Business and Regulatory Impact Assessment (BRIA) - Toolkit

Purpose of the Business and Regulatory Impact Assessment process

BRIAs should be used to help officials assess the costs, benefits and risks of any proposed primary or secondary legislation, voluntary regulation, codes of practice, policy changes or guidance that may have an impact on the public, private or third sector or regulators. A BRIA is one tool that forms part of the policy development cycle, and alongside other impact assessments, engagement and consultation, can help Ministers and officials in considering policy options and making decisions.

Officials should complete a BRIA or identify why one is not needed. This is the case even where the additional burdens are not obvious. In such cases it can either help confirm understanding that the impact is minimal or help address unintended impacts which had not been identified initially. The content of a BRIA should be proportionate to the problem involved and the size of the proposal and should take into account our international legal obligations around regulatory transparency and good regulatory practice. A partial BRIA should be published alongside any public consultation to support gathering feedback from those stakeholders affected by the change.

While the broad impact on business is important, the Scottish Government is also concerned about the impact on particular groups or specific sectors which may be affected differently. BRIA helps officials in assessing the impact of the proposed polices on these groups too.

As well as general costs and impacts, the BRIA helps consider other aspects of policy and regulation that will be important both to businesses and from a wider regulatory perspective, for example potential Internal Market/ EU Alignment or International Trade concerns and the impacts on anybody which is required to enforce any measures.

The BRIA is a helpful tool when engaging with external stakeholders. They can provide an opportunity to explain to stakeholders:

• what the issue is, supported by evidence
• why the government is proposing to intervene;
• what businesses are already doing in this space,
• what other policy activities are in place to address the issue
• which options the government is considering, and which one (if any) is preferred;
• how and, to what extent, new policies may impact on them, on business more widely and on Scotland's competitiveness;
• the estimated costs and benefits of proposed measures.

It is easier for stakeholders such as businesses to engage with policy where there is a clear, appropriately detailed BRIA that allows them to understand the proposals and provide feedback, for example on any costs or unintended consequences that officials may have missed or underestimated.

The BRIA should also support consideration of other implementation aspects of the policy/ regulation, such as Legal Aid impacts and contribution towards Fair Work goals. Of particular importance for regulatory options but relevant for all policy is considering whether the proposals are in line with our international legal obligations and how compliance will be promoted or enforced, if relevant. Achieving the aims/ objectives will be dependent on businesses complying with the policy. Where this includes a regulatory requirement, the BRIA should consider how this will be verified and by who, and what enforcement actions or penalties will be used if needed.

Impacts on Small and Mirco Business

It is vital that officials consider the impact on small businesses^[1], which make up most businesses registered in Scotland. Whilst these businesses form an important part of the economy, they are more likely to have limited available resources, in particular time. This can mean it is harder for them to engage with the Scottish Government, respond to public consultations, understand requirements and comply with Scottish Government's policy and regulations. Any additional costs resulting from implementation of a new policy or regulation may also be harder to absorb for small businesses.

Officials therefore need to make sure this is considered when making decisions about policy and who policy should apply to. Officials should ensure they proactively engage with these businesses to help them mitigate any negative impacts and support them as the policy/regulation is implemented. Impacts may not be straightforward – for example changes to turnover may result in small businesses reaching VAT registration thresholds that have wider impact than the direct costs from Scottish Government policy.

Where the regulatory proposals also affect Small and Micro Business overseas (e.g. those exporting to Scotland), you are obliged (under international trade agreements) to include them in your considerations.