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Rarely does a set of legal changes so live up to its dramatic billing.

New sentencing guidelines, introduced in February last year, were widely trailed as the most fundamental change to health and safety enforcement for more than four decades, since the Health and Safety at Work Act took effect in 1974.

The Sentencing Council鈥檚 鈥淒efinitive Guideline鈥� created a nine-step, codified approach to all health and safety and corporate manslaughter offences committed by companies and individuals.

Sentencing was tied to revenue, with large companies turning over 拢50m or more generally falling into a range of fines from 拢6,000 to 拢3m, depending on culpability and harm caused. In certain circumstances, the country鈥檚 biggest firms could face penalties of 拢10m for the most serious breaches or even 拢20m for corporate manslaughter.

Law firm Kennedys has pointed out that large firms would previously have expected a fine of 拢250,000 to 拢350,000 if guilty of failures that caused death, but this would now typically be expected to be about four times higher at 拢1.2m.

Moreover, the guideline advises the courts to give more weight to the harm risked rather than that caused, which adds further uncertainty about the magnitude of the possible fine imposed, given this could in part be down to the judge鈥檚 interpretation of what happened.

The construction sector had particular reason to pay attention: despite accounting for about only 6% of the UK workforce, the nature of the industry means it is responsible for around one-third of work-related deaths.

So, now that the guideline has been in place for 18 months, how much of an impact is it having on the sector 鈥� and is it proving the deterrent it was designed to be?

Year One

By July last year, insurance and dispute resolution lawyer BLM found that of the first 101 health and safety fines issued since the guidelines came into force, nearly 40% concerned the construction industry. These amounted to nearly 拢8m, while the costs of prosecuting those construction companies came to more than 拢350,000.

This summer, another law firm, Clyde & Co, has arguably produced the most significant analysis of the guideline鈥檚 impact yet, given it is based on a full year鈥檚 worth of data and implications.

It found that across British industries, fines of more than 拢1m 鈥� which used to be viewed as the benchmark for a company causing a public disaster 鈥� had become commonplace: 19 penalties were at least this amount, more than the previous 20 years combined.

Nearly 拢77m of fines were collected in that first year, up 111% on the previous 12 months, although construction was by no means the only industry that felt the impact. Manufacturing was the most heavily fined sector at 拢22.7m and attractions giant Merlin was slapped with the biggest penalty, 拢5m, for a rollercoaster crash at Alton Towers, in which 16 people were injured, including two teenage girls who needed leg amputations.

The amount people are hit by is insignificant to the suffering of the victims. The amounts are minimal 鈥� 拢1m fine on, say, a 拢2bn project is absolutely insignificant

Bernard McAulay, Unite

However, construction was fined nearly 拢13m from 1 February 2016 to 31 January this year, with an average just shy of 拢93,000. This was against 拢7.1m the previous 12 months, an 82.8% increase. The highest fine was against Balfour Beatty for a trench collapse on a wind farm project in Lancashire seven years ago.

Monavon Construction received the biggest fine by percentage of turnover 鈥� 27.5% 鈥� across all industries, after pleading guilty to corporate manslaughter when two men died from their injuries as a result of falling through a hoarding and down into a basement while walking past a building site in north London.

The fine 鈥� amounting to 拢550,000 鈥� illustrates a growing fear that SMEs are being particularly hard hit by the sentencing changes.

The guideline鈥檚 central thrust was for fines to be proportional to the size of the company, so large and small firms are impacted in similar ways.

Yet Clyde & Co found big contractors 鈥渁re yet to be fined anything like 0.1% of their turnover鈥�, while SMEs are typically being hit with 1.5% to 3.75% of revenue.

As such, the law change has been far more significant for SMEs, particularly as it comes at a time when more than a quarter of construction companies are exhibiting signs of potential insolvency, according to acccountancy firm Moore Stephens. This is because smaller construction firms are finding it particularly difficult to secure bank lending for projects, hitting their cash flow.

SMEs

However, the Health and Safety Executive (HSE) has been particularly concerned by SMEs for some time. For example, the HSE targeted small refurbishment sites during a month-long drive in 2015, resulting in 692 enforcement notices and 983 notifications of health and/or safety breaches. This exposed problems associated with working at height and exposure to silicon dust and asbestos. The HSE chief inspector of construction said at the time workers were found to have been 鈥減ut at risk to save minutes on the job鈥�.

Rhian Greaves, head of compliance and strategic support at Clyde & Co, says: 鈥淭he most significant impact in the construction sector has been on SMEs. The HSE has spent a lot of time trying to get SMEs to commit to health and safety, given the period they鈥檝e come through [the financial crisis] and margins they make [can lead to cutting corners].

鈥淟arger contractors will probably say 鈥榝air enough鈥� on them receiving a higher proportion of fines, given they have health and safety systems in place. This is an education piece for SMEs.鈥�

Greaves adds that the Court of Appeal has 鈥済enerally been unsympathetic鈥� to those protesting the size of their fines, which is a 鈥済ood indication of where the judiciary is at the moment 鈥� they鈥檝e been waiting for this鈥�.

In other words, the judiciary has believed for some time that more substantial fines were necessary and they are unlikely to let up soon. It is more likely, argues Greaves, that larger firms will see their fines increase to create an industry parity than that those of smaller contractors or subcontractors come down.

Large firms

For now, though, there are concerns the bigger firms are not receiving the type of punishments that will do them any material damage and therefore force them to improve their standards.

For example, unions are concerned by the 拢1.1m fine and costs levied at Crossrail contractor consortium BFK last month after it pleaded guilty to three offences regarding the death of a worker in 2014 and two others who were injured the following year.

The Unite union鈥檚 national construction officer, Bernard McAulay, admits the courts must examine incidents like these on their circumstances before levying penalties, but adds: 鈥淲hen on a multi-billion contract, people will look at the amount people [are hit by] and think it is insignificant to the immediate suffering of the victims and their families. The amounts are minimal to what they could be 鈥� 拢1m fine on, say, a 拢2bn project is absolutely insignificant.鈥�

Accidents don鈥檛 just happen, they鈥檙e caused 鈥� a structure should not just collapse, nor should a crane

Phil Whitehurst, GMB

McAulay even claims that large contractors can so easily afford the penalties that some use them in projecting project costs. He says: 鈥淲hen they tender for jobs they incorporate the level of [anticipated] fine, so there鈥檚 no commitments to improving accountability.鈥�

Phil Whitehurst, the GMB union鈥檚 national officer for engineering construction, adds: 鈥淎ccidents don鈥檛 just happen, they鈥檙e caused 鈥� a structure should not just collapse, nor should a crane. Anybody who enters that site gate in the morning should leave as safely as they arrived, all in one piece. That means the actual fines have to reflect the seriousness of what is being caused.鈥�

The HSE

There were all sorts of rumours prior to the guideline鈥檚 introduction that swirled around the industry. Peter Caplehorn, who chairs the Construction Industry Council鈥檚 health and safety panel, recalls the 鈥渨orry鈥� that the increased fines would essentially be 鈥渞evenue cover鈥� for the HSE.

Although Caplehorn says theses concerns have 鈥渟ettled down鈥� since the guideline鈥檚 introduction, the HSE still finds itself firefighting this suggestion, with its press office frequently correcting articles that make such an implication. An HSE spokesman sighs: 鈥淭he very premise is wrong, we don鈥檛 take any money from the fines.鈥� All fines actually go to the Treasury.

However, the unions are concerned about inspection numbers and think the size of the average fines on smaller firms might also hide the number of failures that are really taking place across the industry.

鈥淭he fines have gone up, but have the number of incidents gone up or decreased?鈥� says McAulay.

His concerns are based on figures obtained by Unite in June following a Freedom of Information request. These showed that only 7,912 unannounced inspections on construction sites took place in 2016/17, a 14% drop on 2015/16 鈥� a year that had also seen a slight fall.

McAulay says: 鈥淭he number of HSE inspections has seen a steady decline [over the austerity years], because people in government say 鈥榗ut, cut, cut鈥�, but it should be about improving standards. It鈥檚 maybe better getting more individuals [who breach health and safety rules] than having an increased level of fines.鈥�

For its part, the HSE agreed to meet Unite. about concerns over the number of inspections, insisting construction is 鈥渁 priority鈥� and that its targeting of interventions and ability to deal with investigations has 鈥渋mproved significantly鈥� in recent years.

However, there are some early signs the new penalty regime is working. For example, the HSE recorded 30 fatal injuries in the construction sector for 2016-17 鈥� this is down from 47 the previous year and is the lowest on record.

Either way, the guideline has clearly renewed pressure on the industry as a whole, with an emboldened judiciary seemingly determined to take advantage of its new sentencing strength.

That means the often eye-watering fines of the past 18 months seem likely to only increase in size, while unions will push for the sort of reforms that could end up in even more inspections and, therefore, further breaches unearthed on the nation鈥檚 building sites.