2 The Companies House Information
Processing System (CHIPS)|
14. The Companies House Information Processing System
(CHIPS) replaces Companies House's 20 year old electronic processing
system (STEM); its aims are to: provide greater flexibility to
develop electronic services; simplify the process for customers;
extend the hours of service availability; deliver efficiencies
to reduce costs for the customer; and provide a base for the implementation
of the Companies Act 2006.
15. The programme started in April 2001 and was due
to be completed in April 2005 but it was only finally implemented
in February 2008. The project was originally outsourced to a private
sector company but in 2004 it was brought back in-house. Companies
House said that this was because it was concerned with "increasing
cost and changing requirements".
Mr Jones told us that the discussions on the scale and scope between
the third party supplier and Companies House "led to a breakdown
in that working relationship" and it was this which caused
the work to be brought back in-house.
Moreover he explained that the Companies Act 2006 was not responsible
for changes to scope or the scale of the project and that it was
"completely irrelevant" to the discussions between Companies
House and the supplier as the CHIPS system was "simply to
replace the existing STEM system".
16. Bringing the project in-house meant that £12.1
million of expenditure was written off, representing the entire
value of the contracted work before February 2005. Mr Jones told
us that, although "that work was not wasted" as "it
was preparatory work leading up to what was then the development
of the system in-house", very little of it had added value
to the system as it works now and so "should not be forming
part of the carrying value of the new system".
17. Although the submissions from 7side and the Association
of Company Registration Agents Limited recognised that delays
to CHIPS had been far from ideal, they were sympathetic to Companies
House's position. The Association of Company Registration Agents
Limited said that:
it would have been much more regrettable if the
new systems had been introduced before they were properly ready.
The costs to the commercial world of a Companies House that fails
to function properly, or which has not fully thought through the
complexities of what it is trying to do, enormously outweigh the
additional costs of getting the new systems right.
18. The main concern expressed about CHIPS came from
dissemination agents. Dissemination agents buy data in bulk from
Companies House, add detail to it and then sell it on. Bisnode,
a Europe-wide group of business information companies, complained
that the dissemination agents had not been consulted on the project:
Companies House did not focus on DAs [dissemination
agents] and re-users when planning the implementation [of CHIPS],
and thereby only provided a smooth service to Companies House'
They were particularly concerned about the timing
of bulk data file deliveries. Before CHIPS was implemented bulk
data files were delivered between 12 a.m. and 2 a.m.; since the
system has been in place the files are being delivered between
5 a.m. and 7 a.m. Bisnode said that "the impact of this will
be that our clients will receive the data later."
Companies House told us:
Some of the bulk data products are currently
being delivered a few hours later than was previously the case.
We are looking at our options for tuning the new system to improve
Companies House also informed us that other bulk
image files were being delivered nearly 24 hours earlier than
was previously the case.
A further concern for Bisnode was that, as of 20 March, users
had not received the "mortgage" product
that Companies House offered to dissemination agents, since the
system went live on 25 February. Companies House said that:
We have experienced a number of short-term difficulties
with the bulk data products following the implementation of CHIPS.
Most of these were resolved within two weeks of CHIPS going live,
although some issues with the bulk supply of mortgage data persisted
until the month of April. We work closely with our bulk customers
on an ongoing basis on a range of issues. This included keeping
them up to date on the action that we were taking to resolve these
19. We are concerned that there were initial teething
problems with Companies House Information Processing System (CHIPS)
which resulted in a deterioration of some services to dissemination
agents. We trust that all services are now of a similar or higher
standard to that offered before the rollout. IT systems should
result in an improvement of service to all customers:
we would be concerned if that were not the case.
Companies Act 2006
20. The Companies Act 2006, which is intended to
give companies greater flexibility in the way they operate, received
Royal Assent on 8 November 2006. In order to implement it there
have had to be substantial changes to Companies House's systems
and processes. Companies House told us that although by October/November
2007 considerable progress had been made in ensuring that it was
ready for the new Act, it was not confident that it would be ready
by the target implementation date of October 2008. Mr Jones said
that there was:
detailed analysis of the work which had to be
done and the steps which had to be put in place before we could
do that work, and they were largely around getting CHIPS in.
Companies House advised the then Minister for Competitiveness,
Stephen Timms, of the risks that were evident from the analysis
and he made an announcement to the House by Written Statement
on 7 November 2007 that the commencement date of part of the Act
would be delayed until 1 October 2009. BERR hoped that by announcing
the delay to implementation early, costs to business would be
minimised. Mr Dart
made clear that these delays, caused by delays to CHIPS, would
only affect a small part of the Companies Act:
most of the key de-regulatory benefits, the benefits
which show up in the bottom line for companies, that save them
money in their administrative costs, have already been delivered
or will be delivered by October 2008.
21. 7side, the only organisation to comment on the
delay in their submission, told us:
we fully understand the complexities and issues
they [Companies House] are faced with and in our view it is better
to delay the implementation rather than bring in legislation that
will clearly cause issues and disruption all round.
22. The delay to the Companies House Information
Processing System (CHIPS) has resulted in delays in bringing parts
of the Companies Act 2006 into force. This is disappointing and
the large amount of public money wasted on the original contract
is deplorable. Nonetheless we believe Companies House and BERR
were right to postpone commencement of these sections of the Act,
rather than to press ahead and risk disrupting thousands of businesses
if implementation proved impossible.
23 Ev 28 (Companies House) para 29 Back
Ev 28 (Companies House) para 26 Back
Q 45 Back
Q 46 Back
Q 49 Back
Ev 17 (Association of Company Registration Agents) Back
Ev 20 (Bisnode) Back
Ev 18 (Bisnode) Back
Ev 31 (Companies House) Back
Ev 31 (Companies House) Back
Companies registered in England and Wales sometimes create a mortgage
or charge that must be registered. If so, they must deliver details
of it, together with any document creating or giving evidence
of it, to the Registrar of Companies. Back
Ev 33 (Companies House) Back
Q 53 Back
Ev 34 (Companies House) Back
Q 56 Back
Ev 42 (7side) Back