What the RPC does
The Regulatory Policy Committee provides its external, independent scrutiny of new regulation through the Government decision-making process.
When a Government Department wants to regulate, it must submit its proposal to the Reducing Regulation Committee, a Committee of Ministers which vets all new regulatory proposals. Every regulatory proposal must be accompanied by an Impact Assessment (IA), which assesses and presents the likely costs and benefits, as well as the associated risks, of a regulatory proposal that might have an impact on the public, private or civil society organisations. This IA is scrutinised by the RPC which provides an opinion to the RRC on the quality of analysis and evidence presented in the IA. This opinion then informs the decisions of Ministers as to whether they proceed or not with the proposal.
How does the RPC scrutinise impact assessments?
The RPC assesses impact assessments against well established guidance set out by the BRE IA Guidance, IA Toolkit, One-in, One-out Methodology, and HM Treasury’s Green Book. Additionally, in ‘Reviewing Regulation,’ published August 2010, the Committee set out six recommendations based on the common themes emerging from the scrutiny of IAs.
Recommendation 1: Don’t presume regulation is the answer
Has a market failure or regulatory failure been clearly identified that necessitates the need for government intervention?
Have non-regulatory alternatives been considered to correct the cause of the market failure and, if not, has sufficient justification been provided to explain why this would not be a viable option?
Has the ability of the regulatory intervention to correct the causes of market failure been clearly demonstrated and any potential unintended consequences and/or behavioural impacts taken into account?
Recommendation 2: Take time and effort to consider all the options
Have a sufficiently wide range of options been taken forward for stakeholders to comment on during the consultation?
Has any potentially promising option been ruled out of detailed appraisal without substantive reasoning?
Recommendation 3: Make sure you have substantive evidence
Is there evidence explaining how the market(s) currently work and how any market failure identified is causing the observed behaviour in the market(s)?
Have the outcomes and responses of public consultation (where appropriate) been used as evidence to inform the estimates of impacts presented for post-consultation stage IAs?
Is there evidence that other relevant Departments or other public bodies (where appropriate) have been involved in forming the estimates of impacts presented?
Recommendation 4: Produce reliable estimates of costs and benefits
Have all impacts of the regulatory proposal been identified, including any unintended consequences?
Have all costs been valued at their opportunity costs?
Has the correct ‘do-nothing’ scenario been established?
Is the time period for the calculation of the net present value long enough to encompass all important costs and benefits, and has the appropriate discount rate been used?
Is it easy to see what are the most important risks and uncertainties?
Recommendation 5: Assess non-monetary impacts thoroughly
Has the quantification and/or valuation of non-monetised impacts been undertaken in accordance with common techniques?
Are these non-monetised impacts presented in a way that enables them to be considered and clearly compared across the different options considered in a systematic manner?
Recommendation 6: Explain and present results clearly
Is it clear who will benefit and who will bear the cost under each option, when these impacts will be incurred, and by how much?
Does the IA reference the source of data, research and evidence used and is the robustness of each of these clearly demonstrated?
Recommendation 7: Understand the real cost to business of regulation
Is the policy in scope of the ‘One in, one out’ policy?
Has the Equivalent Annual Net Cost to Business been calculated and is it robust?