Introduction to Regulatory Impact Assessment

1. Introduction to Regulatory Impact Assessment Claire Chaubert February 2007

2. Regulation… is any government measure that seeks to change the behaviour of individuals or groups

3. “….a tool which informs policy decisions. It is an assessment of the impact of policy options in terms of the costs, benefits and risks of a proposal.” What is a Regulatory Impact Assessment?

4. Principles of good regulation • Proportionality • Accountability • Consistency • Transparency • Targeting

5. When is an RIA done? • For all policy proposals • Possible impact on business, charities, the voluntary or public sectors • Even if recommended option is not regulatory • Major proposals must clear Cabinet Committee – Panel on Regulatory Accountability, chaired by the Prime Minister before they can be cleared by other policy committees

6. Framework for policy makers • Evidence-based options analysis • Risk assessment • Cost/benefit analysis • Avoiding unintended consequences • Effective consultation • Planned implementation and delivery • Informed decision-making

7. Impact assessment – key questions • What’s the problem being solved? • Clear rationale - market failures or social reason; Risk assessment for not acting • Why is change needed? • What are the options for intervention? • Baseline option of doing nothing • What are the alternatives to classic regulation? • What are the costs and benefits? • Wider economic, environmental and social, distributional impacts, dynamic effects, e.g. unintended consequences • Who will be affected? (business, public sector, charities and voluntary sector, consumers, individuals, social groups) • Do the benefits justify the costs?

8. Stages of RIA • Policy idea & development (Initial) • Consultation (Partial) • Policy agreement (Final) Winners and losers, risks, broad estimates of costs and benefits Ideas fleshed out, quantitative assessments Final recommendation, costs and benefits confirmed following consultation

9. RIA drafted by line ministry RIA PROCESSES Scrutiny by NAO Submission to Parliament

10. This is what it can lead to…

11. UK developments • Currently implementing major improvements to the RIAs to address key challenges: - Inconsistent top-level support • Variable quality • Insufficient focus on costs and benefits • RIAs and Guidance too lengthy • Consultations skewed • Increase transparency of analysis of options • Need to embed culture change • Ongoing process of learning from experiences

12. Revising the Impact Assessment: Main Proposals • Revised template with one-page summary sheet • Shorter Guidance • Declaration by Chief Economist to certify the quality of the analysis • A focus on assessing the full range of impacts of policy options • Changing the name from “Regulatory Impact Assessment” to “Impact Assessment” • An on-line database of completed Assessments, providing a single point of access for stakeholders • Improved training and support to departments

13. Revising the Impact Assessment: What does Success look like? • Impact Assessments developed as policy options are being identified and considered – fully cycle approach • Decision-makers to expect and have high-quality Impact Assessments when they make policy judgements • Clear identification of costs and benefits, including disproportionate impacts • Impact Assessments to be the accepted basis for cross-departmental discussion within Government on impact of proposals • Stakeholders outside Government to want Impact Assessment because of greater visibility on costs and benefits

14. More information • Websites: www.betterregulation.gov.uk www.cabinetoffice.gov.uk/regulation www.brc.gov.uk