Select Committee on Business and Enterprise Minutes of Evidence

Examination of Witnesses (Questions 20-39)


26 MARCH 2008

  Q20  Chairman: And to make a modest but useful contribution to Her Majesty's Treasury. That is an important point, on top of the surplus you declare, so actually last year it was £3.3 million, the combination of the dividend and the surplus. I know you stand to make a loss this year, so I understand that.

  Mr Jones: No, we are not going to make a loss this year, we are going to make a loss next year, I expect, Chairman.

  Q21  Chairman: Okay. That is forward looking. The point Mr Binley was exploring with you a little was this point about competition with the private sector. We have had a number of complaints in writing from witnesses saying that you do not restrict yourself to providing statutory services and that you compete with the private sector. Do you agree with that analysis?

  Mr Jones: No, I do not. We believe we provide raw data, either to those who are searching for the information via the website or to a number of bulk customers, and we have about 26 or 27 major bulk customers who take basically huge amounts of data from us either on a daily or weekly basis, and we do not want to get into the business, I do not want us to get into the business of competing for a market share. There is a number of bulk producers who take information from us, add value to it and then sell it on to their customers and do a very good job indeed, and form a very useful part of the underlying economic infrastructure. So I think if one looks at, for example, the OFT report which came out last year in which they said they believed we were both charging appropriately for our services and providing appropriate services, that is testament to the fact that actually what we are doing is providing raw information. There is a question about whether or not providing that raw information in unusable formats is acceptable or not, and I would argue that my responsibility is to move with the times in terms of how we provide that information to people. So, for example, our website is constantly improved and modernised so that we are providing information in a very readable format. We have considered other ways of providing information and I am aware that there are registries around the world which are, for example, providing information via SMS texting. I would still argue that that is raw information that we are providing. We are simply providing it in a more digestible form.

  Q22  Chairman: Do you think there are any products you offer which are not statutory products, any products at all?

  Mr Jones: There are no products that we are offering which do not have a statutory basis.

  Q23  Chairman: Because the suggestion has been made to us that actually what you do is you think of a new product you quite like and then put it on a statutory footing, so it actually was not a statutory and that you add it to the statutory list and, hey presto, it is statutory suddenly.

  Mr Jones: I would argue that we are certainly trying to do what we can to serve our customers as best we can but within the limits of the statutory framework that we operate within. The things we do which are not statutory are largely in terms of helping customers understand our services, helping customers understand how our services are going to change in the future, trying to encourage the behaviour of customers in different directions so that they, for example, file their information electronically with us rather than on paper because there are key efficiencies there for us and therefore key costs savings that we can pass on to our customers. So we do engage in a large number of information days, exhibitions, focus groups, web filing seminars, all of which are intended to try and help our customers both understand us and work with us in a way which is more cost-efficient for the long-term.

  Q24  Chairman: I know that your data can be used in a whole stack of different ways by us and organisations that want it, but are there any services related to the use of your data which you think Companies House should not offer in principle?

  Mr Jones: As I have said already, I do not think we should be getting into the business of adding value to the information which is on our register. I think our responsibility is to register that information and make it available in as accessible a form as we can to as many people as want it, and to charge for those services sufficient to cover the costs of providing them.

  Q25  Mr Binley: Have you read your website lately, Mr Jones?

  Mr Jones: Yes.

  Q26  Mr Binley: And you recognise that as a marketing tool, do you? Let me quote you three lines from it, because I think this really highlights the problem you have, both hiding behind the thing about being a registration only organisation whilst really being out there and selling. Let me just highlight three phrases. "You can use WebCHeck to purchase companies' latest accounts and annual returns as well as a selection of company reports all online". "Companies House Direct is your premier research tool for assessing and downloading company information directly to your own pc". "You can keep an eye on your competitors or even your own company and monitor which documents are being filed". Now, the whole thrust of that—and I am a marketing man—is that you really provide vital information to deal with your business and deal with your competitors. That is the feel of it, the ambience you are creating, and I understand why, because you have got a very valuable tool indeed. I want to come on to that later, but do you understand why people see that there is a real tension between your arguing that you are simply a registration organisation and your marketing activity, which is about the business side of information and list creation, and so forth?

  Mr Jones: I was quite heartened to hear the way in which you read those out from the website, I have to say. It seems to me that what we are doing on the website is encouraging people to use the information.

  Q27  Mr Binley: You are selling.

  Mr Jones: We are selling inasmuch as we have to cover our costs, but we are encouraging people to use that information. Let me, just as an aside, I think demonstrate that the proof of the pudding is in the eating. You talked about the website. We are one of the biggest website providers in government in the UK. In January this year we had over 50 million hits on our website. So people do see it as a very important source of information, and it is a very important source of information, and the way in which I think we were encouraging people to use the services of WebCHeck and Companies House Direct, and indeed Monitor services, which was the other one you referred to, I think is absolutely right because Monitor is a very important tool in the fight against fraud, and perhaps we will come on to that later. WebCHeck and CHD (Companies House Direct) are very clear and easy to use access points into the information we have got. I can see where your line of questioning is going and where it is going is, "Well, if you are going to encourage people to use that information so much, shouldn't you make sure it's more accurate?"

  Q28  Mr Binley: My very next question! You are absolutely right.

  Mr Jones: My difficulty in that is two-fold: (a) I do not have the powers to assess the accuracy of the information, and (b) I think I have demonstrated that the volumes of information that we get into Companies House would mitigate very strongly against our being able to check in any more than just superficial detail the quality of the data that we get.

  Q29  Chairman: Before I hand over to Michael Clapham to take this argument slightly further, just one last little detail point on late filing. We have had very little evidence from users of your service, individual users, but one small organisation wrote and said—and I have some sympathy with this point. I know you said they have ten months to file and I understand that context. "They seem very sharp to catch late filing and charge the £100 penalty. One of my returns was delayed in the post but the fine still stood and we were charged because of another government department's inadequacies", is the exact quote. Now, is evidence of posting, proof of posting, sufficient defence?

  Mr Jones: No. I would say two or three things to that, Chairman. The first thing I would say is that we encourage people to file their information electronically anyway, so if people would file their information electronically they would not have problems with postal strikes.

  Q30  Chairman: Can I just deal with that point? He does not have web access. It is a small charitable organisation.

  Mr Jones: The second point I would make is that postal strikes are advertised pretty well in advance.

  Q31  Chairman: This is lost in the post. This is not a strike, it is a delay in the post.

  Mr Jones: If the individual thinks that he has had stuff lost in the post, the first thing I would say is that they should first of all send us information which enables us to get back to them as and when we have received it. The second thing I would say is that if they have an issue with the Royal Mail then they would need to take it up with them.

  Q32  Chairman: So the advice would be, if you are filing late or towards the deadline use a proof of postage, special delivery, recorded delivery, something like that to make sure?

  Mr Jones: Absolutely, Chairman. Actually, my advice would be to file on-line.

  Chairman: If you possibly can. Thank you very much.

  Q33  Mr Clapham: Mr Jones, you have said that you are a repository of UK company information and an important repository, as you have explained. Given that information is there, you are bound to attract, of course, the information companies, dissemination agents, et cetera. Do you see that really as being a main function that you provide? Is it something you would give priority to? Do you see it as being a priority service?

  Mr Jones: Do you mean marketing companies and the like?

  Q34  Mr Clapham: Yes, I mean the companies that seek that information in order to be able to, as you say, add to that, enhance it, and then pass it on.

  Mr Jones: Yes, I would see our role as providing raw information to a number of companies that do add good value to it and sell it on to their customers. In the context of, for example, a company that is buying the information off us to use it as a mailing list to directors to sell their services, for example, I would not see us necessarily as fulfilling that role. Indeed, the new Companies Act will prevent that happening because directors' residential addresses will not appear on the public register. Service addresses will appear, but individual directors' residential addresses will be protected. I think there is a number of companies that buy our services and information that have very laudable aims and a good customer base and are doing a good service.

  Q35  Mr Clapham: Given, as you say, it does become a priority and you employ just above 1100 people, providing that kind of service down the line to information companies, et cetera, must take quite a lot of servicing and quite a lot of the input of your staff, does it not?

  Mr Jones: Not a huge amount. The bulk outputs that we produce are largely produced automatically from our IT systems. We do have a very good customer liaison centre. We have good relations with our bulk purchasers and also good relations with our other customers, but there are not large numbers of staff beavering away to aggregate the information we have got. By and large, what happens is that bulk producers buy from us the changes to the register that day and then apply it to the total of information they have already got. So they effectively keep a mirror image of the register and then they manipulate it in the way they wish.

  Q36  Mr Clapham: Is it a service that does sort of generate a revenue and helps to keep Companies House operating?

  Mr Jones: Yes. We cover our costs by charging bulk customers the amount that their service costs us. We actually halved the cost to bulk purchasers in our last major fees order, which was in 2005.

  Q37  Mr Clapham: Just coming back to the question before the last that I asked in relation to the amount of staff who are actually engaged in providing the service, one of the reasons I asked that is because according to some of the information we have got bulk data files are now delivered to dissemination agents later than they were when they were operating the old system and I just wonder why that was.

  Mr Jones: It is true to say that we implemented our new computer system on 25 February and it is true to say that in the first couple of weeks of operation we had a few teething problems. In particular, we had a few teething problems producing some of our bulk outputs. As of yesterday, my customer liaison staff tell me that in their discussions with the bulk output takers they are now content with the information they have got and that they are getting it accurately and timeously, and things seem to be back on track. So I would accept that in the first couple of weeks there were some issues with some outputs, yes.

  Chairman: One of the frustrations about this inquiry, I should tell you—and this is one of our routine investigations for MDPB, so we are not here for a particular reason. Nothing actually has happened to bring you before us now. We do this and it is your turn in the spotlight, as it has been ACAS and the MDA and others in the past, but awareness of the inquiry has been growing latterly and we had calls yesterday which disagreed with your analysis in the office, so this is a matter to which I think we may have to return. We shall see.

  Q38  Mr Weir: One of our witnesses raised the concern that you are planning to offer what they call a citizen's company registration service. Can you tell us if this is the case, and if so what does it mean?

  Mr Jones: Yes, I can. At the moment, anybody can incorporate or register a company with us. Last year we had something like 440,000 companies incorporated on the register in Great Britain. There is a number of good and a number of not so good incorporation agents out there who will do that job for you. If you want to incorporate a company, you can go to an agent and they will effectively fill the forms in for you and often provide an ongoing secretarial service subsequently. We provide an electronic incorporation service, but the only people who can currently access that electronic incorporation service are incorporation agents because there is specific software that is required to do it. Something like 90% plus of companies are currently incorporated electronically via incorporation agents. I have had a number of discussions with the incorporation agents and their umbrella body, ACRA, about our plans to offer a direct incorporation service to companies who want to incorporate with us electronically not via incorporation agents. I have made it clear to them that it is my strategic objective to provide that service because I am not in business to provide a living for incorporation agents, I am there to provide a service to companies in the UK, but what I have also said is that we will not seek to compete with incorporation agents in terms of an ongoing business relationship with companies. So they have a lot to offer to companies in terms of advising on the constitution of the company, advising on how the company might run its meetings, advising on how the company might be structured, advising on future secretarial services as well as doing the basic electronic incorporation with Companies House. I am never going to get involved in competition in that broad range of services, but I have made it clear that our stated aim is that we will provide a direct electronic service to individuals, and I have also said that that is unlikely to be before 2010.

  Q39  Mr Weir: Have I picked up correctly that individuals can presently incorporate companies without going through incorporation agents?

  Mr Jones: On paper.

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2008
Prepared 21 November 2008