My Lords, as many Members of the Committee have already noted, my noble friend Lady Neville-Rolfe is well known in your Lordships’ House for her pursuit of impact assessments and is a stern critic of government departments that hide behind the exact wording of Cabinet Office guidance. Recently, many of us have joined her in being appalled by the complete lack of impact statements published to support the Government’s coronavirus policies, involving—I remind the Committee—the greatest ever peacetime infringement of civil liberties. The Department of Health and Social Care used the flimsy excuse that the Cabinet Office does not require impact assessments for policies intended to have a temporary effect.
I am particularly interested in my noble friend’s Amendment 104, which requires an annual report to Parliament. I am not wholly in favour of annual reports, because they can degenerate into boiler plate and have a very short-term horizon; I prefer the concept of periodic reports that can look at impacts over a longer time span. However, whether such reviews are annual or less frequent, I suggest to my noble friend that the report could also usefully concentrate on the quality of consultation carried out by the regulators, and that would include the quality of impact statements.
Consultations by the PRA and the FCA often feel like not much more than going through the motions. They are not alone in the public sector in seeming to exaggerate the benefits and underestimate the costs. HMRC, for example, is a particular case in point, having been criticised more than once by the Economic Affairs Committee of your Lordships’ House for the use of cost assumptions that seem to bear little relationship to reality. Similarly, the PRA’s consultation on ring-fencing rules was widely regarded as a massive underestimate of the cost of compliance, as was borne out by subsequent cost experience. A superficial impact assessment, or one that overstates the benefits or systematically underestimates the costs, is worse than useless and can lead to poor policy-making. It would be wise to ensure that the regulator’s performance in this regard is kept under review.