Offshore Charging Review Group
Minutes of the Meeting held on 27 October 2005
Mr Ian Whewell, Chair, HSE
Mr Bob Kyle, UKOOA
Mr Paul Holman, BROA
Mr Bill Tomkins, PEFD
Mr Kelvin McFadyen, HID, Secretary
Introduction and Apologies
1. Apologies had been received from Jane Bugler, IMCA, Bill Murray, OCA and Dominic Cattini, IADC.
Minutes of the Meeting held on 2 October 2003
2. The minutes were agreed by correspondence and published on the HSE website.
3. Min 5 – The issue was raised with the Divisional Management Board and cascaded down to team leaders.
4. Min 13 – IADC did not respond but the point was made in the report.
5. The standard breakdown of costs was circulated. The aim of the hourly rate is only to recover costs, not to deliberately make a profit or loss. There was a surplus of income over expenditure (£273.7k). However, the proportional make up of the rate remains fairly static.
6. Industry commented that the 2004/05 Activity Summary (OCRG 2005/2) compared to the 2003/04 summary showed that less hours were worked and invoice values were lower, but more invoices were issued. The reduced hours and values resulted from a number of inspectors on a six-month training course at Heriot Watt University. The increase in invoice numbers stemmed from changes in the way some companies were billed. Larger Duty Holders had received composite invoices for several installations based in a business unit. This delayed payment, as the invoices were then split up by the Duty Holders accountants for authorisation. Separate invoices for each installation were now being issued. It was also noted that the title dates on paper OCRG 2005/2 were wrong.
Proposed Rate 2006/07
7. The proposed rate of £147 was circulated to members prior to the meeting. The reduced rate reflected the benefits of the efficiency reviews and reduced overhead costs. The proposed rates will be submitted to an HSC sub-group and then to the HSC on 6 December for agreement. The HSC Chair then writes to the DWP seeking Ministerial approval for the 2006 Fees Regulations to be made. Should Industry have any charging issues they wish HSC to be made aware of they can be included in this paper. Industry should let Mr Tomkins know as soon as possible.
8. Industry raised the question of alternate charging methods that was a concern for, at least, one sector. This point had been made to HSC previously, but as had been stated before it will require a suitable Bill to act as a vehicle for amending the Health and Safety at Work etc. Act 1974 (HSWA). This was done in relation to charging for railway safety in 2003 and there is now a clause in HSWA giving ministers the powers to make regulations for a rail levy. It should be noted that the Rail Industry made strong representations for change in the Deloitte & Touche review and lobbied Ministers with their case. HSE had no knowledge of the case made to Ministers. The Deloitte & Touche report is on HSEs website.
Queries & Disputes Procedure
9. There has not been a Level 3 dispute for some years, but two have now arisen. This has caused HSE to review the procedures published on its website. This is mainly a tidying up exercise to reflect organisational changes and the reality of what happens with queries. The procedures refer to the Disputes Panel Chair as HSEs Director of Safety Policy, a post that has not existed for two years. Queries are supposed to be directed to the finance branch in the first instance. In almost all cases the finance branch simply forwards the query to the charging team responsible. Also a number of queries are received directly by the charging teams. Consideration is being given to whether the charging teams should become the first point of contact, thus removing a link in the chain and speeding up responses.
10. HSE is contacting the independent members of the disputes panel to see if they are still willing to be called upon in the other charging schemes. HSE has spoken to Jim Petrie who was nominated for this role some time ago. He is still available to act as an independent member of an Offshore Level 3 panel although the Chair suggested that the group might wish to consider if Mr Petrie’s knowledge of the industry was still current. It would be also be useful if OCRG could nominate a second “independent” in case Mr Petrie is not available if and when a dispute arises in future. The independent members should have a good knowledge of the industry and be without current industry connections.
11. Industry queried the data supplied with invoices citing that some Duty Holders felt there were hidden or unidentifiable costs such as preparation work prior to an inspection. It asked whether these could be included in the rate. HSE said that it was not possible to include these costs in the overhead and to do so would be unfair. HSE is required to recover the cost of relevant work done. To smear costs such as preparation work in to the overhead would penalise some Duty Holders. New guidance was being prepared for inspectors regarding what they should put in the notes against timelines to provide better information to Duty Holders on what they are paying for. This guidance needs to be common across three charging regimes as a new IT system is coming on line shortly.
12. Regarding the new IT system (COIN) which HSE was introducing across operational divisions to inter alia record usage of time, HSE would try to make the transition as seamless as possible. But it was possible that errors would occur. HSE asked that industry bear with us during the transition period, but any queries should be addressed to the charging team in Aberdeen (e-mail to [email protected]).
Any Other Business
13. Industry raised the issue of charging for marine inspections raised in a memo from an inspector. HSE said that this had arisen because the team involved was engaged in work on the fringe of OSDs usual activities, that little of its work was chargeable. They had proposed the idea of charging for certain marine inspections. However the proposals were outside the legal bounds of charging as the costs would be smeared rather than linked to specific Duty Holders. The Chairman had spoken to the inspector concerned and his line management pointing out the error of this line. The Chairman had corresponded with BROA on this issue and reiterated that there was no work being done, or intention, to extend charging to general marine activities.