The Government is seeking to reduce the burden
of regulation on business, charities and the voluntary and public
sectors whilst maintaining the protection afforded to society.
Regulatory Impact Assessments (RIAs) have a crucial role to play
as they are designed to enable policy makers to assess the need
for, and impact of, new regulations. RIAs can be influential in
identifying the appropriate regulatory option and ensuring that
the policy decision is well informed.
In June 2006 the Comptroller and Auditor and General
reported on the extent to which departments are embedding impact
assessment into their processes and culture. [2]The
examination focused on four departments—Culture, Media and
Sport (DCMS); Trade and Industry; Home Office; and Transport.
This memorandum by the National Audit Office sets
out the findings from the report that relate to DCMS. The memorandum
is structured as follows:
— Part 1 looks at the use of RIAs;
— Part 2 looks at DCMS performance
on RIAs; and
— Part 3 deals with efforts to embed
impact assessment into Departmental processes and culture.
Appendices 1 and 2 provide further details of the
DCMS assessment.
Part 1: The evolving better regulation agenda
1.1 Regulatory Impact Assessments have been used
since 1998 and around 200 are now produced each year. RIAs allow
policy makers to analyse the likely impacts—economic, social
and environmental—of a policy change, and the options for
implementing it.
The role and use of RIAs
1.2 The scope of RIAs should be proportionate
to the size of the regulatory proposal being analysed. There is,
however, still a tendency for departments to make their RIA documents
too lengthy through the inclusion of repetitive material—this
was the case with the RIA for the Licensing Act Regulations.
1.3 There was wide variation between departments
in the extent to which they had considered the need for, and had
begun to evaluate, the impact of regulation. The use of ex-post
evaluation was limited in the DCMS, but the Department has recently
taken steps to strengthen this area. It has established a Task
Force, chaired by its Better Regulation Minister, to review the
sectors regulated by the Department. It is initially looking at
Gambling and Licensing.
Part 2: The quality of impact assessments
2.1 We reviewed two DCMS RIAs -on the Licensing
Act and Gambling Bill. We scored each of the key areas in the
RIAs using a "traffic light" system (Figure 1). Appendix
2 also contains a summary of our assessments.
Scope and Purpose of the RIA process
2.2 Departments can use the RIA process
to assess options to achieve their objectives, including alternatives
to regulation, and whether a regulatory response is required.
Departments should give more structured consideration to non-legislative
solutions rather than assuming that regulation is the only answer,
especially in cases involving potential or actual market failure.
An example of where DCMS could have improved its Gambling Bill
RIA has been outlined in Figure 2.
Consultation
2.3 Consultation allows departments to gather
the views of stakeholders and enables them to open up their thinking
to external challenge. It can help departments to identify unforeseen
problems and to increase the robustness of its costs and benefits.
We found that the DCMS is being flexible in how it approaches
consultation. The RIA for the Licensing Act was informed through
the use of stakeholder events and ongoing stakeholder forums,
although there was still room for improvement (Figure 3).
Costs and benefits
2.4 Final RIAs are signed off by the relevant
Minister who states that the benefits of the regulation justify
the costs. RIAs therefore need to demonstrate this, using quantitative
and qualitative techniques, and reflecting uncertainties as appropriate.
Departments should involve specialists, such as economists and
statisticians, to help them in this. The impact on small businesses
should also be considered.
Compliance
2.5 Regulations are often introduced to
encourage changes in behaviour, so RIAs should consider how the
regulations will be complied with and enforced, and the sanctions
that will apply in the event of non-compliance. The Department's
RIA for the Gambling Bill demonstrated some weaknesses in this
area of analysis (Figure 4).
Implementation, monitoring, evaluation
2.6 Good quality RIAs will outline how the
regulation and its effects are to be implemented, measured and
monitored, and describe the reviews and evaluations which will
be used to judge how far the regulation is achieving defined objectives.
The Departments RIA for Licensing Act demonstrated some good quality
analysis in this area (Figure 5).
Competition
2.7 Regulations can affect competition by
influencing such things as costs, availability of resources, and
market entry and exit. 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's
Regulatory Review Team. The Department did not consult with the
OFT in developing the Licensing Act RIA and we consider this to
be an oversight (Figure 6).
DCMS performance in comparison to the other departments
in our review
2.8 Figure 7 sets out the overall performance
of the DCMS in comparison with the other departments in our sample.
We carried out some due diligence testing on a further four RIAs:
Digital Switchover; The Hague Convention (Partial RIA); Cultural
Test for British Films (Partial RIA); and Ecclesiastical Exemption
(Partial RIA). The inclusion of the results from the due diligence
testing indicates the performance of the DCMS is similar to other
departments in our review.
Note 1:
The results include our in-depth analysis of
14 RIAs and were supplemented with further assessments of an additional
16 RIAs to test whether the main sample results were representative
of departmental performance.
Note 2:
Each RIA is assessed against six key criteria
(set out in Figure 2) and this table presents the results of the
total number of individual assessments against these criteria.
For example, four RIAs would equal 24 assessments.
Part 3: Departmental Responses to the Challenges
of the Better Regulation Agenda
Departmental structures for delivering Better Regulation
3.1 The Better Regulation Executive requires
departments to establish common structures to take forward the
better regulation agenda. Departments have a Regulation Minister,
supported by a Board Level Champion with responsibility for better
regulation issues. All departments have established central teams
to promote the use of RIAs and provide a quality control function.
These teams usually have a responsibility for co-ordinating the
Administrative Burdens Reduction initiative and departmental Simplification
Plans.
3.2 Departments have used their discretion to
adapt this framework to their own circumstances. The DCMS has
established a Better Regulation Task Group headed by the Department's
Better Regulation Minister. It is responsible for the strategic
co-ordination of Better Regulation work within the Department
and its membership includes those from sectors affected by DCMS
regulations.
3.3 The resourcing of central teams is a matter
of departmental priority and there is no straightforward measure
of the appropriate level of resources. The size of teams reflects
the level of involvement in regulatory issues, the workload and
nature of the department (Figure 8). Departments were not given
additional funding to respond to the increased pressures created
by the Administrative Burdens work and it has been up to departments
to allocate what they consider to be appropriate in this area.
The DCMS has established a separate Unit to take forward Administrative
Burdens and Simplification work, and this works closely with its
Better Regulation Team.
Figure 8
The composition of Better Regulation teams
| Size of team (1)
| Grades | Expertise
| Number of RIAs reviewed by BRU (2)
|
| DCMS | 1.2 (1) | Headed by G7
| General/Economist | 25
|
| Trade and Industry | 12 (5)
| Headed by Grade 5 | General (3)
| 120 |
| Home Office | 5 (2) | Headed by Grade 6
| General/Economist | 60
|
| Transport | 6 (3) | Headed by Grade 7
| General | 50 |
| | |
| |
Notes:
(1) The figure in brackets indicates the number of staff
in the better regulation team that are committed primarily to
work on the Administrative Burdens exercise and Simplification
Plans.
(2) Includes RIAs seen at the three stages of development—initial,
partial, full—in 2005.
(3) The DTI's Better Regulation Team has had an economist
in place since 30 May 2006.
Source: National Audit Office.
Departmental approaches to embedding impact assessment
3.4 The NAO has established a number of principles that
it believes to be important in influencing staff behaviour and
evaluated departmental performance against these. The results
of this analysis are discussed below.
Senior management should demonstrate its commitment to impact
assessment
3.5 Senior management in DCMS has sought to promote the better
regulation agenda.
Good practice example
DCMS' Board Level Champion has raised the profile of Better
Regulation by inviting the BRC's Members to speak to the Board.
Departments should promote the use of impact assessment
3.6 Better Regulation teams play a vital role in raising awareness
of the need for impact assessment, and assessing the quality of
RIAs. The ability of the DCMS's better regulation team to adopt
a proactive role has been restricted by the requirement to respond
to the Government-wide Administrative Burdens Reduction initiative.
We found that a lack of resources has meant that DCMS has not
been able to actively promote the Better Regulation team, cascade
good practice or to inform policy officials of the latest developments.
The Better Regulation agenda is now being led by the Department's
Economic Impact Unit in a bid to address these weaknesses.
Departments should provide a robust challenge function to policy
teams, and ensure minimum standards are met
3.7 "Challenge" should be endemic within departments.
The Better Regulation teams play an important role in reviewing
the technical quality of RIAs and challenging policy makers to
demonstrate the need for regulation. All of the teams undertook
some form of RIA review, although the extent and depth of this
challenge differed markedly. We found that the DCMS' Better Regulation
team offered only a limited quality control function. It advises
on the content of RIAs but does not have the resource to critically
evaluate quality. The team does not see all RIAs and there is
no compulsion to take on board its advice. Policy teams have tended
to liaise directly with the BRE for advice on technical matters.
The Department is taking steps to address these weaknesses.
Departments should provide appropriate and timely support
Departmental training on Better Regulation
3.8 All departments provide some form of training on better
regulation although the focus and content varied widely. The DCMS
has developed a number of "policy" training courses,
which includes a module on better regulation. DCMS also ran an
externally facilitated workshop on Better Regulation in May 2005
and planned to run 14 sessions for 80 delegates, which represents
around 20% of staff. Feedback from delegates has been positive,
and most believed it to be of the right pace and content. The
DCMS is now planning to involve the BRE in the delivery of its
RIA training courses.
Departmental use of the intranet to influence the behaviour
of policy-makers
3.9 Departmental intranets can be used to share information,
guidance and advice on better regulation, highlight best practice
and ensure that changes in Government policy are disseminated.
The DCMS has a dedicated site, which at the time of our review
simply directed policy makers to the BRE site. It has, however,
recently been updated to enhance its usefulness to policy teams,
and it now includes an outward facing page which allows stakeholders
to engage with the Department.
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Evaluation of Regulatory Impact Assessments 2005-06, Report
by the Comptroller and Auditor General, HC1305 of Session 2005-06. Back
