Better Policy Making
Ofcom's approach to Impact Assessment
Why is Impact Assessment important?
1.1 The decisions which Ofcom makes can impose significant costs on our stakeholders and it is important for us to think very carefully before adding to the burden of regulation. One of our key regulatory principles is that we have a bias against intervention. This means that a high hurdle must be overcome before we regulate. If intervention is justified, we aim to choose the least intrusive means of achieving our objectives, recognising the potential for regulation to reduce competition. These guidelines explain how Impact Assessments will be used to help us apply these principles in a transparent and justifiable way.
"The option of not intervening...should always be seriously considered. Sometimes the fact that a market is working imperfectly is used to justify taking action. But no market ever works perfectly, while the effects of...regulation and its unintended consequences, may be worse then the effects of the imperfect market"
Better Regulation Task Force (September 2003)
1.2 Impact Assessments form a key part of best practice policy making, which is reflected in our statutory duty to carry them out. They provide a way of considering different options for regulation and then selecting the best option. In selecting and analysing options, the need to further the interests of citizens and consumers is of paramount importance.
1.3 Impact Assessments are also useful tools for reviewing existing regulation. They provide a framework for weighing up the costs and benefits of removing regulation, as well as analysing other options.
1.4 In identifying options, we will aim to consider a wide range of options, including not regulating. Where appropriate, we will explore more risk-based, targeted approaches to regulation and will consider whether there are alternatives to formal regulation, such as co-regulation.
1.5 In developing policy proposals, our aim will be to think widely about the possible impacts, taking account of the whole value chain and knock-on effects across the communications sector. By doing so, we will seek to minimise any unintended consequences.
1.6 To be effective, the process of doing an Impact Assessment should begin right at the start of a project, with the Impact Assessment being developed from then onwards. An Impact Assessment should therefore be a core part of the policy-making process, not a bureaucratic add-on.
1.7 In these guidelines we say we expect Impact Assessments to be carried out in relation to the great majority of our policy decisions. This is a significant commitment, but in carrying out Impact Assessments, we will be guided by the principle of proportionality. This means that a decision which is likely to have a wide-ranging impact and/or impose substantial costs on stakeholders will have a more comprehensive Impact Assessment than a decision which will have a less significant impact.
1.8 An Impact Assessment should show how a regulatory decision is designed to fulfil our statutory duties. The principal duty of Ofcom is to further the interests of citizens in relation to communications matters and to further the interests of consumers in relevant markets, where appropriate by promoting competition. What the Act requires us to do to fulfil this principal duty falls into six main areas, ranging from ensuring the optimal use of the radio spectrum to providing audiences with adequate protection against offensive and harmful material.
1.9 We are also required to keep the carrying out of our functions under review to ensure that regulation does not involve:
- the imposition of burdens which are unnecessary; or
- the maintenance of burdens which have become unnecessary.
1.10 The benefits for citizens and consumers are potentially largest where markets are open, new entrants can compete against incumbents, investment is encouraged and innovation flourishes. For this reason, we are committed to promoting open and competitive markets. Where appropriate, therefore, Impact Assessments need to show the extent to which the options under consideration would have an impact on competition.
1.11 Another benefit of carrying out Impact Assessments is that they provide a mechanism for considering the impact of our work on the interests of the full range of our stakeholders, including different groups of citizens and consumers. In some cases, for example, we will need to consider the impact of policy options on the interests of people living in different parts of the country or people who are elderly, disabled or on low incomes.
1.12 Our stakeholders play an important part in the Impact Assessment process as often they will be in possession of the information needed to carry out the analysis. Generally, therefore, we will seek to engage with stakeholders at an early stage.
1.13 These guidelines reflect the comments we received from stakeholders in response to the draft guidelines that we published in February 2005. The overall response to the guidelines was very positive, although many respondents made the point that we will now need to implement them effectively. We have not made wholesale changes to the guidelines following the consultation, but have made some amendments which we hope will provide greater clarity about our approach. A summary of the key points made by respondents to the consultation and an explanation of how we have addressed them can be found in Annex B. All the non-confidential responses to the consultation are on our website.
1.14 In producing these guidelines, Ofcom has had regard to other relevant guidelines, including the Cabinet Office publication, “Better Policy Making: a Guide to Regulatory Impact Assessment” (January 2003). We have also taken into account the guidance issued by the Better Regulation Task Force, which identified five principles of good regulation: proportionality, accountability, consistency, transparency and targeting. These guidelines also reflect our experience of carrying out Impact Assessments in the period since Ofcom’s inception. While they set out our general approach to Impact Assessments, the wide range of decisions which Ofcom has to make means this approach will be tailored as necessary to fit the type of decision being made.
1.15 It is important to stress that the publication of these guidelines forms part of a programme of work designed to embed the process of carrying out Impact Assessments across the organisation. We will be following the approach set out in the guidelines from 1 August 2005, although the process of improving Ofcom’s Impact Assessments and thereby improving our policy decisions will continue. This will involve training for those involved in carrying out Impact Assessments and other initiatives to raise awareness and provide assistance. We will also continue to draw on best practice in the UK and elsewhere.
1.16 We have chosen to use the term ‘Impact Assessment’ rather than ‘Regulatory Impact Assessment’. This is for two reasons. First, it better conveys the potentially broad scope of our policy proposals, which will often extend beyond introducing new regulation. The introduction of spectrum trading, for example, is a fundamental change in the way that spectrum is allocated and has the potential to lead to significant de-regulation. Secondly, ‘Impact Assessment’ is the term used in section 7 of the Communications Act 2003 (“the Act”), which sets out Ofcom’s legal obligation to consider the impact of its proposals and is discussed in section 4 of these guidelines.
1.17 These guidelines do not have binding legal effect. Ofcom will consider each case on its merits and will apply the guidelines where it is appropriate to do so. In the event that we decide to depart from the guidelines, we will normally set out our reasons for doing so.
1.18 If you have any comments or questions about these guidelines or Ofcoms approach to Impact Assessments more generally, please contact Tom Kiedrowski (firstname.lastname@example.org) or Marco Marini (email@example.com).
The full document is available below