THE COSTS AND BENEFITS OF THE POWER PRESSES REGULATIONS (1965)
| Date | 01 July 1983 |
| Author | Phillip Morgan |
| Published date | 01 July 1983 |
| DOI | http://doi.org/10.1111/j.1467-8543.1983.tb00129.x |
THE COSTS AND BENEFITS OF THE POWER PRESSES
REGULATIONS
(
1965)’.2
PHILLIP
MORGAN*
THE economics of regulation has not produced a voluminous theoretical literature (but
see Veljanovski, 1978). Neither have there been many published codbenefit studies
of existing
or
proposed regulatory requirements, at least
so
far as the
UK
is concerned.
There are some examples in the transport and environmental fields (see Appleton,
1977 and Hobbs, 1978) but virtually none
in
the field of health and safety at work. This
is surprising given the long history
of
legislation in this area and more recently because
of the concern often voiced that health and safety legislation places
UK
industry at a
competitive disadvantage for little material gain
in
terms of improved health and
safety.
The purpose of the present article is therefore twofold. We consider the costs and
benefits of a particular piece of health and safety legislation, the power presses
regulations, with a view to exploring its effectiveness and its resource allocation
implications. In
so
doing we encounter some interesting methodological problems
of
valuation. Our discussion of these problems may prove useful to future researchers in
this area
or
at least in stimulating further debate. Although we do not touch on the
question of the value
of
a life (for a survey of the considerable literature in this area,
see Mooney, 1977), we derive some implicit values for serious disabilities such as the
loss
of
limbs. This is again an area where few empirical estimates are to be found.
THE
POWER
PRESSES REGULATIONS
We give only a brief resume of the power presses regulations here since
our
main
concern is
to
identify and attempt to estimate their costs and benefits. Readers
interested in the detailed provisions of the regulations should consult the regulations
themselves
(S.I.
1965 No. 1441,
HMSO).
The power presses regulations came into force
on
July 29th 1966. They require, in
all premises where power presses are in use, that an ‘appointed person’ carry out
various specified tests and inspections of the presses, both after every toolchange and
also during the first four hours of every shift. The appointed person, normally a
toolsetter, receives special training such that he is competent to carry out the tasks laid
down by the regulations.
A
further requirement is that a statutory examination of each
power press be carried
out
by a ‘competent person’ normally an insurance company
assessor. Presses incorporating fixed guards must be examined once a year, while
presses
with
other fencing receive examinations twice yearly.
COSTS
AND
BENEFITS
OF
THE
REGULATIONS
The present study considers the economic effects
of
the regulations
in
resource
terms, for the
most
recent year, 1978, where sufficient data is available. We are
therefore concerned with the estimation of annual resource costs and benefits for 1978.
when the effects of
the
regulations have ‘settled down’. We do
not
consider one-off
costs incurred soon after the introduction of the regulations (for example. the cost
of
training lecturers in the skills necessary for running courses for toolsetters). nor the
total
of
costs incurred and benefits reaped since the inception of the regulations.
The resource costs
of
the regulations fall under three main headings. First,
*
Economic Adviser, Health and Safety Executive.
101
182
BRITISH JOURNAL
OF
INDUSTRIAL RELATIONS
training costs (of toolsetters and supervisors). Secondly, costs in terms of
lost
production arising from ‘downtime’ (when the presses are not in use,
in
this case
because of compliance with the requirements of the regulations). Thirdly, the levy cost
of
statutory examinations. Note that all of these costs fall on power press users in the
first instance. We have not considered one other possible resource cost namely, the
costs
of
enforcement
of
the regulations to the Factory Inspectorate. This might well
have been a significant item in the early days of the regulations as special enforcement
initiatives often accompany the introduction of new health and safety regulations.
However, by
1978
no separable and significant component of Factory Inspectorate
activities can be ascribed
to
enforcement
of
the
1965
regulations.
The benefits of the regulations can be largely considered in terms of averted
accidents at the power presses and averted breakdowns of the presses due to
malfunctions. The resource3 savings which stem from averted accidents include
reductions in lost production, damage to plant and machinery, administrative time and
savings in medical treatment. The main resource saving stemming from averted
breakdowns of the presses is a reduction
in
lost production. Some of these savings
directly accrue to power press users although not all. The National Health Service will
benefit from savings in medical treatment while the economy as a whole may benefit
from a reduction in the
loss
of labour resources caused by disabling injuries.
Annex A discusses in detail both the empirical and conceptual problems
encountered in attempting to estimate the costs referred to above and the assumptions
we have chosen to adopt. Annex
B
covers
our
estimates of those costs at some length,
while the main body of the paper presents a summary of the cost estimates and some
evidence regarding benefits. However, some of the key problems
of
estimation and the
assumptions made are crucial to a full understanding of the results and are therefore
discussed in the section below.
PROBLEMS
OF
ESTIMATION
On the cost side, a critical factor is the extent
to
which the power press industry4 was
already meeting the requirements of the regulations prior to their introduction
in
1966.
Clearly any sections of the industry already complying with those requirements would
not have faced any new costs when the regulations came into force,
or
subsequently. It
is generally felt, by those with a detailed knowledge
of
the power press industry, that
while work practices prior to
1966
may not have conformed exactly with the
requirements of the regulations, best-practice firms were following a system of
preventative maintenance based on regular inspections of the presses. However, there
is no hard evidence on the proportion of power presses that were subject to inspection
in this way. Consequently, we have assessed costs on the assumption that there was no
prior compliance with the requirements
of
these particular regulations in any section
of the industry. This assumption was made not in the belief
of
its accuracy but because,
in the absence
of
hard evidence, it produces maximum estimates
of
the cost impact
upon the power press industry.’
Continuing on this theme, we have not only assumed that there was no prior
compliance with the requirements of the regulations but also that there was full
compliance within the industry once the regulations were brought into force. This is
thought to be a reasonable generalisation but to the extent that there are pockets of
non-compliance this will mean that costs actually incurred by firms will be somewhat
smaller than estimated here. Similarly, not all of the potential benefits of following the
provisions
of
the regulations
will
have been realised if some degree of non-compliance
exists.
The second major problem in estimating costs concerns the extent to which
compliance with the regulations involves interruption to production. Two extreme
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