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Business Impact Target

Volume 686: debated on Tuesday 15 December 2020

My right hon. Friend the Under-Secretary of State for Climate Change and Corporate Responsibility (Lord Callanan) has today made the following statement:

This statement sets the Government’s business impact target in respect of the economic impact on business of qualifying regulatory provisions which come into, or cease to be, in force for this Parliament, and covers related matters as required under section 21 of the Small Business, Enterprise and Employment Act 2015 (“the Act”).

The manifesto undertook that Government

“will strive to achieve the right regulatory balance between supporting excellent business practice and protecting workers, consumers and the environment”.

The Government do not believe that the current methods of assessing regulatory impacts allow for this. Therefore, the Government will consult with business to ensure the impact of regulation is reflected more effectively, so as to continue to provide necessary protections without placing unnecessary burdens on business. Until the completion of the review the Government will set a target of zero. This will in effect be a holding target and will enable the Government to continue to monitor regulatory impacts and remain transparent to business on the impacts of the regulatory programme it is delivering in the immediate term. This holding target makes clear that Government remain committed to achieving regulatory balance and do not intend to increase the regulatory burden on business.

Upon completion of the review, the target and the methodology to be used for assessing the economic impact, along with any other related matters as required under section 21 of the Act, will be revised to reflect the findings of the review.

Business Impact Target1

The Government are setting a net target of zero savings to business and voluntary or community bodies from qualifying measures that come into force or cease to be in force during this Parliament.

Interim Target2

The interim target covers the savings to be achieved from qualifying measures that come into force or cease to be in force in the first three years of this Parliament. The Government’s interim target is also set at zero.

Measurement of the Business Impact Target3

The impact of each qualifying measure will be assessed on the basis of its equivalent annual net direct cost to business (EANDCB) measured in 2019 prices and with a 2020 present value base year. As in the previous Parliament, the contribution to the business impact target will be the sum of the EANDCB over the first five years for which the measure will be in force, or the sum of the EANDCB over the full lifetime of the measure for measures that are, or will be, in force for less than five years.

Qualifying Regulatory Provisions4

Under the Act, the measures that are in scope for the business impact target are described as “regulatory provisions”. That includes both legislation and the activities of Ministers and listed regulators. The Secretary of State must determine the regulatory provisions that are to be scored against the target (“qualifying regulatory provisions”). Qualifying regulatory provisions are regulatory provisions that do not fall within any of the exclusions set out below:

a) Regulatory provisions that have been certified by Departments or regulators as falling under the de minimis rule, namely those that have an EANDCB of less than ± £5 million;

b) Regulatory provisions that implement new or changed obligations from European Union regulations, decisions and directives, and other international commitments and obligations, except in cases of gold-plating. This includes measures incorporating EU law into domestic law under the EU Withdrawal Bill and legislation made for the purpose of implementing the EU Withdrawal agreement, including implementation of new EU law during the implementation period.

c) Regulatory provisions that have been certified by departments or regulators as dealing with deficiencies in retained EU law (under the EU Withdrawal Bill and other legislation);

d) Regulatory provisions that are intended to deliver—or to replicate—better competition-based outcomes in markets characterised by market power;

e) Regulatory provisions relating to systemic financial risk;

f) Regulatory provisions relating to civil emergencies;

g) Regulatory provisions concerning fines and penalties, and redress and restitution;

h) Regulatory provisions that implement changes to the classification and scheduling of drugs under the Misuse of Drugs Act 1971 where these follow the recommendations of the relevant independent advisory body;

i) Regulatory provisions that have been certified by departments or regulators as relating to the safety of tenants, residents and occupants in buildings that stem from, or relate to, Government’s response to the Grenfell tragedy, reviews, inquiries or working groups;

j) Regulator casework including specific investigation and enforcement activity, individual licence decisions, and individual advice;

k) Education, communications activities, and promotional campaigns by regulators, including media campaigns, posters, factsheets, bulletins, letters, websites, and information / advice helplines;

l) Policy development by regulators, including formal and informal consultations, policy reviews, and ad hoc information requests;

m) Changes to the organisation and management of regulators, except for those resulting from legislative changes or another policy change that is a qualifying regulatory provision;

Independent Verification Body5

The Government will reappoint the Regulatory Policy Committee as the independent verification body to verify the impact on business of measures in scope of the business impact target (and the list of non-qualifying regulatory provisions).

1As required under section 21(1)(a) of the Act.

2As required under section 21 (1)(b) of the Act.

3As required under section 21 (3)(b) of the Act.

4As required under section 21(3)(a) of the Act.

5As required under section 25(1) of the Act.