Date:

Fees for intervention - a dangerous model

The Triennial Review of the HSE, launched by the Department for Work and Pensions ("DWP") back in April 2013, provided a wide reaching review of both the form and functions of the HSE. Whilst the report published last month highlights the near universal agreement that the regulator remains valid and fit for purpose, the comments made in relation to the HSE's Fee for Intervention (“FFI”) regime were not so encouraging. Little over a year since its inception in October 2012, the recommendation that FFI be phased out unless a number of fundamental concerns can be addressed is a clear shot across the bows of this new regime.

The Report

Rather than being in response to any perceived failings by the HSE, the triennial review complies with Government policy which dictates that all such non-departmental public bodies ("NDPBs") undergo a substantive review at least once every three years. It is perhaps unsurprising therefore, that by and large, the conclusions of the review are positive and encouraging of the HSE.

Widespread investigations have been conducted, including analysis of performance information, consultation with individuals and key organisations interacting with the HSE, and also a public consultation, to which DWF submitted a detailed response following a debate session with key clients across a range of sectors. Following this, the report usefully identifies a number of areas where the structure and governance within the HSE can be improved, these include areas such as performance analysis, length of investigations and relationships with other organisations and regulators.

In line with our own perceptions, and those of many of our clients, the overall conclusion of the report is that there is a continuing need for the functions that the HSE delivers, and a strong case for these being most effectively delivered in the model currently adopted.

Fee for Intervention

Despite the near universal agreement that the regulator remains valid and fit for purpose, the report's conclusions in respect of the FFI regime, a topic only brought within the scope of the review by the wealth of comments received from stakeholders, are of particular interest.

Since the inception of the FFI regime, a growing area of DWF's work has been advising its clients in relation to both the issues posed upon receipt of an invoice and for the processes needed to challenge them. Aside from the obvious issue of cost, there are potentially significant consequences for both current and future HSE investigations, along with ramifications for any related civil claims that may arise following a workplace accident, which clients need to carefully consider before payment of an invoice.

We are seeing a growing divide between HSE inspectors and companies, often as a result of borderline cases of alleged material breach and arguments over how much time the inspectors have spent on the cases and the apportionment of such time between dutyholders. Particularly in light of the goal-setting nature of our health and safety legislation and absence of any definitive guidance as to what constitutes a material breach, the discretion afforded to inspectors and ties with the HSE's funding creates an unease with many clients upon receipt of an FFI invoice.

As recognised by the report, these concerns over FFI have damaged the perceived impartiality, independence and therefore integrity of the HSE.

Furthermore, having worked closely with clients to challenge invoices through those appeal procedures afforded by the HSE, we have long been concerned over the independence of these processes. At present, only upon escalation to dispute level 2 when the dispute is considered by a panel of HSE staff and an independent representative, do we see any independent input into the decision.

This too has been picked up upon by the review, noting a need for at least one independent person involved at the first formal stage in FFI appeals.

The phasing out of FFI?

Having branded the FFI regime a dangerous model in need of urgent review, we await to see how the government will respond to these serious concerns. Whilst a ministerial statement has welcomed the recommendations around reforming the HSE it stopped short of making any recommendation that they be adopted. The statement further provided that some of the recommendations require further consideration and therefore the Government will respond more fully later this year.

With HSE funding already having been cut by approximately £80 million over three years and with funding set to be further reduced over the next two years, the revenues raised by FFI form an important part of the HSE's funding strategy. Against this backdrop, we consider it unlikely that the FFI regime will be phased out altogether. In any event, whether it need be removed entirely it is perhaps too early to tell. What is clear however is that there is a need to minimise the detrimental effects observed in the FFI regime and we welcome further discussions on this topic.

 

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

Steffan Groch

Partner and Head of Regulatory - Head of Sectors

I head up DWF's national Regulatory team as well as leading the firm’s ‘go to market’ sector expertise. I am also Chair of the UK Health and Safety Lawyers Association.

Paul Matthews

Partner - Head of Regulatory (Yorkshire and North East)

I am a Partner in the Regulatory team and a corporate defence specialist who provides up-front regulatory compliance advice and representation to businesses and senior managers in relation to investigations and prosecutions by regulatory bodies.