HSE fines increase by 74% in a year
Local authority fines rise by 1,870% in a year
The value of fines collected for breaches of the Health and Safety at Work Act has doubled in a year, according to a research report from global law firm Clyde & Co.
Data obtained directly from the Health and Safety Executive (HSE) and over 300 Local Authorities shows that the total value of fines collected from businesses increased to £73.2m in the first year of the new sentencing guidelines (year end 31 January 2017), up from £35.4m in the previous 12 months.
New sentencing guidance introduced on the 1st of February 2016 toughened penalties for health and safety and corporate manslaughter offences. Under the new approach, the scale of fines varies according to the turnover of the company but can exceed £20m for the very worst cases involving corporate manslaughter, and potentially more for the largest companies.
The amount collected in fines by the HSE increased by 74% during the first year of the new sentencing guideline, to £61.6m up from £35.5m.
The total sum collected by local authorities showed an even greater increase of 1,870% over the same period. Fines collected by local authorities in the last year rose to £15.2m, up from £0.8m in the previous 12 months.
Rhian Greaves, Head of Compliance & Strategic Support in Clyde & Co's Safety, Health & Environment team, comments: "Health & Safety is now a top priority for the boardroom. Our research confirms what we have been seeing in practice - the new sentencing guidelines are biting hard."
"Good health and safety management is morally right. It also makes good business sense. When the potential reputational damage and adverse PR is added to the cost of the fine, it's clear that health and safety failures are now a major business risks."
The Clyde & Co report highlights that the HSE has enforcement oversight of 'higher risk sectors' including construction and manufacturing. While local authorities are responsible for the enforcement of 'lower risk sectors', such as retail, leisure, hospitality, care, catering, warehousing and office space.
Manufacturing and construction bear the brunt of the new regime
Clyde & Co says that the manufacturing and construction sectors have paid the most in fines as a result of health and safety breaches, which is perhaps unsurprising given that these are deemed amongst the most risky sectors by the HSE.
Fines paid by the construction sector reached £13m in the first 12 months of the new sentencing guidelines, compared to £7m in the previous year, an increase of 83%.
Fines against the construction sector represented 21% of the overall total imposed by the HSE this year. The highest fine imposed on the sector was £2.6m, ordered to be paid by Balfour Beatty.
The manufacturing sector paid an even higher sum for health and safety failings. The value of fines collected from the manufacturing sector hit £22.8m in 2016/17, up from £11.4m in the previous year – a 99% rise.
The highest fine imposed on the manufacturing sector was £3m ordered to be paid by Cristal Pigment UK Limited following two separate incidents in which toxic gas clouds were released. Total fines paid by the manufacturing sector represented 37% of the overall total collected by the HSE this year.
Rhian Greaves says: "The floodgates are beginning to open and the new Guideline is clearly having an impact. We have seen more fines exceeding £1m this year than in the previous 15 years combined. Companies should be concerned that fines are now routinely hitting the £1 million mark, even in apparently less serious cases meaning that all breaches of health and safety law are now a serious threat to a company's bottom line."
Logistics companies in the firing line
Clyde & Co says that the logistics sector has suffered the most in the first year of the new sentencing guideline, with warehousing organisations paying out six times as much as the total figure for all local authority cases in the previous year.
Rhian Greaves adds: "The myriad of risks presented by distribution centres places them at the top of the local authorities' agendas as they seek to regulate arguably the highest risk industry within their jurisdiction."
"There is a strong consensus that the logistics sector represents the most challenging risk for the local authority to manage. The public's growing preference for internet shopping has seen huge distribution centres spring up nationwide. With high level racking, mechanical handling equipment and large numbers of employees, agency and gig economy workers, the area presents something of a perfect storm. "
- Total fines collected by the HSE in 2016/17: £61,579,949.21
- Total fines collected by the HSE in 2015/16: £35,473,823
- Total fines collected by local authorities in 2016/17: £15,150,664
- Total fines collected by local authorities in 2015/16: £768,883