Fees for Intervention in the UK – A matter of perception

Introduction

The UK Government has recently published its response to the Triennial Review of the Health and Safety Executive (HSE).  One of the areas considered in the Review was how the HSE is funded and, in particular, the Fees for Intervention regime (FFI).

FFI in a nutshell

FFI was introduced under regulations 23 to 25 of the Health and Safety (Fees) Regulations 2012 on 1 October 2012 and the HSE has issued guidance as to how FFI operates in practice.  In essence, FFI places a duty on the HSE to recover its costs for carrying out its regulatory functions from those dutyholders found to be in material breach of health and safety law.  A “material breach” is deemed to occur when, in the opinion of an HSE inspector, there is or has been a contravention of health and safety law that requires them to issue a notice in writing of that opinion to the dutyholder (for example, in the form of a notification of contravention, an improvement or prohibition notice, or a prosecution).  The fee payable under FFI is £124 per hour. The total amount to be recovered will be based on the amount of time it takes HSE to identify and conclude its regulatory action, in relation to the material breach (including associated office work), multiplied by the hourly rate.

If the dutyholder disagrees with the invoice that has been sent to them regarding FFI, they may query it with the HSE.  No fee is payable by the dutyholder for the cost of an initial query and, if the query is not upheld, the invoice must be paid within 10 days of the dutyholder being notified of the decision.  If the dutyholder is not satisfied with the decision, they may formally dispute the invoice.  However, if the dispute is not upheld, the dutyholder will be required to pay the HSE’s costs for dealing with the dispute at a rate of £124 per hour.

According to data from the HSE website, between October 2012 and January 2014, invoices regarding FFI totalled £10,680,443.34 and the average invoice was for £501.42

The Review’s Conclusions and Recommendations Regarding FFI

The Review acknowledged the strength of feeling from stakeholders about FFI and that concerns fell into two categories:

• FFI amounts to a penalty or fine regime which is contrary to the principles of natural justice in that the HSE acts as “police, prosecutor, judge and jury”.
• FFI is used by the HSE to plug the gaps in its budget which means that inspectors are motivated to act by the prospect of generating income rather than by a response to genuine risk.

The Review pointed out that the most serious and obvious breaches of health and safety legislation may be so clear cut as to not require an inspector to spend much time on them.  Apart from black and white cases, however, there are cases which fall into a grey area and which may involve an inspector spending more time and engaging specialist assistance to determine the issue.  Therefore, a dutyholder may be charged more under FFI in cases which the arguments are finely balanced (and where the dutyholder may have behaved less culpably but has not quite achieved a satisfactory degree of compliance) than for the most flagrant transgressions.

There was conflicting evidence as to whether inspectors’ behaviour has, in fact, been influenced by the fact that a proportion of the money from FFI is recouped by the HSE.  However, it is harm to the relationship between inspectors and businesses, caused by the perception that the inspectors’ decisions will be influenced, which is the most damaging aspect of FFI.  As a result, businesses have been reluctant to seek advice or extend an inspector’s visit in case it leads to a FFI charge.

Nevertheless, given the current level of public spending in the UK, it was acknowledged that the revenues derived from FFI plays a crucial role in enabling the HSE to function.  Therefore, it was recommended that the Government’s first scheduled review of FFI after October 2013 should include:

• stakeholder representation in the review panel to provide assurance of the impartiality of the findings;
• the views of stakeholders on how FFI is working;
• if FFI is to be retained, consideration as to whether the threshold for FFI has been set at the right level;
• consideration as to whether there is evidence that the anticipated incentives to comply have made a difference and improved health and safety performance;
• consideration as to whether there have been any detrimental impacts on the behaviour of HSE Inspectors and/or those inspected and/or on health and safety performance; and
• consideration of alternative sources of income, which should be tested against the same criteria.

The Review recommended that unless the link between “fines” and funding can be removed or the benefits can be shown to outweigh the detrimental effects, and it is not possible to minimise those effects, FFI should be phased out. 

Finally on the subject of FFI, the Review had heard that the HSE’s appeals system for FFI was not trusted as it was understood to be an entirely internal process (although there are independent panel members appointed to consider the formal dispute stage). However, no appeals have reached the formal disputes stage, so the independent members have not yet had any cases to consider.  The Review recommended that, as an urgent action, there should be at least one independent person involved at the query stage in FFI appeals to ensure that the appeal process is independent and impartial throughout, and is seen to be so.

The Government’s Response

The Government said that it remains committed to the underlying principle that businesses that are found to be in serious breach of health and safety law – rather than the taxpayer – should bear the related costs incurred by the regulator in helping them put things right.  However, it recognised the concerns referred to in the Review about FFI and, in particular, how misperceptions of it might have potentially damaged previously positive relationships between HSE and those it regulates. Mike Penning, then Minister for Disabled People, instructed the HSE to set up the review panel, under an independent chair, to consider not just the operation of FFI, but also the impact charging has had on the relationship between HSE and business.  The review panel is due to report in July 2014, and the conclusions will be published once the Minister (the newly-appointed Mark Harper) has had an opportunity to consider them. 

Opinion

It is clear that the public perception of FFI is as important as how it actually operates in practice.  The Review has correctly identified that, in order for FFI to command the confidence of dutyholders, its image must be improved.

One aspect of FFI which was not specifically addressed by the Review is the potential for dutyholders to incriminate themselves in prosecutions.  It is entirely conceivable that a dutyholder may elect not to challenge a FFI invoice for circa £500, simply because the time and effort involved in querying and disputing it may significantly outweigh the cost of paying.  Nevertheless, the fact that a dutyholder has paid a FFI invoice may be taken as evidence that it accepts that a material breach has been committed and the Chief Legal Adviser to the HSE has refused to rule out using this as evidence in a future prosecution.  It remains to be seen whether he review panel’s report will offer any comfort to dutyholders on the risk of apparently admitting liability.