Business and Regulatory Impact Assessment (BRIA) - Toolkit

Section 4: Implementation considerations

Enforcement/ Compliance

When considering compliance, you should assess what activity has been undertaken to identify the levels that are needed as a minimum, would be viewed as a reasonable accepted outcome, and would be desired as the best outcome. Given these and available resources, officials should identify what level of compliance/ enforcement activity can be expected

In order for policy proposals to be effectively implemented, there will be a requirement for business and stakeholders to comply with the expectations. Officials should consider how this will be encouraged/ enforced and monitored for each option and set this out in the impact assessment. Compliance and enforcement will vary by policy proposal and approach – for example, regulation is likely to have a higher compliance expectation and include enforcement powers.

Promoting Compliance

Officials should detail how the Scottish Government and its partners will promote compliance with the new policy. This should include plans to share information, set expectations among the public and businesses, and encourage those affected to take any necessary action.

Monitoring Compliance

Key considerations for monitoring compliance/ implementation that should be covered include:

• Responsibility – There must be clarity on who is responsible for monitoring compliance with each option. This should consider the cost and resource implications for those expected to carry out monitoring work, and how it aligns or conflicts with existing workload;
• Existing vs new monitoring mechanisms – Existing monitoring mechanisms may usable where applicable to reduce implementation requirements, though they may need to be adapted. If new monitoring mechanisms are proposed, officials should consider the burden on those who are subject to multiple monitoring activities;
• Compliance against the overall policy objective and delivery success measures – Officials should be clear about what the levels of compliance are needed as a minimum, what would be viewed as a reasonable accepted outcome, and what would be desired as the best outcome. These should be measured against the overall policy objectives;
• Process – How will compliance be monitored, the frequency of monitoring and how it will be reported?;
• Impact on business – What level of resource/ cost will be required by businesses/ stakeholders to demonstrate their compliance? Officials should consider how this applies across sectors/ groups/ types of business and whether some groups (such as small businesses) may be disproportionately impacted by some approaches.

Officials should consider how monitoring and reporting can be aligned with existing mechanisms and activity. This may help reduce the burdens on businesses and regulators, and make it easier for businesses to comply with the requirements.

Enforcement and Sanctions

In some cases where legislation has put in place requirements, it will be appropriate to put in place enforcement mechanisms beyond monitoring of compliance. These should set out the responsibilities, powers, and process for those who are expected to take enforcement action.

When considering enforcement options, officials must engage fully with local authorities and COSLA, relevant existing regulators (and their sponsor teams) and the Public Service Reform Directorate as relevant.

Regulators in Scotland are supported by the Strategic Regulators Code of Practice and expected to act in line with the '4 Es approach' – they should engage, explain, encourage, and enforce only when necessary.

In all cases, officials must engage with those who may carry enforcement responsibilities/ act as regulators as early as possible to allow the plans and expectations to be clearly agreed. Key considerations will be the same as monitoring compliance, with some additional requirements:

• Responsibility – who will have specific responsibility for taking enforcement actions/ pursuing them as necessary?
• Powers – what powers will the regulator have to support its enforcement work. Officials should consider what powers are necessary to deliver the desired outcome while also considering the rights of business/ individuals who are subject to those powers?
• Resources – what resources are required to deliver enforcement responsibilities? Where regulators have other activities and work, officials should agree (with relevant SG colleagues as required) the relevant priorities for regulators and what levels of enforcement activity can be reasonably expected.
• Sanctions/ penalties – what will the sanctions/ penalties be on those who are determined to be non-compliant with the requirements? These may range as appropriate for the legislation. They may include facing improvement instructions, directions to close or Fixed Penalty Notices. Officials must make sure that all penalties are proportionate and in line with wider expectations. Legal colleagues should be consulted on these options as part of developing legislation, and officials should consider what other stakeholders need to be involved to implement (for example the Scottish Courts and Tribunal Service)

Exemptions

Officials should consider whether there is scope for exemptions to requirements and enforcement actions for certain groups where there is an undue impact, and it does not conflict with the overall policy objective. In particular, this may be relevant for small and micro businesses. Possible exemptions and implementation considerations that may be considered for such businesses include:

• Full exemptions – certain defined businesses not subject to requirements
• Partial exemptions – certain defined businesses not subject to some of the requirements or subject to different warnings/ sanctions
• Opt-in/ voluntary compliance – certain business allowed to opt in to regulatory regimes rather than automatically expected to comply
• Extended transition periods – certain defined businesses allowed a longer period before compliance is required
• Temporary exemptions - Exempt defined businesses for a period of time where immediate compliance would harm their business (e.g. where a product needs to be redesigned)
• Different requirements by size – less onerous requirements, less frequent inspections, registration rather than licensing
• Financial Aid – Support for small businesses to meet compliance costs

UK, EU, and International Regulatory Alignment and Obligations

The Scottish economy is interconnected with the rest of the UK, Europe, and the world. Scottish Government officials must therefore consider impacts beyond domestic business implications.

The context within which Scottish Government policy is developed changed on 31 December 2020 when the UK left the EU single market. This section of the BRIA requires policy makers to consider the impact of the proposals on, and within this changed context. It specifically requires consideration of three distinct, but related regulatory factors related to leaving the EU: intra-UK trade, international trade, and the Scottish Government's EU alignment policy. Relevant policy teams lead on these specific subjects and will be able to provide further advice.

Leaving the EU means that regulatory features that were relevant when part of the EU single market fell away upon exit, and the UK now has a new regulatory landscape. In addition, the Scottish Government has a commitment to maintain alignment with the European Union where this is possible and within Scotland's interest. This requires policy makers to understand and engage with this new context and its potentially complex interactions with devolved policy and devolved policy impacts.

Internal Market/ Intra-UK Trade

The UK's exit from the EU single market on 31 December 2020, created a new regulatory landscape within which devolved policy operates. For internal ('intra') UK trade, two significant regulatory features were introduced:

• the United Kingdom Internal Market Act 2020; and
• Common Frameworks

The United Kingdom Internal Market Act 2020

The United Kingdom Internal Market Act 2020 came into force when the UK left the EU single market on 31 December 2020.

Consent was sought from the devolved legislatures to the legislation and no devolved legislature gave consent. The Scottish Parliament and the Senedd Cymru voted to withhold consent. The Scottish Government lodged a legislative consent memorandum (available on the National Records website) advising against giving consent, in which it stated that the Act,

"…undermines both the devolution settlement and agreed processes that are already established to agree common frameworks and ways of working across the UK following EU exit."

The United Kingdom Internal Market Act 2020 contains provisions as follows:

• Part 1 introduces new market access principles of mutual recognition and non-discrimination for goods;
• Part 2 provides for market access for services (mutual recognition of authorisation requirements and non-discrimination of service providers);
• Part 3 introduces a new system for the mutual recognition of professional qualifications;
• Part 4 provides for the creation of a new reporting, advising and monitoring function for the Competition and Markets Authority (CMA) by creating the Office for the Internal Market (OIM) within the body;
• Part 5 contains provisions relating to the Northern Ireland Protocol;
• Part 6 gives UK Ministers powers to spend directly in devolved policy areas;
• Part 7 reserves subsidy control; and
• Part 8 adds the Act to the list of protected enactments in Schedule 4 of the Scotland Act 1998.

Parts 1-2 of the Act should be considered in particular when developing policy that has potential market impact.

Part 1: Goods

The mutual recognition principle means that goods which have been produced, or imported into one part of the UK and which meet regulatory requirements in that part of the UK, may be sold in any other part of the UK, free from any relevant requirements that would otherwise apply to their sale in that other part.

The non-discrimination principle prohibits direct or indirect discrimination based on treating local and incoming goods differently.

These rules are subject to certain exclusions set out in the Act.

Where proposals introduce or change legislation that relates to the sale of goods, you should take appropriate advice and consider:

• whether the proposals will result in policy divergence between UK nations, and the nature and potential impacts of divergence;
• whether the market access principles of the Act are relevant and in what way they interact with the proposals, particularly in terms of policy effect, including whether there is an exclusion for the policy area within the Act; and
• whether there is a relevant Common Framework.

Part 2: Services

Service providers who are authorised to perform a service in one part of the UK may not need a separate authorisation to perform that service in another part. The non-discrimination provisions of this Part prevent direct and indirect discrimination against service providers located in another part of the UK.

These rules are subject to a number of exclusions set out in the Act.

Where the proposals relate to the provision of services, for example, an authorisation requirement for the provision of services, you should consider:

• whether the proposals will result in regulatory divergence between UK nations, and the nature and impacts of any divergence; and
• whether the mutual recognition and non-discrimination principles are relevant and in what way they interact with the proposals, particularly in terms of policy effect, including whether there is an exclusion for the policy area within the Act.

Part 3: Professional Qualifications

Part 3 provides for a system for the mutual recognition of certain professional qualifications that are regulated in law across the UK. It introduces an "automatic recognition" principle for a professional qualified in one part of the UK to be treated automatically as qualified in respect of that profession in another part of the UK, as well as setting out the situations where the automatic recognition principle does not apply.

Where proposals relate to regulation of professional qualifications you should consider:

• whether the proposals will result in regulatory divergence between UK nations, and the nature and impacts of any divergence; and
• whether the provisions of the Act are relevant and in what way they interact with the proposals, particularly in terms of policy effect, including whether there is an exclusion for the professional qualifications within the Act.

Common Frameworks

When considering intra-UK impacts and proposals, you should also establish whether the policy area is covered by one or more Common Framework(s).

The Common Frameworks programme was agreed by the four governments of the UK in 2017 to establish common approaches in some areas that were governed by EU law, and that are within areas of devolved competence. More information relating to the basis on which the programme was established and the principles underpinning Frameworks can be found in the Joint Ministerial Committee (EU Negotiations) Communique of October 2017. Common Frameworks are the Scottish Government's preferred means of managing post EU policy divergence across the UK, on the basis of progress by agreement and respect for devolution.

In 2021, a process was developed by the governments of the UK to consider exclusions to the UK Internal Market Act (2020) for agreements reached in Common Framework areas. The process is available on the gov.uk website.

Where policy areas are covered by an existing Common Framework you should consider:

• as above for intra-UK trade impacts; and
• relevant impacts of agreements reached within Common Frameworks relating to managing policy divergence and any exclusions required to be agreed within a Common Framework, as per the agreed process linked to above.

Contact

For further guidance on Common Frameworks, contact the team in the Constitution and Cabinet Directorate (IMAFrameworksTeam@gov.scot).

Assessment

In all cases you should record and evidence the intra-UK regulatory impacts and interactions.

International Trade Implications

The Scotland Act and Scottish Ministerial Code convey an overarching duty on Scottish Ministers to comply with international law and treaty obligations. Following departure from the EU, the UK is responsible in its own right for remaining compliant with international obligations, including with respect to the World Trade Organization (WTO), and Free Trade Agreements. This obligation extends to devolved matters, meaning that new policy and regulations introduced by Scottish Ministers are potentially subject to legal challenge if they do not comply.

The purpose of these questions is to ensure that:

• policy makers are giving due consideration to the impacts that regulatory policy could have on international trade into, and out of, Scotland, and
• policy teams have factored the potential notification responsibilities that may arise from this into their timelines for policy development and legislation

Policy teams are responsible for ensuring their policy complies with WTO law and other international obligations, such as those within free trade agreements. Officials should seek SGLD advice where necessary. In some cases there will be a requirement to notify WTO members ahead of any regulatory changes.

International Obligations

The WTO is the international body which establishes and manages the rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible. This is achieved through its overarching principles of non-discrimination between member states and transparency.

In order that the international trading environment remains stable and predictable, members are required to notify measures relevant to particular WTO Agreements. These include, but are not limited to, the following:

• The Technical Barriers to Trade (TBT) Agreement requires WTO members to notify in advance changes to technical regulations, standards and procedures for assessing standards conformity.
• The Agreement on the Application of Sanitary and Phytosanitary Measures (SPS) concerns the application of food safety and animal and plant health regulations. It requires members to notify measures taken to ensure food is safe for consumers, and to prevent the spread of pests or diseases among animals and plants.
• Agreement on Subsidies and Countervailing Measures (SCM) addresses the use of subsidies by governments that may have an impact on trade.
• The Government Procurement Agreement (GPA) sets out the framework for government procurement of goods and services between WTO members, ensuring that suppliers of goods and services from other member states are treated no less favourably in securing government procurement than domestic suppliers.

There are other WTO Agreements which could have implications for Scotland's policy making, for example in agriculture, fisheries and services trade.

Each agreement contains specific requirements for notifying other WTO members of policy and regulatory changes, and criteria for determining whether a measure is notifiable. The reference or otherwise to international standards is a material factor. The requirement to notify can have a significant impact on legislative timetabling.

As the UK's independent trade policy evolves international obligations may change over time. Compliance with WTO obligations can also help to meet similar obligations under Good Regulatory Practice and Regulatory Cooperation (GRPRC), Technical Barriers to Trade (TBT) and Sanitary and PhytoSanitary (SPS) Chapters of Free Trade Agreements, such as the UK-EU Trade and Cooperation Agreement (TCA).

Impact on International Trade

Relevant changes to regulation that could affect trade and investment include:

• the ability of Scottish businesses to trade or provide services overseas, or
• the ability of overseas businesses to export to the Scotland or provide services to Scotland
• foreign investors/companies operating in Scotland being impacted differently from UK-owned companies/investors
• the assets of foreign investors/companies being removed from them or substantially taken out of their control.

The ability of businesses to trade within Scotland should be captured within the impact assessment. However, the ability of overseas businesses to export to Scotland is also an aspect that policy makers will need to consider.

When answering this question, policy makers should consider the following considerations for assessing impacts on international trade:

• Does this measure have the potential to affect imports or exports of a specific good or service, or groups of goods or services?
• Does this measure have the potential to affect trade flows with one or more countries?
• Does it place particular technical requirements upon (imported) goods?
• Does this measure include different requirements for domestic and foreign businesses?
• o i.e. are imported and locally produced goods/services treated differently and not on a level playing field?
• o i.e. are any particular countries disadvantaged compared to others?

Where you answer yes to any of the above questions, please provide a description and assessment of the rationale, and contact WTO Compliance Enquiries (wto@gov.scot) and SGLD to discuss potential notification responsibilities.

International Standards

Some WTO Agreements and FTAs encourage members to 'base' regulatory measures on relevant international standards, where they exist.

If a relevant international standard (or parts thereof) would support compliance with a measure that achieves a legitimate policy objective, policy makers are encouraged to consider using relevant international standards as a basis for the measure.

Please contact WTO Compliance Enquiries (wto@gov.scot) within the Directorate for International Trade and Investment (DITI) for further advice to complete the assessment, for advice on potential notification responsibilities under WTO agreements and for further guidance on identifying international standards.

EU Alignment consideration

In this section you should consider if the measure is likely to impact on the Scottish Government's policy to maintain alignment with the EU.

Scotland's commitment to remain close to the EU means Scotland will continue to align with the EU where appropriate, and in a manner that contributes towards protecting and advancing standards across a range of policy areas.

Assessment

Your considerations should include:

• the Scottish Government's commitment to maintain and advance the high standards that Scotland shares with the EU;
• access to EU markets for people, goods, and services; and
• any potential implications for EU alignment associated with the United Kingdom Internal Market Act 2020 or Common Framework agreements.

Implementation

You will also wish to consider how the policy in question will be implemented. The assumption is that a decision to align will be given effect via existing powers or primary legislation, however there may be times where such methods will not allow the Scottish Government to align or may not be the most effective or efficient method of doing so. Business and Regulatory Impact Assessment: Toolkit 17 of 33

In such cases, section 1(1) of the UK Withdrawal from the European Union (Continuity) (Scotland) Act 2021 provides a regulation making power to maintain Scottish Ministers' ability to keep devolved Scots law aligned with EU law as it develops and where that is in Scotland's best interest.

The Continuity Act policy statement approved by Parliament on 8 June 2022, sets out the factors that Ministers must consider in making decisions in relation to EU alignment.

Contact

For further advice on alignment please contact the Directorate for External Affairs (EUAlignmentmailbox@gov.scot).

More information on assimilated law is available on the gov.scot website - Assimilated law (Retained EU law) - Europe - gov.scot (www.gov.scot)

Legal Aid

When drafting this section of the BRIA you should consider whether your proposed policy could give rise to increased use of legal processes or create new rights or responsibilities, what implications it may have on fulfilling individuals' right to access to justice through availability of legal aid and any possible expenditure from the legal aid fund.

If your policy will create a new procedure or right of appeal to a court or tribunal, any change in such a procedure or right of appeal, or any change of policy or practice which may lead people to consult a solicitor then it is likely that it will have an impact on the legal aid fund.

You should also consider whether the policy will result in additional people seeking legal assistance or being taken through the courts.

If you identify an impact or are unsure whether your proposed policy will impact the legal aid fund, please contact the Access to Justice team through the BRIA inbox: legalaidtrawl@gov.scot, attaching a copy of your draft BRIA.

You should allow ten working days for an initial response, and you should note that your information may be shared with the Scottish Legal Aid Board (SLAB). If your policy is sensitive and cannot be shared with SLAB or can only be shared in part you should state this clearly in your email.

Digital Impact

Officials should address key challenges around thinking and gathering evidence about the impact of technology on specific industries, firm types, and businesses of varied sizes.

Digital technologies are a central part of everyday life now. Consumers and customers expect easy, digital services. The explosion of smartphone use, online services, and transactions both private (like banking) or public (like road tax) and innovative new markets and platforms like Uber and Amazon have changed the way in which people live, work, and operate. If the Scottish Government does not consider digital / technological advances and their effect on or fit with policies and regulations, then there is a risk of changes being made which quickly become unfit for purpose, and which may require revisiting and amending later and at cost.

Changes to policy, regulation or legislation can often have unintended consequences, should government fail to consider advances in technology and the impact this may have on future delivery. Digital Impacts may include:

• The proposed change is to be delivered in an 'analogue' way, for example it may be a check that requires physical forms filled in by hand and posted. Services and interactions are increasingly moving online. The impact of the change could mean that it would need to be revisited, at cost, at a later stage when services move online.
• The proposed change is to be delivered in an only digital way i.e. via a website – an online transaction – this would have an impact on those without access or capability to get online and may have a cost for both Government and the business or individual to support them to a stage where they can get online.
• Where a change only applies in Scotland or according to Scots law, the assessment must consider online transactions that may originate from outside of Scotland – how would the change be enforced?
• Where a change includes age restrictions – consideration would need to be considered around enforcement, roles, and responsibilities in an online transaction process. This list is not exhaustive however it gives an understanding of digital issues to consider

The digital impact test requires officials to consider whether the changes being made can still be applied effectively should business/government processes changes – such as services moving online.

Officials should set out the consideration given to ensuring that proposals are consistent with the increasing shift of economic, social, and governmental interactions online. For example:

• Does the measure take account of changing digital technologies and markets?
• Will the measure be applicable in a digital/online context?
• Is there a possibility the measures could be circumvented by digital / online transactions?
• Alternatively, will the measure only be applicable in a digital context and therefore may have an adverse impact on traditional or offline businesses?
• If the measure can be applied in an offline and online environment will this have any adverse impact on incumbent operators?

Business Forms

All new forms introduced because of Scottish Government legislation must also be test run as early as possible with appropriate businesses, business organisations and stakeholders to ensure they are clear, simple, and easy to complete. It can be useful to get business/business organisations to help in the development process; however, there is a firm commitment to consult an appropriate sample of 6-12 business likely to be affected by any proposal and they should be engaged on any new forms.

In completing this section of the impact assessment template, officials must provide details of any new forms being introduced and explain how they were developed, what input stakeholders had in their development and the results of the test run.