Regulatory bodies do not have a good enough understanding of the costs and benefits of regulation, risking value for money. Robust analysis of the costs and benefits of regulatory activity is essential for effective regulation, value for money and accountability. The regulators we questioned were not able to put a full monetary cost on their regulatory activity, including the wider costs to industry of complying with regulations. They face challenges in measuring costs and benefits when their focus is often on reducing risk, where it can be difficult to determine what would have happened if the regulator had not acted. The government’s Business Impact Target aims to reduce the costs of regulation to business, but the Regulatory Impact Assessments (RIAs) that underpin this target currently consider the costs of regulations without an adequate assessment of the benefits. For example, the costs of gambling regulations for gambling companies are captured, but the benefits of those regulations in reducing crime or harm are not. The Competition and Markets Authority has also criticised RIAs for not giving enough consideration to the impact of regulation on competition and innovation. The government has committed to a review of the Business Impact Target and the Department is preparing to launch a consultation later this year. Recommendation: In its review of the Business Impact Target, the Department should consult with regulatory bodies and wider stakeholders on how to ensure robust analysis of regulatory costs and benefits is built into regulatory policy design and evaluation. Furthermore it should include proposals to better reflect the impact of regulation in promoting competition and innovation.