6. Debate on the Finance Committee report: Inquiry into the financial estimates accompanying legislation

Part of the debate – in the Senedd at 4:30 pm on 24 January 2018.

Alert me about debates like this

Photo of Mark Drakeford Mark Drakeford Labour 4:30, 24 January 2018

As most Members who've taken part in the debate, Dirprwy Lywydd, have said, this is a relatively technical and specialist area, but genuinely important in making sure that we are able to provide the information that is necessary to allow Members of the National Assembly and those who take an interest in particular pieces of legislation to be able to understand the implications of the legislation that comes before this Chamber. 

The intention when developing a regulatory impact assessment is always to present as full and as detailed an assessment as is possible, given the available evidence. This includes consideration of the costs and benefits associated with cultural change and with the aspirations of legislation, although as was acknowledged during evidence sessions, it is not always necessarily straightforward to quantify those costs and benefits. In the future, we will seek a proper balance between the need to present a monetised assessment of costs and the risks of presenting incorrect or misleading figures.  

While the financial assessment will consider the impact on all groups, I want to reassure Assembly Members and the point raised by Mike Hedges that particular attention is paid to the potential impact of legislation on private businesses in Wales, and whether the proposals have a detrimental impact, potentially, on the competitiveness of Welsh firms. 

Now, the Welsh Government believes that the Treasury Green Book and Standing Order requirements provide a suitable framework for preparing RIAs. Here in Wales, however, we also deploy the Well-being of Future Generations (Wales) Act 2015 in developing the policies we pursue and the policy options we consider. As a result, and as Simon Thomas noted, a project is under way within Welsh Government to develop an integrated approach to impact assessments, using the framework provided by the well-being of future generations Act. The purpose of that is not to reduce important assessments, but to try to make sure that the sum of them is more than just the component parts. While RIAs are not within the scope of that project, they will be informed by the results of the integrated impact assessment. 

Dirprwy Lywydd, at the end of the fourth Assembly and in response to the publication of the 'Making Laws in Wales' report and the previous Finance Committee's legacy inquiry, the Welsh Government committed to review the development and presentation of the financial impact, and there is a significant overlap between the committee's recommendations and the work undertaken and in progress within Welsh Government to strengthen RIAs as a result of those previous pieces of work. The latest version of the legislation handbook on Assembly Bills, which was published in August of last year, includes a chapter setting out revised guidance on developing a regulatory impact assessment. It includes a number of changes aimed at improving the clarity and accessibility of RIAs.

The Welsh Government economists have developed a standard summary table to be included at the start of each RIA, as Nick Ramsay suggested. That summary table, which has been used in the explanatory memorandum for each Bill introduced during the fifth Assembly, has been designed to present clearly all of the information required in Standing Orders. And in a point that Mike Hedges raised, the guidance has been revised in response to concerns that the presentation of monetised benefits alongside cash costs could be misleading. 

Finally, the guidance has been strengthened to make it clear that the RIA for a Bill should, as far as practicable, include a best estimate of the costs of any associated subordinate legislation. I was grateful to hear members of the Finance Committee, including its Chair, noting the evidence from stakeholders, reflected in the committee's own report, in acknowledging that as a result of that earlier work, presentation of RIAs has improved during the fifth Assembly. 

Dirprwy Lywydd, I'm not going to be able to deal with all the recommendations in the Finance Committee's report either. I want to draw attention to a small number, if I could, dealing first of all with the issue of stakeholder engagement, which a number of Members have highlighted. The evidence given by stakeholders to the inquiry was clear that in the past there had not always been sufficient stakeholder engagement when developing an RIA, and where there had been engagement it had often come late in the process.

The Welsh Government recognises that stakeholder engagement is essential and the revised guidance sets out a more clearly defined, staged approach to the development of an RIA, one part of which is the inclusion of a draft RIA as part of the consultation exercise. And that is intended to respond to points that both Simon Thomas and Nick Ramsay have made this afternoon in providing an opportunity for stakeholders to engage in the process and to provide additional or alternative information before we get to that final analytical point. Linking the publication of a draft RIA to the consultation process is intended to ensure engagement takes place at the early stage of the policy-making process. The publication of a draft RIA is expected to become the norm in the future.

I turn to the issue of financial implications, and this is another issue that the report focuses upon in the inclusion of financial implications in the post-implementation review of legislation. I set out in the Government's response that the legislation handbook on Assembly Bills has been revised and now includes financial considerations as one of the issues to be considered in any post-implementation period. The shared view on how the financial estimates accompanying legislation can be strengthened and improved is reflected in our response to the committee's recommendations. I simply repeat what I said in that document that the one recommendation we felt unable to accept is the recommendation that RIAs be extended to consider how any costs identified in the analysis will be funded and by whom, and that's because the RIA is a value-for-money assessment and to consider how any cost will be funded goes beyond the purpose and design of that assessment. It's not to say that matters of funding and affordability are unimportant—far from it—it is simply that funding and affordability are considered during different parts of the development of legislation and are included as part of any financial resolution. 

Dirprwy Lywydd, I wanted to end by providing—