Home >Forcing small businesses to pay for health and safety inspections would add to red tape woes, says Forum of Private Business

Forcing small businesses to pay for health and safety inspections would add to red tape woes, says Forum of Private Business

23 January 2013

A bid to force small businesses to pay for their own health and safety inspections is being criticised by the Forum of Private Business...

A bid to force small businesses to pay for their own health and safety inspections is being criticised by the Forum of Private Business.

Under the 'Fee for Intervention' proposals, which are set to come into force October 2012, firms deemed to be in 'material breach' of health and safety regulations by the Health and Safety Executive (HSE) would be forced to pay inspectors' hourly rates from the moment the inspection begins - regardless of when a breach is detected.

Forum members are concerned that this would be unfair, and that the HSE's drive to recover costs could lead to a heavy-handed approach and inconsistency from individual inspectors over what constitutes a breach in the first place.

“Businesses which deliberately flout health and safety rules should be brought to task but this is not how the vast majority operate - clearly it is not in their best interests to allow lax health and safety procedures to exist. Our members want help, guidance and support, which is what our Health and Safety Guide provides, not ever more threats of financial penalties,” said the Forum's Chief Executive, Phil Orford.

“The delicate balance of trust between small business and regulators, which has shown tentative signs of improving recently, could be further complicated by what subjectively constitutes a 'material breach' according to different inspectors, creating in all likelihood a postcode lottery for businesses concerning health and safety compliance and enforcement.

“We want every government department to understand the significant financial demands on business at present, in this case from consultants and the HSE itself. There needs to be greater understanding shown by enforcement officers that firms face a number of inspections from multiple agencies across all aspects of their business.”

The initial consultation into the Fee for Intervention proposals took place in October 2011. Following continued lobbying by the Forum, which last week submitted its concerns to a House of Lords committee tasked with scrutinising the plans, they will now be reviewed.

The Forum is putting forward evidence showing that business owners have serious doubts about the proposed system of charges. They are also calling for significant measures to ease health and safety red tape.

In May 2012, just 3% of the Forum's Health and Safety Panel members argued that businesses should pay the full cost of the Fee for Intervention operation. A total of 62% felt that recovery costs should be scaled according to the size of a business and more than 90% that either the size of the business or the seriousness of the breach should have an impact on the level of costs.

The panel was also asked to comment on the Government's Löfstedt review of health and safety regulation. In all, 87% of panel members agreed with the review's strategic aims, with the focus on common sense and streamlining laws particularly welcomed.

Business benefits of good health and safety

The Forum's Health and Safety Panel members felt that the business benefits of good health and safety practices and policies were greatest locally, notably amongst caterers, garages and manufacturers, with 48% stating they believe a good health and safety policy gave them a competitive advantage in their local area.

In all, 42% of businesses felt that the HSE should be given authority over local enforcement activity as this would potentially lead to greater consistency, citing its expertise and existing geographical inconsistencies in enforcement.

However, 57% of respondents disagreed and there were real concerns that the HSE's approach would be too heavy handed - despite recognition of the benefits of putting in place good health and safety procedures.

Respondents said the advantages include that it gives the perception that the company is better organised than its rivals, strengthens local reputation and allows them to compete more effectively for tenders.

Good health and safety was also seen by panellists as useful in terms of reducing staff absences so that work can be completed in a timely and effective manner.

In terms of support wanted by businesses, many believed the HSE should issue more free advice leaflets - 89% of members surveyed found the Forum's Health and Safety Guide to be a useful tool.

Contained within the Forum's practical health and safety package, and complete with sample health and safety policy templates, the step-by-step guide gives business owners the peace of mind that they are legally compliant and helps them provide a safe working environment for their employees and customers.

"We have found the Health and Safety Guide a useful tool in dealing with all our health and safety needs,” said Forum member Vernon Bradshaw, of Valerie Ann Leisure Ltd in Stockport.

“We also appreciate the legal expenses insurance included with membership of the Forum of Private Business, which covers our business for up to £75,000 for health and safety prosecutions."

Health and safety red tape a growing problem

Despite the Government's well-publicised deregulatory agenda health and safety red tape is an ever-increasing barrier to small business success and economic growth.

Last year the Forum's 'cost of compliance' survey found that administering health and safety leaves the UK's smaller employers with a combined annual bill of £3.8 billion.

Unlike large companies, these firms do not have internal resources dedicated to complying with regulations. Business owners or key senior managers are forced to devote a large amount of time to form filling - according to the Forum's research an average of almost 40 hours each month - or they have to pay for an outside consultant, which can be extremely expensive.

Overall, based on data provided by members who took part in the survey, the total annual cost of legislative compliance for smaller employers is £16.8 billion - comprised of £11 billion in internal costs and £5.8 billion for external contractors - which is £14,200 per firm on average. External health and safety support costs almost £986 million per year.

The Forum is urging the Government to create better access to simple, consistent advice about health and safety compliance in order to reduce the need for costly outsourcing.

Of the recommendations made in Lord Young's recent review of health and safety legislation, businesses on the Forum's Health and Safety Panel were most positive about a proposal to consolidate health and safety regulations into a single set of accessible regulations, with 86% of panellists supporting this.

The scale of the problem is further evidenced by the latest 'Business Perceptions Survey', published last month and carried out on behalf of the National Audit Office, the Better Regulation Executive and the Better Regulation Delivery Office, One-third (33%) of businesses believe that complying with all regulations has become more time consuming over the past 12 months.

Interestingly, fewer businesses believe that overall regulation levels are an obstacle to success compared to three years ago, with the number indicating this falling from 62% in 2009 to 55% in 2012, but the research shows this time cost is disproportionately affecting small and medium sized firms compared to bigger companies.

Complying with health and safety red tape is seen to be significantly more burdensome than other laws across many areas - particularly the time-cost, deemed to be a major headache for 74% of businesses.

Other health and safety requirements reported as more of a problem than other areas of legal compliance include requirements to provide the same information multiple times, finding general advice and support, sourcing information about which regulations apply to specific businesses, keeping up to date with changes and paperwork and form-filling.

When asked about local and national government approaches to regulation, just 31% of respondents said that specific health and safety laws are fair and proportionate - much lower than the figure for all regulations.

Even fewer (22%) believe it is easy to comply with health and safety - again, considerably lower than the overall regulatory picture.

The Forum is also recommending that the HSE phases costs in such a way that smaller firms are not hit disproportionately, and is calling for a service that would allow struggling businesses to pay costs over a more sympathetic time period - one that can be negotiated once the fee has been accepted by the business.