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Concerns over health and safety cost recovery scheme as number of inspections rises

Out-Law News | 18 Aug 2014 | 3:54 pm | 2 min. read

Businesses subject to costs recovery by the Health and Safety Executive (HSE) should be careful not to leave themselves open to payment being used as evidence of wrongdoing in the event of future disputes, an expert has said.

Laura Cameron of Pinsent Masons, the law firm behind Out-Law.com, was commenting as new figures obtained by the firm showed an increase of 1,200, or 6%, in the number of inspections carried out by the HSE since its statutory 'Fee for Intervention' scheme was introduced in 2012. This scheme allows the HSE to recover costs from businesses it finds to be in material breach of health and safety law during an inspection.

"There may be a concern that the Fee for Intervention scheme is an incentive for the HSE to boost the number of inspections it undertakes because it knows they can bring in extra revenue, following major budget cuts," she said.

"While that does mean more businesses flaunting health and safety regulations are being caught, even some very well-run businesses might also be trapped in the net as the test of whether a breach is 'material' is a judgement call for the HSE inspector who will have a keen eye on all misdemeanors. As a result, some businesses could grow sceptical of the HSE's motives, believing it to be chasing targets rather than simply proactive monitoring," she said.

Although businesses could see paying any Fee for Intervention invoice as the "most time and cost effective solution" given the limited scope to challenge HSE's decisions on costs under the existing regime, this approach could potentially be seen as an "admission of guilt", she said. This could have "serious ramifications" if the company was later subject to criminal prosecution, she said.

"Making the payment, rather than challenging it, could potentially be cited as evidence of poor health and safety performance," she said.

The Fee for Intervention cost recovery scheme came into effect on 1 October 2012. It means that those found to be in 'material breach' of health and safety laws are now liable for payment of theHSE's related costs including those incurred as a result of inspection, investigation and taking enforcement action. The HSE defines 'material breaches' as those that would require it to issue notice in writing of that breach to the business, employer, public body or other 'dutyholder'.

In January Martin Temple, an independent expert commissioned by the government to review the work of the HSE, included his concerns about the detrimental impact of the scheme on the public perception of the agency's integrity in his report. He concluded that, unless the link between fines and funding apparent in the scheme could be removed, Fee for Intervention should be scrapped entirely. A review panel with an independent chair is due to report to the agency later this month on the operation of the scheme and the impact it has had on the relationship between the HSE and those that it regulates.

Pending any changes to the scheme as a result of these reviews, Cameron said that any businesses in receipt of a Fee for Intervention invoice in the meantime should ensure that any payments would be regarded as being made 'without prejudice' to prevent them from being used by the HSE as evidence in future disputes.

"Clearly, the best protection is to comply with health and safety law," she said. "However, these laws are ever-evolving and if failings do occur, we would strongly advise businesses that feel that the HSE's costs are excessive, or those that dispute the outcome entirely, should definitely undertake an appeal as simply making the payment could leave them vulnerable in any future legal action."