Inside Track

In March Employment Minister, Chris Grayling, announced an independent review of health and safety to be chaired by Professor Ragnar Lofstedt.  Today Professor Lofstedt announced his terms of reference, making clear that regulations and compensation are very much in scope, but the Health and Safety at Work Act 1974 is not.

There had been criticism that Professor Lofstedt was being allowed to write his own terms, notably from Lord McKenzie, former Minister with responsibility for health and safety.  However, as with all such reviews it's likely that the terms of reference were the result of discussion and agreement between the Minister commissioning the review and its leader.

The review will seek to determine:

• the scope for consolidating, simplifying or abolishing regulations;
• whether EU Directives have been 'gold-plated' in the UK with extra requirents;
• what can be learnt from other countries;
• whether there is a clear link between regulation and positive outcomes;
• whether there is evidence of inappropriate litigation and compensation arising from health and safety legislation; and
• whether legislative changes are needed to clarify the position of employers where employees act irresponsibly

The terms of reference also make clear that regulations and Approved Codes of Practice enforced by HSE and local authorities are in scope, but the Health and Safety at Work Act and other primary legislation is not and neither is legislation enforced by others such as food safety.

We've already been in touch with Professor Lofstedt and will be contributing in a constructive and balanced manner.  There is much that is good about the current health and safety regime, but also aspects that can, and should, be improved.

There are two particular areas that are undermining the good work that HSE and Ministers have been doing for some time to simplify compliance, focussing attention on practical actions to manage significant risks. 

The first is the European Commission which continues to see more legislation as the answer to all ills, without stopping to look at whether existing requirements are actually being implemented effectively.  This is not an easy problem to remedy, the UK government cannot resolve it alone.  But it is important that the review shines a light on the issue and provides some independent evidence that can help a growing alliance of member states and MEPs change the Commission's direction.

The second is the effect of the civil compensation system in driving paperwork requirements.  For all that HSE does to reduce paperwork requirements, it will come to nothing if compensation claims are still settled essentially on the basis of what paperwork was produced, rather than on what practical action was taken to actually manage the risk.  As I mentioned in a previous blog there is an urgent need to clarify the role of paperwork.

The review is a positve move and Professor Lofstedt is emanently qualified to lead it.  This looks to be a good opportunity to address the real issues on the basis of evidence, rather than the knee-jerk response based on supposition that too often dogs health and safety. 

 Today, Lord Chancellor, Ken Clarke, launched a consultation on major reform of the compensation system.  Stories of a ‘compensation culture spiraling out of control’ are often over-played.  But the compensation system does have some serious flaws and is responsible for many of the problems in health and safety that are wrongly attributed to regulations.

A good compensation system should ensure that people who deserve compensation for harm caused by the negligence of another, get it quickly and this is delivered in a cost-effective manner.  Decisions should be made on the basis of how well risks were controlled in practice, not the quantity of paperwork involved.  Unfortunately that is all too rare.

The consultation launched today proposes the introduction of a fast-track system for small compensation claims as well as imposing a limit on legal fees that may be paid.  At present small claims come with big legal fees – a £5,000 settlement will frequently involve £10,000 costs and take manymonths, if not years.  And much of that cost and time is incurred before the employer is even notified of the claim. 

In 2005-6 EEF campaigned alongside the Association of British Insurers for the introduction of a fast-track system for employers’ liability claims that would result in the great majority of cases being settled quickly through mediation.  This would deter speculative claims for compensation by taking the profitability out of the system, as well as ensuring that those who deserve recompense get it far more quickly.  We came close to succeeding in the campaign, but in the end the system was restricted to small motor claims. 

We need to work through the detail, but it looks like the governments proposals would introduce the kind of fast track system for which we campaigned.  It builds on an earlier consultation which proposed banning the payment of referral fees where a third party is paid (typically several hundred pounds) for referring a claim to a solicitor. 

The proposals so far are very welcome and appear to go a very long way to meeting that test of delivering compensation promptly and in a cost-effective manner.  But what isn’t being addressed at present is the over-reliance on paperwork that I mentioned.  On its own paperwork never saved a single life – it is practical action that makes the difference. 

Whilst the Health and Safety Executive continues good work to reduce the bureaucracy involved in complying with health and safety regulations, defending compensation claims continues to be very much about producing paperwork rather than about identifying the action that was actually taken.  Much of this stems back to what are know as ‘the Woolf Lists’ of documents that may be relevant to a claim.  Instead of being a useful aide-memoire these seem to have become requirements without which a claim cannot be defended. 

The Government deserves credit for the action it is already taking.  If it will turn its attention to the Woolf lists as well we may hear rather less about a ‘compensation culture’.

This morning Employment Minister, Chris Grayling, made a major announcement on the Government's approach to health and safety. There will be an independent review of all health and safety legislation, the number of inspections will be cut by a third by focussing more tightly on high-risk sectors and those who manage risks poorly, and companies found to be putting people at risk will be charged for the cost of their inspection and follow-up action. 

EEF has welcomed the announcement that builds upon the 'Common Sense, Common Safety' report produced by Lord Young last autumn. 

Independent Review of Legislation

The Minister confirmed that Professor Ragnar Lofstedt, of Kings College Centre for Risk Management, has been appointed to lead an independent review looking at health and safety legislation with a particular remit to tackle duplication and unnecessary legislation.  He is due to report in the Autumn. 

This is a welcome step to review a whole regulatory area, rather than piecemeal changes to individual regulations.  It provides the opportunity to identify duplications, inconsistencies and inefficiencies produced by layers of different regulations and is the kind of approach we are keen to see taken in other regulatory areas, including climate and environment.  

Unlike the Young review, European legislation is very definately within scope.  In answer to my question on this, Chris Grayling recognised that EU legislation is far too often disproportionate.   He went on to indicate that the report will be made to both the UK government and European Commission and that he will be using it to inform negotiations.  This is a particularly welcome development.

Modernising the inspection regime. 

The Health and Safety Executive and Local Authorities will more tightly focus their proactive inspection – aiming at high hazard and high risk sectors as well as companies with poor records.  This will result in 33% (11,000) fewer inspections by HSE.  The Local Government Association today wrote to local authorities calling for a similar approach.  However, HSE's enforcement policy will remain the same as will its activity in investigating complaints and injury reports.      

A system - sometimes referred to as 'fee for fault' - will be introduced to charge companies for inspection and associated work if they are found to have significant failings (but not mere technical breaches).  In principle it certainly makes sense that if someone is to pay, it should be the companies who are taking an unfair short-term advantage by putting employees at risk.  Of course getting that targetting to work effectively in practice presents some challenges.  We are already engaged with HSE on this and are expecting a consultation in the summer, with implementation of a system not expect until spring 2012 at the earliest.  

Putting all of this together, good employers in most manufacturing sub-sectors can expect to see less of the regulator, but a company who does badly at an inspection can expect to be charged for the privilege and will receive a poor rating from the regulator, meaning they will be on the list for future visits.  

 Tackling the health and safety 'cowboys'

The Occupational Safety and Health Consultants' Register (OSCHR) goes live today, it has been created by a partnership between 5 professional organisations and the Health and Safety Executive.  Businesses can now search an online directory of consultants who have degree level qualifications, at least 2 years experience, complete continual professional development and are subject to enforceable codes of conduct.  1600 consultants have been accepted on the register, including over 20 of EEF's own health and safety advisers who provide consultancy support and training to businesses. 

Whilst not a legal requirement, registration is a strong indication of competence.  However, the true test will be whether the professional organisations, who are responsible for policing the register, are prepared to be robust in tackling those who oversell their services or are excessively risk-averse.  Without this, the register will bring no additional benefits.

Simplification of Compliance

Work will continue to help lower-risk small businesses comply with a minimum of fuss.  Having already issued simplified guidance and risk assessment tools, HSE today launched a new microsite called 'Health and Safety Made Simple - the basics for your business.'  This is something EEF has had input to through HSE's Small Business Trade Association Forum.

As ever, the proof of the pudding will be in the eating, but overall it was a welcome announcement that recognised the importance of effectively managing substantive risks, whilst avoiding disproportionate responses and unnecessary burdens.  Or, as the Minister put it, 'tackling the rogue employers, whilst removing red tape from the vast majority of employers who play by the rules'. 

Christopher Chope MP has presented 12 Private Member's Bills to parliament, addressing key points from the Young Review of health, safety and compensation.  Now a backbench Conservative MP, Christopher Chope was a member of the Health and Safety Commission (now the HSE Board) between 1992 and 1997.

Amongst them is a Bill that would introduce statutory licensing of health and safety consultants, despite the fact that Lord Young indicated that a revised voluntary system should be given the chance to work.  I am very concerned that a statutory qualifications system would introduce excessive costs, but no additional benefit for lower risk premises, including some manufacturers. 

Private Member's Bills generally do not make it past their second reading.  However, government can choose to adopt particular bills and support the individual member in their course through both houses of parliament. 

The Bills are:

• Reporting of Accidents, Diseases and Dangerous Occurences Regulation Bill
• Local Government Ombudsman (Amendment) Bill
• Low Hazard Workplaces (Risk Assessment Exemption) Bill
• Self Employment (Risk Assessment Exemption) Bill
• Health and Safety Consultants (Qualifications) Bill
• Activity Centres (Young Persons' Safety) (Amendment) Bill
• Health and Safety at Work (Amendment) Bill
• Volunteering Bill
• Road Traffic Accident (Personal Injury) (Amendment) Bill
• National Health Service Redress (Amendment) Bill
• Compensation (Limitation) Bill
• Criminal Records (Public Access) Bill

At the first reading stage, no more than their title is required so there is no further detail.  We will be monitoring closely, to lend support where appropriate, but to spell out the problems that would arise from statutory licensing of consulants.

 As a consequence of Wednesday’s Comprehensive Spending Review, the government has announced that HSE’s funding will be cut by 35% between now and 2014.  Responsible for regulating health and safety in manufacturing businesses, HSE received £239million funding from the Department of Work and Pensions last operating year.

What does this mean for manufacturing?  Will the inspector no long call?  Or will support and advice dry-up? There are a range of options that are likely to be considered.  

• Cutting inspections and enforcement activity.  Understandably for a regulator, HSE will make cuts elsewhere first, attempting to protect its front-line activity as much as possible.  There will however be greater pressure to prioritise, both more hazardous sectors and poor performers within those sectors.  HSE has for many years used a rating system to determine frequency of visits, a bad score at your last inspection means an earlier call.  Those in less hazardous sectors with good past performance are likely to see reduced activity, but for more hazardous manufacturing there will be little change.
• Charging.  In major hazards industries such as petrochemicals and nuclear power, HSE currently passes on the costs of inspection, investigation and review of safety cases.  There are strong signs of this being extended to fill the financing gap.  At one extreme this could involve charging developers for land use planning applications – where HSE reviews planning applications near a major hazards site.  At the other extreme, inspections could be charged for, perhaps where an enforcement notice is issued.  I for one am concerned this would sour what is often a constructive relationship and incentivise inspectors to find fault.
• Cutting campaigns and advertising.  A freeze was sanctioned after the election and it is hard to see this being lifted.
• Reduction in policy work.  This initially sounds like it has no drawbacks – no policy work means no legislation.  Certainly cuts will need to be made and this has advantages for business.  But EEF is emphasising the ministers the importance of maintaining activity to fight our corner in EU negotiations as well as to provide simple, practical guidance.  HSE is likely to further its policy of working with organisations like EEF to share the costs of practical guidance.
• Use of officers trained to a lower level.  At present inspectors undergo 2 years of pretty intense training, including a high-level qualification.  We could see them held back for higher level enforcement activity, with less expensive officers used to fill the gap on routine work.  Less expert staff could be less forceful, but could also take a more rule-based and less flexible and pragmatic approach.

The likelihood is that we’ll see a combination of all of these measures.  EEF will be pressing for a mix that ensures businesses are helped to comply and in which inspection and enforcement is proportionate and targeted on risk.  

Find out more about this and other hot topics at our forthcoming Health, Safety and Environment Update seminars taking place around the country in October and November.  Find out more here.

 This morning David Cameron and Lord Young launched a far-reaching report on health and safety and compensation.  It criticises excessive and bureaucratic health and safety, but lays the bulk of the blame not on regulation, but on the compensation system, some over-zealous local authorities and unscrupulous or poorly qualified consultants. 

The report signals the biggest change to health, safety and compensation in years.  Some of the recommendations focus on public and school safety, but many are directly relevant to manufacturers.  We’ll be going through them in detail in our forthcoming Health, Safety and Environment seminars. In the meantime, here are a few of the key issues.

Reforming compensation. 

At the moment the system works more for claimant solicitors than anyone else, with the legal costs of small claims often exceeding the compensation awarded.  One key recommendation is introduction of a fast-track system for small injury claims and stopping ‘front-loading’ by solicitors.  This would require early disclosure of a claim giving the employer an opportunity to settle early, cutting down on legal costs, but also ensuring that the claimant gets compensation much sooner.  

There is also a promise to restrict no-win, no-fee advertising (could this be the end of daytime TV?) and companies referring cases to solicitors, though an outright ban unfortunately seems discounted. 

Many of these recommendations formed a part of joint campaigning by EEF and the Association of British Insurers and we are very pleased to see them finally being taken forward.

Clamping down on unscrupulous Health and safety consultants. 

Early on in his review Lord Young indicated that he wanted a statutory licensing system for all health and safety consultants and in-house advisers requiring qualifications to degree level.  We made clear to him and his team that this would be excessive and cost many lower risk manufacturers a great deal of money as their NEBOSH certificated in-house adviser would have to be replaced by a consultant. 

He listened and has instead backed the agreement reached between HSE and professional organisations including IOSH.  They will be required to toughen their codes of conduct and take action against those who advise excessive responses to low risks whilst HSE will publish a list of qualified consultants on its website.

Codifying regulations

Lord Young has backed the current legal framework but recommended that HSE brings all the different regulations together into one accessible set.  This would allow anomolies and overlaps, such as the large number of slightly different risk assessment requirements, to be resolved.  It might also allow consideration of whether duties should be civil or criminal in nature (see my blog on the Law Commission review). 

Reporting of Accidents

The report recommends a change to the RIDDOR regulations on reporting of accidents – they would be required once someone has been off for 7 days instead of 3.  Given that the majority of accidents currently go unreported, change had to come.  A law that is neither ignored nor enforced brings health and safety into disrepute.  

Bear in mind, that whilst a report directly to the Prime Minister is extremely powerful, its contents are recommendations at this stage.

What do you think of the review?  Will it resolve the problems of excessive caution and bureaucracy - or is it a step too far?  Your comments are welcomed.

EEF Members can read a little more detail in a briefing here. Lord Young's report can be downloaded from the No 10 website here.

The Health and Safety Executive has just published 'One Year On' its first update on progress with the occupational health and safety strategy for Great Britain. 

We do criticise government at times over health and safety, but we are happy to play our part in helping deliver the strategy.  Whilst excessive bureaucracy is damaging to business and the reputation of health and safety, practical, proportionate action to manage safety and health risks is just good business.

Our Chief Executive, Terry Scuoler is quoted prominently in the introduction to the report, identifying just one of the actions we have taken:  piloting of a balanced scorecard to help board set and monitor meaningful health and safetymeasures.  We worked with the insurance company, Travelers, to produce the scorecard as a response to requests from members for help in this area.  EEF members can access it for free here; and we will make it available to others late this year. 

The scorecard forms part of a Joint Delivery Plan for manufacturing industry that we agreed with HSE a year ago, it identifies how we are working to take forward 3 of the strategic themes:

• Improving leadership by company boards;
• Improving competence, particularly amongst non-specialist managers; and
• Prioritising and targetting key topics and sub-sectors to create healthier and safety workplace.

 In doing this we also contribute to two other themes:

• Customising support for SMEs; and
• Involving the workforce.

We have just reviewed progress and will shortly be updating our joint plan.  I'd urge you to have a look at the HSE One Year On report as well as our joint delivery plan and think what part you can play in promoting and delivering sensible health and safety.

 If you want to know the latest on health and safety, from the implications of the Young Report to developments with new EU Directives, come along to one of our Health, Safety and Environment Update Seminars, running in locations around the country from 28th October.  Find out more here.