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Fibre tips: asbestos exposure accounts for 5,000 fatalities a year in the UK, and the rate is forecast to double over the next two decades. This shockingly high death toll has prompted the enactment of stricter asbestos control regulations, which take effect this month. Neil Hodge asks the experts what the new legislation will require of non-domestic property owners.

More than a century after it was first found to cause respiratory disease and only five years after its use was outlawed in the UK, asbestos is again a key item on every organisation's risk agenda--or at least it should be.

Asbestos has long been seen as a risk management and insurance nightmare, and it regularly comes back to haunt many a firm. Two months ago, for example, Royal & Sun Alliance upset investors when it said it had set aside 96 million [pounds sterling] to pay for asbestos claims in the US, which had contributed to a 146 million [pounds sterling] loss in its previous financial year. In March, a school in Derby was closed for two weeks for specialist cleaning after high levels of airborne asbestos were discovered. Around 400 pupils and 30 members of staff had been at risk. And Omni-Pac, an egg-box factory in Great Yarmouth, dosed last October after asbestos was found in the building. Its 200 employees were recently told that the length of the clean-up operation and the resultant loss of business meant it wouldn't be reopening.

Organisations are readying themselves for tough new rules that require them to guarantee the safety of their staff by assessing the condition of all asbestos-containing materials throughout their premises. The Control of Asbestos at Work Regulations 2002 take effect from 21 May. They impose duties on the landlords of "non-domestic properties"--including office buildings, schools, hospitals, libraries, corridors, lifts, communal lobbies, gardens and car parks--to manage the risk of exposure and properly maintain all asbestos-containing materials.

According to the Royal Institution of Chartered Surveyors (RICS), six million tonnes of asbestos remain in buildings in the UK, affecting as many as 500,000 non-domestic premises. It was widely used until the mid-1990s in insulation, roofing and fire blankets. The last type to be banned was chrysotile or white asbestos--as recently as November 1999.

Currently, all UK employers have a duty to protect their employees from any exposure to asbestos or, where this is unfeasible, to reduce their exposure to the lowest possible level. But the new regulations will place an extra duty on property owners to manage asbestos in their buildings by determining if there is any present, how much there is and what condition it's in. Crucially, landlords must presume that certain construction materials contain asbestos unless there is strong evidence to show that they don't, and they must also keep a register of the location and condition of all asbestos-containing materials on their premises.

The regulations will bring UK law into line with the European chemical agents directive and will make employers accountable for declaring the amount, type and safety of any asbestos-based materials in their buildings. They have been introduced in a bid to reduce employees' exposure to asbestos, which currently causes 5,000 deaths annually. The Health and Safety Executive says that this rate is likely to double over the next 20 years to become the most common cause of early death among adult males. Any breach of the regulations is likely to be treated as a breach of the Health and Safety at Work Act 1974 as well. The maximum penalties on summary conviction are a 20,000 [pounds sterling] fine for a breach of the act and 5,000 [pounds sterling] for a breach of the regulations.

Yet it seems that too many organisations are unsure of their responsibilities under the regulations--some don't even know that they are affected at all. "Awareness of the impending compliance date for the asbestos legislation among companies is very low," says Peter Gordon, head of consulting at Alexander Forbes Corporate Risk Solutions, the risk management arm of insurance broker Alexander Forbes. "There is no doubt that, as the implementation date draws near, there will be a rush to find qualified surveyors to assess buildings for the new rules. Tenants and property owners must be aware of their commitments and the risks they may face."

The regulations are not without their critics. The CBI says it was "fundamentally opposed" to their introduction, and to the need for conducting "willy-nilly reviews" to locate asbestos in buildings. It cites the extra burden that the rush for compliance will place on British businesses, particularly as the UK is implementing the directive two years before the other member states of the European Union. Carolyn Halpin, chair-elect of the Association of Local Authority Risk Managers and a risk management officer at Middlesbrough Borough Council, admits that the reviews are "bound to be a burden on resources", but she welcomes the regulations. They allow risk managers to be proactive in prioritising areas that need immediate remedial action without being too prescriptive, she says.

Halpin points out that Middlesbrough Borough Council owns around 700 buildings, and that its records had largely failed to specify the level of asbestos in each building. The council's asbestos review process, now in its fourth month, has since prioritised those properties deemed most likely to contain it and potentially require some remedial work. Around 350 buildings have not undergone a full review yet. Halpin says that the HSE allows a "leeway period to be in full compliance of around 18 months".

Many organisations are under the impression that they do not need to have completed their reviews by 21 May, as long as there is a risk management and review process in progress, but Peter Morgan, an HSE spokesman, says such views are wrong. "The regulations--with the exception of regulation 4--have been in place for 18 months and a full asbestos risk register for all properties is supposed to be completed by May, or organisations could risk prosecution," he warns.

Legal experts have highlighted grey areas that could potentially lead some organisations to break the law, particularly with regard to the definitions of terms such as "dutyholder" and "suitable assessment". Elizabeth Shepherd, a partner in the environment, health and safety team at law firm Eversheds, says: "The regulations state that dutyholders 'shall ensure that a suitable and sufficient assessment is carried out as to whether asbestos is, or is liable to be, present'. They also stipulate that reviews should be done 'regularly'."

But the regulations do not specify what a suitable and sufficient assessment actually is, according to Shepherd. "They don't define a timescale for a regular review either," she says. "This lack of specific wording is likely to mean that many organisations will fall foul of the spirit of what the law is trying to achieve."

There are three kinds of asbestos review currently available: a visual check; a visual check with "sampling, as appropriate"; and a "special circumstances" review if refurbishment or demolition work is likely. The RICS points out that "at the present time there is nothing to prevent the dutyholder from performing their own presumptive inspection if they feel competent to do so".

Shepherd says that the regulations leave it open to organisations to decide what kind of review is suitable. This could mean that "many organisations with large property portfolios could simply opt for a purely visual inspection to save money". She points out that the cost of these reviews is rocketing, because it's thought that there are only 500 qualified asbestos surveyors in the UK to meet the rising demand. Avisual review with sampling for an average building can cost up to 5,000 [pounds sterling], for example.

Shepherd also says that the term "dutyholder" is bound to catch out many people. "A dutyholder can be anyone who is responsible for maintenance and repair work in a building. Ninety-nine per cent of property leases require tenants to have a full repairing lease, which means that they, rather than the owner of the building, are responsible for asbestos reviews and remedial work. As a result, those organisations that think the regulations don't apply to them could be in for a real shock."

Peter Atkinson, a partner specialising in dispute resolution at law firm Pinsents, believes that the high price of reviews and remedial work will be a problem for many organisations. "It's going to be extremely hard to comply fully with the regulations because of the potentially massive annual costs of conducting asbestos reviews indefinitely," he says.

Margaret Sharkey, an advice worker at the London Hazards Centre, a charity that campaigns for safety at work, argues that the law doesn't go far enough. "It's disappointing that it applies only to non-domestic buildings and not all premises," she says.

Sharkey points out that the regulations do not cover workers who could disturb asbestos while carrying out household maintenance work as part of their jobs. "Since homeowners don't have a duty to conduct an asbestos review of their own homes or to inform people that they may be exposed to asbestos, contractors will still have no legal protection and could be putting themselves at risk by doing work in other people's homes," she says.

Neil Hodge is a freelance business journalist
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Title Annotation:Business Risk Management
Author:Hodge, Neil
Publication:Financial Management (UK)
Geographic Code:4EUUK
Date:May 1, 2004
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