As the fourth birthday of the Health and Safety Executive's (HSE) controversial Fee for Intervention Scheme (the "Scheme") passes we examine what the future holds, as revenues continue to fall short of anticipated levels and the Scheme finds itself challenged by judicial review.
The Scheme was launched in October 2012, following the introduction of the Health and Safety (Fees) Regulations 2012, which placed a duty on the HSE to recover its costs from those it regulates. This extended the scope of the HSE's cost recovery powers and allowed it to recoup the costs of any intervention arising from the identification of a material contravention of health and safety law by a dutyholder.
The Scheme required the HSE to concentrate, "on higher risk industries and on tackling material breaches, while leaving those dutyholders which pose a lesser risk and which comply with the law, free from unwarranted scrutiny...lifting some of the regulatory burden on them".
A gaping hole
At the consultation stage, it was anticipated that the HSE would reap revenues of £43.7m per annum through the operation of the Scheme. So, with the HSE now charging £129 per hour for its Inspectors' time, has this income generating initiative borne fruit?
In short, no.
Figures obtained show that sums recovered have fallen well short of anticipated levels, leaving the HSE with a gaping hole in its finances
- At the consultation stage, the HSE forecast that it would reap revenues of £43.6m per annum through the operation of Fee for Intervention (FFI). Four years on, the HSE is now charging businesses £129 per hour for its inspectors' time but the money recovered is far lower than initially forecast.
- The HSE has invoiced £35.3m and collected £26.2m in FFI charges since 2012.Whilst year on year there has been an increase in revenues, 2015/16 figures stand at just £11.3m - some 74% less than had been originally hoped.
- In 2013/14, the FFI revenue budgeted was £17 million but only around £5 million was recovered. In 2014/15, the budgeted income increased to £23 million, yet again only around a third of this was actually recovered (£8.3m). This year tells a similar story, with the HSE continuing to fall well behind its projected figures.
- In terms of industry specific impacts, unsurprisingly construction and manufacturing have borne the brunt of the Scheme, perhaps predictably as two of only three sectors still subject to proactive HSE inspection.Construction companies have received invoices equivalent to 27.85% of the overall total, with manufacturing businesses in receipt of a huge 36% of HSE bills.
- Perhaps unsurprisingly, private companies have received the bulk of the invoices raised from the HSE, with 82% of the total issued. Individuals are the second largest group to be subject to invoices, with the sums being over £1.77 million.
- The scope for successful challenge is limited. Just 39% of queries and 19.5% of disputes have been upheld.
- The HSE has even fallen short of the levels prescribed for the Treasury cap on the FFI scheme, which requires it to return any surplus sums to Central Government. The cap started at £10m for 2012/13, rising to £17m in 2013/14, £23m in 2014/15 and £11m 2015/16.
An uncertain future?
Whilst FFI has not been the sweeping change anticipated, it has remained contentious, so much so that the Scheme is currently the subject of an application for judicial review. OCS Group UK is seeking to have its FFI bill overturned and the HSE's current system for determining appeals quashed on the basis that the HSE acts as "prosecutor, judge and jury".
The judicial review hearing is yet to be fixed but is expected to take place in May this year.
When granting permission to judicially review the Scheme, the Court also had some strong words, saying, "It is arguable that the HSE is, unlawfully, judge in its own cause when operating the FFI scheme, and that the scheme is either unlawful or being operated in an unlawful manner".
With the Scheme not reaching the levels anticipated in terms of revenue collected, as well as the ongoing judicial review, questions may be asked as to whether it can continue in its current form. We will provide a further insight as to the future of the Scheme once the judicial review process has been concluded.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.