Pollution Prevention and Control (Fees) (Miscellaneous Amendments) Regulations 2022

Baroness McIntosh of Pickering Excerpts

Monday 23rd May 2022 Grand Committee

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, the Pollution Prevention and Control (Fees) (Miscellaneous Amendments) Regulations 2022 were laid before the House on 25 April 2022. I will refer to these regulations as the fees regulations.

As the environmental regulator of the offshore oil and gas sector, which I shall refer to as the offshore hydrocarbons sector, BEIS’s Offshore Petroleum Regulator for Environment and Decommissioning, which I shall refer to as OPRED, recoups the cost of its regulatory functions from the offshore hydrocarbons sector rather than the taxpayer footing the bill. OPRED minimises the impact of the offshore hydrocarbons sector on the environment by, for example, controlling air emissions and discharges to sea and minimising disturbance over the life cycle of operations, from seismic surveys to post-decommissioning monitoring.

Regulatory activities for which OPRED can recover costs are covered in two ways: within a suite of regulations that are covered by the fees regulations, and by five fees schemes which are not, as they do not require legislative change and will be amended administratively. OPRED’s annual fees income is on average £6.2 million, which is recovered from around 120 companies, which are billed quarterly. OPRED recovers its costs via fees based on hourly rates.

The fees regulations will revise the hourly rates used to calculate fees payable by the offshore hydrocarbons sector. The fees relate to the provision of regulatory functions in relation to the environmental management of offshore operations. Currently, the fees that OPRED charges for providing regulatory services are based on hourly rates of £197 for environmental specialists and £108 for non-specialists. Environmental specialists are qualified technical staff who carry out the legislative functions of the Secretary of State, and non-specialists are administrative staff who support them.

The current hourly rates have been in force since June 2021. OPRED reviewed the cost base and concluded that the existing hourly rates need revising to reflect the present costs to OPRED of providing specific regulatory services. The fees regulations will therefore amend the charging provisions by increasing the existing hourly rate for environmental specialists to £201 and decreasing the current hourly rate for non-specialists to £104. As the changes relate to cost recovery, they do not represent monetary changes linked to inflation.

OPRED’s fees are determined by adding together the recorded number of hours worked by environmental specialists and non-specialists on cost-recoverable activities, multiplied by the hourly rates. The new hourly rates were approved by Her Majesty’s Treasury in March 2022 and were calculated in line with the Treasury’s Managing Public Money guidance. They cover the expenditure on all resources used by OPRED to support cost-recoverable activities—for example, staff salaries, accommodation, IT and office services, and corporate services such as human resources, senior management, legal, finance and learning and development.

Guidance on OPRED’s fee-charging regimes is published and clearly explains the scope of the cost-recoverable functions undertaken by OPRED and how the costs are to be calculated and recovered. The cost-recoverable functions undertaken by OPRED include, for example: the evaluation of applications and issuing of consents for seismic surveys, and the conducting of appropriate assessments of the likely significant environmental effects of proposed projects; assessing and approving operators’ oil pollution emergency plans; and compliance monitoring activities, including offshore environmental inspections.

The fees to be paid will be revised by a small amount, sufficient only to allow OPRED to recover its eligible costs. OPRED’s guidance on its fee-charging regime will be revised to reflect the new hourly rates. Those who OPRED charge are aware that the hourly rates are reviewed annually. Although there was no statutory requirement to consult on the fees regulations, in April 2022 OPRED informed the offshore hydrocarbons sector of the planned revisions to the hourly rates, and no representations were received.

Therefore, I conclude by emphasising the importance of the revisions to the hourly rates being introduced by the fees regulations. The revisions will enable OPRED to recover the costs of providing regulatory services from those who benefit from them, instead of these costs being passed on to the taxpayer. The fees regulations will be debated by the House of Commons tomorrow, 24 May. I therefore commend the draft fees regulations to the House.

[Baroness McIntosh of Pickering (Con)]

My Lords, I congratulate my noble friend on bringing forward these regulations, which seem perfectly reasonable. I thank the environmental specialists and non-specialists for the crucial work they do in this sector.

I have just one small question to ask my noble friend, if I may. If you look at the same regulations from last year, we seem to be reversing the rate that was agreed for the non-specialist workforce. I think the rate was increased from £101 to £108 last year, so I would like to understand why the Government have decided to cut that back to £104.

My noble friend has just told us that there were no responses to the consultation, so one has to accept that no alarm was expressed by the non-specialist sector. For my greater understanding, can he explain what proportion of the workforce are environmental specialists, as opposed to non-specialists? Paragraph 7.3 of the Explanatory Memorandum states that

“the total amount to be recovered by OPRED in FY 2022/2023 will be broadly similar to the average received in previous years”.

On what assumption is that based? Is the increase in environmental specialists being covered by the reduction in the non-specialist sector in order to keep it within that envelope?

With those few remarks, I welcome the regulations before us.