Better Regulation Guidance


The current level of determination to reduce the regulatory burden was stated in the 2001 Labour Party’s business manifesto ‘The Best Place To Do Business’. This announced the government’s intention to ‘deregulate where desirable and regulate with as light a touch as possible’.

In August 1998, the Prime Minister announced that no proposal for regulation which has an impact on businesses, charities or voluntary bodies, should be considered by Ministers without a Regulatory Impact Assessment (RIA) being carried out. Where regulations or alternative measures are introduced, this should be done in a light touch way, with decisions informed with a full regulatory impact assessment, which includes details of not only the obvious costs and benefits of the proposal but also the wider economic, social and environmental impacts. New regulations should only be introduced when other alternatives have first been considered and rejected, and where the benefits justify the costs.

Regulatory Reform Action Plan:

…the Government’s overarching aim is to deliver better regulation, which means:

  • regulating only where necessary;
  • doing so in a light touch way that is proportionate to risk; and
  • deregulating and simplifying existing regulations wherever possible.
  • For the private sector the aim is to reduce unnecessary business costs. We have already introduced, for example: licensing reforms, including increased flexibility over opening hours.

    The Regulatory Impact Unit works with other government departments, agencies and regulators to help ensure regulations are fair and effective and that all new and existing regulation is necessary. New regulations should comply with the principles of better regulation and impose the minimum burden. We also play a role in helping to reduce bureaucracy and cut red tape.

    The Regulatory Impact Unit (RIU) is based at the centre of Government in the Cabinet Office. Its role is to work with other government departments, agencies and regulators to help ensure that regulations are fair and effective. Regulations are needed to protect people at work, consumers and the environment, but it is important to strike the right balance so that they do not impose unnecessary burdens on businesses or stifle growth.

    The Unit’s work involves:

      Promoting the Principles of Good Regulation
      Identifying risk and assessing options to deal with it
      Supporting the Better Regulation Task Force
      Removing unnecessary, outmoded or over-burdensome legislation through the powers as enacted in the Regulatory Reform Act.
      Improving the assessment, drawing up and enforcement of regulation, taking particular account of the needs of small businesses

    In addition to taking an overview of regulations which impact on business, the RIU also examines the impact on the voluntary sector, charities and the public sector.

    • The Regulatory Impact Unit (RIU) Scrutiny Team consists of staff with a wide range of experience of policy development and implementation from across a number of Government Departments and includes a number of secondees from private industry. The team works closely with other Cabinet Office Units, other departments, regulators and the regulated, focusing on those regulations which impact on business, charities, and the voluntary sector. The Team’s aims are to:

    a) seek the removal of outdated and the improvement of unduly burdensome existing regulations;

    b) help ensure future Government laws and regulations meet the Principles of Good Regulation:

      Transparent – clearly define objectives and obligations;
      Accountable – regulators are accountable to parliament and appeals procedures are accessible;
      Consistent – with existing UK and EU regulations;
      Targeted – focus on the problem; and
      Proportionate to risk – balance risks and costs.

    c) Help spread best practice on better policy-making and regulation with the Better Policy Making: A Guide to Regulatory Impact Assessment

    Each Government Department has a Departmental Regulatory Impact Unit (DRIU), which acts as the first point of contact within Departments on regulatory issues. The Scrutiny Team work closely with DRIUs and Departmental officials to ensure Departments:

    a) prepare robust Regulatory Impact Assessments (RIAs) to assess the impact of proposals that are likely to have an effect on business, charities and the voluntary sector which consider all available options including non-regulatory alternatives;

    b) include a Regulatory Impact Statement, agreed with RIU, in any Ministerial correspondence seeking collective agreement for "significant" proposals;

    c) provide early and effective consultation with those affected;

    • The RIU Economics Team has a consultative role for the Regulatory Impact Unit, to provide economic advice across the unit.

    Our role includes:-

    • reviewing and providing advice for the economic aspects of regulatory impact assessments in conjunction with the Scrutiny Team
    • economic aspects of regulation of European Team issues
    • departmental risk issues, in particular departmental risk frameworks as part of the Modernising Government secretariat
    • providing advice about alternatives to state regulation and recent experience.
    • Ministerial Panel on Regulatory Accountability By direction of the Prime Minister a Committee has been constituted with the following Composition and Terms of Reference:


      Minister for the Cabinet Office and Chancellor of the Duchy of Lancaster (Chair)
      Chief Secretary Treasury
      Secretary of State for Trade and Industry
      Minister of State Cabinet Office
      The Chairman of the Better Regulation Task Force and the Chair of the Small Business Council are invited to attend.

    Terms of Reference
    "To take a strategic overview of the regulatory system; to tackle instances where progress on regulatory reform is blocked; and to call Ministers to account for new regulation and their performance in addressing the burden of existing regulation."

    • The Ministers were appointed to drive forward the better regulation agenda throughout Government. They are charged with removing any regulations which are outdated or burdensome, and; ensuring that the new regulations are truly necessary and, if so, are introduced at the least cost to business.
      Home Office:
      Lord Falconer of Thoroton QC
    • Policy makers are now required to carry out a Competition Assessment as part of their Regulatory Impact Assessments (RIAs), which are already required, before policies that effect business, charities and the voluntary sector are implemented. The Office of Fair Trading and RIU have jointly launched guidance to policy makers across Government on how to assess the impact their proposed policies and legislation will have in the market place.
      Guidelines to Competition Assessment: A Guide to Policy Makers Completing Regulatory Impact Assessment sets out a two stage process for examining the competition implications of proposed policies.
    • All RIAs must include a Competition Assessment, except where the proposal solely effects the public services.
      This looks at the impact on competition within UK markets. It should analyse the impacts of a proposed regulation on UK firms in the relevant market(s) and on importers into the UK. It does not attempt to consider whether the proposal will affect the ability of UK firms to compete outside the UK (i.e. the effect on UK ‘competitiveness’) which should be addressed elsewhere in the RIA.
      Competition is an essential part of a healthy economy, helping to provide low prices and choice for the consumer. It also tends to increase efficiency and innovation. Regulations can prevent markets from working well when they impact adversely on competition.
      A regulation that deters potential new entrants to a market, introduces distortions between existing competitors, reduces the number of existing competitors in a market, or changes firms’ behaviour in other related activities may lead to higher prices, reduced choice for the consumer and/or reduced innovation.
      Regulations can impact on competition in a number or ways, for example by:
      • directly affecting firms’ costs, availability of resources or requirements of customers, e.g. by changing cost structures;
      • directly specifying what product or service must be produced, e.g. by specifying a minimum standard for a product; and
      • directly impacting on how firms compete in a market, e.g. by preventing new firms from entering a market.
      • The aim of the detailed assessment is to understand in more depth the potential competition impacts identified in the competition filter test. In undertaking the detailed assessment, you should:
      • consider all possible effects of a regulation, including any knock-on effects on related sectors;
      • check whether these effects do in fact raise concerns for competition;
      • and compare policy options in terms of their impact on competition, and, if possible, identify suitable alternative policy options.

      The three steps in carrying out a detailed assessment are:

      • Identifying affected markets: Define more precisely which markets are affected by a regulation. NB do not forget markets that may be indirectly affected.
      • Understanding the current nature of competition: Before investigating how a regulation will change competition, policy makers should understand how competition currently operates in the relevant markets. This involves exploring in more detail supply and demand factors, market outcomes and the competitive process.
      • Identifying the impacts of the regulation: Identify both the direct and indirect impacts on competition resulting from each policy option presented in the RIA.

    • The Better Regulation Task Force was established in September 1997. It is an independent body that advises Government on action to ensure that regulation and its enforcement accord with the five principles of good regulation:
    • Transparency
    • Accountability
    • Proportionality
    • Consistency
    • Targeting

    The Task Force does this by carrying out studies of particular regulatory issues. These reviews are taken forward by sub-groups of Task Force members who set their own working methods and produce detailed reports. As an advisory group with limited resources, the Task Force cannot carry out full consultation, but all sub-groups discuss their proposals with key organisations and individuals, as well as with Ministers and Government Departments. All reports are endorsed by the full Task Force before being sent to the relevant Ministers for their response. The Prime Minister has asked Ministers to respond to Task Force reports within 60 days of publication.
    The Better Regulation Task Force regularly reviews how Ministers and Government departments have acted on recommendations in earlier reports.

    • The Better Regulation Task Force has recently revised its Principles of Good Regulation leaflet, which it first published in 1998 and revised in 2000. Government Departments and independent regulators alike should use them when considering new proposals and evaluating existing regulations.
      The principles have been taken up in the Regulatory Impact Unit's
      Guide to Good Policy Making .
      In summary, the five principles are that good regulation should be:

      Proportionate: Regulators should only intervene when necessary. Remedies should be appropriate to the risk posed, and costs identified and minimised.

      Accountable: Regulators must be able to justify decisions, and be subject to public scrutiny.

      Consistent: Government rules and standards must be joined up and implemented fairly.

      Transparent: Regulators should be open, and keep regulations simple and user friendly.

      Targeted: Regulation should be focused on the problem, and minimise side effects.

    • Alternatives to state regulation:

    The Better Regulation Task Force Reports, Alternatives to State Legislation, published in July 2000 and Imaginative Thinking for Better Regulation, published in September 2003.

    A discussion paper prepared by the National Audit Office on alternatives to state-imposed regulation at

    The National Consumer Council has produced a guide to self-regulation called Models of Self-Regulation which can be found at

    The Department of Trade and Industry has produced a booklet Thinking Alternatively! which contains guidance on alternatives to regulation. It is available from the DTI Better Regulation Team on 020 7215 5557.

    • The Regulatory Reform Act 2001 received Royal Assent on Tuesday 10 April 2001.

    Briefly the Act:

    • provides Ministers with a wide power to use Orders to reform primary legislation.
    • gives Ministers a reserve power to set out a code of good practice in enforcement.

    • White Paper on competition & minimising regulation:

    In the "White Paper, modern markets: confident consumers, the Government has set a new agenda:

    • to promote open and competitive markets
    • to provide people with the skills, knowledge and information they need to become demanding consumers
    • to encourage responsible businesses to follow good practice
    • to avoid burdening those businesses with unnecessary regulation
    • to protect the public from serious trading malpractice and unsafe products.

    Modernising regulation

    Consumer legislation is already well developed and needs little extension. Risk, cost and alternative ways of achieving the desired result will always be considered before regulation.
    However, the Government will legislate when new circumstances emerge for consumers that cannot be dealt with in other ways.

    reducing burdens

    The Government believes there is scope for removing a number of burdensome regulations without jeopardising consumer interests".

    "1.6 This White Paper proposes initiatives to tackle these major issues. The Government will look first for opportunities to make markets work, including through better information and self-regulation, but will not hesitate to regulate when other options have failed to solve problems or the risks to public health and safety are unacceptable. And it will ensure consumers' concerns are heard in Government.
    Open and competitive markets are the best guarantee of a good deal for consumers. They encourage innovation in products and services. They ensure competitive prices. The Government will give priority to ensuring that domestic and international markets are as open as possible".

    Chap 2:

    "The Government is determined to remove barriers to trade and investment, and deliver a strong and effective competition policy, which stimulates open and competitive markets, and brings benefits to consumers".
    "2.3 The OFT has made clear that its overriding priority under the Act will be to seek out cartels and serious abuses of market powers.
    2.4 Competition policy exists to protect consumers and businesses against anti-competitive behaviour. They should therefore have a strong voice in competition decisions and assurance of compensation".

    Chap 6:

    "Meeting new needs

    6.4 The challenge for the Government is to meet new needs, without distracting business from their focus on consumers by imposing unnecessary regulatory burdens. That is not in the interests of consumers, who would suffer through either higher prices or reduced choice. Measures therefore need to be proportionate and targeted. They need to be understandable by those they are aimed at, and they need to take account of the views of those they will affect.
    6.5 The system of regulatory impact assessments builds on this by focusing attention on how far the harm identified will be reduced by a proposed measure, and comparing that to its expected costs both to business and the rest of society. The Government will continue to develop techniques for identifying, measuring and considering how consumers will be affected – the risks and benefits – by individual proposals for change. DTI will publish the criteria it uses for risk assessment by October 1999.

    Assessing risk

    6.6 A major concern for consumers is the safety of products, particularly food. Product safety is not absolute - there are always risks. The Government therefore needs to ensure that the regulatory framework protects consumers against unacceptable levels of risk to their health and well-being. The starting point for considering action has to be proper risk assessment - what is the nature of the problem, what are the possible hazards or detriments, how likely are they to occur and how serious are they when they occur?

    6.7 Nevertheless, in some cases conclusions are hard to reach because the risks or the seriousness of the hazards are uncertain, even to experts. Where there is the risk of serious or irreversible damage, it may be necessary to take a "precautionary approach" but decisions should be based on an objective assessment of associated uncertainties and the costs and benefits of action, and have to be reviewed as knowledge improves – disproportionate action simply stifles innovation for no benefit.

    6.8 Consumers need good quality information if they are to form a view of the safety of products. Individuals have different risk thresholds in deciding whether to purchase goods. The Government is therefore committed to clear product labelling enabling consumers to make properly informed choices (see Chapter 3).

    6.9 The Government is also seeking to promote better understanding of scientific analysis. This involves ensuring that research into health and consumer concerns takes place at an early stage alongside new scientific developments. In addition, in the Foresight programme, the Government is building a dialogue between the scientific community, consumers and business. It is doing this through a research programme aimed at identifying the consumer interest in relevant scientific developments. These steps are designed to provide confidence in the development of new products and services which will benefit consumers".

    Assessing consumer safety issues

    DTI’s safety research programme is planned to meet the concerns of consumers, businesses and local authorities, and the results are disseminated widely.

    High quality information on risks to consumer safety is needed to inform decisions both nationally and internationally. As part of its safety research programme, DTI gathers statistics on injuries which involve consumer products, using the Home Accident Surveillance System. This system, which draws data from a representative sample of UK hospitals, is currently being upgraded.
    In addition, there is a programme of in-depth research to identify the precise nature of specific risks and help policy-makers choose the best way to deal with them.

    Reducing burdens

    6.10 The Government believes that there is scope for removing burdensome or unnecessary regulations, while protecting consumer interests. In some cases the conditions which gave rise to the need for the regulations have changed. In others the regulations themselves were not prepared with the rigour that the Government now intends to adopt. The consequence is that such regulations can act as obstacles to the competitiveness of businesses - particularly small firms - that trade fairly and provide safe, quality products and services. They make it more difficult for businesses to focus on their customers and meeting their needs.
    6.14 Chapter 7 sets out how the Government plans to target enforcement action more precisely on rogue traders. This provides an opportunity to review offences and penalties in other parts of consumer protection legislation to see if they are still necessary and, if so, whether the type and level of penalty is appropriate. The Government proposes to review all offences and penalties and, where these need to be retained, consult on whether criminal or civil penalties are most appropriate in each case. The Government will also reinforce the drive towards securing compliance through guidance rather than enforcement through prosecution for the majority of businesses that make the occasional mistake.

    Chap 7:

    "Persuasion and education of traders

    7.2 Reliance on legal powers is a last resort. Most businesses want to comply with their obligations and look to the authorities to assist them in doing so. In recent years enforcement authorities have increasingly offered advice and guidance to business. The Government welcomes this and endorses the Better Regulation Task Force’s report (1) on enforcement which aims to consolidate and extend this approach.

    7.3 Any enforcement regime should be fair to traders as well as ensuring that consumers are protected. To that end, the Enforcement Concordat aims to encourage co-operation with business and fair and consistent enforcement practice by local authorities and central government. Many local authorities have already signed up to the Concordat. The Government urges all enforcement authorities who have not to do so within the next year".

    The Enforcement Concordat

    The Enforcement Concordat sets out what business and others being regulated can expect from enforcement officers:

    • standards – the level of service and performance the public and business people can expect to see
    • openness – wide dissemination of information in plain language, full consultation and discussion of problems with those experiencing difficulties
    • helpfulness – a courteous, prompt and efficient service, with contact details provided for further dealings
    • complaints – well-publicised, effective and timely complaints procedures
    • proportionality – minimising the cost of compliance to business by ensuring any action taken is proportionate to the risk
    • consistency – duties will be carried out in a fair, equitable and consistent manner.
  • Before formal enforcement action is taken, there will be an opportunity to discuss the circumstances of the case and, if possible, resolve points of difference, unless immediate action is required (for example, in the interests of health and safety).

    7.5 There are three problem areas.

    • The level of criminal sanctions, and the risk of civil action by consumers, do not deter determined rogues who continue to carry on unlawful conduct where the profits outweigh the occasional judicial setback and where they can live with an adverse effect on their reputation. This problem is compounded by the time it takes to enforce some of the existing legislative provisions. This enables the rogue trader to keep ahead of the authorities.
    • Outside areas where there are specific licensing regimes (consumer credit, financial services), there is no means of preventing a rogue trader from continuing to pose a threat to consumers by moving from one dishonest practice to another.
    • A number of trading practices which cause harm to consumers are still legal.