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Assessing the impact of proposed new policies

Impact Assessments, used to assess the need for and the likely impact of proposed government policy interventions, do not yet consistently provide a sound basis for assessing the relative merits of different policy proposals. Further improvement in the quality and use of Impact Assessments is needed in order to achieve value for money.

According to a report published today by the National Audit Office, some Impact Assessments are of a high standard, but wide variation remains between the best and worst.

Eighteen per cent of the NAO’s sample were assessed as ‘red’ because they may not provide sufficient evidence to convince the reader that the right conclusion has been reached. Over half had weaknesses with only 28 per cent fully meeting reasonable quality standards.

The number of policy options considered has improved, but is still too limited, with almost half of the assessments considering only one option, or one option plus a “do nothing” option. In addition, Impact Assessments for interventions originating from European Union decisions are often produced only after a decision has been made at European Union level.

The use of quantification in analysis for Impact Assessments is improving, with 86 per cent of those reviewed by the NAO containing some quantification of the costs of their preferred option and 60 per cent containing some quantification of benefits.  However, 10 per cent of the assessments had not quantified either the costs or the benefits.

Departments have increased the resources that they allocate to preparing Impact Assessments and internal scrutiny has improved. Some Impact Assessments have altered the course of some policy development, yet only half of policy staff felt that they were useful in the policy process.

"Once a policy is adopted, consequences and costs begin to flow. It is therefore fundamental to achieving good value for money that the standard of proof applied in Impact Assessments is high. Ministers need to be advised on the range of consequences and risks implied as fully as possible before they take their decisions.  This means that departments need to strive for high quality in the Impact Assessments they produce.  Although progress is being made, there is more to do.”

Amyas Morse, head of the National Audit Office

Notes for Editors

  • Impact Assessments assess the need for, and likely impact of, proposed government policies.  Impact Assessments are required for all government interventions which affect the private sector with a cost of over £5 million, including UK implementation of European Union directives and rulings.

  • The Better Regulation Executive, situated in the Department for Business, Innovation and Skills, works with government departments to improve the design of new regulations and to simplify and modernize existing regulations. Individual departments are responsible for the quality of their own Impact Assessments, while the Better Regulation Executive is responsible for promoting high quality Impact Assessments across government.

  • Press notices and reports are available from the date of publication on the NAO website, which is at Hard copies can be obtained from The Stationery Office on 0845 702 3474.

  • The Comptroller and Auditor General, Amyas Morse, is the head of the National Audit Office which employs some 900 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.

PN: 36/10