Five years of Impact Assessment in Sweden: A Tale of Limited Improvement

Regelradet_report_2009-2014

The Report of the Swedish Better Regulation Council “2015. Final Report 2009-2014” summarizes the six years in which the Council has operated in the form of a committee of inquiry. The Council’s main task has been to review new and amended proposals for statutes that impact business. The Council’s remit has also included participating in training courses and providing advice and support to regulators, participating in better regulation work at the EU level, on request reviewing impact assessments prepared at the EU level, and otherwise monitoring developments within the area of better regulation. The Council has also had a number of other tasks and projects, such as monitoring administrative costs and the provision of a collection of examples of good impact assessments on its website.

From 1 January 2015, the activities of the Swedish Better Regulation Council will be narrowed down to review of proposals for new and amended regulation and those tasks that are pursuant to this review meaning that the distinction between administrative costs and the impact assessment disappears. The review of administrative costs will thus be wholly included in the assessment of the impact assessment’s quality. The Council, which from the said date will be made permanent, will also become an autonomous and independent decision-making body under the umbrella of the Swedish Agency for Economic and Regional Growth (Tillväxtverket).

During the years 2009-2014 the number of proposals assessed as having an impact assessment that complies with the requirements has been equivalent to 39 per cent. More specifically, during the years 2009–2012, the proportion of impact assessments which were assessed as meeting the requirements was around 40 per cent (39–42 per cent). In 2013, this figure fell to 34 per cent and in 2014 it was 36 per cent. The result has thus not trended in the desired direction when looking at the trend over time. The strong political support at the start of the Council’s mandate is a key reason why the work of the Swedish Better Regulation Council has had an impact in the first years. In recent years, however, it has been noted a lower level of interest in these matters, which in all probability is one of the explanations for why the results have not improved.

Common deficiencies that the Council has noted in impact assessments over the years are the lack of calculations or estimates of costs, and that the calculations or estimates are not fully reported. Alternative solutions are often poorly reported and it is extremely rare that any financial accounting of alternative solutions, if any, has been done. It is also common that the number of affected businesses and industries is not described well enough. Such information is essential to be able to calculate or estimate the economic impacts that a proposal might have on the businesses affected, but also to develop an understanding of how the proposal may impact these businesses in other respects. There are also deficiencies in the description of the proposal’s impact on the competitive situation, and whether there needs to be special consideration for small businesses. When these points are described, there is often a brief comment that the proposal will affect all companies in a similar way, and special consideration cannot be given to small businesses. According to the Council, a more detailed account of how and in what way a proposal impacts companies is valuable – from the regulator’s point of view but also from the point of view of follow-up.

The deficiencies highlighted by the Swedish Better Regulation Council arise from the work on impact assessment which should be seen, in the words of its Chair Karin Lindell, as a “marathon rather than a sprint”. Stamina and thorough preparation are required to assess the impacts of a proposed statute. As the Council has already made clear on a number of occasions, senior management’s commitment is of the utmost importance, as well as sufficient time and resources being allocated to the important work of regulatory impact assessment.

The Swedish Better Regulation Council’s follow-up shows that in almost half of these cases, the regulator changed its impact assessment based on the Council’s comments. Accordingly, this could occur to an even greater extent. Today, the Council does not have a mandate to take enforceable action in respect of the quality of these impact assessments and this influences the perception of its action. Over the years, a number of interview-based surveys have been carried out in order to find out how the Swedish Better Regulation Council is perceived. The Council’s work is perceived as important, but the question of its mandate is an issue that has been raised – the mandate of the Swedish Better Regulation Council is perceived as toothless.

The lack of satisfactory results regarding the quality of impact assessments, despite the Council’s measures and work with the issues, means thacostt more enforceable measures must be instituted to persuade regulators to prioritize work with impact assessments and to assess the impacts of proposed regulation more thoroughly in each individual case. The Council therefore proposes it is assigned a stop function with mandatory resubmission – meaning that proposals that have an impact assessment which is assessed as not complying with the requirements need to be revised and submitted again to the Swedish Better Regulation Council. Only after the Council assesses that the impact assessment meets the requirements should the proposal be able to proceed in the legislative process.

Another recommendation regards the introduction of measurable goals. To date, measurable goals have been confined to administrative costs, which is also the case with the current goals. In order to take as broad an approach to costs as possible, so that even those industries with low administrative costs but nonetheless other higher costs are included, the Council proposes that all costs for businesses be included in new measurable goals and interim objectives.

(Fabrizio Di Mascio)