You lie, we die - Hazards issue 118

Hazards issue 118, April-June 2012

How the government is bad for you and for the economy

Your life just got a little bit cheaper. Safety regulations and enforcement are out of favour, and for more and more workers, this could mean they are out of luck. Hazards editor Rory O’Neill warns this immoral government strategy will exact a high human and economic cost.

You lie, we die
Hazards issue 118, April-June 2012

This isn’t just chipping away at workplace safety protections. This is a premediated government assault intended to crush the life out of them.

No minister is going to stand up and say it is an economic imperative that more workers should die, but there’s a large but lurking behind their safety reassurance. Admitting “we have to protect people,” UK safety minister Chris Grayling followed up swiftly with a “but if we stifle their employers with unneeded rules and regulations those people won't have a job in the first place.” [see: Dark hearts]

TOTAL DISASTER Fundamental safety management failings were the root cause of the Buncefield oil storage blast, Britain's most costly industrial disaster, the COMAH Competent Authority Strategic Management Group concluded. So why does the government think criminally negligent firms like Total – fined £3.6 million plus £2.6 million costs in July 2010 for its part in the disaster - should have exclusive rights to “shape” official enforcement approaches? [more]

Deregulation of health and safety got top billing in chancellor George Osborne’s 21 March 2012 announcement of measures for “supply-side reform of the economy.”

His Budget statement said: “The government will scrap or improve 84 per cent of health and safety regulation” and added other measures would include the Health and Safety Executive (HSE) urging the European Commission to introduce “micro-exemptions or lighter touch EU health and safety regulation” for small and medium-sized firms, “based on ideas raised during the Red Tape Challenge.”

With the economy flatlining, businesses must go unfettered by regulation and inspection, the government mantra goes. But this is an act of faith in the power of business that makes neither safety nor economic sense.

It’s all about money

An unabating flood of research shows government policy should be turned on its head. You want businesses to make more money? Make sure they are properly regulated. You want to reduce the haemorrhage of public cash? Clamp down on safety offenders and make businesses more efficient and less of a drain on government coffers.

US government authorities admitted in March 2012 that calculations in 2011 by the academic Paul Leigh that put the cost of occupational injury and illness in the country at $250 billion a year “still do not capture the full economic burden.” The team from the National Institute of Occupational Safety and Health (NIOSH) added “the national investment in addressing occupational illness and injuries is far less than for many other diseases with lower economic burden even though occupational illnesses and injuries are eminently preventable.”

Recent research, including Leigh’s evidence from the US and other studies from the UK (Hazards 113) and Australia, has found poor health and safety is a massive burden on business as well as workers, the community and the public purse. The 2012 Australian government study suggested employers could get a £2bn annual boost to productivity, which would equate to about £6bn in the UK, by just keeping their workers safe and healthy [See below: Australian workers bear the cost of bad jobs]. And a 2010 paper in the journal Safety Science Monitor concluded good quality safety management “was a corollary to company share value.”

OK, it’s all about jobs

None of this is news to the UK government. But the business lobby is clamouring for further deregulation and the government, sensing some electoral capital to be gained, is keen to oblige. Setting its sights on the safety “jobsworths” and “job killers”, it made sure everyone from the boardroom to the editorial room knew it, with a stream of headlines screaming the government’s resolve to axe pesky safety rules and save our jobs. [see: Dark hearts]

COCA-COALITION Was the government’s workplace health czar commemorating dead and injured workers on Workers’ Memorial Day, 28 April this year? Nope, Dame Carol Black was lapping up the industry message at the London HQ of Coca-Cola, a self-proclaimed ‘great place to work’. [more]

When it comes to the axe wielding at least, ministers have been true to their word. On government orders, official safety inspections were slashed by a third; the Health and Safety Executive (HSE) was told to trim its budget by 35 per cent by 2015. Most firms were at a stroke removed from any threat of unannounced preventive official safety inspections. And safety minister Chris Grayling, in an April 2012 speech to the Policy Exchange, declared his determination “to cut the number of health and safety regulations in half.”

But stopping those nit-picking HSE inspectors turning up at firms without so much as an invitation and then taking action just because Britain’s apparently far too numerous criminal safety laws are not being obeyed turns out to be a seriously bad business move.

A May 2012 study led by Professor Michael Toffel of the famously business-friendly Harvard Business School discovered a surprise visit from an official safety inspector is good for both jobs and the bottom line, and the benefits just go on and on. The news release announcing the study was clear enough: “New study shows that workplace inspections save lives, don't destroy jobs.”

The study, published on 18 May 2012 in the journal Science, used a “clinical trial” of California’s randomised safety inspections to discern their effect on both worker safety and companies’ bottom lines. The results were unequivocal: Workplace inspections do reduce on-the-job injuries and their associated costs and do not cause any harm to companies’ performance or profits.

The study looked at company survival, employment, sales and total payroll to see if inspections were detrimental to the inspected firms. “Across the numerous outcomes we looked at, we never saw any evidence of inspections causing harm,” Toffel explained. And the effect was long lasting, with the report noting the reduced injuries and cost savings lasted for at least four years after the inspection.

Commenting on the study in the Harvard Business Review, Toffel and co-author David I Levine note: “Managers should welcome OSHA inspections. Randomly inspected establishments improve worker safety and reduce employers' premiums for workers' compensation insurance. And we found no evidence that these establishments suffer any of the competitiveness problems suggested by political rhetoric - like disruptions leading to lost sales or solvency concerns, or any effects on wages - compared to our control group. The differences are small but telling: OSHA inspections offer substantial value to workers, companies, and society.”

If the findings were replicated across the US, Toffel told Hazards in an 8 June 2012 email, their revised estimate of the annual saving to business would be “very approximately $20 billion per year.

“And this dollar cost doesn't consider reductions in pain and suffering.” [See below: Inspections are good for safety and jobs]

‘Cost-shifting’ by US employers and insurers is landing the bill for work-related injuries and ill-health on the public purse and the community at large, an April 2012 US study published in the Journal of Occupational and Environmental Medicine concluded. It said this leads to artificially low workers' compensation premiums for employers. “This is a classic example of what we call a 'negative externality' in economics - where prices do not accurately reflect costs that spill over to others and have negative social outcomes,” said Paul Leigh, lead author of the study and a University of California Davis professor of public health sciences.

“Workers' injuries and illnesses cost much more than what current workers' compensation payments suggest, and the resulting low premiums provide little incentive for companies to promote workplace safety.” The study showed that just 21 per cent - or $51.7 billion - of those costs were covered by workers' compensation. “Cost-shifting affects everyone, because we're all paying higher Medicare and income taxes to help cover that 79 per cent,” said Leigh.

Look, we’re doing it anyway

The government’s economic case for deregulation is threadbare. On 28 February 2012, it announced its one-in-one-out strategy to put a ceiling on the overall volume of regulation would deliver a saving of £4m in the six months to June 2012. In terms of the economy – Britain’s GDP is measured in £trillions - this isn’t even loose change.

Still, this is a cash bonanza compared to the savings from its first safety target, the accident reporting regulations RIDDOR. Reducing reporting requirements so 30,000 injuries a year disappear from the statistics will deliver a cash saving to firms of £240,000 a year, or just £0.05 each. [See below: Controversy over accident reporting changes]

EXPENSIVE BUSINESS The government is spending more than £10 million annually on efforts to ‘ease the regulatory burden on business’. Top spenders include the Better Regulation Executive (BRE), which develops policies to ‘reduce regulation’, costs £3.9m a year to run and employs 44 civil servants, and the Better Regulation Delivery Office (BRDO), which operates the primary authority scheme and advises councils, costs £3.5m a year to run and employs 27 civil servants. [more]

Ministers now want a more grand plan to put every regulation and every regulator in the firing line. The Department for Business (BIS) said the Enterprise and Regulatory Reform Bill, published on 23 May 2012, will introduce ‘sunsetting clauses’ putting a scrap-by date into new regulations. There is a presumption the law will be time-expiry, and will only survive if a government department puts a case in its defence. The Bill also includes measures for reducing “inspection burdens” on businesses of all sizes. [See below: Government publishes ‘sunsetting’ bill]

The union body TUC is unimpressed: “Despite all the evidence, the government retains its obsession that businesses are over-inspected,” a spokesperson said. “Changes introduced last year mean that most employers will never have the benefit of a health and safety inspection unless they report a death or serious injury. This will mean employers will be both less likely to report injuries, and also will be less likely to take adequate measures to protect their workforce.”

He warned: “We are already seeing evidence that fatalities seem to be rising in many industries as businesses cut back on health and safety. If the government continues to give the message that good health and safety is a burden then this can only increase.”

Who’s asking you?

This is not the sort of thing ministers want to hear. And to prove it, they are increasingly refusing to listen to anyone outside the business lobby. In February 2012, prime minister David Cameron hosted a Downing Street pow-wow with representatives of the business and insurance lobbies, to get their directions on reform of safety and compensation laws (Hazards 117). Families Against Corporate Killers (FACK), the organisation representing those who have lost family members at work, has been waiting a year for ministers to agree to a face-to-face. It is still waiting.

The government is employing a consultation two-step that involves either asking loaded questions which can’t solicit an off message response or only asking questions of those who would give the required answer anyway. Initiatives like the government’s Red Tape Challenge and its Löfstedt review of regulation don’t ask how can safety be improved, they ask how can safety burdens be reduced.

In part two of the approach, the formal tripartite government-business-union consultative processes that once fashioned UK safety laws are increasingly being sidelined in favour of informal and unaccountable processes, frequently with an invitation to contribute only going to the business lobby.

The government would prefer to limit the business of consultation to business. In May 2012, its Focus on Enforcement initiative did just that. It asked just those British chemical firms covered by the Control of Major Accident Hazards Regulations (COMAH) – those with the potential to cause the worst devastation if they go bang - how they’d like their safety enforced. [See below: Blast danger firms get exclusive say on enforcement ]

No-one else – certainly not the workers or local residents who would be blown to smithereens – gets a look in.

Key references

Getting closer to understanding the economic burden of occupational injury and illness, NIOSH blog, 30 March 2012.

Paul J Leigh. Economic burden of occupational injury and illness in the United States, Milbank Quarterly, volume 89, number 4, pages 728-772, December 2011 [pdf].

Paul J Leigh and James C Marcin. Workers' compensation benefits and shifting costs for occupational injury and illness, Journal of Occupational and Environmental Medicine, volume 54, issue 4, pages 445–450, April 2012.

TJ Larsson. Safety management systems – Culture, cognition or cash?, Safety Science Monitor, volume 14, Issue 2, 2010. Safety at work blog. 23 March 2012

Department for Education, Employment and Work Relations news release 13 March 2012 • The cost of work-related injury and illness for Australian employers, workers and the community 2008–09, Safe Work Australia, March 2012 • ACTU news release, 14 March 2012 and Safe at work webpage •

New study shows that workplace inspections save lives, don't destroy jobs, Harvard Business School news release, 17 May 2012 • Harvard Business Review, 30 May 2012.

David I Levine, Michael W Toffel, Matthew S Johnson. Randomized government safety inspections reduce worker injuries with no detectable job loss, Science, volume 336, number 6083, pages 907-911, 18 May 2012.

The Coca-Coalition’s bad taste

Was the government’s workplace health czar commemorating dead and injured workers on Workers’ Memorial Day, 28 April this year? Nope, Dame Carol Black, the government’s National Director for Health and Work, was lapping up the industry message at the London HQ of Coca-Cola, a self-proclaimed ‘great place to work’.

The company, a purveyor of tooth-rotting beverages and keen proponent of behavioural safety systems – known by unions as blame-the-worker schemes – hosted an event for the industry lobby group, the Food and Drink Federation. A news release noted: “A tour of the onsite facilities and introduction to the team helped Dame Carol appreciate the company’s long-standing commitment to workplace wellbeing.”

FDF was launching its voluntary ‘Public Health Responsibility Deal’. Dame Carol, second from left next to Coca-Cola Great Britain general manager Jon Wood, commented: “Government alone cannot tackle the major public health problems this country is facing. The food and drink industry has a strong track record on workplace wellbeing, with many of FDF’s members having already signed up to the Public Health Responsibility Deal. There is excellent work going on and we need to keep building momentum.”

Voluntary deals are high of the government’s list of palatable alternatives to effective regulation and enforcement of workplace health and safety.

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Australian workers bear the cost of bad jobs

It is workers, not employers, who overwhelmingly bear the costs of workplace injuries and diseases, an official Australian report has shown. The report, published in March 2012 by Safe Work Australia, revealed threequarters of the costs of workplace injuries and diseases is borne by the injured workers themselves, including loss of current and future income and non-compensated medical expenses.

Ged Kearney, president of the national union federation ACTU, said the cost of Aus$60.6 billion (£40bn) for workplace injuries and diseases in the 2008/9 financial year was far too high. “We think we are a clever country but it isn’t so smart to forgo almost 5 per cent of our nation’s GDP on the cost of preventable workplace injury and illness,” Ms Kearney said.

Safe Work Australia estimated that the cost of workplace injury and disease to workers, their employers and the community for the 2008/9 financial year. It found injured workers themselves bear 74 per cent of this cost, including loss of current and future income and non-compensated medical expenses. Twenty-one per cent of the cost is borne by the community and just 5 per cent is borne by employers.

Employers, though, had a considerable amount to gain by ensuring their workplaces are safe and healthy. “Employers could get a Aus$3 billion (£2bn) boost to productivity by preventing workplace accidents and incidents,” Ms Kearney said.

She encouraged workers to become involved in making their workplace safer by electing health and safety representatives, joining their workplace health and safety committee, and by seeking advice from their union.

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Government publishes ‘sunsetting’ bill

The government has published a Bill that will build ‘sunsetting clauses’ into new regulations and that includes a presumption the laws will be scrapped unless a government department argues for their survival.

The government also says the Enterprise and Regulatory Reform Bill, published on 23 May 2012, will include measures for “reducing inspection burdens on businesses of all sizes and increasing SME access to reliable, consistent advice on complying with regulations in areas such as trading standards, health and safety and environmental health.”

Business secretary Vince Cable said: “The measures in the Enterprise and Regulatory Reform Bill will help make Britain one of the most enterprise-friendly countries in the world. It will improve our employment tribunals, reform and strengthen competition enforcement, scrap unnecessary red tape and help ensure that people who work hard and do the right thing are rewarded.”

When the Bill was flagged up in the Queen’s speech on 9 May 2012, a TUC spokesperson commented: “Despite all the evidence, the government retains its obsession that businesses are over-inspected. Changes introduced last year mean that most employers will never have the benefit of a health and safety inspection unless they report a death or serious injury. This will mean employers will be both less likely to report injuries, and also will be less likely to take adequate measures to protect their workforce.”

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Inspections are good for safety and jobs

Stopping those nit-picking safety inspectors turning up at firms without so much as an invitation and then taking action against law-breaking employers turns out to be a seriously bad business move. A May 2012 study led by Professor Michael Toffel of the famously business-friendly Harvard Business School discovered a surprise visit from an official safety inspector is good for both jobs and the bottom line, and the benefits just go on and on.

The news release announcing the study was clear enough: “New study shows that workplace inspections save lives, don't destroy jobs.” The study, published on 18 May 2012 in the journal Science, used a “clinical trial” of California’s randomised safety inspections to discern their effect on both worker safety and companies’ bottom lines.
The results were unequivocal: Workplace inspections do reduce on-the-job injuries and their associated costs and do not cause any harm to companies’ performance or profits. The study looked at company survival, employment, sales and total payroll to see if inspections were detrimental to the inspected firms.

“And this dollar cost doesn't consider reductions in pain and suffering.”

And the effect was long lasting, with the report noting the reduced injuries and cost savings lasted for at least four years after the inspection.

Peg Seminario, safety director with the US national union federation AFL-CLO, said the study “tells us is that protecting your workers on the job and keeping them safe is good for workers but is also good for business. What's too costly is not addressing injuries and illnesses. We can't afford not to protect people.”

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Blast danger firms get exclusive say on enforcement

The government is asking those British chemical firms with the potential to cause the worst devastation if they go bang how they’d like their safety enforced.

TOTAL DISASTER Firms like Total – fined £3.6 million plus £2.6 million costs in July 2010 for its part in the Buncefield disaster – are being told by ministers they can “make a real difference to the way compliance and protection is achieved” on Britain’s major hazard sites. This business-only consultation is “shaping how companies can best work with regulators in a successful and cost-effective way,” the government said.

Under a Focus on Enforcement initiative announced by the Department for Business (BIS) on 8 May 2012, “the government is inviting companies in the chemicals sector to feed in their experiences of working with national regulators and local authorities on the enforcement of the Control of Major Accident Hazards (COMAH) regulations.” The firms will be allowed to make anonymous submissions.

Announcing the initiative, business and enterprise minister Mark Prisk said: “Focus on Enforcement will give businesses in the chemicals sector the chance to make a real difference to the way compliance and protection is achieved on COMAH sites, shaping how companies can best work with regulators in a successful and cost-effective way.”

He added: “I want companies in this area of business, and those that advise and assist them, to visit the website, to tell us their views and suggest how we might reduce enforcement burdens and share best practice. This is your chance to make a real difference to the way these regulations are enforced.”

Peter Newport, chief executive of the Chemical Business Association, welcomed the review, adding: “We are keen to see the review explore how the burden and costs of regulatory compliance can be reduced.”

COMAH comes under the enforcement umbrella of both the Health and Safety Executive (HSE) and environment regulators. But unlike HSE consultations, this BIS led initiative is only seeking the views of the major hazard firms. COMAH site workers and neighbouring residents who could face drastic and possibly deadly consequences in the case of another Buncefield, are not being given the opportunity to participate.

Fundamental safety management failings were the root cause of the Buncefield oil storage blast, Britain's most costly industrial disaster, the COMAH Competent Authority Strategic Management Group concluded. Under the Focus on Enforcement approach, firms like Total – fined £3.6 million plus £2.6 million costs in July 2010 for its part in the disaster – are granted exclusive rights to “shape” the official enforcement approaches.

No-one else – certainly not the workers or local residents who would be blown to smithereens – gets a look in.

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Controversy over accident reporting changes

A dramatic reduction in the number of workplace injuries required to be reported by employers will deliver scant savings to business but could mean early warnings of problems are missed. Since 6 April 2012, employers have not been required to report to the Health and Safety Executive injuries that keep workers off normal duties for seven or fewer days. Previously three day plus injuries were reportable. Employers now have 15 days, rather than 10, to report an incident.

The Department of Work and Pensions (DWP) says the changes to the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations (RIDDOR) 1995 will see a fall of around 30 per cent in the number of incidents that must be reported by law – an average of around 30,000 fewer reports a year. It estimates the move could save businesses 10,000 hours a year.

Health and safety minister Chris Grayling said: “We want less red tape for business, and these measures should save companies thousands of hours a year. We are freeing them from the burdens of unnecessary bureaucracy, while making sure serious incidents are properly investigated.”

But Paul Kenny, general secretary of the GMB, commented: “This will do absolutely nothing to improve the health and safety record of UK employers or make workplaces safer. There will be 30,000 fewer accidents reported, which is not the same as 30,000 fewer accidents.” Unions believe records of less serious incidents could provide valuable intelligence which could help prevent future more serious problems.

The plans were also ridiculed by the business lobby. John Longworth, director-general of the British Chambers of Commerce, said “the government’s own figures show that this will only save firms £240,000 annually, which in the grand scheme of things, is tiny.” The saving equates to 5p per business per year.

In 2008, the Health and Safety Executive estimated the cost of a single workplace fatality was £1.5m. Each occupational cancer prevented would save society in excess of £2.5m, government estimates suggest. Unions argue this shows protective, preventive regulation backed up by enforcement easily and quickly pays for itself – delivering benefits to business and society as a whole.

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Cutting regulations is an expensive business

The government is spending more than £10 million annually on efforts to ‘ease the regulatory burden on business’.

Top spenders include the Better Regulation Executive (BRE), which develops policies to ‘reduce regulation’, costs £3.9m a year to run and employs 44 civil servants. The Better Regulation Delivery Office (BRDO), which operates the primary authority scheme and advises councils, costs £3.5m a year to run and employs 27 civil servants. Better Regulation Units (BRUs), which are based in each Whitehall department, cost the public purse an estimated £2.2m every year.

The Red Tape Challenge website, which allows the businesses to identify regulations they want scrapped, has 13 civil servants working on it and is expected to cost £796,288 to run this year. The Cabinet Office paid a web developer £25,008 to maintain the site and outsourced the moderation of the comments at the cost £37,328.

There are also 24 civil servants including finance directors and policy heads who are ‘board level champions’ who push the better regulation agenda in their departments. The Department for Business, Innovation and Skills (BIS) told EHN it would be too expensive to calculate the cost of their work. The cost of the government’s deregulation drive was uncovered by Environmental Health News (EHN) in a series of Freedom of Information Act requests. EHN totted up the total annual cost of the BRE, BRDO, BRU and the Red Tape Challenge to £10.2m.

Stephen Battersby, immediate past president of the Chartered Institute of Environmental Health (CIEH), told EHN the money would be better spent cracking down on firms that put the public at risk. “There is no evidence of over-regulation, indeed it was deregulation of banking that led to the irresponsible lending that led to the crash,” he said.

TUC general secretary Brendan Barber said the government was wasting precious money and resources on “an ideological whim.” He added: “With 20,000 people across the UK dying prematurely as a result of work-related accidents and illnesses, cutting back on vital safety regulation is the last thing they should be doing.”

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