Specialist Health and Safety consultancy Southalls and international law firm Gowling WLG, warn that manufacturers are one of the most at risk sectors from the HSE’s controversial Fee for Intervention (FFI) scheme. This comes as concerns have grown recently over increasingly tenuous connections given for bills by inspectors as manufacturers bear the brunt of escalating fees.
The Fee for Intervention (FFI) scheme which came into force in 2012 significantly changed the way in which the Health and Safety Executive (HSE) charge companies for breaches in Health and Safety regulations.
An FFI is triggered when an inspector finds a material breach. This is when something is contrary to Health and Safety regulations but is not serious enough to warrant anything more than a letter to the offending party demanding the breach is put right.
A gaping hole
The HSE’s policy on FFI is acknowledged by industry experts as a means of plugging a 35% cut to its budget as well as raising revenue for the Treasury. Since the scheme was introduced a total of £35m has been invoiced and just £26m has been collected, far short of the original targets set.
This has prompted the regulator to charge as much as possible for its time. Andrew Litchfield, Partner, Gowling explains: “The HSE has been finding material breaches when in the past they would have just given an informal notice. We are seeing more letters than ever before after a visit expecting a business to rectify the HSE for its time.”
FFI bill of £5.2m for manufacturers
The manufacturing sector is one of the industries that have been hit the hardest. In June 2016 for example, 1460 FFI invoices were sent totalling £962,081. This brings the total bill facing the sector last year to £5.2m with manufacturers bearing the brunt of the FFI scheme.
There is therefore concern that despite assurances, inspectors will operate under implicit, if not explicit, targets for recouping costs. So what should manufacturers be doing to better protect themselves?
Andrew Litchfield, partner, Gowling WLG advises: “Manufacturing is a sector where a lot of the inspections still take place. In the current climate, they need to expect a visit sooner rather than later and must assume that the HSE will be actively looking for a material breach.
“So if you have a situation where you believe that a material breach has been wrongly identified, be prepared to engage with the inspector and don’t be fearful of pushing back. If possible, if it’s something that can be fixed easily then agree a solution at the time – this will help reduce the time spent on the issue and therefore your invoice too.”
Furthermore there still exists some confusion as to what constitutes a material breach, even among the HSE, it is in fact a legal contravention that has been found. If a business receives an FFI therefore, it is a civil matter it is not a fine so it has to be collected through a civil court if a business refuses to pay.
Andrew Litchfield explains: “There is a distinction that must be drawn between whether something is a material breach or not and the commercial decision to pay. Since there is a risk that payment of an invoice may be used in the future to prove that there was acceptance of a material breach. So those businesses must write to the HSE and explain why they disagree and if they’ve chosen to pay, they must also state that their payment is not an admission that a material breach had taken place.
“Also, look carefully at the invoice and amount of time spent. The HSE should only be recovering reasonable expenses. If you feel strongly that the amount of time spent is incorrect then dispute it.”
In seeking to challenge a cost imposed on them, businesses may end up enduring even greater costs still. The scope for a successful challenge is limited, in 2016 just 39% of queries and 19.5% of disputes have been upheld.
So the scheme remains contentious, so much so that it’s currently the subject of an application for judicial review. Since the HSE’s current system for determining appeals is done on the basis that the HSE acts as “prosecutor, judge and jury” with no room for an independent view.
Businesses are therefore far less inclined to invite the HSE in to have a chat about an issue. John Southall, Director, Southalls said: “We’ve seen where a client has invited them in on an issue they thought they were managing well, only to find out that a material breach was recognised.
“There has even been an instance recently where a client attended a HSE course on a high risk issue, silica dust prevention only to receive a visit from an inspector just weeks later. Is the HSE acting as regulator or cash generator?”
The FFI fee total to date has increased each year since 2012, in the last two years alone there has been a 49% increase. The fee hit £15m in 2016, an increase of 23% from £12m in 2016. By charging £129 per hour for an inspection following a Health and Safety breach, the HSE can recoup its costs.
In March this year it was announced that the HSE has been forced to dramatically overhaul its procedure for appealing against Fee for Intervention bills. It has agreed for the first time to disclose its evidence and reasoning to dutyholders and to appoint a new adjudication panel of independent experts from September 2017.
John Southall, said: “If you are sent an FFI don’t panic, always take professional advice before simply paying an invoice as it may help prevent further unnecessary costs in the long-term.”
To view the Southall and Gowing WLG interview on the FFI issue please visit – https://vimeo.com/204019039