Construction firms were fined over £720,000 in the first six months of the HSE’s Fees for Intervention (FFI) cost recovery scheme. But that’s only the beginning of the story. In its latest six-month review the HSE reveals that the number of invoices and revenue generated is increasing.
This is not a paywall. Registration allows us to enhance your experience across Construction Management and ensure we deliver you quality editorial content.
Registering also means you can manage your own CPDs, comments, newsletter sign-ups and privacy settings.
There is clear evidence, too, that construction sites – with their relatively high levels of accidents and fatalities – are being specially targeted. In September a campaign of unannounced site visits focused on the construction sector. This mirrored a similar month-long campaign earlier in the year when, out of 2,607 site visits, basic safety standards were deemed to be breached at nearly half of them. A total of 631 enforcement notices were served for poor practice and there were 539 prohibition notices ordering dangerous activities to stop immediately. It’s also worth mentioning that fines are cumulative: the longer the inspectors remain at your site, the more it costs.
Case study: Watch the waste
A Midlands construction site was targeted for inspection and ruled to be in breach of health and safety regulations in a number of areas, the most important of which was the failure to manage waste materials and keep access routes, into and within the site, clear. Inspectors spent two and a half days on site investigating breaches and advising on putting them right. They returned a week later to check the work had been carried out. The company received a bill for £2,840, payable within 30 days. What’s more, it saw its insurance premiums increase by 15%.
But the consequences of failing to take FFI seriously extend beyond the issue of fines. Insurers in particular are looking for a robust attitude to compliance. A company which accumulates a series of fines will very quickly also have to face up to higher premiums and tougher policy terms.
Even companies with immaculate claims records are likely to see their insurance costs rocket if they build up a poor FFI history. Underwriters are already using online FFI evidence to assess risks in the construction sector. So your fines record will become as much a part of your risk management profile as your claims experience.
The question is, what can firms do to protect themselves against this extra regulatory burden and the associated costs? Compliance is the first and probably the only answer. The HSE guidelines are strict. Indeed, for the most serious breaches, they have the powers to close a site indefinitely. So there is every reason to ensure that your company complies with the rules. Even a relatively small fine can have a serious impact on your cash flow as well as your reputation and insurance costs.
Before the HSE inspectors descend on you, build up a clear picture of your health and safety obligations. Many businesses turn to their insurance broker to keep them on the right side of H&S rules. A specialist broker with experience in the sector can quickly identify the accident black spots and the potential hazards that an inspector will jump on. Unstable structures, accumulating waste materials, poor machinery maintenance records… these are some of the tell-tale signs. And the cost of putting a site in order will be a fraction of the mounting burden of fines and insurance bills.
Formulating a robust health and safety policy to keep your business on the right side of the rules ideally means involving your broker in your business plans. Risk management and health and safety policies flow from your overall strategy. As the HSE spreads its net wider and actively scrutinises the operations of more firms, those not meeting their mandatory obligations under the health and safety regulations will end up paying dearly.
So it is vital to take action now, as an FFI fine will inevitably create uncertainty for your business. The costs is counted not only in the fines themselves but in business interruption and also through higher insurance premiums. Your broker can help you avoid this scenario, and also create long-term stability for your business by building risk management strategies and closer relationships with insurers.
Richard Davies is a corporate director at insurance broker O’Connors.
