HSE consultation on costs recovery – is your industry sector impacted?
Market Insight 22 August 2023 22 August 2023
UK & Europe
Regulatory & Investigations
The HSE has issued a consultation on proposed changes to cost recovery. This is following the independent Tailored Review of HSE in 2018, which recommended that HSE should explore opportunities for expansion of the use of cost recovery in certain sectors. HSE has now identified where current cost recovery mechanisms do not recover the full cost of the regulatory activity.
Proposals - new charging regimes
The main proposal is that HSE recovers the full cost of all its regulatory activities in the following three sectors:
- Oil, Gas and Chemicals Pipeline Systems
- Onshore Oil, Gas and Geothermal Exploration and Production
- Wind and Marine Energy (Renewables)
The policy aim on which HSE is consulting is to ensure full cost recovery where the risk profile of the sector, the hazard or the nature of emerging technologies require risk-based interventions to reduce the potential for injury or ill-health to workers and/or the wider public.
Rationale behind proposals
Currently in these sectors, HSE’s regulatory interventions are funded only partially by Fee for Intervention (FFI). As FFI only applies where a material breach of the law is found through a regulatory intervention, when there is no breach, HSE does not recover its costs. Therefore, HSE’s preferred approach to prevent incidents in high hazard industries is through a fully funded cost recovery regime of regulatory interventions.
HSE considers many of the characteristics of the three sectors match the characteristics of similar sectors for which full cost recovery is already in place. These include:
- the potential to create great harm to workers, the environment and the public
- the highly specialised and strategically important nature of these industries
- the requirement for staff with specialist skills
- regime specific regulatory activity is used
- emerging technology with expected growth and complexity
HSE states that the only way for it to maintain regulatory excellence is through full cost recovery.
Draft, indicative hourly rates
Through the proposed cost recovery rates HSE will recover the full cost of regulating duty holders in these sectors. If full cost recovery is introduced FFI will cease to apply.
The Proposed Draft Indicative Hourly Rates are shown below:
SectorProposed Draft Indicative Hourly Rates
Oil, Gas and Chemicals Pipeline Systems£220
Onshore Oil, Gas and Geothermal Exploration and Production£310
Wind and Marine Energy (Renewables)£192
HSE proposes to recover costs incurred through quarterly invoicing. If duty holders do not pay promptly normal credit control action will be taken.
The implementation of these cost recovery proposals will not change HSE’s regulatory approach to these sectors, which are evidence-based, but will provide a sustainable financial model to ensure effective regulation now and in the future.
Proposals – to existing fees regulations
There are proposals to review hourly rates in relation to permissoning activities undertaken by HSE within the explosives industry. It is also proposed to remove the current application fee payable for interventions under the Explosives Regulations 2014 and the Dangerous Goods in Harbour Areas Regulations 2016, and that the hourly rates be applied for all work undertaken.
Changes are also proposed to Offshore First-Aid and Medical training approvals in that the fees should be simplified to provide for three distinct fees for each of the two types of training approvals.
Full details of the consultation can be accessed here. Responses must be received by 4th September 2023.