Regulatory Impact Statement

What is a Regulatory Impact Statement

A Regulatory Impact Statement is a paragraph (in addition to the partial RIA) to include in the Cabinet paper or Ministerial letter to colleagues seeking collective agreement to the proposal. The paragraph must explain the impact on business, charities or voluntary organisations of any proposals involving new or amended regulations. It must take account of the results of the partial RIA and any discussions with the Cabinet Office RIU and SBS.

When is a Regulatory Impact Statement required?

A proposal requires a Regulatory Impact Statement if it is ‘significant’, ie:

• the partial RIA suggests high costs (in excess of £20 million in any year);
• the issue has high media topicality or sensitivity;
• the issue is one on which the Better Regulation Task Force has reported or where there is Task Force work in hand; and
• the proposal would have a disproportionate impact on a particular group, eg small businesses, charities or a particular business sector.

The Regulatory Impact Statement must be agreed with the Cabinet Office RIU and, if the proposal affects small firms, the SBS. The SBS has the right to have its view recorded in the Cabinet paper or letter to colleagues.

If you are not sure whether you need to prepare a Regulatory Impact Statement, consult your DRIU or the Cabinet Office RIU.

Example of a Regulatory Impact Statement:
on proposals to revise controls on the recycling of sewage sludge to agricultural land.

“The investment necessary to deal with the end of sea dumping and the increased quantities of sludge which will be produced during the period up to end 2005 has been allowed in price limits set by OFWAT, with water company strategies based on greater use of recycling sludge on agricultural land and in some cases partly on increased incineration. The capital cost of these improvements in England and Wales is estimated to be approximately £400 million between 2000–2005.

“The partial Regulatory Impact Assessment demonstrates clear environmental benefits of the proposed Regulations compared to the costs for businesses. Incineration would require £173 million in recurring costs, landfill £83 million while the agricultural route costs £23 million. In addition incineration would require capital costs of £661 million whereas the current AMP3 programme for the agricultural route requires £400 million. As this proposal may involve significant costs for industry, the Cabinet Office’s Regulatory Impact Unit has been consulted. The Unit was content that the risks, costs and benefits of this proposal had been properly assessed and that the proposal appears consistent with the principles of good regulation – transparency, accountability, targeting, consistency and proportionality.”