Contribution
My Lords, I thank the noble Lord, Lord Wilson, for stepping in for the Minister and for introducing the SI. The instrument revises the hourly rate used to determine fees paid by the offshore oil and gas industry for environmental regulatory services provided by OPRED. Specifically, the instrument increases the hourly rate for specialist officers from £210 to £256 an hour and for non-specialist officers from £114 to £130 an hour. We understand that these amendments are designed to ensure full cost recovery for OPRED’s activities, shifting the burden of regulation from the taxpayer under the polluter pays principle.
From these Benches, we fully support the polluter pays principle as a pillar of responsible environmental and economic policy. It is right that it is in place and is being updated. On that basis, we do not oppose the instrument. Having said that, like the noble Baroness, I have a couple of questions for the Minister about the details of the SI.
On the scale of the increases, there will be a rise from £210 to £256 per hour for specialists, which I calculated as nearly 22%, as well as an increase from £114 to £130 an hour for non-specialist officers. These are quite substantial increases. We note that there have been previous increases in recent years under the same mechanism. The department tells us that they reflect the application of the Treasury’s Managing Public Money to account for a share of corporate services, senior management, human resources, office services and the like.
We recognise that overheads are increasing for OPRED, as they are for many businesses across the country. We are aware that inflationary pressures exist, but I am concerned that in the arrangement before us these inflationary pressures are being passed on to the industry. Can the Minister reassure the industry that OPRED is not only aware of that cost pass-through but is doing everything it can, within its power, to make sure that cost pressures are controlled and managed so that that pass-through does not happen any more than is needed? As the Minister said, there were only five responses, but transparency was raised. It is quite a big extra cost. Under the changes proposed here, we are asking the sector to absorb an extra £1.6 million a year, taking the total from £7.3 million to £8.9 million for these services.
It is also important for OPRED to provide a bit more clarity. It talks about administrative services and the like. When this SI is brought back next year, can it include a paragraph that says more about what types of inflationary pressures are being placed on OPRED and where they are coming from rather than simply using “administrative pressures” and the like as a catchphrase. The industry wants a bit more clarity on that. My request to the Minister is for next year’s SI to state the key sectors and ways in which OPRED has faced inflationary pressures over the past year.
I turn briefly to small operators in the North Sea. The SI says that there are not many small operators and that they will require fewer services, so although there is a cost burden for them, that it is slightly less. However, that has a danger of becoming a self-fulfilling prophecy. Will the Minister say whether any consideration has been given to a more tiered approach? There may not be many small operators within the field, but where there are, these cost burdens could have disproportionate and significant costs for the operation of their overall business. For next year, can the department give any consideration to that?
Finally, as we are moving away from European measures, I want to see that we continue to ensure that we have the best practices and transparency in the management of those costs, to make sure that we are building the best relations with the industry, which is under strain, and that we support a just transition as we move away from North Sea oil to renewables. This industry has a number of pressures on it, including costs coming from different directions. We fully support the work that OPRED does and recognise its importance. The questions that I have asked the Minister are not to detract from our support for the vital environmental work that it does.