Health and Safety in Scotland

CORRECTED TRANSCRIPT OF ORAL EVIDENCE    To be published as HC 1344-iii

House of COMMONS

Oral EVIDENCE

TAKEN BEFORE the

 Scottish Affairs Committee

Health and Safety in Scotland  

Wednesday 26 October 2011

Phil Scott and Garry Clark

Evidence heard in  Public Questions  178 - 276

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Oral Evidence

Taken before the  Scottish Affairs Committee

on  Wednesday 26 October 2011

Members present:

 Mr Ian Davidson (Chair)

Fiona Bruce

Mike Freer

Jim McGovern

Mr Iain McKenzie

Graeme Morrice

David Mowat

Mr Alan Reid

 ________________

 Examination of Witnesses

Witnesses:  Phil Scott, Chemical Industries Association, and Garry Clark, Scottish Chambers of Commerce, gave evidence.

Chair: Before we go straight on to the first witnesses I want to make a brief statement. There have been a number of reports this morning. I want to make it clear that I did not threaten anyone and did not intend to threaten anyone. I apologise if anyone took offence but reiterate that no threat was made or intended. I think everybody here understands that point. Are there any observations?

Mr Reid: Chair, I was very surprised myself when the matter was made public yesterday. I was present for all of the private meeting last week and I have no recollection whatsoever of any threat being made to anybody. I am sure that if a threat had been made I would have remembered it. What also puzzles me is that if a threat was made, no other member of the Committee said anything at the time. There was no sharp intake of breath. It was all a bit of a surprise when, six days later, these alleged remarks were put into the public domain.

Mike Freer: I was also at both sessions. There was a robust discussion about the inquiry and the hon. Lady was somewhat sensitive to the criticism, but I did not hear those comments that were supposed to have been made at all.

Jim McGovern: I too was present at both sessions. I have to say that I heard nothing whatsoever that could be construed as threatening, hostile, intimidating or aggressive. I am disappointed in the member of the Committee who, following a private session of the Committee, went public in a press statement making alleged statements about being intimidated. She certainly did not seem to be intimidated at the time. That is the big disappointment for me. She has waited six days to make these comments.

Fiona Bruce: I did not hear a threatening statement, Chair. There was a debate which I consider was of a robust nature, in line with political debate.

Q178 Chair: Could we move on and invite our witnesses to come forward? We are now picking up the investigation into health and safety in Scotland. This is the third session of this inquiry. Could I ask the visitors to introduce themselves, first of all?

Mr Scott: Good afternoon. My name is Phil Scott. I am representing Chemical Industries Association. I am the Safety and Risk Policy Manager for CIA.

Mr Clark: I am Garry Clark. I am Head of Policy and Public Affairs at the Scottish Chambers of Commerce.

Q179 Chair: I will start off by asking you both whether or not there is a difference between the profiles of your UK and Scottish membership. As you may be aware, we commissioned a report from the National Audit Office that helped identify why there were some differences between accident statistics in Scotland and the rest of the UK. In particular, could you also tell us whether or not you have any idea what proportion of your membership is involved in high, medium or low-risk activities?

Mr Scott: We do not see any material difference in the member companies that we represent, whether they are in Scotland or England and Wales. The companies tend to be national or multinational companies with sites both in Scotland and south of the border. With regard to the issues that we have with the Health and Safety Executive, there are some and they tend to be national rather than ones specifically relating to the way the HSE operates in Scotland.

Q180 Chair: I want to follow up on that one before I ask Mr Clark. In terms of the make-up of your industry, the style of companies and the nature of the work undertaken, there should not be any difference in the statistics between England and Scotland.

Mr Scott: I do not see any reason why there would be. CIA has 17 member companies in Scotland. They tend to be at the higher end of the hazard range. The industries that we represent in Scotland cover oil refining, synthetic and fine chemicals, agrochemicals and pharmaceuticals, just as we do in other parts of the UK. The way they are regulated by the Health and Safety Executive is consistent with the way they are regulated in other parts of the UK. That is because the part of HSE that regulates companies in Scotland is a centralised organisation. It works out of a national office but with three regional areas, Scotland being one of those regions. There should not be any difference in the priorities for what is inspected, nor the standards expected of companies. From a CIA perspective we do not see any significant difference in the health and safety standards that members can show.

Mr Clark: The Scottish Chambers are an umbrella organisation representing 21 Chambers of Commerce spread geographically pretty much all the way throughout Scotland from Caithness down to the Borders and Dumfries and Galloway. We represent within that membership some 10,000 businesses of all sizes across all sectors. It is an extremely broad church in terms of its membership. Very many will be exposed to health and safety issues of some description, but probably most of them will deal with their local authority rather than HSE direct, although some of our larger members, particularly in the oil and gas sector or the chemical industry, will have direct relationships there.

At a UK level our sister organisation, British Chambers of Commerce, represents some six of the 21 Chambers that we also represent. Those tend to be the larger Chambers. They tend to be the cities, aside from Fife, Renfrewshire and Ayrshire. It is probably slightly more skewed towards the larger end of the scale in terms of British Chambers of Commerce membership in Scotland.

Q181 Chair: I want to be clear on that. You are skewed more towards the larger end of the scale than the British Chambers.

Mr Clark: No; the British Chambers will probably be skewed towards the slightly larger businesses than us because their membership in Scotland tends to be predominantly in the cities, whereas our membership is spread throughout Scotland more generally.

Q182 Chair: But the British Chambers across the whole of Britain will also presumably include the sort of people that you have.

Mr Clark: Yes.

Q183 Chair: If we looked at the statistics, it should be pretty much of a muchness, should it?

Mr Clark: Yes, if you compare the UK to Scotland, it should probably be very similar. Our membership profiles are pretty similar.

Q184 Chair: What about in terms of high, medium and low risk?

Mr Clark: We would certainly have a number of high risk, predominantly at the higher end but also working down the membership scale. I do not know what the medium and low-risk profile would be for our membership.

Q185 Chair: My impression would have been that your people were overwhelmingly low risk or medium risk.

Mr Clark: Most of them will be small businesses. Some 90% of our membership are probably small or micro-businesses. Most of them will be relatively low risk but there could be some high risk in there as well.

Q186 David Mowat: The Chairman was exploring the issue that the statistics show that over the last four or five years the rate of injury in Scotland is quite a lot higher than the rate in England and Wales as a whole. We are just trying to understand from your perspective whether or not you have any insights into why that might be, and in particular whether it is due to the fact that there is a different industry profile or particularly risky industries. Some people have said it may be because of the higher percentage of agriculture in Scotland. Agriculture is one of the worst industries in terms of this. I am just interested to get your view on that.

Mr Clark: I do not think I can give an empirical answer to that, but certainly, yes, there is a preponderance of agriculture. Some of the Chambers I have mentioned-Ayrshire, Aberdeenshire or Perthshire-would have fairly large numbers of agricultural businesses in the membership. I do not know whether or not there is any relation to shorter daylight hours during the winter or if there is any correlation between winter time and higher rates of accidents. I do not know what the specific-

Q187 David Mowat: The answer Mr Scott gave was as far as the chemical industries were concerned. As far as you can see, the health and safety processes are the same between England and Scotland. I think your written submission said that as well.

Mr Scott: They are pretty much the same. Some member companies have a process that is not replicated elsewhere in the UK, but I do not think there is any material difference there. We think there are about 150 companies in Scotland engaged in chemical processing of some sort. Many of those will be fairly small businesses. In the sector we represent they tend to be at the higher end of the scale in terms of employment and the hazard range. Because of the larger size and the hazard range they tend to be quite well regulated. There is a mature relationship with the regulator, which we understand and respect. There is a very responsible attitude on behalf of those companies. From the perspective that I can bring to your question, I do not think there is any material difference between those companies in Scotland and in the rest of the UK.

I know from other dealings with the Health and Safety Executive that their priorities occasionally change, depending on hazards and incidents that have happened. Where that has happened it has not tended to be in our industry. Construction is an obvious example of an industry where there tend to be higher accident rates, but in the chemicals industry the health and safety performance is relatively stable and of a good standard.

Q188 David Mowat: The reason we have for that-there is quite a big difference in the rates-is that perhaps Scotland has more agriculture and also, apparently, more construction, which surprised me a bit, but that is part of it as well. Has under-reporting in terms of the health and safety environment been an issue in terms of your industry? Do you see any difference in the propensity of that between the different geographies?

Mr Scott: Again, from the perspective of chemical companies in Scotland I am not aware that it is a serious issue. These chemical companies tend to be invested in heavily either from the UK, or increasingly from abroad. They are mature companies with a long-term business plan. There is no advantage in under-reporting. They are not going to get a quick advantage from under-reporting.

Q189 Chair: Can I ask Garry to follow that up about under-reporting?

Mr Clark: I am certainly not aware of us measuring anything like that among our members but I would be more than happy to make inquiries.

Q190 Chair: It is the sort of thing that is very difficult to measure if people by definition are under-reporting it. Is there anything you can help us with on that at all? It was specifically one of the issues that the NAO identified as an unknown. You are closer to these firms than we are. Can you help us at all?

Mr Clark: As you say, I think it is a very difficult one. If they are not reporting it to HSE or local authorities, then I am not sure we would pick up anything that anyone else does not. I am certainly happy to make inquiries.

Q191 Chair: We presumed that you knew everything, you see, about all your member companies.

Mr Clark: If only.

Q192 Chair: I was not quite sure whether or not, in conversations with people from other Chambers or elsewhere in the UK, you would form impressions or anything like that. One of the issues is the extent to which there is a macho culture in Scotland, which makes people want to carry on working even if one of their legs has been cut off and they want to finish their shift. We wondered therefore whether you had been identifying or picking up any of that.

Mr Clark: We certainly have not been aware of anything specific along the lines of under-reporting or things going unsaid or unrecorded. That is not to say it does not happen, but we have not picked up anything specifically.

Chair: I understand that. Jim, you wanted to come in on this and then Iain.

Q193 Jim McGovern: Garry, the Chair has just said that we presumed you knew everything. It would probably be helpful to yourselves if you presumed that we know nothing. When we ask a question, work on the basis that we do not know.

Phil, when you say that there is very little difference or insignificant difference s between Scotland and England and Wales , and it is not a serious issue, could you substanti ate that? Could you quantify i t? What are the differences, or is there just simply no difference in your industry ?

Mr Scott: Are you asking in terms of the chemical processes and the manufacturing processes there, or the accident statistics?

Q194 Jim McGovern: The accident statistics, yes: the health and safety issues. That is why we are here.

Mr Scott: The accident frequency rate across the chemicals industry in the UK is round about 0.219. The last statistics we had for Scotland, which were 2009 figures, were 0.25. There are minuscule differences and there will be variations year-on-year. The trend has consistently been down. If you look at the figures over the last five years, the rate of three-day accidents has been falling. In Scotland, in the last year of figures we have-2009-there were no fatal accidents in the chemical sector. There were no reports of diseases. There was a small number of major accidents to people from things like falls, workplace transport incidents and those sorts of issues. There were six, eight or 10 of them. I can give you the figures if you want me to look at them now or I would be happy to send them to you

Q195 Jim McGovern: With your indulgence, Chair, it would probably be helpful if Mr Scott was able to provide the Committee with those figures. Accidents like slips, trips and falls are not exclusive to your industry. If we specifically talk about your industry, are there some parts of it that are more likely to have higher figures than others?

Mr Scott: The focus that we have in CIA, and also the focus that companies have, is on preventing major accidents-preventing the large escapes of flammable and toxic gases, liquids and so on that can cause a major accident. The accident frequency rate from things like slips, trips, falls, machinery-guarding accidents and that sort of thing has always been low. Statistically, it is trending low, so the focus tends to be on preventing the large unwanted major accidents that have the potential to damage lots of people, lots of the environment and lots of assets. That focus is the same, certainly in CIA membership, whether it is in Scotland or England and Wales.

Q196 Chair: Before I bring Iain in, I want to follow that up. In terms of benchmarking your companies against each other, not only for the big things but also the slips, trips and falls, do you as an association have a mechanism for doing that or do you just leave it to individual companies to pursue benchmarking measures?

Mr Scott: We gather indicators of performance across a wide range of metrics, including accidents, excursions beyond environmental permit limits and so on, on an annual basis. They are called indicators of performance. Each of our member companies is charged with providing them. We get a return rate of about 96% or 97% each year so we can look across all of our members and from that we can get an average headline figure of the accident frequency rate. We can compare that with individual companies as well.

We have also recently started some work with the HSE to get live data from them on things like three-day accidents and major losses of containment, should they happen-that sort of thing. We are now getting information which is current rather than our IOPs, which are a year in arrears.

Q197 Chair: It comes back to the identification of best practice and implementation by mutual support and so on. I am not clear from what you are saying whether or not that actually takes place. I can see that you sit in an office somewhere and compare the statistics. I am not quite sure whether there is then some sort of feedback where firms are identified when they may be falling down and can learn from others. Is there a methodology for that?

Mr Scott: Yes, there is. Forgive me if I did not paint the right picture. We have a very close interaction with member companies. We visit sites; we pay account visits; we have three-monthly meetings of regional site managers where there is a very open discussion about health and safety incidents that may have happened and initiatives that seem to be working. There is very close sharing at the operational level so we can do that benchmarking. Taking individual company statistics, we would not use them in an open forum. We would use that on an individual basis with the company. We would go in and say, "The benchmark for this particular process safety topic in your industry is such. You seem to be here. Is there anything we can help you with?"

Q198 Chair: That is helpful. You would actually be doing that.

Mr Scott: Absolutely.

Q199 Mr McKenzie: Going back to the non-reporting aspect and the difficulty of following that up and tracing, have either of you had brought to your attention or do you have evidence of any of your members participating in the act of actively encouraging employees not to submit a report of an accident having taken place in their place of work but asking them to look upon reporting that elsewhere?

Mr Clark: I certainly have not been aware of anything of that nature.

Q200 Mr McKenzie: I say this from the base, Chair, that I have heard from constituents that employers will place a bit of pressure upon employees not to register accidents at work for fear that it infringes on team bonuses and other things.

Mr Scott: That has traditionally been a pressure in industry, not just in the chemicals industry but in any industry. Boards of companies like to have long periods without any lost time accidents. What is possibly a more likely scenario is that if somebody has an accident at work, they may be encouraged not to take three, four, five or six days off because they cannot do their normal job, but to come in and do some lighter work. I have certainly known of that happening. They are not off work, but maybe for a few days they cannot do their normal manual job. I would not say that it is very common. I certainly could not give you an exact example of when I have seen it, but I am aware that it is something that may well happen in all industries.

Q201 Jim McGovern: I am sorry for interrupting, but on that point, are you saying, Phil, that a person might be offered that opportunity or told, "You can still come to work because we will give you a different job"?

Mr Scott: As I said, I could not give an exact example of somewhere I have seen those circumstances and that I could state how that went. The way you might imagine it is probably as good as the way I would imagine it.

Q202 Jim McGovern: Is it an offer or an instruction to come to work?

Mr Scott: I am certainly not aware of any instructions for people to come to work when they have had an accident and they are not fit to do so. I am just not aware of that. I could not give a single example of it. I could not say that it does not happen, but I am not aware of any examples of it.

Mr Clark: It is possible that something like that may be more common since the fit note changes; doctors issue certificates saying, "You are off work for seven days. You are not fit to do X, Y or Z but you can do this type of work."

Q203 Jim McGovern: I am aware of the phased return to work or light duties, but I am intrigued as to whether an employer in your experience would say to an employee who has been injured, "I insist you come to work tomorrow and I will give you a different job", or whether they say, "Would you like to come back to work tomorrow and I will give you a different job?"

Mr Clark: It would certainly seem that the latter, as you have described there, would be a reasonable offer, in terms of offering the employee the ability to come back to work and maybe not lose any wages, to do something else and make themselves useful about the place if they were able to do that. I would not like to think of employers putting too much pressure on an employee who might have been injured.

Mr Scott: Could I make two more observations on that which may be helpful? First, in terms of the chemicals industry, the companies are quite heavily unionised. It is mainly GMB and Unite. We have had no information from union sources about that being a particular factor in member companies. That is the historical picture.

If I had one concern about whether this was a scenario that might increase in the future, there is a public consultation by the Health and Safety Executive, which has just closed, called "Fee for Intervention", whereby they will directly charge industry for their inspections where they find a material breach. The charge rates are quite high: £133 an hour, which equates to about £750 a day. For investigations of accidents, that will soon multiply with increasing numbers of inspectors and increasing days of investigation. The sums that companies could be faced with could be quite high. If anything is going to drive reporting underground, or put pressure on employers to suggest perhaps that an accident would not be reported and somebody would stay at home, that is more likely to do it in the future, but historically, I stand by what I have said: I have no information and no evidence that that has been an issue in our industry.

Chair: That was a very helpful point about unionisation as well, which we have come across elsewhere.

Q204 Mr Reid: As you will be aware, there are differences between Scotland and England in how prosecutions are handled. In England the HSE carry out the prosecutions themselves, whereas in Scotland they pass them to the Crown Office and Procurator Fiscal Service. Have you noticed any differences in the way that prosecutions are handled between Scotland and England because of this difference in who carries them out?

Mr Clark: Our organisation deals exclusively with Scotland, although we do compare notes with our sister organisation, the British Chambers of Commerce. I have to say that so far it is not something that has been flagged up by members as a major difference in terms of carrying out their business in Scotland rather than England.

Q205 Mr Reid: Is there any feeling that the process is slower in Scotland because of the extra organisation involved?

Mr Clark: I have not heard anything of that nature being flagged up, but again many of our members are exclusively operating in Scotland. Some will operate on both sides of the border, but I have not heard of specific examples of prosecution by the Procurator Fiscal and Crown Office Service being any more or less effective than south of the border.

Q206 Mr Reid: What about the chemical industry?

Mr Scott: No; we have no information about that part of the process causing any additional difficulties. I would say that whichever side of the border you are, it is an extremely long-winded process. It takes a long time anyway. Certainly for the chemicals industry, the Health and Safety Executive uses the same process-the enforcement management model-to determine whether to take enforcement action. Once enforcement action is initiated, it just takes its course and I do not think it is that different in England and Wales compared to Scotland.

Q207 Mr Reid: Even if HSE is using the same methodology, does the Procurator Fiscal Service prosecute the cases that HSE asks them to prosecute or is there a further sifting process within the Procurator Fiscal’s office?

Mr Scott: The process is that HSE determines whether it considers it has enough evidence to initiate a case. At that point in England and Wales it can take the prosecution itself in the magistrates court; otherwise it refers to the Crown Prosecution Service. In Scotland I understand that it refers it to the Procurator Fiscal, but at that point it is outwith the decision of HSE as to whether to initiate proceedings or not.

Q208 Mr Reid: Going to the end of the process, if a company has been found guilty and then gets fined, are you aware of any differences in the scale of fines between Scotland and England?

Mr Scott: I have no information on that.

Q209 Jim McGovern: As a result of the comprehensive spending review it is my understanding that the Health and Safety Executive is going to have to cut its budgets by 35% by 2014-15. How do you imagine those cuts will affect the relationship between the Health and Safety Executive and both your members-the Chambers of Commerce and the chemicals industry?

Mr Scott: For most of the chemicals industry-certainly for most of the CIA members-I do not think it will make that much difference. The cuts that HSE has to make are 35% over four years. That is the difference between their budget and what they recover in charging; that is primarily COMAH charging. Our industry is already heavily subject to COMAH charging and it is not an area that HSE is going to cut because it is a revenue stream. We do not think there will be very much difference in the chemicals industry, certainly not in terms of companies subject to the COMAH regulations.

The Fee for Intervention initiative, which I mentioned earlier, is going to have an impact on non-COMAH companies and companies that are at the COMAH lower tier level. In the impact assessment for that consultation, HSE’s estimate is that they will reduce inspections at low-risk premises by about 110,000 a year across the UK and they will focus on higher priority areas. We do not know what those higher priority areas are. It may be that in the chemicals industry, for example, we will get more inspection rather than less, but in lower risk industries-maybe in some of Garry’s constituencies-they will get fewer inspections.

Q210 Jim McGovern: Garry, I will narrow the question down slightly for you. I do not know about the make-up of your membership, but my own background is in the construction industry prior to having this job. There was a perception in the construction industry-certainly in the trade unions that represented people in the construction industry-that the Health and Safety Executive at the time, back in the 1970s, 1980s and 1990s, was grossly underfunded. When Phil refers to high-priority areas, could you envisage a situation when the construction industry will be even less looked at than it was previously?

Mr Clark: The cuts that are forthcoming and under way in Health and Safety Executive budgets highlight the issues that our members have in terms of health and safety. On the one hand, they would welcome a more proportionate approach to health and safety in terms of lighter touch on lower-risk business and maybe a heavier touch on high-risk businesses. But at the same time one of the issues is perception-how they perceive the Health and Safety Executive or their local authority will interact with their business. On the one hand, you potentially have the hope of lighter touch regulation on lower-risk businesses. If that is coupled with less information for that business, then the fear that business has over what it is going to mean and what impact the regulation may have on their business, if they choose to expand, take on more staff, or get involved in different aspects of business, may result in a negative impression of that impact even though they may be subject to lighter touch regulation than they are at the moment. None of us is saying that regulation is a bad thing. Regulation exists for a reason and it must be applied; but it must be applied sensibly and according to risk. It must also be something where businesses can engage with health and safety regulators so that they know what they are getting into and they do not have a false impression of the circumstances out there.

Q211 Jim McGovern: Going back to when I was working in the construction industry in the 1970s, 1980s and 1990s, my recollection is that we only ever saw the Health and Safety Executive if there was a fatal accident on a building site. Other than that, there were no routine inspections or anything. Would you agree with my perception that those inspections will be even scarcer than they have been previously? I think you would agree that the construction industry is a high-risk industry.

Mr Clark: Yes, absolutely. What is important is that proactive steps are taken to ensure that there are not fatal accidents within individual businesses. Again, that highlights the dilemma: on the one hand we want to see lighter touch, but on the other hand we want to see early intervention to prevent these sorts of accidents from happening in the first place. Certainly, our members tell us that they welcome proactive engagement with Health and Safety to ensure the safety of their staff, their employees and the future of their business.

Q212 Jim McGovern: Thank you for your answer. You have possibly anticipated my next question. Is that how you would like to see the HSE absorb these cuts to the budget? Do you really believe it is achievable, because I certainly have doubts?

Mr Clark: I think it is going to be very difficult, given the scale of the cuts, for the Health and Safety Executive to maintain high levels of proactive engagement, particularly with smaller businesses. The bigger players, as Phil has already mentioned-if we speak to our members in the oil and gas sector, for example-have good and long-standing relationships with Health and Safety. They have teams of staff dedicated to dealing with health and safety issues in the workplace. Smaller businesses often do not have that luxury. It is important to them that they are able to maintain a good relationship with Health and Safety. If they are reducing their budgets on the promotion and marketing of their work, for example, it will make that job more difficult. It will make businesses more likely to have false perceptions of the weight of health and safety legislation and what impact it could have on their business.

Mr Scott: The HSE Impact Assessment on the Fee for Intervention programme suggests that the income it will generate from industry is about £43 million a year. As well as getting revenue that way, they are going to re-prioritise their inspections so that they concentrate on the higher risk areas. I would have thought construction would be one of those areas. It must be at the expense of some lower risk businesses and maybe a greater focus on investigation as well, as opposed to primary inspection, but in regard to what we all perceive as high hazard, as in the chemicals industry, and high risk, as in the construction industry, I do not think there will be a significant change in the inspection profile in those parts.

Q213 Jim McGovern: Phil, I am not sure you can comment in any great detail about the construction industry-maybe you can; I do not know if you have ever experienced it. I am sure you would agree that when you get down to small companies and maybe an employer with five or six people, if the employee says, "I don’t want to do that because there is a hazard and it is dangerous", very often the attitude is, "Off you pop, we will get somebody else to do it." You are out of work and somebody else will do that.

Mr Scott: Yes.

Q214 Jim McGovern: Is that a fair reflection?

Mr Scott: I would agree with that entirely, yes.

Q215 Fiona Bruce: Good afternoon, gentlemen. Obviously you are aware of which industries are high risk. Have you had any discussions with the Government about which should be prioritised if there is to be a reduced number of inspections?

Mr Scott: No, we have not, certainly not within CIA. We have commented to Professor Löfstedt in his review of health and safety regulation on the regulations that impact on our industry. It is fair to summarise by saying that we do not have a problem with the regulations per se. We do have some issues with the way in which those regulations are implemented, but that is not going to change the health and safety priorities.

In terms of Fee for Intervention and the rest of industry that will now be charged, there is no information from HSE yet about how they will re-prioritise, so we have not had an opportunity to engage with them about where those priorities might be.

Q216 Fiona Bruce: Would you welcome that?

Mr Scott: Yes, we would, for our sector and the businesses that we represent. We work fairly closely with the Health and Safety Executive on their range of strategic priorities. We generally agree with those priorities-things like emergency response, leadership in high hazard companies and use of performance indicators. We understand those priorities and we work closely with our companies to make sure they can meet all those needs.

Q217 Fiona Bruce: I was very interested in the conversation earlier, Mr Clark, where you commented about a degree of fear through perhaps a degree of ignorance. How far do you think that is inhibiting expansion of small businesses at this time?

Mr Clark: It is certainly the subject of a survey that my colleagues in the British Chambers of Commerce carried out earlier this year and in the report they published in May. That highlighted that, essentially, for very small businesses there was a significant fear of the cost of regulation to their business in terms of health and safety regulations. That increased as they got to above 10 members in employee level. It really did not change until you got past 250 and into the larger business area. There was certainly quite a substantial worry about the cost of regulation at that size of business.

Anecdotally, members in Scotland have been telling us that as the HSE changes its focus, they are more concerned about being caught out on fairly minor issues where fines and so on are imposed. That may be at the expense of long-term engagement to try and prevent some of the major issues taking place. Again, there is proportionality in terms of HSE’s or the local authority’s engagement with the business.

Q218 Chair: I want to follow up that point. Has it been the subject of discussion between your organisation and the HSE-if there is a pattern there? Have you any feedback on that?

Mr Clark: That discussion has taken place. It has not been directly between Scottish Chambers and HSE, but there have been discussions between British Chambers and HSE about that.

Q219 Chair: This is a genuine issue that has been identified. Do you have the feeling that they are listening to you on things like that? The point you are making there is a very serious one. If it is justifiable, the HSE ought to know your anxieties are justified; and if not, it is a misapprehension because bad stories spread more quickly.

Mr Clark: I think that is right, but in essence if we are cutting the HSE budgets so much, and if marketing and promotion are going to suffer as a result of that, it is going to be more difficult. It is relatively straightforward for ourselves or British Chambers to speak to HSE about these issues, but where it really matters is between the individual business and the regulator. If there is less engagement taking place there, then those businesses may have a false impression. Health and safety costs are a burden to business. They are the third largest cost to business, the highest being employment costs and employment law costs. There is an undoubted cost, but it may not be as onerous on a small business as they think. If they are able to engage at an earlier stage, more information would be welcome.

In the Scottish Chambers, for example, we partnered with NHS Health Scotland and the Department for Work and Pensions last year on the promotion of a Healthy Working Lives advice line for businesses across Scotland. Our involvement was mainly on the health at work aspect, but health and safety was also specifically covered by the advice line. We were certainly trying to promote that as well as being an independent source of information about health and safety to smaller businesses. It is certainly something that is provided and was partly funded by Scottish Government and DWP. We were very happy to support that kind of information spread in the workplace.

Q220 Fiona Bruce: You have touched on what I was going to ask you next, which was how we can make most use of the budget we have to communicate with small businesses in particular, in a way they feel is non-threatening. The very words "Health and Safety Executive" are daunting to a business that cannot afford to invest in the kind of human resources that you can when you are a 250-man business. Do you have any other thoughts about how we can do this so that there is not the fear of any contact at all with HSE on the part of small businesses? How can we break down that barrier so that it seems a constructive relationship?

Mr Clark: It is always a very tough one. Trying to facilitate contact between Government at a national level and small businesses, which by their nature are usually extremely local, is very difficult. As I have mentioned, in the Chamber of Commerce network in Scotland we have tried to promote the service that was being provided by NHS Scotland. It is probably not as well known a service as the NHS would like it to be, but it did provide members who used it with a degree of reassurance. It is the same with environmental inspections. Nobody wants to go-in Scotland’s case-to the Scottish Environment Protection Agency, and say, "Look, I am thinking about doing this this way; is that okay?" because it is like asking the police, "Am I going to commit a crime or not?" It is that kind of attitude. People will not necessarily feel comfortable going to Health and Safety, but they may be comfortable going to another information provider such as NHS Scotland, a Chamber of Commerce or their business organisation in order to access that kind of information. It is advertising the fact that the information is available.

Q221 Fiona Bruce: It is there but it needs to be communicated better.

Mr Clark: It is partly there, yes.

Q222 Fiona Bruce: I would be interested to know what your views are about the fact that there is, in all likelihood, going to be a higher proportion of inspections on a certain range of industries and how you feel that will impact overall on health and safety and the accident levels.

Mr Clark: I think it will depend on the industries involved. As I say, a lot of the larger industries are already reporting to us good relationships with HSE. Unless there is a specific problem with accidents in that particular industry, it is difficult to see how a larger number of inspectors would necessarily impact significantly on that relationship. Where there is a lack of a relationship is with the smaller businesses and those with lower or medium risk that do not have that day-to-day contact and do not have a staff dealing with health and safety issues in their workplace. It is at that level that there is the greatest danger of an increasing disconnect between HSE and business.

Q223 Fiona Bruce: So concentrating on higher risk is also concentrating on areas where perhaps there is greatest compliance.

Mr Clark: Yes. There tends to be greater awareness of risk and how to tackle that risk in some of the larger and more high-risk businesses in particular.

Q224 Fiona Bruce: To disproportionately concentrate on those at the expense of communication with the lower-risk ones could disproportionately disadvantage those who work for the lower-risk areas.

Mr Clark: At the end of the day, the priority should be safety. Where the engagement happens should be directed towards ensuring the maximum possible safety of employees.

Q225 Mike Freer: I am now utterly confused as to what the view of the BCC is. What I seem to have heard is that you want less regulation. There are currently 131 regulations and you want them consolidated. You welcome a focus on high-risk industries. You want a light touch approach to low-risk industries, but you want the Health and Safety Executive to spend more money educating low-risk industries. Is that basically what we have just heard?

Mr Clark: In essence, we want to ensure that the focus of the Health and Safety Executive is on high-risk industries, ensuring that where there is significant danger or where there are significant issues in those areas they are addressed.

Q226 Mike Freer: You want them to inspect the high-risk industries and then spend lots of money telling the low-risk industries, "We are not going to inspect you."

Mr Clark: It needs to be appropriate. One of the things that businesses need is an awareness of what the Health and Safety Executive is there to do. It is not necessarily a burden on the business. At the lower end of the scale the perception of HSE is worse than the impact of HSE. What we need to do is communicate more effectively. That perhaps need not be done by HSE itself, but in terms of the work that it is carrying out and the impact on individual businesses, if a business is looking to expand in the range of work it does and expand the number of employees it has-to have them working in different areas, for example-it needs to be able to make a phone call and say, "Look, what is this going to mean for my business?" Quite often they do not feel comfortable going to Health and Safety.

Q227 Mike Freer: Why will that change? If they do not feel comfortable now, I am not sure that the HSE having lots of adverts saying, "We are warm and cuddly; come and talk to us" is going to change that perception.

Mr Clark: Perceptions can change.

Q228 Mike Freer: In the full document, the BCC clearly states that it feels that the burden of regulation is cumbersome and onerous. That is not what you are saying.

Mr Clark: It is onerous for some and it needs to be appropriate. That is what we are saying. Using another regulator as an example, the Scottish Environment Protection Agency had an extremely poor reputation until very recently. It is still not loved by all, but it has decided to take a more appropriate approach to risk and to deal with businesses as customers. That kind of culture change within the regulatory community, if you like, has had a positive impact on businesses. They now feel more comfortable dealing with SEPA than they did a number of years ago. Changing the way that a regulator engages with businesses and focusing its activities more appropriately and more sensibly can have a positive impact.

Q229 Mike Freer: To be fair to them, that is a different issue from the one that we are addressing. The focus on high risk and low risk is one thing. How the HSE then engages with its customers is a somewhat different approach. It could approach every industry in the same way and have a very good engagement process.

Mr Clark: It needs to be both.

Q230 Graeme Morrice: This is a question for both gentlemen. In relation to the "Good Health and Safety, Good for Everyone" document, could I ask your views on the proposals to shift the burden of the charges levied by the Health and Safety Executive for inspections and investigations on to those businesses who default? Do you also share the concern that has been expressed that this will introduce an element of unpredictability to HSE resources which would affect its ability to carry out its responsibilities effectively?

Mr Clark: In terms of cost recovery issues, that is one area where some of our members have said that they are detecting a change in attitude from HSE, from a more positive engagement approach towards a more nitpicking approach, which they have not welcomed. It has to be said that it has not been a universal view, but it has been a view that has been expressed by a number of businesses who have said that they feel as if there is a conflict between cost recovery and promotion of safety in the workplace.

Chair: Sorry, but could you speak up a little bit for the old gentlemen on the Committee?

Q231 Graeme Morrice: Mr Scott, what do you say?

Mr Scott: Yes, we do have concerns about the current move to increase charging and the framework within which it will operate. The criterion for whether or not charges are applied will depend on whether, in the opinion of the inspector, there is a material breach. "Material" is not defined at this stage. HSE’s estimates are that about 70% of their inspection hours will be billable. I think there will be a change in the relationship between HSE inspectors and industry. There will be less clarity about when an inspector will come, what they will be looking at and whether or not there will be a charge at the end. Most small to medium-sized businesses will not have a budget for this, so they will be faced with charges at a month’s notice, on a month’s invoice. They could be paying quite significant sums of money.

Q232 Graeme Morrice: As a supplementary question, Phil, you mentioned the opinion of the inspector and that a material breach is something that could potentially be challenged by those allegedly committing that breach. How would that work? If the business that was seen to be in breach did not actually agree that they were in breach, what kind of redress do they have to challenge that, if there is a cost at stake that is incurred if they are found ultimately to be in breach?

Mr Scott: The framework is not very clear at this stage. The consultation document did not have all the details. It did outline a two-stage appeal process. If the operating company was aggrieved at the charges or had an issue with whether or not it was a material breach, they could appeal. The appeal in the first instance would be to the inspector and his or her line manager. Following that, there would be a second level of appeal to a higher officer in HSE. The charges would still be applied and they would be refundable if it was found in favour of the operating company at the end of the process. The company would still have to pay the charges.

Q233 Graeme Morrice: I am quite interested in this two-stage appeal process. Are you aware of what percentage of appeals are upheld, either at stage one or stage two?

Mr Scott: I could not give any information about that. This is a new system that has not been started yet. They are expected to do some dry runs towards the end of this year, and it is expected to start from April of next year. It has not been tested yet. Under COMAH charging, there is a mature procedure for appeals. It is a three-stage appeal in that case. The charges are stopped pending the outcome of the appeal, so it is a slightly different situation. It is fair to point out that Fee for Intervention, to a certain part of our industry but of much greater impact to the rest of industry, is a totally new area for industry and for HSE.

Chair: That particular point relates to point 10, Mike, which you were going to raise. Was there anything else you wanted to follow up on that?

Q234 Mike Freer: The CIA made the comment that this is a cost that will make the industry uncompetitive in the global market. Can you briefly explain what costs are involved and where the HSE will step in to add extra costs? Where is the tipping point?

Mr Scott: Cost recovery is one of a number of factors that can make investment in the UK slightly less attractive in a global chemical market. Seventy-five per cent of our CIA members are foreign headquartered. It can make it slightly less attractive to invest in the UK than elsewhere because of things like cost recovery and delays in obtaining consents for hazardous substances. There is a whole range of things that may make it a little less attractive to an investor.

Q235 Mike Freer: What would the average cost be to one of your companies? You say it is making the sector uncompetitive in a global market. How much are we talking about? For instance, if the company was to base itself in Brazil and the annual cost of inspection was £10 million a year, and if it came to Scotland it would be £30 million a year. Can you give examples of how far adrift the cost structure would be to put Scotland at a disadvantage?

Mr Scott: I certainly could not give you an example by comparison with Brazil.

Q236 Mike Freer: I used Brazil as an example, but it is wherever the major competitor company is. If a global chemical company is about to invest in new plant, what is the cost difference between X country and Scotland? Do you have those data?

Mr Scott: The cost difference is based around direct charging, which for COMAH is at the rate of £156 an hour. That is times a 7.5-hour day and then times the number of inspectors involved. Typically, our members in the medium range of 100 or 200-it would not be an oil refinery at Grangemouth or a 50-member SME-would have an intervention plan that suggested they could expect 20 or 30 days’ inspection a year and they might pay something like £50,000 or £80,000 for that in direct charges.

Q237 Mike Freer: How would that compare, say, to Texas?

Mr Scott: It probably would not have any direct charging. OSHA may apply some charges, but it is a completely different system there. It is a more tick-box system rather than going into the details of the leadership from the top, the procedures that the company follows and the way it audits its processes.

Q238 Mike Freer: Has the CIA done any data comparison with the cost of regulation between the major countries that the industry is active in?

Mr Scott: No, we have not done any direct cost comparisons with other countries. We have submitted evidence to Professor Löfstedt’s review about the trend in terms of the cost rises for COMAH charging from 2007 and how they are projected up to 2012. We have detailed company-based information and factual information about what companies were paying in 2007 and what they are going to pay in 2012. We can see the rising trend there, but what we have not done is compared that with a company in the south of Italy, or Bulgaria or wherever.

Q239 Mike Freer: Is there any empirical evidence for that?

Chair: It is quite difficult for us to say that the charging system places British business at an unfair disadvantage if we have no comparisons.

Mr Scott: The comparison is that whether you are starting up a chemical business in another of the 27 member companies of the EU or whether you are doing it in Scotland, the cost of development is going to be the same. The standards expected will be the same. But when you are up and running and in production, the costs of operating that plant in Scotland will be higher than operating it in another part of the EU. In other parts of the EU they do not get charged directly for inspection.

Q240 Chair: The comparison would be the Scottish charges and UK charges as compared with nothing at all.

Mr Scott: Yes, in most of the EU.

Chair: That is the sort of point that Mike was trying to flush out there.

Q241 Mike Freer: It is, but we are not sure we are comparing apples with oranges. We can say that the UK has a cost recovery process that does not exist in France. That may well be true, but if we are looking at the total cost of regulation or the total cost of business between Scotland and France, France may be cheaper on some areas but the social cost on employers may be greater. The total cost of operating is what will make the investment decision, not just the regulatory element. I am a bit concerned that we are being sent down a bit of a blind alley without any empirical evidence, or even apples and apples comparisons with our European competitors. I am not convinced that argument is based on anything other than, "It’s an additional cost."

Mr Scott: We would not base our arguments solely on the direct charging costs from HSE. It is one of a number of issues, including our planning system, the delays in getting consents and the variability of energy prices. Our industry is highly energy-dependent. There are a number of issues that we add to our lobbying, if you like, to try to make a good case for investment in UK businesses.

Q242 David Mowat: I was going to suggest that to you. I know that energy prices are an issue in your industry and that our energy prices in this country are among the higher ones in Europe. I would guess that in terms of the ongoing operability of a plant that is a much more significant issue than HSE, which may be annoying and unnecessary from your perspective, but in terms of the absolute amount it must be much lower than the extra you are paying for energy.

Mr Scott: I suspect it is. Some of the costs in direct charging, particularly when charges are applied following investigation, can run into millions. This is not necessarily small beer, but I agree that energy is more likely to be a larger variable for companies than HSE costs.

Q243 Mike Freer: I am sorry to be a dog with a bone on this, but your letter of 16 June says: "This is a charge that is not faced by competitor businesses in the rest of Europe, meaning that in a globalised chemicals industry this acts as a disincentive for multi-national companies to provide investment in Scottish chemical manufacturing and to do business in Scotland." That is not quite what you have just said. You have said it is "a factor".

Mr Scott: It is a disincentive. It is not the only one.

Mike Freer: That is a better description.

Q244 Mr McKenzie: Staying on the subject of costs, this is a question to Mr Clark. You say you are concerned that low-risk businesses are not burdened with excessive costs. Can you give some examples of what you consider are excessive costs?

Mr Clark: It is important to look at the regulatory environment as a whole when you are looking at that. The overall cost to business in the UK of health and safety regulations is somewhere in the region of £2 billion a year. It is not insubstantial. There is more that could be done to try and mitigate those costs. We have seen, for example, EU directives coming in covering areas that we already cover at a domestic level but imposing even higher hurdles for companies to overcome. On that basis we would certainly argue that we should be much more circumspect as to how we apply regulation in general.

It is difficult to pick out any one regulation or another. One of your colleagues once described identifying the individual problems and regulations as like trying to identify which brand of car is causing a traffic jam. It is very difficult to pick out anything in particular. Again, going back to the perception issue, if businesses are looking out there and seeing 131 health and safety regulations but they don’t necessarily have a clear idea which ones apply to them and which do not, then that is something we need to address. We need to ensure that the best possible information is given to businesses as they move forward in their line of work.

Q245 Mr McKenzie: You mentioned a sum of £2 billion. Is that across the UK?

Mr Clark: That is across the UK.

Q246 Mr McKenzie: Are you aware of the proportion of that £2 billion that is applied to low-risk industries?

Mr Clark: I could not give you a breakdown of that at the moment, no.

Q247 Chair: I want to follow this up. You mentioned earlier that businesses described health and safety-related matters as their third highest cost. I have a difficulty with that. Coming back to construction, is a safety rail a health and safety burden or is it something essential? Is providing a ladder for a construction worker a health and safety burden or, again, is it something essential to protect your work force? The implication is always that this is something unfair that is put on just for badness. In the past we have said that if it was not for regulations some employers-not all, but some-would have small children climbing chimneys. It is a question of striking a balance.

Mr Clark: As I mentioned earlier, I do not think regulation per se is a bad thing. Our members would not say, "Let’s have a free-for-all." Regulation is about sensible action in order to achieve the overall objective that we all share. We all want safer workplaces. We do not want unnecessary accidents in the place of work and we must work towards that. We can ensure we have the best possible regulation in order to achieve those objectives while still imposing-

Q248 Chair: Who could possibly be against best possible regulation? It is a question of what it means. In another context-I keep coming back to building sites-we had somebody saying that signs were in English and all the workers were Polish. To have a regulation saying, "You have Polish workers so you have to have Polish signs" seems quite sensible, but you cannot guarantee that a bad employer will do that unless there is a regulation. This is really a difficulty that we are struggling with. We are generally pretty sympathetic to the call that some regulations are unnecessarily burdensome. It is a question of how you separate the wheat from the chaff. How do we make sure we have regulations that do not allow employers who could be described as chancers and rascals to get away with practices that no decent employer would defend? We have also had meetings with employers who have said to us, "We want regulation on some of the cowboys to make sure that we are not, by paying properly and taking proper precautions, being priced out of the market by the villains."

Help us. How do we formulate these things and how can we take this forward in a way that is mutually advantageous?

Mr Clark: It is a difficult one to put your finger on. At the end of the day what it comes down to is common sense and it is very difficult to define common sense. At the end of the day what we need is a common-sense approach to regulation in this country, to ensure that we are allowing business to get on with what it needs to do but at the same time ensuring that health and safety, above all, is important. Ultimately, ensuring the safety of those in the work force has to be a top priority.

Q249 Chair: I know, but there is nothing you have said that we could disagree with.

Mr Clark: Absolutely, but when you have situations like the self-employed being asked to perform health and safety inspections on themselves, and home workers being under the same health and safety workplace inspection rules as someone who is working on site, it does not seem to be common sense. Those are the areas we need to look toward to say that does not make sense and it needs to be more appropriate.

Chair: But coming back to the question of self-employment, and-again-construction, if you are on "job and finish" and you are self-employed, there is a great tendency to want to cut corners. That is why the contractors on the main site are then seen as being responsible for everybody within the site. You cannot trust the self-employed in those circumstances to look after their own health and safety because there is a clear incentive to cut away those corners. We do find ourselves with a dilemma about how we try to be helpful to small businesses without, as I say, scrapping things that people would abuse. If you had a magic answer it would be quite helpful to have it; otherwise we will just sit here exchanging platitudes. Fiona wants to come in, and she no doubt has the answer.

Q250 Fiona Bruce: Would your members be interested in an industry standard or kite mark which SMEs, for example, could voluntarily apply for at a cost-a bit like Investors in People or, in my profession, Lexcel for lawyers-which largely enables them to be reassured that they are complying with the professional standards required, and if an inspector comes along, they will be seen as one of the businesses who have made best endeavours?

Mr Clark: As you say, it is certainly something I have been aware of in one or two industries where they have looked to take on board that sort of model. There is some merit in it. The flip side is that you do get members-I am thinking of agriculture in particular-who claim that the worst inspections they get are from Quality Scotland. In essence, they are private inspections rather than inspections from public bodies. There is probably some merit in that if there is a material benefit in terms of overall inspections.

Chair: Could I cut across? We are having a vote at 4 o’clock. This is fun and we could quite easily go on all night, but if people think we could rattle through it we will try and finish by 4, and that will let us go off and vote. We have covered quite a lot of the ground but there are some specific points left. We will give an opportunity for any key points at the end. Fiona, do you want to make a brief point?

Q251 Fiona Bruce: Many of the advisers who assist companies to attain kite marks are themselves inspectors, and that is a big reassurance. They are coming in, if you like, as a friend rather than a potential foe from the perception of the SME.

Mr Clark: That is a positive approach.

Q252 David Mowat: I was looking at your evidence. One of the things that you mention is intervention plans in 2012-13 being more onerous than historically. Could you elaborate a little on what you mean by that?

Mr Scott: We have been working with the Health and Safety Executive for several years to try and increase transparency for their inspection plans so that companies know how much inspection they are likely to get, when they are likely to get it and what topics are going to be inspected. The HSE has been extremely co-operative in that. It has now delivered to all chemical sites-all COMAH sites-a two-year intervention plan. The intervention plan outlines what inspections are going to happen in the first year and a slightly fuzzier outline of what is going to happen in the second year. It is a rolling two-year plan, so after the first year they revise it.

When our members got their two-year intervention plans, over the three years that this has been operating, there was a marked increase in the intervention time the longer you go on. We have been able to trend that. We looked at the intervention time that was delivered in 2007-08 and so on, and when you project it through to 2013 there is a rising curve of the amount of inspection that companies can expect. That seems to be across the piece.

Q253 David Mowat: Why do you think that is?

Mr Scott: I think there are two reasons. One is undoubtedly the financial pressure and the pressure to close the gap in the budgetary cuts they have had to make.

Q254 David Mowat: What you are saying is that someone has cut the budget and so they have said, "Right, the way to fix this is to do more of these interventions and we can charge you guys directly."

Mr Scott: I think that is right, yes.

Q255 David Mowat: If that is true, it sounds pretty unacceptable. What they should be doing is figuring out ways to make health and safety better, not just doing more interventions in order to get more money back.

Mr Scott: On making health and safety better, our policy is that the best health and safety is good for business. We recommend to all our members that they adopt the best practices that we can possibly recommend. We understand that there is a public perception that major hazard industries will be properly regulated and properly inspected. We understand that, but where companies can demonstrate that they have leadership and all the best protection measures in place, I find it a little odd that there is this rising curve and that they are going to keep coming back and keep inspecting. Surely there must be some point at which they say, "We have asked industry to do this and they can demonstrate competence and leadership." In our industry, as I explained earlier, we have a falling trend in terms of incidents, accidents and so on, so performance is improving and yet the cost continually rises.

Q256 David Mowat: I repeat what I said earlier. It seems to me that it is an extremely serious thing for them to have done if, on the one hand, they have had some cuts but instead of actually making any cuts they have said, "Right, we won’t do that; what we will do is more interventions and that will enable us to charge industry directly." If that is what they have done, we would need to investigate that further ourselves. That would seem to me to be very serious.

Mr Scott: It remains to be seen whether or not the forward expectations will be realised in practice. There are roughly the same numbers of inspectors and the same numbers of hours in a day. We will wait to see what happens, but it is worrying that the projections that most of our members are getting are that there will be more inspections. [1]

Q257 David Mowat: You mentioned that turnover of inspectors was apparently increasing and that-in your words-there was a tendency for more formal enforcement. Could you explain that?

Mr Scott: This was an issue raised by some of our members in Scotland. We have a three-monthly meeting with all the regional site managers, as well as making individual visits to the site. The majority of them said that they were having difficulties building relationships with the HSE inspector because of turnover-churn in inspectors. We understand that there were some staffing difficulties. They got extra inspectors into the hazardous installations directorate part from the field operations part-the bit that used to inspect engineering, woodwork and that sort of thing. In Scotland, there has been, I understand, quite a significant change in the turnover of inspectors. I would expect that to be a transitory thing. I do not think it is going to happen year on year; I certainly hope not.

Q258 David Mowat: Is that worse in Scotland than in the rest of the United Kingdom?

Mr Scott: We have not had the same information from our regional managers in other parts of the UK.

Q259 David Mowat: What about the tendency towards more formal enforcement? Is that worse, or different, in Scotland?

Mr Scott: It was reportedly different in Scotland. It was reported by our members that it was worse. I have to say that we put these issues to HSE and they approached them very constructively. They wanted to understand the reasons. They wanted to understand our members’ reasons for making those claims and we are still working through that.

Q260 Mr Reid: We touched on perception earlier. This is a question for Garry. To what extent do you think there is a problem that false perception of health and safety regulations is inhibiting businesses from expanding?

Mr Clark: That seems to be the conclusion of the report the British Chambers of Commerce published earlier this year. The report, as I said, showed fairly high levels of negative perception in terms of the impact of regulation, particularly in small businesses. As those businesses look to expand it is obviously not good news.

Q261 Mr Reid: Did the report identify why the problem existed and why businesses think this way?

Mr Clark: Not specifically, other than the negative area they have and the lack of communication that is a danger of failing to engage with the business community.

Q262 Mr Reid: Do you think the businesses are over-regulated as far as health and safety is concerned?

Mr Clark: It is difficult to generalise. Some businesses would feel that they are, in that the hand of regulation seems to weigh fairly heavily on them. At the end of the day, as I was saying earlier, that is why it needs to be appropriate. The pressure needs to be on businesses who continue to fail health and safety regulations and continue to have accidents rather than those businesses that continually have a good record.

Q263 Mr Reid: But is that part of the perception problem? You have a legitimate right to make representations to Government and to HSE when you think regulations are over-burdensome, but is there a hidden side-effect that when you do make that statement it leads businesses to worry that as they expand, the regulations will be too burdensome?

Mr Clark: Businesses worry about regulation at the best of times. Obviously, we need to ensure that they have the best possible information available to them. For example, one of the things that is happening in Scotland at the moment is the introduction of the business and regulatory impact assessment; civil servants have to go out to businesses at a very early stage in the regulation process and have a discussion with those businesses about why they want to have those regulations and what the intended impact of those regulations is. Businesses can explain to them what the cost is and those can somehow be balanced. It is educative both for Government in making regulations but also to the business in understanding why Government is seeking to regulate and what it is seeking in terms of that regulation.

Q264 Mr Reid: That is all right for the business that has taken the decision that it wants to expand, and contacts HSE and has this conversation, but how does Government or HSE get the message across to a self-employed person who is thinking of taking on staff but hears all these stories about burdensome regulations? How do you think we could better get the message through to that person?

Mr Clark: First of all, obviously the small business in those circumstances would probably seek out guidance and advice-there has to be somewhere it can go to get that advice. At the moment I do not think the HSE have enough spread throughout Scotland in terms of their impact. In terms of the advisory group in Scotland on HSE issues, the CBI and the FSB are the only business representatives on it.

Q265 Mr Reid: What would you like done to improve that situation?

Mr Clark: There needs to be wider engagement with the Scottish business community, other than the current engagement that is taking place, in order that we can all provide our members with the advice and support they need going forward.

Q266 Mr Reid: Have you noticed any differences in geographic areas? Do you find that potential employers are more aware in some parts of the country?

Mr Clark: There are differences across the country. There are hot spots and not-spots. For example, a lot of our members in the north-east of Scotland are oil and gas-related and tend to have a decent relationship with HSE. The other big operators-for example, in Grangemouth-have been mentioned. It is more in terms of the scale of the business rather than the geographical location.

Q267 Graeme Morrice: If we go back to the "Good Health and Safety, Good for Everyone" document I touched on earlier, it was certainly noted that big employers have their own in-house health and safety staff, but small employers invariably have to go to external consultants for advice. It was noted in the document that standards in relation to that are "variable".

In terms of the Government proposal to introduce a register of health and safety consultants, do you believe that will help to ensure businesses get better advice and reduce the cost s burden to small and medium-sized businesses in particular ?

Mr Clark: I have not taken soundings on that specific aspect.

Q268 Graeme Morrice: What is your gut feeling?

Mr Clark: I know we have a number of health and safety advice providers within our membership. How they will take to a register I am not 100% certain. Obviously what we want to do is drive up standards in the area and ensure that our members get the best possible advice and support.

Q269 Graeme Morrice: Do you think having a register will drive up standards?

Mr Clark: Possibly but not necessarily. I do not think having a register necessarily makes a member company any more or less effective.

Q270 Graeme Morrice: You would need to reach certain standards to get on to the register and be registered in the first place.

Mr Clark: Yes. Certainly we would support a high level of expertise within the health and safety advice network in Scotland. Certainly we have a number of members within our membership who carry out those functions very well.

Q271 Graeme Morrice: What is Mr Scott’s view?

Mr Scott: I do not think it would do any harm at all. I cannot see any disadvantage in it. In a similar vein, we are currently engaged in an initiative with Cogent, which is the sector skills council, in which we are developing approved process safety training standards. We are accrediting service providers; we are actively looking at service providers who want to put on courses on process safety and checking that they are competent to do so and that industry is going to get good value from them.

Q272 Chair: I want to come to the Government’s review of health of safety and the Löfstedt inquiry. Do you both feel that you have had the opportunity to express views to that?

Mr Scott: Yes. We have met Professor Löfstedt on two occasions. We have completed the survey and we also wrote to him personally.

Q273 Chair: Are you happy?

Mr Scott: We welcome the broad view that he has taken, which is slightly outwith the original terms of reference. It is not just about which regulation should stay and which should go; it is about how the regulations are implemented. That allowed us to raise a lot of the issues that we have discussed here today.

Mr Clark: Our engagement has been through colleagues in the British Chambers of Commerce in terms of health and safety.

Q274 Chair: Inasmuch as you can be happy, you are happy with the methodology and the access you have had.

Mr Clark: Certainly we do not have any complaints.

Q275 Chair: To draw things to a close, we are going to be out around Scotland, Garry, seeing groups about a variety of issues. We have been up in Orkney and Shetland and all the rest of it. There are probably a number of locations where we really want to meet some of your Chambers of Commerce, with this being part of the agenda, because there is still the dilemma about how to identify what can go and making sure that chancers and rascals do not abuse the system and stuff like that. We have already taken the opportunity to meet small businesses about exactly how bad the banks are and similar issues. We can deal with this section as well. Perhaps the staff can pick that up and add it to the agenda.

Mr Clark: I am very happy to do that.

Q276 Chair: Are there any final, final points that anybody wants to raise? Usually when an MP says any final points it means he is about halfway through and just wants to give his audience hope, but we are actually drawing to a close. Are there any points you think we have not asked you, or any answers you had ready to questions that we have not asked? [Interruption.] The bell is ringing; you had better be quick.

Mr Scott: The only thing I would say is that despite the exploration we have had of HSE and some of the issues that we have, there is generally a very good relationship in our industry with HSE in Scotland. Health and safety has its proper priority there.

Mr Clark: I want to thank you very much for the opportunity to engage particularly with our membership throughout Scotland. We very much look forward to working with you on that.

Chair: Thank you.


[1] Note by witness: HSE are making cuts, for example by closing and merging offices to reduce estate costs, and reducing support functions to protect front line inspection - but we also see plans for increasing the number of chargeable inspections.

Prepared 27th January 2012