1.1 Ofcom’s decisions can impose significant costs on our stakeholders and it is important for us to think very carefully before adding to the burden of regulation. Our bias against intervention means that the prospective benefits of regulation must exceed the costs. If intervention is justified, we are guided by the principle of choosing the least intrusive means of achieving our objective. These guidelines explain how Impact Assessments can help us make these judgements 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 effect of...regulation and its unintended consequences, may be worse than the imperfect market."
Better Regulation Task Force (September 2003)
1.2 An Impact Assessment is a way of considering different options for regulation, including not regulating, and then selecting the best option. Impact Assessments form a key part of best practice policy making and these draft guidelines reflect Ofcom’s commitment to producing effective Impact Assessments.
1.3 Furthermore, Impact Assessments are useful tools for reviewing existing regulation. They provide a framework for weighing up the costs and benefits of removing regulation, as well as the costs and benefits of other options. In identifying options, we will consider whether there are viable alternatives to formal regulation such as co-regulation.
1.4 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 is therefore a core part of the policy-making process, not a bureaucratic add-on.
1.5 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. In carrying out Impact Assessments, however, we will be guided by the principle of proportionality. This means that a policy which is likely to have a wide-ranging impact and impose substantial costs on stakeholders will have a more comprehensive Impact Assessment than a policy which will have a less significant impact.
1.6 Another benefit of carrying out Impact Assessments is that they provide a mechanism for considering the impact of our work on the full range of our stakeholders, including different groups of citizens and consumers. For example, in some cases we will need to consider the impact of policy options on people living in different parts of the country and on people who are elderly, disabled or on low incomes. Our stakeholders also play an important part in helping us to produce Impact Assessments – often the information we need to complete an Impact Assessment will be in their possession.
1.7 While these guidelines set out our general approach to Impact Assessments, the huge range of decisions which Ofcom has to make means this approach will be tailored as necessary to fit the type of decision being made.
1.8 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 has identified five principles of good regulation: proportionality, accountability, consistency, transparency and targeting.
1.9 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.
1.10 We look forward to receiving views on the approach set out in these draft guidelines. We intend to publish a final version of the guidelines in June 2005 and to follow the approach outlined in those guidelines from 1 July 2005.