16/09/2016
The controversial Fee For Intervention (FFI) scheme introduced in 2012 has become even more contentious. Under The Health and Safety and Nuclear (Fees) Regulations 2016 (“the Fees Regulations”), all HSE fees, including FFI have increased by four percent. However in addition for FFI invoices , the HSE can now recover costs of legal advice it receives in relation to disputes under the FFI regime.
Why has the HSE risked angering businesses, especially those in the manufacturing and construction industry, which have been hardest hit by the FFI scheme? In the last year the manufacturing industry has paid around £5.2 million in FFI charges, with the construction sector following close behind at £4.2 million. These are not inconsequential sums for industries that are being forced to strategise for a predicted severe economic slowdown in 2017 following Brexit beginning in earnest.
The FFI Charge Increase And Justifications For It
In 2009/10 before FFI was introduced HSE received from the government £231m. HSE’s business plan for 2016/17 shows that HSE will receive £140m in the current year which will reduce even further by 2019/20 to £123m. This means that government funding will have reduced by more than £100m in 10 years..
According to the Explanatory Memorandum to the Fees Regulations::
“HSE’s main cost recovery regimes have shown deficits in the last two years.
Whilst the appropriate level of regulatory activity has been relatively stable,
pay costs (the largest element of the rates) for the specialist staff required to
deliver these functions has increased significantly to support recruitment and
retention in very competitive markets. It has not been possible to fully offset
the impact of these increases on the rates through operating efficiencies and
other cost economies."
The 4% increase takes the rate that HSE can recover under FFI from £124 to £129 per hour.
The Impact of FFI on Business
According to recent figures, the average FFI invoice is £650. However, in the event of an ongoing investigation, companies may receive multiple invoices which could total tens of thousands of pounds. The largest invoice sent out to date was for £201,150.60.
As the Explanatory Memorandum states FFI was introduced to achieve the overarching policy aim “of shifting the cost of health and safety regulation from the public purse to those businesses that break health and safety laws”. Under FFI HSE will seek to recover its costs if, in the inspector’s opinion, a duty holder is in material breach of health and safety law.
It follows that organisations which pay an FFI invoice are accepting that they have broken the law. This implication can have severe consequences for businesses in the future, especially when tendering for contracts.
Challenging Fees For Intervention Invoices
Under the FFI scheme an organisation served with an invoice can raise a ‘query’ within 21 days of receipt in writing to HSE’s FFI Team. The query is decided by the investigating inspector’s line manager. If the query is not upheld then there is no further cost to the organisation. If the organisation wishes to challenge this determination it can raise a ‘dispute’ in writing within 21 days. The dispute is determined by a panel comprising two HSE managers and an independent representative drawn from a pool of industry and trade union representatives. If the dispute is unsuccessful then the organisation will be charged for the panel’s time at £129 per hour.
New Fees Regulations
Under the new Fees Regulations, the HSE will now be able to pass on the cost of legal advice sought when dealing with a dispute. . The Explanatory Memorandum says this is necessary “to provide greater transparency and independence”, but does not explain how. Neither the Guide to FFI Queries and Disputes or the Guidance on the Application of FFI, nor the HSE website make any reference as to how, when and from whom legal advice would be sought.
FFI Concerns
The Explanatory Memorandum notes that FFI has been “unpopular with some stakeholders”.
In 2014 Martin Temple, the then Chair of EEF, the Manufacturers’ Organisation, published his report following his review of HSE at the request of the government. He expressed concerns about FFI saying:
“ At its worst stakeholders told me that it is against the principles of justice for HSE to act as police, prosecutor, judge and jury.”
He concluded:
“…I am very concerned at the strength of feeling from stakeholders that FFI damages HSE’s reputation for acting impartially and independently. I comment on it here because of the impact it appears to be having on HSE’s reputation for independence and its integrity as a regulator.”
Mr Temple is now the new Chair of HSE.
Please read our other Blogs on Fees For Intervention:
Fee For Intervention – The Essentials : Part One - FFI Explained
Fee for Intervention – The Essentials Part Two - Challenging an FFI Invoice
Fee for Intervention – The Essentials Part Three - Insights into HSE’s investigation from the FFI Notice
Fisher Scoggins Waters are a London based law firm who are specialise in construction, manufacturing and engineering law. If you would like more information about the FFI scheme or wish to challenge an invoice, please phone us on 0207 993 6960.