Evaluation of cumulative impact of Evaluation of cumulative impact of Evaluation of cumulative impact of safety, health and environmental safety, health and environmental safety, health and environmental regulation on various chemical sectors: regulation on various chemical sectors: regulation on various chemical sectors: issues, challenges and lessons learned issues, challenges and lessons learned issues, challenges and lessons learned DTI/BRE Conference on the Evaluation of Regulation « Adding up the costs and benefits » 24 th November 2006 London Economics, November 28, 2006 11-15 Betterton Street, London WC2H 9BP, UK
Agenda Agenda Agenda � Objectives of project undertaken by LE/RPA � The target sectors � The target regulations � Method � Challenges � Key elements of questionnaire � Key results 2 November 28, 2006
Objectives of the project Objectives of the project Objectives of the project � Estimation of costs of compliance with current SHE regulations in excess of minimum costs necessary to ensure current levels of protection in 3 sub-sectors of chemical industry: Industrial coatings � Aerosols � Specialty chemicals � � Proposals for reduction in costs of compliance with current SHE regulations while maintaining current levels of protection � Toolkit for future studies 3 November 28, 2006
The target sectors The target sectors The target sectors Industry Turnover (£bn) Industrial/decorative coatings 1.4 Specialty – organics 8.7 Specialty – inorganics 2.9 Specialty – soaps 2.9 Specialty – other 1.7 Aerosols 1.2 Mixture of very large firms and SMEs 4 November 28, 2006
The target regulations The target regulations The target regulations � In total, package of 16 SHE regulations to be assessed jointly: Hazardous waste classification and waste disposal COMAH Packaging and packaging waste regulations Carriage of dangerous goods including DGSA CHIP/Dangerous substances/ dangerous preparations Dir. Biocidal products directive/regulations IPPC/Pollution prevention and control regulations Solvent emissions regulations COSHH regulations Management of health and safety at work regulations Cosmetics regulations Food contact regulations General product safety regulations The reporting of injuries and dangerous occurrences – RIDDOR Health and safety (first aid) regulations 5 November 28, 2006
Method Method Method � Primary data collection Face-to-face interviews with representatives of 48 � companies (different size), with opportunity by survey participant to review write-up of interview � Estimation of total costs of compliance and excess cost of compliance Use of information from interviews and grossing up to � generate sector-wide estimates 6 November 28, 2006
Challenges Challenges Challenges � Industry involvement and support Support of 3 trade associations (British Aerosol � Manufacturers’ Association, British Coatings Federation, British Association of Chemical Specialities on steering group with DTI, Defra, Cabinet Office), Dti, Scottish Enterprise and DETI in NI but……. � Participation issues (90 names but only 48 participants) � Response issues (information available to respondents) � 7 November 28, 2006
Key elements of questionnaire Key elements of questionnaire Key elements of questionnaire � Identification of entity to which response applies (plant, company’s UK operation, world- wide operation) � Questions about: Overall cost of compliance, as % of total turnover � (multiple choice approach) Specific costs in absolute terms (staff salaries, other � time commitments, equipment, other plant or process costs, external advice and testing, charges imposed by the regulator, fees for permits and inspections, foregone business, changes to products, changes to labelling, other) 8 November 28, 2006
Key results Key results Key results � Average total cost of compliance with SHE regulations in 3 sectors: 2.1% of turnover (range of 0.9% to 3.1% across 10 industry classifications) � Average excess cost: 0.6% of turnover (range of 0% to 1%) � Compliance costs roughly constant across firm sizes within industry groups 9 November 28, 2006
Key results Key results Key results � Weighted cost of compliance: 1.20% of turnover � Weighted excess cost: 0.4% of turnover 10 November 28, 2006
Key results Key results Key results � An important feature in interview process was asking companies to think of activities they would not undertake in the absence of regulations (issue of baseline) => reduction in estimate of compliance costs � Insurance, reputation important drivers 11 November 28, 2006
Key benefits Key benefits Key benefits � 5 main areas: Better SHE performance � Greater efficiency in handling waste � Benefits of visits from regulators � Improvement of company’s reputation (consumers, � general public) Forces companies to analyse production processes � systematically Level playing field - no race to the bottom � 12 November 28, 2006
Key benefits Key benefits Key benefits � Many proposals for: Better implementation of current regulation � Changes to regulation � Changes to process of producing regulation � � Perhaps more interesting aspect but also source of tension with regulatory bodies 13 November 28, 2006
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