Headlines: November 15th, 2001

Regulatory impact assessments (RIA) have helped contribute to better policy making and to reduced business costs, according to the National Audit Office (NAO).But, although the NAO says there are many examples of good practice in preparing RIAs across Whitehall, there is room for improvement.

RIAs have been introduced and developed by Government in response to concerns raised about the impact of regulation, which can impose new costs on businesses, charities, voluntary organisations, and ultimately the citizen. The effort involved in understanding and implementing new regulations can be particularly heavy for small businesses.

A good RIA should clarify the objective of the regulatory proposal, the risks being addressed and the likely costs and benefits of options for delivering the objective. The NAO says three factors characterise good RIAs – starting early, consulting effectively, and analysing costs and benefits appropriately.

The report also recommends policy makers 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.

The report draws on an examination of RIAs from 13 departments and agencies. It cites how the RIA on the proposed regime for the National Minimum Wage avoided 150 million pounds in unnecessary administrative costs to employers. And an RIA on new pesticide regulations showed that employers would incur disproportionate costs from a new mandatory training requirement. A non-regulatory option was adopted instead.

The Cabinet Office is responsible for providing guidance and assistance on RIAs, while the Small Business Service of the Department of Trade and Industry advises on small business consultation and analysis aspects.