Sentencing Council’s impact assessment-large fine increases for organisations of all sizes

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Sentencing Council’s impact assessment-large fine increases for organisations of all sizes

Published 11 April 2019

The Sentencing Council has recently assessed the impact and implementation of the Sentencing Council’s Health and Safety Offences, Corporate Manslaughter and Food Safety and Hygiene Offences Definitive Guideline, which came into force on 1 February 2016. Its report on this assessment was published on 4 April.

The guideline followed a new model for sentencing based on the culpability of the offender, the risk of harm and likelihood of harm created by the offence as well as any actual harm caused. The guideline has a suggested starting point and range for an appropriate fine linked to the turnover of the organisation. In respect of individuals, factors of culpability and harm also have to be assessed with a corresponding sentencing table. Individuals sentenced under the guideline can receive a range of different sentencing outcomes from a discharge up to two years’ custody.

The Sentencing Council’s assessment relied on data from the Ministry of Justice’s Court Proceedings Database (CPD). It also included a comparison of prosecutions data from the Health and Safety Executive covering a 16 months pre-guideline period and a 16 months post-guideline period. This sample covered a range of high, medium and low fines.

The assessment included a content analysis of the sentencing remarks of Crown Court judges in 71 health and safety cases, after the introduction of the guideline, in order to gain a greater understanding of how the guideline is being used to sentence cases and identify any potential implementation issues.

Health and Safety Offences

The assessment found that there has been an increase in the proportion of organisations sentenced in the Crown Court as opposed to in the Magistrates’ courts (55% in 2017 compared to less than half in the period 2011 to 2015). This is perhaps surprising given that since March 2015, Magistrates’ courts have had the same unlimited power of fine as the Crown Court. A possible explanation for this is that initially the Magistrates’ courts may have been uncomfortable sentencing medium and large organisations given the potential for million pound fines and some larger organisations may have preferred being sentenced in the Crown Court until any initial sentencing patterns had begun to emerge.

The clear finding of the assessment is that fine amounts increased after the guideline came into force for organisations of all sizes with the average fine increasing from £40,500 to £221,700. In the pre-guideline period 17% of organisations received a fine of £60,000 or more, whereas this increased to 51% in the post-guideline period.

The Sentencing Council had suggested during the consultation stage that there would be little impact on micro and small organisations, but this impact assessment reveals an unanticipated increase in the fines imposed. The table above shows that the median fine for micro/small organisations has increased from £20,000 to approximately £45,000.

The assessment also identified an increase in the median fine for medium organisations from £20,000 to £100,000.

Prior to the guideline coming into force, the Sentencing Council anticipated that more serious offences committed by larger organisations would result in higher levels of fines and this is supported by the findings of the assessment, with Large and Very large organisations showing the most marked increase in the median fine - from £25,000 pre-guideline to approximately £370,000 post-guideline.

For individual offenders, there has been an increase in the number of adults convicted of health and safety offences since the guideline was introduced with approximately 200 convicted in 2017 which reflects a steady increase from approximately 145 in 2011.

There has been a small increase in the number of individuals who have received custodial sentences  which has gone from approximately 4% in 2016 to 6% in 2017. This increase is hardly surprising given that no specific guideline previously existed for individuals committing health and safety offences and judges are now obliged to consider a custodial sentence even if the offence is one of low culpability. The proportion of individuals receiving a fine has also increased by a similar percentage.

There has been an increase in the size of fines for individuals with the average fine increasing from  £6,300 to £8,200.

In respect of sentencing cases for individuals, the most common mitigating factors cited were ’good character and/or exemplary conduct’ and the most common aggravating factors cited were ‘previous convictions’ and ‘cost-cutting at the expense of safety’.

Corporate Manslaughter

The Sentencing Council found that there was a small increase in the fines imposed on organisations sentenced for corporate manslaughter, but urge caution in the analysis of these figures due to the low volumes of convictions. In fact the analysis was limited to only 10 cases pre-guideline and 6 post-guideline. This decline in prosecutions post-guideline was anticipated, in our view, in light of the likely higher fines for health and safety offences.

From DAC Beachcroft’s own analysis of the level of fines in all corporate manslaughter cases to date, we found that the average fine for the 14 organisations convicted of the offence since its introduction in the pre-guideline period was £268,041. The average fine for those organisations convicted since February 2016 is £500,640 which represents a significant increase.

However, the Sentencing Council is correct to be cautious about interpreting the results of fines for corporate manslaughter given the limited number of convictions to date, especially since differences between defendant organisations in terms of financial resources and whether a sentence followed a guilty plea or a conviction after trial can significantly influence the level of fine imposed.

Food Safety and Hygiene Offences

The vast majority of organisations are sentenced in magistrates’ courts (97% in 2017). The assessment found that there was an increase in the size of fines imposed on organisations sentenced for food safety and hygiene offences, albeit less pronounced than that for health and safety offences. The average fine rose from £2,200 pre-guideline to £7,100 post guideline.

For individuals, in the post-guideline period, a fine was imposed on 92% of offenders, 3% received a suspended sentence, 2% received a community order and less than 1% were sentenced to immediate custody. There was a small increase in the level of fine from £930 to £1,300.

Correct Application

An analysis of Crown Court transcripts for sentencing of organisations and individuals indicated that the guideline was being correctly followed in the majority of cases. This is supported by the results of its analysis of a sample of Court of Appeal judgments which suggests that fewer appeals have been successful following the guideline’s introduction. The Sentencing Council has therefore concluded on the basis of its impact assessment that the guideline is being correctly applied.

Comment

The Sentencing Council does intend to investigate further the operation of the guideline in due course at which stage it will consider whether any revisions are required. On the basis of this impact assessment,  we do not expect any revisions in the foreseeable future. However, in our view, it is difficult to attach any significant weight to the conclusions from the assessment, especially in relation to health and safety offences given that the analysis was limited to a 16 month period prior to and post February 2016. The purpose of the guideline was to ensure greater consistency but there does not appear to be any detailed analysis of that. From our own experiences, the sentencing brackets are extremely wide and it is still difficult to predict the likely penalty to be imposed.

It is also worth noting that the impact of the guideline on ‘not-for-profit’ organisations has not been considered  and in our experience the approach to sentencing of such organisations can vary considerably.

The overall results are of no great surprise given that we are already aware from the Health and Safety Executive’s enforcement statistics of the increases in fines since the introduction of the guideline. For example, the Health and Safety Executive’s statistics show that there were only 5 organisations fined £500,000 or more in 2014/15 but this increased to 38 cases in 2016/17 and 45 cases in 2017/18.

There appears to be no appetite at this stage for providing more detailed guidance for fining ‘Very large’ organisations. Such organisations currently fall to be fined in accordance with the sentencing tables for ‘Large’ organisations i.e. those organisations with a turnover of £50m and over.

In due course a more detailed examination of the fines imposed upon smaller organisations may be warranted as the fines imposed upon them are likely to represent a greater percentage of their turnover and profit compared to larger organisations.

For the time being, the Sentencing Council appears to be confident that the guideline is achieving one of its key objectives of ensuring that fines are sufficiently substantial to have a real economic impact.

Authors

Chris Baranowski

Chris Baranowski

Leeds

+44 (0) 113 251 4842

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