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Turning to the regulations, it is clear that the Hampton principles are similar to apple pie and motherhoodwho could be against them? Of course, the devil will undoubtedly be in the detail. From practical experience, I shall take just two examples. The first is Hampton principle 6, which is going to be endorsed in these regulations, which states that:
I look forward very much to the Health and Safety Executive implementing principle 6 of the Hampton principles, because anyone involved in business would say that many visits made by the Health and Safety Executive are time-wasting and are made for no apparent reason. So again, it will be for the devil to be found in the detail to see whether the HSE adopts principle 6.
I look forward to that principle being adopted in the activities of the Financial Services Authority in relation to Northern Rock. It will be a matter for judgment and subsequent action to see whether the FSA observed principle 9 or whether it will be called to account as the Northern Rock saga unwraps itselfif that is the correct phrase in this particular circumstance.
In general, however, I welcome the Governments adoption of the full impact assessment and almost getting a sunset clause. Obviously, I welcome the principles, but by 2011 we will know whether this has had any practical effect.
Lord Bach: I thank both noble Lords for their useful and helpful contributions to the debate, and particularly for their support for the order and the code. I am especially delighted to have pleased the noble Lord, Lord Razzall, so much on sunset clauses. He and I had a brief exchange in the House yesterday on this subject, and I seem to have satisfied him within 24 hours. Both noble Lords quite rightly spoke in general terms about regulation, and it is true that over-regulation has affected not only this Government, but all Governments which have gone before them. Indeed, it was noticeable in the House yesterday how those who had had senior roles in previous Governments of a different political persuasion nodded vigorously when the point was made that this is a difficult issue for the Government. It always will be so in a civilised society, because there is a need for regulation to protect consumers and employees.
It is vital that that regulation is not overburdening, is not too costly and is worth its weight. As is clear, the Government are determined to reduce the level of regulation where they can. They need to bring better regulation to the fore. We are determined to do that.
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That action includes simplification plans to reduce the administrative burdens of regulation for businesses, where the Government have set a target of 25 per cent, and the public sector where the Government have set a target for the reduction of bureaucracy at 30 per cent. We mean to carry that out. The points that both noble Lords have made about regulation are well taken.
The noble Lord, Lord Hodgson, made a detailed point about devolution. The Act defines much of this. We do not have the power in the order to apply the code to devolved matters, so I am afraid that the answer to his questions is Yes. The article quoted is a repeat of Section 24(3) of the 2006 Act. I hope that he will be pleased to hear that we are seeking agreement through other means with the devolved Administrations to do exactly what he says. For example, we have just agreed with the Northern Ireland Administration that they will adopt the code voluntarily, because they see the benefits for their economy and businesses. Wales is similarly minded to adopt the code voluntarily, and we are in discussion with the Scottish authorities. I cannot put it higher than that. I hope that that goes some way to satisfy the noble Lord that we take his point about the need to have common codes, if we can, across the devolved Administrations and England.
I am delighted that the noble Lord, Lord Hodgson, did not ask me details about either the Peddlers Act or the Hypnotism Act. Of course I would have been in a position to answer all his questions if he had wanted to ask about those Acts.
I do not claim that merely because the name of the new department includes the words regulatory reform that that in itself is anywhere near a solution to the problems that have been raised today, but I think that it is just a sign or symbol of the importance that the Government place on the issue. I know that we can be sure that both parties opposite will keep us to the mark on the issue.
The Merits Committee, referred to by the noble Lord, Lord Hodgson, was fairly favourable towards this code and it liked the way that it was written. I emphasise that the overarching aim of these instruments is to ensure that regulators work to minimise burdens and enforce regulations in a risk-based, targeted and proportionate way. We can effectively protect our environment, reduce accidents, protect workers or promote a competitive, efficient economy only if we have appropriate, good-quality regulation that is proportionately and flexibly enforced. We believe that this approach will bring real benefits to many groups: first to regulators because they can target their resources more effectively, to honest and compliant businesses because the costs to them of regulatory enforcement will fall, to society in
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The noble Lord said: The Government made the Company and Business Names (Amendment) (No. 2) Regulations 2007 on 5 November and they came into force on the following day, and I shall explain in due course why. These regulations add the words Government, NHS, HSC, and HPSS to the list of terms that require the Secretary of States approval before any person with a place of business in Great Britain trades in Great Britain under a name that includes them. The only exception is if the term is part of the surname, forename, or initials of the trader doing business under his own name or one of the partners in a partnership doing business under the partners names. The regulations also require the Secretary of States approval before a company can be registered in such a name. The Northern Irish Government have a made a similar provision, so these restrictions will apply throughout the United Kingdom. As laid down in the parent legislation, and to ensure continuing effect, the regulations require approval by a resolution of each House within 28 sitting days of their coming into force.
Perhaps I may briefly explain some of the controls over all traders business names and over companies registered names. Business names are those under which anyone trades, whether the trader be a company, an individual or a partnership. There are some restrictions on the choice of business name. These are not many, but they are important for the protection of the public. For example, a trader cannot use a business name ending in plc unless, of course, it is a public company registered under that name.
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A companys registered name is its legal name. It is the name under which a company appears on the index of company names held by the Registrar of Companies. There are more controls on company names than on business names to ensure that each company name is unique. It is in addition to the requirement for approval before registration for a company name that suggests a connection with Her Majestys Government or a local authority or includes a specified word or expression. This requirement is very similar to that for business names. It is for the same purpose; that is, the protection of the public.
In practice, when prior approval is required for either a companys registered name or business name, the application is considered by the Registrar of Companies on behalf of the Secretary of State. The registrar may take account of the views of others whether or not the regulations require the applicant to seek the views of a specified body with regard to the proposed use of a particular word or expression.
The regulations specifying the words and expressions that require prior approval are made under the Business Names Act 1985 and the Companies Act 1985. The specified words include words which imply national or international pre-eminence, such as British, international and European; words which imply business pre-eminence or representative status, such as association, council, and federation; words and expressions which imply specific objects or functions, such as trade union, stock exchange , register and trust; certain other words which could be used in names so as to mislead the public, such as police, abortion and university; and, since 6 November, the words we are considering, Government, NHS, HSC, and HPSS.
The purpose of the regulations is to protect the public. In the case of the word Government, it is to prevent people from being misled into believing a company or business has a connection with a foreign government. Those protected are not just individuals, but also other businesses. There is a real risk of financial damage when a business pretends to an official status. The word Government has an implicit meaning of authority and responsibility attached to it above and beyond any business or company, which is why we have added it to the list of sensitive words and expressions.
As for NHS, the purpose is particularly to protect patients from unscrupulous persons passing themselves off as part of the National Health Service.
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The regulations do not apply to either companies incorporated or to persons carrying on business in Northern Ireland, but there is no geographical restriction on companies operations. There is a real risk that those unable to exploit NHS would turn their attention to the Northern Irish equivalent. Healthcare in Northern Ireland is provided by Health and Social Care in Northern Ireland, which until recently was called the Health and Personal Social Servicesthus HSC and HPSS. The use of either HSC or HPSS as part of a company or business name could foster dangerous confusion amongst patients, service users and the wider public between genuine NHS, HSC or HPSS services and others seeking to use these terms in their business or company names in an attempt to capitalise on the reputation of the genuine services.
Earlier this year, Northern Ireland made a similar provision for Government and the other words. The regulations do not prohibit the use of these prescribed terms in company or business names, rather it is a requirement for prior approval. In considering whether to give approval, the public interest is paramount. Existing businesses and companies will be affected by these regulations only if they seek to change their name.
The regulations are unusual in that they are subject to approval after being made. That not only enables the Government to act quickly, it prevents an opportunist registering a company in a name that is about to be prohibited. If the regulations are not approved by both Houses within the specified time, they will cease to have effect, which would leave open the possibility of the public being misled. I apologise for taking a bit of time to move this regulation, but it is slightly unusual and, I hope, is of interest to Members of the Committee. I beg to move.
Moved, That the Grand Committee do report to the House that it has considered the Company and Business Names (Amendment) (No. 2) Regulations 2007. First Report from the Statutory Instruments Committee.(Lord Bach.)
Lord Hodgson of Astley Abbotts: I have a sense of having been hit repeatedly over the head with a rather heavy hammer. I thank the Minister for that extremely thorough explanation of this technical piece of company law. The noble Lord, Lord Razzall, and I are Companies Act 2006 freaks. We spent 14 or 15 happy days in this room. This presumably now moves into the 2006 Act. It is referred to here as Section 29(1) of the Companies Act 1985. I assume that there is a schedule of derivations and destinations which will tell us where it ends up in the 2006 Act. Can the Minister tell us where this information ends up in the 2006 Act? It would be very helpful if the Ministers officials could send an updated list of derivations and destinations to those of us who are participating today. We shall return to these issues in future debates and it would help us to produce sensible questions and comments for the Minister if we could have that information.
That having been said, it is clearly sensible that there should be a power to stop individuals and companies being set up in a way that gives greater weight to them or implies associations that do not in fact exist. I also understand the pre-prohibition requirement to stop the unscrupulous dashing in during the gap between the regulations being published and coming into force. My only surprise is that we have got as far as this without the words Government and NHS being on the list. I know that royal and national are on the list because I was once involved, along with the Bank of England, in setting up a company with the word national in its title. It took an inordinate amount of time to unravel it, even though the Bank was keen on the formation of the particular company.
The same goes for any business. There is no retrospective effect in these regulations. Am I right in believing that if an organisation has such a name in its title, it has got it? I ask this because if it is retrospective, that is another issue. The paragraph goes on to state:
Transferred is an interesting word. What does it mean, because transfer can occur in several ways? It could be an outright sale of the business that carries the name, a change of owner with a new beneficial owner taking over the assets of the business, or it could just be part of a corporate reorganisation whereby a body is transferred from one subsidiary of the group to another with no effective change in ownership or control. It seems unfair because a companys name is an asset acquired in good faith and therefore possibly capable of sale, but certainly to prohibit a transfer within a group of companies with no change in ownership would be unduly restrictive. Perhaps the Minister could explain the background to this and give details of the proposed length of any transitional period. I do not see the length of the transitional period set out in the Explanatory Memorandum, although I may have missed it.
Before I conclude, I want to stray a fraction wider. We are considering here a regulation which is going to be administered by Companies House. There is, of course, some controversy about Companies House and its ability to handle its existing duties under the Companies Act 2006. The Minister will have seen the Financial Times of 8 November reporting that:
A large measure of that is that Companies House, despite the fact that we have been considering the changes arising from that Act for something between seven to nine years, is unable to meet the timetable that the Government originally gave.
That is not an academic point, because when we considered the Companies Bill in Committee, we learnt of scams from overseas boilerhouses, which got hold of lists of private shareholders and cold-called
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If the Minister is going to write, he will be aware that a number of other issues about the implementation of the Act are starting to cause major concern within the legal community. I should be extraordinarily grateful if he could respond on the issue of the chairmans casting vote, which is apparently disappearing; the question of limited liability, where the new model articles apparently do not contain a reference to limited liability, which is required to make a company limited under the new Act; and, most technically, the interplay between Sections 152 and 323, which appears to prohibit a custodian from voting shares for which he or she is responsible both for and against. If he or she is acting for more than one investor, one investor may say, Please vote for this, and another may say, Please vote against. The way in which the Act is now being interpreted is that it is not possible to do that, you can vote only one way. That is one problem that we have with the proposal to require institutions to explain how they have voted.
I have had a couple of letters from major institutions explaining their concerns about that. Time is of the essence as the juggernaut of implementation rolls on, so if the Minister were able to give us a little more visibility on those other issues, that would be extremely helpful. We have no problem with the regulations as they stand; we understand why it has had to be done post-event; but it would be helpful if he could say something about the issue of transfer and what that means precisely.
Lord Razzall: I was simply going to say that we on these Benches agree with these eminently sensible regulations. I cannot resist commenting with admiration on the ability of the noble Lord, Lord Hodgson, to ask the Minister questions that have absolutely nothing to do with the regulations.
Lord Bach: I share with the noble Lord, Lord Razzall, his admiration for that ability of the noble Lord, Lord Hodgson. Not being a veteran of the Companies Bill, now the Companies Act, I begin to see how it has marked all those who took part in its many days of consideration.
The new powers are to be found in the Companies Act under Section 55, which covers company names, and the other section iswait for itSection 1,194, for business names. I hope that that answers the first question of the noble Lord, Lord Hodgson. On the question about retrospective effect, there is none. On transfer, the expression in Section 2(2)(b) of the Business Names Act 1985 places no restriction on the meaning of the word transfer.
On most of the points made by the noble Lord about the Companies Act, I will write to him. I cannot promise to answer all the questions that he posed to me today, but we will have a good look at them to see whether we can help and of course we will distribute the letter that we write to him to the noble Lord, Lord Razzall, and other veterans of that campaign.
The final implementation date of the Companies Act is 1 October 2009, so the noble Lord, Lord Hodgson, now knows which of the 365 days of that year has been chosen. I am not in a position to answer his other questions on the Companies Act; I do not think that he would expect me to do so.
Lord Hodgson of Astley Abbotts: Will the Ministers letter explain transfer? That was an extremely elegant glide down for an easy single to third man, if I may use the cricketing term, in the sense that it did not actually say what transfer meant. Does it require a change of control or not? Is an intra-company transfer from one subsidiary to another okay but outright sale not okay? I understand that that may be a difficult question for him to answer on the fly, but it would be helpful if we could have it clear in any letter that the Minister will write.
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