Authors:Alexandra Sinclair
Last updated:2023-09-18
Sidelining impact assessments leads to poorer laws
Louise Heath
Description: PLP
Impact assessments (IAs) are used by government departments to evaluate legislative policies and their projected costs and benefits to the UK, and provide vital assistance to MPs and peers getting to grips with proposals that are often debated at very short notice – yet they are not being used as they should be.
In 2018, the government introduced a requirement, as part of its Better Regulation Framework, that IAs are only required where the annual net impact of a regulatory measure on business, charities or voluntary bodies exceeds £5m. This is known as the ‘de minimis threshold’. This guidance means IAs are not produced for policies that have significant impacts on society, but that are estimated to have cost impacts of less than £5m.
Government departments also repeatedly fail to lay IAs for laws with a financial impact of over £5m or lay them late – often after committees have reported, at which point assessments are effectively useless. MPs and peers have been required to debate and vote on statutory instruments (SIs) when they did not have the explanatory material that would assist them in assessing the risks of the instruments. The Secondary Legislation Scrutiny Committee (SLSC) published a report on these issues in October 2021: Fourteenth report of session 2021–22 (HL Paper 76, 14 October 2021). It noted that the House of Lords was forced to debate many important instruments while still awaiting the IA, including the draft Medical Devices (Coronavirus Test Device Approvals) (Amendment) Regulations 2021 and the Money Laundering and Terrorist Financing (Amendment) Regulations 2019. In one instance, the committee received an IA six months after it had already considered the instrument (see page 22 of the SLSC report).
This is concerning not just from a scrutiny perspective, but also because IAs are supposed to ‘inform and underpin policy development’ (SLSC report, para 16, page 5). If IAs are not available at the time these instruments are made, it suggests that these policies are underdeveloped. The SLSC has described IAs as ‘integral to the policy development process’ in Twenty-first report of session 2021–22 (HL Paper 109, 25 November 2021, page 1). Without one, how can parliamentarians or the public be sure that the option chosen has a sufficient evidence base and is the right policy solution?
For primary and secondary legislation with an impact below the de minimis threshold, departments can choose to carry out a cost-benefit analysis consisting of a ‘less detailed, but proportionate, assessment of the impacts’.1Department for Business, Energy & Industrial Strategy, Better Regulation Framework: interim guidance, March 2020, para 1.2.6, page 12. The SLSC has urged government departments to give some assessment of the impacts of instruments below the threshold, but departments rarely choose to do so. In the context of Brexit, the overwhelming majority of the 622 SIs laid before Exit Day contained a one-line statement in the explanatory note that said no IA was needed because ‘[t]here is no, or no significant, impact on business, charities or voluntary bodies’.
The government is not obliged to lay an IA when the measure is due to expire within 12 months. During the pandemic, it subsequently extended past the initial 12-month period many of the SIs made to deal with COVID-19 but still no IAs were forthcoming. In July 2021, Paul Scully MP made an announcement exempting all time-limited COVID-19 SIs from IAs. The SLSC wrote a letter expressing its disappointment with this move and the government did make an undertaking to retrospectively issue IAs if measures became permanent. This does not redress the fact that parliamentarians were forced to approve hundreds of COVID-19 SIs with no statements explaining their supposed impacts and often on the basis that such measures would be temporary when some have now been in force for over 18 months.
The procedural upshot of these trends is that IAs are often not playing their intended role in the formation of legislative policy. The outcome is that the quality of the laws we get, and have to live by, is likely to be lower. In July 2021, the government announced that it was again looking to reform the Better Regulation Framework, including IAs. From the government’s perspective, IAs take time and money to produce properly, and leave it vulnerable to questioning and criticism if they indicate that the proposed policy may cause detriment. The SLSC notes in its October 2021 report that the government plans to ‘streamline’ the IA process (see para 18, page 5). It has legitimate fears that this could lead to poorer-quality explanatory information given for legislation, which will hinder scrutiny of these instruments further. IAs are already not being used as they should be and there are grounds to think that ‘streamlining’ the IA process could sideline their role in law-making even further.
1     Department for Business, Energy & Industrial Strategy, Better Regulation Framework: interim guidance, March 2020, para 1.2.6, page 12.  »