BOOK REVIEWS

REGULATORY IMPACT ANALYSIS. BESTPRACTICES IN OECD COUNTRIES PUMA, OECD,Paris, 1997, 291 pp.

In an era of competitive global markets and rapidtechnological change, governments need to improvetheir understanding of the costs and bene®ts ofregulation. Regulatory impact analysis ± the systematicassessment of positive and negative impacts of regulationand alternatives ± has helped many governments toreduce regulatory costs on businesses while maximizingthe e�ectiveness of government action in protectingpublic interests.This is the ®rst report to look at how regulatory impact

analysis is actually designed and carried out across themember states of the OECD. `Best practice' is identi®edin areas such as improving the capacity of governmentto produce high-quality analysis, applying analyticalmethods including bene®t±cost analysis, collecting data,and consulting with the public to ensure that estimatesare realistic.Regulatory impact analysis (RIA) encompasses a

range of methods aimed at systematically assessing thenegative and positive impacts of proposed and existingregulations. The development of RIA is part of a generaltrend in member countries towards `regulatory manage-ment' aimed at improving how governments use theirregulatory powers.Experience in OECD countries shows that, properly

designed and applied, RIA can improve the e�ectivenessand e�ciency of governments and can help addressbroader issues of competitiveness and economic per-formance in innovative and globalizing economies. RIAby itself is not a su�cient basis for decisions; instead,RIA is best used as a guide to improve the quality ofpolitical and administrative decision-making, while alsoserving the important political values of openness,public involvement and accountability.Most OECD countries now use some form of RIA

in regulatory decisions, and OECD countries haveagreed to expand its use. In May 1997, for example,ministers of OECD countries endorsed the recommen-dations in the OECD Report on Regulatory Reform,which include a recommendation that governments`integrate RIA into the development, review, andreform of regulations'.This report describes RIA systems used in a range of

Member countries and their historic development(Chapters 1±5). It compares the elements of thosesystems and their practical implementation (Chapters 6and 7). Based on country experiences, it identi®es currentbest practice in RIA (Chapter 9).

Although signi®cant gains from an RIA programmecan be seen early, achieving the full bene®t of bestpractices requires major cultural change among regula-tors, politicians and interest groups. Full integration ofRIA into decision processes is a long-term task requiringsustained and administrative support.

One of the goals of RIA is to ensure that the bene®tsof government action justify the costs, and that theoption chosen maximizes bene®ts and minimizes costs.This principle, at the core of bene®t±cost analysis (BCA),is already widely accepted in member countries andshould be the central principle of an RIA programme.This does not mean that full-¯edged bene®t±costanalysis is always feasible nor appropriate. While RIAprogrammes should apply the BCA principle to allregulatory decisions, the form of analysis used should bebased on practical judgements about feasibility and cost.

Several analytical approaches other than BCA arecurrently used in member countries. Chapter 8 discussestheir relative merits. A basic conclusion is that all areessentially partial BCAs. Thus all can provide relevantinput to decisions made under the BCA principle.Governments may wish to improve their RIA pro-grammes gradually so as better to support the BCAdecision principle.

A key to good RIA is the quality of the data. Dataproblems are signi®cant and can be costly to resolve. Toreduce data problems, many governments have adoptedanalytical methods that are less data-intensive. Chapter10 discusses strategies for collecting and analysing data.

Adopting best practice in RIA is not a `one-o�' task.Several emerging issues have major implications for theconduct of RIA and will require new responses asunderstanding and abilities improve. Replacement oftraditional command-and-control regulation with more¯exible, `performance-based' regulation poses di�cultissues of cost estimation. The importance of the dynamiccosts of regulation in terms of lost growth, productivity,innovation, trade and investment are increasingly recog-nized. Better tools are needed to understand theseimpacts more fully. Compliance and enforcementstrategies can also be crucial in determining the realimpacts of regulation and must be carefully consideredin RIA.

The cumulative impacts of regulation (`regulatoryin¯ation') may also be greater than the sum of indi-vidual impacts if indirect costs such as falls in investmentand employment due to perceptions of a `hostile'environment take hold. Understanding the magnitudeand impact of `regulatory in¯ation', considered inChapter 11, comprises some of the greatest challengesfor RIA.

PUBLIC ADMINISTRATION AND DEVELOPMENT

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Copyright # 2000 John Wiley & Sons, Ltd.

RIA can be useful in assessing existing as well as newregulation, but the review of existing regulation raisesparticular practical issues. Maximizing RIA's impact onregulatory quality means setting the right priorities forreform. Countries have set priorities that focused onfunctional types of regulation (e.g. regulation restrictingcompetition), regulations identi®ed by expert bodies,and sectors, such as certain industries or professions.An important challenge for RIA is ensuring that the

information generated by the process has maximumimpact on political decision-making. Some pressurescurrently favour the acceptance of RIA insights. Theseinclude competing calls on governments for bothbudgetary stringency and measures to promote competi-

tiveness on one hand, and for new and extended socialand environmental programmes on the other.

However, it is also necessary to take positive action toenhance the e�ectiveness of RIA. Such actions caninclude attempts to inculcate RIA perspectives as part oflong-term processes of cultural change and to buildpolitical commitment through broad principles ofreform and the allocation of speci®c responsibility forreform outcomes.

This book will no doubt be welcome to practitionersas well as students of RIA in a wide range of countries.

PAUL COLLINSCommonwealth Secretariat, London

THE TREASURY IN PUBLIC POLICY-MAKING,Richard A. Chapman Routledge, London, 1997,xiv � 204 pp.

The Treasury remains pre-eminent among British centralgovernment departments. Over the years it has survivednumerous challenges, or apparent challenges, to itssupremacy ± most notably during the 1960s in the shapeof the Department of Economic A�airs and the CivilService Department, and at other times via a successionof attempts to strengthen the grip of No. 10 DowningStreet. In truth ± and for various reasons ± such chal-lenges have been either lacking in sustained momentumor else they have had their central focus elsewhere. TheTreasury coexists with the Cabinet O�ce, togetherconstituting the twin pillars at the heart of the o�cialWhitehall machine, each holding dominion within itsrespective sphere. A strengthening of one need not bringdiminution to the other. The Treasury, like the CabinetO�ce (and for much longer), has had to be accom-modated more often than it has had to accommodate.Exactly how has the Treasury maintained its place as a

chieftain of the `Whitehall village'? According toRichard Chapman, the keynotes are `persuasion,advice and encouragement' rather than the exercise ofpowers. Of course, such apparent informality has ahard underpinning ± most obviously in the Treasury'sstrategic economic and ®nancial management role, towhich successive governments have attached so muchimportance. Rules and procedures shape its relationshipswith the spending departments, including Next Stepsagencies ± the Treasury's role in the creation andmonitoring of these provides the focus for one of thechapters, replete with case studies. The politicalauthority of the Chancellor of the Exchequer (who sitson many of the important cabinet committees) and thequality of its sta� are further factors underpinningthe Treasury's position, as is the rich fund of experienceit has accumulated over the years. Departments know

their own business; the Treasury knows everybody'sbusiness.

Chapman devotes successive chapters to the historicalbackground and to the structure and organization of theTreasury ± two chapters which, together, account forapproximately half of the actual text. The historicalsketch is by no means a routine narrative. Chapmanshows, for example, that the Haldane Report of 1918was not simply shelved and left for academic fodder; onthe contrary, it `set the tone for later thinking on centralgovernment administration in Britain' (p. 32). He do�shis cap to Sir Warren Fisher and Sir Edward (Lord)Bridges (Heads of the Civil Service in 1919±39 and1945±56 respectively) but sees the Plowden Report(1961) as the progenitor for much of the currentemphasis upon management. Re¯ecting the morerecent recognition of Plowden's signi®cance for thechanging culture of British public administration (asdistinct from the report's more immediate impact uponpublic spending procedures) Chapman claims that it`marked the end of the post-war period and thebeginning of a new period of professional management'(p. 162). Yet, without holding Plowden directly respon-sible, Chapman is far from impressed with all aspects ofthe legacy. The new, more business-like, commerciallyorientated philosophy, of which Next Steps and the®xation upon customer±contractor relationships areproducts, has changed the administrative culture ofWhitehall, probably irreversibly. What is missing, Chap-man insists, is the link between such accoutrements ofmodern management and the `ethos of public serviceassociated with accountability through ministers toParliament' (p. 165).

Readers will not ®nd here any extensive analysis of theTreasury's macroeconomic role. For that they must turnto Thain and Wright's monumental The Treasury andWhitehall (1995). Chapman eschews the use of extensivequotes from participants that were a feature of the quasi-ethnography employed by Heclo and Wildavsky in their

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Copyright # 2000 John Wiley & Sons, Ltd. Public Admin. Dev. 20, 277±280 (2000)