Increasing fines: are they enough to deter rule-breaking?

Commercial Motor
September 27, 2017

 

Breaking the law can be an expensive business for hauliers. What’s more, it seems to be getting more expensive by the year.

In June, by way of example, PCS Recycling had to pay £175,000, made up of a £120,000 fine and £55,000 in compensation, after being found guilty of dumping waste. The two owners of PCS Recycling, a father and son both called Patrick Corbally, were also handed a suspended prison sentence at Snaresbrook Crown Court, but it was the size of the £175,000 fine and costs that stood out.

It is an eye-watering figure for any company to pay – particularly a small one – and it raises an important question for lawmakers: do big fines work? If you make penalties as severe as possible, does it decrease offences?

The answer, some argue, is not as straightforward as might first appear.

Financial consequences

Backhouse Jones transport solicitor Andrew Woolfall says: “It’s one of those issues where the answer depends on the circumstances. If you look at a lot of the headline offences – corporate manslaughter for instance – most companies take them very seriously. Big fines are only part of the picture. They can close a small company, but big companies are as likely to be concerned about their reputation as paying the fine. And they will be worried about financial consequences long-term. Often, the first thing the board of directors will ask is ‘What effect will this have on the share price?’”

Whatever the potential size of the fine, most in the industry point out that only a few hauliers set out with the deliberate intention of breaking the law.

Rothera Sharp solicitor Laura Newton says: “For most of those who end up with convictions it is not a calculated decision, so the size of any fine is not likely to be relevant. But the headlines that a big fine get might make people think about their procedures.”

Newton says hauliers and drivers are often unaware that they can go to prison for offences. Prison sentences can be given, not just for offences that involve death or injury, but also to those such as repeated and planned tachograph offences.

The severity of any punishment for haulage offences is partially dependent on the Sentencing Council (formerly the Sentencing Guidelines Council), which gives guidance to courts on how to decide on penalties. As a result, in some areas the maximum penalties have become more severe. Woolfall points out, for instance, that while the largest punishment for common offences such as overloading used to be £5,000, it is now unlimited. It may be rare, but magistrates’ courts can hit offenders far harder if they see fit to do so.

Woolfall says the increase has been noticeable. “A 10% overload would have received a £600 fine 20 years ago, and is now more likely to be £2,000”.

Company size matters

Newton says that for health and safety offences, the latest guidelines make clear that a company’s size and turnover should be taken into account when a court decides on punishment. The bigger the firm, the heavier the stick that magistrates are likely to use, even if magistrates have, by and large, been reluctant to dish out £10,000 penalties.

However, the potential size of turnover-related fines is likely to stop large companies from regarding some potential fines as a mildly troubling running cost, says James Firth, head of licensing policy and compliance at the FTA.

Among the recent cases of substantial fines being handed out to big firms was the £330,000 fine imposed by Preston Magistrates’ Court in July on food company Dr Oetker, after a driver visiting the firm’s Leyland site was hit by a reversing forklift truck.

However, most solicitors, including Woolfall and Newton, believe it is more likely to be action from traffic commissioners (TCs) than magistrates that worry the hauliers who need frightening into compliance.

RHA deputy policy director Duncan Buchanan agrees: “The whole area is a bit of a minefield, but fines are a blunt instrument. They may be appropriate in the right context but they are not always. You might, for example, want a lifetime ban for someone who manipulates their tacho. Ideally we want a regulatory system that rewards virtuous hauliers and punishes non-virtuous ones.”

Lifetime bans remain rare, but there is evidence that TCs are getting tougher. In June, North West TC Simon Evans banned Christopher Champion from vocational driving for three years for using a magnet to create false tachograph records. In many ways this was a punishment more costly than a fine.

Similarly, Oban-based livestock haulier Donald MacKay was banned for four years by Scottish TC Joan Aitken for using another driver’s digital card on more than 300 occasions . In such circumstances it is possible to argue a lengthy ban trumps a large fine.

The same can be said for less serious offences. In the same month Champion was banned for three years, two drivers were banned from driving for a month by deputy TC Miles Dorrington after using their mobile phones at the wheel. It is not three or four years, but it is enough to hurt. Again, this is likely to be more effective than a fine, particularly because offenders are going to be conscious that a further offence will perhaps result in a longer ban.

Whether fines or the regulatory action of a TC are more effective in keeping hauliers operating more safely might well be a moot point. Often offenders will be faced with both: first a fine when they appear before court, then a operating ban or other restriction when they appear before a TC. The UK regulatory system may not be doing such a bad job after all.

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Commercial Motor

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