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20/07/2012 - Health and Safety: New 'Fee for Intervention' cost recovery scheme

On 28 June 2012, new regulations were approved which will require businesses to pay a fee if found to be in "material breach” of health and safety law. The fees are designed to compensate the HSE for time spent during investigation and enforcement and will be payable at an hourly rate. The proposed rate for 2012/13 is set at £124 per hour.

When will the scheme start?

The new cost recovery scheme will take effect from 1 October 2012.

How will it affect businesses?

The HSE estimates that an inspection that results in a letter is likely to cost a business at least £750.  Should a full investigation be required, the duty holder may be liable for fees reaching tens of thousands of pounds. Businesses will be concerned that full costs will not be known until after the investigation is complete. Principal contractors are likely to react to the changes by ensuring that the liability for costs is passed down to sub-contractors through their contracts. Smaller businesses are therefore likely to be hit hardest.

Concerns may be alleviated to a certain extent by the knowledge that businesses must be found to be in "material breach” of health and safety law before being liable to pay under the new cost recovery scheme. The scheme will not apply to law abiding businesses.

Gordon MacDonald, the HSE’s programme director, said: "It is right that those who break the law should pay their fair share of the costs to put things right – and not the public purse.”

A material breach will be at the HSE’s discretion

A business will be in material breach if, in the HSE inspector’s opinion, there has been a contravention of health and safety law serious enough to require the HSE to send a formal notification letter. That inevitably builds a degree of subjectivity into the system.

Market reaction

Concern has been expressed by those worried that a visit generating an invoice is likely to harm the dynamic between businesses and the HSE.

John Walker, the national chairman of the Federation of Small Businesses, made the following comment with reference to the proposals for the new scheme: "Not only could they add to the fear that many small businesses have about health and safety regulation, but they could have a serious impact on their relationship with the inspector.”

The HSE’s consultation documents predict an income of approximately £60m per annum from the new scheme.

Practical considerations

It may assist businesses in responding to the new fee regime to consider the following points:

• When were your health and safety policy and risk assessments last revisited? Those are the building blocks which lead to compliance with the law.
• Do your contracts with others enable them to pass costs on to you? If so, how compliant with the law are they? It may be necessary to revisit some of those contracts.
• Do you have systems in place to ensure that regulators’ queries or concerns reach the right people and are responded to both properly and efficiently?
• Do you have insurance cover which will indemnify you in the event of a substantial fee (as opposed to a criminal penalty) from a regulator?

If a fee is requested from you, there may be grounds for appeal or a later refund. Be aware that you may have to take action within set time frames.

Further information

For further information as to the scheme and the effect it might have on your business, please contact Michael Veal, partner and head of the regulatory and business crime team, on (01202) 786340.

Guidance has also been published on the HSE’s website, explaining how the scheme will work in practice and its application.

Authored by:

Amelia Williams (show profile)

Published by:

Michael Veal (show profile)

Article type:

News (show all News)