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10 Jul 2001 : Column 232WH

Corporate Killing

12.59 pm

Ross Cranston (Dudley, North): I am pleased to have the opportunity to raise this subject in Westminster Hall, and in doing so I welcome my right hon. Friend the Minister for Criminal Justice, Sentencing and Law Reform to his new position. He has already given a speech on this subject in the past three weeks, and he is on the case. I look forward to his reply to the debate.

Hon. Members are aware of the public disquiet that arises when the criminal law seems helpless when faced with catastrophic events, such as the Herald of Free Enterprise disaster, the King's Cross fire and serious rail crashes at Clapham, Southall and Ladbroke Grove. There are also other, less well-publicised tragedies in which people are killed and nothing seems to happen. Today I intend to outline why I believe that holding the companies responsible for such tragedies to account in law is both principled and possible.

I begin by drawing the attention of hon. Members to the problems with the law at present. With regard to the tragedies that I referred to, there might well be prosecutions under the Health and Safety at Work, etc. Act 1974. The Court of Appeal, in a 1999 decision—Howe—said that fines for health and safety offences should be of a level that brings the message home to a company's managers and shareholders. Consequently, First Great Western Trains was fined £1.5 million following the Southall crash. However, can we with all honesty say to the public that such action recognises the degree of culpability that should be attached to a company and its management in such tragedies? If we, as a society, can say that motorists who do not intend to kill someone, but do so through recklessness or irresponsible driving are guilty of involuntary manslaughter, how can we absolve the company that pays little regard to the safety of its staff or its customers? When the inquiry judge in the Herald of Free Enterprise case found that the company was infected from top to bottom with a disease of sloppiness, did that not illustrate the need to make companies as accountable as individuals for their actions? Such sloppiness was not the fault of one individual, but of a culture in which safety was very much a secondary consideration compared with profit.

The recognition that companies are responsible for the ethos and the culture that pervades their action is central to the principle underlying an offence of corporate killing. Safety should not simply be seen as secondary, but as an equal part of the problem. Companies and organisations must recognise their place as stakeholders in society. At the recent conference organised by the British Safety Council at which the Minister gave a speech, Sir Michael Latham, chairman of the construction company Wilmott Dixon, welcomed a law that punishes managers who make no serious attempt to protect people on construction sites. He said:


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Having outlined the principle behind an offence of corporate killing, I want to turn to the practice. First, I commend the Government, who have recognised the problem. At the last election the Labour party committed itself to the introduction of an offence of corporate killing. In May last year, the Home Office published a consultation paper based on a 1996 Law Commission report. No implementing measures were mentioned in the Queen's Speech, but I commend the Government for giving a lead on the issue.

I want to discuss the points raised by the Home Office and Law Commission documents. Both show that the ordinary criminal law is inadequate. The Southall rail crash is indicative of the way in which a company's lack of attention to safety led to safety systems on the First Great Western express either being faulty or not being switched on, and inadequate procedures for determining when a train should not be taken out. The Crown Prosecution Service prosecuted the company but the judge halted the trial. The matter was referred to the Court of Appeal, which in February last year upheld the decision of the trial judge on that point.

The result is that, at present, to convict a company of manslaughter by gross negligence it is still necessary to identify the top management of the company as being to blame, rather than to recognise that the company as a whole should be responsible. It is not possible simply to find that the company has a duty of care and has been in breach of it in a grossly negligent way; nor is it possible to aggregate management failures whose cumulative effect is negligence.

When my hon. Friend the Member for Hendon (Mr. Dismore) introduced his Corporate Homicide Bill last year, he rightly pointed out that the so-called identification theory led to the law discriminating against small companies in which it is easier to identify a manager or director who is to blame. Indeed, it is no surprise that the only three successful prosecutions for corporate manslaughter have involved small companies. With larger companies, responsibility is diffuse, so there is often no one person to whom blame can be attached. Even if an individual can be identified, it is highly unlikely that that person will be part of the top management, to accord with the identification theory.

It was to overcome the identification problem that the Law Commission in 1996 proposed a completely new offence of corporate killing. No longer would it be necessary to establish first that an individual was guilty of manslaughter and secondly that he or she was part of the top management. Rather, the prosecution would have to establish that the company's conduct, which caused death, fell far below what could reasonably be expected. Causation would be established by a management failure, such as the management and organisation of activities in a way that failed to ensure the well-being of those affected, whether employees, customers or others. Corporate killing could result from the cumulative acts of several individuals in the company. That approach was rejected by the Court of Appeal in the context of corporate manslaughter.

The offence of corporate killing would not be precluded even if the immediate cause of death was the act or omission of an individual. However, in contrast with corporate manslaughter, individual blameworthiness would not be a prerequisite for

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corporate killing. The law would then better recognise the reality of business life—that often it is the cumulative effect of many actions within a company's culture that causes poor attention to safety and, sometimes, tragedies. However, as I have said, there might be cases in which, although a charge of corporate killing was available, an individual in the company could also be prosecuted for manslaughter offences. In that way, the offence of corporate killing sidesteps the identification problem. However, that problem would remain outside the context of a death, so that—absent vicarious liability—a company could not be liable in criminal law for wrongdoing unless a directing mind was blameworthy. That causes difficulty with a range of statutory offences that demand mens rea. It is also a problem with the application of statutory defences. I wrote about that problem many years ago. While some judges have indicated a willingness to overcome the difficulty, ultimately we need legislation. However, that is a separate issue.

The Government have accepted the Law Commission recommendation for an offence of corporate killing along with changes in the general law of manslaughter. Those are not my concern today. Indeed, the Government have gone further than the Law Commission and accepted that the offence of corporate killing should be applied not just to companies but to all undertakings such as NHS trusts and partnerships. In their consultation paper they say that some 3.5 million organisations might come within the ambit of the offence. There is no good reason not to extend the law of corporate killing to cover Government bodies as well.

Let us turn to some of the difficulties in implementing an offence of corporate killing. It has been suggested that business is against such a proposal, but that is a red herring; many prominent business leaders, such as Sir Michael Latham, are in favour of the new offence. While there is resistance to a new offence—in some cases, I have to concede, by lawyers—the debate is being won by the proponents of change.

When the consultation document was published last year, the Institute of Directors said that it was happy to support its proposals; in fact it called it a step in the right direction. There were those at the recent British Safety Council conference, like Gwyn Hughes from P&O Princess Cruises, who feared that a law of corporate killing would lead to co-operation and information drying up or being destroyed. However, he said that he could not object to legislation because he had no solution to the social need to allocate blame.

The difficulties that I envisage are to do with the legal ramifications of such an offence. The offence of corporate killing will arise irrespective of individual culpability, although it may be that, as well as citing severe corporate failure, the prosecution in particular circumstances might be able to proceed against an individual—whatever his or her level in the company—for a manslaughter offence. My concern is whether there should be additional, new consequences in the criminal law for people such as directors or managers of companies that are convicted of corporate killing. There can be little argument with the proposal in the consultation document that an individual who contributes to a management failure resulting in death might be disqualified from participation in the management of any future undertaking. That is a

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principled extension of the company directors disqualification legislation, and would enable the sanction to be tailored to the individual's failure.

More controversially, the consultation document asks for comments on secondary liability for corporate killing for individuals who "substantially contribute" to the undertaking's primary offence. Presumably, the degree of culpability would fall short of conduct otherwise giving rise to a manslaughter prosecution—in the new scheme for that offence, reckless manslaughter, unlawful act manslaughter or manslaughter by gross negligence. However, there are problems of principle and of policy. There must be some causal connection between the individual's conduct and the killing. It should not be enough that he or she happens to be a director or manager of the undertaking—putting the individual in the dock might satisfy a sense of vengeance, but it would be unjust and would provide no incentive for corrective action by undertakings. It would also undermine the principle that the offence of corporate killing should hold to account not individuals but companies as a whole, with the aim of encouraging a business ethos that recognises the duty to stakeholders.

The only way that I can see to take the notion of "substantial contribution" forward is to build on the well-established test for making directors, managers or other similar persons liable under regulatory legislation, such as section 37 of the Health and Safety at Work, etc. Act 1974, which is about whether corporate killing has the consent or connivance of, or is attributable to neglect on the part of, such a person. For individuals to be convicted on that test, it must be shown at least that they have responsibility for making relevant management decisions and have failed, for example, to adopt a sound safety policy based on acceptable risks or to ensure that mechanisms are in place to review and monitor the application of such a policy.

The offence of corporate killing is essential for the sake of public confidence in our system of justice. All too often, companies and organisations have been able to escape the net of the general criminal law for gross errors that would have seen individuals in the dock. The offence of corporate killing will be an important additional string to the bow of making all companies take safety seriously. Most companies recognise not only that they have a moral obligation to those affected by their activities, but that it makes good business sense as well.

In the long run, a good safety record will pay for itself, as shareholders, employees and customers gain confidence in companies. The offence of corporate killing will help all organisations to appreciate that, and help to change corporate culture so that safety is given the same priority as profit.

1.16 pm

The Minister for Criminal Justice, Sentencing and Law Reform (Mr. Keith Bradley) : I congratulate my hon. and learned Friend the Member for Dudley, North (Ross Cranston) on securing the debate, and also on the quality of his speech. It was wide ranging and covered the ground on corporate manslaughter effectively.

As my hon. and learned Friend points out, we are committed to the introduction of an offence of corporate killing that will hold companies to account

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for serious wrongdoings. Our consultation paper, issued in May last year, set out our thoughts on how to reform the law on involuntary manslaughter as a whole. One of the key proposals was to introduce a new offence of corporate killing to be used instead of the current law of manslaughter. The fact that there have been only three successful prosecutions of a corporation for manslaughter highlights the need for reform. A company may be convicted only if an individual or a group of individuals who embody the company are found guilty. That requirement, known as the identification doctrine, means that it is difficult to secure a conviction, even when a company has been found to be at fault under the Health and Safety at Work, etc. Act 1974.

I shall use an example already cited by my hon. and learned Friend. In the case of the Southall rail crash, which claimed seven lives, the judge ruled that a charge of manslaughter could not proceed because of the difficulty of identifying someone when Great Western Trains was responsible for the negligence. However, it was not in doubt that the company had done wrong. It pleaded guilty to a charge under the 1974 Act and received a fine of £1.5 million. We recognise that convictions under the 1974 Act are serious, but we share the view expressed by my hon. and learned Friend that it is important that a company can be charged specifically with a homicide offence when a death is caused by its wrongdoing.

The proposals put forward for consultation built on the Law Commission report entitled "Legislating the Criminal Code: Involuntary Manslaughter", which was published in 1996. We use the term involuntary manslaughter because our proposals concern the criminal liability of those who kill when they do not intend to cause death or serious injury. There are two ways to consider such people. One way is to argue that society should always punish a person who causes terrible consequences. The other is to argue that a civilised society should not make people liable to punishment for a serious crime simply because of the result of their conduct, but only when they were aware that their conduct could lead to death.

One criticism of the current offence of unintentional manslaughter is its wide scope. At one end of that range is conduct by a person who causes death while engaged in a criminal act that carried with it no more than a risk of causing some slight injury. At the other is death caused in circumstances in which the risk of death was obvious. One of the problems with the wide range of conduct covered by manslaughter is the difficulty that judges have in determining appropriate sentences for particular cases. It also leads to problems for the public, who may not understand why a judge has awarded a particular sentence. It was against that background, as well as because of concerns at the lack of successful prosecutions of corporations for manslaughter, that we made our proposals last year.

The consultation period ended in September 2000. During that time, we received more than 160 responses. Almost all were of high quality and required careful consideration. As my hon. and learned Friend will know, it was not possible to fit a Bill to reform the law in this area into what was to be the final Session of the previous Parliament. Nor was it possible to include such a Bill in last month's Queen's Speech. There has been a

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benefit, however, in that we have been able to devote more time to giving those responses detailed consideration.

We have yet to make final decisions in the light of the comments put to us. However, the introduction of a new offence of corporate killing is a manifesto commitment. Needless to say, we aim to honour that commitment, but I cannot say exactly when a final decision will be announced. When we make our announcement, we plan to publish a list of those who contributed to the consultation exercise, together with a summary of their responses, except in those cases when contributors asked not to have their comments made public.

Our aim is that the law should be more effective in making private individuals and undertakings accountable for their actions. Unless there are overwhelming reasons against doing so, it is reasonable that large undertakings should be no less liable to prosecution for manslaughter than private individuals or sole traders.

The Government are mindful of the need for businesses to continue to operate successfully. However, corporations must also operate responsibly, and effective sanctions against the kind of negligence or recklessness which kills are an important way to ensure that. To mark the seriousness of the offence, it would be triable on indictment only. We also propose, however, that alternative verdicts under sections 2 or 3 of the 1974 Act would be available to a jury in the event of a defendant being found not guilty of corporate killing.

The proposals set out in the consultation paper focus on the way in which activities are managed or organised by the undertakings. The offence of corporate killing will be committed when a management failure is one of the causes of death. Management failure will be defined as conduct that falls far below what can reasonably be expected of the undertaking in the circumstances. That is an exacting test, but not an unreasonable one; conscientious enterprises that take seriously their responsibility to ensure the health and safety of those affected by their activities should have nothing to fear. Expert witnesses will be available to assist a jury in determining what it was reasonable to expect of a particular defendant in the circumstances.

We also propose that companies should be liable when management failure is a cause of death rather than the cause of death. That is because, in many cases, the death may be more directly connected to the operational negligence of an employee—for example, a train driver may pass through a red signal, or a construction worker may erect scaffolding dangerously. However, the management failure might consist of a failure to take precautions to prevent such negligence, or a failure to introduce appropriate training or supervision.

The Law Commission suggested applying the offence of corporate killing to incorporated organisations only. That would create anomalies, because it would exclude large partnerships yet include some public companies and others that were not run for profit. As my hon. and learned Friend pointed out, we propose going further than that and applying the new offence to all undertakings.

Our proposal would considerably broaden the scope of the offence to about 3.5 million enterprises; for example, it would include NHS trusts and voluntary

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bodies. That reflects our view that the offence should be as inclusive as possible, and that employees and members of the public should be entitled to the same level of protection, regardless of the status of the undertaking.

Our proposals also recognise that Crown bodies should be held accountable when death occurs as a result of management failure. We have proposed an approach similar to that in the Food Safety Act 1990. That would allow the courts to make a declaration of non-compliance with statutory requirements, which requires immediate action to rectify the shortcomings that have been identified. The proposal provoked considerable debate, and we are carefully considering how Crown bodies should be held to account when a management failure is a cause of death. As my hon. and learned Friend recognised, it is a difficult issue, which raises important constitutional questions about how—not whether—the Government should be held to account.

Our consultation paper also invited views on whether individuals should be liable when they have contributed to a corporate killing. One concern is whether corporate liability alone might fail to provide a sufficient deterrent, particularly within large or group companies. Another consideration is that individuals who are responsible for a fatal incident can be prevented from continuing in similar positions, where the public would be vulnerable to similar conduct. If the causal link between the individual and the death were sufficient, it would be possible to prosecute for one of the individual offences. However, even when the individual cannot be prosecuted for manslaughter in his or her own right, we recognise the force of the argument that the public interest demands that individual directors who have contributed to management failure resulting in death should be subject to specific action against them. As my hon. and learned Friend said, there is already the option of disqualification for up to 15 years under the Company Directors Disqualification Act 1986 in the case of directors who are convicted of an indictable offence in connection with their promotion, formation, management or liquidation of a company.

The consultation paper also invited opinions on whether there should be an additional criminal offence in respect of contributing to the corporate offence and, if so, whether imprisonment should be available as a sanction. Not surprisingly, we received many comments on that proposal. It will come as no surprise that that was probably the most contentious part of the consultation paper. I have noted what my hon. and learned Friend said on the issue, and I agree that the approach taken in section 37 of the 1974 Act is worth considering. We shall have to come to conclusions on the right way forward. In doing so, we will take careful note of the comments that we have received.

Although I cannot say what conclusions we shall reach on that last question or on the other issues of detail, I can set out the broad considerations that we believe we need to bear in mind in reaching them. First, reform is needed. The train accidents that have occurred over recent years, involving the death of passengers, have ensured that the process that the Law Commission started in 1996 with the publication of its recommendation for a new offence of corporate killing remains as relevant as ever.

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Secondly, life cannot be made entirely risk-free. We must guard against raising unreasonable public expectations in that respect. The programme of maintenance work that Railtrack put in hand after Hatfield and the disruption to train services raise the issue of the lengths to which an enterprise should go in ensuring safety.

I mention those two points because they underline for us the need to strike the right balance when introducing our proposals on corporate manslaughter in the light of the consultation exercise. My hon. and learned Friend referred to a balance, and safety must be given the same priority as profit. The public and employees have a right to be protected from goods and services that are lethally substandard. On the other hand, we must bear in mind the fact that too strict a test of liability might lead the more conscientious enterprises to question whether to continue supplying goods or services that attract risk. It is important that we consider those issues in detail; we must get it right before we proceed to legislate. We should not let up in our determination to reform the law in this area. I thank my hon. and learned Friend for the opportunity that he has provided for the Government to reiterate those points.


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