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Evaluating the quality and use of Impact Assessments The role and approach of the NAO

Evaluating the quality and use of Impact Assessments The role and approach of the NAO. To cover. The role of the National Audit Office (NAO) The potential benefits of Impact Assessments Our examinations of Impact Assessments Lessons learned. The role of the NAO.

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Evaluating the quality and use of Impact Assessments The role and approach of the NAO

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  1. Evaluating the quality and use of Impact AssessmentsThe role and approach of the NAO

  2. To cover • The role of the National Audit Office (NAO) • The potential benefits of Impact Assessments • Our examinations of Impact Assessments • Lessons learned

  3. The role of the NAO The NAO scrutinises public spending on behalf of Parliament through: • Financial audit of the accounts of all central government departments and agencies • Value for money audit of the economy, efficiency and effectiveness with which government spends public resources Hold Government to account for spending taxpayers’ money Independent analysis of the evidence

  4. The Regulation team We cover: • The economic regulators – the design of regulators and risk-based approaches • Competition bodies – the introduction of competition and prevention of anti-competitive behaviour • Consumer issues – the impact or regulation on consumers and adequacy of consumer protection • The regulatory reform agenda – the effectiveness of the system and outcomes 5/6 reports each year.

  5. Value for money • Hold regulators and departments to account but also seek improvements in delivery • Focus on effectiveness – low spend but big impact • Do not question the merits of policy decisions • Parliamentary scrutiny

  6. Our Regulatory Reform work • Impact Assessments – since 2001 • Reducing the burdens of regulation on business – since 2007 • Reviewing regulators’ approach to inspecting and enforcing regulations – since 2008

  7. Our objectives – regulatory reform To hold the BRE and departments to account for delivering the regulatory reform agenda, and to help improve working practices • Are ‘tools’ being used effectively? • Are initiatives delivering their intended objectives?

  8. The benefits of Impact Assessments • Increase transparency and strengthen accountability • Help encourage evidence-based policy formation WHICH MEANS: • The need for regulation is challenged • A better chance of achieving good policy outcomes

  9. Some challenges • Embedding IAs in policy development • Process and governance

  10. Impact Assessments – NAO work • We began our work in 2001 and have published an annual report since 2003-04 • Originally, we examined the quality of IAs • From 2006, we examined quality but also the use of IAs: • A review of departmental processes • Considered how depts have used IAs to inform policy development • Post-implementation review • 2008 – our broadest review of quality

  11. NAO criteria for assessment

  12. Results of NAO reviews • Generally ‘competent’ – few areas of significant weakness – policy officials understand the requirements

  13. 2007 Report

  14. 2008 Report

  15. Results of NAO reviews - quality COST-BENEFIT ANALYSIS • Improving but still persistent weaknesses • greater incidence of quantification • 67% estimated costs (up from 56%) • 60% estimated benefits (up from 40%) • type of analysis • 24% used sensitivity analysis (up from 13%) • 22% used specialists (up from 14%)

  16. Results of NAO reviews - quality • But wide variation between the best and worst IAs • Superficial evidence base • Basic analysis • Lack of justification for an absence of monetisation A NEED TO FOCUS ON THE EVIDENCE BASE • A need to consider a range of options, including non-regulatory

  17. Results of NAO reviews - quality IMPLEMENTATION AND ENFORCEMENT • Practical enforcement considerations often missing: • 80% did not include an implementation plan • 66% did not estimate enforcement costs • Impact tests need to be applied with more vigour – need to consider the full range of potential impacts CONSIDER THE PRACTICAL IMPLCATIONS OF NEW REGULATIONS

  18. Results of NAO reviews - governance • Departments are strengthening scrutiny arrangements • increased frequency of review; • greater use of economists in review • IAs more embedded in the policy formation process • Challenge still lacking in places • A need to make scrutiny bite – inc external scrutiny

  19. Lessons learned • Improve content of IAs • Establish robust processes to integrate into policy formation • Provide support for policy officials • Culture? Embed principles into a way of thinking

  20. Lessons learned A need to make IAs an integral part of the policy making process • How to create the right incentives? • Senior level commitment • Parliamentary use in the passage of legislation • Scrutiny / review – Government / SAI / Parliament • Show benefits to policy officials / make easier to use

  21. Contact: richard.baynham@nao.gsi.gov.uk lorna.gordon@nao.gsi.gov.uk

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