My Lords, I beg to move that these regulations, which were laid before the House on 21 April 2021, be approved. I will refer to them as the fees regulations.
As the environmental regulator of the offshore oil and gas industry, which I shall refer to as the offshore industry, BEIS’s Offshore Petroleum Regulator for Environment and Decommissioning, OPRED, recoups the cost of its regulatory functions from the industry, rather than the taxpayer footing the bill. OPRED’s role is to minimise the impact of the offshore industry on the environment by, for example, controlling air emissions and discharges to sea and minimising disturbance over the lifecycle of operations, from seismic surveys through 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 four fees schemes that are not, because 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 130 companies. These are billed quarterly. OPRED recovers its costs via fees based on hourly rates. The fees regulations will increase the hourly rates used to calculate fees payable by the offshore industry. The fees relate to the provision of regulatory functions for the environmental management of offshore operations. Currently, the fees that OPRED charges for providing its regulatory services are based on hourly rates of £190 for environmental specialists and £101 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 place since April 2020. OPRED has reviewed the cost base and concluded that the existing hourly rates need to be increased to fully recover the costs of providing specific regulatory services. The fees regulations will therefore amend the charging provisions by increasing the hourly rates for environmental specialists and non-specialists to £197 and £108 respectively. As the increases 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 November last year. They were calculated in line with the Treasury’s Managing Public Money guidance and 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: the evaluation of applications and issuing of consents for seismic surveys and the conducting of appropriate assessments on 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 revised fees to be paid will increase by a small amount, sufficient only to allow OPRED to recover its eligible costs. In this regard, the additional total cost resulting from the increase in hourly rates will be around £300,000 per year. OPRED’s guidance on its fees-charging regime will be revised to reflect the new hourly rates. Those charged by OPRED are aware that it reviews its hourly rates annually and, although there was no statutory requirement to consult on the fees regulations, in February OPRED informed the offshore industry of the planned increase to the hourly rates. No representations were received.
I conclude by emphasising the importance of the increase to the hourly rates being introduced by the fees regulations. The increase will enable OPRED to recover the costs of providing regulatory services from those who benefit from them, instead of those costs being passed on to the taxpayer. The fees regulations were debated and approved by the House of Commons on 26 May. I therefore hope that noble Lords will support the measure and I commend the regulations to the Committee.
4.33 pm