The Regulatory Policy Committee exists to ensure departments effectively weigh up the costs, benefits and risks of new regulations. Its interim chair, Stephen Gibson, tells Beckie Smith why it’s important to tell departments what they need to hear – even if it’s not what they want to hear
Ask a regulatory economist to reflect on the greatest achievements of their career, and the answer is sure to include a statistic. For Stephen Gibson, head of the government’s Regulatory Policy Committee, that statistic is 70%.
Part of Gibson’s career was spent as principal economist at the broadcast regulator Ofcom, where he led an impact assessment on regulating TV advertising for junk food. Over two years, his team looked at the evidence underpinning a series of measures that balanced the benefits of reducing child obesity with the costs to advertisers, broadcasters and manufacturers.
“That was really, really successful. So if I look at what’s happened afterwards, there’s been a 70% reduction in children viewing junk food adverts since we put the policy in place.
“That’s an example of how evidence-based policymaking can really be very effective, and at the same time seek to minimise the costs to the businesses it affects.”
In many ways, the Regulatory Policy Committee seems like the natural home for someone like Gibson, who has racked up some 25 years on either side of the regulatory table – including nine as head of economics for Network Rail, and stints at the regulators Ofcom, Postcomm and Ofwat.
The RPC is an independent body, sponsored by the Department for Business, Energy and Industrial Strategy, and is responsible for assessing the impact of regulatory and deregulatory proposals. Gibson took up the interim chair post late last year, and has been on the board for two years.
The process is straightforward. Before a department can introduce a new regulation – anything from the 5p plastic bag levy to a ban on advertising for cigarettes – it must produce an impact assessment and present it to the RPC.
Civil servants must weigh up the costs, the benefits and the risks of the measure – and who will be affected. “If you have all the costs falling on one group of players, and all the benefits falling on a separate group of individuals, even if the benefits outweigh the costs, you may still be concerned at the distributional effects,” Gibson explains.
The RPC then looks at the strength of the evidence and analysis in the assessment and gives an opinion: green if the assessment is fit for purpose; red if it isn’t. It also directs departments to fill evidence gaps or present better analysis where assessments are not quite up to snuff. “That gives the department an opportunity to provide better evidence to justify why they think this regulation is good,” Gibson says.
The RPC turned a decade old at the end of last year, and – as Gibson noted in his speech at a celebratory reception in January – it has provided more than 4,000 such formal and informal opinions on regulatory impact [see box].
Over that time, the quality of departments’ impact assessments has improved – partly thanks to the training the committee now provides, Gibson says. It offers bespoke training for departments, as well as generic training for all civil servants and policy analysts on the process of assessing impact. “We’ve really seen that pay off in terms of the quality of IAs that have been coming through to us,” he says.
But however well they are put together, impact assessments do not determine whether a policy goes ahead – that is up to ministers. The RPC’s role is to ensure departments are weighing up the potential costs and benefits of policies using sound evidence to support those decisions.
Gibson says that while the framework “works reasonably well, there are certainly areas where it could be improved”. At the top of the list is timing: departments only have to send in their assessments just before they are due to be put before parliament.
“That really is too late in the process, because by then the policy has already been decided on,” Gibson says. “While it may help for next time around, it’s too late to actually impact on the policy that we’re thinking of now.”
“I’m an economist, I believe in evidence-based policy. When the quality of the evidence is less good, it feeds through into the quality of the policy”
He wants to introduce mandatory scrutiny at the consultation stage, or at least “very much earlier in the process that we currently have”.
Seeing a sub-par impact assessment on a bill two weeks before it goes to parliament is frustrating, he says. “I’m an economist, I believe in evidence-based policy. And where you see the quality of the evidence being less good, it feeds through into the quality of the policy.”
There’s a chance Gibson’s wish may be granted, through an upcoming review that will look at the scope and role of the Better Regulation Framework and the RPC. BEIS had been planning a consultation this summer, but the coronavirus crisis has put that on hold.
Another rough edge that could be smoothed out through the review is the call-in process. This is how the RPC ensures measures requiring extra scrutiny get it, even when they would not usually come under the committee’s remit.
There are several reasons measures don’t come across the RPC’s desk. One is a de minimis threshold: it only examines the regulations that will have an impact of £5m or more on businesses. “That allows us to focus all our resources and efforts on the larger, more important regulatory proposals, rather than concentrating totally on the minnows,” Gibson says.
But if the RPC thinks a measure could have a big impact on one group – or if it has “a different view of the costs or benefits” from the department making the proposal – it has another card to play. It asks the Better Regulation Executive, another BEIS unit that oversees the government’s regulatory reform agenda, to “call in” the measure by asking the department for an impact assessment.
But this arm’s-length process isn’t perfect, Gibson says. “It’s a bit of a postbox process, and it would probably just be smoother and more effective if we were able to do it directly.”
RPC members with regulations minister Lord Callanan (Gibson is third from right). Photo: RPC
He would also like the committee to have the authority to red-rate impact assessments for reasons other than their impact on businesses: namely the effects they could have on the environment, trade and competition.
The RPC does not lose interest in policies once they are in motion. In the last two years it has been working on improving departments’ approaches to post-implementation reviews – in which they look at whether policies are actually working. That means looking back, several years on, at whether the costs and benefits set out in the initial impact assessments have become reality.
“Is the policy actually being effective? Does it need to be tweaked? Has it done its job? Should it be withdrawn, or does it need to be extended? Because actually, it might be having less of an effect than we thought it might.” These are the questions departments should be asking, Gibson says.
“Historically – certainly when I joined the committee – departments weren’t very good at doing that. They weren’t very good at doing a post-implementation review at all, and where it was done, it was relatively poor quality,” he says. He puts this down to departments no longer monitoring and evaluating what was happening in the market after the measures were introduced.
“I think it’s still a natural thing in departments to focus on the new policy and the new issues, rather than the policies that were developed four or five years ago. The natural consequence of that is that departments don’t devote as much resource to post-implementation reviews. That’s not the thing that gets the senior officials’ attention,” he says.
The RPC has been trying to turn that around by asking departments to put monitoring and evaluation measures in place right from the start. “Take the 5p levy on plastic bags: is it reducing the number of plastic bags? And the answer is yes, massively. Other policies might have been less effective.”
“It’s a natural thing in departments to focus on new policy, rather than the policies that were developed four or five years ago. That’s not the thing that gets senior officials’ attention”
So is the drive to improve scrutiny of policies a few years out working? “I think the answer is still mixed. I think it takes quite a while… the benefits come three to five years after you put in place the monitoring and evaluation, so we’re not yet in the position to really see those benefits.”
In the coming months, the RPC will be working on a Whitehall engagement plan to raise its own profile and look at how it can work more effectively to achieve its goals.
And it turns out that engagement is one of Gibson’s fortes. Along with his work on junk food advertising at Ofcom, another source of pride has been his work at the health charity Bowel Cancer UK, where he spent eight years as deputy chair.
“Over the eight years we developed it from a relatively small, family-based organisation into a national cancer charity, which was really effective in influencing UK cancer policy,” he says. This clout helped the charity successfully lobby for the NHS to roll out bowel cancer screening to under 60s, he says.
Gibson also contributed to the development and implementation of the charity’s strategy, which now focuses on supporting research into the disease. “That was very important for me personally, because my father and my grandmother died from bowel cancer when I was in my mid-20s. So it was really personal for me, and it was very, very powerful that we were able to really develop the organisation, to raise its profile and give it a national leading role in terms of fighting the disease.”
Another change he introduced was to put a seven-year limit on trustee postings, to ensure the charity could benefit from fresh thinking. That meant last year he had to step down from the board, although he still sits on panels for research grants as a lay member, representing people affected by bowel cancer who could stand to benefit from the charity’s research.
And, demonstrating that impact assessments are never far from his mind, he adds: “Having lay people on board just gives you that sense of remembering that there are people rather than just patient numbers involved. I think that is really important.”
A decade of scrutiny
To mark its 10th anniversary, earlier this year the RPC published a document entitled A decade of scrutiny detailing some of its notable cases.
In his opening remarks, Gibson noted that the committee’s work is “not always welcomed with open arms”. “We tell government departments and ministers what they need to hear,” he wrote.
The case studies show how the RPC has forced the government to demonstrate the evidence on which it is basing regulations over the years, Gibson says.
In the run up to the Trade Union Act 2016, the RPC red-rated the government’s impact assessment of a consultation on measures to require the backing of 40% of eligible union members before industrial action could be taken. The committee found the government had failed to provide sufficient evidence of the impacts of public sector strike action on the economy – which it later produced.
Another policy to fall foul of the RPC’s red pen was a measure requiring energy providers to include a machine-readable barcode or QR code on household energy bills, which consumers could use to get more information about their energy usage. The initial proposal said small and micro businesses should not be exempt from the rule because it would prevent the policy from working – but the RPC said the impact assessment lacked evidence for this. A quantitative analysis included in the revised assessment showed small businesses would bear a disproportionate cost of the policy – leading to a full exemption.
Gibson says the last decade of work has not only helped to improve policymaking domestically, but has also meant the RPC has made a name for itself internationally.
He saw this firsthand when he went to a number of international events after becoming interim chair in November. “We’re seen really as a centre of excellence: someone to be learned from, someone to take as an example of best practice. That really drove home to me the reputation that we have not just in Europe, but around the world.”