Guidance

Accountability for regulator impact: guidance from RPC for trade bodies, business groups and civil society organisations

Published 6 March 2014

This guidance explains how the RPC reviews cases referred to us by representative trade bodies under the Government’s Accountability for Regulator Impact policy. If you are a body representing businesses or you are a civil society organisation, these pages explain what you should do if you feel the cost assessment prepared by your regulator is not correct.

The Accountability for Regulator Impact (ARI) policy covers any proposed change in policy, process or practice by a national non-economic regulator that imposes a significant cost or saving on business or civil society organisations. It focuses primarily on the costs of enforcement activities. It does not cover changes in law that affect regulators and the business they regulate. These require the sponsoring government department to prepare a full impact assessment.

You should approach your regulator to discuss concerns if the regulator has not engaged with you about the impact of a significant change. This is particularly important where the regulator has not produced an estimate of costs to business. You can use the regulator’s complaints process if needed and, failing that, contact the Better Regulation Executive.

You can ask the RPC to review the regulator’s assessment, if you consider that it substantially mis-states the likely financial impact of the proposed change. You should do this only after you have discussed the proposals with the regulator and tried to resolve directly with the regulator any differences of opinion on the cost estimates.

If, following discussion with the regulator, you are unable to reach broad agreement and you want the RPC to review the assessment, follow the steps below to see what to do next.

• Information that business representatives or a civil society organisation should send to the RPC

• How the RPC considers dispute cases

• Nature of the evidence that representatives may wish to submit to the RPC

1. Information that representatives should send to the RPC

• The regulator’s assessment of the estimated costs (or savings) to business of a change in policy, process or practice.

• An explanation of why you disagree with the regulator’s assessment, particularly around which underlying cost assumptions you disagree with.

• Additional information and evidence to support your position; include sources of evidence.

• Description of your efforts to discuss your views and evidence with the regulator, and efforts made to reach agreement.

Please email this information to [email protected]

We will acknowledge receipt of your submission within three working days and give you more information at that point on next steps. If you do not receive an acknowledgement, please telephone 020 7215 1460

2. How the RPC considers dispute cases

We check that the case is within scope of the arrangements for an RPC review of dispute cases.

We then screen cases received to ensure that the parties have made reasonable effort to reach broad agreement. In particular, we establish whether you have:

• discussed your concerns with the regulator; and

• offered information and evidence to challenge the regulator’s assessment.

Our focus is on the underlying evidence base for the regulator’s assessment of the impact on business and civil society organisations. We do not comment on the merits of proposed changes in the regulator’s activity.

In many cases, we look initially to resolve a dispute through conciliation. In these cases:

• we invite both parties to participate in conciliation;

• if both parties agree, we normally arrange a meeting to discuss the issues; and

• we prepare a statement of any agreement reached between the parties.

Where the parties cannot agree or where conciliation may not be the best means of resolving a dispute, we then move to arbitration. In these cases, we:

• review the assessment provided by the regulator and the information and evidence you provide;

• examine whether the regulator’s initial assessment is still valid in light of any new evidence or whether the regulator should revise their assessment; and then

• issue a decision to the parties and publish it on the RPC website subsequently.

3. Nature of the evidence that business representatives may wish to consider submitting to the RPC

This section provides guidance and tips for business representatives and trade associations to consider when submitting information to us as part of the process.

You are asked to set out clearly any significant differences between yourselves and the assessment of the regulator. You are not required to provide us with a detailed or technical assessment. However, any additional evidence could help us resolve cases in a fair and proportionate way.

Guidance on cost-benefit analysis

You might find it helpful to refer to the following guidance when preparing and submitting information or analysis to us:

• The Better Regulation Executive’s guidance on Accountability for Regulator Impact

• The Better Regulation Framework Manual particularly paragraphs 2.3.26 – 2.3.61

However, you should be proportional in assessing what level of resource to invest in the analysis to ensure that the process is not overly burdensome.

Type of information (if relevant) that could help to inform the RPC’s judgment
1. Information on groups affected by the proposal. Evidence of relative impact on a particular sector, size or type. Explanation of the sources of evidence gathered.
2. Assessment of the direct impacts (costs and benefits) on business, in monetary terms where available. Information how these impacts are calculated, and about the sources for assumptions used.
3. Information on indirect impacts on business, if relevant.
4. A qualitative assessment of the impact on business might be helpful if a quantitative assessment is not possible.
5. Explanation of potential risks, sensitivities and unintended consequences of the proposal.
6. Assessment of the impact on small and micro-businesses.

How to assess impacts on business

When assessing costs and benefits, you might find it helpful to distinguish between different types of impacts:

• Transitional costs and benefits - these are transient or one-off costs or benefits that occur; they normally relate to implementation of a proposal.

• Recurring costs and benefits - these are the ongoing costs and benefits while the proposed change remains in force.

Other costs on business could include, for example:

• Labour costs - full time equivalent costs are typically used to estimate the costs of employees’ time to the employer and should include employers’ pension contribution costs, National Insurance contributions and allowances as well as basic salaries. For salary data, the Annual Survey of Hours and Earnings (ASHE) is a recommended source, although you may decide to use alternative sources if there is a clear justification for doing so.

• Costs of new equipment or new production processes - formal/informal consultation with those likely to be affected may provide the best data.

• Costs of collecting information and providing proof of compliance - use labour costs, plus the cost of new equipment required to do this.

• Costs of getting licences – could be calculated by estimating the fees plus administrative burdens. Enforcement authorities/regulators should be able to help with providing estimates.

• Costs of extra legal, accountancy or other consultancy advice - consultation with businesses and stakeholders as their experience might be informative.

• Enforcement costs: enforcement activities may generate costs to both regulators and business. Such activities could include: inspections, fines and information obligations.

When collecting and submitting evidence, it would be helpful if you assess and clearly specify all sources of evidence gathered and show that it is applicable to the whole business group likely to be affected by the proposed change. Where relevant, the assessment could benefit from stating the sample size and response rates if the analysis is based on consultation with relevant stakeholders or businesses. This would enhance robustness of the assessment.