An independent report carried out for the National Audit Office and the Department for Business, Innovation and Skills (BIS) suggests that the burden of doing business is beginning to lift. The fifth Business Perceptions report has found that there is now a sense of less regulatory pressure on industry and fewer obstacles to enterprise as a result of regulations.
The results of the survey paint a positive picture of the on-going efforts by the coalition government to introduce regulatory reform and reduce the cost of enforcement for British firms. The report findings are backed by on-going plans by the Health and Safety Executive (HSE) to further reduce its number of guides and recommendations. A total of 15 Approved Codes of Practice (ACOPs) as recommended by Professor Löfstedt’s independent review of health and safety legislation ‘Reclaiming health and safety for all’ are currently subject to review, revision, consolidation or withdrawal.
The BIS estimates that a cumulative net reduction of regulation to business since January 2011 of around £3.3bn has been achieved.
While the lifting of regulations and the removal of obstacles is advantageous, the cost of implementation has been criticised as being excessively high. The Environment Health News (EHN - Chartered Institute of Environmental Health) cites figures released under the Freedom of Information Act, calculating that the UK government is currently spending more than £10 million per year to cut regulations.
The planned Fee for Intervention (FFI) proposals, due for implementation in October 2012 may also result in additional costs for those businesses not meeting health and safety law. The new scheme will see HSE charging non-compliant organisations for the time and effort expended by the Executive to put health and safety breaches right, investigate the issue and take enforcement action.
The Business Perceptions Report
The Department for Business, Innovation and Skills’ report concludes that the cost of doing business is beginning to ease.
Key findings from the fifth Business Perceptions Report are:
- 41% of businesses say that the balance of regulation is about right.
- 55% of businesses feel that the level of regulation is an obstacle to their business, but this is a reduction from a peak of 62% in 2009.
- 46% of businesses think the burden of regulation will stay the same over the next 12 months.
- One-in-nine businesses have made contact with a body or organisation to make a suggestion on improving the regulatory regime.
The joint report by the newly formed Better Regulation Delivery Office and the Better Regulation Executive in BIS will be used to guide further regulatory reform activity. The report suggests that businesses can now see progress and some are starting to participate in the reform process via forums such as the Focus on Enforcement’ campaign in which BIS calls for businesses to submit their feedback on enforcement, suggest improvements, reductions and steps for change.
While the changes to regulations have been well received by those surveyed for the Business Receptions Report, there are suggestions that the reduced cost of doing business is being supplanted by the expense of de-regulation.
Further Plans To Reduce Guides and Regulations
A total of 750 regulations have been cut so far as part of the deregulation process, designed to free up UK businesses to be more competitive and more efficient. The changes have been driven in large part by Professor Löfstedt’s independent review of health and safety legislation ‘Reclaiming health and safety for all’. The review has asked for 15 Approved Codes of Practice (ACOPs) to be reviewed, consolidated or made obsolete by 2013. Minor revisions to an additional 15 ACOPs are scheduled for 2014. There are additional plans to limit all ACOPs to no more than 32 pages, save for in exceptional circumstances.
One of the key proposals is to remove the Management of Health and Safety at Work Regulations 1999 and replace with a much reduced guidance.
ACOPS to be revised, consolidated or withdrawn:
- Dangerous substances and explosive atmospheres (ACOPs L134 - 138)
- Legionella (ACOP L8)
- Asbestos (ACOPs L127, L143)
- Gas safety (ACOPs L56, COP20)
- Hazardous substances (ACOP L5)
- Workplaces (ACOP L24)
- Management of health and safety (ACOP L21)
- Agriculture (ACOP L116)Pipelines (ACOP L81)
ACOPS to be left as is or to have only minor amendments
- Diving (ACOPs L103 - 107)
- Work equipment (ACOPs L22, L112, L114)
- Lifting equipment (ACOP L113)
- Confined spaces (ACOP L101)
- Pressure systems (ACOP L122)
- Hazardous substances - pottery production (ACOP L60)
- Hazardous substances - lead (ACOP L132)
- Quarries (ACOP L118)
- Worker involvement (ACOP L146)
Does Cutting Regulations Cost Millions?
While the cost of enforcement for business would appear to be reduced, EHN has suggested that the cost cutting has actually cost millions itself. Quoting figures obtained under the Freedom of Information Act, it estimates that the UK government has spent more than £10 million annually since announcing its commitment to regulatory reform and cutting 750 regulations. The spending has been spread amongst several activities;
- The executive charged with developing policies to reduce regulation, the Better Regulation Executive (BRE) employs 44 civil servants and costs £3.9 million per year. This includes £864,000 per year for the Regulatory Policy Committee.
- The Better Regulation Delivery Office (BRDO) has a team of 27 civil servants and costs £3.5 million per year to run. Its function is to advise councils and operate the primary authority scheme.
- The Whitehall-based Better Regulation Units cost £2.2 million annually to maintain.
- The Red Tape Challenge website is expected to cost £796,288 this year. It has already been allocated a £25,008 budget for web maintenance and £37,328 for comment moderation. The site takes suggestions from businesses on regulations they would like to see scrapped.
- 24 board level champions, including finance directors and policy heads, also represent a cost to regulation cutting but, the BIS states that it would be too expensive to calculate the cost of their work.
A number of public figures have challenged the spend, suggesting that it could be spent more effectively elsewhere. Brendan Barber, TUC general secretary, told EHN that, ‘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.’
Fee For Intervention (FFI)
Businesses breaking health and safety laws may be required to pay the HSE a Fee For Intervention (FFI) to cover the Executive’s cost in the event of spending time and effort helping non-compliant organisations to satisfy health and safety requirements, investigate and enforce. The fee will be levied by HSE inspectors witnessing ‘material breaches of the law’ when visiting business premises. A material breach is defined as a breach of the law serious enough to warrant a written notification from the inspector. Examples include missing safety devices on machinery and poorly stored asbestos materials.
The FFI is being introduced by the HSE and Government as an alternative to spending money from the public purse when encountering non-compliant firms and taking required remedial action. The HSE also hopes that the FFI will encourage businesses to be compliant at all times, rather than taking shortcuts in the hope of undercutting competitors and potentially putting lives at risk.
The FFI will only be required when the HSE’s inspectors carry out the work. The fee will not be applicable in the event of inspections by other agencies and bodies such as local authorities.
Self-employed individuals who don’t put others at risk as a result of their workplace activities, businesses that already pay HSE fees and businesses that work with certain biological agents will all be exempt.
The fee payable will be determined by the amount of time the inspector has been required to spend on helping the business remedy its health and safety breach. This will include site visits, time spent on site, report writing, letter writing, taking statements and enlisting specialist support.
The FFI will be implemented on 1st October 2012.
Summary
There is clear evidence that regulations are being lifted, with 750 made obsolete so far. This is backed by an increased feeling amongst business leaders that there are fewer regulatory obstacles, leading to less of a burden of regulation for industry. Although 55% of respondents to the fifth Business Perceptions report feel that regulations still pose a business obstacle, this is down from the 61% recorded in 2009.
The HSE has outlined continuing plans to reduce regulation even further, as set out in the recommendations made by Professor Löfstedt’s independent review of health and safety legislation ‘Reclaiming health and safety for all’. 15 Approved Codes of Practice (ACOPs) will be reviewed, consolidated or made obsolete by 2013 with a further 15 subjected to minor changes by a 2014 deadline.
Although regulations are being lifted, the process of deregulation is extremely costly. It is estimated the process requires an annual budget of approximately £10 million. Some suggest this money could be better spent targeting rogue traders or improving safety regulation, not removing it.
Businesses making savings from the removal of regulatory obstacles may also find those savings cut when the Fee For Intervention (FFI) is introduced in October 2012. This requires non-compliant businesses with material breaches of health and safety law to pay for the HSE inspector’s time in remedying the situation.
If these regulations are being reduced, the following questions need to be answered:
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With changes in the regulation amounting to less prescriptive practice does this mean that there will be more ambiguity and therefore increase the reliance for the courts to authoritatively interpret regulation?
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Does this mean that I should revise my organisations H&S Management System?
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Where will the requirement for risk assessment and effective management now lay – will insurers play a more important role in assessment and management.
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Does this mean my organisation is potentially more open to breaching health and safety requirements?
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Does this mean that the Health and Safety at Work etc. Act 1974 will have to be amended to include the principles of risk assessment and management?
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Does this mean that BS OHSAS 18001 is going to be further relied upon if the management of Health Safety ACOP L21 is revised?
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If we have larger supplier chain that includes small and micro companies is the knock on effect going to be deterioration in written safety systems and health and safety management and a possible reduction in health and safety performance
If you would like to discuss the above or need advice please call or email Ark Workplace Risk Ltd.