In the aftermath of the judge handing down a £5 million fine last week to Merlin Entertainments, owner of Alton Towers, Paul Paxton, the Stewarts Law solicitor representing the victims of the Smiler ride accident, said: “Money alone will never replace limbs, nor heal the psychological scars.”
While money cannot undo what has happened, the scale of the fine could be a wake-up call to other visitor attractions to ensure that they tighten their safety regimes and avoid similar accidents.
What is clear is that, coming just days after Network Rail was fined £4 million for safety failings in connection with the death of the actress Olive McFarland, the judge was sending a strong message that the financial penalties after serious accidents are no longer going to be mere pinpricks — they will lead to gashes to the balance sheets of culpable businesses.
The context for the Merlin and Network Rail penalties is the new sentencing guidelines for health and safety offences that came into force in February. As Chris Green, of Weightmans, says: “Following the new guidelines, the penalties for industrial accidents are just rocketing.”
Already the impact of the penalties has been extraordinary. “It’s been a game-changer,” says Chris Morrison, of Clyde & Co. “While we don’t have all of the data yet, we can safely say that fines relating to Health and Safety Executive prosecutions in the first six months post the guideline are significantly greater than the whole of the previous year,”
In effect, as Green explains, a new scale of penalties has been introduced based on the erring company’s financial turnover (as opposed to profitability). “For example, there was recently a case of a care home that had a fatality for which they were held responsible and the fine was £1.5 million on a turnover of £12 million,” Green says. “Not so long ago £500,000 would be regarded as the top end for corporate manslaughter in practice, while an accident which was a non-fatality would be £100,000. So you can see the size of the increase.”
High though the penalties such as Merlin’s have become, they could be much higher. Because Merlin pleaded guilty it automatically reduced its tariff by a third.
Andrew Sanderson, of Fieldfisher, says this level of discount could be seen as controversial. “What it means is that the bigger the fine, the bigger the reduction, and some people regard that as unjust. While pleading guilty does save court time, the perceived financial benefit for the business of a discount may be viewed negatively.”
It is important to remember that none of this money goes to the victims or their estates — it goes to the government.
As Keith Cundall, of Irwin Mitchell, says, the victims are still primarily reliant on compensation for financial loss from the company’s insurers, which will depend on individual circumstances. Mere loss of life (as in the case of a child) leads to a bereavement award of less than £13,000.
So the purpose of the higher penalties is not just to punish, but to prevent. “It’s a way of encouraging boards of directors to become much more hands-on when it comes to health and safety,” Green says. “Traditionally some directors have been happy enough to delegate health and safety to safety specialists and let them get on with it. Now, because of the level of potential fines, there is a big incentive to take much more interest and to ensure that standards are kept high.”
One consequence of the rise in penalties is that auditors are taking a much greater interest, because they could have material bearing on the state of a company’s financial health.
This comes at a time when the number of fatal injuries (in the 140s each year) seems to be levelling off after many years of sustained reduction. It may be that a degree of complacency has set in that needs to be disrupted to jump-start further reduction.
That is why the shared view of lawyers in the health and safety field is that Brexit is unlikely to make any significant difference. “The foundation of our legislation is the Health and Safety at Work Act, which dates back more than 40 years,” says Helen Devery, of BLM. “While some new regulations came from Brussels in the 1990s, that simply reflected a process of modernisation. There is no demand for a repeal of health and safety legislation among my clients.”
If there is a need for change, Devery adds, it may be at the more pragmatic level of recruiting many more specialist health and safety judges for the magistrates courts.
However, perhaps the biggest threat to health and safety, says Paul Dean, of HFW, comes potentially from financial cost-cutting in industries feeling the pinch. “I was at a conference in Dubai last week,” he says, “and heard a presentation at on offshore supply vessel [OSV] forum about saving costs on safety in the current difficult market. I was troubled by this.”