Offshore Charging Review Group (OCRG)
Minutes of the Third Meeting on Tuesday 19 September 2000 held in Rose Court, London
Mr N Stone, HSE PEFD (Chair Items 1-6)
Ms A Sharp, HSE SPDC (Chair Items 7-11)
Mr I Whewell, HSE OSD
Mr I Travers, HSE HID
Mr M Reyland, HSE PEFD
Mr K McFadyen, HSE OSD (Secretary)
Mr J Petrie, UKOOA
Ms J Bugler, IMCA
Mr P Holman, BROA
1 Welcome, introduction and apologies
1.1 Mr Stone said that Ms Sharp had to attend an HSC meeting and that he had been asked to take the chair until she arrived. He welcomed Mr Travers to the meeting, who was going to report on the COMAH component charging feasibility project at item 6.
1.2 Apologies had been received from Mr I Bell (OCA), Mr D Taylor (Kerr-McGee), Mr P Wyatt (Shell) and Mr R Wilson (AEEU).
2 Minutes of the previous meeting (11 April 2000)
2.1 The minutes had been circulated to all members and no amendments were requested.
3 Matters arising (not covered by the agenda)
3.1 (Previous minutes para 6 refers) ICRG papers had been copied to OCRG members.
3.2 (Previous minutes para 8 ii refers) The Chair said that
although alternative charging schemes would be covered by agenda
item 6, he felt an update on the proposed Safety Bill might give
industry other avenues to consider. It was possible that the
Safety Bill would include a new power enabling HSC/E to recover
costs through levy arrangements. If a levy power is obtained
there would still need to be consultation with relevant
industries on a move from fees and charges to levy arrangements.
The advantage of a levy was that it would provide industry with
far greater predictability than was possible with
'actuals' charging. Industry might wish to bear this in
mind in forming views on alternative charging schemes. HSE agreed
to keep industry updated on the Bill's progress and to
present a paper for discussion at the next meeting which set out
possible options for the way forward.
Action: HSE (Mr Stone)
3.3 (Previous minutes para 9 refers) HSE had written to
several organisations, including the CBI and other public sector
regulators, to get information for the 'Charging
benchmarking' exercise. So far there had been a mixed
response, with some organisations expressing an interest in the
exercise but wanting more information on the scope. Responses had
been received from DVLA, Metropolitan Police and the Pesticides
Safety Directorate of MAFF. Others, including CAA and MCA, needed
to be chased for a response. BROA offered assistance, if
required, in getting MCA involved as industry has an input to the
3.4 (Previous minutes para 19 refers) OSD reported that the
agendas and minutes of the first two meetings had been submitted
to the HID section responsible for placing them on the Internet.
They were currently being formatted for inclusion. It was thought
that delay had occurred due to the current reorganisation, but it
was accepted that in future publication needed to be quicker, or
the impact would be lost.
4 Industry-wide Charging Review Group: report on first meeting
4.1 The main issues discussed were the ICRG's terms of reference, the financial reports from the four Charging Review Groups, the operation and fitness for purpose of the queries and disputes procedure, and a detailed discussion of the draft proposals for the evaluation and review of the operation and effectiveness of the charging schemes. The industry representatives felt it had been useful to get the four groups together to exchange ideas. However, in the longer term they were uncertain whether the ICRG would continue to be of value. If the four schemes did not achieve some measure of parity it was likely that there would be good, understood, reasons for this and cross scheme debate would have a lesser value. The frequency of meetings would be kept under review. The next meeting was on 31 October.
4.2 The presentation of the ICRG progress report to the HSC in July had been useful, and the report well received. HSE considered that progress had been made, that the mechanisms were in place to ensure that industries' concerns were addressed, and that the schemes had operated effectively and equitably so far. However, the Commission still had concerns about the new charging schemes, which would be addressed as part of the evaluation and review.
4.3 The consultants to be engaged for the evaluation project would be invited to the next OCRG meeting and industry views would be sought in the interim concerning the survey sample, among other things. Industry expressed interest in the scope of the project. Industry had participated in a number of reviews over the years with mixed results. It felt that the variable quality of the outcomes was significantly influenced by the level of industry input. HSE accepted that there were some issues concerning the scope of the regulations that evaluation would need to address including, for example, charging boundary questions.
5 Disputes procedure
a) Industry nominee:
5.1 The industry nomination of Mr Edmund Terry as a member of
the disputes panel was accepted by OCRG members. Mr Terry had
signified his willingness to serve. HSE would now write to Mr
Terry setting out the terms of appointment. If he accepted, Mr
Norris would write formally appointing him.
Action: HSE (Mr Stone)
b) Other issues
5.2 HSE reported that 14 Level One offshore charging queries had been received between 1 April and 31 August. All these, plus one carried over from the previous period, had been resolved. Only one was found in favour of the duty holder. One other query received during this period had been designated as Level Two and had yet to be resolved. In contrast it was reported that three COMAH disputes had gone to the Disputes Panel. Of these, one had been found in favour of HSE, one for the duty holder and one referred back to level 2.
5.3 The group agreed the need for feedback on disputes,
particularly the nature of the dispute and issues involved, as
well as their resolution. HSE was exploring whether key issues
arising out of Disputes Panel determinations should be published
on the Internet or reflected in the charging guidance,
particularly where the information disseminated would assist the
achievement of best practice.
6 COMAH component scheme project
6.1 Mr Travers handed out some working papers on the project stressing that they were not the finished product. He said that this project was a feasibility study carried out under PRINCE principles and that much of the work had been contracted to HSL. The main issues involved in charging were predictability, the cost of running the scheme and the transparency of the charge. As this was a feasibility study, it could conclude that an alternative method of charging was not feasible. A report was due at the end of November. If the report suggested component-based charging was feasible and this was accepted by the project board, proposals would be put to the HSE Management Board and Commission before industry consultation next year.
6.2 Mr Travers went on to describe the factors involved in a component scheme for safety report assessment. These included the effort required; size of inspection team;, variation in sites and in the way safety reports were presented; specific factors/components for each site; and the different agencies' priorities. Similar factors also applied to the inspection process, but it looked as though an hourly charge would need to remain for investigation work. The project was also looking at the possibility of rebates for good performers.
6.3 Once the final product had been to the COMAH CRG, it would be circulated to OCRG members. The group thanked Mr Travers for his presentation.
7 Industry charging guide
7.1 A redraft of Annex A, para 3.19 was circulated with the
agenda. HSE apologised for the time taken to get this out, but a
legal opinion from HSE solicitor had been needed. This was to the
effect that a 'connected activity' was more limited than
inspectors may have thought. They could only inspect the task
connected to an installation and the management arrangements for
that task. Inspection of normal shipboard equipment was not
within their vires. Industry queried the definition of normal
shipboard equipment. HSE responded that, since the application of
the HSW Act was by virtue of a connected activity, inspectors
could only inspect equipment provided for that activity.
Redrafted guidance was with inspectors, to see if it was clear to
them. It was agreed that industry could see this guidance.
Industry agreed to comment on the draft paragraph by the end of
September, and made the point that the whole issue was a
continuing problem stemming from the way the regulations were
written, which should be raised during evaluation of
Action: Both sides
7.2 HSE had received a letter from IMCA on behalf of the
industry just before the meeting which raised points about advice
and other non-chargeable activities. It was agreed to set up a
meeting between Ian Whewell, Jane Bugler and Jim Petrie to
discuss these issues.
Action: Both sides
8 Finance report
8.1 HSE presented the Memorandum Trading Account (MTA) figures for the financial year 1999/2000 which would be included in HSE's accounts, and which showed a trading loss. HSE said that it was now necessary to review the assumptions made when the rate was set and compare these with the outturn. HSE would also be reviewing the methodology used to determine costs as preparation of the charge-out rate for 2001/2002. That rate would apply from 1 April 2001 and would not seek to recover the losses from last year and this. Current information suggested that the directly chargeable input, particularly by Band 2 inspectors, was overestimated. The loss results from HSE having put in place a rate which did not fully reflect the costs incurred. HSE was required to recover all appropriate costs. The system was still bedding in and more accurate base data was becoming available to calculate the rate. Proposed revised rates would be submitted to the HSC in December, and with the Commission's approval, to Ministers shortly after. HSE was currently undertaking a study to establish the reason for the difference in costs and charges across the four regimes. A paper containing the findings of this study would be presented to the ICRG meeting in October.
9 Efficiency plan
9.1 HSE said that the efficiency plan for HID Land Division had been reviewed to see if there were any 'read across' issues that were relevant offshore. COMAH was a new regime and the plan emphasised achieving improvements in safety report assessment. Offshore was a more mature regime, and it was felt that the efficiencies in safety case assessment that Land Division sought were achieved some years ago. Instead of this, offshore safety would be taking forward efficiencies through the standard requirements of the government planning processes.
9.2 Several projects were underway to meet these requirements. A review was taking place of inspection planning, with the aim of increasing effectiveness and efficiency and getting more out of the activity. Safety case systems and procedures were being reviewed to improve the audit trail. A report on this was due out soon. OSD would be looking for more accessible and better structured records of assessments following solicitors advice on the need for this. There was also a peer review project too look at resolving difficult issues more effectively, and a review of the scope for using administrative staff more effectively as a cheaper alternative to inspectors.
9.3 Industry welcomed the idea of an auditable trail of safety
case assessments as an aid to the review of accepted cases. HSE
promised to provide a detailed summary of these initiatives for
the next meeting.
10 Any other business
10.1 Jim Petrie announced that he was retiring and that this should be his last OCRG meeting. He said that UKOOA was reviewing its organisation and that a replacement would be notified in due course. The group thanked him for his contributions to the work of the group.
10.2 Mr McFadyen said that he was seeking to realign the invoicing periods with its normal accounting quarters. This would make invoicing less complicated when charge rates altered, but was likely to mean a four month invoice issued in January. The group noted this.
10.3 The Chair said that she had to provide a report for the next ICRG meeting on key issues and wanted to ensure that the group was content with what she proposed to say. The main points would be:
- Wording of guidance on charging duty holders for inspection of contractors working from vessels which were not installations had been agreed, subject to final comments. To assist industry, HSE would also provide copies of the more detailed guidance for inspectors . However, there remained underlying issues which related to the regulations themselves, which would be taken up when charging was evaluated.
- The issue of data supplied with invoices had been dealt with satisfactorily.
- The charge out rate remained an issue, and had been highlighted by recent costing calculations which produced a shortfall in costs recovered so far. If correct, this would indicate that the current rate might be too low.
- There was continuing interest in both efficiency and benchmarking, but there had been some difficulty in finding comparable regulators against which to consider HSE.
- Industry had sought clarification on charging for advice, and HSE was to discuss a draft revision to the relevant section of guidance. A revised version of the guidance was planned for publication towards the end of the year.
- HSC was likely to be interested in the concern about charging duty holders for the inspection of contractors, and about the fact that this arose from explicit provisions in the regulations, which would be raised as an issue when charging was evaluated. It would also be interested in questions relating to the charge out rate. The Group agreed that these were the main items to report to ICRG.
11 Date of next meeting
11.1 The next meeting would be held on Tuesday 3 April 2001, in Aberdeen.