The amount charged to businesses through the Health and Safety Executive’s controversial “Fees For Intervention” scheme hit a record high last year, having increased every year since the scheme was introduced in 2012, says international law firm Pinsent Masons.
The HSE charged businesses £15m last year, an increase of 23% from £12m the year before. The fees are detailed in the latest HSE report and accounts.
The scheme allows the HSE to recover “intervention” costs from businesses it believes to be in material breach of health and safety law irrespective of any formal enforcement action it might decide to bring. The HSE is not required to provide evidence as to why it suspects a business of wrongdoing and most appeals against the fees are heard by the HSE itself.
The HSE’s charges to businesses have increased by a total of 49% over the last two years, up from £10m in 2013/14 (see graph) – this is not split into industries.
Under the scheme, if the HSE thinks a business is breaching health and safety laws, an inspector will serve a “Notification of Contravention” which triggers the £129 hourly rate for the HSE’s staff man hours. The total charge depends on how long it takes HSE to identify and conclude its regulatory intervention.
The fees the HSE charges businesses through this scheme are intended to cover all its costs, including site inspections and subsequent office work. The charges are also meant to cover the administration costs of invoicing businesses, travel, training and paying staff, telecoms and even IT.
Despite forcing businesses to pay over £15m in fees last year, the costs of administering the scheme were even higher. The scheme fell short by £2.7m in 2015/16, which represents an increase of 53% on the shortfall of £1.8m for 2014/15, says the accounts.
The Fees For Intervention scheme is just one of several cost recovery schemes the HSE runs. Although the HSE charges fees through these schemes, recovers its costs following successful prosecutions and receives funding from the taxpayer, it is still losing money. It ran a total budget deficit of £11.7m last year, a 64% increase on its deficit of £7.1m for 2014/15.
Kevin Bridges, partner at Pinsent Masons, said: “Generally speaking, this is a very unpopular scheme with businesses and its costs are continuing to mount.
“As well as the HSE’s growing budget deficit, there are concerns that its ‘Fees For Intervention’ scheme is encouraging the HSE to intervene with more businesses in order to generate more revenue to close that gap, although there appears to be no evidence that the gap is in fact closing. As a result, some businesses are naturally growing sceptical of the HSE’s motives.
“There is also limited scope to challenge the costs the HSE imposes and as appeals are heard by the HSE itself, many businesses decide to just pay up. This leaves them potentially vulnerable in the event of future legal disputes as it could be cited as acceptance of poor health and safety performance.
“The best way for businesses to avoid charges is to comply with health and safety law, but we would suggest to those businesses who are considering paying an HSE invoice to state that the payment should be regarded as ‘without prejudice’ and paid for administrative purposes only, to ensure it is not used against them at a later date.
“There is no suggestion the scheme will be scrapped but the appeals process is certainly the subject of a legal challenge, to be determined by the courts in 2017.”