The Economic Cost of Fire: estimates for 2003

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1 The Economic Cost of Fire: estimates for 2003 March 2005

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3 The Economic Cost of Fire: estimates for 2003 March 2005 Office of the Deputy Prime Minister: London

4 Office of the Deputy Prime Minister Eland House Bressenden Place London SW1E 5DU Tel: Web site: Crown copyright 2005 Copyright in the typographical arrangement rests with the Crown. This publication, excluding logos, may be reproduced free of charge in any format or medium for research, private study or for internal circulation within an organisation. This is subject to it being reproduced accurately and not used in a misleading context. The material must be acknowledged as Crown copyright and the title of the publication specified. For any other use of this material, please write to HMSO Licensing, St Clements House, 2-16 Colegate, Norwich NR3 1BQ Fax: or [email protected] Further copies of this publication are available from: ODPM Publications PO Box 236 Wetherby West Yorkshire LS23 7NB Tel: Fax: Textphone: [email protected] or online via Printed in Great Britain on material containing 75% post-consumer waste and 25% ECF pulp. March 2005 Product code 04 CSR 02991

5 CONTENTS Executive summary 5 CHAPTER 1 Overview 6 CHAPTER 2 Methodology 8 CHAPTER 3 Results 19 CHAPTER 4 International comparisons 28 CHAPTER 5 The cost of arson and malicious false alarms 30 ANNEXES Annex A: Average costs by location 34 Annex B: Updating the economic cost of fire 38

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7 Executive summary This report contains new estimates of the cost of fire to the economy of England and Wales. Due to methodological refinements, these results are not directly comparable to those published previously by Home Office and ODPM. However, the new method has been applied to data back to 2000 to present a consistent time series. Fire continues to impose significant costs on the economy of England and Wales. In 2003, the total cost is estimated at 7.7bn, equivalent to approximately 0.9% of the gross value added of the economy. The costs as a consequence of fire, including property losses, human casualties and business disruption, are estimated at 3.3bn in The cost to the FRS of providing fire cover is estimated at 1.7bn in The cost of FRS attendance at both false alarms and non-building fires is estimated at almost 700m respectively, due to the large proportion of all incidents that these account for. The total cost of arson in 2003 is estimated at 2.8bn, which includes an allocation of the total costs incurred in anticipation of fire. The cost of FRS response to malicious false alarms is estimated at 83m. The average cost of a domestic fire is estimated at 25,000, of which approximately 15,000 is accounted for by the economic cost of injuries and fatalities. The average cost of fire in a commercial building is estimated at 58,000, of which the cost of fire damage to property represents 45,000. The average cost of a vehicle fire is estimated at 4,700. Whilst caution should be exercised in analysing trends over a short period of time, particularly since it is difficult to observe costs directly, the cost of fire remained stable as a proportion of the economy over the period examined, at approximately 0.9%. Methodological changes are discussed in detail in chapter 2, but are also set out in brief below. Box 1: Changes to the methodology for calculating the cost of fire 1. Estimates of fire protection in domestic buildings are included for the first time. 2. The FRS is placing increasing emphasis on providing community fire safety and so estimates of this cost have been made. 3. New, evidence based weights are used to estimate the time spent at secondary fire and non-fire incidents. These replace assumptions based on a FRS handbook and alter the way in which response costs are allocated. 5

8 CHAPTER 1 Overview Fire represents a significant cost to the economy in terms of its direct impact on individuals and property, extra protection installed in buildings, the administration of fire insurance and the resources required to provide fire cover through the Fire and Rescue Service. Estimates of the economic cost of fire provide a useful tool to assist policy-makers with policy appraisal and evaluation. Through use in cost benefit analysis, they can help to provide answers to questions such as: What would be the saving to the economy of preventing a given number of fires? How can scarce resources be used most effectively to tackle the most significant costs. What is the optimal balance of resources that should be allocated to fire safety education, fire protection and fire response? What are the trade-offs? Of course, cost benefit analysis does not provide the definitive answer to these questions, and is just one of a range of tools that can be applied to consider the impacts of a policy. The first estimates of the cost of fire in England and Wales were published in the Home Office report The cost of fires: A review of the information available 1, which drew upon analysis conducted overseas, particularly in the United States. Minor refinements have been made to the methodology in subsequent estimates published by Home Office in and ODPM in The challenge in any assessment of the total cost of fire is to decide on which impacts should be included and to find appropriate methods of measuring them. Some costs are relatively easy to measure, for example expenditure on the Fire and Rescue Service. Other costs are more difficult to measure directly and estimates have been made using evidence-based assumptions. A full exploration of the methodology, including refinements made since the last estimates were published, can be found in chapter 2. 1 Donald Roy (1997), The cost of fires: A review of the evidence available. 2 Mark Weiner (2001), The economic cost of fire (Home Office Research Study 229): 3 Scott Dennison (2003). The Economic Cost of Fire: Estimates for 2000: 6

9 Overview Estimates for 2003, the latest year for which data is available, are set out in chapter 3. The chapter also presents results for 2001 and 2002, and revises previous estimates for 2000, using the updated method. Several other countries have published estimates of the cost of fire. These are briefly compared to results for England and Wales in chapter 4. Deliberate fires now account for over half of primary fires, causing damage to lives, property and communities. An estimation of the cost of deliberate fires and other malicious fire behaviour is made in chapter 5. Annex A presents estimates of the average costs of fire for a detailed list of locations. Annex B suggests how estimates for future years could be updated until new values are published. 7

10 CHAPTER 2 Methodology The impacts of fire are many and varied and there are a number of different ways in which those impacts could be categorised. This study continues the approach adopted by Dennison (2003), with total costs broken down into three categories: (a) Costs in anticipation these are predominantly protection and prevention measures undertaken to prevent or mitigate the damage caused by fire. (b) Costs as a consequence These are costs that are incurred as a result of fire. These costs are due to exposure of property, individuals or the environment to fire and its products, and the cost is borne by a range of victims. These include individuals, private firms and society. (c) Costs in response These are the costs of extinguishing and clearing up after fire. Society bears the majority of these costs. The components of these costs are presented in table 2.1. The rest of the chapter discusses how these costs have been calculated. Table 2.1: Costs estimated and not estimated in the cost of fire Estimated Costs in Anticipation Fire protection in buildings (capital costs) Fire safety equipment Fire safety activity by the FRS Insurance administration Costs as a Consequence Property losses Lost output Emotional & physical suffering Healthcare costs Loss of business Costs in Response FRS response costs Not Estimated Fire protection in consumer items Fire safety research Non-FRS fire safety education and training Fire protection in buildings (maintenance costs) Environmental costs Heritage and cultural costs Costs to the community Clean-up costs Disruption to households Wider economic distortions Disruption costs to public services Loss of output due to false alarms Private fire brigades 8

11 Methodology (a) Costs in Anticipation FIRE PROTECTION Fire protection in commercial and public sector buildings All new buildings (and a large proportion of the total stock) are constructed or maintained in accordance with fire regulations. The additional protection accorded by compliance with these regulations is likely to have prevented a significant number of fires from occurring and saved many lives. However, it will also have increased the monetary cost of construction and design. The majority of fire regulations apply to non-dwellings and dwellings of multiple occupation, where building owners may not have the correct incentives to invest in fire protection at the socially-optimal level (i.e. there is a market failure). Research by the Building Research Establishment estimated the additional costs of meeting fire safety provisions for a variety of different building types. 4 For non-dwellings, these costs were estimated at approximately 5% of construction costs, which is the factor adopted by Dennison (2003) and retained for this report. There are two ways that this figure can then be used to estimate the cost of fire protection. The approach used by Roy (1997) was to assume that the cost of fire protection was the additional costs associated with new buildings in any one year. However, this ignores the cost of fire protection in existing capital and can result in highly volatile estimates. There is a stock of fire protection in existing buildings and the most suitable method for estimating the costs of these is to assume that the construction cost is annuitised over a number of years. This can be viewed as the annual cost of loan repayments to build the capital spread over its lifetime. In order to calculate the annuitised costs, the following assumptions are made: a) Real discount rate = 3.5% 5 b) Average lifetime of building = 80 years 6 c) Average building is half-way through its lifetime d) The cost of fire protection in buildings is the same today as it was 80 year ago (in real terms) In practice, it is likely that assumption (d) will overstate the overall cost of fire protection since fire regulations tend to become more stringent, and hence costly, over time. Calculations made on this basis will not capture building costs perfectly. Some buildings (e.g. unaltered existing stock) will not be covered by these building regulations, whilst others will have additional fire protection not required by 4 BRE (1996) Quantifying the cost of Meeting Building Regulations Fire Safety Requirements in New Buildings. 5 As recommended by The Green Book (HM Treasury, 2003). 6 ONS Capital Stock calculations. 9

12 The Economic Cost of Fire the regulations (due to licensing requirements, insurance purposes or individual preference). Furthermore, the research suggests that the costs are higher in steel-framed buildings, an issue which is not addressed by the current method. Further development could be beneficial in estimating the cost of maintenance and repair. The estimates above only include the costs incurred in the initial construction of buildings, but there are likely to be significant costs associated with repair and maintenance of buildings in accordance with fire regulations. Estimates suggest that over a thirty year life cycle, these could equate to around 2% of total building costs 7. The Government is reviewing the fire safety aspects of the Building Regulations and future estimates should take account of any changes that are made. Fire protection and safety equipment in dwellings Previous estimates of the cost of fire protection in dwellings have been based on expenditure on domestic fire protection equipment such as fire extinguishers and smoke detectors. In addition to these costs, this report extends the approach outlined above for non-dwellings to enable estimation of compliance costs in dwellings for the first time. Households purchase fire protection in domestic properties through expenditure on fire safety equipment. Ownership rates of various types of fire safety equipment are recorded by the British Crime Survey. Using these in conjunction with estimates of the average price of equipment and its useful life, it is possible to estimate annual expenditure. Building regulations apply to some dwellings, such as flats and houses above three floors. Complying with these regulations requires measures such as ventilation and fire resistance of stairs and stair enclosures, escape lighting and fire protection measures in lobbies and corridors. BRE (1996) estimated additional capital costs of 2.5% in flats and maisonettes, and 0.4% in houses of three storeys or above. As the capital stock figures are not sufficiently detailed to allow us to separate the value of dwellings by the number of storeys, previous estimates have assumed that fire regulations do not increase capital or life cycle costs in dwellings. However, other sources enable us to disaggregate the dwelling stock by the number of storeys. 8 By assuming that dwellings have the same value irrespective of the number of storeys, it is possible to estimate the capital stock value of these types of dwelling and hence the additional capital costs incurred. Additional capital costs are estimated at 2.5% for flats and maisonettes, and 0.4% for houses of three storeys and above. The method adopted for non-dwellings is used here, though dwellings are estimated as having a useful life of 99 years (in line with ONS guidelines). The cost of compliance with building regulations may include the costs of installing some fire protection equipment, but this is not likely to cause significant over-estimation of total costs BRE (as above). 8 English Housing Condition Survey, ODPM.

13 Methodology Fire protection in other equipment It is likely that fire protection measures are incorporated into the design and construction of a number of goods other than buildings, and that these measures will impose an extra cost that would not exist in the absence of fire risks. For example, it would be expected that fire protection measures are included in the design of vehicles and electronic equipment such as personal computers. However, the heterogeneity of these items and the limited availability of reliable data make any attempt to capture this cost extremely difficult and resource-intensive. These costs have not been estimated for this report. FIRE SAFETY ACTIVITY The Fire and Rescue Service undertakes fire safety work in the form of inspections and community fire safety. The labour cost of this work can be estimated from brigades records of total hours spent on fire safety activity and average hourly pay rates. The hourly rates of pay have been calculated using medians of pay scales, with a weighting added to take account of the inspection hours available to each rank of fire safety officer. Allocations are also made for non-pay running costs and capital costs, in line with aggregate FRS expenditure. Data on fire safety inspections is collected by local brigades and is available disaggregated by a number of different locations, which can be grouped together into domestic, commercial and public sector buildings. The FRS has taken an increasing role in promoting fire safety in the community through home fire risk checks and publicity events. This work has been primarily targeted at households and for the purposes of these estimates has been wholly attributed to the domestic sector. The FRS also spends a small proportion of time on fire investigations. These have been apportioned to different locations in proportion to the time spent undertaking fire inspections at these different locations. It is likely that some fire safety work is undertaken by private enterprises and public sector bodies, but at present it is not possible to capture the likely costs of this activity. INSURANCE ADMINISTRATION The payment of insurance premiums does not represent a cost of fire to the economy since they are transfer payments rather than a welfare loss to society. However, the administration cost of insurance is a genuine welfare loss and is therefore included as a cost of fire. If there was no need for fire insurance, the capital and labour used by insurance companies to administer policies and claims could be used elsewhere. The Association of British Insurers (ABI) records the value of commissions and expenses for commercial properties, domestic properties and vehicles. It is assumed that the proportion of these expenses that are attributable to fire is equal to the proportion of fire claims to total claims. The public sector is assumed to be self-insured and so no insurance administration is attributable to these fires. ABI data is recorded for the UK, but is scaled to England and Wales using their share of UK gross value added. 11

14 The Economic Cost of Fire (b) Costs as a consequence DAMAGE TO PROPERTY Insurance statistics currently provide the best insight into property losses resulting from domestic and commercial fires. The ABI represents the majority of the UK insurance market and publishes annual statistics on the total value of claims from domestic and commercial fires each year. There are a number of reasons why we would not expect the value of ABI claims to fully reflect the value of actual losses. 1. The ABI does not represent the entire UK insurance market, with approximately 6% of the market 9 accounted for by other insurers, principally Lloyds. 2. Many domestic properties are not insured, either because they are too great a risk for insurance companies to insure, or the premium is higher than the household is willing to pay. 3. Large firms may have sufficient financial flexibility to insure themselves. 4. Even when property is insured, the claim will not usually equal losses because there are excesses to pay. Whilst this may be relatively small for domestic property, it can reach 1m for certain commercial risks. 5. Fires resulting in damage below this limit will often not be reported to insurance companies, and will not appear in ABI data. The BCS estimates that only around 23 per cent of domestic fires are reported to the fire brigades. 10 As a result, it has been necessary to make various assumptions to adjust the ABI data to estimate the value of property damaged in fire. These assumptions are listed below. Domestic property 1. Estimates suggest that approximately 27 per cent of households did not have contents insurance, and 39 per cent did not have building insurance in 1997/8 (ABI, 1999). This latter figure is likely to over-estimate uninsurance since it may not include buildings insurance for rented properties which will be insured by the property owner rather than the household. The problem is exacerbated since some properties may have buildings or contents insurance, but not both. It is assumed that one third of households (the mid-point of the above figures) do not have insurance of one form or another. 2. It is assumed that the risk of fire and hence average property damage is the same for both uninsured and insured properties ABI website. 10 ODPM (2004) Fires in the Home: findings from the 2002/03 British Crime Survey.

15 Methodology Commercial property 1. It is assumed that all commercial capital will be insured (as a requirement of institutional shareholders and loans taken out), with the exception of small businesses which may tend to avoid insurance to minimise costs. (For this purpose, small businesses are defined as non-dwelling capital owned by persons). Conversations with people in the insurance industry suggest that the assumption on uninsured capital may be a serious under-estimate of the size of the uninsured market. Large firms in particular will tend to self-insure and some even have their own internal insurance companies which insure and re-insure risks to manage the exposure of the company to fire losses. This implies that losses will be higher than the assumptions suggest, but at present it is not possible to estimate the likely extent of underestimation. 2. The technique then assumes that the ratio of damage to capital stock is the same for both insured and uninsured property, due to a lack of evidence to suggest otherwise, at the time of this analysis. 3. Lloyds and other non-abi insurers are assumed to represent 10% of the non-domestic market (following advice from ABI 11 ). Public property The assumption that all public property is uninsured is retained, though further work might be useful to test the validity of this. It follows that property losses and loss of business in these buildings will not be included in ABI statistics. In previous reports, the value of damage has been estimated by assuming that the average damage per property is the same as for fires in commercial buildings. An alternative approach is used in Danish estimates of the cost of fire 12, which assume that public property burns at the same rate as private property, and that the ratio of fire damage to total building value is the same. This approach substantially reduces estimates of public sector property damage by approximately 10,000 per fire. This example illustrates that estimates of the cost of fire are sensitive to the assumptions made. Analysis of data collected by the FRS indicates that the average spread of fire in public sector buildings is similar to the average spread in other commercial buildings. 13 This analysis lends support to the current assumption that average property losses in public sector and commercial buildings are the same, since we would expect property damage to be correlated with the extent of fire spread. If property values were significantly different in public buildings compared to commercial buildings, this might support an alternative approach, but this possibility has not yet been tested. Therefore, this paper presents no change to previous methods for estimating public property damage. 11 Mark Weiner (2001) The economic costs of fire. 12 Danish Emergency Management Agency (2001) The socio-economic costs of fire in Denmark. 13 ODPM analysis. 13

16 The Economic Cost of Fire Vehicle fires The ABI publishes the total value of claims for damage to vehicles from all perils, but it is not possible to identify the proportion of the claim solely attributed to fire. However, research by the Arson Prevention Bureau estimated the value of insurance claims from malicious car fires to be 77m in From this figure it is possible to estimate the average damage per car fire in 1996 and use the consumer price index to calculate estimates for more recent years, assuming that the average damage has remained constant in real terms. A further assumption is that the average cost of damage is the same for accidental as for malicious fires. These assumptions may need development in future to test whether they are still appropriate. 14 HUMAN COSTS It is often argued that it is not possible to place a value on casualties in fire, or any other situation. However, such values are implicit in choices that policy-makers face every day. The decision on whether to fund a road improvement against a new school, or to target domestic over other types of fire requires a judgement by a decision-maker and places an implicit value on casualties. There are research techniques that are increasingly being used to place objective values on the cost of casualties. These values include three elements: Healthcare costs. Fire casualties tend to result in costs to the NHS. Reducing these casualties will free money and time to be used on other conditions. Lost output. Fire victims will often have to take time off work. This represents a reduction in production in the economy. Preventing fatalities and injuries will increase the output of the economy. Emotional and physical suffering. The emotional and physical suffering of victims is a significant cost and the hardest to value. It is not possible to value the cost to the individual of experiencing an incident, since different people will be affected in very different ways. To attempt to value this would demean the trauma suffered. However, it is possible to derive the value society places in preventing this incident occurring. A variety of organisations around the world have attempted to value casualties. The values used in this study are published by the Department for Transport and have been used for a number of years in the appraisal of road schemes. 15 A significant element of the value of avoiding fatalities is the gain made by society in terms of increased output. This is a function of the age profile of those at risk and their potential years in work. There is likely to be a significant difference in the age profile of those most at risk of fatality in road accidents and in fires and therefore we would expect the value of lost output and thus the statistical value of life to differ between the two hazards. There is also some evidence to suggest that people place different values on suffering injury or ill health from different causes. Further research may provide more appropriate estimates for use in estimates of the cost of fire. 14 Arson Prevention Bureau (1998) Malicious Car Fires. Research by the Arson Prevention Bureau. 15 Department for Transport (2004) Highway Economics Note No Valuation of the Benefits of Prevention of Road Accidents and Casualties.

17 Methodology The DfT research also provides guidance on valuing serious and slight injuries. In order to apply these figures to fire casualties it is therefore necessary to classify injuries by severity, which is an area that fire statistics do not currently record in much detail. General categories of burns, smoke inhalation, physical injuries and other injuries are recorded, but within these categories there can be significant variation in the severity of injuries. The assumptions used by Roy (1997) are retained. All injuries involving burns and 25 per cent of injuries involving smoke inhalation are classified as serious injuries. The remainder are assumed to be slight. LOST BUSINESS Fire can result in significant losses for businesses in terms of lost production, market share and customer goodwill. Even a minor fire at crucial stages of production can mean very large losses for individual firms. In addition, fires resulting in the closure of firms could have significant effects on staff. However, the losses are not generally as large for the country as a whole. The lost output of one firm may result in a gain in orders (and output) for another firm. For example, a fire that causes a local supermarket to close for a period of time will simply mean that customers will shop at the nearest alternative. In this case the only costs to society are from any additional travel costs (including reduced leisure time). In the same way, a company which gains business may employ more staff to meet that demand, and the net effect on unemployment may be zero. The only loss to the country from fire is where output is lost that is not then produced by another firm. This could either be through foreign competitors picking up the shortfall, or where firms are producing unique goods that cannot be produced elsewhere in England and Wales. There may also be some costs in terms of short term adjustments in the labour market, with people having to move or re-train to find work. There may also be some wider economic distortions (such as social exclusion) that result from large-scale loss of business. However, these costs have not been estimated for the current report. The ABI records the total value of claims made for business interruption. This is likely to under-estimate the lost business to the individual firms, for the same reason that property is generally under-insured. However the losses to society will be significantly less than the sum of the losses to individual businesses. Previous estimates have assumed that the loss to society is 50 per cent of the value of claims for business interruption and that this only relates to commercial fires. This is a rather arbitrary assumption, but given the lack of evidence it is not yet possible to improve upon it. Alternative estimates of indirect loss Estimates of the Cost of Fire in the United States 16 have used an alternative method to estimate indirect loss. These estimates refer to the costs of lost business, temporary housing and missed work, and calculate indirect loss as a multiple of direct loss, where the magnitude of the multiple varies with the type of property affected. The US approach does not take into account any redistribution between different businesses. 16 Hall Jr (2003) The Total Cost of Fire in the United States National Fire Protection Agency. 15

18 The Economic Cost of Fire Estimates of the Danish cost of fire exclude indirect costs since the authors conclude that indirect losses are unlikely to be a true cost to the national economy. In the absence of robust evidence supporting an alternative, the existing ODPM methodology has been retained. However, we recognise the limitations of this approach and hope that work undertaken in future will enable it to be refined. COSTS TO THE CRIMINAL JUSTICE SYSTEM The prosecution and punishment of arsonists results in considerable costs to the criminal justice system. Costs are incurred in terms of policing, legal expenses, court costs and the probation and prison services. The Home Office Flows and Costs model provides estimates of these costs for criminal damage cases, a category which extends beyond arson. Arson cases can take a number of different routes through the criminal justice system and further analysis of these might enable more robust estimates of the costs imposed to be made. (c) Costs in response The cost of the Fire and Rescue Service has been split into two elements for the purpose of estimating the cost of fire: response costs; and fire safety costs. The cost of FRS response to all incidents can be estimated by subtracting the cost of fire safety work (see (a)) from the total budget. The FRS responds to a large number of non-fire incidents (also known as special service incidents), and it is necessary to strip out the cost of responding to these to obtain a more accurate measure of the cost of attending fires. 17 Response costs are allocated to different incident types on the basis of the staff hours spent attending them. These hours are calculated from statistics detailing the average amount of time spent by fire appliances at each incident and an assumption of the number of firefighters operating each appliance (the ridership factor ). For some types of fire and non-fire incidents, this data has not been available in previous years so assumptions have been made based on a fire service training manual. One-off data supplied for construction of the FSEC 18 model has now become available, which shows that in general these assumptions overestimated the time, and hence resources, required to respond to both non-fire incidents and secondary fires. The new data has been incorporated into the estimates of response costs contained in this report. 17 Special Service Incidents include a number of non-fire incidents, notably road traffic accidents. 18 Fire Service Emergency Cover a computer-based model to assist fire and rescue authorities in the construction of local Integrated Risk Management Plans. 16

19 Methodology An estimate is made of the cost of attending and providing cover for special service incidents, and this is then removed from the total cost of response. The remaining cost represents the resources spent by the FRS on providing fire cover. These can then be allocated between different the fire incident types again using data on staff hours. The cost of responding to false alarms is included in the total cost of fire since false alarms would not occur without the risk of fire. In the short run, the marginal cost of attending an additional fire is likely to be significantly below the average cost, since the FRS operates with sufficient spare capacity to enable them to respond to every incident. Therefore caution should be exercised in assuming that the cost of response would be a realisable saving in the event of preventing a given number of fires. However, in the long-run, these costs should be variable as the level of fire cover could be adjusted to take account of a reduction in risk. AREAS FOR FUTURE RESEARCH This report aims to capture as many of the impacts of fire on the economy as possible, but it has not been possible to make robust estimates in some cases due to data constraints. In some of these areas, future research might provide a basis for further development of the cost of fire estimates. It is likely that there are considerable environmental impacts from fire and from fire-fighting, but these have not been quantified sufficiently to enable an estimation of the monetary cost imposed on the economy. Future estimates may be able to draw on on-going research in this field. 19 In addition to the resources required from the FRS, false alarms may well impose a significant cost in terms of output foregone during an alarm for example if an office block is evacuated. These costs have not been estimated, and a robust method to do so would need to exclude both the output that is not lost, but simply transferred to other firms, and the output regained by the firm through more productive working in the time after the alarm has ended. Fires in non-commercial buildings such as schools or hospitals may also reduce output through disruption costs. These costs, which for a school fire might include the loss of educational facilities to pupils for a short period, are likely to be borne by the economy at large rather than transferred elsewhere. However, it is difficult to envisage how these costs might be quantified. Table 2.2 identifies some areas where future research may enable improvements in estimates of the economic cost of fire. The table indicates the potential impact on the total cost of fire from accurately capturing the cost, and the likelihood of achieving these improvements (based on what we understand to be on-going or planned research and our assessment of the difficulties in measuring the costs required to develop the Cost of Fire estimates). 19 E.g. forthcoming research, US National Fire protection Agency. 17

20 The Economic Cost of Fire Table 2.2: Potential areas for future development Research area Potential impact on cost of fire Potential for achieving improvements to cost of fire Fire protection in consumer items Large Very small Costs to the environment from fire and fire-fighting Medium Medium Improved estimates of the costs incurred by the Criminal Justice System Medium Medium Improved estimates of the statistical value of fire deaths Medium Medium Property damage from fires in public buildings Medium Medium Disruption to public services Medium Medium Disruption to households Medium Medium Costs of maintenance and repair in accordance with building regulations Medium Small Expenditure by central government not already captured Improved estimates of insurance coverage in public sector buildings Comparison of the value of property damage in deliberate and accidental fires Small Small Small High High Medium Cost of vehicle fires Small Medium Fire research expenditure by non-government Small Medium bodies Output lost due to false alarms Small Medium Heritage and cultural costs Small Small Clean-up costs Small Small Non-FRS fire safety education and training Small Small 18

21 CHAPTER 3 Results INTRODUCTION This chapter presents estimates of the total cost of fire to the economy in Results are also presented for 2000 (revised since the previous report 20 ), 2001 and 2002, which enables some analysis of trends over time. Results for all years are presented in current prices. A time series is not presented in constant prices due to the difficulty in adjusting the total cost accurately. The cost of fire is an aggregation of a number of different impacts, the prices of which will change at different rates. A notable example of this is the value of insurance claims for property damage, which will be affected by changes in property prices. Property prices rarely move in tandem with the general price level and since this is a major component of the total cost of fire, fluctuations in property prices will impact on total cost estimates. Inflation effects should therefore be considered carefully in interpreting changes to the total cost of fire, particularly if used as a measure of FRS performance. As set out in the chapter 2, the methodology used to calculate the cost of fire has been refined. The data presented below is a continuous time series, but cannot be compared to previous publications of The Economic Cost of Fire. TOTAL COST OF FIRE Table 3.1 shows the headline results for the period The total cost of fire in the first column includes costs incurred in anticipation of fire, such as fire protection measures in buildings. The second column presents the total cost excluding these costs, and it is from this figure that average costs are calculated later in the chapter. The third column illustrates the cost of fire as a proportion of gross value added (GVA) in England and Wales Scott Dennison (2003). The Economic Cost of Fire: Estimates for Gross value added (GVA) is the value of final output net of intermediate input. It is used here because GDP data is not available at a lower level than the UK as a whole. 19

22 The Economic Cost of Fire Table 3.1: Total economic cost of fire in England & Wales, (current prices) Total Cost (incl. cost in anticipation) Total Cost (excl. cost in anticipation) Total (incl. anticipation) as % of GVA ,223m 3,992m 0.85% ,822m 4,415m 0.88% ,178m 4,636m 0.89% ,724m 4,967m 0.90% % change, % +24% The total cost of fire in England and Wales is estimated at approximately 7.7bn in 2003, representing approximately 0.9% of national GVA. By comparison, the total social and economic cost of crime was estimated at approximately 8% of GVA in Chart 1 compares growth in the total cost of fire with changes in nominal GVA between 2000 and The chart shows that whilst both have grown steadily over the period, the cost of fire has increased at a faster rate. Chart 3.1 Growth in the cost of fire (including costs in anticipation) and GVA, (current prices, 2000 = 100) Total Cost of Fire GVA Source: ODPM, ONS. 22 Brand and Price (2000), The economic and social costs of crime (Home Office Research Study 217): 20

23 Results TOTAL COST, BY CATEGORY OF COST The total cost of fire is an aggregate of the estimated cost of a number of different fire impacts. These impacts can be grouped together into three broad categories: costs in anticipation of fire; costs as a consequence; costs in response. Chart 3.2 shows changes in the three main components over the time period. These categories can then be broken down further to enable more detailed analysis. Chart 3.2 Components of the total cost of fire, (current prices) 9,000 8,000 Response Consequence Anticipation 7,000 6,000 5,000 4,000 3,000 2,000 1, Source: ODPM. COSTS IN ANTICIPATION Costs in anticipation include fire protection in buildings, insurance expenses and fire safety equipment. Overall this category has risen by 24% over the period, reaching 2.8bn in Fire protection 23 The cost of fire protection, including fire protection measures in buildings and the purchase of protective equipment, was estimated at 2.2bn in 2003, representing approximately 29% of the total cost of fire. Fire protection in dwellings was estimated to cost approximately 300m, including 100m attributable to fire protection equipment. The cost of fire protection in commercial buildings and public sector buildings was estimated at 1.2bn and 650m respectively. 23 The cost of fire protection in this publication is lower than estimates in previous publications (Dennison (2003)). This is due to a change in the discount rate recommended for use by The Green Book (HM Treasury),

24 The Economic Cost of Fire As shown in chart 3.3, these costs have remained relatively stable over the period. This is because the vast majority of costs are annuitised over the assumed lifetime of the buildings. They reflect the additional costs of construction due to fire safety legislation, along with the existing measures that are already in place in buildings. The annuitised costs will, by their nature, remain fairly constant over time. Fire safety activity The cost of fire safety activity was estimated at approximately 46m in The estimated costs have remained relatively stable since 2000, though we would expect increases in future as the FRS undertakes more community fire safety work. Insurance administration costs The administration of fire insurance was estimated to cost 560m in Although this represented an increase of over 70% on the estimate for 2000, the reason for this may be partly due to the estimation method rather than real fluctuations. Costs cannot be observed directly so are calculated by assuming that the proportion of total insurance expenses attributable to fire is equal to the proportion of fire claims to total claims. The value of total expenses rose by over 30% between 2000 and 2003, whilst at the same time the share of total claims due to fire claims also increased, particularly in the commercial sector. COSTS AS A CONSEQUENCE Costs as a consequence include property losses, the costs of casualties (fatal and non-fatal), and business disruption costs. The estimated cost of this category has risen every year to reach approximately 3.3bn in 2003, 23% higher than in Property damage The value of property damaged by fire was estimated at 1.9bn in 2003, accounting for approximately one-fifth of the total cost of fire, and an increase of 40% since The proportion of total property damage attributable to commercial and public sector buildings rose from 52% to 58% over the period, largely due to an increase in the value of damage per fire in these locations of 67%. This compares to an increase in damage per domestic fire of 21%. The causes of these increases are difficult to unravel as they reflect a combination of property price inflation, the ability of buildings to withstand fire spread and the performance of the FRS. The value of fire damage to vehicles was estimated at just under 200m in Human costs There were 500 deaths from fire in 2003 and around 13,000 injuries. The economic value of these human costs was estimated at around 1.3bn. Although there were 21 fewer fatalities in 2003 than in 2000, the total economic cost of fire deaths was estimated at 660m, 10% higher than in This reflects an increase in the statistical value of life over the period. 22

25 Results The number of injuries fell by 11% over this period, though the estimated economic cost rose by 4% to 600m due to an increase in the statistical value of injury. Around three-quarters of total human costs were suffered in domestic properties, with only 5% in commercial properties. Business losses The value of lost business as a result of fire was estimated at 35m in This category was extremely volatile over the period, with a figure of 90m reported in Costs to the criminal justice system The total cost of arson to the criminal justice system was estimated to be 87m in 2003, of which 84m was accounted for by the cost of proceedings in the crown court. COSTS IN RESPONSE Fire service response costs are estimated at 1.7bn in This represents an increase of 25% since However, since the FRS responded to a greater number of fires, the cost per fire attended rose by only 11%. Chart 3.3 summarises the change in the components of the cost of fire between 2000 and Chart 3.3 Changes in the costs of fire, (current prices) Response Lost business Injuries Fatalities Property losses Fire protection Insurance admin Fire safety 40% 20% 0% 20% 40% 60% 80% 23

26 The Economic Cost of Fire The cost of fire by location The total cost of fire to the economy can also be analysed by the type of fire. Fire statistics for England and Wales 24 are published for 46 different locations, and these have been used as the basis for calculations. However, for a number of cost categories (e.g. property losses), data is not available at such a detailed level and so, for the purposes of the estimates in this report, has been allocated on a pro-rata basis in proportion to the percentage of fires at a given location within a larger category. As a result, in general there is a greater degree of confidence in results at the larger category level. The results presented in this chapter are at this level, though more detailed results are available in annex A. Total cost, by location Table 3.2 shows the cost of fire in different locations, broken down by categories of cost. Table 3.2: Total cost of fire 2003 by location & cost category ( m) Anticipation Consequence Response Number of incidents 3 (000s) Fire protection All Domestic Commercial Public incidents 1 sector Nonbuilding Vehicle , , Fire safety Insurance admin. Property losses Fatality Injury Lost business CJS Fire service response 1, Total 7,720 2,230 2,420 1,150 1, Includes false alarms. 2 Does not include fires in derelict vehicles. 3 Includes estimates for days affected by industrial action ODPM (various years) Fire Statistics United Kingdom.

27 Results The cost of fire in commercial buildings remains the largest contributor towards the total cost of fire, accounting for some 32% of the overall cost. Whilst property losses are highest in the commercial sector, the primary reason for its relative importance is the significant cost of incorporating fire protection in commercial buildings. The total cost of fire in the domestic sector has fallen from 30% of the total cost of fire in 2000 to 27% in Domestic fires are responsible for some 75% of all fire deaths and injuries, and as a result account for a similar proportion of total human costs from fire. The non-building category includes fires in vehicles, outdoor fires, chimney fires and secondary fires 25. This latter category alone accounted for over 60% of all fires that the FRS attended in 2003 (one-third when false alarms are included). As a result non-building fires as a whole accounted for 41% of total response costs, despite the fact that the value of direct losses are significantly lower for these fires than in for building fires. The cost of responding to false alarms (not included in table 2) is also very significant, estimated at 700m in Chart 3.4 shows how the cost of fire in different locations contributes towards the overall cost. The proportions have remained relatively stable over the period. Chart 3.4 Total cost of fire, by location 100% 90% 80% 70% False Alarms Non-buildings Other buildings Public Sector Commercial Domestic 60% 50% 40% 30% 20% 10% 0% Source: ODPM. 25 Secondary fires are defined as reportable fires that are not in primary fire locations, did not involve casualties or rescues, were not chimney fires in buildings and were attended by four or fewer appliances. In most years, grassland and refuse fires account for over 80% of secondary fires. Derelict buildings, derelict vehicles, intentional straw burning and other secondary account for the remainder. 25

28 The Economic Cost of Fire Average cost, by location The average costs of fire are calculated as the ratio of total consequential and response costs to the number of incidents. Whilst it is instructive to examine the costs of anticipation in an analysis of aggregate costs, calculating them as an average per fire is not likely to be useful. These costs will be incurred irrespective of the number of fires that take place and cannot be avoided by reducing the incidence of fire. However, in the long-run, costs in anticipation might be reduced if the total risk of fire declined. The costs to the Criminal Justice System have also been excluded since they are only incurred by deliberate fires. The cost to the CJS is estimated to be 430 per primary fire (including accidental fires). For secondary fires, chimney fires and false alarms, costs to the CJS are assumed to be zero. Average costs for deliberate fires are presented in chapter 5. Table 3.3 shows the composition of the average costs in 2003 according to categories of costs and types of fire. A more detailed breakdown by location is presented in Annex A. Table 3.3: Average cost of fire by location & cost category, 2003 ( ) Consequence Response Property losses All fires 1 Domestic Commercial Public sector Nonbuilding Vehicle 2 3,670 7,000 44,740 44, ,220 Fatality 1,270 7, Injury 1,160 7,120 2,760 2, Lost business Fire service response 1,990 3,170 7,430 3,180 1,680 1,130 Total 8,170 25,280 58,100 51,430 2,660 4,670 1 Does not Include false alarms. 2 Does not include fires in derelict vehicles. Average costs are highest in commercial and public sector fires, largely due to the high level of property losses associated with these fires. Domestic fires suffer by far the highest average cost in terms of both fatalities and injuries. Average response costs are highest for commercial fires. Average response costs Estimates of response costs by location can show considerable variance over time, reflecting how a small number of particularly large incidents can distort the average. The cost of responding to different incidents is allocated in proportion to the time spent attending them. The costs incurred in waiting for a call (providing cover) are apportioned in the same way. As such, the cost of responding to incidents will depend upon a number of factors: the number of incidents in total; the proportion 26

29 Results of total incidents accounted for by that category; the average time spent at different incidents; and the resources available to the FRS. In the short run the marginal cost of attending an additional fire is likely to be significantly below the average cost, since the FRS operates with sufficient spare capacity to enable them to respond to every incident. Therefore caution should be exercised in assuming that the cost of response would be a realisable saving in the event of preventing a given number of fires. However, in the long-run, these costs might be more variable as the level of fire cover could be adjusted to take account of a reduction in risk. 27

30 CHAPTER 4 International comparisons Attempts to estimate the economic cost of fire have been made in a number of other countries. As yet there is no internationally agreed methodology, so costs cannot be directly compared. However, chart 4.1 shows a comparison of costs as a percentage of the national income in four countries. In the case of England and Wales, a measure of gross value added is used as a measure of national income, since GDP figures are only available for the UK as a whole. 26 Chart 4.1 International comparison of the cost of fire Cost as % of National GDP 2.0% 1.8% 1.6% 1.4% 1.2% 1.0% 0.8% 0.6% Firefighter costs Human losses Other economic costs Building construction Net fire insurance Economic losses 0.4% 0.2% 0% England & Wales Denmark USA Canada Costs as a percentage of national income vary between approximately 0.9% in Denmark and 1.8% in the United States. This difference can partly be explained by the category other economic costs, which has not been included in estimates for Denmark and England and Wales, but has been for the USA and Canada. This category largely consists of estimates of the cost of building fire protection into equipment other than buildings (for example, computers). 26 Data is taken from: Danish Emergency Management Agency (2001) The socio-economic costs of fire in Denmark; Hall Jr (2003) The Total Cost of Fire in the United States National Fire Protection Agency; Schaenman, Stern, Bush (1994) Total Cost of Fire in Canada. An Initial Estimate, The National Research Council of Canada Fire Research Laboratory. 28

31 International comparisons Estimates of firefighter costs are substantially larger for the USA and Canada, where estimates include the cost of volunteer firefighters. In the USA, fire departments made up wholly or largely of volunteers cover around two-fifths of the population, and the value of the time they donate is included in the cost of fire. This cost is equivalent to approximately 0.2% of GDP. Estimates for Canada also include the costs of volunteer firefighters. Estimates of the direct and indirect losses from fire are also published by the World Fire Statistics Centre More details can be found at 29

32 CHAPTER 5 The cost of arson and malicious false alarms The costs of arson and malicious false alarms represent a significant proportion of the total costs of fire. These costs are not in addition to the estimate already of total cost of all fires, which includes the cost of deliberate fires 28 and malicious false alarms, but are a separate exercise. TOTAL COST OF MALICIOUS FIRE BEHAVIOUR The estimated costs of malicious fire behaviour are presented in table 5.1. Due to refinements made to the methodology, the estimates presented here should not be regarded as directly comparable to those in Dennison (2003). Malicious fire behaviour was estimated to impose a cost of 2.9bn on the economy in This is an increase of 32% since 2000, a larger increase than in the total cost of fire over this period. The cost of arson was estimated at 1.7bn when costs in anticipation were excluded. The cost of malicious false alarms was 94m, a decline of 11% since Table 5.1: Total cost of malicious fire behaviour ( m) Arson (incl. costs in anticipation) Arson (excl. costs in anticipation) Malicious False Alarms Total (inc. costs in anticipation) ,153 1, , ,427 1, , ,586 1, , ,849 1, ,932 % change, % +38% -11% +31% To estimate the cost to the economy of deliberate fires, a few amendments are made to the method adopted in chapter 2. These are set out below. In addition, an estimate is made for the costs incurred by the criminal justice system. 28 Deliberate fires are those fires where malicious or deliberate ignition is merely suspected. They include those recorded by the fire service as doubtful. 30

33 The cost of arson and malicious false alarms COSTS IN ANTICIPATION Fire protection in buildings, insurance against fire and fire safety activity are not solely undertaken due to the threat of arson. However, deliberate fire-setting increases the risk of fire and so it can be assumed that it will increase the costs incurred in anticipation of fire occurring. It has been assumed that the proportion of fire protection expenditure due to arson is equivalent to the long-run proportion of all fires that are deliberate. For the purposes of this paper, ten year averages were taken, which indicated that approximately 20% of domestic fires are deliberate, 45% of other buildings and 70% of vehicle fires. COSTS AS A CONSEQUENCE Data on casualties in deliberate fires is collected separately to all fires, enabling an estimate of the average human cost for deliberate fires. In general, there are fewer fatalities and injuries in deliberate fires and hence human costs are lower. In Dennison (2003), the cost of malicious fires was estimated based on the assumption that the average value of property loss from a deliberate fire was the same as in an accidental fire. However, both anecdotal and statistical evidence suggest that fire damage is more significant in deliberate fires. Table 5.2 presents the results of analysis that indicates fire spread in deliberate fires is twice as extensive as in accidental fires. Table 5.2: Fire spread in deliberate and accidental fires Dwellings % of incidents where fire spread beyond room Average area affected by direct burning (m 2 ) Accidental 6.4% 2.6 Deliberate 20.6% 6.6 All Fires 9.5% 3.6 Non-dwelling buildings Accidental 10.6% 7.0 Deliberate 21.2% 13.2 All Fires 15.4% 10.0 Source: ODPM analysis of FDR1 returns It is likely that the value of property losses is correlated with the area affected by fire damage, but more work is required to quantify this relationship. For this report, the average value of property damage has been adjusted using data from an analysis of the British Crime Survey 29, which suggested that the average cost of damage from deliberate dwelling fires is 15% higher than in all dwelling fires. It is assumed that a similar relationship exists for fires in other buildings. 29 Aust (2001) Fires in the Home: Findings from the 2000 British Crime Survey. 31

34 The Economic Cost of Fire The value of lost business due to arson is calculated as a proportion of the lost business due to all fires, with the proportion equal to the percentage of all commercial fires that are deliberate. Costs to the criminal justice system As set out in chapter 3, the total cost of arson to the criminal justice system was estimated to be 87m in It is assumed that only individuals responsible for primary fires will be prosecuted and hence the cost of secondary fires, chimney fires and false alarms is zero. It is further assumed that the average cost to the CJS is the same for all primary fires. RESPONSE COSTS Average response costs are assumed to be the same for deliberate fires as for all fires. The cost to the FRS of deliberate fires was estimated to be 643m in Table 5.3 compares the relative contribution of different categories to the cost of all fires and the cost of arson. Table 5.3: The costs of arson in 2003 Cost ( m) Share of total cost of arson Fire safety 20 1% Insurance expenses 220 8% Fire protection % CJS costs 90 3% Human costs 250 9% Property damage % Lost business 20 1% Response costs % Source: ODPM analysis Response costs rose by over 60% between 2000 and This was largely due to a substantial increase in the number of secondary fires attended by the FRS, many of which were deliberately started. The proportion of total FRS costs that are allocated to secondary fires (and thus arson) therefore increased. This may present a false picture of real costs, in as much as brigades retain spare capacity to enable them to provide fire cover at all times. As such they may be able to attend increased numbers of secondary fires without using additional resources. However, it does indicate the very real burden that deliberate fire-setting places on the FRS. THE COST OF MALICIOUS FALSE ALARMS In addition to deliberate fire setting, there is a further cost from malicious false alarms. Currently the only cost that can be calculated is the cost of the time spent by the Fire and Rescue Service in responding to these calls. This cost was estimated at 84m in

35 The cost of arson and malicious false alarms AVERAGE COST OF DELIBERATE FIRES Estimates of the average cost of deliberate fires tend to be slighter higher than estimates for all fires due to the assumption that the damage to property is more widespread. There is also a small additional cost incurred by the criminal justice system. Table 5.4 presents estimates for the average cost of deliberate fires in various locations. Since the costs incurred by the criminal justice system are not available by location, average costs are calculated by simply dividing total CJS costs by the number of primary fires. It is assumed that no action will be taken against individuals responsible for secondary fires. It should be noted that the vehicle fire category does not include fires in derelict vehicles, which are instead classified as secondary fires. Fires in derelict vehicles only account for approximately 5% of all secondary fires, the majority of which are accounted for by refuse or grassland fires. Due to data constraints it has not been possible to estimate response costs for different types of secondary fire, but it is likely that the cost of responding to a fire in a derelict vehicle is the same as responding to a fire in any other vehicle. However, other average costs (human, property, lost business, CJS costs) will be as for secondary fires in general (i.e. zero). Table 5.4: Average costs of deliberate fires, 2003 ( ) Human costs Property Damage Lost business CJS costs Response Cost Average Total cost All fires 460 3, ,840 6,320 Building 6,080 17, ,320 27,960 Domestic 8,570 7, ,170 19,690 Commercial ,410 2, ,430 56,720 Public sector 3,490 45, ,180 52,930 Non-derelict vehicle 590 2, ,130 4,830 Derelict vehicle ,130 1,130 Secondary ,650 1,650 33

36 ANNEX A Average costs by location The table below presents the average costs, by location for each year , broken down into response and consequential costs. For the purposes of appraisal, data for 2003 should be used, but this time series may be useful to show that there is some variance in average costs, particularly in categories where there are a relatively small number of incidents in a given year. In addition, for the purposes of appraisal, caution should be exercised before assuming that the cost of response would be a realisable saving in the event of preventing a fire. In the short run the marginal cost of attending an additional fire is likely to be significantly below the average cost, since the FRS is expected to operate with sufficient capacity to respond to any incident. However, in the long-run, we might expect these costs to be more variable as the level of fire cover adjusts in line with the risk of fire. The average costs presented below exclude costs incurred by the Criminal Justice System, since these only apply to deliberate fires. The cost to the CJS is estimated to be 430 per primary fire (including accidental fires). For secondary fires, chimney fires and false alarms, costs to the CJS are assumed to be zero. Locational definitions are as used in Fire Statistics United Kingdom. 34

37 Annex A Table A1: Average costs by location Response Cons Ave Cost Response Cons Ave Cost Response Cons Ave Cost Response Cons Ave Cost Fires and false alarms 1,700 3,200 4,900 1,600 3,300 4,900 1,900 3,400 5,300 1,800 3,400 5,300 Total fires 1,900 6,400 8,200 1,700 6,200 7,900 2,200 6,700 8,900 2,000 6,300 8,300 Total buildings 2,800 21,400 24,200 2,700 24,300 26,900 4,500 28,400 32,900 3,300 28,500 31,800 Total domestic 2,500 19,000 21,600 2,500 20,300 22,800 3,100 20,300 23,400 3,200 22,100 25,300 Single occupancy dwelling 2,500 23,300 25,800 2,500 25,100 27,700 3,100 25,400 28,500 3,500 27,800 31,300 Multiple occupancy dwelling 2,700 17,700 20,400 2,700 19,700 22,400 3,400 20,200 23,600 3,100 22,100 25,200 Other or unspecified dwelling 3,100 10,600 13,700 2,500 10,000 12,500 3,100 10,100 13,300 3,500 11,600 15,100 Private garages, sheds, etc 2,000 9,600 11,600 2,100 9,000 11,000 2,100 7,500 9,600 2,300 9,200 11,500 Total commercial 6,400 33,600 39,900 6,100 40,200 46,300 10,700 48,900 59,600 7,400 50,700 58,100 Agricultural buildings 20,400 31,800 52,100 21,300 37,400 58,700 60,600 47, ,900 33,000 48,400 81,400 Industrial premises 7,300 34,100 41,400 7,500 42,100 49,600 8,200 50,300 58,500 8,000 52,100 60,100 Mining and quarrying 8,700 40,700 49,400 4,800 39,500 44,200 3,500 57,500 61,000 11,500 47,100 58,600 Electricity, gas, water coke, nuclear 5,700 33,800 39,500 5,800 60,000 65,700 8,300 48,500 56,800 8,500 52,700 61,200 Metal manufacture 7,300 35,700 43,000 8,900 68,300 77,200 7,200 52,800 60,100 10,500 56,700 67,100 Non-metallic mineral products 8,900 30,800 39,600 9,900 42,100 52,000 4,500 45,500 50,100 6,900 86,500 93,400 Chemicals 7,300 37,900 45,200 16,000 43,900 59,900 13,600 53,100 66,700 6,400 53,400 59,900 Metal goods engineering 6,400 34,800 41,200 6,700 41,500 48,200 9,900 55,500 65,400 7,700 47,500 55,200 Vehicle manufacture 6,800 31,300 38,100 7,200 40,100 47,300 5,600 50,700 56,300 9,200 54,300 63,600 Food, drink,and tobacco 7,700 32,000 39,700 8,500 39,400 47,900 6,500 49,200 55,800 7,800 49,000 56,800 Textiles, footwear etc. 9,900 32,000 41,800 15,100 40,200 55,300 10,000 54,900 64,900 8,800 53,600 62,400 Timber, wood products 10,400 32,400 42,800 6,300 39,400 45,700 8,700 46,000 54,800 10,100 62,800 72,900 Paper, printing 4,400 32,700 37,200 4,400 38,200 42,600 6,300 47,000 53,400 4,700 49,200 53,900 35

38 The Economic Cost of Fire Table A1: Average costs by location (continued) Response Cons Ave Cost Response Cons Ave Cost Response Cons Ave Cost Response Cons Ave Cost Rubber, plastics 6,600 44,300 50,800 5,700 36,800 42,500 7,400 47,100 54,600 10,100 52,700 62,800 Other Manufacturing 11,000 34,900 46,000 8,800 39,800 48,600 12,200 48,200 60,400 10,900 49,000 59,900 Construction 3,900 31,900 35,800 3,700 37,000 40,800 3,400 53,200 56,500 4,100 50,800 54,900 Trade hotels etc 4,600 33,600 38,200 4,300 39,800 44,100 6,100 48,700 54,800 4,600 50,500 55,100 Wholesale distribution 5,600 30,900 36,500 13,600 36,500 50,100 18,000 45,700 63,600 10,200 47,100 57,300 Recycling 37,700 30,100 67,800 9,900 39,600 49,500 28,000 48,700 76,700 13,000 48,900 61,800 Retail distribution 4,200 32,300 36,500 3,500 39,100 42,600 5,000 48,500 53,500 3,800 49,200 53,000 Sale, repair etc. of vehicles 7,100 37,700 44,800 5,100 40,500 45,600 8,500 50,400 58,900 7,800 54,200 62,000 Hotels 3,500 36,300 39,800 4,000 44,900 48,900 4,600 48,900 53,500 5,100 49,800 55,000 Hostels, holiday camps, etc. 2,100 35,200 37,300 2,200 37,500 39,700 2,100 48,000 50,100 2,400 50,100 52,500 Restaurants 2,800 35,000 37,800 3,500 39,900 43,400 12,000 50,300 62,300 4,000 52,900 56,800 Public houses, clubs etc. 4,900 33,500 38,400 5,300 42,000 47,400 4,900 49,200 54,200 4,800 52,400 57,200 Transport and communications premises 5,200 31,700 36,900 8,100 39,400 47,400 4,800 46,800 51,600 7,200 49,900 57,100 Banking, finance, insurance, real estate etc. 7,100 31,500 38,600 4,900 37,400 42,400 4,600 46,700 51,300 6,100 48,200 54,300 Public sector 2,700 29,600 32,300 2,900 38,200 41,100 4,100 43,200 47,300 3,200 48,300 51,400 Public administration, defence, law enforcement etc. 2,800 32,600 35,400 2,800 40,500 43,400 9,900 46,300 56,200 3,300 50,800 54,100 Schools 3,600 27,500 31,100 3,600 35,100 38,600 3,500 40,600 44,100 3,900 45,600 49,600 Further education etc. 4,000 28,900 32,900 3,000 35,800 38,800 2,900 42,300 45,100 3,300 45,300 48,600 Hospitals - nonpsychiatric 2,200 28,900 31,200 2,400 39,100 41,500 2,400 41,500 44,000 2,600 48,300 50,900 Hospitals - psychiatric 2,100 36,100 38,200 1,500 43,000 44,500 1,500 47,100 48,600 1,600 53,000 54,600 36

39 Annex A Table A1: Average costs by location (continued) Response Cons Ave Cost Response Cons Ave Cost Response Cons Ave Cost Response Cons Ave Cost Other medical care 2,600 27,300 29,900 3,400 35,800 39,200 2,500 39,500 42,000 2,900 45,200 48,100 Recreational and other cultural services 3,200 28,500 31,800 3,200 34,800 38,000 3,200 40,900 44,100 3,500 45,800 49,300 Elderly persons home 1,900 28,600 30,500 1,900 44,900 46,800 1,900 44,300 46,200 2,200 51,200 53,400 Childrens home, homes for disabled 2,500 28,600 31,100 1,900 44,000 45,900 1,900 50,600 52,500 2,700 48,100 50,800 Other miscellaneous services 2,600 30,100 32,700 4,100 38,900 43,000 11,800 45,600 57,400 5,000 52,500 57,500 Other buildings 4,900 29,100 34,000 3,400 36,500 39,900 4,900 41,500 46,400 6,100 46,500 52,600 Unspecified buildings 7,400 29,800 37,200 4,200 36,400 40,600 4,000 42,000 46,100 4,900 44,700 49,600 Total non-buildings 1,500 1,300 2,800 1,500 1,000 2,500 1,600 1,100 2,700 1,700 1,000 2,700 Vehicle fires 1,300 3,600 5,000 1,000 3,200 4,200 1,700 3,200 4,800 1,100 3,500 4,700 Outdoor (primary) 3,500 6,700 10,100 3,400 6,100 9,500 4,000 8,600 12,600 5,300 8,200 13,500 Outdoor fires 1, ,400 1, ,500 1, ,500 1, ,700 Chimney fires 3, ,200 3, ,200 3, ,200 3, ,600 False alarms 1, ,400 1, ,500 1, ,500 1, ,700 1 Does not include fires in derelict vehicles. Figures may not sum due to rounding. 37

40 ANNEX B Updating the economic cost of fire In order to be of use in the appraisal of fire projects, it is necessary for the cost of fire, particularly average costs, to be up-to-date. In future, ODPM will aim to publish annual data in the December following the end of the calendar year. However, this target will rely on the availability of both data and resources. If estimates are required before new data is published, a standard method can be adopted to update values as a guide. Because the cost of fire is made up of a number of components not fully representative of the general economy, we would not necessarily expect average costs to move with inflation and nominal GDP. However, for guidance purposes, values can be uprated using an index which reflects inflation and real per capita economic growth in the intervening period. For example, if values are required at price and output levels for a future year, these should be calculated by adjusting the 2003 figures given in appendix A by the current estimates of the increase in nominal GDP per capita. To obtain values for year x, the 2003 values can be multiplied by: 1 + % increase in nominal GDP per capita 100 It is expected that the method used to calculate the cost of fire will continue to evolve and therefore it is recommended that the most recent estimates of the economic cost of fire should be used. 38