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Cutting Budgets, Cutting Safety

First the Present. The overall economy is now most certainly at the beginning of a recession. This is characterised by two successive quarters of economic contraction. House prices are falling, the economy is shrinking in all the major sectors (1). With some unique conditions not experienced in previous economic downturns, such as a government owned and backed banking institute, analysts are finding it hard to predict if this is going to be just a short term crisis or the worst slump we've ever experienced.

But as we all know the first thing that happens when economic trouble is merely even mentioned is that a company begins to batten down the hatches. Spending in departments with difficult to quantify ROI (Return on investment) such as Marketing, Training and Health & Safety are often the first to be hit.

A Strange New Age
The past... If you've lived a few years longer than most then its likely that you've seen this all before. The thought that it's nothing new will certainly be with you but don't be too sure of yourself. At the height of the recent boom we experienced a major change in Fire legislation in the form of the Regulatory Reform Fire Safety Order (RRO). Its essential change is its move from 'prescriptive' based legislation to an 'assessment' methodology and with it the appointment of a 'responsible person' who's responsible for the orders implementation.

The previous method had been in place since the beginning of the seventies. Its ability to be implemented by companies and enforced by fire authorities has been tested in both good and bad economic times, such as the recession of the eighties and the boom of the late nineties / early two thousands. We must consider of course that ultimately its methodology has been deemed unacceptable but we have evidence that the method itself, a prescriptive method, was viable in terms of implementation and regulation in times of economic strife.

So now we have, unlike in the past, our 'assessment' method and with it a defined 'responsible person'. This is the person responsible for ensuring the fire safety arrangements are of a reasonable standard. He need take all reasonable precautions and ensure due diligence at all times in the undertaking of these precautions in order to prevent incident from fire.

Tough Decisions in Unreasonable Times
And now the future... Let us consider briefly why the previous legislation was supplanted for the RRO.

With a prescriptive approach only a minimum requirement for safety could be prescribed to a wide range of industries. A small retail shop may have the same basic fire precautions (fire extinguishers, fire doors) and policies as a markedly different enterprise, such as a medium size manufacturing workshop. Obviously the two both represent unique and individual risks in their operation but these are not addressed in a prescriptive approach.

With the new 'assessment' method there is for all business' now a way to tailor fire safety arrangements. With customisation however comes increased cost.

Possible costs:-
1. Training of Responsible person to a level 'reasonable' based on the scope of his post and how hazardous the work environment
2. Opportunity cost when the person carrying out the role instead of his contracted duties
3. New equipment for the unique risks identified by the responsible person in his risk assessment
4. All equipment should be third party accredited, as opposed to cheaper non-accredited products, ensuring reliability of operation, this may require re-purchasing of existing equipment
5. Training for all new equipment (Physical cost & Opportunity cost)
6. New safer work practices which may require less efficient work methods, new equipment or additional/specialist labour
7. The constant maintenance, review and updating of all fire safety arrangements to ensure continued due diligence

All these costs are as a result of a 'reasonable', lawful approach to fire safety.

These, as can be seen, soon begin to accumulate and represent a fair cost for a company, especially a small to medium sized business. A cost not only in physical terms, as in cash, but also investment in manpower and time to co-ordinate it all. Suffice to say, save but a few companies, many have taken the added responsibility grudgingly with many feeling that it is even more red tape and bureaucracy.

I wont go into here on as to why this is a misguided notion but prior to now it was likely that as the economy was steady and growth was being sustained, thus almost ensuring profitability, these additional operating costs could be tolerated. But what now with the impending recession looming?

Many a department head will be pouring over figures, planning for budget squeezes to come and rationalising all costs.

As a function of Health & Safety will be Fire Safety.

This is going to represent something of a moral crisis for business.

Cuts in funding mean less focus on managing and implementing Health & Safety and Fire Safety. Less focus and less management will most likely lead to the rise in incidents over time. An incident can be interpreted as failure to comply and may result in prosecution.

So in these forecast times of economic strife a business is going to be balancing

the pressures of expenditure against its lawful duty to commit money and resources to safety.

If we say now that an incident occurs, a life is lost, the owners have been charged under the order and the case has come to court. The case rests on whether it was reasonable, faced with the prospect of crippling the business, to expect the owners to invest in the alarms with the scale of investment outweighing the benefits gained to overall fire safety.

This is of course a theoretical case but it is easy to see how it can stretch to an array of business' and how it is pertinent in this time of economic downturn.

Under the prescriptive method, compliance was black and white and it could be budgeted for. With the assessment method RRO costs 'appear' as risks are identified and resolved and some times in-turn creating new risks. Re-assessment is constantly required as the business changes so do the risks.

Companies are entering turbulent times and these kinds of decisions are going to be affecting a greater number of companies and with a greater number of frequency the worse the economy gets. The problem is that of all the departments it is likely that Health & Safety is the one that will be worst hit.

The proof of its application is the absence of incident. This can be the same absence of incident for as long a time without expenditure. It's the one day, when the last major tragedy is a distant memory in peoples minds, when a fire rips through the building, claims lives and subsequently livelihoods (2), that the decision to cut spending on fire safety is lamented. Business' often learn the hard way. Cuts in safety cut into lives.

Footnotes

1 - http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/08/22/cconway122.xml
2 - 80% of business?s fail within three years of suffering a major fire - http://www.lanarkshire.com/?node_id=1.4.26.8.6

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