Editor's blog Monday 25 July 2011: EXCLUSIVE - Health Bill: five impact assessments officially risk-rated as unfit for purpose

A Health Policy Insight exclusive
 Impact assessment on policy on GP commissioning red-rated twice in succession as unfit for purpose
 Impact assessment on policy on 'provision - provider liberalisation, economic regulation and joint licensing' red-rated as unfit for purpose once; amber-rated after changes
 DH fails on almost 50% of policy impact assessments; a further 40% must be changed

The Department of Health's final stage impact assessments (IAs) for the Health And Social Care Bill legislation have been strongly criticised by the Regulatory Policy Committee - the independent committee set up to verify the quality of government policymaking, a new report confirms.

The Department Of Health's Impact Assessment (IA) for the sections of the Health Bill on GP commissioning was red-rated as unfit for purpose twice in succession, in the opinion of the Regulatory Policy Committee.

The RPC also red-rated as unfit for purpose the IA on the sections on 'provision - provider liberalisation, economic regulation and joint licensing' once; and after DH revision the RPC then  amber-rated the revised draft as requiring defined changes at the second attempt.

The RPC also red-rated the DH's IA on Public Bodies as unfit for purpose twice in succession.

The ratings are the official 'opinion' of the RPC, and ministers must then decide whether to proceed. It is clear that Health Secretary Andrew Lansley decided to go ahead with his Bill.


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The Regulatory Policy Committee review of government departments' policy impact assessments (IAs) has found that between January and June 2011, the Department of Health was risk-rated red for 6 impact assessment policy documents, and amber for a further 5.

Just 2 were green-rated.

The DH policy of GP Commissioning & the NHS Commissioning Board (basically, the Health And Social Care Bill) was double-red rated, at both assessments.

The RPC deems a red flag as 'not fit for purpose'. It regards amber as 'fit for purpose ...  (but) changes should be made'. The full RPC definitions for red, amber and green are copied below.

The RPC document states (3.13 & 3.14) "The principal reason we rated IAs as ‘Not Fit for Purpose’ was because they did not provide reliable estimates of the costs and benefits of the regulatory proposals being considered, including those of unintended consequences and potential risks and uncertainties ... The second main reason why we Red flag IAs is because they contain insufficient evidence to justify the conclusions reached".

And it adds (3.15) "3.15. We will Green flag an IA where the conclusions are clearly based on the evidence that is available. An Amber flag is more likely if the conclusions reached are partly but not obviously fully based on the evidence presented".

It continues (3.17), "we will Red flag an IA at consultation stage if it considers only the preferred option or an alternative that is either too simple a variant on the preferred option or is an unrealistic option. We will also Red flag an IA at consultation stage if it presents detailed analysis of a preferred option but gives only cursory or unjustified assessment of alternatives, including non-regulatory options".

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IRC - the six recommendations and red-amber-green definitions

Recommendation 1: Don’t presume regulation is the answer
 Has a market failure been clearly identified and is it demonstrated that government intervention is warranted?
 Have non-regulatory alternatives been fully considered and, if not, has sufficient justification been provided to explain why not?

Recommendation 2: Take time and effort to consider all the options
 Have a sufficiently wide range of options been taken forward for detailed appraisal?
 Has any viable option been ruled out of detailed appraisal without good reason?

Recommendation 3: Make sure you have substantive evidence
 Is there evidence explaining how the market currently works and how any market failure identified is causing the observed behaviour in the market?
 Have the outcomes and responses of public consultation (where appropriate) been used as evidence to inform the estimates of costs and benefits presented?
 Is there evidence that other relevant departments or other public bodies (where appropriate) have been involved in forming the estimates of impacts presented?

Recommendation 4: Produce reliable estimates of costs and benefits
 Have all the potential impacts of the regulatory proposal been identified, including any unintended consequences?
 Have all costs been valued at their opportunity costs?
 Is the time period for calculation long enough to encompass all important costs and benefits, and has the appropriate discount rate been used?
 Is it easy to see what are the most important risks and uncertainties?

Recommendation 5: Assess non-monetary impacts thoroughly
 Has the quantification and/or valuation of non-monetised impacts been undertaken in accordance with established techniques?
 Are the non-monetised impacts presented in a way that enables them to be compared across the different options in a systematic manner?

Recommendation 6: Explain and present results clearly
 Is it clear who will benefit and who will bear the cost under each option, when these costs will be incurred, and by how much?
 Does the IA reference the source of data, research and evidence used and is the robustness of each of these clearly demonstrated?

RED – If an IA receives a Red flag, this means we have significant concerns with the analysis and evidence presented. The issues we raise must/need to be addressed before a ‘Fit for Purpose’ rating can be obtained on resubmission. In terms of our six recommendations it is the failure to fully adhere to one or more of these that will lead to a Red flag being issued. We judge the IA to be ‘Not Fit for Purpose’.

AMBER – If an IA receives an Amber flag, this means we have areas of concern with the quality of analysis and evidence presented. These issues should be addressed prior to the IA being finalised so as to improve its contribution to the final decision made. On this understanding, we judge the IA to be ‘Fit for Purpose’.

GREEN – If an IA receives a Green flag, this means we have no significant concerns with the quality of analysis and evidence presented. We make suggestions where we think the IA could be improved to deliver greater clarity or to aid understanding. We judge the IA to be ‘Fit for Purpose’.