This conclusion conflicts with the HSE's stance that the low level of prosecutions primarily reflects a lack of incriminating evidence.
The report, which recommends that companies and their senior officers should be prosecuted more frequently, is the result of a review of the organisation's activities by senior members of the HSE.
Its proposals were accepted by the HSE's deputy director-general, David Eves, and a department - the operational research unit - was set up recently to implement the recommendations.
Tony Lloyd, Labour spokesman on health and safety, has called for a government statement. 'It is a scandal that directors who might have been criminally responsible for deaths and injury, were left unprosecuted for reasons other than lack of evidence,' he said.
'There would be a national outcry if the police couldn't prosecute individual culprits because of insufficient training.'
Last year only 16 out of the executive's 2,252 prosecutions were taken against directors or managers. Only six of these resulted from investigations into the year's 538 fatal injuries or 30,684 major injuries. This is despite the HSE's own figures showing that in more than 65 per cent of workplace deaths, 'responsibility rested with senior management'. In the same period 26 workers were prosecuted.
The leaked report states that prosecution against senior managers is 'often difficult because of the problems in obtaining evidence from individuals. The introduction of procedures to be followed in accordance with the Police and Criminal Evidence Act (Pace) and the Home Office Code of Practice is an added complication'.
The report, however, then adds that 'these obstacles can be overcome with suitable training and accumulated experience and we recommend that the division should consider more prosecution of individuals holding senior management posts'.
Since this recommendation, police officers in London and Manchester have been asked to train inspectors 'on Pace' - which became law in 1984 - and on the use of tape recording.
Rory O'Neil, of the Sheffield Occupational Health Project, said: 'The HSE has always shied away from treating directors as potential criminals and has therefore failed to investigate their conduct. The quiet coaxing and prodding of employers to improve safety standards often does not work so directors and managers must face a real threat of prosecution.'
The HSE will also try to focus on workplaces that are known to be more hazardous.
The report says there has been 'a massive development of small firms characterised . . . by their elusiveness for registration purposes, (and) by their ignorance of health and safety standards'.
The HSE's figures show that employees in manufacturing establishments of under 15 employees are 20 per cent more at risk of major injury than those in larger establishments.