RIA Process

What is an RIA?

A Regulatory Impact Assessment (RIA) is a tool which informs policy decisions. It is an assessment of the impact of policy options in terms of the costs, benefits and risks of a proposal.

It is not specific to the UK Civil Service – many countries use a similar analysis to assess their proposed regulations and large organisations appraise their investment decisions in similar ways too.

You should start the initial RIA at the very early stage of policy development.

You should also check the Policy Makers’ Checklist before you begin.

Examples of starting RIAs early;

• RIA on motor salvage regulation – the Home Office set up a task group, with members from all sectors, to help develop the policy.
  
• The Health and Safety Executive (HSE) shared their initial thinking on genetically modified organisms with 24 organisations affected by the proposals. The responses gave the HSE valuable information to include in the RIA, eg how much time businesses considered they would save under different aspects of the proposals.
  
• Starting the RIA early on veterinary retailers’ records showed policy makers that they did not have enough information to calculate the cost of the proposals. They were able to fill this gap by asking vets and pharmacists in time to inform the later stages of consultation.

All RIAs published by Government departments since January 2001 can be accessed via the RIU website.

Benefits of the RIA process

The RIA process helps you to:

• think through the full impact of your proposals;
• identify alternative options for achieving the desired policy change;
• assess options (regulatory and non-regulatory);
• ensure your consultation exercise is meaningful and reaches the widest possible range of stakeholders;
• inform negotiations in the EU;
• determine whether the benefits justify the costs;
• determine whether particular sectors are disproportionately affected.

Why should I do an RIA?

In August 1998 the Prime Minister announced that no policy proposal, which has an impact on business, charities or voluntary bodies, should be considered by Ministers without an RIA being carried out.

Since then, there has been a slow but steady movement towards non-regulatory solutions – codes of practice and industry standards are two examples. And the Government is publishing more of its policy thinking and proposals in the form of strategy papers and discussion documents as well as the more established formats of Green Papers, White Papers and consultation documents.

Regardless of the format, any published proposal or set of options which impact on business, charities or voluntary bodies and could result in regulation should be accompanied by an RIA, even if your recommended option is not regulatory.

RIAs should be seen within the context of making better policy. They should be at the heart of evidence-based policy making. To find out more about Better Policy Making, visit the Cabinet Office Strategy Unit’s website Policy Hub

Who is required to do an RIA?

All government departments and agencies where they exercise statutory powers and make rules with a general effect on others should produce an RIA.

RIAs and the policy making process

You should always aim to start your RIA early. The RIA process is a continuous one. However, it can be thought of as consisting of three phases (UK flowchart):

• initial RIA which should be prepared as soon as a policy idea is generated;
• partial RIA which builds upon this, is produced prior to the consultation exercise and must accompany the consultation document; and
• full/final RIA, building on the information and analysis in the partial RIA, which is prepared for the post-consultation collective agreement and, if it is a regulatory proposal, for the Parliamentary process.

Note that the RIA should be proportionate to the likely impact of the proposal. If the proposal is likely to affect only a few firms, many firms to a very small degree, or if the costs and benefits are likely to be small, then the RIA can be quite short. Where the impact is likely to be substantial, however, more data and depth of analysis will be required.

When should I do an RIA ?

It is always good practice to produce an RIA as a structured way to inform policy making, but you must prepare an RIA for all proposals (legislative and non-legislative) which are likely to have a direct or indirect impact (whether benefit or cost) on business, charities or the voluntary sector and could have a regulatory solution. This includes proposals which reduce costs on business and others, as well as those that increase them.

However, although the trigger for producing an RIA is that it has an impact on business, charities or the voluntary sector, once it is undertaken it should cover the full range of impacts on all stakeholders.

In the case of Private Members’ Bills, which the Government is planning to support, or is not intending to oppose, you should produce an RIA by the date set down for Second Reading. It is good practice to prepare an RIA for a Private Members’ Bill being opposed, in order to obtain the evidence to justify the objection to the Bill, although this is not a requirement.

For legislative or non-legislative proposals, which originate outside the UK, you should prepare an RIA in order to obtain policy clearance for your Minister’s negotiating stance when attending international meetings and to support UK negotiations. See the EU Proposals – Overview section for more information.

You do not need to do an RIA for:

• proposals which impose no costs or no savings, or negligible costs or savings on business, charities or the voluntary sector;
• increases in statutory fees by a predetermined formula such as the rate of inflation; or
• road closure orders.

However, even if you think that the effects of your proposals are likely to be negligible, it is still good practice to produce an RIA. It is not always clear when a proposal is being formulated whether there will be any impact on business, charities or the voluntary sector or how large any impacts will be. If this is the case, prepare an initial RIA to see whether this gives you sufficient information to decide.

In the case of Budget and Finance Bill measures you may not be able to publish your RIA in advance – for example, where there is a danger of pre-emptive action. This does not affect the requirement that Treasury Ministers have an RIA in front of them assessing the possible options before they decide to act, and the reasons for deferred publication must be discussed with the Regulatory Impact Unit.

Departments must be prepared, if challenged, to defend the decision not to produce an RIA.

What makes a good RIA?

A good RIA will:

• include the best information available at the time;
• be clear, concise and proportionate to the problem/risk it is addressing;
• be a stand-alone document, explaining the problem clearly, setting out the alternatives to regulation and the options, without the need to refer to other documents;?
• contain a high quality of analysis
• use plain language; and
• avoid technical terms that are unintelligible to the lay person.

An example of a good RIA can be found at www.dti.gov.uk/ccp/enterpriseact/intro.htm

How is a significant proposal defined?

A proposal is judged to be ‘significant’, if:

• 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.

In these circumstances a Regulatory Impact Statement is required.

Other impact assessments

The information you gather and the analysis you carry out for the RIA will contribute to the wider impacts which you need to consider - e.g. sustainable development, health impacts, race equality issues and rural proofing. The full list of impacts that you might wish to consider can be found here. By carrying out an RIA, you will have already met your obligations of the mandatory requirements of assessing sustainable development and race equailty.

Some departments and agencies choose to use their own framework or checklist for analysing policy proposals. This analysis can inform your RIA, but it does not remove the need to carry out an RIA on any proposal which impacts on business, charities or the voluntary sector.

Help and advice

• Your first port of call should be your Departmental Regulatory Impact Unit (DRIU) whom you should ideally consult early on in the policy development stage, or at whatever stage you realise you need advice. They need to know about your RIA as they are responsible for providing Cabinet Office with details of all your department’s policy proposals that may affect business, charities or the voluntary sector.
• The Cabinet Office RIU can provide DRIU contact details and is also happy to help, they can be contacted on 020 7276 2198.
• Departmental economists will also be able to help with the analysis.
• The Office of Fair Trading can give you advice on assessing competition effects through either their Competition Assessment helpline 020 7211 8500 or via email to competition.assessment@oft.gsi.gov.uk
• The Small Business Service (SBS) can help you with the small firms impact test. Their number is 020 7215 4276.
• The Better Regulation Task Force (BRTF) has developed five principles of good regulation; transparency; accountability; proportionately; consistency and targeted. The Task Force use these principles to judge policy implementation; you may wish consider the five principles when developing a policy. The BRTF is happy to be consulted: Telephone 020 7276 2139, mailto:taskforce@cabinet-office.gsi.gov.uk, website www.brtf.gov.uk