HSE: stealth tax and bad regulation coming (and forget the promised moratorium)

Few government agencies are as necessary as the HSE – and few create so much annoyance with fatuous interventions.  Clearly, there is a tricky balance to be struck but unfortunately the government’s latest proposal is heading in the wrong direction.  A “fee for intervention” proposal is currently out for consultation which closes on the 14th October.  (I was unaware of it until I read a press report).

Basically, the proposal is to reduce the number of health and safety inspections by about a third – 11,000 per annum – as “part of a package of measures to change the culture…” and it will also start recovering its costs where it intervenes.  The justification for all this seems perfectly reasonable at first sight.  In the words of the consultation document,

… it is reasonable that duty holders that are found to be in serious material breach in standards – rather than the taxpayer – should bear the related costs incurred by the regulator in helping them put things right. A cost recovery principle will provide a deterrent to those who would otherwise fail to meet their obligations and provide a level playing field for those who do.

In reality it is riddled with problems.  For a start it’s not at all clear how these proposals will “change the culture”.  They say they are going to target higher risk industries and through the better use of “intelligence”.   These are admirable aims but are about better management, not changing culture.  What it’s really about is part funding the HSE through a swingeing increase in fines described in true Orwellian terms as “fees”.

Then there’s the question of the moratorium on new domestic regulations for small businesses announced only this last spring?   This is easily dealt with,

“Ministers have confirmed that the moratorium will not apply to these proposals …”

So, they were just kidding about the moratorium then; I’m glad they told us.

And there is the trigger for and level of fines fees involved.  Where any “material” (as opposed to merely “technical”) breach of health and safety law is found and followed up with a letter (or email)  the fees will apply, the amount depending on the complexity of the investigation.  The current hourly rate is £133 and it is estimated that a letter will typically result in a charge of £750 and an enforcement notice £1,500.  More complex cases will cost much more.

A “material” breach, the consultation document helpfully explains is, “When, in the opinion of the inspector, there has been a breach … which requires them to make a formal intervention [i.e. a letter].”  A “technical” breach is one where again, in the opinion of the inspector, a formal intervention is not required.

This really is a jobsworth’s charter.  Inspectors will be able to hit any arbitrary targets then might be set for the number of interventions or the amount of revenue raised simply by adjusting their opinion.  Or maybe it will depend which side of bed they got out of in the morning.  Either way the strong temptation will be to pick off low hanging fruit, meaning in practice smaller businesses that are unlikely to have the management or financial resources to challenge an inspector’s opinion.

Or to put it another way, this is just setting up a system that creates potential for conflicts of interest in the HSE.  We need to know that action is taken when, and only when, there is genuine risk and not just because the HSE budget is under pressure.

(For the avoidance of doubt let me say clearly that I’m sure that 95% of inspectors are thoroughly professional in their approach but no-one should be put in a position where they face contradictory directives from their management.)

From the point of view of small business this represents yet another regulatory minefield – exactly the sort of thing that is so unpopular and with just cause.  The HSE only has to be expert in one field, the business in every field.

If the government were serious about changing the culture, especially among harder-to-reach small companies, it would use inspectors more as consultants, going into firms to help and advise and resorting to formal interventions only when the management is clearly dodging its responsibilities.  For the majority of companies that want to improve their health and safety this would be a practical and cost-effective way to to so.  However, under the “fee for intervention” system a company would have to be mad to ask the HSE for advice.

Government should be helping British firms cut their costs and improve their efficiency while doing the same for its own direct responsibilities (which have the same relationship to the economy as a whole as do head office costs to an individual firm).  Unfortunately, this proposal doesn’t do so; it merely shuffles costs off the government’s books and onto the private sector’s books; it is an HSE stealth tax that rearranges the financial deck chairs but achieves no net benefit for the economy.  In fact it will almost certainly increase costs for the economy as a whole.

And it won’t do anything for the standing of the HSE which is a pity because it has an important role to play.

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