15 COST
341. The Government argues that the proposed offence
would not create any new regulatory burden and that major costs
should only, therefore, be incurred by companies who currently
fail to have adequate health and safety arrangements in place.[461]
Its regulatory impact assessment does however, anticipate the
following additional costs to industry and the state:
| Costs to Industry:
|
|
| Defending the additional 5 prosecutions a year expected
| £2.5 million |
| Legal advice on the new proposals | £6 million
|
| Additional training costs | £6 million
|
|
| Costs of prosecuting new offence
|
| Courts | £83,000 |
| Crown Prosecution Service | £150,000
|
|
| Total: | £14.7 million
|
342. The Government has pointed out that this total cost amounts
to less than 0.1% of the costs incurred by the state, industry
and individuals by work-related injuries, estimated at between
£20 billion and £31.8 billion in 2001/02.[462]
Accordingly, it argues,
even a very small reduction in work-related deaths and injury
would allow the costs to be met.[463]
343. However, we heard very mixed views on whether
we should expect the number of deaths related to death and injury
to reduce as a result of the enactment of this Bill. Mr Bill Callaghan,
Chairman of the Health and Safety Commission suggested to us in
oral evidence that we might see such a reduction "all other
things being equal".[464]
344. However, CMS Cameron McKenna LLP believed the
Government was making a "questionable" assumption. They
argued:
"There is a notable dearth of evidence supporting
the deterrent effect in individual offending generally, and in
the health and safety sphere for companies in particular. We question
whether deterrence can operate at all at the level of inadvertence
and unconscious risk taking which is the typical characteristic
of work place accidents. Claims about deterrent effect beg serious
questions about the individual and collective behaviour of individuals
in large organisations. There seems to be a confusion here with
the issue of pursuing 'compliance' strategies, which are conceptually
quite distinct from deterrence and form part of complex regulatory
structures (like that of the HSWA). Even more questionable is
how there can be a 'marginal deterrent' effect from an offence
which carries the same unlimited maximum fine as a serious health
and safety offence . Certainly no evidence has been put forward
to help understand how such an effect would work, or what other
(less desirable) consequences might also arise".[465]
345. The Government's regulatory impact assessment
also made the following further points related to cost:
- the five additional prosecutions
expected annually should not be treated as entirely new since
health and safety charges would be likely to have been bought
in such cases;[466]
- the offence would have a beneficial impact on
small and medium enterprises (SMEs) by creating a "level
playing field" by making it easier to prosecute larger companies
for corporate manslaughter;[467]
and
- there would be no additional costs of investigation
to the Health and Safety Executive(HSE) or the police as the HSE
already investigate work-related deaths and major public incidents
are already subject to full police investigation.[468]
346. Some witnesses agreed with the Government and
did not anticipate large additional costs.[469]
347. However, many did consider that the proposals
would have significant cost implications.[470]
Some believed there would be an increase in spurious claims if
the Bill were enacted costing companies money in defending themselves.[471]
The Confederation of British Industry, for example, commented:
"[t]he expectation by the Home Office, that
the offence will attract no more than five prosecutions a year,
is a heroic assumption. There is a significant possibility that
pressure groups will seek to press for prosecution in a much larger
number of cases…it will be tempting for enforcers to put
forward corporate manslaughter papers to the CPS rather than justify
inaction and poor usage of the new law to a sceptical section
of the public".[472]
348. The Crime Committee of the Police Superintendents'
Association believed the Bill would result in protracted and
resource-intensive police investigations.[473]
Others argued that the Bill would put pressure on companies to
move towards formally certified Health and Safety Management systems
with additional costs.[474]
It was also feared that
the Bill could discourage foreign investment.[475]
349. Some industry groups also warned that the Bill
might encourage "risk averse" behaviour which would
result in some costs.[476]
The Railway Forum, for example, warned that "the prevalence
of a 'safety at any price' approach in many areas has had serious
consequences, particularly with regard to industry performance
and cost".[477]
However, the Centre for Corporate Accountability dismissed such
arguments. Mr Bergman, Director of the Centre, argued, "[W]e
are very sceptical of a lot of 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".[478]
The Railway Forum also pointed out to us that "[R]isk aversion
is an outcome of confusion, to be blunt, people not understanding
what they are meant to be doing or felling disorientated".[479]
350. EEF, the manufacturers' organisation warned
that some consultants might try to captialise on such misunderstanding
and "unscrupulously exploit the passing of the legislation
in order to generate business to convey false messages about what
actually is required".[480]
We also heard evidence that the Bill would in fact have a disproportionate
impact on SMEs since they would have less resources to consider
the new offence and might be more likely to rely on such consultancy.
Dr Janet Asherson from the Confederation of British Industry argued,
"[T]hey may overreact and pay more, comparative to their
profit base or to their running costs".
[481]
351. The Local Authorities Co-ordinators of Regulatory
Services pointed out that local authorities are co-enforcers of
the Health and Safety at Work Act along with the HSE. They therefore
felt the Government's regulatory impact assessment should have
considered the costs to local authorities even if they were neutral.[482]
352. We did not receive substantial evidence to
suggest that companies that currently have adequate health and
safety arrangements in place would incur major costs when complying
with this legislation. We recommend that the Government works
with industry advisory bodies to try to educate industry about
the offence and therefore minimise the cost of legal advice and
training.
461 Draft Corporate Manslaughter Bill, para 30 Back
462
Draft Corporate Manslaughter Bill, para 26 Back
463
Draft Corporate Manslaughter Bill, para 55 Back
464
Volume III, Q 525 Back
465
Volume II, Ev 102 Back
466
Draft Corporate Manslaughter Bill, para 39 Back
467
Draft Corporate Manslaughter Bill, paras 46 and 47 Back
468
Draft Corporate Manslaughter Bill, para 39 Back
469
Volume II, Ev 8, 48, 226 and 301 Back
470
Volume II, Ev 199, 301, and 305 Back
471
Volume II, Ev 1, 54, 63, 78, 79, 189, 210 and 253 Back
472
Volume II, Ev 249 Back
473
Volume II, Ev 39 Back
474
Volume II, Ev 37, 53, 54, 63,78, 241, 249 and 272 Back
475
Volume II, Ev 210 and 249 Back
476
Volume II, Ev 40, 77 and 87 Back
477
Volume II, Ev 40 Back
478
Volume III, Q 51 Back
479
Volume III, Q 184 [Mr Lyons] Back
480
Volume III, Q 276 [Mr Schofield] Back
481
Volume II,I Q 364 Back
482
Volume II, Ev 66 Back
| 
