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Rationale and objectives of Government intervention

Any government intervention should have a clear rationale.

The Summary: Intervention & Options page of the Impact Assessment template asks you to provide this information – see the hypothetical example below (a complete example is provided):

Market failure, equity and ethical considerations are the key motivations for government intervention. They are not necessarily mutually exclusive and a combination of factors may underpin the need for any one intervention.

It is important to articulate the rationale at the very earliest stage in the policy development process. Analysis of the market failure or other objectives should underpin the evidence base for policy development. It also provides a guide to the likely additional costs and benefits that may occur as a consequence of any proposed intervention.

To begin this it is important to identify:

• the problem, its scale and the context in which it arises;
• evidence and nature of the problem; and
• the probability that it will occur and likely frequency.

As part of this process you should consider any existing policy levers that either try to address or could address the problem. These levers could include regulatory and non–regulatory solutions within and outside of government.

You should also take account of the principles of good regulation [External website] and consider whether there are alternatives to regulation [External website], such as provision of information and self–regulation See also the Better Regulation Taskforce reports, Routes to Better Regulation [External website] and Imaginative Thinking for Better Regulation. [External website]

It is helpful for policymakers to use Impact Assessment as a process for thinking through and understanding the consequences of possible and actual interventions throughout the process of policy–making.

• Many departments use the Rationale, Objectives, Appraisal, Monitoring, Evaluation and Feedback (or ROAMEF) model of the broad policy cycle – see the HM Treasury Green Book [External website]: appraisal and evaluation in central government.
• The Impact Assessment Guidance illustrates key points in the policy–making process when an Impact Assessment should be undertaken – for example at development; options; consultation; final proposal; implementation and review stages.
  • At each stage, your Impact Assessment should be underpinned by a model like the ROAMEF model, although how much you focus on each aspect of the appraisal and evaluation cycle might vary at different stages of the Impact Assessment process.
  • At an early stage in the process the policymaker should start an Impact Assessment by thinking about the rationale for intervention and the objectives of the policy. Various options for dealing with the issue would then be appraised. How the options for intervention would be later monitored and evaluated should also be considered at this early stage.
• In this way Impact Assessments should be seen as living documents which would be revised a number of times as information about the likely costs or benefits becomes clearer. This is aimed at improving the analysis underpinning policy making and ensuring it is more transparent.
• Consideration of the specific impact tests at an early stage will also help ensure that policy development is joined up; that individual policy proposals take account of the Government's priority objectives; and that unintended consequences are minimised.

Further information on the stages of Impact Assessment can be found here: flowchart.