Economic Analysis Unit (EAU) appraisal values

HSE's Appraisal Values are the costs to society associated with each individual case of workplace fatality, workplace injury and work-related ill health.

They are most frequently used in impact assessment and appraisal of proposed measures which aim to improve occupational health and safety. The prevention of workplace accidents and work-related ill health leads to a reduction in costs to society, and the Appraisal Values are used to inform estimates of the size of such reductions in cost. Any such reduction in costs (i.e. benefits) can then be compared with the cost of government intervention.

In December 2011, HSE published an updated methodology for the calculation of aggregate costs and Appraisal Values. See the detailed methodology report for a fuller explanation of the cost model (and supporting methods and data). In brief, the Appraisal Values for the latest year of 2010/11 are calculated by dividing an estimate of the aggregate costs to society of workplace injury and ill health ^[1] in 2010/11 (as calculated by the Cost to Britain cost model) by the number of new incidence cases in 2010/11 for each category of injury and ill health.

It should be noted that since December 2011, the Appraisal Values are not directly comparable with earlier published estimates, being based on the new improved costing methodology.

The Appraisal Values give the costs to society per case of four kinds of workplace accidents and ill health:

• Fatalities
• Reportable injuries - injuries that would be reportable under the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 1995 (RIDDOR) 
• Minor injuries - an injury resulting in less than 4 days' absence from work
• An average case of ill health

An average case of ill health is the average cost across all types of ill health included in the Costs to Britain estimate. Specifically this excludes any long latency illness due to lack of data at the time of development.

The Appraisal Values reflect a range of costs but for simplicity of presentation they are presented below in two overall categories of cost:

• Non-financial human costs representing the value of 'human costs', sometimes described as 'pain, grief and suffering'
• Financial costs, which is the sum of the following:
  • Net lost income, taking into account the offsetting of transfers from one party to another, e.g. benefits payments are a cost to government, but an equal and opposite offsetting benefit to individuals
  • The cost of insurance, less compensation payouts to individuals
  • Production disturbance costs, such as cost of recruitment and work reorganisation
  • Health and rehabilitation costs, such as NHS costs
  • Administrative and legal costs, such as costs of administering benefits claims.

The average Appraisal Values for all workers are summarised in the table below. In most cases, these are the values which should be used for appraisal of HSE interventions ^[2].

Cost to society per case - average Appraisal Value estimates for 2010/11 for all workers (2010 prices)

Note: these estimates are subject to sampling variability which is not shown in the table.

The Costs to Britain cost model also produces Appraisal Values for the broad groups that bear part of the overall cost to society: individuals, employers and the Government (the 'cost bearers'). These Appraisal Values reflect only the costs to one of the cost bearers and do not take into account the net effects of transfers, such as benefits payments from government to individuals. They therefore are not normally suitable for sole use in social cost benefit analysis of interventions. However it can be useful to demonstrate the impact of a policy on a particular group within distributional analysis - for example using the costs to employers' Appraisal Values to estimate the value of any avoided injury or ill health (i.e. the benefits). Indeed enquiries to HSE on the costs of work related injuries and ill health often request the cost to only one group, such as 'employers' or 'workers'.

More detail of these appraisal values can be found in Costs to Britain of workplace injuries and work-related ill health: 2010/11 update.

References

1. Not including long latency illness.
2. Ideally, specific estimates of particular injury or illness types would be made for each new policy appraisal. For example, for occupational asthma HSE has produced research which outlines a specific economic value: RR474 - The true cost of occupational asthma in Great Britain. Where available, these values should be used. However, it is invariably expensive to research the economic cost of specific conditions, therefore in most cases the proportional approach is to use the appraisal values.