I said at the beginning of the sitting that no hot beverages are allowed in the Committee. I want to make that point again. We will now hear oral evidence from the Institution of Occupational Safety and Health. Before I call the first Member to ask a question, I remind all Members that questions should be limited to matters within the scope of the Bill and that we must stick to the timing of the programme motion that the Committee has agreed, which states that the Committee will question the first witness until 9.30 am. Will the witness please introduce himself for the record?
Thank you, Mr Jones, for presenting evidence to us this morning. In your submission to the Joint Committee, you were clearly against the removal of health and safety legislation from the self-employed as set out in clause 1. It is telling that there are no witnesses in support of the clause today, so I will have to ask you to set out the case for the changes, such as it might be. Although the most recent survey from the Federation of Small Businesses showed that six out of 10 businesses cited the economy as the most important barrier to growth, and the businesses I speak to generally cite access to finance, there is a strong perception that health and safety regulation is a significant burden.
Thank you, Mr Hood. What work has the institution done to understand the evidence base for the concerns over health and safety regulation when it comes to small businesses and the self-employed?
Richard Jones: Our position is that we are firmly against the clause. The evidence that we have looked at suggests that there is not a strong case for including it. Professor Löfstedt, the Health and Safety Executive and the Federation of Small Businesses have all said that it will improve the perception of burden but not the reality. To our mind, the proposed exempted group—the numbers are projected to be around 840,000—is not overly burdened by health and safety at the moment. Our health and safety system is risk-based and proportionate, so people who do not employ others and who work in a relatively low-risk environment have very little call on them from the point of view of health and safety law. They are not required to register their business with the enforcement authorities, so it is very unlikely that the enforcement authorities will ever know of them and therefore they will never be visited. Anyone who employs fewer than five people is not required to have written health and safety policies or to write down their risk assessments, and they are exempted from the Health and Safety (Display Screen Equipment) Regulations 1992. It is hard to see what burden actually exists. It was telling that the HSE did an initial impact assessment before the consultation, and after the consultation it revised its impact assessment. One of the things it did in preparation for that revision was to identify 60 self-employed people who were not employers and would fall within the exempted group. Admittedly, that is not a big study, but the evidence was telling. Only five of that group of 60 thought they had any health and safety responsibilities at all. The rest either thought that they did not or were unsure. None thought that regulation was a factor for them, and many took health and safety precautions anyway. When asked why they did that, they said, “It is for my own protection and for the preservation of my livelihood. In any case, the actions that we take are common sense.” Finally, the HSE asked them whether exemption from health and safety law would make any difference to them. I can give you the quote from the response. It said:
“The response was unanimous, with all 60 stating it would not.”
Our view is that the proposal is unnecessary, unhelpful and unwise. Unnecessary because there does not seem to be a problem that needs to be fixed; the target group does not recognise it as a problem. It is unhelpful because the target group will not get any benefit from it. It is unwise because we believe that it will cause confusion and uncertainty.
Referring back to the Joint Committee on the draft Deregulation Bill, if I remember rightly the impact assessment said that initially there would be additional costs for businesses and a saving only after time. Do you still see that to be the situation?
Richard Jones: There will be an upfront cost of about £1.7 million, averaged out over a 10-year period. It estimated that there will be a saving of about £300,000, which works out at about 37.5p per self-employed person. However, we think that is a gross overestimate, when you think about the research that the HSE has done subsequently in talking to the 60 self-employed people. They will not feel any benefit at all because they are not doing anything for heath and safety now, and they will not change what they are doing.
It is nice to see you again, Richard. We talked about the difference between perception and reality, but in politics and many other things perception is reality. You talked about your target group—the self-employed people who do not employ anybody—and said that they will not see any benefit. However, I put it to you that the target group is not the people who are currently self-employed but the people who might become self-employed in the future. The perception that they are not going to be burdened by health and safety regulations might encourage them to become self-employed and further improve our economic performance.
When our major European competitors, such as Germany, Italy and France do not include the self-employed within the scope of health and safety regulation, how can we compete? They do not have horrendous health and safety records and are seen as safe countries. What are they doing differently from us?
Richard Jones: The systems in different countries are all different from ours. It is telling that the inclusion or non-inclusion of the self-employed across Europe is varied. Germany is probably the most pronounced, because it exempts the self-employed from most health and safety laws, although construction is different—the temporary and mobile sites directive explicitly requires the self-employed to be included. Sweden was mentioned, but it includes the self-employed in its law.
Richard Jones: France and Italy are a little unsure. They do in some respects, but not all. When you look across Europe, the UK, Portugal, Spain and Ireland, all include the self-employed. I can see little evidence in the Löfstedt report for why we should go the way of Germany or France. Equally, you could ask why they do not go the way of the UK, Spain, Portugal and Ireland. However, it is not as simple as that, because the systems in each country are different. Martin Temple, chairman of the EEF—formerly the Engineering Employers Federation—has just concluded his triennial review of the Health and Safety Executive; that is another review within the past three years.
Richard Jones: Our view is that they are civil servants and have to support it.
Martin Temple specifically asked a question in his evidence-gathering about whether we can learn from other systems in Europe, and he got very little evidence. In fact, he said that the German system is inappropriate because it is inflexible.
I would like to explore the potential negative impacts of moving the self-employed out of health and safety regulations, in particular the elements of confusion to which you referred. We have had a massive growth in self-employment. Since 2008, three quarters of people leaving unemployment have gone into self-employment—three times the number going into traditional jobs—84% of whom are aged 50 and above. What likelihood do you see of these changes causing confusion? The hon. Member for North West Leicestershire suggested that health and safety regulations prevent people from becoming self-employed, yet we have had a massive increase in self-employment. What is the likelihood that they will cause confusion?
Have you had time to study the draft list of those who will be exempt? The Minister without Portfolio, the right hon. and learned Member for Rushcliffe (Mr Clarke), mentioned beekeeping and mountaineering in his speech on Second Reading. Is it easy to identify whether those occupations will be exempt or subject to health and safety legislation from looking at the list?
Richard Jones: Looking at the list, those occupations will not be included, as far as I can see. A number of occupations that pose a risk to other people are not included in the list. The figures from the Office for National Statistics that you quoted show that 367,000 new self-employed business started up between 2008 and 2012, so clearly health and safety did not put them off.
The other statistic that I found staggering is that there are 4.2 million self-employed people in the UK, of whom the Health and Safety Executive estimates that 3.1 million do not employ anybody. However, an additional 304,000 people are not self-employed in their main job, but are self-employed in a second job. That is nearly a third of a million people who probably do not recognise themselves as being in the self-employed category because they have a proper job. The main jobs that are cited are taxi and cab drivers—166,000—who are not on the list. Apart from the railways, there is nobody in any form of transport in that list, although they clearly pose a risk. It cites “other construction trades”, but does not go into what they are—161,000—carpenters and joiners, 140,000, and farmers, but it does not give the number. Taxi drivers, cab drivers, carpenters and joiners are all in the top occupations for this, but you could include landscape gardeners, garden clearance people, handymen, odd-job men, removal men, house clearance, hairdressers, beauticians, complementary therapists, tattooists, body piercers, caterers, window cleaners, painters and decorators. The list of people who could pose a risk to others is quite extensive, but they will be exempt from this law. To our mind, just producing this list and saying, “If you are on it, you are not exempt; if you are not on it, you are exempt,” is quite a dangerous move. It was not one of the recommendations made by Professor Löfstedt in his report, and it was not what the Health and Safety Executive consulted on, so arguably there is no mandate for this.
Our feeling is that an important safeguard has been lost. The Health and Safety Executive had concerns about this. I am citing again from its consultation document and impact assessment where it explored a wholly prescriptive approach using a comprehensive list, but it was warned against doing so by sector experts, who said that there were
“many exceptions and atypical cases. Relying exclusively on such an approach would therefore risk unintended consequences of…exempting some self-employed who do pose a risk”
and that all the HSE’s options were, therefore, heavily reliant on the self-employed having to assess the risk they posed to others. That safeguard has been lost in the new proposal.
Might there be implications for civil litigation if someone was exempt from health and safety, and they not only posed a risk but caused harm or injury to a customer?
Richard Jones: The main duties on the self-employed stem from section 3(2) of the Health and Safety at Work, etc. Act 1974. That has been with us for 40 years, and there has never been a problem. That duty merely codified the common law duty that everybody has to take care of themselves and others who may be affected by their activities. Although they may be exempted from criminal liability, they will not be exempt from civil liability so they can still be sued if their negligence causes harm to others.
Good. Now, Professor Löfstedt said that there was a case for doing what other countries do and
“exempting from health and safety law those self-employed people…whose workplace activities pose no potential risk of harm to others.”
He said that 1 million people could be relieved of those obligations. You disagree with that. Why?
Order. We are not having points of order just to make comments. If it is a point of order, I will take it. If it is not, I will be less co-operative with future requests.
Can you remind us what the procedure is for asking questions when the witness is trying to give an answer? Should the witness be given time fully to answer a question before Members ask supplementaries?
That is not a point of order. I have made it clear that questions from Members should be brief. Since the witness is wanting to make representations to the Committee, I will give them a wee bit more leeway than I will Members. Short and sharp questions, please.
Richard Jones: Thank you, Chair. As I said, there would be very little effect. For those who would be exempted, the problem we see is the confusion and uncertainty that could be caused. Now that we have seen the prescribed list, that has made the situation somewhat worse for us, especially if the message goes out that a million self-employed are exempted from law.
In its impact assessment, to which I keep referring, the Health and Safety Executive commented:
“In theory, all 3.1 million self-employed who have no employees in the UK might think the exemption could apply to them, if they hear about it casually.”
We know that it is very difficult to communicate messages to the target group; because of the numbers and diversity, we believe it is highly likely that most of them will hear about the exemption casually. Many who should not be exempted might think that they are. That is the big danger—it is not about the danger for people who are exempted.
No, I asked how much it would cost for a business. I think you are purposely taking an extreme at one end and an extreme at the other. Will you answer my question? You are a professional in the industry and I am asking what a small business would pay on average. I do not think that that is an unreasonable question. You have given me an extreme example of the chemical industry and the example of someone who is self-employed.
My question is about unintended consequences. Might there be a temptation for businesses that see the change to think that rather than having employees they will make their work force self-employed in order to gain the exemption?
Richard Jones: That is a possibility and a concern that we have. I would raise another aspect. If we are talking about perceptions, the Federation of Small Businesses thought that exempting this group would help to change perceptions of the health and safety burden. Our view is that it would not; it would reinforce it. If a group is taken out of the health and safety framework on the pretext that it relieves them of burden and if, at some point in the future, they want to expand and think about employing people, they may be deterred from employing those people, because they think this huge burden will descend on them.