Health and safety watchdog's 'fee for intervention' scheme has been effective, according to new report

Out-Law News | 09 Sep 2014 | 3:45 pm | 2 min. read

A controversial scheme through which the Health and Safety Executive (HSE) can claim back the cost of inspections and enforcement action from businesses it finds to be in "material breach" of the law has been effective, according to a new report.

An independent panel convened to review HSE's 'fee for intervention' (FFI) scheme (38-page / 994KB PDF), which began in October 2012, said that there was no "viable alternative" which could meet the policy's aim of shifting the cost of regulating workplace health and safety from the taxpayer to those who break the law. It also found no evidence that the introduction of the scheme had in any way influenced HSE's enforcement policy.

"Both HSE and the government believe it is right that those who fail to meet their legal health and safety obligations should pay our costs, and acceptance of this principle is growing," said HSE chair Judith Hackitt. "This review gives us confidence that FFI is working effectively and should be retained."

The FFI 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 HSE's related costs including those incurred as a result of inspection, investigation and taking enforcement action. 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'.

Martin Temple, an independent expert commissioned by the government to review the work of HSE, said in January that the scheme could have a "detrimental impact" on the public's perception of the agency's integrity. He concluded that, unless the link between fines and funding apparent in the scheme could be removed, FFI should be scrapped entirely.

However the HSE review, chaired by Liverpool University professor of public policy Alan Harding and featuring participants from the GMB trade union, government and Federation of Small Businesses, said that on the evidence these concerns had been unfounded. Although the scheme had not been popular, it had been "embedded effectively and applied consistently", while "generally, inspectors and dutyholders continue to work together in improving health and safety management", they said in their report.

In order to create a "level playing field" for businesses, the review recommended that the scheme be extended to those businesses and organisations currently covered by other enforcement regimes. It could be appropriate to consider doing this during the scheduled review of  source regulations, which is due to take place next year. The report also urged HSE to ensure that the scheme did not later become subject to revenue targets.

"It is critically important that the revenue raised by FFI is seen in terms of its effectiveness in shifting the cost burden of certain aspects of health and safety regulation to non-compliant businesses and does not become subject to a revenue target system in future," the report said. "We urge HSE to ensure that future revenue-raising from FFI does not play any role in future decisions about the size of the inspectorate and the way in which their work is targeted."

"We also urge HSE to ensure that its system for targeting inspections is robust and able to identify those organisations who are deliberately seeking to gain commercial advantage by failing to comply with health and safety legislation," the report said.

According to the report, companies paid almost £10.7 million in fees for intervention between the introduction of the scheme and January 2014. Of this total, around £4.2m was paid by manufacturers and £2.8m by construction firms.

"Not many would have predicted an extension of the scheme in light of the comments made by Martin Temple earlier this year," said health and safety law expert Laura Cameron of Pinsent Masons, the law firm behind "Notwithstanding the independent review panel concluding that there are 'challenges' associated with FFI and also acknowledging that FFI has not been popular with some inspectors and dutyholders, it looks like it is here to stay."

"That said, the need to stave off the perception – or reality – of the scheme becoming a 'cash cow' for HSE is highlighted in the panel's report and it will be interesting to see how that pans out in practice over the next couple of years," she said.