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Generally speaking, Impact Assessments require calculation of costs and benefits in constant prices – i.e. expressed in ‘real terms’ at ‘today's general price level (see HM Treasury Green Book, Section 5.42). Administrative burdens need to be calculated using the Standard Cost Model, and included within the aggregate costs presented on the Summary: Analysis & Evidence page of the Impact Assessment template.
When considering these issues, policy–makers are advised to engage with Departmental or other Economists at an early stage if possible.
Impact Assessment is also the means by which the Government maintains an up–to–date record of admin burdens across the UK economy. A stocktake of these burdens was undertaken in May 2005, and each department manages its own baseline on a stock database. In order to keep the baseline up to date, administrative burdens generated from the Standard Cost Model must also be calculated in 2005 prices, and presented clearly on the Impact Assessment template. To record the results of these calculations, the Summary: Analysis & Evidence page of the template features a separate box.
You should undertake an Impact Assessment for new regulations or other new interventions. For measuring the impact on the admin burdens baseline, three steps should be carried out:
Impact on Admin Burdens Baseline” (see below).
The net impact (in constant prices) of the change to admin burden (including any one off transition costs) should also be included within the aggregate calculations of annual and total costs at the top of the Summary: Analysis & Evidence page (see below). If appropriate, the basis for the calculation should be set out in the Evidence Base included in the Impact Assessment
As a reduction in admin burdens should be shown as a reduction in costs – rather than an increase in benefits – the impact of any changes should be included in the costs boxes not in the benefits boxes on the Summary: Analysis & Evidence page.
A proportionate approach should be taken to the price adjustment process which reflects the significance of the proposal under consideration. For example, where the burden is small and there are no substantial changes in prices between the time period in which the impact assessment is conducted and 2005, then the figures used for the cost benefit analysis can be used to estimate impact on the departmental baseline – and vice versa. Nevertheless, any calculation needs to be defensible and based on strong evidence.
An appropriate conversion rate should be used. As admin burden figures are only indicative, in most of the cases it will be sufficient to use a general rate. You could consider using the following:
IHYS”) might be appropriate. (See for further information the HMT website.)
If you are dealing with a simplification proposal whose sole aim is to reduce admin burden (i.e. there are no other admin or policy costs or benefits associated with the proposal), it would usually not be necessary to complete all sections of the Impact Assessment Summary: Analysis & Evidence page. In these cases carry out the following steps:
Impact on Admin Burdens Baseline” (see example below).
As this example relates solely to a simplification proposal, you would not usually need to complete the boxes for the annual and total costs and benefits at the top of the Summary: Analysis & Evidence page.
If your admin burden reduction proposal causes one off transition costs, they have to be quantified carefully and included in the one off transition costs box at the top of the Summary: Analysis & Evidence page. They do not have an impact on the admin burdens baseline.
More information to support the application of the SCM can be found on the Cabinet Office website. This includes:
Further questions on this topic should be sent to regulation@cabinet-office.x.gsi.gov.uk.