The Health and Safety Executive (HSE) in the UK are due this week to introduce a fee for the “intervention cost recovery scheme”, known as Fee for Intervention (FFI). Under the auspice of the Health and Safety (Fees) Regulations 2012, the changes will see the HSE able to recover its costs for carrying out its regulatory functions from any organisation or self-employed person found to be in material breach of health and safety law. Those that break health and safety laws will then have to pay for the HSE’s time in putting matters right, investigating and taking enforcement action.
What Will this Mean for UK Businesses?
The implications are mixed. On the positive side, it is expected that there will be a reduction in the number of HSE inspections (estimated at 11,000 fewer across the UK, a cut of 33%) although this will depend on the industry in which individual businesses are involved. On the negative side, clients will now have to bear the cost of HSE interventions where they are found to be in breach of health and safety regulations, and are required to rectify it.
The potential costs associated with investigations should not be underestimated – ranging from an estimated £750-1,500 for a simple letter/enforcement notice, to tens of thousands of pounds in extreme cases—the impact for UK businesses could be significant.
An hourly rate of £124 has been set for all HSE staff; the requirement of specialist support could only increase the overall fee. No time frames for investigations have been laid out making the fees difficult to contest.
Low Risk…Low Fees?
The businesses that will be most at risk of large FFI fines will be those involved in “high risk” activities, such as construction, waste and recycling and manufacturing. These activities will be proactively inspected, and are therefore at more risk of being fined.
The “medium risk” class of industries such as agriculture, quarrying, and health and social care, will also be under scrutiny but the intervention will be through other means than direct inspection, such as via joint initiatives with other businesses.
“Low risk” industries, such as light manufacturing, retail shops and transport, will no longer face proactive intervention from the HSE. However, exposures relating to a Reporting of Injuries, Diseases and Dangerous Occurrences Regulations (RIDDOR) incident, or an inspection following a complaint to HSE, should not be discounted.
Beyond the Fees…
For businesses subject to an investigation there is also the added complication of the outcome of a wider investigation into health and safety requirements. The threat of prosecution diverts attention away from the business needs, and requires a considerable investment of time from senior management to aid the investigation process. To mitigate the impact of FFI health and safety management should remain a major priority for businesses. It is necessary that all health and safety obligations are met to avoid these costs.
Will the Insurance Market Respond to FFI?
Seeing as there does not have to be an incident/event to cause a prosecution, it is likely that insurers will view this cost as a business risk rather than as an insurable exposure. Focus therefore, should be on prevention rather the cure. The extent of the financial penalties imposed by FFI could be extensive, therefore organisations should ensure that their health and safety obligations are being met, and remain a business priority