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Lord Haskel: My Lords, I thank the Minister for introducing the order and explaining to us what it was all about. The Minister told us how Companies House became a Next Steps agency in 1988 and achieved trading fund status in 1991. The Minister implies that this is the reason for the improved performance. I think that is an exaggeration. Any change in business and industry is always caused by a variety of factors. Probably in this case it is largely due to the sensible introduction of information technology, good training, setting proper standards and introducing an ethos of harmony, co-operation and pride so that the service is delivered quickly, efficiently and effectively. That is what has been happening in thousands of companies and organisations throughout the country over the past 15 to 20 years and it is totally unrelated to privatisation.
As the Minister reminded us, this is the first order under the deregulation Act. We recognise that the Government have followed the correct procedure under Part II of the Act and have consulted the registrar. Ironically, he is the last person to consult, because he has a conflict of interests. It is the users who should be consulted as we have suggested in our amendments, but they were rejected by the Government. In fact it was the consultant who consulted the users.
The conclusion of the Government's own consultant seemed to be that the users and customers would clearly prefer Companies House to remain a public sector agency. They value the Civil Service virtues of impartiality, reliability and public service and they were concerned about providing documents to a private sector contractor who might not have these virtues. As consultants usually do, they also have to give their clients what they think the clients want, so there are a couple of rather grudging suggestions that the operation of the London Search Room could be contracted out, as well as certain aspects of the Scottish registry. To cover themselves, the consultancy group pointed out that a company ignorant of the business could make things worse.
It is obvious from the consultant's report that the main essential in Companies House is quality management. It is unclear how this dogma-driven contracting out will achieve this. Perhaps the Minister can tell us. The consultant's report shows overwhelmingly that it is the quality and excellence of the service and accuracy of the information, together with the even-handedness, confidentiality and professionalism of the enforcement, which is important to the users of Companies House. If the profit motive is being introduced in what is essentially a public service,
The Minister referred to some of the functions to be contracted out. I can understand that the users will be concerned. Article 5 of Schedule 3 allows a contractor to take over from the Secretary of State responsibility for prohibiting the registration of certain business names and extending the period for delivering accounts. Has the Minister any idea of the worry it would cause if this crucial power over business was contracted out to a private company open to all the pressures of the marketplace?
The same concern applies to the functions of the registrar in Article 3, Schedule 1. According to the first provision in that schedule, he can contract out the enforcement to receive the documents required by him under the Companies Acts. Is the Minister aware of the power he would be conferring on a contractor and the deep disquiet that this would cause? I would share that concern. Company registration is not like an ordinary service where companies can take their business elsewhere if they do not like the way registration is being handled. UK companies are a captive market and have to register here. Therefore it is no wonder that the consultant's report emphasises even-handedness and quality management. It is no wonder also that there is no requirement in the order to consult the staff, because the Minister knows that from them he will hear good reasons why the service will not be improved by contracting out. In addition he will be given an excellent technical development strategy, including electronic filing and document imaging.
The approach to this order is a good example of the differences between these Benches and noble Lords opposite. It is a difference of vision. On these Benches we have one ambition for Companies House, and that is for it to become a world class centre of excellence satisfying its users and contributing to the efficiency of British industry, and the effectiveness of British Government. What is the vision of the Government? It is sub-contracting, which will involve more supervision, more regulation, less control of standards, more uncertainty and additional layers of management.
This order to contract out parts of Companies House shows how out of touch the Government are with modern thinking in industry and business. Industry has moved on and the search now is for world class centres of excellence. This should be the objective, and not some minor bit of privatisation, discredited and outdated, in order to reduce the Civil Service by some few dozen employees. In view of what he has heard this evening, perhaps the Minister will reconsider this order. He will also perhaps reconsider the action to be taken under the order and even withdraw it altogether.
The concern on the part of the users of Companies House was that they were anxious about the unknown. At one time it had been proposed to privatise the whole enterprise. However, it was thought appropriate at this stage simply to see whether contracting out certain parts of the operation might result in delivering the benefits of the service without causing widespread unease and disquiet.
It is important to recognise that this order does not mean that the enterprise will definitely be contracted outthat is, those parts of the enterprise which are subject to that process. On the contrary, it provides for the possibility for that to happen. If contracts are put out to tender and there is an unsatisfactory response, the contracting out process will not go ahead. That seems to me to be the important safeguard. As I said earlier when I was talking about value for money, by that I do not just mean low prices. It is essential that the contractor maintains, and where possible improves, current levels of service. Unless this can be demonstrated, contracting out will not go ahead.
The noble Lord also referred to an anxiety that some may have at the fact that information would be provided to a private contractor rather than to someone on the public payroll. However, just as those on the public payroll are subject to the rule of law as regards how they deal with the information that they receive, precisely the same legal principles will apply to those in the private sector, should they do that job. There is no fundamental difference in that regard. It seems to us that the noble Lord, Lord Haskel, is being quite unnecessarily alarmist about all this
Lord Harris of Greenwich: My Lords, the noble Lord has just said that the rules will be exactly the same, be they for public sector employees or private sector employees. Does the Official Secrets Act apply to private sector employees?
The crucial test is this. How does one provide the public with the best service? The order provides the possibility of contracting out services. Those services will be contracted out only if the placing of the contract will be to the benefit of the public. I commend the order.