ELCI REVIEW NEEDS TO BE A FUNDAMENTAL ONE SAYS HSC CHAIR BILL CALLAGHAN

HSC press release - C005:03 - 7 February 2003

The Government's review of ELCI (Employers Liability Compulsory Insurance) is a unique opportunity for a fundamental reform of the system of compensation for workplace injury and ill health, Chair of the Health and Safety Commission, Bill Callaghan, said today.

Speaking at the Iron Trades Conference in London Mr. Callaghan gave his personal view of what the review might achieve. He said:

"The Government review offers an opportunity that will not arise again for years. We need to use this opportunity to identify options for reform."

He added that ELCI was just one element of a wider system for insurance and compensation and he was pleased that the government was proposing to consider the whole of current employer liability and worker compensation arrangements. His own view was that short-term technical adjustments would not solve the problems.

He said the present system has many disadvantages:

"It does not drive better health and safety performance or rehabilitation. It deals with consequences rather than prevention. It is not economically efficient. The costs of the system are out of line with the compensation payouts, and include a heavy element of legal fees. Neither does it cope well with occupational diseases that might have a long latency period. Recent high profile crises in the industry had demonstrated that."

Mr. Callaghan went on to look at the possible options for reform which he believes range from short term arrangements which help create better incentives, to placing stronger incentives on employers by making them bear more of the costs of health and safety failure.

"If the costs of health and safety failures were better known and borne by those who created the risks, a better and more efficient allocation of resources could follow. And the business case for investment in health and safety would be clearer to all organisations - remember that prevention and rehabilitation provides savings, so it is not all about new financial burdens".

Mr. Callaghan said that we need to ask some fundamental questions. For example, are adversarial relationships the most efficient way to secure compensation or encourage prevention or rehabilitation? Radical options should not be ruled out and a "no fault" system explored.

He concluded:

"Today I have outlined how we might make work a better place to be - a better and safer place to be for all those workers who now leave employment because of sickness and ill health. It is also about a more efficient system. Ensuring that costs are recognised and borne by those who create them. Creating incentives for good health and safety performance. Penalising poor performers.

"I do not minimise the difficulty of reform. But if we get this right we could make a real difference."

Press enquiries

All enquiries from journalists should be directed to the HSE Press Office