly defined circumstances, of carrying out a fast-track consultation. It might, for example, be possible to allow the fast-track procedure when the policy team can demonstrate that its consultation would be of interest to only a very limited number of stakeholders who are already engaged with the department on the policy area in question. However, the definition of suitable circumstances would need to balance a variety of different factors. The Government would welcome views on suitable definitions.

5.14 Under the current Code, departments can indeed carry out shorter consultations – the Code states that “Ministers retain their existing discretion not to conduct a formal written consultation exercise under the
terms of the code”. However, this policy would set out circumstances where shorter consultation periods might be considered sensible without being seen as departures from the Code or from best practice. Reasoning
5.15 While 12-week consultations are welcomed by many stakeholders for reasons set out earlier in this document, it can be argued that it is not necessary in all circumstances to carry out a written consultation lasting 12 weeks and that there are disadvantages to 12-week consultations. The Consultation Institute19 has
produced a discussion paper on the topic in which the disadvantages of 12-week consultations are listed as the following:

In practice

5.16 It can be argued that the benefits of shorter consultation periods fall primarily on the side of the Government department. However, if, for example, the primary stakeholders “consist of a largely closed list
of known specialist or technical organisations, most of whom are expecting the consultation, and who have the skills and infrastructure to respond in a shorter period of time… then fast-tracking would make sense for all parties.

5.17 The proposed fast-track option would allow for consultations to last, for example, for six weeks, with advance notice of the consultation being given to the stakeholders.

Possible pros

5.18

Possible cons

5.19

Option 3 A principles-based approach

Introduction

5.20 Under this option, the criteria in the current Code would be replaced by core principles that would have to be taken into account by central Government departments and agencies when consulting on policy ideas or proposals. Departments would consult in a manner which they deemed to be appropriate and proportionate to the policy under discussion and to the stakeholders affected.

Reasoning

5.21 The rationale for a principles-based approach is that a consultation exercise will be most effective, efficient and proportionate when it is designed around the needs of the stakeholders and is proportionate to the issues being discussed. Observance of the principles would ensure that consultations are designed to meet
these requirements and achieve certain standards.
5.22 The goal of this option therefore is to encourage departments to think more carefully about their stakeholders when designing their consultation exercises and to encourage innovation in designing their
processes. This would lead to a greater diversity in responses, from those already engaging with Government to those whose voices had previously gone unheard.

In practice

5.23 If, for example, a department needed to consider views relating to a matter affecting only a handful of stakeholders and the Government had been holding regular meetings with them about this, the department may decide that no formal, written consultation is required as it would be considered excessive – the responses would simply set out what that the Government already knew. Alternatively, for a consultation on a policy area concerning many different stakeholders, including those rarely engaged in Government matters, an entirely different approach might be appropriate, going far beyond the typical, written consultation exercise. Minimum standards for such consultations could apply for certain sorts of policies or proposals. Thresholds already exist: for example, major proposals with a potential cost of over £20 million currently require approval from a special Cabinet committee chaired by the Prime Minister (the Panel for Regulatory Accountability). Consultations on issues over this threshold could warrant a specific level of consultation so as to reduce the risk of abusing the system.

5.24 The principles of a policy of this kind might be drafted in the form of questions or a check-list along the lines of those in case study 1 on Ireland or be based around broad best practice principles, e.g.:

5.25 The Cabinet Office might supplement the principles by regularly publishing examples from across Government of successful consultation exercises which had used a variety of methods to seek stakeholders’
views. Departmental Consultation Coordinators would work with policy leads to ensure their consultations respect the principles. The Government would welcome views on what the core principles might be and whether there is merit in a checklist of questions to ensure the consultation is handled appropriately.

Possible pros

5.26

Possible cons

SUMMARY OF QUESTIONS

If you are thinking of submitting a formal response to this consultation, please do not feel obliged to answer every question and feel free to make other comments on the topic of Government consultation practice, process and policy that you consider relevant.

Current policy

1. Do you think the Government’s Code of Practice has led to an improvement in the way the Government consults and to improved policy outcomes?
Please illustrate your answer with any concrete examples you may have.

2. Are 12 weeks generally the right amount of time for the formal, written element of Government consultations to last? Do you think that there are circumstances where a shorter or longer duration may be more appropriate?

Monitoring compliance

3. Is the system for monitoring and promoting performance of departments in relation to the criteria in the current Code of Practice on Consultation right? What improvements could be made?

Consultation and Impact Assessment

4. Is the new approach to Impact Assessment sufficient to improve public consultation on the evidence base for Government policymaking? How could consultation policy improve consultation on Impact Assessments? Consulting for the right reasons at the right time

5. When in the policy development process do you think the Government should consult stakeholders? Please cite any relevant examples when you have been consulted at the right or wrong time. How best to seek stakeholder input?

6. Do you think that more emphasis should be placed on alternative or supplementary approaches to consultation in a revised consultation policy? What supplementary approach or approaches would work best
for you/your organisation?

Awareness-raising

7. How do you generally become aware of Government consultations and how would you like to learn about upcoming and current Government consultations?

Reporting back following consultations

8. How do you rate the feedback you have seen from Government departments following consultations and what improvements or changes would you like to see in relation to reporting back?

Consultation fatigue

9. Is “consultation fatigue” an issue for you? If so, why is this and how do you think this issue could be overcome?

Other issues

10. Please feel free to give us any other views you may have about the effectiveness of current consultation policy, the future of consultation policy, the case studies in this paper and other examples from the UK or
elsewhere.

Options

11. Do you think any of these options would make for a good consultation policy? If so, which option and what changes could be made to improve it?

12. Are you content with the Government’s preliminary analysis that the options identified in the consultation document would not impose costs on the private or third sectors?

7.1 The Government wishes to consult individuals and organisations about the future of consultation policy over the period 14/06/2007 to 28/09/2007.

7.2 This consultation exercise will be accompanied by an online discussion and by events to discuss the future of consultation policy – see www.consultations.gov.uk. If you have any queries, please contact the Cabinet Office at Consultation.Policy@cabinetoffice. x.gsi.gov.uk.

7.3 Following the consultation, the Government will consider responses and, by 30/11/2007, publish a document containing a summary of the responses received; a statement of how these will affect future policy; and an outline of future activity as regards consultation policy. This will be published at www.cabinetoffice.gov.uk/regulation.

7.4 Electronic versions of this document can be found at www.cabinetoffice.gov.uk/regulation.

7.5 You can also contact us via email at Consultation.Policy@cabinetoffice.x.gsi.gov.uk.

7.6 We are able to supply copies of this consultation document in alternative formats (such as large print or Braille) upon request.

7.7 Please send your responses to this consultation by 28/09/2007 to: Cabinet Office, 4th Floor, 22 Whitehall London SW1A 2WH / Email: Consultation.Policy@cabinetoffice.x.gsi.gov.uk

7.8 For enquiries, contact Ian Ascough at the above postal address, via Ian.Ascough@cabinet-office.x.gsi.gov.uk or on 020 7276 2175.

7.9 This document and the consultation process have been planned to adhere to the Code of Practice on Consultation issued by the Cabinet Office and is in line with the six consultation criteria, which are:

7.10 Representative groups are asked to give a summary of the people and organisations they represent, and where relevant who else they have consulted in reaching their conclusions, when they respond.

7.11 Information provided in response to this consultation, including personal information, may be published or disclosed in accordance with the access to information regimes (these are primarily the Freedom of Information Act 2000 (FOIA), the Data Protection Act 1998 (DPA) and the Environmental Information Regulations 2004)

7.12 If you want the information that you provide to be treated as confidential, please be aware that, under the FOIA, there is a statutory Code of Practice with which public authorities must comply and which deals, amongst other things, with obligations of confidence. In view of this it would be helpful if you could explain to us why you regard the information you have provided as confidential. If we receive a request for disclosure of the information we will take full account of your explanation, but we cannot give an assurance that confidentiality can be maintained in all circumstances. An automatic confidentiality disclaimer generated by your IT system will not, of itself, be regarded as binding on the department.

7.13 The Cabinet Office will process your personal data in accordance with the DPA and in the majority of circumstances this will mean that your personal data will not be disclosed to third parties

7.14 Individual contributions will not be acknowledged unless specifically requested.

7.15 Your opinions are valuable to us. Thank you for taking the time to read this document and respond.

7.16 If you have comments or complaints about how this consultation is being handled, please contact Ian Ascough in the Better Regulation Executive: Ian.Ascough@cabinet-office.x.gsi.gov.uk or 020 7276 2175

WHO WE ARE CONSULTING

Annex 1: Who we are consulting
This consultation document has been sent electronically to the organisations listed below. Government
departments and agencies will also be alerting their key stakeholders to the launch of this consultation
exercise.
Please feel free to forward this document, a link to it or the contact details set out at the beginning of
this document to any individuals, organisations or businesses who you think might be interested.Action with Communities in Rural England
Adam Smith Institute
Advertising Association
Advertising Standards Authority
Age Concern
Agricultural Industries Confederation AIC
Amicus
Association of British Insurers
Association of British Offshore Industries (ABOI)
Association of British Oil Industries (ABOI)
Association of British Travel Agents (ABTA)
Association of Chartered Certified Accountants
Association of Chief Executives of Voluntary
Organisations
Association of Chief Police Officers
Association of Convenience Stores
Association of Police Authorities
Association of Port Health Authorities
Association of River Trusts
Association of the British Pharmaceutical Industry
Better Regulation Commission
Bio Industry Association
Black Environment Network
Black Training and Enterprise Group
British Association of Record Dealers (BARD)
British Bankers Association
British Beer and Pub Association
British Cement Association
British Chambers of Commerce (BCC)
British Chemical Distributors and Traders
Association Ltd
British Dental Trade Association
British Hallmarking Council
British Metals Recycling Association
British Overseas NGOs for Development
British Potato Council
British Poultry Council
British Retail Consortium
British Vehicle Rental and Leasing Association
British Woodworking Federation
Campaign to Protect Rural England
Centre for Environment, Fisheries and
Aquaculture Science
Chartered Institute of Environmental Health
Chartered Institution of Water and Environmental
Management
Chemical Industries Association
Citizens Advice Bureau
City of London Corporation
Civil Aviation Authority
Cleaning and Support Services Association
Coal Authority
Commission for Equality and Human Rights
Commission for Rural Communities
Confederation of British Industry (CBI)
Consultation Institute
Consumer Council for Water
Countrywide Farmers Plc
Demos
Economic and Social Research Council
Electrical Contractors Association of Scotland
Energy Industries Council
Energy Networks Association
Energywatch
Engineering Employers Federation (EEF)
English Partnerships
Environmental Services Association
Environment Council
Environmental Health Institute
Environmental Industries Commission (EIC)
Environmental Services Agency
Environmental Services Association
Equal Opportunities Commission
European Commission
Federation of Environmental Trade Associations
Federation of Master Builders
Federation of Small Businesses
Financial Reporting Council
Financial Services Authority
Fire and Rescue authorities
Fire Industry Confederation
Food and Drinks Federation
Food Standards Agency
Foodaware
Football Licensing Authority
Forestry Commissioners
Forum of Private Business
Friends of the Earth
General Optical Council
General Medical Council
Genewatch UK
Green Alliance
Greenpeace
Hearing Aid Council
Historic Buildings & Monuments Commission
Home Grown Cereals Authority
Homebuilders Federation
Homeless Link
House Builders Federation
Housing Corporation
Human Fertilisation & Embryology Authority
Institute for Economic Affairs
Institute of Asian Business
Institute of Chartered Accountants of England
and Wales
Institute of Directors (IoD)
Institute of Interim Managers
Involve
Judicial Studies Board
Justice
Justices’ Clerks’ Society
Law Society
Liberty
Local Government Association
London Investment Banking Association
London School of Economics
MIND
National Consumer Council
National Council for Voluntary Organisations
National Energy Foundation
National Grid
National Landlords Association
National Union of Farmers
Natural England
Oxfam
Path National UK
Policy Exchange
Policy Studies Institute
Proprietary Association of Great Britain
Radio Electrical and Television Retailers
Association (RETRA)
Regulatory Policy Institute
Restorative Justice Consortium
Royal Institute of British Architects
Royal Institute of Chartered Surveyors
Royal National Institute for the Blind
Royal National Institute for the Deaf
Royal Society for the Prevention of Accidents
Royal Society for the Protection of Birds
Royal Town and Planning Institute
Sea Fish Industry Authority
Security Industry Authority
Shelter
Small Business Council
Small Business Europe
Small Business Service
Society of Chief Officers of Trading Standards in
Scotland (SCOTSS)
Society of Motor Manufacturers and Traders
Society of Pension Consultants
Sports Industries Federation
Stonewall
Trades Union Congress (TUC)
Trading Standards Institute
Trademarks, Patents and Designs Federation
Turning Point
United Kingdom Environmental Law Association
(UKELA)
United Kingdom Sports Council
Waste Working Party of the UK Environmental
Lawyers Assoc.
Water UK
Wellcome Trust
Which?
Wine and Spirit Trade Association
World Wildlife Fund

Annex 2: Definitions

It is important to define the terms “consultation” and “stakeholders” to clarify the context and scope of this consultation exercise.

Public Engagement and Consultation

Public engagement in policy development and service design underpins a representative democracy. This engagement can take many shapes and forms and be undertaken at any stage of the policy process - from gathering ideas about how best to address an issue through to evaluating how well policy objectives were met.

Engagement can lead to improved governance and accountability; build social capital, networks, inclusion and shared ownership of issues and help develop citizens’ confidence and knowledge about operating in the public realm.

Another key benefit, of course, is delivering better policy and services. At those stages in the policy process where the Government has formed a preliminary policy analysis and developed options for scrutiny, it is right that this engagement takes the form of consultation. Here the objective is to listen fully and carefully so the Government can build up a broad evidence-base which allows for effective and efficient policymaking before decisions are made. Consultations which truly reach all those with an interest lead to better policies and reduce the risks of policies failing to meet their objectives and of unintended consequences and can lead to further engagement from experts and interested parties further down the line. It is sensible therefore to set out clearly a consistent set of expectations that Government sets itself at these policy stages where consultation, rather than other forms of engagement, is needed.

However, while consultation serves a specific purpose in seeking evidence for policymaking and exposing preliminary analysis and options to scrutiny, it need not be a restrictive term when it comes to method. In other words, consultation should not be understood purely as meaning written consultation. While this may often be themost useful method for consultation, it is not the only medium, and certain policy areas, particularly because of those people who might be affected, may better be served by other forms of consultation. There is, for example, considerable value to be gained through supplementing written consultations with other forms of consultation and in maintaining regular contact with principal stakeholders. Many Government departments hold regular meetings with key players in their policy areas, referring to these as Policy Forums or Stakeholder Forums. Such forums allow constructive dialogue to take place on policy objectives as well as on the detail of proposals. These discussions should be considered as consultation.

Stakeholders

Consultations are aimed at “stakeholders”. By stakeholders we mean those outside of central Government with a specific interest in the topics under discussion. These may be organisations of associations, companies or individuals who have a specialist interest or who might be affected by the new policy, the policy change or the
proposed legislation. In very many cases members of the public are also stakeholders.

Insofar as central Government department consultations are concerned, other central Government departments should not be considered “stakeholders”; Whitehall has internal procedures to co-ordinate and join up policymaking across Government. However, the public sector outside of central Government can be considered stakeholders and is free to respond to central Government consultations. The Cabinet Office strongly advises departments to work closely, before any public consultation takes place, with colleagues in other departments,
agencies or local government bodies, etc. as relevant, and especially with those who may have to administer and/or enforce the policy.

International examples of definitions
Case Study 8: The Organisation for Economic Cooperation and Development (OECD) defines consultation as “a two-way relationship in which citizens provide feedback to government. It is based on the prior definition of information. Governments define the issues for consultation, set the questions and manage the process, while citizens are invited to contribute their views and
opinions.”
Case Study 9: The Government of the Republic of Ireland, in its “Reaching Out”23 guidelines for consultation, defines consultation as “a structured public engagement which involves seeking, receiving, analysing and responding to feedback from stakeholders. A structured consultation process entails defining the purpose and subject of the consultation (such as a policy initiative, a regulatory change, a legislative proposal or a service delivery). It also entails identifying the key audience whose views are to be sought, framing the questions to be asked, providing information and receiving and analysing the responses. It is important to differentiate between ongoing consultative mechanisms (involving standing committees, forums or groups) and one-off
consultation exercises.”
Case Study 10: Australia’s Department of the Environment and Heritage defines the term as “a process of discussion between those proposing a course of action and those likely to be affected by those actions”.
Case Study 11: New Zealand’s Department of Conservation has defined consultation as “a genuine invitation to give advice and genuine consideration of that advice”.25 The Department states New Zealand case law which says that consultation can include:

Annex 3: Impact Tests

In collaboration with Government departments and a handful of stakeholder organisations which regularly respond to Government consultations, and through surveying small businesses (facilitated by the Small Business Service) the Cabinet Office has carried out initial analysis of the costs and benefits of Government consultation for the private and third sectors as well as the costs and benefits for Government.

There are, of course, no mandatory costs associated with consultation for individuals or the private and
third sectors, and in responding to a consultation stakeholders will, at least informally, have to carry
out a cost-benefit analysis to weigh up the resources required to respond and the potential pay-back in better policies. Effective consultation should reduce the risk of policy failure.

None of the options set out in this consultation document imposes costs on the private or third sectors, and the costs on the public sector are expected to be minimal.

The Cabinet Office has carried out screening on
the following impact tests:

In all of these except the Small Firms Impact Test (SFIT) it was decided that, at this stage, there was no impact from the proposals set out in this consultation document so the tests were not taken any further. It was decided that an SFIT should be carried out to Stage 1 level.

Small Firms Impact Test (Stage 1)

Discussions have been held with bodies representing small business interests about how Government consultations could be improved. Also, facilitated by the Small Business Service, small businesses were surveyed as to their views on how Government currently consults and the scope for improvements. Twelve small businesses responded to this survey expressing a range of views regarding the adequacy of Government
consultations in a variety of policy areas.

Comments received from small businesses included:

The consultation document addresses many of these issues and in the options looks at how they might be addressed in practice. Adopting any of these options would lead to no mandatory costs and no significant or disproportionate impact on small businesses.

Cabinet Office
4th Floor
22 Whitehall
London SW1A 2WH
e-mail: consultation.policy@cabinet-office.x.gsi.gov.uk
Published: June 2007