Press Release - Better Regulation: Making Good Use of
Regulatory Impact Assessments
15 November 2001
Regulatory impact assessments (RIA) have helped contribute to
better policy making and reducing the costs to business according
to a National Audit Office report published today. It concludes
that while there are many examples of good practice in the process
of preparing RIAs across Whitehall, there is room for
improvement.
Presenting the report to Parliament, Sir John Bourn, Head of the
NAO, said that RIAs have been introduced and developed by
Government in response to concerns about these regulatory burdens.
Their purpose is to explain the objective of the regulatory
proposal, the risks being addressed and the likely costs and
benefits of options for delivering the objective. Three factors
characterise good RIAs - starting early, consulting effectively,
and analysing costs and benefits appropriately. Policy makers could
pay more attention to some aspects of preparing RIAs. These include
evaluating a range of options (including not regulating) and
encouraging self-regulation where feasible. If regulation is
required, policy makers should consider how to encourage compliance
by those affected.
Regulation can safeguard citizens, promote a prosperous economy
and protect the environment. But regulation can also impose costs
on businesses, charities, voluntary organisations, and ultimately
the citizen. And the effort involved in understanding and
implementing new regulations can bear particularly heavily on small
businesses.
The report draws on an examination of RIAs produced by 13
departments and agencies. It uses examples of good practice to
illustrate what departments and agencies can do to apply the RIA
process to good effect so that they achieve the five principles of
good regulation: transparency, proportionality, targeting,
consistency and accountability. For example, consultation on the
basis of the RIA on the proposed regime for the National Minimum
Wage resulted in the adoption of a different method of
implementation that avoided £150 million in unnecessary
administrative costs to employers. And a RIA on new pesticides
regulations showed that employers would incur disproportionate
costs from a new mandatory training requirement which were not
justified by the benefits. So a non-regulatory option was adopted
instead.
The Cabinet Office are responsible for providing guidance and
assistance on RIAs, while the Small Business Service of the
Department of Trade and Industry advise on small business
consultation and analysis aspects. The report highlights ways in
which they and the line departments and agencies can build on what
has been achieved so far. The report recommends that:
- the Cabinet Office should, in revising the guidance
they provide departments, give clearer advice to policy makers on
the circumstances in which a regulatory impact assessment is
needed, and clarify that the RIA should address how the desired
level of compliance is to be achieved in practice;
- the Small Business Service should produce guidance for
departments and agencies on how to consult more effectively with
small businesses over RIAs, including making greater use of focus
groups and networks of small businesses; and
- Departments and Agencies should draw on the expertise
necessary to quantify the benefits of the regulation proposed and
examine the scope for focusing enforcement arrangements so as to
minimise the burden on businesses.
The report also sets out examples of good practice and provides
a checklist of key questions for policy makers when preparing
RIAs.
Sir John said today
"In deciding whether to regulate, and how much, departments
and agencies need to strike the right balance between protecting
the citizen and limiting the impact on those being regulated,
especially small businesses. Considering what form of regulation if
any is needed throughout the policy making process requires a
continuing culture change in Whitehall. Regulatory impact
assessments have proved effective in promoting this change but more
could be done to improve the way they are prepared, presented and
consulted upon."
Notes for Editors
Policy makers in departments and agencies are required to
produce regulatory impact assessments where legislation is
contemplated which is likely to have regulatory impacts upon
businesses, charities or voluntary organisations. The Minister
sponsoring the legislation is required to sign off his or her
assent to the final version of the assessment before the
legislation can be presented to Parliament.
Press notices and reports are available from the date of
publication on the NAO website at http://www.nao.org.uk/ Hard copies can
be obtained from The Stationery Office on 0845 702 3474.
The Comptroller and Auditor General, Sir John Bourn, is the head
of the National Audit Office employing some 750 staff. He and the
NAO are totally independent of Government. He certifies the
accounts of all Government departments and a wide range of other
public sector bodies; and he has statutory authority to report to
Parliament on the economy, efficiency and effectiveness with which
departments and other bodies have used their resources.
Press Notice 54/01
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