Select Committee on Home Affairs and Work and Pensions Minutes of Evidence


Examination of Witnesses (Questions 49 - 59)

MONDAY 24 OCTOBER 2005

MR DAVID BERGMAN AND PROFESSOR STEVE TOMBS

  Q49  Chairman: Mr Bergman, can you introduce yourself briefly and your organisation and also introduce Professor Tombs?

  Mr Bergman: We are both from the same organisation. We are from a charity called the Centre for Corporate Accountability. I am the Executive Director of the organisation. Steve Tombs is the Chair of the Board of Directors of the organisation. We are a charity concerned with work and public safety. Our focus is primarily on law enforcement and corporate criminal accountability in relationship to that. Our prime activity is the provision of free and independent advice to families bereaved from work-related deaths, looking at investigation and prosecution issues arising from those deaths. Also, we undertake research and advocacy.

  Q50 Chairman: Thank you. I think you have been in for the previous two sessions. There is a general welcome for the fact that legislation is here but perhaps some reservations about its value in its current form. What is your own assessment about the value of having this Bill at this time?

  Mr Bergman: We may be not quite as pessimistic as some of the other speakers. We think that it will have a bite. Although the management failure must be a management failure of senior managers, and we do feel that is a serious limitation, despite that it will still have an impact, nonetheless. The Government says that it will increase the number of prosecutions by five, maybe it will be more than that, I do not know, but certainly it will have an impact, symbolic and also practical, but clearly we do feel there are significant limitations to the final draft.

  Q51  Chairman: Clearly, if the impact does not just reduce perhaps the five deaths a year that might lead to prosecutions but some of the several hundred a year that have been referred to by earlier witnesses in accidents, in one way or another, that will be a very good thing. How have you assessed the real impact of the Bill in terms of its regulatory burden on companies, whether it will, as some have suggested, get in the way of entrepreneurial activity, whether, in fact, it might simply just produce, right across British business and the public sector, an excessively risk-averse culture, which would be welcome in terms of the impact on people's lives but might actually mean the whole economy operating in a very ineffective and inefficient way? Have you been able to assess the impact of the measures that you support on the way in which the country operates?

  Mr Bergman: The first thing to say is that the actual Bill itself does not impose any additional duties at all upon companies or company directors, it simply captures a particular form of conduct on the part of companies, conduct which is viewed to be particularly serious, and define that as a criminal offence. That is a very important thing to note because often there is a misconception that the new offence is going to impose further duties. In relationship to the risk-averse question, clearly the purpose of the Bill is to deter a certain form of risk-averse culture and risk-averse behaviour. We are very sceptical of a lot of the rhetoric about risk-averse conduct and the way that is being used to try to question the merits of the Bill, because clearly an offence of this kind will, we hope, deter inappropriate risk-averse conduct that goes on at the moment. We do feel, if a company is complying currently with health and safety law, they have absolutely nothing to fear from this offence, and that is important.

  Q52  Chairman: I do not want to put words into your mouth but are you saying that if a company carries out its current legal responsibilities properly there is no danger that they will end up being prosecuted under this new piece of legislation?

  Mr Bergman: That is absolutely the case. I do not think anyone doubts that, whether it is Government, business or ourselves.

  Professor Tombs: Just to go back to the more general issue, I am going to be a bit crafty here and I am going to put on my academic hat. I am a Professor of Sociology who has researched this area for many years. I see no evidence whatsoever. David referred to the rhetoric around the effects of regulation, and you used the phrase "regulatory burden". There is actually no evidence that I know of, and I have been looking at this area for some 15 years, that increased regulation of business leads to a decline in productive activity, leads to something called an increase in risk-aversion or leads to a decline in investment. In fact, there are very many good arguments why regulating business more effectively, in a whole series of areas, not just in terms of health and safety, how creating equal conditions of competition amongst all companies, so that the companies which are complying with the law are not carrying an unfair burden in terms of costs of compliance, that creating a level playing-field actually improves levels of productivity and improves the health of a sector.

  Q53  Chairman: When you say there is no evidence, just to press you on this point because it is important, amongst the people who have suggested what I have said about the regulatory burden include British Gas, the NHS Confederation in the public sector, the British Retail Consortium, the Business Services Association and the CBI. Can you explain, because obviously you deal with those industries, why such a broad range of bodies all misunderstand the legislation in the way that they do?

  Mr Bergman: I will make just one, brief point, to say that in relation to any proposal that technically could be difficult or create difficulties for business as suggested by Government, or suggested by others than the Government—it is typical for that sort of language to be used, by business, it is not in a specific response to this particular offence. I do not think that these particular organisations which make this point are really making a comment about this Bill, they are making a political point in order to try to counter the people who may be wanting to make changes to the current Bill or perhaps even to try to prevent the Bill from being enacted in the first place.

  Q54  Mr Clappison: You have argued that the offence should apply to all employing organisations, not just incorporated ones; that would include, for example, partnerships. Could you say a little bit more about how you would approach this issue?

  Mr Bergman: First of all, we approach this issue on a matter of principle. One should go back to, for example, the Government's consultation document in 2000, where the Government itself proposed that the offence should apply to unincorporated bodies. Clearly, in 2000, the Government thought it was practical for that to take place. In our view, when you have an opportunity to create a new offence of manslaughter, like this one, it should be as inclusive as possible and it should apply to all businesses and all undertakings. A public body, or a partnership, or other forms of unincorporated associations, can create the same kinds of risk and cause the same deaths as those businesses that are set up for profit, so, in our view, in principle, any new offence should apply to them. The Government accepts that there are no technical problems in applying this offence to them. We say in our response that, first of all, many unincorporated bodies have the same stability of management as private companies. It is true that they do not have a current duty of care but it is easy to legislate that, so that, for the purpose of this particular offence, they do have a duty of care. We do not see any particular obstacles that should prevent the offence applying to unincorporated bodies. The debate has been going on for 15 years. This is a "once in a generation" opportunity perhaps. I do not know. Clearly, it has been a long time and it is important that this Bill, if it does goes through, is inclusive. Although there may not be many situations that are known now where an unincorporated body has caused a death, if that is the case undoubtedly there will be cases in the future and if we create a Bill that does not allow for that unincorporated body to be prosecuted there will be cries of "injustice" and why not try to avoid that possibility.

  Professor Tombs: Going back, in a sense, to first principles, one of the reasons why we are here, and people around this table know this better than I do, is partly because of the kind of landmark prosecution that failed following the Zeebrugge disaster and then, through the nineties, the emerging sense that the law simply could not be applied to certain kinds of undertaking, large companies, and a sense of outrage, I think, a sense of injustice to which David has just referred. That is why, I think, as a principle at this moment, all things being equal, that where possible, this offence needs to be as inclusive as possible. Otherwise we will be in the same situation -4, -5, -10 or 15 years down the line, where a sense of injustice emerges because certain Crown bodies or certain unincorporated entities are not covered by the law and there appears to be, popularly, the sense that the law applies to some kinds of organisations and not to others.

  Q55  Mr Clappison: On the same general theme of getting it right now, as it were, in general terms you seem to welcome the idea of linking corporate guilt to management failure. Can you say why you favour this approach over other options which we have heard about, and no doubt you are aware of and you have heard of this afternoon, such as corporate culture?

  Mr Bergman: What you have got to recognise is the way this debate has developed in Britain. In 1994 the Law Commission came out with its First Report and then in 1996 was the key Law Commission Report which proposed a new offence of corporate killing and the concept of management failure was inherent in that particular Law Commission Bill. The Government in 2000 then supported that Law Commission Bill. Our view is that there are alternative ways of creating a new offence. In Australia the concept of "corporate culture" is used, in America a vicarious liability with a due diligence test is used. These are all perfectly possible tests that could apply but we are a practical organisation and clearly we had to engage with what was the offence that was really being discussed at the heart of Government and that was the offence which had the concept of management failure. Therefore, we have been looking at that offence, looking at management failure, because of the fact that the Government has been proposing that.

  Q56  Colin Burgon: CCA have got some concerns about the way "senior manager" has been defined in the draft Bill. Could any definition of "senior manager" avoid the risk that companies will seek to avoid liability by delegating that responsibility below the level of senior manager?

  Mr Bergman: This senior manager test is perhaps at the heart of criticisms of this Bill. Really it is a serious restriction compared with what had been proposed by the Law Commission and supported by the Government in 1996 and 2000 and does limit severely the circumstances in which a company or organisation will be able to be prosecuted, because you have to show the way in which the organisation is managed by a senior manager. In our view, we understand why it may have been inappropriate for the Government to have supported the previous proposal which simply required a management failure, the reason being that it would have allowed an organisation to be prosecuted simply perhaps on the basis of failures at a supervisory level. If these supervisory failures were sufficiently serious they could be deemed to be a management failure that could result in a company being prosecuted and we can understand the Government's concerns about that. However, what we are concerned about is that the Government does not go the other way and make it effectively so difficult to prove the offence that the company escapes culpability where there are serious failures within an organisation. What we are proposing is that there is an alternative test for culpability, along with the current one, so that where you had a management failure in an organisation and that management failure was known about, or ought to have been known about, by a senior manager, and obviously that management failure fell far below what could be reasonably expected, in those circumstances a company would be able to be prosecuted. I am sorry that I did not actually answer your key question, whether it is a real danger that companies will delegate responsibilities down. I think that is exactly what is promoted by this Bill and that is why it is a dangerous Bill, apart from being not a fair Bill, because increasing incentive is opposite to the one that the Government is supporting in relationship to its other health and safety policies where it wants responsibility to be at the top of an organisation. It is interesting that the Health and Safety Executive commissioned the consultants Greenstreet Berman to do a survey of company directors and see whether or not, in their particular companies, they had appointed a director in charge of health and safety. In relationship to those companies that had not and in relationship to those companies that had delegated responsibility down, one of the main reasons why the companies had done that was because of the forthcoming corporate manslaughter legislation. Of course, if you were a good corporate lawyer, that is what you would be suggesting, not to the good companies, the good companies no doubt would be adopting best practice, but to those companies which wanted to try to limit their exposure as much as possible clearly that would be the best advice to give.

  Q57  Chairman: Can I pursue this further because I want to understand it. If you have the senior manager test, if something went badly wrong at a lower level, as it were, and it went to court, and you went back through the minutes of the board and it was clear that a company had devolved responsibility downwards, in a conscious act, would it not be possible still to prosecute the senior management, as it were, for responsibility for that decision, in other words, for pushing it down? This is quite crucial to our entire discussion, I think, as to whether there is sufficient in there to catch the company that has deliberately devolved responsibility down or whether there is not.

  Mr Bergman: You are absolutely right and that is what the Home Office's position is, that it would be possible to prosecute a company on the basis of grossly negligent delegation, in effect, but you would have to show that delegation was grossly negligent. If you had a failure, a very serious failure, at a company level and that failure may have been known about or there may have been some understanding at a board level, but that failure at that senior manager level was not one that fell far below what could be reasonably expected then you would not be able to prosecute the company. You can prosecute the company only when the failure at a senior manager level fell far below what could be reasonably expected. You can have a situation where you had a very serious failure at a factory level, let us say you can show that serious management failure was the responsibility of a senior manager at that factory level, but that senior manager would not be defined necessarily as a senior manager in the context of this particular Bill. In order to connect that failure to the company in order to prosecute them for manslaughter you would have to show that the failure was at another level within the company, and often that is very difficult to do, particularly if you delegate responsibility down.

  Q58  Colin Burgon: Continuing this point, you point out that by focusing on failures by senior managers the proposed offence would apply unequally to small and large organisations. Is it possible to avoid this problem if the concept of senior management failure is maintained, and if so how?

  Mr Bergman: I think the senior manager test needs to be revised. It needs to be revised in order to ensure that it is not only situations where there are greater failings at a senior manager level which can allow a company to be prosecuted, a company should be able to be prosecuted where very serious management failures were lower down in the organisation and were known about, or ought to have been known about, by senior managers. Why we say that it is discriminatory against large organisations is because large organisations can delegate down and can escape accountability in the same way as they can at the moment, it does not deal with the current failure that the law is supposed to be dealing with.

  Q59  Justine Greening: Moving on now to what constitutes a relevant duty of care, the draft Bill talks about an offence being created if there is a gross breach of a relevant duty of care. I understand that duty of care has been built very much around the concept of negligence and I know that the CCA has expressed some concerns about that sort of definition, pinning it to negligence. Can you tell us what additional duties legally you think are owed by organisations, which you think should be on top of the negligence definition, if you like? Which ones are relevant and why?

  Mr Bergman: I think the important thing to recognise is that we accept that you have got to ground the offence in a breach of some kind of duty. The Home Office did not have to latch on to civil law duties of care. In fact, it is very peculiar, if you think about it. Why do you bring in civil law principles into a manslaughter offence, it is a bit peculiar, and in fact the Law Commission, in one of its reports, which we note in our report, were against that, they thought that you just should not be using civil law principles. The other duties which exist are the duties that companies are being prosecuted for every day of the week. The duties contained in safety at work legislation are statutory duties. In our view, it would be much more appropriate, either instead of or in addition to the duty of care principles, to ground the offence in relationship to those statutory duties. These duties are very well known, they have been around for 30 years, companies have to abide by them every day and inspectors come to their work places, inspect and ensure compliance in relationship to them, so why not use those?


 
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