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The RPC publishes opinions on fit for purpose impact assessments (November 2014)

Published impact assessment opinions based on external, independent scrutiny of new regulation by the Regulatory Policy Committee

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The Regulatory Policy Committee (RPC) has today published its latest batch of opinions on the evidence base for regulatory proposals brought forward by the Government.

Live consultations

Of the opinions published today, two relate to consultations that are currently open:

  • Tackling Partial Not-Spots in Mobile Phone Coverage (estimated to cost business from £1 million for a multi-operator virtual network solution to £338 million for an infrastructure sharing option) – parts of the UK have mobile coverage from one or more, but not all mobile operators. The Government proposes that these so-called ‘partial not-spots’ for voice calls should, wherever possible, be eliminated. This will maximise the area in which consumers can make and receive calls within the current combined network coverage footprint of the four UK Mobile Network Operators. As a result, the Department expects to see benefits to local businesses and an increase in economic activity, as well as less easily quantified social benefits (e.g. social inclusion and enhanced consumer choice). Ofcom estimates 21% of the UK landmass is in partial not-spots, and that under current network upgrade plans, this will be reduced to 13% by 2016. The consultation includes a range of options for reducing the areas covered by ’not-spots’ to increase consumer choice and benefit.

  • Children’s Homes Quality Standards Regulatory Reform – the Government believes that the current regulatory framework for children’s home is excessively focused on process and not on whether homes are delivering services which improve children’s outcomes. The consultation sets out proposals for reforming the framework to create incentives focused on improving welfare of children and not processes.

Final stage impact assessments

Of the opinions published today, the RPC has confirmed as fit for purpose ten final stage impact assessments. This includes validating the estimated costs and benefits to business and civil society organisations. This includes the following proposals:

Validated deregulatory proposals

  • Speeding up cheque payments (£93.5 million benefit each year) - the proposal is to modernise existing cheques legislation to enable “cheque imaging” to be introduced in the UK. Individuals or businesses who receive a cheque can either take it to their branch where it will be scanned and processed digitally or they can use their bank’s mobile banking application to create the digital image of the cheque and pay it in electronically. All banks and building societies that offer cheque payment services in the UK will be affected by the proposal. It will also affect those businesses and civil society organisations that issue and receive cheques as part of their ways of making and receiving payments. The RPC has validated the benefits to business of £93.5 million each year.

Validated regulatory proposals

  • Compulsory microchipping of dogs (£0.4 million cost each year)– the proposal will require all dogs to be microchipped by 2016. There will be costs to businesses involved in the breeding of dogs, those responsible for the management of databases of dog ownership information and veterinary practices. The proposal will also result in costs to dog owners and benefits to civil society organisations of more responsible dog ownership, reducing kennelling, re-homing and euthanising costs. The costs of training and for the purchase of microchips by businesses have been validated by the RPC as £0.4 million each year.

  • The Management of Independent Schools: The Independent Educational Provision in England (Prohibition on Participation in Management) Regulations (£0.08 million cost each year) – the proposal will affect over 2,400 independent schools who will need to familiarize themselves with changes the ability for individuals to be barred from management roles. This will relate to instance where there is a concern over the spreading of extremist messages, or engagement in financial and legal malpractice. The RPC validated the expected costs from familiarisation and for the replacement of any barred individuals as equivalent to £0.08 million each year

  • Amendment to the National Minimum Wage regulations 2014 (£421 million cost each year, but out of scope of government’s regulatory account) – The changes increase the rates of the national minimum wage in line with recommendations of the Low Pay Commission. The increased rates are expected to cost business £421 million each year. However, as the proposed changes represent a periodic adjustment to an existing regulatory regime that is intended to maintain the current level of regulation in the face of general wage and price inflation, they have been assessed as being out of scope of the Government’s One-in, Two-out policy.

  • The Equality Act 2010 (Equal Pay Audits) Regulations 2014 (no direct costs or benefits) – the proposal will require some businesses and civil society organisations to undertake an equal pay audit if they are found to be non-compliant with equal pay legislation. The RPC validated the department’s assessment that the proposal will have no direct impact on businesses or civil society organisations who are compliant with existing legislation.

Validated regulatory proposals (with net benefits to business and civil society organisations)

  • Implementation of the Wood Review proposals for UK offshore oil and gas regulation (up to £2 billion benefits each year if all benefits were considered direct) - the proposal implements all of the recommendations of the Wood review for UK offshore oil and gas regulation including the development of a new strategy for maximising economic recovery from the UK Continental Shelf (UKCS); and creating a new arm’s length body for the regulation of UKCS hydrocarbon recovery, and maximising collaboration in exploration, development and production across the industry. The proposal is expected to facilitate the production of an additional 3-4 billion barrels of oil over the next 20 years. There is considerable uncertainty regarding the impacts, but the benefits to business are expected to be between £20 billion and £56 billion over the 20 years.

  • Banning exclusivity clauses in zero hours contracts in the UK (£0.08 million benefit each year) – the proposal will ban the use of exclusivity clauses in employment contracts that do not offer guaranteed hours. The Department expects this to have a cost to those businesses currently using exclusivity clauses, but that such costs overall will be outweighed by the benefits to other employers from the increased availability of individuals for work. The Department have also, subsequently consulted on proposals to tackle employers who seek to avoid the ban.

  • Orphan Works (permissive with net benefits for businesses) - the proposal means holders and users of works, where the creator is unknown or cannot be located, would be exempt from the regulatory framework surrounding copyrighted works.

  • Amendments to the Early Years and General Childcare registers (unquantified benefits to business) - the proposal implements a series of reforms the childcare registration system by aligning and streamlining the requirements of both the Early Years and General Childcare registers. The RPC validated the Department’s assessment of the proposal as being net beneficial to business.

  • Access to Intermediary Services by Descendants and Relatives of Adopted People (permissive with net benefits for businesses) - the proposal is to enable direct descendants and other persons with a prescribed relationship to adopted people to have access to intermediary services for adoptions. Intermediary services provide support to those wishing to meet birth relatives. As a permissive change to regulation the RPC agreed with the Department’s assessment that the benefits to voluntary adoption agencies will outweigh any costs.

EU measures

The RPC has confirmed as fit for purpose one impact assessments relating to a consultation on a new regulatory proposal that originates from the European Union. This means the RPC agrees that the impact assessments contained sufficient information to support the consultation process.

  • The implementation of the EU Mortgage Credit Directive – the proposal will amend the current regulatory system for mortgage lending, to bring a greater range of circumstances into a single regulatory scheme under the Financial Conduct Authority (FCA) mortgage regime.
Published 12 November 2014