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Regulatory Impact Assessments: Good Practice

Our evaluations of RIAs have produced a large number of learning points highlighting good and bad practice. The good practice points are summarised in our reports, and they are also listed below.

Other organisations also provide good practice and guidance on how to produce a good RIA. Some of these are listed in our Relevant Guidance page.

Recommendations in NAO Evaluation of RIAs Compendium Report 2004-05

To Departments

• Assessing Options. Regulation may not always be the best response to achieve objectives. Departments should use the RIA process to assess options to achieve their objectives, including alternatives to regulation, and whether a regulatory response is the best option.
• Transparency in Policy Making. Final RIAs should summarise briefly options that have been considered and discarded. This increases transparency and demonstrates that departments have considered a range of options.
• Measuring the Impact of Proposals. Departments should analyse and present the Do Nothing option in all cases to provide a measure of the impact of the proposals. They should ensure this takes account of the contribution which known existing measures can make to the proposals in the RIA.
• Competition Assessment. Departments should involve specialists, such as economists, in completing competition assessments at an early stage, and should seek advice from the Office of Fair Trading.
• Differing Levels of Compliance. Departments should include in the RIA process the impacts of different levels and patterns of compliance, and the effectiveness of different enforcement strategies. This should help inform the choice of options and the most appropriate enforcement regime.
• Impact on Small Businesses. Departments should allow the Small Business Service sufficient time to consider the implications of proposals on small businesses.
• Informing and Challenging. RIAs have the greatest value if they are integrated into the policy process. Departments should aim to produce good quality RIAs that inform and challenge policy-making.
• Fit for Purpose. Departments should ensure that the RIAs produced are fit for the required purpose. There is no point in producing complex or elaborate RIAs for small-scale regulations, while other regulations demand in-depth analysis integrating the efforts of economists, statisticians, lawyers and subject-matter experts.
• Using Information. Producing RIAs and monitoring and evaluation lead to collection and analysis of a great deal of information. Where this information relates to departments’ performance measurement indicators, departments should ensure that the information is incorporated into their performance reporting.
  
  To the Cabinet Office
   
• Keeping track of RIAs. Around 175 RIAs were produced across the Government in 2003. If RIAs are to maximise their influence, and to serve as a communication tool, it is important that businesses and others can obtain up to date lists of RIAs. Cabinet Office should update its website regularly to ensure all RIAs are included.
   

Recommendations in NAO Evaluation of RIAs Compendium Report 2003-04

• Planning and timing. RIAs should be undertaken early in the policy making process for any measure which may impact on businesses, charities and voluntary organisations and should evolve throughout the process. Policy makers should plan as early as possible the timetable for the RIA process and for implementation of the policy. 
• Resources. The RIA process is often crucial to good policy making and departments should ensure that the process is properly resourced and that appropriate training is given.
• Experience. Where possible, departments should draw on previous experience of producing RIAs, thus encouraging a culture of thorough scrutiny of regulatory proposals within the policy making process.  
• Clear objectives. RIAs should include a clear statement of the objectives for the regulation to demonstrate that the department knows exactly what the regulation is trying to achieve. The objectives should also properly inform the consideration of policy options, including alternatives to regulation.  
• Range of Options. Departments should consider a range of options to achieve their policy objectives, and present these in the RIA. These should include a "Do Nothing" option and alternative regulatory methods where appropriate, and consider the appropriate enforcement regime for each of the different options.  
• Risk Assessments. The RIA should include a detailed risk assessment of the problem or risk which the policy is trying to address, including the consequences of not regulating. Where practicable the risk assessment should present evidence-based estimates to illustrate the scale of the issue the regulation aims to address.
• Public consultation. Departments should undertake a full public consultation to obtain the views of key stakeholders and any other interested parties. They should ensure that the planned timetable for the RIA process allows at least twelve weeks' response period in line with guidance.  
• Reflecting uncertainty. RIAs should be realistic and have regard to the uncertainties, for example by presenting ranges of costs and benefits where appropriate, rather than single point figures. They should normally include the effect of changes in key assumptions by undertaking and presenting sensitivity tests.  
• Costs and Benefits. Departments should, wherever practicable, present quantified estimates of the costs and benefits of the regulation. They should also draw on advice from in-house experts such as economists to ensure methodologies are robust.  
• Compliance Assessment. Departments should consider the consequences of achieving less than 100 per cent compliance with the regulation. Assessing the impacts of lower levels of compliance can inform the decision making process. Departments should also consider patterns of compliance in their assessments.  
• Monitoring and Evaluation. Departments should outline in the RIA how the regulation and its effects are to be measured and monitored, and describe the reviews and evaluations which will be used to judge how far the regulation is achieving defined objectives. They should also explain how information from monitoring and evaluation will be used to inform future policy making.