The government has given HSE the green light to begin developing commercial revenue streams, including a paid-for inspection service, promising it would “go further” than recommended in the triennial review.
According to the Department for Work and Pension’s response to Martin Temple’s fundamental assessment of the regulator, which broadly backs most of its recommendations, HSE will begin testing the market demand for meeting “requests from businesses to provide advice on a commercial basis” within the next three months, promising to legislate if necessary to allow commercial change to happen.
It adds that, “in the long term the government would like to see HSE meeting a much larger proportion of its costs from commercial activities.”
A review of HSE’s controversial cost recovery regime has already been completed, according to the response, and is due to be presented to HSE’s board at a meeting closed to the public on 2 July. The regulator’s non-executive directors will then decide upon recommendations to make to the minster, Mike Penning, before the review is published and changes, if any, are made.
The response, released on 26 June, over five months after the original report, states: “The government welcomes Martin Temple’s recommendations on the commercialisation of HSE but intends to go further. It is committed, in the next 12 months, to taking forward changes to allow HSE to become more commercial in outlook and in delivery. Where legislative changes are necessary, the government will take these forward, subject to parliamentary timetables.”
Among the revenue streams the regulator is exploring is charging for advice on land use planning. Work is already underway to enable HSE and HSL to offer “an enhanced level of service at the pre-application stage to developers and industry, and providing more support to local authorities so that they better understand risk issues”.
In 2013/14, according to its annual report, HSE provided advice on over 1,120 planning applications. Mike Penning, the minister with responsibility for health and safety, has asked HSE to launch the full service by March 2015.
The report mentions developing a service whereby countries looking to develop their health and safety regulatory systems can engage HSE for support and guidance, though it makes no reference to timescales.
HSE has already appointed a commercial director, Leo Enright, formerly head of operations of forensic DNA at life science company LGC, who will oversee the work to meet government expectations for growing its commercial revenue.
According to the government response, Enright has established a “high-level steering group”, comprising of Judith Hackitt, two HSE board members, an HSL board member, Martin Temple and the head of the health and safety sponsorship team at the DWP, to oversee the development of HSE commercialisation.
The group will be “responsible for considering and advising the HSE board and the minister on the options for commercialising HSE, setting the pace and direction for the delivery of change and providing challenge to this work and to those who will be responsible for its delivery”.
The Temple review, which had powers to recommend HSE’s abolition, found overwhelming support for the work of the regulator, and said it broadly complied with government standards for the effective oversight and management of non-departmental government bodies. However, it outlined how HSE should become more commercial.
Temple’s review, which was announced in April 2013 in line with the requirements of the Public Bodies Act to review all non-departmental public bodies every three years, went on to recommend significant reform of HSE’s current model for its cost recovery scheme.
The government response outlines the action HSE and DWP are taking to implement Temple’s recommendations on FFI, which he labelled a “dangerous model”. Temple expressed considerable concerns about the “strength of feeling from stakeholders that FFI has damaged HSE’s reputation for acting impartially and independently, and thereby its integrity as a regulator.”
It even went as far as to suggest FFI should be “phased out” if HSE cannot sufficiently decouple the link between what are perceived as “fines” and funding or demonstrate how the benefits outweigh the detrimental effects.
However, the DWP response says: “The government remains committed to the underlying principle of the FFI cost recovery regime.”
“The minister for disabled people instructed HSE to set up a review panel, under an independent chair, to consider not just the operation of FFI, but also the impact charging has had on the relationship between HSE and business,” the response states.
The four members of the review panel were: chair Professor Alan Harding, the director of Liverpool University’s Heseltine Institute for Public Policy and Practice; Ken Moon, the Wessex regional chairman of the Federation of Small Businesses; Dan Shears, the GMB union’s national health and safety officer; and Fiona Walshe, the deputy director for health and wellbeing at DWP.
The FFI review’s terms of reference, previously unreleased, were obtained by Safety Management. They outline how the review panel should examine four of Temple’s recommendations, namely:
- the views of stakeholders on how FFI is working
- if FFI is to be retained, whether the threshold for FFI has been set at the right level
- whether there is evidence that the anticipated incentives to comply have made a difference and improved health and safety performance
- whether there have been any detrimental impacts on the behaviour of HSE Inspectors and/or those inspected and/or on health and safety performance.
According to HSE, views on FFI gathered during the triennial review were fed into the panel and dutyholder research was also commissioned from HSL.
Temple outlined in his January report how, in light of developing HSE’s new commercial operations, “the remit of the HSE board should be reviewed and refreshed”, adding new skills and experience if necessary.
In response, the government and the HSE carried out a “light-touch” review of the board’s remit, and concluded it was “broadly appropriate”. It added: “However, they recognised that the move to commercialisation of HSE will require a shift in the focus of the board to deliver this”.
The required skills and experience of new board members was updated to include things such as “commercial acumen”, “corporate governance” and “understanding of public policy environment”. In May the requirements were used in advertisements for two new posts to replace David Gartside and Richard Taylor who will leave later this year.
In his forward to the response Mike Penning said: “I want to ensure HSE delivers value for money to the taxpayer, whilst ensuring safety for the nation. At my request, HSE has already made good progress on increasing the opportunities for commercial income, building on work it had already begun.
“Selling our expertise abroad will not only help businesses and governments to save lives, but, as part of our long-term economic plan, will show the world we’re leading the way in exporting expertise overseas.”
A spokesperson for HSE said the regulator welcomed the government response.
“HSE is well positioned to meet the recommendations made in the review,” they added. “Britain has one of the best health and safety records in the world – meaning fewer people are killed, injured or made unwell by work in this country.
“HSE has an international reputation as a world-class regulator and there are opportunities to export some of the best aspects of effective work-related health and safety regulation.
“Through its laboratory - HSL- HSE is already selling services and products internationally. The main focus of HSL’s work is on understanding and managing health and safety risks. It provides a broad range of services including research, expert advice and consultancy, and specialist training and products to government and industry both in the UK and internationally.”
Manufacturer’s trade association EEF said it was satisfied that the DWP had supported the majority of the report’s recommendations, including “restricted commercialisation”.
However, it expressed concern about “missed opportunities to look beyond the recommendations”, including “incentivising” HSE to meet its target of completing investigations of non-fatal accidents within 12 months. It said the year-long legal time limit should be introduced, with the option of extension on application to a judge at the crown court.
EEF also suggested the DWP should have used this opportunity to establish a unified health and safety agency that includes functions currently carried out by local authorities to cover all workplace health and safety issues.
“On Fee for Intervention, we welcome the establishment of the review panel to consider the operation of FFI and its impact on the relationship between HSE and business,” said Terry Woolmer, head of health and safety policy for EEF. “What we find less satisfactory is that the formal terms of reference for the panel have not been previously been made available publicly, nor has there been a public call for evidence inviting stakeholder views'.
He added: “We do think that there has been under-investment in the provision of 'funding' for HSE. We know that investment in good health and safety makes business sense and saves businesses money. Equally, investment in HSE is of wider benefit to the UK economy and should in our view form part of the business 'growth' agenda.”
Woolmer said the EEF would have liked to see the government commit to “target additional HSE resources in key areas”, including the provision of a HSE inspector manned advice line and further HSE sponsored research.
IOSH also called for a single regulatory body, and expressed disappointment that this had not been considered in the government response.
Richard Jones, the institution’s head of policy and public affairs , said: “IOSH remains disappointed that neither further funding for HSE nor a single enforcement agency have been considered and that the focus is entirely on further commercialisation.
“We note the establishment of a steering group to advise the HSE Board and Minister on commercial activities and importantly, to provide challenge. Scrutiny will be absolutely vital, as we believe it’s essential that commercial activities do not erode confidence in the independence of the regulator.”
The British Safety Council expressed concern that the commercialisation of HSE could jeopardise its independence. Its chief executive Alex Botha said: “While we agree that there is scope for HSE to develop commercial opportunities, we would like to repeat concerns we’ve raised before that commercialisation can compromise the independence of the HSE and affect its relationship with those responsible for health and safety. In particular the British Safety Council is concerned that commercialising a wider range of services may confuse the role that HSE adopts with those it regulates.”
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