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COMAH Charging Review Group

Minutes of the Meeting held on 8 October 2003


Present:

Mr Dan Mitchell, Chairman, HSE

Industry Members

Mr Tom Fidell - LPGA
Mr Ian McPherson - UKPIA
Mr Clive Musgrave - Transco
Mr John Sherwood - E & E Ltd
Mr Nick Berentzen - CIA

HSE Members

Dr Brian Fullam
Mr Bill Tomkins
Mr Mark Reyland
Mr Ron De Cort
Mr Kelvin McFadyen, Secretary

Observer Ms Julie Pascoe, HSE


Welcome and Introductions

1.The Chairman welcomed members to the seventh meeting of the Review Group. He introduced John Sherwood who had replaced John Holding, BCDTA, and Julie Pascoe a member of the Charging Efficiency Project Team.

Apologies had been received from:
Mr Tudor (TUC)
Mr Burns (SEPA)
Mr Ford (SEPA)
Mr Bosworth (HSE)
Mr Rodger (CIA)
Mr Hitchings (EA)
Mr Wesson (BOC Gases)
Mr Mark Platt (CBI) who has replaced Sylvia Channon.

Minutes of the Meeting of 22 March 2002

3.The minutes had been circulated and published on the Internet, and were accepted.

Matters Arising not covered by the agenda

4.The Deloitte & Touche Report on the Reasonableness of Chargeout Rates (Minute 20) had been circulated to members and published on the Internet.  

5.The revised Charging Guide (Minute 22) has been updated on the Internet. Any further comments should be sent to the Secretary.

Progress on the Evaluation of Charging

6.Paper CCRG 2002/6 giving a brief update on the progress with the Gas, Offshore and Rail reports had been circulated to members. The same methodology had been used as for the COMAH report, with similar emerging findings across all four regimes. A paper would be going to the HSC on 3 December saying that there was insufficient evidence of a need for a fundamental rethink to the approach to charging; that the administration could be tightened up; and that the disputes procedure is long winded, but equitable.

7.HSE had met Deloitte & Touche on 8 October to discuss their draft consolidated report. It will take three or four weeks for this report to be finalised. The HSC fees sub-group was aware of this report, and it would be proposed to HSC and Ministers that it be put on the Internet early in the new year.

Charging Efficiency Project/Bearing down on bureaucracy

8.This project had arisen from the evaluation report on reasonableness of charge out rates and is aimed at improving the productivity and efficiency of staff and operations. The reasonableness report showed a variation of rates across the six organisations compared in the evaluation, with HSE's rates higher than the others.

9.To reduce rates HSE will consider ways of increasing the proportion of productive days, increasing the productivity of individuals, reviewing the mix of support and technical staff and reducing aspects of the indirect cost base.

10.The terms of reference of the project are:

11.The scope of the project covers the charging regimes for COMAH, offshore, railways, gas transportation and nuclear. There is a project board chaired by a member of the HSE Board, with members of senior staff from various divisions plus two external members. The project team consists of three staff from HID and one external member.

12.The plan is to collect data from the five regimes, the Environment Agency and the external comparators used by Deloitte & Touche. The collection of this data and its analysis is due to be completed by mid-December. There will then be a report produced, in conjunction with those doing the work, on cost reduction and productivity measures, with a timetable for implementation.

13.There are projects already underway in rail, COMAH, gas and field operations to increase the productivity of front line inspection staff. It is planned to tap into these projects to gain data for the efficiency project. These projects arose because studies showed that the amount of contact time recorded by inspectors was low and reducing. This was considered to be related to the administrative burden placed on front line staff, which was diverting them from the planned number of days available for front line work.

14.Industry asked why HSE could not simply reduce the charges. This was not feasible because Treasury Guidance says that full economic costs should be recovered. Therefore it is necessary to reduce costs first.

15.Industry queried why there was a sub-group of the HSC set up to look at fees. HSE make fees regulations annually covering a wide range of activities. The HSC make recommendations to Ministers on these regulations, but does not wish to get involved in the detail. The sub-group was established to look at the detail and make recommendations to the full HSC.

16.Industry asked how confident HSE was that it could reduce its costs. HSE has to look at what I does and make those operations more efficient. This may not necessarily reduce the charge rates, but if HSE spent less time on a particular area of work the total cost to industry would reduce.

17.LPGA members felt it inappropriate to increase rates when the Deloitte & Touche report said they should be reduced, and would consider writing to Ministers about it. HSE is required by the Treasury to recover full economic costs of its operations and has to set a rate to do that.

18.enerally industry was pleased that action was being taken on the Deloitte & Touche report. HSE has to invest in new processes and ways of working

19.Industry asked if copies of the overheads used in the presentation could be made available. It was agreed that these would be sent to the Secretary as a PowerPoint file to distribute electronically. Action: Secretary

(Post meeting note: PowerPoint presentation circulated to those industry members present)

Proposed Chargeout Rate for 2003/04

20.A letter had been sent to members in advance advising the proposed rate for 2003/04. Members were given a handout showing the outturn rate for 2001/02, which is used to inform the new rate. The proposed rate had been reviewed in the light of these figures and revised down to £113 ph from the £117 ph previously notified.

21.The rate reflected currently known costs and had been reduced because some inadmissible costs had been included originally. The Treasury had questioned why the cost of HID trainee inspectors training with FOD was not included in the charge out rate since this was part of HSE's costs. However advice from HSE's lawyers was that such costs were too remote from HID operations to be included - given the fee raising provisions in the Health and Safety at Work etc Act 1974. It was intended that the new rate should come into force as close to 1 April 2003 as possible to fit in with the HSE planning year. The proposal will go to the HSC rates sub-group on 29 October, before going to the full HSC on 3 December and Ministers thereafter.

22.Industry felt that in view of expected results of the Charging Efficiency Project, and the closeness of the current and proposed rates, that it would be inappropriate to increase the rate. HSE pointed out that the benefits of the efficiency project would take some time to feed through after the project reported in April. It was pointed out that other rates were proposed to increase considerably more, for a variety of reasons. Any significant further changes to the rate would be notified to members via the Secretary.

Frequency of Meetings

23.Members agreed that one meeting a year would be sufficient for normal business, with the proviso that other meetings could be called for specific urgent business. Meetings would be held annually in the autumn.

ICRG Report

24.A draft report (CCRG 2002/7) had been circulated to members. It was agreed to amend the report to reflect the decision on frequency of meetings and industry's concern about Treasury Guidance restricting HSE's ability to reduce rates in anticipation of future efficiency savings. The Secretary would circulate a revised draft for members comment.

Action: Secretary

(Post meeting note: Revised report circulated and cleared)

Any Other Business

25.Paper CCRG 2002/8 had been circulated giving members statistics on activity, invoicing and disputes. Industry queried the amount of time spent on assessment as opposed to inspection. The number and quality of safety reports meant that assessment was taking more time, but the ratio should eventually change.

26.Industry asked whether there was any analysis of the queried and disputed invoices that could provide lessons to both sides and reduce the numbers. HSE undertook to carry out a review and provide a report to members.

Action: Secretary

Date of Next Meeting

27.The date of the next meeting was provisionally set for 8 October 2003.


Updated on HSE website 3 December 2003

Updated 2008-12-05