Guidance

The Regulatory Policy Committee - guidance for businesses and civil society organisations

The Regulatory Policy Committee provides the government with external, independent scrutiny of the evidence supporting changes in law that affect businesses, charities and community groups.

Who we are

The Regulatory Policy Committee (RPC) is an independent body, sponsored by the Department for Business, Innovation & Skills. The committee is formed of eight independent experts from a range of backgrounds, including business, the voluntary sector and academia. Our recent report, provides a detailed discussion on the key regulatory changes that we reviewed between 2010 and 2015, the accuracy of government estimates of impacts, and reports on departmental performance.

When we were set up

The RPC was established in 2009. It was the first body, in the UK, set up to provide independent scrutiny of proposed regulatory measures put forward by government. In 2012, the RPC became an independent advisory Non‐Departmental Public Body (NDPB). An NDPB is defined as a “body which has a role in the processes of national government, but is not a government department or part of one, and which accordingly operates to a greater or lesser extent at arm’s length from ministers”.

What we do

We assess the quality of evidence and analysis supporting regulatory changes affecting businesses, charities and voluntary organisations.

  • we check whether central government departments’ estimated costs or savings to business, as a result of regulatory reforms, are accurate. The accuracy of these estimates is important as they help inform decisions on whether or not proposals are taken forward;

  • we check that government departments explain why new regulation is more appropriate than the alternative, such as voluntary codes. A clear principle of the Government’s better regulation framework is to not presume regulation is the answer and to consider a range of meaningful alternatives, we help ensure that proposal consider these points; and

  • where new regulations are required, we check that the government minimises the effects on small businesses in particular.

How we do it

We provide opinions on the impact assessments submitted by government departments

Regulatory proposals are accompanied by an impact assessment (IA), which assesses and estimates the likely costs and benefits, as well as presenting the associated risks, of a regulatory proposal that has an impact on business, charities and voluntary organisations, the public sector or individuals. A well written impact assessment should, in a single place, explain clearly the issue the Government is trying to tackle, how it intends to tackle it and what the effects of the proposal will be.

For proposals that regulate or deregulate business or civil society organisations, the impact assessment is scrutinised by the RPC. The RPC provides an opinion to government ministers on the quality of analysis and evidence presented in the impact assessment. This opinion then informs the decisions of ministers as to whether they proceed or not with the proposal.

How we develop opinions on impact assessments

Once an impact assessment is submitted by a government department, the RPC operates an established, rigorous and consistent multi-stage assessment process. This is done in line with the guidance published by the Government in the Better Regulation Framework Manual

The meaning of red, amber and green opinions

  • Red: The impact assessment is ‘not fit for purpose’. There are major concerns over the quality of the evidence and analysis and overall quality of the impact assessment that need to be addressed.

  • Amber: The impact assessment will be ‘fit for purpose’ if the concerns raised in the RPC opinion are resolved in order to improve the IAs contribution to the final decision made. More detail on what an amber rating means can be found here.

  • Green: The impact assessment is ‘fit for purpose’. No significant concerns or some minor issues where the impact assessment could be improved to deliver greater clarity or to aid understanding.

Published copies of RPC opinions can be found here.

Small and Micro Business Assessments (SaMBA)

Smaller business (up to 50 employees), including micro-businesses (up to 10 employees), are thought by government to suffer disproportionately from the burden of regulation. The SaMBA is intended to ensure that all new regulatory proposals are designed and implemented so as to lessen the burden.

A SaMBA is mandatory within an impact assessment for domestic measures that regulate business and come into force after 31st March 2014 (except those that qualify for the fast track). The reason for an exemption, mitigation or lack of mitigation should be clearly explained in the impact assessment to avoid a ‘red’ opinion.

Calculating the government’s performance against ‘One-In, Two-Out’

When looking at an impact assessment, the RPC examines the costs and benefits to businesses, charities and voluntary organisations. These are included as an estimated equivalent annual net cost to business and civil society organisations (EANCB). The EANCB is the annualised net cost (or benefit) of a proposal. This spreads the overall impact of a proposal across a time period, usually ten years, to enable a more meaningful comparison between the net impacts of different proposals. It is these figures that are included in the government’s ‘regulatory account’ and on which the performance against ‘One-in, One-out’ and ‘One-in, Two-out’ are assessed. Under these rules a proposal is classified as:

  • an ‘IN’ if a proposal imposes a net cost on business;

  • an ‘OUT’ if a proposal is deregulatory and is net beneficial to business; or

  • a ‘Zero Net Cost’ if a proposal is regulatory and is net beneficial to business.

A complete record of all the validated figures that are included in the Government’s ‘One-in, One-out’ and ‘ One-in, Two-out’ accounts can be found here.

How we work with businesses, civil society organisations and other external stakeholders

We work directly with government departments. Information or views from relevant parties on new regulatory and deregulatory proposals should, be submitted to the department responsible for developing the policy during their consultation.

However, if you have additional information that you think the committee should be considering when deciding if an impact assessment is fit for purpose, details on what to do can be found here.

How we collaborate with European partners

We work with organisations which have a similar role in their own nation. We work with colleagues from Germany, Netherlands, Sweden and the Czech Republic under the title of “RegWatchEurope”. Our work with this group has influenced other European nations, Iceland, Norway and France, to establish their own bodies to work on this subject.

Why do it all

Our work helps ensure ministerial policy decisions are made based on accurate evidence. We provide independent advice on the quality of the evidence used to inform policy changes. As a result of our scrutiny:

  • businesses and civil society organisations are less likely to be burdened by regulation that is not supported by robust evidence;

  • the estimated costs and benefits of regulatory proposals are more accurate; and

  • the Government’s claims regarding the balance of the ‘regulatory account’ are more reliable than would be the case without independent scrutiny.

What we don’t do

We do not comment, or offer opinions, on policy – such decisions are for the Government.

We do not review impact assessments for proposals that are not in the scope of the Reducing Regulation Cabinet sub-committee. As such, we do not scrutinise impact assessments that relate to tax or spending decisions. We scrutinise impact assessments that relate to the regulation or deregulation of business or civil society organisations (or concern their regulation), and as such we do not review IAs for proposals that only regulate individuals or public bodies.

What our impact has been

We have helped deliver better policy making. The quality of evidence underpinning regulatory changes has improved since the RPC was established in 2010. The proportion of impact assessments rated as fit for purpose has risen from 56% in 2010 to 81% in 2012, before levelling off during 2013 and the first half of 2014.

We have helped maintain the integrity of the system. We have looked at the evidence for over 1,600 proposals, and issued over 2,400 opinions, since 2010. Our work has improved the accuracy of the estimated annual costs and savings to business by nearly £500 million per year, meaning the Government’s estimated benefits to business and civil society organisations from regulatory changes would be £2 billion each year, rather than the £1.5 billion validated by the RPC.

We help promote greater transparency. We publish a complete record of the estimated value of individual measures that make up the government’s regulatory accounts (for ‘One-in, One-Out’ and ‘One-in, Two-Out’). From 2013, we have also published validated costs of new EU regulations. The result is a far greater degree of transparency about the costs of regulation than has been available previously.

How our role and remit are expanding

We have been asked to take on additional roles throughout the course of this parliament where an independent perspective is required. For example, our role in examining how departments propose to lessen the effects of their regulatory proposals on small business, where doing so will not compromise the policy intent, was added in 2013. Since taking on this role, we have identified four cases where such an approach has not been satisfactory and where this assessment alone has resulted in the impact assessment being rated as not fit for purpose.

We also arbitrate between regulators and businesses where there are disagreements on the cost of proposed changes in the enforcement of regulation. This applies to non-economic regulators. Information on how we undertake this role can be found here.

We also have a role in looking at whether issues relating to public risk have been taken into account in departments’ assessments of the impact of proposals.

Published 7 August 2014