The HSE's Regulatory Change Of Heart
In October 2010, the Department of Work and Pensions announced that it was cutting the HSE's grant by 35% over four years from April 2011 - roughly equivalent to £80m. To recoup some of this loss, the Government introduced FFI to recover the costs from businesses failing to comply with health and safety regulation.
Prior to this new piece of regulation, the HSE applied the concept of regulation in its widest context, with the focus shared between advising and enforcing. This new law has effectively narrowed the HSE’s interpretation of regulation as FFI deters companies from proactively inviting the HSE to comment on their operations.
This is due to the fact that if a material breach is found, the HSE must issue a notice of the breach, at the cost of £124 per hour. Effectively, this significantly changes the previously advisory culture of the HSE that helps companies with the sometimes confusing application of health and safety legislation, to one that is actively seeking to sustain itself financially at the cost of industry.
What Is A Material Breach?
A 'material breach' is defined as when an HSE inspector believes there has been a contravention of health and safety law that is serious enough to require them to notify the person of that belief in writing. Breaches may be identified when the HSE carries out a routine inspection of a site, investigates an accident or follows up on a complaint.
For example, if as a result of an investigation the HSE inspector issues an improvement or prohibition notice this would trigger the charges to be applied.
To help decide if the breach is 'material', inspectors will apply the decision frameworks established under the HSE’s Enforcement Management Model (EMM) and Enforcement Policy Statement (EPS).
- Having inadequate risk assessments
- Providing ineffective arrangements/emergency procedures
- Having inadequate access to competent assistance etc.
- Exposure to hazardous substances (e.g. dusts, fumes and chemicals)
- Exposure to noise, vibration, asbestos, confined spaces etc. where the effects are acute or chronic
- Contact with moving machinery
- Falls from height
- The improper use of lifting equipment
- Not providing adequate welfare facilities (e.g. toilets, washing facilities, drinking water, facilities to eat meals)
Other, more specific examples for the construction sector might relate to:
- Unsafe movement of mobile plant on site
- Unsafe access and egress to places of work
- Unsafe demolition activities
- Improper and miss planned steel erection
- Unsupported excavation work
- Having no/out of date training for managers and operatives
How Much Money Has The HSE Made So Far?
Half way through the 2013/14 financial year the FFI had gathered £3.9m, under half of the forecasted £8.5m.
With FFI revenue budgeted to achieve £17m in 2013/14, HSE looks set for an end of year shortfall of around £6m when the month-on-month growth in the amount of money invoiced is taken into consideration. The following year, 2014/15, the budgeted FFI income increases to £23m.
The figures come after a freedom of information request by consultancy ELAS found that HSE has billed businesses for £5.5m since fee for intervention started just over a year ago.
HSE's acting deputy chief executive, Gordon MacDonald, explains that, "FFI invoices are issued every two months and each invoice covers the cost-recoverable work undertaken in the previous two-month period...If an investigation spans two invoice periods the duty holder will receive two invoices for the single investigation".
What Does The Future Hold?
When asked whether the HSE would seek to increase income or decrease costs when faced with a budget shortfall from FFI, a spokesperson for HSE said: "Any shortfall in budgeted receipts is for the HSE to manage within its overall financial position. The prevention of death, injury and ill health to those at work and those affected by work activities is paramount. We will continue to focus on high risk and poor performing sectors, taking formal enforcement action to prevent harm and secure justice where it is appropriate."
However, the Employment Law Advisory Service’s lead health and safety consultant, Wayne Dunning, said: "It will be very interesting to observe over the coming months how HSE attempts to make up the budget deficit so far and hit the £17m target. The HSE will be more than aware of which companies don’t have the proper policies in place and are therefore high risk. There’s a possibility that if HSE does fall short of its target at the end of the financial year, their aim will be to carry out more probing investigations into businesses, their Health and safety policies and supporting documentation."
Whatever the financial outcome or the true agenda of the HSE, it is clear that FFI is effective in generating income for the HSE at the expense of companies failing to properly apply health and safety requirements.
What can be done to prevent incurring the Cost of FFI?
Many organisations are already fully complying with health and safety legislation and can demonstrate this to the enforcement authorities, insurers, unions and staff through a well documented health and safety management system.
Companies that cannot confidently boast this can safeguard themselves by working to answer ‘yes’ to the nine questions below:
- Have you developed a strategy for health and safety incorporating meaningful health and safety performance standards?
- Have you confirmed the health and safety policy is up to date and signed?
- Are you delivering health and safety leadership from the top?
- Do you have appointed competent advisors, both internal and external?
- Have you identified hazards, assessed risks, successfully applied control measures and provided safe systems of work?
- Do you regularly consult staff and provided training?
- Have you implemented an appropriate health and safety management system?
- Do you continuously monitor safe working procedures and investigate accidents?
- Have you developed a positive health and safety culture, considering issues such as competency, control, communication and co ordination of health and safety issues?
If you are answering 'no' to the majority of these questions, be aware that the cost of accidents, legal non-compliance and disregard of a positive health and safety culture is increasing and the law is now geared to lean on employers to bear the financial burden.