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COMAH Charging Review Group

Meeting 20 March 2001

11am - 2.30pm Hope room, Rose Court, London

Minutes of the Meeting held on 21 September 2001

Industry Members

Mr Tom Fidell, LPGA;
Mr John Holding, BCDTA;
Mr Ian McPherson, UKPIA;
Mr Clive Musgrave, Transco;
Mr Paul Wesson, Ind. Gas Industry.

HSE members

Dr Brian Fullam;
Mr Mark Reyland;
Mr Bill Tomkins;
Mr Ian Travers;
Mr Charles Ransome, Secretary.

EA Members

Mr Andrew Hitchings

SEPA members

Mr John Ford

Observers

Mr Kelvin McFadyen, HSE;
Mr Nick Berentzen, CIA.


Welcome and Introductions

1 Mr Mitchell welcomed members to the fifth meeting of the Review Group. He introduced Paul Wesson representing the industrial gas industry following the recent retirement of Logan Colbeck; and Nick Berentzen (CIA) and Kelvin McFadyen (HSE HID Charging Team) who were attending as observers.

2 Apologies had been received from Wil Huntley (EA), Jim Mowatt (TGWU), John Burns (SEPA) and David Bosworth (HSE SPD).

Minutes of the Meeting of 20 March 2001

3 The minutes were agreed.

Matters Arising not covered by specific agenda items

4 Terms of Reference (min 3): Members noted the revised terms of reference (CCRG 2001/08) which reflected the arrangements agreed at the previous meeting with HSE providing a permanent chair and secretariat.

5 2001/02 charge out rate (min 7-8): following the previous meeting, details of EA's charge out rate had been issued to members. The 2001/02 rates had come into operation on 1 April (SEPA) and 20 August (HSE & EA).;

6 Benchmarking Study (min 17-20): Members noted that a comparison of the charge out rates of a variety of organisations was now being undertaken as part of the Evaluation of Charging. Mr Fidell reported that although LPGA had met with the evaluation consultants (as at min 20), the issue of how the CA's charge out rates compare with those of other organisations had not been specifically addressed.

7 Ratios of on-site/off-site time (item 22): HSE had not yet undertaken the promised analysis of ratios for a range of industry sectors, as no suggestions had been received from the CCRG industry representatives as to how the sectors should be grouped. It was agreed to prepare an analysis for the next CCRG meeting using industry groupings determined by HSE.
Action: Secretary

Mr Holding's researches among BCDTA members had revealed that for chargeable regulatory work in relation to storage premises, on-site:offsite ratios of 1:4/5 were not uncommon.

8 Mr Fidell was concerned that inspectors undertaking chargeable regulatory work in relation to COMAH sites should be suitably experienced. He believed it had been previously minuted that two years experience was the minimum requirement within HSE. It was explained that although there is an experience requirement, circumstances will differ among individuals. For example, a discipline (technical) specialist recruited from industry may be competent within 6 months to carry out chargeable work within the relevant technical specialism; whereas regulatory specialists recruited at entry level would have to undergo an extensive period of training, including two years to gain the basic skills and a further year gaining knowledge of the industry, and it might be some months after this before they were ready to take responsibility for regulatory work at 'simple' COMAH sites (although while in training they could conceivably be employed, under experienced supervision, on tasks such as information gathering for a major incident investigation).

9 Charging arrangements in other EU countries (item 23): The secretary had provided members with a report from the component charging feasibility study which outlined the charging arrangements in place in 12 European countries in early 2000. Members had not been able to obtain any further, more up-to-date data.

10 The secretary had also investigated the charging arrangements associated with the Biocidal Products Regulations 2001 (UK implementation of the 'Biocides Directive'). Under these regulations, charges would be raised for the work involved in authorising biocidal products; applicants would pay a fee in advance, based on an estimate of the cost of the staff time likely to be required, and the fee would subsequently be adjusted in the light of the actual effort delivered. As the eventual fee would be determined by the specific costs of individual members of staff rather than based on a single charge out rate, there appeared to be little common ground with COMAH charging.

(NB following the meeting, information has been obtained about COMAH charging arrangements in Eire. The Health and Safety Authority charges for notification, and for safety report assessment according to a schedule of fixed fees which differentiate among different types of premises/operations and between full safety reports and updates. Details are attached as Annex 1 to these minutes).

Chairman's Report

11 2001/02 statistical information: Members noted the statistics on chargeable work delivered and invoices issued/queried in the current year (attached as Annex 2 these minutes). The increased amount of investigation activity as compared with the previous year was attributable to a number of major incident investigations, notably in relation to the Conoco Humberside refinery. Mr Hitchings confirmed that the figure shown for the amount of chargeable work delivered in the first quarter by the Environment Agency was accurate, even though it was much lower than might be expected when compared with the previous year's total.

12 Mr Musgrave referred to instances of operators having received invoices for safety report assessment work when they were under the impression that the assessment was complete and all charges had been received and paid. It was explained that the chargeable activities concluding an assessment ( outcome meeting and follow-up) should be identifiable from the statement provided with the relevant invoice. Any assessment charges issued subsequently were likely to be the result of belated work recording by assessment team members. It was agreed that HSE should take action to minimise instances of late work recording and to alert operators when delayed invoices were anticipated.
Action: Secretary

13 Mr Holding reported that eight companies had been called to a meeting in connection with designation of domino sites. Although there had been no HSE representation at the meeting, all the companies (included some non-COMAH sites) had been invoiced. Mr Holding would provide the secretary with further details to enable HSE to investigate the circumstances.
Action: Mr Holding

14 Draft Chairman's Report to ICRG: In discussion of the draft report, it was agreed that the paragraph dealing with the benchmarking study should be amended to convey the fact that members were dissatisfied with the outcome of the study; they were looking to the work now being taken forward by the evaluation consultants to produce a meaningful comparison of charge out rates, together with an analysis of the components of those rates, for a representative sample of bodies in the public and private sectors. The draft report should also be amended to reflect discussion of the component charging scheme (paras 20-22 below).
Action: Secretary

Memorandum Trading Account (MTA) 2000/01

15 Mr Reyland explained that annual MTAs comparing income with the full economic delivery cost were required for all chargeable services whose cost exceeds £100,000. HSE's 2000/01 COMAH MTA had revealed a small under recovery of costs (i.e. total income £3,099,616; total cost £3,114,034). Paper CCRG 2001/13 showed the hourly rate (£105) which would have been needed for full cost recovery, and the direct and indirect components of that rate.

16 Members noted that work was now underway to calculate economic charge out rates for COMAH and the other charging regimes for financial year 2002/03. It was intended to apply the new rates as from 1 April 2002, following HSC and Ministerial approval. It was hoped to be able to inform industry of the proposed rates at the ICRG meeting in November, prior to seeking HSC approval.

Progress on Business Improvements

17 Review of Work Recording - HSE form HI251: The secretary reported that the streamlined arrangements for data recording in relation to major hazard establishments which had been described in detail at the previous CCRG meeting, had now been successfully trialled within HSE. The outcome of the trial was now being reviewed to assess whether any refinements were required prior to implementation of the new arrangements.

18 New IT system for processing charges: The secretary said that the system for capturing details of HID inspectors' chargeable work at source was now in operation, and had provided the data used by the recent (April-June) COMAH invoicing run. A new IT system which would provide a more cost-efficient means of extracting this data for invoicing had recently been successfully tested and was expected to be available for the July-September invoicing run. Examples of the outputs from the new system (i.e. the detailed statements which would accompany invoices to operators) were circulated for information.

19 Mr McPherson welcomed the improved quality of information provided to operators with the last round of invoices, and was anxious that this should be maintained with the new system. However, to ensure an adequate degree of transparency, it would be essential to improve the level of information provided in support of EA charges. Mr Hitchings said that the new time recording system now in use within EA offered scope for providing greater detail (e.g. date of work, name of inspector) and EA were investigating how this might best be exploited.

Progress with Component Charging Scheme

20 At the previous CCRG meeting, members had considered the findings of the feasibility study and had agreed that work to fully develop an implementable scheme should be taken forward. Whether the scheme would eventually be implemented would depend on the outcome of the evaluation of charging and the CA's response to its recommendations.

21 Mr Travers reported that a 'reality check' conducted with inspectors had echoed the concerns of industry that the estimates of effort generated by the component models as developed to date were excessive. However, it had proved difficult to secure resource for the task of re-calibrating the models although it was hoped that an individual might become available later in the year. A further problem was that there was still relatively little data available on actual effort expended (e.g. to date, only a few safety report assessments had been fully completed) and re-calibration might therefore need to employ a mixture of 'real' data and estimates.

22 Although the ideal would be to have an alternative scheme fully worked-up and ready for implementation should the evaluation exercise reveal significant discontent with the existing arrangements, the CA was obviously anxious to avoid nugatory effort. In this respect, Mr McPherson said that UKPIA members had a clear preference for 'actuals' charging to be retained, provided the improved quality of invoice information was maintained. While other industry members favoured further development of the component scheme, they re-iterated their concerns that the charges produced by the models as currently configured were too high; and that the majority of full safety report assessments would already be complete before the scheme could be introduced. Although component/banded schemes were operated in some other EU countries, they were not appropriate for application in the UK as they were not geared to full cost recovery.

Queries and Disputes Procedure - Update

23 Mr Tomkins reported that the arrangements were now in place under which the decision as to whether a level 3 dispute is submitted to the panel is made jointly by the Chairman and an external member. He confirmed that independent members are named individuals (e.g. CBI nominees) who are totally independent from the CA. He also explained that for level 3 disputes, the HSE submission to the panel is regarded as being owned by the appropriate Directorate/Division. Members noted that Nick Starling had replaced Clive Norris as Head of HSE's Safety Policy Directorate and Chairman of the Disputes Panel.

24 Mr Berentzen said no further concerns had been expressed by CIA members over the complexity of the queries and disputes procedure.

Any Other Business 

25 Mr Fidell expressed concern that compliance with the LPG industry's codes of practice which had been developed in conjunction with HSE, was not being accepted by inspectors as demonstration that risks were as low as reasonably practicable (ALARP). His concern was shared by Mr McPherson and Mr Musgrave. It was suggested that in practice, few sites do comply fully the relevant codes of practice and moreover, it was for the inspector to judge whether compliance provided adequate demonstration or whether account also needed to be taken of changes/developments in technical standards. In this respect however, Mr Fidell pointed out that the codes of practice were subject to review and updating every two years, and it was therefore reasonable to seek agreement that compliance would be accepted as 'demonstration of ALARP'.

26 While it was accepted that the CCRG was not the appropriate forum at which to reach such an agreement, it was recognised that the issue had a bearing on the costs of enforcement. Therefore, the Chairman felt it would be useful to include Codes of Practice and ALARP on the agenda for the next CCRG meeting and invite an appropriate speaker, and asked the secretary to arrange this.
Action: Secretary

27 Mr Fidell also raised the issue of new developments (e.g. housing estates) appearing in the vicinity of existing COMAH sites; he was anxious that guidance should be provided to Inspectors on the extent to which adaptations could reasonably be expected to be made at such sites in order to address the increased level of risk resulting from the new development.

28 It was agreed that the appropriate for a for discussion of policy on these issues were CIF, ACDS and the discussions taking place on the updating of 'Reducing Risks, Protecting People'.

Date of Next Meeting

29 The next meeting would be held on Friday 22 March 2002 in London.

Evaluation of COMAH Charging - Report by Consultant 

30 Denbigh Cowley from Deloitte and Touche outlined, and CCRG members discussed, the emerging findings from Stage 1 of the COMAH charging evaluation under five main headings:

31 Practical effect of charging on industry's health, safety and environmental policies, practices and compliance: it was thought the number of operators who had reduced their inventories to avoid COMAH requirements and costs, was probably more than the 12% quoted. Although all operators (rather than the quoted 8%) should be concerned to 'get things right first time', the CA's experience of the reality was somewhat different.

32 Effect of charging on the relationship between the CA and industry: working relationships between operators and the CA were thought to be largely unaffected by charging; the deterioration was likely to be a perception of senior managers with budget concerns. In addition, the increased 'inspector focus' resulting from charging might be perceived by operators as 'coldness' on the part of inspectors, and there might also be greater reluctance to challenge inspectors' judgements for fear of incurring additional charges. Inspectors had expressed a need for greater clarity about 'which advice is chargeable and which is not', and this need was shared by industry. The Secretary would consider how best to address this need.
Action: Secretary

33 Effect of charging on the operational behaviour and morale of inspectors: Operator perceptions of inspector morale and behaviour were based primarily on increased inspector focus, use of greater numbers of specialist inspectors, and the fact that some inspectors appeared embarrassed by the issue of charging. It was noted that the increased use of specialist inspectors to enable more effective assessment of risks was the result of a policy decision by HSE. The view that there was less emphasis on lower-tier and non-COMAH sites was probably the result of the unavoidable priority given to safety report assessment in the first few years of operation of COMAH.

34 Cost to industry and the CA incurred in complying with and administering the new charging arrangements: that relatively few invoice queries had been received by inspectors was due to the fact that most queries were dealt with by HSE's central finance and/or the charging team.

35 What business improvements could be made to the charging systems?: the fact that no more than 50% of operators favoured alternative charging arrangements (e.g. flat rate or banded scheme) was probably the result of concerns that an alternative scheme might adversely affect the distribution of charges across the industry. Members were also doubtful that an alternative scheme would provide for increased dialogue with the CA. Inspectors believed that an alternative method of charging would help eliminate 'unnecessary diversions from their core work'; it was believed that this referred to the effort required to distinguish between the chargeable and non-chargeable elements of inspections and investigations, and to deal with queries from operators in this regard.


Annex 1

COMAH Charges: Eire

The Minister for Enterprise, Trade and Employment has approved the following Schedule of Charges in relation to the functions of the Health and Safety Authority arising from the requirements of the European Communities (Control of Major Accident Hazards involving Dangerous Substances) Regulations, 2000 (S.I. No. 476 of 2000)

Schedule of Charges

Regulation 48

Notification, £300. 

Safety Report:

Manufacturing, £14,300;
Storage, £6,600;
Inventory < 5 tonnes, £1,650;
Closed Systems, £1,100;
Licensed Explosives Stores, £1,980.

50% of above charges to apply to first Safety Report based on Notification under S.I. No. 292 of 1986, as amended;
25% of above charges to apply to second etc. top tier site in same company.

Five Year Update

Manufacturing, £3,630;
Storage, £1,650;
Inventory < 5 tonnes, £660;
Closed Systems, £330;
Licensed Explosives Stores, £880. 

25% of above charges to apply to second etc. top tier site in same company 


Annex 2 

Summary of COMAH chargeable work 2000/2001 

NUMBER OF HOURS 

ACTIVITY HSE EA SEPA TOTAL
Defer 3.00 5.00 3.00 11.00
Domino 50.00 20.00 70.00
Enforcement 853.50 60.50 43.00 957.00
Inspection 9329.50 914.50 1046.00 11290.00
Investigation 3215.50 107.50 124.00 3447.00
Limit Info 4.00 3.50 7.50
Prohibition 31.00 31.00
Register 120.00 113.50 0.50 234.00
Safety Report Assessment 16197.5 2912.50 367.00 19477.00
Total 29804.00 4177.00 1603.50 35524.50
Value (£) 3099616.00 428168.00 139504.50 3667288.50

Summary of COMAH chargeable work April - August 2001/02

ACTIVITY HSE EA SEPA TOTAL
Defer - - -
Domino 46.80 6.00 - 52.80
Enforcement 393.50 37.00 - 430.50
Inspection 2494.70 50.10 47.00 2591.80
Investigation 2938.90 17.50 0.50 2956.90
Register 15.00 18.10 - 33.10
Safety Report Assessment 8669.90 384.60 63.50 9118.00
Total 14558.80 513.30 111.00 15183.10
Value (£) 1514115.20 53352.00 9990.00 1577457.20

N.B.: 'Limit Info' is now included within 'SR Assessment'; 'Prohibition' is now included within 'Enforcement'; EA & SEPA data covers period April - June only.

Invoicing Information No. Issued Value (£)
April - June 2000 315 618,884
July - Sept 2000 353 856,332
Oct - Dec 2000 479 955,885
Jan - Mar 2001 606 1,300,505
Total 2000/01 1,753 3,731,606
Apr - June 2001 430 1,022,690

Queries and Disputes Data 2001/02 - to end August

Level 1 Level 2 Level 3
No of cases carried forward from q/e March 2001 13 3 3
No of cases received during the period 46 0 1
No of cases not pursued by the Duty Holder 0 0 0
No of cases where the charge was varied 5 0 0
Total No of cases resolved in the period 29 1 0
No of unresolved cases at period end 0 1 4

Updated 2008-12-05