Cost recovery for the inspection of notifications for onshore 'boreholes'
This guidance provides advance notice of how cost recovery for the inspection of notifications for onshore 'boreholes' will work, following Ministerial and Parliamentary approval of the Health and Safety and Nuclear (Fees) Regulations 2021.
- Part 1 - Cost recovery arrangements
- The fee boundary and what is cost recoverable
- Cost recoverable activities
- Advice and guidance
Part 2 - Illustrative example of cost recovery activities
Part 1: Cost recovery arrangements
This guide is aimed at operators of onshore boreholes and others entitled to drill boreholes that are subject to the requirements of regulation 6 of the Borehole Sites and Operations Regulations 1995 (BSOR). It provides information about how the cost recovery scheme operates, as well as details about the scope and nature of the activities undertaken by HSE, for which costs are recovered. It also explains how the costs are calculated. This edition shows the hourly fee from 1 April 2023.
The fee boundary and what is cost recoverable
HSE will recover its costs for work associated with inspecting notifications under regulation 6 of BSOR. Such work refers to all of HSE's activities when dealing with a notification, whether these activities take place on-site or elsewhere.
The Health and Safety and Nuclear (Fees) Regulations 2021 allows HSE to recover the cost of these activities, from an operator of a borehole site or a person entitled to drill a borehole (ie a dutyholder), who has submitted to HSE a notification as required under BSOR.
HSE recovers the costs of its activities for certain onshore borehole sites under the Control of Major Accident Hazards Regulations 1999 (COMAH). No fee is payable under BSOR for any function where a fee is payable (or has been paid) for that function under COMAH. HSE publishes a Cost Recovery Guide for COMAH.
Cost recoverable activities
HSE will recover its costs, based on an hourly rate, for the time spent in inspecting notifications submitted under the provisions of regulations 6(1), 6(2), 6(3), 6(4) and 6(5) of BSOR. This includes time spent on the following activities:
- desktop inspection work
- on-site verification inspection work
- meetings (wherever they take place)
- telephone conversations
- report writing
Cost recovery rates are calculated in accordance with HM Treasury guidance on fees and charges, and include the full cost of carrying out the cost recoverable work. See Methodology used for calculating fees.
Costs will be recovered for the inspection of all notifications. Inspection includes all work associated with the provision of an auditable HSE decision record in accordance with HSE procedures.
The total amount of time spent inspecting a particular dutyholder's notification is cost recoverable. This includes time spent on planning the inspection, recording findings and communicating with the dutyholder to obtain further information. Dealing with third parties, such as consultants or agents engaged by the dutyholder to support the notification submission, is part of the inspection process and therefore cost recoverable.
Most inspection work takes place by consideration of the information provided in the notification. However, it may be necessary to supplement this with visits to the dutyholder's offices for discussion and clarification purposes. The process may also involve a visit to the relevant borehole site.
Cost recovery for inspection starts as soon as the notification has been received and covers all stages in the inspection process, through to completion of appropriate records.
The cost recovery for notification inspection ends at the point when the inspector has completed the inspection and the dutyholder has addressed any points raised. On some occasions, further inspection work may arise as the borehole operation is conducted, eg if changes to the notified borehole operation are made by the dutyholder, which then requires the inspector to revisit the earlier inspection.
Inspection work not directly connected with borehole notification inspections and investigation work following an incident, complaint etc are not classed as cost recoverable work and will be subject to Fee for Intervention if a material breach of the law is identified during the intervention.
Advice and guidance
Notifications can be greatly assisted by advance discussion between dutyholders and HSE. Dutyholders are encouraged to discuss and resolve such matters with HSE in advance of submission, thereby avoiding any subsequent difficulties. This work is not subject to cost recovery.
Who is subject to cost recovery?
The cost of boreholes notification work is payable by those who are dutyholders under regulations 6(1), 6(2), 6(3), 6(4) or 6(5) of BSOR.
Methodology used for calculating recoverable fees costs
The total cost to be paid is calculated based on the time spent on the particular cost recoverable activity, multiplied by a pre-determined hourly rate. The costs recovered are calculated in accordance with HM Treasury's guidance Managing Public Money, and includes the full cost of all the resources used in carrying out and supporting that cost recoverable activity. These costs are included in the Memorandum Trading Accounts prepared annually and which are set out based on six main headings. The costs included in these headings are as follows.
- Gross salaries of direct staff
- staff actually carrying out the work, their line managers and support staff
- Gross salaries of operational management and strategy
- staff who deal with the consistency and quality of operational work, as well as finance and planning issues specific to that directorate
- General administrative expenditure
- accommodation costs
- use of information technology
- travel and subsistence
- staff development and training
- office services (for example postage and telecommunications)
- services bought from external suppliers
- any other appropriate costs that may arise
- Corporate services
- common services (for example finance and planning, human resources, senior management and business services)
- Capital charges
- depreciation of fixed assets, cost of capital and insurance.
- Executive delivery costs
- developing and maintaining guidance for dutyholders;
- internal guidance for inspectors (for example to achieve consistency of regulation);
- consulting and discussing current problems and their effective control with dutyholders and their representatives; and
- industry-specific research and development.
Administrative and financial arrangements
HSE issues invoices and receives payments for all cost recoverable activities irrespective of who carried out the work, for example sHSE or a contractor. HSE is responsible for debt recovery. Invoices identify each separate cost recoverable activity, including:
- date of activity
- number of hours spent
- the rate to be applied
- the name of the inspector doing the work
- the total amount payable
Invoicing and debt recovery functions are carried out centrally; inspectors are not responsible for the issuing of invoices or for any follow-up actions relating to non-payment of invoices. Queries on invoices should be referred to the contact point given under Contacts for advice and guidance.
Invoicing will take place within 30 working days of the end of a quarter. Invoices will be issued on the pattern of quarters March to May, June to August, September to November and December to February. Invoices will invariably contain costs for time outside these strict quarterly periods.
Payment will be due to HSE within 30 days of the date of the invoice. HSE will actively pursue outstanding debts in accordance with its debt recovery procedures.
HSE will prepare annual Memorandum Trading Accounts, which will be subject to scrutiny by HSE's internal audit and also externally by the National Audit Office.
Fees are made on an 'actuals' basis. That is, the recovery of the full costs of the time spent by HSE carrying out a relevant activity or intervention. The way in which HSE has approached the identification of the relevant costs for inclusion in the charge out rate follows the guidance in HM Treasury's "Managing Public Money".
From 1 April 2023, the charge out rate is £185 per inspector hour.
Procedure for handling queries and disputes
If a dutyholder has a query about an invoice, they should contact HSE to seek to resolve it informally. If it is not possible to do this, they should refer to the HSE procedure for handling queries and disputes.
It should be noted there are time limits at each level, within which queries should be submitted.
Procedure for resolving operational issues
Where matters of dispute arise on operational issues, which have implications for the cost recovery regime, these will first be considered by the Offshore and Onshore Boreholes Cost Recovery Review Group. This Group has the overall responsibility to keep under review the effectiveness and operation of the borehole cost recovery regime's financial and administrative arrangements. The membership of the Review Group will comprise representatives from industry and trade associations, as well as HSE officials.
If the matter cannot be resolved by the Review Group, it will be referred to senior officials within HSE.
Contacts for advice and guidance
For further advice or queries on the operation of the cost recovery system, contact:
Energy Division Finance Business Partner Team
2.2 Redgrave Court
Email: [email protected]
For queries about making a payment, contact:
Health and Safety Executive