SUBMISSION TO DEPARTMENT FOR TRANSPORT RAIL REVIEW

From: 	Centre for Corporate Accountability
Disaster Action
Safety on Trains Action Group

INTRODUCTION

1.1	This is a submission to the Department for Transport’s current review of the Railways. On 19 January 2004, Secretary of State Alistair Darling announced a major review of the structure of Britain's railway. He stated that the review will also look at regulation of safety, "which at the moment is the responsibility of the Health and Safety Executive, Health and Safety Commission and the Railway Safety and Standards Board."

1.2	He went onto say that:  

"Safety is of paramount importance. And all those involved undoubtedly work hard to ensure a safe railway. But there are now a plethora of industry standards some of which are over cautious or are being applied in an over-cautious way.” 

"Safety regulation needs to be focused on the real risks to passengers and employees and should not be an obstacle to providing reliable services. We need the right organisation to do that."

1.3	We are writing this joint submission because it has recently been reported in the press that the Secretary of State is now considering moving responsibility for safety regulation out of the Health and Safety Executive, possibly to a body within the Department of Transport.

1.4	It is the view of the Centre for Corporate Accountability, Disaster Action and the Safety on Trains Action Group that if the government considers safety on the railways to be of paramount importance and is concerned to have a system of safety regulation the public can trust, it should NOT remove responsibility for safety regulation from the HSE.

THE PRINCIPLE OF INDEPENDENCE

2.1	It is essential that the organisation involved in enforcing safety in any industry is, and is seen to be, entirely independent of the industry itself. Lack of such independence was found to have been a factor in the Zeebrugge Ferry, Kings Cross, Piper Alpha, and Clapham disasters. We urge the Government to review the Inquiry reports for each of the disasters that have occurred since 1987. Without exception they illustrate the danger of the Secretary of State’s proposed approach and suggest that independence of the safety authority is essential.

2.2 	Lord Cullen, following his inquiry into the Piper Alpha disaster, recommended that safety for the offshore industry should be taken out of the Department of Energy, not least since the Department of Energy’s approach to regulation was characterised by:

“…over-conservatism, insularity and a lack of ability to look at the regime and themselves in a critical way.” 

2.3	In his report into the Ladbroke Grove Railway Disaster, Lord Cullen also indicated the importance of the safety regulator being independent. He stated:

“If the safety regulator is to discharge its function properly and give the public notice that it is doing so, it is essential that it should be independent of the industry and be clearly seen to be independent of it”. ….. 

“I am satisfied that the respective functions of the safety regulator and the Rail Regulator, which are clearly distinct, should be seen to be performed by different bodies. This is desirable in order to give public confidence of their independence and of their distinct accountability.”

2.4	The principle of independence was one of the key factors in the original decision to remove the Railway Inspectorate into the HSE out of the Department of Transport in 1990.

2.5	We would further contend that transferring responsibility for the Health and Safety Executive’s Railways Inspectorate to the Department of Transport would create serious difficulties in maintaining clear lines of reporting and accountability.  The principal line of reporting would lead to the Secretary of State. Given that the regulatory body would remain responsible for implementing statutory responsibilities under the Health and Safety at Work Act, presumably the existing line of reporting, to the Health and Safety Commission, would need to remain in place in some form.  The creation of two lines of reporting would mean an added layer of bureaucracy, and make the management of the regulatory authority un-necessarily complex.   

2.6	It would be highly inappropriate for the Government to revert to the position prior to 1990, particularly in the current climate, when poor performance, and the need for modernisation of the rail industry, have created an intense focus upon the safety aspects of the industry and the need for proper regulatory oversight.

THE ROLE OF THE HEALTH AND SAFETY EXECUTIVE

3.1	Research shows that the Health and Safety Executive remains the most trusted by the public of all the regulators by some margin, and has good relationships with those it regulates. The challenge is to build on current developments to ensure that such findings hold good for the rail industry.

3.2	It should also be noted that Lord Cullen concluded in his report following the Public Inquiry into the Ladbroke Road train crash: 

“I am not persuaded that a new safety regulator for the railways should take the place of the HSE. I recommend that the HSE through the HMRI continue to fulfil that function. However, I would emphasise that it is imperative that the HSE are provided with adequate resources in order to fulfil their role … “

REGULATION AND ENFORCEMENT

4.1	In his speech, Alistair Darling stated that that:

 "there are now a plethora of industry standards, some of which are over cautious or are being applied in an over-cautious way" 

4.2	This statement raises two points: the first one, is the number and nature of the 'industry standards'. It is unclear which standards the Secretary of State considers to be 'over-cautious'. These concerns must be set out in more detail.

4.3 	It should be noted that neither public inquiry into the Southall and Ladbroke Grove railway disasters has concluded that safety standards are too onerous and they should be reduced.

4.4 	This comment appears to suggest, however, that the rail industry suffers from over-regulation and that it would welcome exemption from some of the safety obligations imposed upon it. It is our view that there is no justifiable reason why one industry - in particular the railway industry - should be exempt from obligations which otherwise apply to all industries nationally.

4.5 	Secondly, the comment also appears to criticise the HSE for enforcing safety law on the railways in an over-cautious manner. There is, as far as we are aware, no evidence available to justify this statement. On the contrary, the clearest common conclusion of academic literature on safety regulation in the UK is that under-enforcement across all sectors of industry has long been the norm. Further, a major recent study, conducted from Oxford University and supported by HSE, found no evidence of over-zealous safety regulation in the rail industry – quite the opposite in fact. 

If the Secretary of State has evidence to support his position, it is important that he publishes it.

4.6	In any event, the dangers of a light touch approach to enforcement were exposed in the Cullen Inquiry.  The report stated that: 

“There was unanimity that it was essential that the safety regulator should have adequate strength. Mr J. Rimington, formerly Director-General of the HSE, put the matter succinctly when he wrote in his submission to the Inquiry of “ …a unified regulatory body well resourced and powerful enough genuinely to challenge vested industrial interests and stimulate change”.

4.7	The report also stated:

“The HSE submitted to me that the HMRI relied on assurances given by Railtrack as to the actions which would be taken to follow up the investigation of the SPAD on 4 February 1998. I have referred … to a number of recommendations made by the Formal Inquiry which were not in fact implemented. Miss Bacon said that this was a good example of “where we were told things were going to happen. We took that on trust and did not issue an improvement notice”. She added: “With the benefit of hindsight, it might have been a good thing if we had done so”.

4.8	In addition, if the Secretary of State considers that there should be a different approach to enforcement - perhaps one which avoids the threat of formal enforcement action including prosecution - he should be aware that the evidence suggests that such strategies do not work. We are appending to this document a section of recent evidence submitted by the CCA to the Select Committee Evidence on Work and Pensions which stated that formal enforcement with the threat of prosecution was the most useful way of obtaining compliance.

4.9	Any strategy that results in reduced inspections, investigations and warnings  of formal enforcement will - the evidence suggests - not result in improved safety performance in the railways. 

CONCLUSION

5.1	It is therefore our contention that the Government:

(a)	should not remove the independence of the railway safety regulator; 
(b)	should keep this responsibility in the hands of an adequately funded HSE;
(c)	should not allow for a regime that is based around simply taking information on trust by railway companies and; 
(d)	should not prevent the regulator from enforcing existing safety law through inspection, investigation, imposition of notices and prosecution..

Extract from the Centre for Corporate Accountability’s Evidence to the Select Committee on Work and Pensions, concerning the ‘Work of the HSC/E’, February 2004

HSE’s New Policy? Retreat from both inspections/investigations and formal enforcement
4.23	[W]e would like to bring to the attention of the Select Committee, HSE’s current new thinking on inspection/investigation in particular, and its enforcement strategy  more generally. In the CCA’s view, HSE’s new thinking is wholly inconsistent with its own and other research and is fundamentally a strategy designed to accommodate reductions in resources, not one aimed at making the HSE more effective.

4.24	A recent discussion paper entitled ‘Regulation, Enforcement, Inspection and What we will Do’, was presented by Justin McCracken to an HSE Board meeting on 3 September 2003, and has been circulated to the Commission. The paper indicates that the HSE is considering whether it should ‘put more emphasis on the “educate and influence” aspects of our work’. It is also recognised that this will necessitate “using a smaller proportion of [the HSE’s] total front line resource for the inspection and enforcement aspects of [HSE’s] work”. This ‘significant shift of emphasis’ is justified on the basis of:

“a belief (and we agree that at present our evaluation of the effectiveness of different approaches and techniques is not sufficiently well developed to allow it to be more than this) that by altering the balance in this way will help us to climb off the current plateau in safety performance and to tackle increases in ill health”.

4.25	Whilst McCracken is right to acknowledge that there is no evidence indicating that such a shift would have a positive effect on occupational health and safety outcomes, he is mistaken in suggesting that there is insufficient evidence to consider the relative effectiveness of different regulatory strategies. On the contrary, there is a substantial international and UK literature on what motivates employers to improve their occupational health and safety performance. Four major reviews of this literature have recently been undertaken – all commissioned by national regulatory authorities. In addition there are a number of smaller UK-based studies. In the following section we present the main findings of this research as they relate to a range of regulatory options, and consider whether they provide support for a shift of resources away from enforcement and inspection activity and towards the provision of education and advice. 

4.26	The main findings of international and UK research on the relative efficacy of various regulatory tools are as follows:

•	All the major reviews of the international literature conclude that one of the most important drivers of improved occupational health and safety performance is legislation, backed by credible enforcement. This finding is mirrored in the UK studies, where the need to comply with the law was the most commonly cited reason for health and safety initiatives amongst all sizes of organisations. 
•	Respondents to many survey studies indicate that “the prospect of enforcement is a key reason for making health and safety improvements, and that higher levels of enforcement would prompt organisations to make further improvements”.
•	A wide-ranging review of the international literature on a range of inspection regimes found that ‘almost all studies concluded that inspection works’. ‘Inspection activity’ was broadly defined by the authors to include: planned inspections, reactive investigations and enforcement action (formal and informal). Some studies demonstrate significant reductions in individual plant injury rates following inspections coupled with some form of enforcement action. Brief inspections that did not result in penalties had no injury reducing effects.
•	All of the studies identified fear of reputational damage as either one of the most important drivers, or as the next most important driver after regulation.
•	Whilst awareness of legislation was found to be a key initiator of action, there is some evidence that advisory, awareness raising and educational activities are less effective in the absence of the possibility of enforcement. More generally, there is significant evidence of the limits of voluntarism.
•	All of the major reviews identified serious limitations with the “safety pays” and cost avoidance arguments that are commonly relied on by regulatory agencies in this and other countries. 

4.27	Whilst many of the studies reviewed are self-report studies, thereby raising concerns about subjectivity and possible bias, three factors suggest we can be fairly confident in the validity of the main findings outlined above. First, there is remarkable consistency with regard to the findings reported in the international literature, giving rise to confidence in the conclusions reached by the individual studies. Second, four separate reviews of the international research have reached identical conclusions with regard to what the majority of the studies tell us about the drivers of management commitment to occupational health and safety, indicating that not only are the findings of the various studies consistent, but also that they are unambiguous. And third, these findings are replicated in relation to research on environmental management, where compliance with regulation was the most commonly cited spur to greater management action.

4.28	Whilst other factors (such as the wish to avoid paying compensation) can influence health and safety management in the UK, the only factors commonly identified by the UK research to prompt health and safety improvement were the fear of loss of corporate credibility and the need to comply with health and safety regulations. Moreover, fear of loss of corporate credibility is itself partly created by a fear of adverse regulatory enforcement action, and therefore, the enforcement of regulations is virtually a precondition in creating reputational risk.

4.29	In relation to SMEs, the main motive for occupational health and safety improvements seems to be fear that their operations might be curtailed by a regulator and/ or loss of business subsequent to a high profile incident.

4.30	Thus regulation backed by the threat of credible enforcement is the most effective lever that regulators possess for motivating management to improve the occupational health and safety performance of their undertakings. And this is true for both large, and small- and medium-sized (SMEs) organisations. However, as Wright points out, it is likely that optimum results will only be achieved: “if there is a real possibility of detection and subsequent enforcement in the event that standards are not maintained, implying that the actual or perceived level of direct contact with the regulator should be high.”

4.31	Insufficient resources for the HSE (see previous section on ‘resources’) already severely restrict the amount of inspection and enforcement activity it can undertake. It is likely to be HSE’s inability to properly fulfil its enforcement and inspection functions that has brought about the current plateau in safety performance and increases in ill health referred to by Justin McCracken. HSE should therefore not be contemplating shifting resources away from front line inspection and enforcement activities.

Other Enforcement Strategies
4.32	It is worth while considering what evidence there is for the utility of other enforcement strategies: 

4.33	Corporate Credibility, Enforcement and ‘Naming and Shaming’: In the case of larger and reputationally sensitive firms or firms operating in high risk sectors, fear of adverse publicity and loss of corporate credibility may be significant motivating factors. As stated, regulatory enforcement action is a key factor in creating reputational risk. In addition, the evidence suggests that additional regulatory and legal strategies which capitalise on these concerns – for instance, mandatory occupational health and safety performance reporting, formal court ordered sanctions of adverse publicity, the regular and widespread naming and shaming of noncompliant organisations and their directors – are also likely to be effective. 

4.34	Recent HSC/E initiatives are failing to fully motivate companies through capitalising on the latter’s concerns to preserve credibility and reputation. For instance, although the HSC/E are now encouraging companies to publicise health and safety performance in their annual reports, this is entirely voluntary and as such does not provide a sufficient incentive to companies to improve their performance. In relation to the publication of HSE’s prosecutions and notices database, the HSE contemplated and then rejected the option of ranking offending companies, thereby missing the opportunity of shaming the most recalcitrant occupational health and safety offenders. 

4.35	Penalties: Wright et al. observe that since “the fear of enforcement is a significant motivator for organisations, there may be value in exploring new types of penalties… to maximise the deterrent effect of enforcement, such as court ordered publicity”. However, the HSC/E have not undertaken any work in  considering more imaginative penalties such as: on-the-spot-fines, equity fines, adverse publicity orders, corporate probation orders, corporate community service orders, or the disqualification of culpable directors. This is despite the fact that Action Point 9 of Revitalising Health and Safety required the Health and Safety Commission “to advise Ministers on the feasibility of consultees' proposals for more innovative penalties.”.

4.36	‘The Business Case’: The HSC/E continue to put great emphasis on information-based strategies promoting the economic and business case for health and safety, despite the fact that study after study has demonstrated that UK management are not motivated by the economic arguments for health and safety, and that in many circumstances safety does not ‘pay’. This is largely because, even if they can be  calculated adequately, the real costs of occupational injury, death and ill-health in the UK are borne by victims, their families and the state, and not by employers. Whilst it may be useful, in some contexts, to demonstrate that health and safety improvements are cost neutral or may offer positive financial benefits, the evidence suggests that the more general usefulness of such strategies are limited and certainly should not be pursued as an alternative to, or at the expense of, enforcement and inspection activities.

4.37	Trade Unions: The only other factor shown to have a measurable and significant impact upon workplace health and safety is employee and trade union representative involvement. The evidence that increased workforce consultation and participation has a positive impact on health and safety outcomes is extremely robust and really now beyond dispute, and yet no mention is made in the HSE discussion paper of regulatory strategies to increase worker participation. 

4.38	HSE’s further Strategies: Alternative strategies which are mentioned in the HSE discussion paper (partnerships; motivating senior managers; intermediaries; supply chain; best practice; education and awareness; provision of information) may be useful and sometimes necessary adjuncts to HSE’s core inspection and enforcement activities but, again, cannot be pursued as alternatives to, or at the expense of, regulation and enforcement. This is because the evidence does not demonstrate that these are key drivers of behavioural change for employers. 

Conclusion
4.39	There is a striking disjuncture between the approach advocated by McCracken in the paper referred to above, and the factors identified by independently conducted international and domestic research on the relative effectiveness of different regulatory strategies. 

4.40	McCracken states that: “Inspection and Enforcement will be a vital part of our work”.  However, he also acknowledges that resources will need to be shifted from the HSE’s inspection and enforcement activity. The bulk of the evidence suggests that such a reallocation of resources is likely to result in a deterioration in workplace health and safety.