COMAH Charging Review Group
Minutes of the Meeting held on 5 March 2008
Kevin Allars (KA), HSE Chair
Tom Smith (TS), CBI (Explosives Industry Group)
Hugh Bray (HB), TSA
Julie Hesketh-Laird (JHL), SWA
Diana Montgomery (DM), CIA
Steve Elliott (SE), BCGA
Douglas Leech (DL), CBA
Rob Shuttleworth (RS), LPGA
John Duckworth (JD), NG
Steve Wing (SW)
Bill Tomkins (BT)
Christine Flanagan (CF)
Kelvin McFadyen (KM), HSE Secretary
Welcome and Introductions.
- KA welcomed everyone to the meeting which was fulfilling an undertaking given at the October meeting to consult on guidance resulting from changes to the scope of the charging schemes. Members introduced themselves and agreed that the minutes should be attributable.
- KM reported apologies from Ian McPherson, UKPIA; Richard Carter, BERR; Bob Murray; Brian Davis, EA; John Roche, CIA; Janet Asherson, CBI; Mark Reyland, HSE; Steve Chatfield, HSE and Peter Baker, HSE. Kevin explained that as he was moving to another job in HSE next month, Peter, as his replacement, would be chairing future CCRG meetings.
Changes made to the proposal since October
- KA said that after the October meeting the proposal to include common good work in computing charge out rates and extending charging in the COMAH, Gas transportation and nuclear industries was put to the HSC which agreed it and then recommended it to the Minister for agreement. The Minister agreed the changes in late January. Following the discussions in October representations were received regarding the perceived unfair impact on small businesses. These were taken on board and amendments made to the proposal so that lower tier and some top tier COMAH sites would not be charged for all RSP work.
- A letter was sent to all operators setting out the changes proposed. The logic behind the changes were that if a site needed to produce a safety report they would be charged for work checking compliance with the Relevant Statutory Provisions (RSPs) as safety management of the site is part of the safety report. This meant that Lower Tier (LT) sites would not be charged for RSP work. This left around 375 Top Tier (TT) sites that could be subject to RSP charges. However some COMAH sites are not the whole establishment (enclave sites). A list of TT sites whose SIC (Standard Industrial Classification) codes are excluded from Table 1 in the draft guidance was circulated to members.
- Revised proposals were put to HSC, Ministers and BERR explaining that some £400k would not now be recoverable. It is estimated that RSP work will now only increase income by some £600k per annum. There is a commitment to monitor this closely and bring the figures for the first 6 months of operation to the October CRG meeting.
- There is also a commitment to look at a future scheme for COMAH and Offshore, but not GSMR at present, to replace hourly rates with an annual fee. The fee would be signalled in advance, giving industry, and HSE, better predictability, although an hourly rate would remain for incident investigation. Both EA and SEPA will be involved in this process. It is aimed to get a scheme in place for Offshore for the 2009/10 financial year as the definition of their sites is easier than for onshore. The aim for onshore would be for it to be in place for the 2010/11 financial year. A formal project has been set up, and there will be full consultation with industry. The new scheme is not intended to raise more money than the existing ones. As with any such scheme, there will be winners and losers but fairness for the majority.
- SW said that the changes made to the GSMR meant not charging for RSP work where the gas pipeline was operating at less than 8 bar. Major Accident Hazard pipelines would be the trigger point as these were easier to define. This would mean a small reduction in the money raised.
- KA asked if there were any questions so far:
- DM – asked if the fee system would be risk and performance based? – Yes
- RS – asked if that meant by activity? – Yes
- DL – asked if it would apply to LT and TT sites – Yes
- JHL – queried the logic regarding the whisky industry that falls into COMAH because it is mainly storing flammable liquids, but regards distilling as its main function. Some companies distil on one site and store elsewhere whilst others do it all on one site. This raises an issue of competitiveness and the possibility of rationalisation to keep out of TT charging. KA said the line had to be drawn somewhere and that some sites will indeed be charged for RSP work that others (LT, for example) wont.
Changes made to the guides
- SW said there were only a few small changes. A sub-para (f) has been added to para 5 to show where charges will be made for RSP work on MHAPs. New examples have been added at paras 12, 14, 22, 23 and 24.
- JD asked if these changes would be reflected in the regulations and queried the charging demarcation for risk control audits. How would HSE decide which part of the audit was chargeable when it was not a site visit? SW said the changes will be reflected in the regulations. The audit question required some thought about how HSE could apportion the time to an attributable amount. HSE will try to provide an example for the guide.
Action: HSE (SW)
- BT said the changes to the guide were to help industry know what will or will not be charged for. It included reference to the common good elements of HSE’s costs and took on board the comments made to the October meeting. The opportunity was also taken to clear out extraneous text on for example queries and disputes, where a separate guide is in place.
- CF said that the diagram in the guide would hopefully show the logic of who gets charged for RSP work together with the list of SIC codes for included industries. There was still some uncertainty regarding those industries within the SIC 90000 grouping, and as incineration of hazardous waste was now considered to be the main activity, the proposal was to move these to Table 1.
Comments Already Received
- KA said he had had four written comments prior to the meeting. TS had made some useful comments on the wording and queried the income reduction. UKPIA sought clarity of wording regarding work on pipelines; SW will look at this and respond directly. Cabot Carbon complained that they were only in COMAH because of environmental issues. KA had replied to them that they are TT and therefore covered, but that HSE had no intention to increase the health and safety work on their site. Victrex were not members of any trade association and complained about the fairness of the trade associations agreeing anything on their behalf, and especially the offsetting of not charging for RSPs on LT sites whilst still charging at most TT sites. However other points they raised had already been made by others back in October.
- JHL said that storage was an ancillary activity at distilleries as the main activity was distilling.
- DL sought clarification on ancillary.
- KA said that if the industry is within the SIC code in Table 1 they will be charged for RSP work. If members think this needs clarification perhaps a cross reference to example 5 will help.
- HB asked what the asterisks in the table meant. KA said any digit, and that that would be clarified.
- DL queried the different rates for HSE and EA. KA replied that EA were not presently looking to implement this scheme.
- JHL thought para 1.8 was confusing, indicating potential double charging for both COMAH and PPC. KA replied that any activity would only be charged under one of the schemes. BT suggested deleting the final sentence.
- DM queried the implications for extra charges for training inspectors and the words ‘unfamiliar with the site’ in para 1.10. She cited one site that had had visits from seven different inspectors in as many years, saying this was a concern. RS agreed with this. KA responded that HSE does not charge for work done by trainee inspectors, but that staff changes necessitated familiarisation. The new scheme, by virtue of the fixed fee, should remove this concern.
- DM asked whether the time spent on appeals under the Queries and Disputes process was charged for. No.
- DM asked whether REACH would be an RSP and chargeable on TT sites. KA said that this was unknown, as the regulations had not been made yet.
- DM queried whether the examples quoted were realistic. CF replied that the examples were being reviewed and revised ones would be included. It was agreed that the number of examples should be kept to a minimum.
- DL asked whether the list of TT sites whose SIC code excluded them from RSP charges was to be included in the guide. KA said not.
- TS asked for the URLs to be included in the guidance such that they are ‘live and clickable’. Agreed.
- DL asked why the word ‘some’ in para 1.4 was in square brackets. BT replied that it was not clear at the time of drafting whether it should be in or not. The brackets will be removed.
- DM suggested the word ‘some’ should be included in the introduction (line 6). Agreed.
- Several members commented that the flow chart was confusing in its reference to ancillary activities. It was agreed to amend the chart appropriately.
Any other business
- RS asked again about the arrangements for a new scheme. KA replied that there was a commitment to aim to have a new scheme up and running for offshore from 2009 and onshore from 2010. To this end a formal project board had been set up and a project team was being put together. It was expected there would be industry representation on the project team. The project would take a lead from the Regulation and Recognition Project currently being trailed from the HSE Leeds office.
- HB said that EA seemed to be happy with their OPRA system. KA said that HSE had met with EA and SEPA and that they were both party to the ongoing discussions about the future scheme.
- HB asked whether there were any implications for charging from the COMAH review. KA said there were no links and that the COMAH review was an EU project running over the next few years.
- JHL asked what the role of the industry representative on the future charging scheme project would be. KA said that this was not clear yet, but there is a commitment to consultation throughout the project, most likely through this CCRG.
- JD asked if there was to be a fee scheme for GSMR. KA said not yet.
- KA said that the minutes would be circulated to everyone before being posted on the website. BT added that the guides had to be with the section that published items on the web in the next two weeks in order to meet the deadline for system changes. The Fees Regs are about to go to Ministers for signature and will come into force on 6 April.