Appraisal values or 'unit costs'

HSE statistics show that each year, over a million workers are injured or made ill by their work in Great Britain. This can have serious effects on these individuals and their families, as well as employers, government and wider society. The impacts can be measured in terms of ‘human’ costs (the impact on the individual’s quality of life and, for fatal injuries, loss of life), and ‘financial’ costs, such as loss of production and healthcare costs. HSE’s estimate of the total costs of workplace injuries and ill health includes both financial costs and a valuation of human costs.

Estimates of average costs per case of workplace injury or ill health are important in the economic appraisal of policy interventions.  Policy appraisal involves comparing the costs of any proposed new health and safety interventions against the likely benefits (in terms of reduced costs associated with reduced workplace ill health and injury cases) the proposed measure is likely to deliver.

These ‘appraisal values’ are estimated by dividing the total cost estimates by the number of new incidence cases. This can be done for the same range of incident types as for which total cost estimates are produced, namely:

• fatal injury;
• non-fatal injury
  • with 7 or more days absence from work;
  • with up to 6 days absence from work; 
• work-related ill health
  • with 7 or more days absence from work;
  • with up to 6 days absence from work.

Whilst the appraisal values reflect a broad range of cost categories, for simplicity of presentation the appraisal values can be divided into two main component costs:

• Human costs - representing a monetary estimate of the loss of quality of life, and loss of life in the case of fatal injuries.
• Financial costs, which are the sum of the following:
  • Productivity costs including:
    • net lost income, taking into account of loss of output and earnings due to absence from work, and offsetting transfers from one party to another, eg benefits payments are a cost to Government, but an equal and opposite offsetting benefit to individuals;
    • production costs, such as cost of recruitment and work reorganisation
  • The cost of Employer's Liability Compulsory Insurance, less compensation payouts to individuals
  • Health and rehabilitation costs, such as NHS costs
  • Administrative and legal costs, such as costs of administering benefits claims.

The average appraisal values for 2019/20, which is the latest year for which values are available, are summarised below, giving the overall cost per case, financial costs per case and human costs per case. In most cases these are the values that should be used for HSE regulatory impact assessments and cost benefit analysis of health and safety interventions. Given the considerable uncertainties inherent in these estimates (see the annual costs report for further explanation), we recommend that sensitivity analysis is undertaken to test the sensitivity of the appraisal outcome to changes in these values (as well as other variables). The user should also consider whether the injury and ill health classifications above are appropriate for the injury and ill health types under consideration, or whether the values should be adjusted or other more specific sought.

Table 1: Costs to Society per case – average appraisal value estimates (£ in 2020 prices)

Note:

(i) Totals may not sum due to rounding.

(ii) These estimates are subject to uncertainty due to both sampling variability in the injury and ill health incidence estimates and uncertainty in the underpinning prices and assumptions used to estimate costs. The cost model accounts for the former uncertainty although this range of uncertainty is not shown in the table.

Appraisal values specific to individuals, employers or Government

The ‘Costs to Britain’ cost model also produces appraisal values for the broad groups that bear part of the overall costs to society: individuals, employers and the Government (the 'cost bearers'). These appraisal values reflect only the costs incurred by each cost bearer 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 costs to only one group, such as 'employers' or 'workers'.

The following tables present appraisal values reflecting only the costs to a particular cost bearer.

Table 2: Costs to individuals per case – average appraisal value estimates (£ in 2020 prices)

Note:

See notes (i) and (ii):  from Table 1

(iii) These estimates show negative financial costs (net financial income) on average for non-fatal injuries and non-fatal injuries with 7 or more days absence – this is entirely plausible (as insurance payouts partially compensate for quality of life losses ('human costs') but are accounted for in our model only under financial costs).

Table 3: Costs to employers per case – average appraisal value estimates (£ in 2020 prices)

Note:

See Notes (i) and (ii) from Table 1

Table 4: Costs to Government per case – average appraisal value estimates (£ in 2020 prices)

Note:

See Notes (i) and (ii) from Table 1

Footnotes

1. HSE has published research which estimates the costs of new cases of work-related cancer arising from past working conditions. Available at: http://www.hse.gov.uk/research/rrhtm/rr1074.htm
2. For more details on the latest costs estimates, see www.hse.gov.uk/statistics/cost.htm.