Tenth Standing Committee
on Delegated Legislation
Wednesday 4 December 2002
[Derek Conway in the Chair]
Companies (Fees) (Amendment No.2) Regulations 2002
The Parliamentary Under-Secretary of State for Trade and Industry (Miss Melanie Johnson): I beg to move,
That the Committee has considered the Companies (Fees) (Amendment No. 2) Regulations 2002 (S.I., 2002, No. 2894).
The regulations will apply to England and Wales and to Scotland, but not to Northern Ireland, which has its own Companies Registry. The effect of the regulations, which are required for mainly technical legal reasons, is to repeal the statutory fees for microfiche-based services provided by Companies House. Although most existing microfiche services will continue to be available for historical purposes, their use is expected to decline. It will therefore be appropriate for the registrar to set the fee administratively to recover the cost of the microfiche archive service.
Companies House has successfully achieved the Government's modernising agenda of providing access to basic company information electronically. As expected, demand for microfiche has continued to fall, and despite a price increase earlier this year, the number of microfiche searches has sunk to such a level that it is uneconomic to continue to produce them. The organisation will therefore stop updating microfiche-based company records on 31 December 2002. However, the ''frozen'' microfiche product will still be available to researchers if they want it as an archive product.
Companies House has already scanned all the documents that it has received since April 1995 to provide a comprehensive company record. It also has a programme to capture images from older microfiche for the most commonly searched companies to add to the image record. Additionally, it can scan any other document held on microfiche and deliver that electronically to the customer.
We recognise, however, that a few customers will not have access to appropriate computer equipment to receive and view electronic images of company information. The regulations therefore set a statutory fee for a postal paper-based document information service to complement electronic information delivery services. That service is similar to that successfully provided for information about limited liability partnerships since that corporate vehicle was introduced in April 2001. The paper-based document information service is not new. It replaces the previous statutory service for paper documents that was set when microfiche was the primary source of company information.
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Members of Parliament were told that Companies House would adopt such a strategy when I addressed a previous Committee during a debate on the Companies (Fees) (Amendment) Regulations 2002 on 7 March. At that time, I said that Companies House would rely on electronic services or electronically derived services to satisfy almost all demands for basic company information by the end of this year. I said also that the price of microfiche would be raised to minimise losses from delivering those services until Companies House was ready to stop updating microfiche-based company records at the end of the year.
The number of microfiche searches has declined from 2 million in 1995–96 to an estimated 250,000 by the end of this year—a 90 per cent. in seven years. The decline occurred in parallel with Companies House developing and delivering its electronic search services to meet customer demand. It is estimated that if Companies House were to retain existing microfiche services, the cost of the basic product would increase to a prohibitive £20. That is because the costs of producing microfiche are large and essentially fixed, so volumes of searches significantly influence unit costs. Such a high price would be unacceptable even to those users who traditionally use microfiche.
Increasingly, customers have demonstrated that they prefer to receive the more convenient electronic services now available. Those include daily transmission of all new data received for large users, the subscription Companies House Direct service for regular users, and the pay-as-you-go internet WebCHeck service for casual users. Customers may also continue to choose to visit Companies House, where access to all electronic search services is provided.
Companies House has put considerable effort into informing customers about the change to its services. Since the beginning of the year, it has undertaken a communications campaign that has included advertisements in the national press and relevant trade publications, direct mailing to all known microfiche customers, and leaflets in Companies House information centres. The campaign also includes information posted online on the Companies House website and the Companies House Direct service. Companies House has also managed to redeploy all the staff who were involved in the production of microfiche.
The Companies House executive agency is a key statutory registry, and it has an enormously important role in the provision of company information. Since October 2000, the agency has been capable of delivering information anywhere in the world at the touch of a button. That can only benefit the British economy.
I confirm that in our view the regulations are compatible with the European convention on human rights. I hope that my explanation has been helpful.
Mr. Andrew Robathan (Blaby): Before the sitting started, the Minister suggested that I might like to make a speech defending the use of the quill pen, but I
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shall resist the temptation, even though there are artistic merits to the use of such pens.
The Opposition do not have a problem with the order, but I have a few questions. The Minister put my mind at rest about those who may not be computer literate—a concern relevant to many small businesses—but who still need access to the information by some means. I know that Companies House conducted telephone research, contacting 200 customers. Various concerns were raised, so perhaps the Minister can put my mind to rest on those points.
If large volumes of company information on a single product are demanded, can the Companies House online services provide those large amounts of information? Will it be possible to see online the documents relating to a company's incorporation, if a company is interested in that? The Minister mentioned 1995, and I was not entirely clear where earlier documents would be held. Would they be on microfiche, or in a vault somewhere? Is the online system sufficiently resilient to stand up to the battering that it might get from its customers?
As for fees, I note that Companies House has set a target of a 6 per cent. cumulative average annual rate of return; last year's figure was 9 per cent. It seems to me that fees are pretty high at the moment; perhaps the Minister would like to comment. I know that in October the Office of Fair Trading cleared Companies House of predatory pricing, but there does seem to be a point to consider.
Lastly, I was interested that the Minister brought up the figure of, I think, 250,000 microfiche searches this year. I note that in the last financial year there were 413,000 such searches. Demand appears to be falling off, but perhaps she will confirm that.
Mr. Andrew Mitchell (Sutton Coldfield): I rise to seek clarification of a couple of points. I draw the Committee's attention to my outside interests, which are clearly registered.
I assume that the order is merely a modernising measure of the type that you and I so ardently approve of, Mr. Conway, and that, as my hon. Friend the Member for Blaby (Mr. Robathan) said, it is bringing the system used at Companies House into a more modern age while continuing to cater for those who are not computer literate. In that context, I note what the Minister said about the fee, which is stated on the statutory instrument—I did not realise that fees were normally set out in that way. The fee is to be £3 in respect of one document and £2.50 in respect of subsequent documents. The Minister said that the fees can be set administratively by the registrar of Companies House. Can she reassure the business community that, the fees having been set out in that way today, the registrar will not be able to double or treble them tomorrow? By definition, it would tend to be smaller companies with less in the way of income that would be affected by the fees. Larger companies would be computer literate, as my hon. Friend explained.
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Mr. John Smith (Vale of Glamorgan): It was not my intention to speak, but I am interested in some of the points that have been raised. One that interests me greatly is whether the Minister is confident that the transition to electronic datakeeping will be smooth, particularly when microfiche is involved? My reason for asking stems from recent personal experience, when I contacted the Boston Globe to inquire about an article which had been published some time in 1992 and which I believed the newspaper had stored on microfiche. It was a front-page article stating that the Labour party had elected a new leader—a right-wing bank manager type by the name of John Smith. However, emblazoned all over the front page was yours truly, not our dear departed colleague, the late right hon. Member for Monklands, East.
The serious point is that when I contacted the newspaper, the staff boasted about the transition to the new electronic files, but they could not trace the article because the system had broken down and they could not electronically locate the old microfiche records. Consequently, I had to pay an exorbitant fee to join Boston library, where I spent more than a long afternoon going through all the Sunday editions of the Boston Globe published that year. I did eventually find the article, and returned to the newspaper. The front page now adorns my constituency office.