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Impact Assessment guidance

Core to an Impact Assessment is an economic assessment of the proposal’s social costs and benefits in accordance with HMT’s Green Book methodology. The Better Regulation Executive (BRE) of the Department for Business, Innovation and Skills are responsible for the Impact Assessment process (templates, guidance etc). Much of the guidance on this page therefore links to the BIS website.

Impact Assessments are generally required for all UK Government interventions of a regulatory nature that affect the private sector, the third sector and public services (regardless of whether the regulation originates from a domestic or international source).Impact Assessments are not generally required for public spending proposals unless they involve regulation or an administrative burden. Spending proposals, rather, require a business case. The guidance on 'Specific Impact Tests' (e.g. the Environmental Impact Test) which must be produced as part of an Impact Assessment may be helpful, however, in the assessment of any type of proposal.

 More specifically, an IA is required if the regulatory proposal:

• Imposes additional costs or reduces existing costs on businesses or the third sector; or introduces new regulatory costs on the public sector or bodies that deliver public services of more than £5m (equivalent annual costs) or which are contentious in some way.
• Imposes any additional administrative or reporting burden on the public sector or bodies that deliver public services e.g. changes to reporting requirements, additions to information burdens on frontline services, revisions to criteria for releasing funding, and the imposition of new targets.
• Involves some kind of redistribution affecting the public, private or third sector – that is, where there is a transfer of costs or benefits from one group to another, even where this does not yield an overall net change in costs and benefits.
• Involves seeking collective agreement for UK negotiating positions on EU proposals or other international agreements.

Key resources for Impact Assessments

• Impact Assessment Guidance (PDF, BIS website, opens in new window)
  Further guidance on what an impact assessment is, the types of intervention for which an Impact Assessment must be produced, how often it must be completed and published, and the approval processes it must go through.
• Impact Assessment Template (BIS website, opens in new window)
  The standard template to be filled in by anyone completing an Impact Assessment.
• Impact Assessment Toolkit (BIS website, opens in new window)
  Step-by-step guidance on how to complete an Impact Assessment. It draws heavily on the Green Book to set out possible rationales for government intervention, provide an introduction to the principles of Cost Benefit Analysis and valuation techniques, and risk and proportionality.

Guidance on Specific Impact Tests

• Competition assessment (BIS website, opens in new window)
  The Competition Assessment is designed to identify any impacts of a proposal in terms of it restricting or encouraging competition, and to help in the design of policy prosopals to enable them to meet policy objectives without unduly limiting or damaging competition in markets.
• Wider Environmental Impact Test (BIS website, opens in new window)
  The wider environmental impacts of policy options must be identified, such as impacts on air quality, water quality and quantity, flood risk, biodiversity, landscape and noise.  This page links to DEFRA guidance and supporting material to enable the quanitification, in monetary terms where possible, of these wider environmental consequences of proposals for the purposes of the wider environmental specific impact test. It refers to all environmental impacts apart from carbon, for which DECC has responsibility.
• Greenhouse Gas Impact Test (BIS website, opens in new window)
  Any net impacts on greenhouse gas emissions over the lifetime of the policy will need to be reported within the Impact Assessment, split between the traded and non-traded sectors and reported as CO2 equivalent changes. This page also links to DECC's full technical guidance on the Valuation of Energy use and Greenhouse Gas Emissions.
• Health Impact Assessment (BIS website, opens in new window)
  The Health Impact Assessment (HIA) considers the impacts of a proposal on health and well-being, in particular how they can reduce health inequalities. This page links to the Department for Health's website where screening questions can be found to determine whether a full health impact assessment is required.
• Human Rights Impact Assessment (BIS website, opens in new window)
  The Human Rights Specific Impact Test requires the policymaker to state whether the proposal will have human rights implications. This page links to the Ministry of Justice's website, where further guidance documents on human rights are available.
• Justice Impact Test (BIS website, opens in new window)
  The Justice Impact Test considers the impact of a proposal on the justice system - including impacts on the courts, and tribunals, prisons and probhation, the legal aid budget, or the prosecuting bodies and judiciary. This page links to the Ministry of Justice's website where the Justice Impact Test Guidance can be found.
• Rural Proofing Impact Test (BIS website, opens in new window)
  Policies need to be capable of delivering services equitably for everyone. The geography and demography of rural areas present challeges which mean that the the impact of a policy on rural people, businesses and communities must be checked and adjusted where necessary. This page links to DEFRA's Rural Proofing Toolkit, which can be used to produce the Rural Proofing Impact Test.
• Small Firms Impact Test (BIS website, opens in new window)
  The SFIT is designed to help establish the impact of a proposal on firms with fewer than 20 employees, and establish ways to minimise the impact through flexibilities such as exemptions, simplifies inspection, less frequent reporting etc. This page links to BIS guidance on the SFIT.
• Equalities Impact Assessment (BIS website, opens in new window)
  Carrying out an EIA involves assessing the likely effects of policies on people in respect of disability, gender, including gender reassignment and, where chosen, wider equality areas such as age, religion/belief, and sexual orientation. This includes looking for opportunities to promote equality which may have previously been missed or could be better used, as well as negative or adverse impacts that can be removed or mitigated. This page links to guidance from the Equalities and Human Rights Commission on carrying out an Equalities Impact Assessment.
• Sustainable Development Impact Test (BIS website, opens in new window)
  Sustainable Development is about ensuring that the current generation satisfies its basic needs and enjoys an improving quality of life without compromising the position of future generations.  Because sustainability cannot be appraised by cost-benefit analysis alone, the SDSIT is designed to supplement the cost-benefit assessment to determine whether there are compelling sustainability-related reasons to amend the policy. This page links to DEFRA guidance on the questions which need to answered as part of the SDSIT.

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