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Impact assessment – GOV.UK

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This publication is available at https://www.gov.uk/government/consultations/amendments-to-the-poisons-act-1972/impact-assessment
IA number: HO0380
RPC reference number: N/A
Date: 22 September 2021
Stage: Consultation
Intervention: Domestic
Measure: Secondary Legislation
Enquiries: precursorsandpoisons@homeoffice.gov.uk
RPC Opinion: N/A
Business Impact Target: N/A
In light of terrorist attacks in the UK and Europe using explosives, such as the 2017 attack in Manchester, the UK is seeking to strengthen and clarify the Poisons Act 1972 that controls sales of chemicals that can be used in the illicit manufacture of explosives or to cause harm.
The proposed amendments aim to reduce the likelihood of further successful terrorist attacks in the UK by imposing new restrictions and safeguards relating to the purchase of explosives precursors and poisons. Government intervention is necessary to prevent and detect terrorist acquisition of explosives to increase the security of the UK public.
Protecting Homeland Security and keeping our citizens safe.
Prevent terrorists using explosives in attacks, without disproportionately restricting the public’s legitimate accessibility to these substances. Provide a mechanism to alert authorities to terrorist activity. Minimise the burdens on industry and legitimate users.
Do nothing – do not implement the amendments.
Partial implementation of the measures as described (see Options section). This option is intended to strike a balance between security, prosperity and freedom of choice.
Full implementation of the measures laid out with greater restriction on the substances and concentrations available to member of the public and how they purchase them.
As most of the costs are likely to fall on business, the main sensitivity is around the volumes of businesses and marginal time increase taken to complete tasks. Estimates for the number of businesses affected have been currently informed by expert opinion. Post-consultation, further information and sensitivity analysis will test the robustness and consistency of the estimates. There is a risk that businesses may not comply with the regulations, and that the threat of misuse of these chemicals may not be reduced, or the threat is displaced elsewhere.
It will be reviewed.
Signed by the responsible Minister: Date: September 2021
Businesses incur costs from raising awareness and training staff regarding the regulatory changes, estimated in a total range of £0.0 to £0.5 million (PV), with a central estimate of £0.3 million (PV) as well as meeting reporting obligations, estimated in a total range of £5.5 to £25.0 million (PV), with a central estimate of £15.2 million (PV)
Potential public sector costs apply in ensuring that internet sales are compliant and maintaining reporting systems to verify professional status. There may also be small costs surrounding the monitoring and compliance enforcement of the act.
There are no monetised benefits for this option.
Regulation of public use for these high-risk chemicals reduces the risk of misuse of these chemicals. Monitoring their use increases the likelihood of police interception of attempted attacks. The increased attention may lead to a level of deterrence among potential offenders, with the benefit of reducing the likelihood or impact of a potential terrorist attack.
At present there is only one monetised cost for this option. Businesses incur costs from raising awareness and training staff in the regulatory changes.
All other costs fall under the non-monetised section at present due to the lack of data surrounding the marginal time increase businesses will face, and proportion of businesses affected.
Businesses would incur the costs outlined in Option 2 as well as in the provision of information to prospective buyers, business checking and verifying/labelling affected products.
There may be additional public sector costs with Option 2 to the Criminal Justice System due to the transfer of Ammonium Nitrate controls. Home users may be affected by the cost of licences.
There are no monetised benefits for this option.
The increased regulation of Option 3 should lead to more efficient monitoring of the purchase and use of the goods on the substance list, thus increasing the likelihood of police interception of attempted attacks. This should reduce the risk or impact of a potential terrorist attack further than Option 2.
Score for Business Impact Target (qualifying provisions only) £m: 22
This consultation and potential amendments fit with the Home Office strategic objective of protecting homeland security. By gathering further information on potential amendments to the Poisons Act, it will be possible to ensure that proportionate and necessary action is taken to safeguard against illegitimate use of poisons and explosives precursors and keep citizens safe.
The Poisons Act 1972 was amended via the Deregulation Act 2015 to introduce a cohesive system for controlling the marketing and use of chemicals which can be used in the illicit manufacture of homemade explosives or to cause harm (poisons). The current legislation bans the sale, import, possession and use by the general public of eight explosives precursors (Part 1 of Schedule 1A to the Act) above specified concentrations and 15 poisons (Part 2 of Schedule 1A to the Act) unless they are in possession of a valid Poisons and Explosives Precursors licence.
Retailers and wholesalers are responsible for adhering to the licensing regime. They are also responsible for labelling restricted products. Retailers must also monitor transactions of all the substances listed in Schedule 1A to the Poisons Act 1972 for suspicious activity.
This impact assessment (IA) considers recommended amendments for the Poisons Act 1972 that seek to strengthen and clarify controls of the sales of chemicals that can be used in the illicit manufacture of homemade explosives and to cause harm.
The following groups affected will be affected by both Options 2 and 3, but to varying degrees dependant on the option and relevant measures.
Home users will be affected. There are legitimate household or hobby uses for some of the substances affected by the policy amendments. Depending on the option, consumers will need to either apply for a licence or find an alternative product and demonstrate a legitimate purpose when buying the controlled compounds.
Public retailers refers to companies selling chemicals for household or hobby use, including those selling online. This would typically include pharmacies, home improvement stores, garden centres, stores selling pool and spa supplies and pest control supply companies. Depending on the option, public retailers will need to check licences, identify and report suspicions or cease trading certain products.
Online market places will be required to have in place appropriate, proportionate procedures to comply with the same measures as public retailers, adapted to their specific environment.
Business users will be affected by the need to demonstrate an ongoing business use for the chemicals at point of purchase.
Producers, manufacturers, transporters and wholesalers in the UK are expected to be affected by the need to label products within scope of the legislation, the need to report suspicious transactions, thefts and significant losses and by changes in demand for their products. They may also be required to re-train staff given the changes to restricted substances.
The general public may be expected to be safer because of the reduced chance of misuse of dangerous chemicals.
The Home Office and enforcement authorities will administer the licensing scheme and reporting hotline, ensure legal compliance and take action against retailers found to be supplying poisons in breach of the regulation. There may also be a downstream impact on the Criminal Justice System (CJS) and the Ministry of Justice (MoJ) due to any increase in prosecutions for breaches of the regulations.
Implementation of explosives precursor and poison controls forms part of the Chemical, Biological, Radiological and Explosive (CBRE) Protect strategy, which aims to prevent and detect the acquisition of dangerous materials or the construction of explosives. This is done through a variety of policy tools: research to understand the availability of substances, legislation, support to industry self-regulatory regimes (encouraging industry to secure or remove products of potential harm), awareness raising and voluntary measures.
The Poisons Act 1972 sets out a framework for mandatory suspicious transaction reporting and licensing restrictions on members of the public to acquire, use and possess niche and more dangerous explosives precursors and poisons.
Proposed amendments seek to address key legislative priorities for controlling explosives precursors identified following the Manchester Arena and Parsons Green explosive attacks. This includes new obligations on online marketplaces and strengthening checks on professional users to prevent substances of concern being used for illegitimate purposes.
The policy objectives of the proposed amendments are to:
There are three options for the UK Government in relation to the proposed amendments to the Poisons Act 1972:
Source: Home Office, 2021.  
Source: Home Office, 2021.
While efforts have been made to understand the costs and benefits to all affected groups, it is necessary to make assumptions to produce some cost estimates and ranges. Currently, the majority of the costs are provided only to give a sense of scale, and rely on the current best assumptions rather than robust evidence. The consultation will allow the Government to gather the data required to complete a full appraisal for the final IA
The current assumptions are as follows:
Estimates of the number of retailers of some substances which would be affected by measures in the IA has been produced by researching the uses of chemicals that will be impacted under these measures and matching them to relevant SIC codes. This builds on the previous research completed in the 2018 IA [footnote 5], that can be seen in Annex B (Table B.1) for reference.
Table 2 presents business type using SIC codes (see Annex B for full detail) to produce the estimated number of businesses affected. Due to the level of uncertainty in estimating the number of businesses affected, the analysis presents a range, using the same 1 per cent and 10 per cent methodology as the previous 2018 IA [footnote 6] (Table B.1) which used expert opinion. These have been used to estimate the potential number of businesses and number of employees affected by the measures outlined.
Source: ONS Business Activity and Size. Note: Figures have been rounded so may not add up precisely to the totals presented.
To produce an estimate for the number of employees affected, the median of bracket bands were used from the same data source and multiplied by the estimated number of businesses affected. In the case of businesses with more than 250 employees an assumption of 500 employees was made, though this is only applicable to a small number of businesses.
Source: ONS Business Activity and Size. Note: Figures have been rounded so may not add up precisely to the totals presented.
A licence holder is a member of the public who has been granted access, by the Home Office, to purchase and use Explosives Precursors and Poisons that are currently regulated in the Poisons Act (see Table 4).
As of June 2020, there were 180 active and valid Explosives Precursors and Poisons (EPP) Licences. Of these 180 licences, 178 will be affected by changes to the limits in availability of regulated substances set out in Annex A.
One licence holder may have access to multiple regulated explosive precursors – hence why the total number of licence holders below for precursors (261) is greater than the number of people with a licence (178).
Source: Home Office, 2020. Note: The numbers in Table 4 indicate licence holders with multiple precursor acquisition ability but the total number of licence holders is 178. The spelling of the EPPs referred to above is taken from the International Union of Pure and Applied Chemistry (IUPAC) nomenculature. The data has since been updated but this has not been reflected in the analysis.
The consultation will provide information and data that will allow for more accurate estimates of the volumes, impacts on businesses and licence holders affected to be made. A more detailed appraisal will then be completed.
Set-up Costs (Private and Public)
Costs to Business
Producers, transporters, wholesalers and retailers of reportable substances will need to understand and inform their staff of the new obligations outlined under Option 2 that affect their business.
Producers and transporters that already deal in reportable substances are expected to have already received training on suspicious transactions and significant loss reporting. As such there is no expected increase in costs to these groups.
For retailers and wholesalers who currently sell reportable substances, it is assumed that training will be required for all members of staff in each store in year 1 of the appraisal period. This training is required to inform staff of their new obligations and is in addition to regular annual training already undertaken. It is expected that the costs will be negligible from year 2 onwards as the requirements of the new obligation become part of the annual training already undertaken.
There are an estimated 6,415 total retailers and wholesalers of regulated substances in the UK and estimated 43,775 employees (from Tables 2 and 3). The estimated average hourly wage of an employee is £9.50, which uplifted by 22 per cent to reflect non-wage costs, leaving a gross hourly cost of an employee of £11.56 [footnote 9]. The 22 per cent uplift is calculated by dividing the non-wage costs (18%) by the remaining wage costs (82%), i.e. what must 0.82 be multiplied by to reach 1 (1.22). The awareness raising and training is expected to take 30 minutes. The calculation is: staff volume x time x gross hourly wage.
The estimate of familiarisation and training lies in a range of £0.0 to £0.5 million, with a central estimate of £0.3 million (2019/20 prices), in year 1 only.
This will be confirmed through consultation and updated in the final IA.
Under Measure 1, producers, wholesalers and retailers will be required to pass on information regarding the reportable substances present in their products and their concentration.
Manufacturer and formulators at the beginning of the supply chain are expected to be aware of the reportable substances present in their products and are currently required to work with the supply chain to ensure products are appropriately labelled. Based on information from a previous consultation and an industry association, it has been suggested that as long as they are made aware of the requirement in advance of the regulation coming into force, the cost of providing this information should be negligible.
It is expected that the cost of transferring this information to subsequent actors in the supply chain will also be negligible.
Under Measure 4, Online Market Places will be required to inform sellers on their platform of their obligations to adhere to regulations regarding reportable substances. To estimate this cost, information is needed on the proportion of businesses operating online and how much time/cost increases they may see as a result of these amendments. This is currently unknown and the consultation will be used to obtain the necessary information to strengthen the evidence base and estimate the cost in the final IA.
Total set-up costs are estimated in a range of £0.0 to £0.5 million, with a central estimate of £0.3 million (2019/20 prices), in year 1 only.
Under Measure 3, producers, transporters, wholesalers and retailers of reportable substances will be required to report suspicious transactions and significant losses within 24 hours of them occurring.
Currently (as of Q2 2020/21) it takes economic actors an average of eight days to complete a SAR. By moving to a 24-hour reporting obligation, there will be an increase in the time taken per week spent on this task. as the number of reports completed will increase due to the requirement to report within 24 hours rather than in the batches currently.
The following cost ranges are used to give a sense of scale and are based on the best estimates of volumes of businesses and best judgement of the time taken. Through the consultation the evidence base will be strengthened, and the time taken and any additional costs to meet the reporting obligation will be better informed.
There are an estimated 6,415 total retailers and wholesalers of regulated substances in the UK. The estimated gross average hourly cost of an employee’s time is £11.56 [footnote 10] (See E.1 for wage and non-wage uplift costs). There is expected to be a marginal increase in the amount of time spent on this task per week of between 10 and 45 minutes. Therefore, the cost is estimated to be between £0.6 million and £2.9 million per year, with a central estimate of £1.8 million per year.
The estimated present value (PV) cost is between £5.5 and £25.0 million, with a central estimate of £15.2 million (PV) over the 10-year appraisal period. For reference, this equates to approximately £1,000 to £4,000 per business, and average PV of £100 to £400 per business per year. Currently, this range also assumes that over time there will be no increase in efficiency of those completing the task. It also assumes that all retailers report SARs. In reality, it is likely that some will report through a head office if they are a large organisation, which will reduce time spent on the task per site. Therefore, this cost may be an over-estimate.
Under Measure 2, producers, wholesalers and retailers of reportable substances will be required to verify professional user status and report suspicious activity associated with such users.
Under existing legislation producers, wholesalers and retailers of reportable substances are required to check that a business is a legitimate business. Measure 2 will require that this process is formalised with the recording of relevant data. It is expected that producers, wholesalers, and retailers will already record this data as part of the existing transaction process. Therefore, the cost is expected to be negligible, but through consultation the evidence base will strengthen, and this will be confirmed for the final IA.
The expectation is that the substantial majority of businesses and the general public will comply with the regulations from the outset. However, if a business or a member of the general public is found to be non-compliant, action will be taken which could result in criminal prosecution.
If information is received about non-compliance, enforcement officers will be tasked to conduct a test purchase and take action as appropriate. A small percentage of randomly selected retailers and businesses in each area will also be subject to routine test purchasing. Guidance has been prepared to assist enforcers in how to conduct the test purchases to ensure they are conducted ethically and within the bounds of the regulation.
Information at this time to estimate this cost is not known, and previous IA evidence (See E.13) hinted that this may be negligible, but through the consultation the evidence base will strengthen, and this will be estimated.
The estimated total cost lies in a range of £5.6 million and £25.4 million (PV), with a central estimate of £15.5 million (PV) over 10 years.
Set-up benefits (Private and Public)
Option 2 is not expected to have any set-up benefits.
The intended benefit of this policy is to reduce the likelihood and/or impact of a potential terrorist attack. A terrorist seeking to execute an attack could be disrupted through one of the following mechanisms:
By reducing the likelihood and/or impact of a potential terrorist attack there will be a reduction in the large direct costs faced as a result of an attack, for example, casualties, emergency services and property damage. In addition, attacks often lead to much wider economic loss that will be restricted by implementing Option 2. By implementing the measures in Option 2 it is expected to create both a potential cost saving to society but also produce a safer environment for the public.
The expected benefits, the prevention of crime and terrorism, associated with this policy are considered to outweigh the costs. It is expected that the measures will act as a driver for retailers/manufacturers to reform some practices and behaviours, to allow legitimate activities by the public and business but remove or reduce the availability of the substances to those seeking to use them for opportunistic or illegal activities.
All costs and benefits in Option 3 are assumed to be additional to those in Option 2 and not exclusive from them.
Set-up costs (Private and Public)
Costs to Business/Economic Operators
This refers to the costs associated with businesses needing to take time to provide information to prospective buyers. This is already standard practice, but as a result of Measure 2 (see Table 1, section E.6) there will be an increased number of products that require information provided.
It is assumed that providing information will be required by all members of staff in each store in year 1 for retailers and wholesalers who currently sell reportable substances. It is expected that the costs will be negligible from year 2 onwards, as those looking to buy will have been given the relevant information and businesses will have better absorbed the changes.
The following cost ranges are estimated to give a sense of scale and are based on the best estimates of business numbers and best judgement of the time taken and potential proportion of businesses that will be affected by the changes to substance concentration limits and restrictions (see Annex A for detail). The consultation responses will provide a better understanding of the proportion of businesses selling the substances in question (listed in detail in Annex A), in addition to the time taken to provide the information and any additional costs relating to this measure. This will enable a more accurate cost estimate which can be included in the final IA.
The number of total retailers and wholesalers of these substances in the UK is not currently known. However, it is estimated to be between 25 and 100 per cent of all regulated businesses (where the large range reflects the considerable uncertainty). This gives an estimate of between 1,600 and 4,615 businesses (central: 3,100) and 11,000 and 43,775 (central: 26,400) employees that sell these substances. The additional time spent on the task is estimated to be between 15 minutes (0.25hrs) and one hour per month. As in previous estimates, the estimated gross average hourly cost of an employee is £11.56[footnote 11]. , Therefore, the cost of providing ioinformation is estimated to lie in a range of £0.4 to £6.1 million, with a central estimate of £3.2 million (2019/20 prices) in the first year of the regulation only.
This refers to the costs associated with businesses needing to check which of their products are affected by the new regulations.
It is assumed that producers and specialist suppliers would already be aware of their products and therefore do not incur a cost. Sellers of ammonium nitrate and products containing ammonium nitrate will already be aware of these products (as it is already a reportable substance) and will therefore also not incur this cost. Therefore, it is expected that this cost will be negligible, but through consultation the evidence base will strengthen, and this will be confirmed for the Final IA.
Retailers will need to work with their suppliers to ensure that products containing chemicals with concentrations above the new limits are labelled, if they are to be made available to the general public. Based on information from the consultation and a key industry association, as long as manufacturers and formulators are made aware of the requirement in good time before the regulation comes into force, the costs of adding a single line of text to a label would be negligible, but through consultation the evidence base will strengthen and this will be confirmed for the Final IA.
Under Measure 8, all businesses will be required to report SARs through the GOV.UK portal, with more in-depth detail required; including biographical data. Businesses will therefore need to spend time training staff to report SARs through the portal (which is an up-front cost) but is not expected to increase the time taken to use (as it is run automatically in the background and then briefly checked over). There is potential for a time saving by using the portal, and its automation, this will be better evidenced through the consultation.
It is assumed that this reporting SARs will be completed by one member of staff in each store for retailers and wholesalers who currently sell reportable substances.
The following cost ranges are used to give a sense of scale and are based on the best estimates of business numbers and best judgement of the time taken. Through the consultation the evidence base will be strengthened, and the time taken and any additional costs to meet the online portal reporting obligation will be better evidenced. This will ensure the cost is estimate will be more robust for the final IA.
There are an estimated 6,415 total retailers and wholesalers of regulated substances in the UK. At an estimated average hourly cost of £11.56 [footnote 12] per hour, and the first-year training to use the online portal may take between one and four hours. Therefore, the estimated cost lies in a range of £0.1 to £0.3 million, with a central estimate of £0.2 million (2019/20 prices) in the first year only.. Currently this range also assumes all retailers report SARs, whereas some will report through a head office if are a large organisation, which will reduce time spent on the task per site.
Police and public servants working in this area will need to read and understand how the new limits outlined under Option 3 that affect their work and what to expect.
Currently, both the police and public servants working in this area already know of the current restrictions around reportable substances and are expected to have already received training on both the current substance list and working with suspicious action reports. There will however be a small time cost in reading the updated list and any implications.
This cost is expected to be negligible, but through the consultation a final option will be decided and any documentation to be read by public servants will be written. Therefore, this cost may be updated in the final IA to include a small awareness time cost after consultation.
The additional set-up costs are estimated in a range of £0.5 to £6.4 million, with a central estimate of £3.4 million (2019/20 prices), in year 1 only.
This brings the total set-up costs to between of £0.5 to £6.8 million (see set-up costs for Option 2), with a central estimate of £3.7 million (2019/20 prices), in year 1 only.
Costs to Business/Economic Actors
Stricter regulation around licensing for chemicals will inevitably deter some members of the public from buying controlled substances, resulting in lower revenue for businesses. However, where an alternative does exist, but costs more (for example diluted versions of the same chemical), there may be a potential benefit to business as it is expected that a higher profit margin can be made from these products.
Moreover, the number of individuals affected by changes in regulation is likely to be very small. As a result, it is expected the costs to businesses will be negligible.
Retailers of substances that are being affected under Measure 6 will need to process any additional licenses that are a result of the changing substance list.
Information at this time to estimate this cost is not known, through the consultation, the evidence base will be strengthened, providing information on the increase in number of licenses they may need to process, as well as the time taken to do so. This will allow the cost to be estimated in the final IA.
Costs to members of the public (home users)
Public users may not be able to continue their interest if they cannot gain access to these chemicals, for example, pyrotechnics, modelling or pool maintenance. In some instances, they may be able to find a substitute, however some may have to forego this hobby. This will only affect a small number of people (178), see Table 4 for licence holders.As a result, it is expected the cost will be negligible.
Members of the public (that is, non-professional consumers) who want to continue using chemicals that contain concentrations above the new thresholds or chemicals that have been moved into the regulated list will have to apply for a license, however it is not known how many of the 178 individuals affected will decide to buy one. A licence currently costs £39.50 and it is expected this will only affect a small number of individuals and is therefore negligible.
Moving Ammonium Nitrate controls to Part 1 changes the Act under which individuals can be charged, hence making it easier to charge an individual for possession of Ammonium Nitrate. This potentially increases the number of individuals within the Criminal Justice System (CJS), on trial and imprisoned.
Although it is not possible to currently estimate the number of expected cases per year as result of the transfer of controls, the estimated weighted unit cost per Terrorism Act (TACT offence defendant is estimated to be approximately £100,000 [footnote 13], plus a cost to the Crown Prosecution Service (CPS) of approximately £3,000 [footnote 14].
A JIT (Justice Impact Test) will be completed post-consultation in the Final IA, where more evidence relevant to the number of businesses affected by the transfer of Ammonium Nitrate controls is known, and a better estimate of expected cases is available.
Members of the public (that is, non-professional consumers) who wish to continue using the chemicals that have been regulated will have to apply for a licence.
A licensing system was previously set up upon implementation of EU regulation 9/8/2013.
It is not expected that there will be any additional staff needed to manage the addition of the new chemical restrictions, although the volume of new licences is not currently known. The licence fee of £39.50 is based on the assumed full cost-recovery of an average one hour of processing time per application (30 minutes Home Office time, 30 minutes police time). The cost of this is expected to balance with the fee income to the public sector, meaning this is a transfer.
Any appeals would go through judicial review (JR) and have an impact on the CJS. No appeals have been submitted since September 2014 when the licensing regime came into operation. This is expected to continue following the introduction of the new regulations.
Currently the volumetric data is unavailable, as it is not clear how many new licences will need to be processed with the changes to substances and concentrations. Through the consultation, the evidence base will be strengthened, informing the estimate.
The additional estimated cost of Option 3 lies in a range of £0.5 million and £6.4 million (PV), with a central estimate of £3.4 million (PV) over 10 years.
This brings the costs of Option 3 to between of £6.0 to £31.8 million (see total costs for Option 2), with a central estimate of £18.9 million (PV) over 10 years.
Set-up benefits (Private and Public), if applicable, normally year 1 only.
Option 3 is not expected to have any set-up benefits in addition to those identified for Option 2.
Option 3 is expected to further reduce the likelihood or impact of a potential terrorist attack beyond Option 2 by limiting the access to potentially harmful and dangerous substances to an even greater extent, whilst still allowing for legitimate use. In addition, it ensures that all economic operators make use of the online portal for reporting SARs which should lead to more granular detail on potential suspects and a defined template for all incoming data that can be used by the police.
The stricter nature of Option 3 will further reduce the size of both direct cost impacts, as well as potential wider economic effects due to the restriction in concentrations of harmful substances that are available, (see Option 2 benefits) as well as going further to provide public safety.
Initial estimates indicate that the Net Present Social Value (NPSV) may be about £15.5 million (Option 2) or £18.9 million (Option 3) over 10 years. The Business Net Present Value (BNPV) is estimated to be about £15.5 million (Option 2) or £18.9 million (Option 3) over 10 years. The net costs to business as given by the EANDCB [footnote 15] may be about £1.8 million (Option 2) or £2.2 million (Option 3) per year (2019/20 prices). However, these estimates are highly uncertain at the moment. The consultation will be used to gather more information to refine these estimates and reduce uncertainty in the Final IA. Therefore, these estimates are purely illustrative, to demonstrate the sense of where costs and benefits lie and the potential scale of these.
Tables 5 and 6, Source: Home Office, own estimates, 2021. Note: Costs per year is in 2019/20 prices. Costs per year, NPSV, BNPV and EANDCB are only given for the central estimate.
It is not currently expected that there will be any place-based analysis required as there is no requirement to build new infrastructure or teams to complete the monitoring and verification of different elements of the policy.
Small and micro-businesses may be affected by the changes but most already have to comply with requirements of the Poisons Act 1972 (1972 Act) because of their stocks of other scheduled substances. Full consideration has been given to this segment of the market, however, as a policy designed to protect the public from explosive attacks, it would not be effective if small and micro-businesses were exempt. Advice on how to comply with the 1972 Act is tailored to the type of business such that the impacts on smaller businesses are proportionate and the measures practical for them to implement.
This is the consultation stage, so not all measures have been finalised nor is all the data required to monetise costs available. The data available has given a foundation on which to estimate some costs but these estimates carry a considerable degree of uncertainty. These are presented to illustrate where costs/benefits may fall and to give a sense of scale of these impacts. Post-consultation data and information should provide a more fully informed and robust set of estimates for the Final IA.
The proposed measures do not appear to pose any large risks; however, the following have been identified as potential problems:
The regulation relies on businesses being responsible and reporting suspicious transactions or significant losses. There is a risk that businesses will not take this up or will forget. There is also a risk that businesses will be fearful of reporting a suspicious transaction to the anti-terrorism hotline due to doubt about the credibility of their suspicion. The economic impact of this is that there is a continued threat of the precursors being easily obtained by terrorists and therefore the threat of death and damage to the public still being present despite the policy. To mitigate this, ongoing awareness raising activities will be conducted and disseminated by various means. This should also refresh the aims of the regulation in retailers’ minds. In addition, mystery shopping will be conducted on a random basis with aggregated results and best practices fed back to trade associations to serve as an incentive to make sure members of staff are aware of the requirements. The hotline is referred to in advice products as the national contact point in order to remove any barriers relating to calling an anti-terrorism number.
There is a risk that alternative explosive precursors that are easier to acquire could be used instead and go undetected. The economic risk here is similar to that stated above; if terrorists resort to less explosive chemicals, less effective devices may be constructed but damage/threat to life and property will still be present. This will be mitigated by a continuous review of the chemicals with changing restrictions to them. These risks will be mitigated by raising awareness through the free of charge provision of guidance documents, a short video on suspicious behaviours and e-learning.
There is a risk that the impact to business is higher than the current cost estimates due to the limited evidence base. This is mitigated at present by providing wide ranges to give a sense of scale and will be further mitigated through the consultation as the evidence to estimate costs will be obtained.
See Tables 5 and 6 above for a summary of estimated monetised costs and benefits to businesses, the BNPV and net costs to business per year. The BNPV is given as £15.5 million (Option 2) or £18.9 million (Option 3) over 10 years. The net costs to business as given by the EANDCB [footnote 16] may be about £1.8 million (Option 2) or £2.2 million (Option 3) per year (2019/20 prices). The evidence base will be strengthened through the consultation, allowing a better informed set of costs and benefits to be completed. A more informed assessment of impacts on small and micro-businesses will be conducted at the time of the Final IA.
Some of the costs may fall unevenly on different groups in society. Home and business users of the chemicals may be affected by the cost of false positive reporting. That is the cost of being regarded with suspicion when the individual’s intentions are entirely legitimate, but this will be raised as a key point as part of awareness and training provided to ensure businesses act lawfully and equally. This cost may fall more heavily on some groups in society if businesses attempt to profile customers according to prejudices or misconceptions about religion, ethnicity, or other demographic characteristics. The cost of being perceived with suspicion and distrust is difficult to quantify but it is likely to cause distress, anxiety and feelings of isolation and injustice in the victims. Awareness raising products delivered alongside this legislation ensure that businesses are able to spot suspicious behaviours because of unorthodox behaviour or requests of individuals or groups, rather than using demographic prejudices. However, even with such an education programme in place there may still be some costs felt by customers in minority ethnic or faith groups. The Home Office does not tolerate profiling by any method.
It is not expected that there will be any wider environmental impacts as a result of this policy. There is little to indicate that the increase in reporting of SARs or change in substances (with greater restrictions) would lead to any environmental impacts at all.
Likewise, the increase in need for SARs and change in substances should not have any significant impacts on the competitiveness of the market. Any changes will affect all businesses/licence holders equally.
There may be a small negative trade impact from the tighter controls put on which substances require a licence and over which concentration limits they are required. This is because there are some current EU licence holders who purchase from the UK and may choose to use other EU suppliers as a result of the tighter restrictions put on supply.
The number of EU licence holders who purchase from UK suppliers is however small, and therefore despite there being a likelihood of moving to EU suppliers the total trade impact is expected to be negligible.
The effectiveness of the new regime would be monitored in part by a change in volume of calls to hotline. The baseline has been measured for suspicious transaction calls to the antiterrorist hotline and will monitor any increase in total calls against those that lead to further action. The Home Office will develop an evaluation plan once a final preferred option has been identified.
The following substances are under potential new listing or changing concentration limits as part of Measure 6.
The following table highlights the number of retail, wholesale and producer businesses affected by the measures, split into SIC Codes from the previous IA [footnote 17] (Table B.1) and the updated set for this IA (Table B.2). This data comes from the ONS[footnote 18].
The SRO has agreed these findings.
Any test not applied can be deleted except the Equality Statement, where the policy lead must provide a paragraph of summary information on this.
The Home Office requires the Specific Impact Test on the Equality Statement to have a summary paragraph, stating the main points. You cannot delete this and it MUST be completed.
Small and micro-businesses may be affected by the changes but most already have to comply with requirements of the Poisons Act 1972 (1972 Act) because of their stocks of other scheduled substances. Full consideration has been given to this segment of the market, however, as a policy designed to protect the public from explosive attacks, it would not be effective if small and micro-businesses were exempt. Advice on how to comply with the 1972 Act is tailored to the type of business such that the impacts on smaller businesses are proportionate and the measures practical for them to implement. Complete
https://www.gov.uk/government/publications/the-green-book-appraisal-and-evaluation-in-central-governent/the-green-book-2020 
https://www.siccode.co.uk/section/a 
https://www.ons.gov.uk/businessindustryandtrade/business/activitysizeandlocation/datasets/ukbusinessactivitysizeandlocation 
https://ec.europa.eu/eurostat/statistics-explained/index.php/Hourly_labour_costs 
https://www.legislation.gov.uk/ukia/2018/67/pdfs/ukia_20180067_en.pdf 
https://www.legislation.gov.uk/ukia/2018/67/pdfs/ukia_20180067_en.pdf 
https://www.ons.gov.uk/businessindustryandtrade/business/activitysizeandlocation/datasets/ukbusinessactivitysizeandlocation 
https://www.ons.gov.uk/businessindustryandtrade/business/activitysizeandlocation/datasets/ukbusinessactivitysizeandlocation 
Hourly wage based on ASHE Median Gross Hourly Wage 2020 for Sales and Customer Service Occupation, Non-Wage uplift based on Eurostat Labour Cost per hour for the Whole Economy (excluding agriculture and public administration). 
Hourly wage based on ASHE Median Gross Hourly Wage 2020 for Sales and Customer Service Occupation, Non-Wage uplift based on Eurostat Labour Cost per hour for the Whole Economy (excluding agriculture and public administration). 
Hourly wage based on ASHE Median Gross Hourly Wage 2020 for Sales and Customer Service Occupation, Non-Wage uplift based on Eurostat Labour Cost per hour for the Whole Economy (excluding agriculture and public administration). 
Hourly wage based on ASHE Median Gross Hourly Wage 2020 for Sales and Customer Service Occupation, Non-Wage uplift based on Eurostat Labour Cost per hour for the Whole Economy (excluding agriculture and public administration). 
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/740981/CTBS_Bill_Impact_Assessment_Lords_Introduction.pdf 
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/740981/CTBS_Bill_Impact_Assessment_Lords_Introduction.pdf 
The EANDCB is the Equivalent Annual Net Direct Cost to Business and is used by the Regulatory policy Committee (RPC) as a standard measure for comparing the costs of regulatory proposals to business across departments. 
The EANDCB is the Equivalent Annual Net Direct Cost to Business and is used by the Regulatory policy Committee (RPC) as a standard measure for comparing the costs of regulatory proposals to business across departments. 
https://www.legislation.gov.uk/ukia/2018/67/pdfs/ukia_20180067_en.pdf 
https://www.ons.gov.uk/businessindustryandtrade/business/activitysizeandlocation/datasets/ukbusinessactivitysizeandlocation 
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