Companies (Fees) (Amendment) and Open-Ended Investment Companies (Fees) (Amendment) Regulations 2000

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Mr. Gibb: The Minister referred to scanning, but that is not the same as companies sending their accounts by e-mail.

Dr. Howells: I was referring to information that can be obtained, which is different. So far, 3,000 documents a month—a figure that is expected to increase when internet filing becomes fully available—have been filed electronically, so we are making progress.

We need to increase fees to fund future improvements and developments. For example, Companies House must finance its current development programme from fees and charges. The cost of investing in the new information technology to which the hon. Gentleman referred must be funded from fees and charges. Staff training for the increasingly electronic work environment, as well as marketing and publicity must also be funded from revenue, which is allocated appropriately across the range of Companies House products and services.

The hon. Gentleman was right to ask—this is the bit that always bothers me—how the regulations will affect small companies, which are the main customers. It is an important service and, as I am sure he will agree, it is impossible to give a generalised response to that question, because the effect will depend on the extent to which individual companies use Companies House services. Additionally, those companies may use intermediaries—and many of them do—to obtain their information. No separate statistics are kept within Companies House on the use of its services by small companies.

The hon. Gentleman asked whether, in light of the proposed increases, I could assure the Committee that Companies House is operating efficiently. Its performance is closely monitored against a number of targets that are reviewed annually. Those targets are related to the processing of documents, the quality of capture of information and the cost structure, which is especially important.

As well as being subject to oversight by my Department, Companies House has a steering board, which includes representatives from business and the professions, to consider the performance and strategy of the agency. Moreover, I consider the agency's targets every year to satisfy myself that it is properly stretching itself to ensure efficiency, operational performance and quality. Each year, I set Companies House a number of public targets that are designed to be stretching. This year, it is expected to achieve eight of its 10 targets and very narrowly to miss the other two. Not many companies in the public or private sector could say that.

Mr. Christopher Gill (Ludlow): Would the Minister also accept that few private sector companies can put up their prices by the amount by which the Minister proposes to put up these fees? It is all too easy for Departments to take such steps with no possibility of redress for customers.

Dr. Howells: That is a proper question, and it would be asked by some customers. We constantly consult the major, and the smaller, customers of Companies House. The hon. Member for Ludlow (Mr. Gill) came into the Room after I began speaking. I said that cross-subsidies are not allowed under the rules by which Companies House as an agency and the trading fund operate. If a private company had to operate a microfiche service, as does Companies House, it would probably find not only that it was able—as a monopoly provider—to increase the search fees, but that it could increase them by considerably more than Companies House is doing. I have kept the increase as tight as possible properly to cover the increased unit costs of providing that information by microfiche.

I regret that we have had to take this measure. However, reductions in the costs of other services and our investment of that money in the provision of electronic services may eventually bring down the cost to customers by as much as £2 million.

Companies House has an annual target of 3 per cent. unit cost reduction on document registration. That was the crux of what the hon. Member for Bognor Regis and Littlehampton asked. In the past two financial years, the agency achieved 10 per cent., not 3 per cent, and it expects to exceed 3 per cent. by a substantial margin in 2000-01. Microfiche services have a high proportion of fixed costs and the unit cost is therefore especially susceptible to declining demand. That is a problem. Direct economies have been made in the cost of microfiche provision. That partly explains why a 60 per cent. drop in demand can be countered by no more than a 30 per cent. increase in fees.

I pay tribute to the way in which the management and staff of Companies House have achieved that. Before the Government came to power, staff were set extremely difficult targets—I have done the same in the past three years—which they have worked hard to achieve. They recognise the importance to customers of providing error-free information and will continue to devote resources to achieving that objective. Improving quality is a major element of the forthcoming three-year development plan.

I hope that I have answered most of the hon. Gentleman's questions.

Mr. Gibb: What about fees in categories 11a and 11b under the previous regulations?

Dr. Howells: I am told that those relate to postage. Fees in categories 11a and 11b have increased by 100 per cent. because costs were previously grossly underestimated and under-recovered.

I have tried to show that the proposed changes have been the consequence of a move by Companies House customers away from traditional forms of obtaining and supplying company information to more modern and cost-effective means, and the continuing development of Companies House in response to those trends.

I draw special attention to the commitment to developing services that are efficient, economical and of high quality. Despite the hon. Gentleman's slight criticism—it was not a slur—that, so far, not enough information has been filed direct via the internet, Companies House puts a good deal of effort into trying to establish its customers' needs and it uses such consultation and interactions as the basis for driving forward its evolving service offer. I am confident that much more information will be filed electronically from now on.

Companies House aims to use the possibilities afforded by modern technology to create an environment of easier access for companies and individuals, whether they are delivering or obtaining information. This dedicated focus on customers has led Companies House to be one of the few public sector organisations to be awarded the chartermark on three consecutive occasions, which is a great achievement. It also allowed Companies House to garner three significant awards in the wider business community for its online information service—Companies House Direct—in 2000. May I say, as a last sentence, that that may be because at least half the Companies House staff are constituents of mine?

Mr. Gibb: I am grateful to the Minister for that full response, but it has not convinced me—I do not know about other members of the Committee—that Companies House has delivered the savings in costs that it should be delivering. Alan Greenspan is critical of this country for not benefiting from the new economy as much as Canada and North America in general. This case is an example, with only 2 per cent. of companies being able to file their accounts by e-mail. The figures for the Inland Revenue are broadly similar. Despite the efforts being made, and I am sure that the staff at Companies House work well and hard, that is a lamentable figure in this modern age of the internet and computerisation. I detect a note of complacency about the efficiency levels being achieved by Companies House. It is wrong to pass the burdens of the declining demand for microfiche services on to those who are forced to continue to use them because they are small and do not have the sophisticated technology of larger operations.

The funds that Companies House requires to complete its improvement programme should not come from the small customers who use it, but from further efficiency savings there. Given that this is an information technology industry, we should see significant cost savings at Companies House. For that reason, I urge the Committee to vote against the increases, as Opposition Members voted two years ago against the previous hefty increase in the fees.

Question put:—

The Committee divided: Ayes 9, Noes 3.

Division No. 1]

Atkins, Charlotte
Campbell, Mrs. Anne
Drown, Julia
Griffiths, Mr. Win
Hesford, Mr. Stephen
Howells, Dr. Kim
Pope, Mr. Greg
Salter, Mr. Martin
Williams, Mrs. Betty

Gibb, Mr. Nick
Gill, Mr. Christopher
Gray, Mr. James

Question accordingly agreed to.


    That the Committee has considered the Companies (Fees) (Amendment) Regulations 2000 (S.I., 2000, No. 3325).



    That the Committee has considered the Open-Ended Investment Companies (Investment Companies with Variable Capital) (Fees) (Amendment) Regulations 2000 (S.I., 2000, No. 3324).—[Mr. Howells.]

Committee rose at ten minutes past Five o'clock.

The following Members attended the Committee:
Benton, Mr. Joe (Chairman)
Atkins, Charlotte
Campbell, Mrs. Anne
Drown, Ms
Gibb, Mr.
Gill, Mr.
Gray, Mr.
Griffiths, Mr. Win
Hesford, Mr.
Howells, Dr.
Jones, Mr. Nigel
Pope, Mr.
Salter, Mr.
Williams, Mrs. Betty

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Prepared 24 January 2001