Select Committee on Home Affairs and Work and Pensions First Report

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
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

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