Prospect fears that stronger penalties for health and safety and corporate manslaughter offences would lead to greater strain on the Health and Safety Executive’s resources have been realised.
The Sentencing Council has just published an assessment of a sentencing guideline that came into effect in 2016.
One of the key findings was that mean and median fines had increased more than five-fold.
But the effectiveness of deterrence is linked to the perceived likelihood of being caught.
Given that the number of prosecutions mounted by the HSE has dropped in each of the past three years, the guideline would be far more effective if we had an adequately resourced regulator.
Punishment and deterrence
Sentencing offenders serves various purposes in the interests of justice. But in health and safety cases – where most offenders are companies receiving a financial penalty – punishment and deterrence are the most relevant.
Courts have a legal duty to impose fines that reflect the seriousness of the offence and which take the offender’s finances into account. Without this, punishment and deterrence – and ultimately justice – may not be served.
But for years, courts did not impose penalties that adequately punished law-breakers and deterred would-be offenders.
The Sentencing Council agreed. In 2014 it launched a consultation on a new health and safety and corporate manslaughter sentencing guideline, which would spell out how courts in England and Wales should set fines.
The guideline came into force in February 2016 and the Council said that fines for large companies committing serious offences would now have “real economic impact”.
Prospect supported the guideline, but we had concerns about the extra pressure it would put on our already stretched members in the Health and Safety Executive.
Assessment of the sentencing guideline
The Sentencing Council recently released an assessment of the guideline. It found that fines have increased across the board, not just for large companies as it expected. But is the guideline serving the interests of punishment and deterrence?
Before the guideline came into force, fines were often appallingly low. HSE figures show that in 2007-08, the average fine per breach successfully prosecuted by the HSE was £12,896. Excluding exceptionally large fines, it was just £7,809.
This is peanuts to large companies. A firm with a reasonably modest revenue of, say, £15m will turnover £8,000 in a little under five hours, assuming round the clock operations.
A household name with a revenue of £500m will turnover £8,000 in 8.5 minutes.
Under the new guideline, turnover is used to calibrate the fine to the size of the business. Offending businesses are placed into one of four categories:
- micro – a turnover of less than £2m
- small – between £2m and £10m
- medium – between £10m and £50m
- large – more than £50m.
Judges cross reference the size of the company with the level of harm risked in the offence and the likelihood of that harm occurring, which gives an appropriate starting point for a fine.
Courts can set a higher starting point for organisations with a turnover that “very greatly exceeds” the £50m threshold, but specific guidance is vague.
Courts then assess the offender’s culpability and financial health, among other factors, to fine tune the punishment. There are nine steps the court must progress through to arrive at the appropriate penalty.
The average fine for an offence has increased since the guideline came into force.
HSE figures show that, last year, each offence successfully prosecuted resulted in an average fine of £99,746 – almost seven times bigger than ten years ago.
The Sentencing Council’s assessment compared fines received in the 10 months before the guideline came into force with those in the 10 months after.
Before the guideline, the mean fine was £40,500 and the median was £12,000.
In the post-guideline period, the mean and median increased to £221,700 and £60,000 respectively – a more than a five-fold increase.
The biggest fine – £5m – was handed to a Merlin Entertainments subsidiary over an incident at the Alton Towers theme park, where 16 people were injured when two carriages collided on a roller coaster.
The Council also looked at how fines for different sizes of organisation had changed.
The median fine for large or very large firms increased from £25,000 to £370,800.
The median fine for a micro or small organisation increased from £20,100 to £45,200.
For medium companies, it rose from £20,000 to £100,000.
The Council didn’t expect this. It intended fines for large companies to increase, but didn’t think those given to small and medium companies would change.
The assessment concluded with the Council saying it would consider whether the guideline requires revision.
Prospect’s concern that the guideline would lead to greater strain on the HSE’s resources has been realised.
Unfortunately, the Sentencing Council did not consider this in its assessment.
The higher financial risk has two primary consequences for cases: large companies are far more willing to pay for top barristers to represent them, even when pleading guilty; and magistrates – which, before the guideline, heard most cases – are nervous about imposing large fines. Instead, the job tends to fall to the Crown Court or a district judge.
These two factors mean more legal wrangling for inspectors, while courts have higher expectations around timeframes, presenting evidence and legal argument.
A more rigorous justice system in itself isn’t a bad thing, of course, but it does place greater strain on an underfunded regulator. And, as the Treasury receives the fine, the HSE does not see any benefit for its extra work.