Costs & Benefits

The original HSE Consultative Document included the costs and benefits of the proposals to fully eliminate the risk of asbestos related diseases in the non-domestic sector. They have since been revised and the full summary of the revised Regulatory Impact Assessment (RIA) is available on the HSE web site. The costs associated in supporting the RIA are estimated to be about £5.1b over an appraisal period of 50 years. The benefits are valued at £5b and the saving of 3800 lives over 'the next century'. More recent estimates by the HSE include £3.2b based on 1.5 million UK non domestic properties. We understand there are other estimates due from the government and await news on this.

Non HSE Estimates

There are several estimates of the cost of compliance by industry commentators and interested parties outside of government. A recent one that caught our eye was £80b. This estimate is presented in an article by John Bridle published in the Safety and Health Practitioner May 2002 on the basis that all surveys will have to be undertaken by qualified asbestos contractors.

Our experience is already showing that the asbestos industry is suggesting that they should always carry out full surveys at their customers expense. The argument is that they alone can find out what is really in a building and therefore provide the information required in Law; presumptive surveys are not in the commercial interest of contractors. John Bridle's opinion is that no lives will actually be saved by the legislation even if industry does spend the estimated £80b.

This is a lot of money to put at risk on inappropriate surveys and management processes. The costs of failure to comply therefore are significant and the benefit of a well thought out management strategy to ensure success is paramount. This is particularly true for large organisations where the cost of failure to comply is likely to be highest.

Litigation

These costs do not include the cost of litigation against organisations by asbestos illness victims as they are seen to be borne by the insurance industry. However, where the litigation leads to the bankruptcy of the organisation as happened in 2001 with Federal Mogul, the US engineering group, then the costs to industry could be even higher. Tilling Towers Perrin, actuaries, are quoted in the Times 18 May 2002 as estimating the total bill for asbestosis in the US at $200b.

Asbestosis Claims against Employers

Our Own Assessment

We recently made an analysis of the UK business marketplace and divided it into 3 groups and using government employment statistics for the year 2000. This gave us a breakdown of the number of employees in each sector and was used as the basis for dividing the costs between the business sectors. The analysis is set out below. It gives a rough indication of the sort of costs involved for most organisations. The figures presented below show that the cost of getting the management process wrong can be very costly indeed. The estimates are so high that there must surely be a place for putting the 'cost of managing the risks from asbestos' on every boardroom agenda rather than depending on ad hoc solutions from unregulated budgets.

Based on the HSE's £8b estimate that includes domestic and non-domestic properties;

• 7000 Large Business - £500,000 each
• 25,000 Medium Business - £37,000 each
• 3.7m Small Businesses - £950 each

However you may look at these figures, they are significant. We await guidance from the HSE with their updates in due course.