§ 3.32 p.m.
§ Viscount Ullswater
My Lords, I beg to move that the Bill be now read a second time.
I need briefly to describe the purpose of bringing this Bill before your Lordships and then I will describe the main provisions of each of the clauses. The Piper Alpha disaster was the most serious accident to occur in the history of offshore development. It was a dreadful reminder that safety can never be taken for granted. We must never forget the tragedy and distress that it brought to the families of those who died or were injured, to all the survivors and to those who took part in the rescue operation. All our energies must be harnessed to the prevention of accidents offshore.
The public inquiry before the learned judge, Lord Cullen, into how the disaster occurred and what could be done to prevent similar disasters was extensive and thorough. The fact that the Government immediately accepted all 106 recommendations in his report is a tribute to its breadth and quality. The offshore industry itself also accepted the report in its entirety. 657 Since the report into the Piper Alpha disaster was published in November last year, much has already been done to implement the report's recommendations as soon as possible. I mention three points by way of illustration of progress so far.
First, on 1st April responsibility for offshore safety was transferred from the Secretary of State for Energy to the Secretary of State for Employment, administered on his behalf by the Health and Safety Commission and Executive. The transfer was agreed on the basis of a substantial increase of resources to the commission rising from £13 million in 1990–91 to £35 million 1994–95. This will allow for a fourfold increase in the number of HSE people working on offshore safety.
Secondly, a revised code of practice on standby vessels was published jointly by HSE and the Department of Transport in July. It incorporates improvements in design and provision of equipment on those vessels as recommended by Lord Cullen.
Thirdly, many of the 106 recommendations require action from the offshore industry itself. For example, the preparation of an evacuation, escape and rescue analysis for each installation. HSE is in regular contact with the industry to monitor progress and to ensure that those analyses will be completed by the end of the year.
But much still remains to be done, in particular to improve and reform the existing health and safety legislation which applies to offshore installations. Lord Cullen saw two main elements to that. First, regulations should be made to require the operator of every offshore installation, fixed or mobile, to submit a "safety case" for acceptance by the HSE. The safety case would need to demonstrate that the risks of a major accident from the installation and connected activities had been adequately assessed and suitable measures applied to control the risks and ensure the safety of personnel. The Health and Safety Commission are making this their first priority, and plan to issue a consultative document, with draft regulations and guidance, in the new year. The new regulations would be implemented progressively for new and existing installations starting in 1993.
The second main element recommended by Lord Cullen was that existing offshore health and safety legislation should be progressively replaced by new regulations. Those new regulations should set the objectives to be achieved rather than the detailed measures which an operator should take to counteract the health and safety risks posed by their offshore operations. Lord Cullen called them goal-setting regulations. They will underpin the new safety case regime by defining the necessary standards to apply to every installation.
The purpose of the Bill is to pave the way for the second of these main legislative tasks—the reform of the existing offshore health and safety legislation. It marks an essential step towards constructing the new goal-setting regulatory regime. It will not of itself alter the existing regime. It deals with the technical legal 658 changes which are necessary to allow the development of the goal-setting regime to take place. It is an important first stage in a process.
Clause 1 of the Bill has three objectives. First, it extends the general purposes of the Health and Safety at Work etc. Act 1974 to offshore safety. That means the Act will cover both the safety, health and welfare of persons on offshore installations or engaged on associated pipeline work, and the safety of installations and pipelines and of their construction and dismantling.
The second objective is to bring present offshore safety legislation within the main body of health and safety legislation by making it into what the Health and Safety at Work etc Act 1974 refers to as "existing statutory provisions". That will allow the existing offshore safety legislation to be enforced by the HSE. And it will also allow the existing statutory provisions to be progressively replaced by new regulations made under the Health and Safety at Work etc. Act.
The third objective is to ensure that the existing statutory provisions can be repealed or modified by health and safety regulations made under the Health and Safety at Work etc. Act and to allow such health and safety regulations to be made about any matters covered by the extended general purposes of the Act.
Each of those objectives must be met in order to implement Lord Cullen's recommendations for the reform of the existing offshore safety legislation. It is the Government's intention, should the Bill receive parliamentary approval, to introduce new goal-setting regulations on a rolling programme over the next three to five years. The regulations will be made following wide consultation with all interested parties.
The Government have taken the opportunity presented by the Bill to bring forward additional measures dealing with important aspects of safety and security of the oil and gas industry and also important changes to penalties for certain offences under existing health and safety law. Clauses 2 to 5 cover those changes.
Clause 2 deals with the proper construction and safe operation of onshore pipelines and prevention of damage to them; and it also deals with the protection of the public from dangers arising from the transmission, distribution, supply or use of gas, including the supply of liquid petroleum gas through tanks.
I deal first with the safety of onshore pipelines. Although most legislation concerning safety of pipelines onshore is already "existing statutory provisions" under the Health and Safety at Work etc. Act, two important parts are not: the avoidance of damage to pipelines and the notification of accidents involving escape or ignition of the contents of pipelines. Part of Clause 2 therefore extends the scope of the Health and Safety at Work etc. Act to cover the proper construction and safe operation of pipelines onshore. Clause 2 makes Sections 27 to 32 and 37 of the Pipe-lines Act 1962 "existing statutory provisions" and allows their repeal or modification by health and safety regulations. Again, as in Clause 1, health and safety regulations may be made for the purposes of the 659 extended scope of the Health and Safety at Work etc. Act. These provisions will be enforced by the pipelines inspectors who transferred to the HSE on 1st April.
I turn to the second part of Clause 2, the safety of gas supplies. Since 1st February 1984, HSE has been responsible for most of the consumer gas safety law. But the Secretary of State for Energy retained the powers to prescribe certain standards of pressure, purity and odour of gas. These standards are set out under the Gas Quality Regulations 1983 which have effect as if made under Section 16 of the Gas Act 1986. The standards of pressure, purity and odour are in essence safety standards. For example, pressure is important because if it is not sufficiently maintained, appliance flames may go out with possible escape of gas creating a risk of explosion. The opportunity is now therefore being taken to transfer responsibility for these safety standards to the Health and Safety Commission and Executive.
The opportunity is also being taken to deal with a difficulty on the use of liquid petroleum gas-LPG. The existing general purposes of the Health and Safety at Work etc. Act cover only gas supplied through pipes. LPG is supplied to a large number of users through refillable or replaceable tanks and cylinders kept at or near the users' premises. These are not covered consistently by existing regulations which protect consumers from incompetent gas installation work.
Clause 2 therefore extends the general purposes of the Health and Safety at Work etc. Act to cover the protection of the public from dangers arising from the transmission, distribution, supply or use of gas, including LPG. It also makes Section 16 of the Gas Act and regulations made under that section so far as they relate to safety, "existing statutory provisions" under the Health and Safety at Work etc. Act. Again it allows the legislation to be enforced by the HSE. Regulations can be made to repeal or modify this law and such regulations can be made about matters covered by the extended general purposes of the Health and Safety at Work etc. Act.
Clause 3 contains a number of provisions consequential on Clauses 1 and 2. The principal changes are those necessary to make a clean break between the Secretary of State for Energy's petroleum exploration and development licensing and health and safety. Currently licences for offshore exploration and development contain model clauses on health and safety. The clause will allow those model clauses to be revoked and removes any requirement on the Secretary of State for Energy when exercising his licensing functions. In future the Secretary of State for Energy will grant licences solely on the basis of economic development of petroleum resources. But Clause 7(3) provides for revocation to come into force only by order of the Secretary of State. That will not he done until the safety case regulations and the new goal-setting regime is in place. There will be no diminution in safety standards. The safety regime, which will operate once the model clauses are revoked, will be considerably strengthened since it will be illegal to operate an installation without a safety case having been accepted by HSE.
660 Clause 4 deals with penalties for certain health and safety offences. For some time both the Government and the Health and Safety Commission have been concerned at the level of penalties levied in magistrates' courts. In the year 1989–90 the average fine for all health and safety cases taken by HSE in any court was £732. That figure must be seen in the light of a maximum fine of £2,000 in a magistrates' court and unlimited levels of fine in a Crown Court. The Government have concluded that they must make provision for higher maximum penalties for certain health and safety offences. Some action has already been taken; the Criminal Justice Act will have the effect of increasing the maximum fine in magistrates' courts from £2,000 to £5,000 from October 1992 for all health and safety offences.
This Bill makes further provision for higher penalties in a number of ways to demonstrate the Government's continuing commitment to good health and safety standards supported by significant penalties for those who fail to meet those standards. The further provisions are in two categories.
The first category of offence is under Sections 2 to 6 of the Health and Safety at Work etc. Act for which the maximum fine a magistrates' court may impose will be increased to £20,000. Offences under these sections are likely to be more serious than other offences because cases are brought when there is a general failure to manage health and safety adequately. This failure to manage health and safety could be a general company failure; it could be a failure to properly control a specific hazard; or it may be a deliberate decision not to comply with these general duties under the Act. Whatever the reason, failure to manage properly health and safety is likely to lead to a number of accidents over time, which could be serious or fatal. It is therefore more serious than a one-off failure to comply with a specific health and safety duty. That is why we want these general duties under the Health and Safety at Work etc. Act to carry higher penalties.
The second category of offence is failure to comply with an improvement or prohibition notice or to comply with a court remedy order made under Section 42 of the Health and Safety at Work etc. Act. For these offences, the penalties on conviction will be increased in a magistrates' court from the current maximum of £2,000 to a maximum fine of £20,000 or six months' imprisonment or both. On conviction on indictment these offences will carry a maximum penalty of an unlimited fine or two years' imprisonment or both. These offences are especially serious because they show at best culpable neglect and at worst deliberate flouting of a duty under law by the employer despite specific issues having been brought to his attention by an inspector.
The clause also deals with certain offences under present offshore health and safety legislation. The penalties on conviction on indictment for some offences may be up to two years' imprisonment or an unlimited fine or both. The first part of the clause will also allow these penalties to be maintained in future regulations dealing with offshore safety. Maintenance of the penalties takes account of the distinctly separate 661 situation offshore where failure to follow certain health and safety regulations could prejudice the whole installation itself together with all those who work on it.
Every accident is a tragedy not just for the person injured but for the family, friends and colleagues. Accident prevention must be the first priority for employers, workers and the regulatory bodies such as HSE. But those who break the law must realise that they run the risk of very serious and substantial penalties. These new penalties are a signal to those with health and safety duties that the Government mean business.
Clause 5 deals with security of oil and gas installations. Similar statutory provisions already exist in respect of the telecommunications, electricity and water industries. The purpose of the clause is to empower the Secretary of State—in this case the Home Secretary—to issue directions to operators of an offshore installation, onshore terminal or oil refinery to preserve their security. Before issuing any such directions the Home Secretary would be required to consult the operator concerned and the Health and Safety Executive. Consultation with the HSE is necessary to avoid any possible conflict between safety and security. Operators would have to comply with such a direction, notwithstanding any other duties. A direction will be laid before Parliament unless the Home Secretary judges disclosure may prejudice national security or the commercial interests of any individual. In such circumstances, following notification from the Home Secretary, persons are prohibited from making disclosures about any such directions.
Directions could be general or specific in nature. General directions might reflect a warning that the industry faced a particular threat or they might address some widespread shortcoming which had been brought to light. Specific directions might be given to an individual operator if the Secretary of State came to the conclusion that there were particular shortcomings in security measures at the site which needed to be rectified.
The Government and the oil and gas industry take the subject of security at onshore and offshore installations very seriously. Arrangements already exist to give advice to operators on the measures necessary to protect the site adequately. I hope that your Lordships will understand if I do not go into too much detail on what those arrangements or measures may be.
I am glad to say that, by and large, operators are generally ready to take action in response to such advice. But some operators have not been so in the past. Necessary improvements can be deferred or overlooked. This can lead to varying standards so that some sites have very good security while at others there is room for improvement. It is these circumstances that the clause will cover ensuring that the Home Secretary can act to remedy matters where necessary.
I turn now to Clause 6 of the Bill. This deals with the parliamentary mechanism for extending the provisions of the Bill to Northern Ireland. Your 662 Lordships will wish to note that the Bill does not extend to Northern Ireland and the definitions in the Bill reflect this. Clause 6 will enable the corresponding Northern Ireland legislation to be enacted with the minimum possible delay soon after the Great Britain legislation becomes effective. This will be achieved by the negative resolution procedure.
I turn to the final clause. For the most part the Bill will come into effect on Royal Assent. The exceptions are those parts dealing with the model clauses—to which I have already referred—and those parts dealing with gas safety. Clause 7 also, as I said earlier, limits the application of the Bill to Great Britain.
This Bill is an important part of the implementation of the Cullen Report on the Piper Alpha disaster. I have, of necessity, concentrated on the main provisions in the Bill. I look forward with interest to your Lordships' views on the Bill. I commend the Bill to the House.
§ Moved, That the Bill be now read a second time. —(Viscount Ullswater.)