Full steam ahead for the HSE’s controversial cost-recovery scheme

Posted on 5 Jan 2012 by Tim Brown

Sally Roff, a partner from DAC Beachcroft considers how Professor Lofstedt’s recent call for simpler and clearer health and safety guidance for businesses could be put at risk by the introduction next spring of the HSE’s cost-recovery scheme.

Sally Roff, partner in DAC Beachcroft’s injury risk group
Sally Roff, partner in DAC Beachcroft’s injury risk group

The Government’s determination to address the perceived UK’s ‘compensation culture’ has led to a timetable of reforms, to be introduced from summer 2012.  They are based on Professor Lofstedt’s recent report which highlighted the need to increase organisations’ understanding of how safety legislation should be appropriately implemented.  It would be natural to assume that the HSE’s cost recovery scheme, to be introduced in April 2012, would have been aligned to further these aims.  This is not necessarily the case and organisations would be wise to prepare themselves financially for the repercussions of the scheme.

Under the scheme, organisations will be charged £124 per hour for the time an inspector spends resolving an organisation’s ‘material breach’ of its health and safety obligations.   Whilst currently businesses are only charged on conviction, the clock will now start ticking once an inspector sends a letter or e-mail providing details of the breach.

There are four main concerns with the cost recovery scheme:

1. Pressure on inspectors – Inspectors, under pressure to recover costs, may apply a wide definition to ‘material breach’ and charge organisations for issues which may have previously been dealt with by way of verbal recommendation.  Guidance has been promised but interpretation is customarily inconsistent.

2. Lack of an independent complaints process – Following concerns raised during consultation, an appeals panel will now be introduced consisting of senior HSE staff plus an external business representative (presumably providing the ‘independent’ element).  The concerns are obvious and will change the balance of the relationship from one where the HSE is seen as adviser to one where it is seen as the policeman.

3. Unpredictability of costs – Despite calls for reduced charges for smaller enterprises, the HSE has argued that it is under an obligation to recover all costs.  The ability of a company to pay will not be taken into account.  Investigations could run into thousands of pounds and it is unlikely that insurers will fund this.

4. Lack of verbal guidance – Organisations who previously might have invited an inspector to their site to discuss improvements to safety would be foolish to alert the HSE in this way, or be prepared to fund its costs.

Whilst the need for self-funding now seems to be a prerequisite of all Government departments these days, it remains to be seen how the HSE’s scheme will work in practice.  The objective, which is intended to be restricted to cost containment, has wider implications which go to the very heart of the relationship between the HSE and industry.