Select Committee on Work and Pensions Written Evidence


Memorandum submitted by the Federation of Small Businesses

1.  INTRODUCTION

  1.1  The Federation of Small Businesses (FSB) is the UK's leading non-party political lobbying group for small businesses existing to promote and protect the interests of all who own and/or manage their own business. With over 210,000 members, the FSB is also the largest organisation representing small and medium sized businesses in the UK.

  1.2  The FSB welcomes the opportunity to respond to this Select Committee inquiry into the Health and Safety Commission (HSC) and Executive (HSE). Our response will focus on the views of small businesses towards the HSC/E and health and safety legislation, incorporating information from our report into Occupational Health and Safety in small businesses in 2007, entitled Whatever happened to common sense? and a report on health and sickness absence issues in small businesses entitled Health Matters: a small business perspective, published in 2006. (Both publications are available to download in full from the FSB website at www.fsb.org.uk/policy).

2.  SUMMARY

2.1  The legislative framework

    —    UK health and safety legislation is not drafted with small and micro businesses in mind which means that legislation impacts in a disproportionate way. The current legislative framework is sufficient; no further regulation is needed but a better application of existing regulations and more useful and accessible guidance for businesses made available.

    —    A specific "positive" duty on employers in the field of health and safety is not necessary and would only create increased bureaucracy for small businesses and encourage risk averse behaviour.

2.2  Inspections, enforcement and prosecutions

    —    The FSB has concerns that the HSE does not have enough front line inspectors in order to police the health and safety regime effectively. Small businesses are competing with rogue employers who are not investing in adequate health and safety systems.

    —    Inspectors need more effective training on how to deal with small businesses including an appreciation of how they operate, particularly in specialised industries with particular working methods and safety procedures.

3.2  Occupational health

    —    The HSE should seek a replacement for the Workplace Health Connect pilot scheme from which funding has been removed. Important lessons should be learnt from the scheme about how to advise small businesses on health and sickness absence issues and which mechanisms of communication are most effective.

    —    Businesses need more accessible and cost-effective advice on occupational health and return to work and greater clarity around their rights and responsibilities in managing the return to work process, in order to improve absence rates.

3.  THE LEGISLATIVE FRAMEWORK

3.1  Is the health and safety burden on businesses proportionate?

  3.1.1  The FSB's 2007 report on occupational health and safety in small businesses illustrates that businesses have concerns about the way in which H&S legislation plays out in small businesses and the burdens it subsequently creates. Many small businesses believe that the current health and safety regime is not proportionate. The issue is that many businesses lack tailored advice on how to implement appropriate and proportionate health and safety systems within their business. The FSB is by no means advocating deregulation or the reduction of health and safety standards in any way. We are only too aware of the benefits that good H&S practices can bring to a business in the form of increased productivity and the enhanced wellbeing of staff. Businesses can benefit from establishing good health and safety systems in the long run but the onus should be on encouraging businesses to implement systems that are appropriate to the size and make up of that individual business.

  3.1.2  The concern of businesses, and as our 2007 report highlights, is that common sense is often absent in the current health and safety regime. The overwhelming response from businesses (particularly characterised by the micro business sector ie with one to nine employees) is that they find administrative burdens to be more bureaucratic than compared to five years ago. Although the enacting of legislation in this area has begun to level off over recent years many businesses are still getting to grips with the basics, for example, in the form of risk assessments.

  3.1.3  Our 2007 survey asked businesses how they found compliance with a list of health and safety requirements including; writing a H&S policy, providing information to HSE/regulators, keeping up to date with new regulations, record keeping, gaining and recording compliance and monitoring and reviewing health and safety systems. 39% of businesses found all of the requirements "quite difficult" to deal with and 21% that they were "very difficult" to deal with.

  3.1.4  Businesses also expressed mixed feelings around the risk assessment process. 32% of members found it straightforward to carry out, but 39% finding it "quite difficult" or even very difficult (21%) to deal with. It is also clear that businesses have particular difficulties in keeping up to speed with new regulations that come into force which is cited as a "very difficult" (40%) or "quite difficult" issue to deal with.

  3.1.5  The 2007 FSB survey also asked businesses about the administrative requirements from a list of current health and safety legislation. Where businesses found the legislation relevant to their business, the Management of Health and Safety at Work Regulations and the Health and Safety at Work Act in particular came out as being "very" (60%) or "quite burdensome" (46%). This is not a surprising response given that the majority of calls to the FSB's 24-hour legal advice line are from businesses asking for help with drawing up a health and safety policy and practical advice on carrying out risk assessments. A number of regulations including; Manual Handling Operations, Lifting Operations and Lifting Equipment, Control of Hazardous Substances to Health and the Consultation of Employees Regulations also tended towards the "quite burdensome" bracket.

  3.1.6  A number of businesses stated that the current health and safety regime specifically acts as a deterrent to them employing more staff. This is hugely concerning for the FSB given that small businesses make up over half of UK GDP and constitute over 50% of new jobs created in existing companies in the UK and 85% of new jobs created in new businesses. Our conclusion is that the current legislative framework is sufficient; no further regulation is needed but a better application of existing regulations and more useful and accessible guidance for businesses along with relevant website information.

Recommendations

    —    The Government should ensure that it takes small and micro businesses into account during the legislative process and tailors health and safety legislation and associated guidance to their situation.

    —    The Regulatory Impact Assessment (RIA) process for any new legislation should be a robust one which specifically analyses and quantifies the potential impact and costs of new legislation on small businesses.

    —    Guidance should be straightforward, jargon free and available from a central, well advertised and easily accessible source. Businesses welcome online templates such as risk assessments which can be used as a starting point and tailored to their own needs.

3.2  Are EU Directives interpreted and translated by HSC into UK law appropriately?

  3.2.1  In September 2006, the FSB published Burdened by Brussels or the UK? Improving the implementation of EU Directives based on a survey of businesses into the "gold-plating" of EU directives. Businesses were asked about their views on the implementation of a number of regulations including the Work at Height Regulations 2005 and the Control of Asbestos at Work Regulations 2002. The report shows some evidence of gold plating but also the fact that unclear transcription of Directives into UK law can cause confusion and difficulties for businesses.

  3.2.2  In the case of the Working from Height Regulations, the findings showed that a significant majority of businesses questioned felt the need to go beyond the scope of the regulations in order to protect themselves legally against every eventuality. For example, the original directive states that only working platforms that could cause a fall from a height of more than two metres need to be inspected. Despite this, 65% of all affected businesses feel the need to assess all work equipment. This highlights the high level of risk aversion felt by small businesses in the face of possible legal challenge. 28% of businesses also said that the requirement to carry out continual risk-based assessments on all equipment and document the findings had a significant impact on their business. Businesses also tend to keep documents longer than the three months after a construction project has finished, in order to protect themselves legally. 28% also said that they had at some stage hired an external consultant to assist with risk assessments under the legislation, which adds to costs for businesses.

  3.2.3  As far as the Control of Asbestos at Work Regulations 2002 are concerned, 22% of businesses said that the regulations were very difficult to understand and, as a result, difficult to comply with. Businesses find this legislation difficult to understand and therefore are often obliged to seek help from a consultant. We are concerned that businesses do this because of a lack of adequate and straightforward tailored advice.

  3.2.4  These figures demonstrate that as a result of the way in which the Working at Height and Asbestos Regulations were transposed and the associated guidance drafted left businesses with doubts as to how to implement the legislation. This all leads to businesses resorting to the help of a consultant (sometimes when this is not really necessary) and taking a risk averse approach which adds to their burdens and costs. More effective, straightforward legislation and guidance would seek to improve this situation.

3.3  Are businesses given appropriate guidance by HSE on their obligations under health and safety law?

  3.3.1  The FSB's experience is that that HSE is making progress in terms of the appropriateness of the guidance it provides for small businesses ie simple to understand, straightforward and accessible. The FSB is pleased that the HSE in some areas makes good use of the Small Business Trade Association Forum in order to get feedback on draft guidance to make sure that it is as suitable for its target audience as possible. The issue with guidance is that in order to be straightforward it is often too generic for individual businesses and does not give them enough information specific to their individual business or sector. The growing number of businesses, particularly micro businesses, working from home-based premises are concerned too that guidance is not taking their circumstances into account. The FSB is pleased with the recent risk assessment templates developed by the HSE for individual business sectors which gives a more tailored steer to businesses as to how they need to approach the risk assessment process.

  3.3.2  Results from our 2007 health and safety survey show us that businesses are concerned that not enough straightforward advice is available in both paper and downloadable format. The FSB appreciates that a good deal of advice is out there, authored by different organisations, but that official advice needs to be more effectively targeted to the businesses and sectors needing help. More imaginative ways of getting the message out should be used to communicate with businesses with cross referencing to other websites such as BusinessLink, Companies House and other websites accessed by businesses on a regular basis.

3.4  What impact will the Corporate Manslaughter and Corporate Homicide Act (2007) have on businesses' approach to occupational health and safety?

  3.4.1  In some senses the Corporate Manslaughter Act and Corporate Homicide Act (2007) will have little impact on the small business sector given that they are being caught and prosecuted under existing legislation anyway. The Act will seek to redress the balance and the issue with previous legislation, in which it was difficult to identify the `directing mind' in larger organisations. Greater awareness of the Act may cause small businesses to think more about their health and safety systems and implement appropriate systems in the workplace. It is also possible that the Act will cause some businesses to take a more risk averse approach because of the fear of prosecution.

3.5  Are director's health and safety duties appropriately covered by voluntary guidance?

  3.5.1  Yes. The FSB believes that Director's health and safety duties are adequately covered by voluntary guidance. This has been reinforced recently through guidance developed by the HSE and Institute of Directors (IoD), with the assistance of the FSB. The FSB is aware that the HSC has considered the issue of creating a positive duty on directors in the field of health and safety. The difficulty with this is that the inevitable consequences would be additional bureaucracy for small businesses and an increased tendency to risk aversion in order to protect their business. Such a duty would also not necessarily help change attitudes and culture within the workplace. In small businesses the distance between a manager and employee is very small so there is much less need for a formal duty to compel business owners to carry out certain tasks which currently happen informally. The issue too is that a positive duty would do nothing to secure the compliance of rogue businesses that are flouting health and safety legislation anyway and doing nothing to implement safe systems in their business.

  3.5.2  HSE could do more to link with Companies House and websites such as IOSH's www.safestartup.org in order give advice on directors duties when a business in the processing of starting up.

4.  RESOURCES

4.1  Does the HSE have sufficient resources to fulfil its objectives as the health and safety regulator and meet its PSA targets?

Does HSE allocate its budget efficiently?

Are there areas of HSE's operations that require additional investment?

  4.1.1  The FSB is concerned that the HSE does not have sufficient resources in some areas to fulfil its objectives and meet its PSA targets. We would like to flag up two particular issues with regard to the HSE's resources invested in inspectors and the inspection regime and the Workplace Health Connect scheme, which are set out in sections 5 and 8 respectively.

5.  INSPECTIONS, ENFORCEMENT AND PROSECUTIONS

5.1  What impact has the reduction in inspection rates had on standards of occupational health and safety?

  5.1.1  The FSB does have concerns that the HSE does not have enough front line inspectors in order to police the health and safety regime effectively. Small businesses are battling against rogue employers who are not investing in health and safety systems and the situation is therefore not a level playing field. In the case of the inspectors themselves, there are concerns around the fact that, the more senior the staff, the less experience they have in the operational aspects of the work. We perceive that this affects work on the front line, inspection targets, how funds are allocated, lack of recruitment and poor selection of staff ie staff with insufficient real life experience and experience of the realities of running a business.

  5.1.2  We do have concerns that in order to meet prosecution targets, small businesses can be seen as an easy target. The FSB 2007 Health and Safety report shows that three quarters of businesses have not been visited by a Health and Safety inspector in the last three years. Businesses that were inspected were twice as likely to be visited by their local authority (15%) as opposed to the HSE (8%). This is largely due to the fact that many small businesses in low risk sectors are visited by the local authority, whereas businesses in higher risk sectors are more likely to be visited by the HSE.

5.2  Does HSE get the balance right between prevention and enforcement?

  5.2.1  Businesses are split as to whether or not they view HSE as an advisory or enforcement body. According to the FSB Lifting the Barriers to Growth in UK small businesses 2006 report, 38% said that they viewed HSE/C as enforcement organisations and 30% as advisory organisations. It is important that HSE makes targeted and straightforward advice available to businesses and carries out enforcement in a targeted way also. Businesses respect HSE guidance as carrying the `official badge' but can also be alienated from the organisation when they see inspectors representing it, acting in a heavy handed way.

  5.2.2  Businesses actually have a fairly positive view of the inspections process. The 2007 H&S survey asked about the outcomes of the inspections process in their business; 46% said that the inspector gave helpful and practical advice and 28% that the visit was straightforward with no action for the business. In one third of cases, businesses were advised of areas in which improvements could be made and in only 5% of cases were enforcement notices or prohibition notices served. As far as the way in which the visit was concerned, 80% of businesses thought that it was handled fairly, only 8% saying that they thought the inspectors attitude was unhelpful and 5% felt that they were treated in a heavy handed way. Some businesses do have frustrations about what they perceive to be a lack of knowledge from inspectors particularly in certain sectors. Businesses are frustrated when inspectors have inadequate knowledge about working methods and safety systems in certain sectors, particularly in specialist industries. There is also concern that inspectors could be more flexible around visiting time particularly in retail premises for example where businesses may be busy serving customers.

  5.2.3  It is important that HSE inspectors work with businesses to encourage compliance with health and safety. A heavy handed approach can alienate business and encourage risk averse behaviour. The onus should be on encouraging businesses to take a risk-based approach which is appropriate to that particular organisation and not simply focusing on legal compliance.

Recommendations

    —    HSE and local authority inspectors need to have more of a "business mind" and appreciate how small businesses operate, including their financial constraints. They should offer more flexibility around the timing of visits and be more open to learning about working methods in specialist sectors.

    —    The inspection regime should be adequately resourced and more effectively targeted so that it truly focuses on those businesses that are failing to comply.

5.3  Are penalties for health and safety offences proportionate?

  5.3.1  The FSB does have concerns that small businesses can be an easy target evidenced by the fact that the majority of successful health and safety prosecutions are brought are against small businesses. The problem is that fines can have a dramatic effect on small businesses yet are easily absorbed by a larger business. Businesses have reported some frustration around inspectors that do not stick to guidelines from the centre in terms of penalties and a lack of communication between HSE and local authority inspection regimes in general.

5.4  How effectively do HSE and local authorities interact in their inspection roles?

  5.4.1  The gap between local authority and HSE requirements is still a significant issue, with little evidence of the two organisations working together and/or sharing responsibilities. This is an area which has been much discussed yet still needs further attention. The lack of communication between the two bodies was evidenced recently by sample risk assessments which were prepared by HSE but not communicated to local authority inspectors who had no knowledge of them and were not prepared to accept them as templates. Businesses need more effective advice and support from a consistent inspections and enforcement regime.

6.  HAZARDOUS OCCUPATIONS

6.1  Is HSE doing enough to tackle the rise in fatalities in the construction industry?

  6.1.1  Around 10% of the FSB's 210,000 membership are employed in the construction industry. We do recognise that given current injury rates and fatalities in the industry, there is further important work to do in engaging with businesses, particularly those employing casual labour which makes it difficult to train and educate staff in their situation.

7.  MIGRANT WORKERS

7.1  Are migrant workers more at risk of occupational health accidents?

Does HSE do enough to protect migrant workers from health and safety risks?

  7.1.1  The FSB is aware that migrant workers are at risk as they do not necessarily have the same standards of health and safety in their country of origin and therefore their commitment, knowledge and training in the subject is not high. There is an important role for employers to work with employees and HSE to in order to provide guidance in relevant languages. It is also important that the EU institutions play a key role in raising standards of awareness and training in health and safety across the EU.

8.  OCCUPATIONAL HEALTH

8.1  What must HSE do to meet its PSA target for ill health and days lost per worker?

  8.1.1  The FSB is disappointed that the HSE and DWP (Department for Work and Pensions) are sending out mixed messages with regard to their aim of addressing workplace health and absence issues. In recent years HSE appeared to be positioning itself as an organisation concerned with addressing workplace health issues, particularly considering the launch of the Workplace Health Connect project in February 2006 (offering free advice and workplace visits to businesses on workplace health and absence management). The HSE invested millions in the project with apparently little or no continuity planning to ensure the continuation of the service beyond the two year pilot. It is disappointing that due to HSE budget restrictions the structures, personnel and expertise gained from the project will be lost after February 2008. Important lessons need to be learnt from the project with regard to the sorts of advice and methods of communications that work most effectively with businesses. The Workplace Health Connect scheme was important because previous HSE initiatives, such as the stress management standards, were not tailored towards small businesses.

  8.1.2  The FSB Health Matters report shows that the main reasons for absence in small businesses (apart from minor illness such as colds and flu and personal reasons) are back pain (21%) and stress, depression or other mental illness (11%). Small businesses say that the main barriers preventing them from providing occupational health and rehabilitation services for their staff in the workplace are that they have too few staff to make it worthwhile (57%) (largely due to the large numbers of businesses with only one to five staff who responded to the survey). The HSE and DWP needs to encourage alternatives to the Workplace Health Connect scheme and the development of initiatives such as NHS Plus. These options give businesses the option of accessing ad hoc services as and when the need arises. A significant third of businesses have concerns about costs which also highlights the need for cost effective and accessible services.

  8.1.3  Issues around improving the relationship between the employer and GP in order to improve absence rates have very much been in evidence in recent years. 45% of businesses expressed support for the development of a "fit note" emphasising what roles an employee is able to fulfil in the workplace, rather than what they are not capable of doing. Lack of advice from GPs is particularly in evidence where stress and mental health issues are concerned with employers needing advice about appropriate staged return to work. DWP and HSE should give impetus to the "fit note" project to make this become a reality. In order to improve the GP/employer relationship 33% businesses were also in favour of better consultation between the employee, employer and GP, 16% in favour of more workplace health and rehabilitation services via GPs surgeries and 15% a named link person in the local health board to promote and support greater contact between GPs and employers.

8.2  Does HSE do enough to embed vocational rehabilitation in the workplace?

  8.2.1  Vocational Rehabilitation in the workplace does not appear to be a priority of the HSE specifically but work that DWP is taking forward more broadly. The DWP along with the DoH (Department for Health) are leading the Task Group on Vocational Rehabilitation which is a positive venture and one with which the FSB is involved. However, there is an apparent lack of government support for the proposed Vocational Rehabilitation Council which stakeholders are trying to promote. Such a Council would seek to improve standards of service provision within the industry and guarantee a certain level of service to business owners.

  8.2.2  In general, it is apparent that HSE inspectors need to be better educated about occupational health issues. There is currently little understanding of contemporary occupational health issues such as mental health and musculoskeletal disorders. Inspectors need to be more proactive and supportive to businesses in this area by providing advice and guidance. Advice on occupational health to small businesses can often be expensive and private providers are not always geared up for responding to the small business and their needs. This is why developing NHS schemes, and similar initiatives such as Workplace Health Connect, are so important. Such schemes also need to be effectively advertised, as our Health Matters report showed, there is currently very low awareness amongst businesses of the workplace health and rehabilitation support available to them.

Recommendations

    —    Sickness absence and back-to-work initiatives should be more effectively advertised and targeted at small businesses with well signposted links to sources of help. Information should be more readily available and simple and easy to understand.

    —    The Government should communicate the rights and responsibilities of employers and employees more effectively where managing return to the workplace is concerned. Employers are unclear of their role in the process.

    —    Greater impetus should be given to improving the education of GPs and practice nurses on workplace health issues to improve the service they offer to businesses. Workplace advisers in GPs surgeries should be made more widely available and the plans for a "fit note" developed to give employers more constructive information about the role that an employee is capable of fulfilling in the workplace.

    —    Incentives in the form of reduced Employers Liability Compulsory Insurance (ELCI) premiums in response for good practice would enable businesses to think more about putting sound occupational health and safety systems in place.

Federation of Small Businesses

January 2008





 
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