HC Deb 19 October 1976 vol 917 cc1314-35

'(1) The Directors of a company to which this section refers shall not be required under subsection (7) of section 1 of this Act to deliver to the Register of Companies copies of documents required to be comprised in the accounts of the company in respect of any accounting reference period.

(2) This section applies to any trading company which

  1. (a) did not have during the accounting reference period more than 18 full-time employees;
  2. (b) at no time during the accounting reference period has been to its knowledge the subsidiary of any other company;
  3. (c) at no time during the accounting reference period has been the holding company of a company which was then limited, and
  4. (d) has not made an offer to the public to subscribe to its shares.'—[Mr. David Mitchell.]

Brought up, and read the First time.

Mr. David Mitchell

I beg to move, That the clause be read a Second time.

The new clause is designed to relieve small businesses from unnecessary regulations, new burdens, useless disclosures and expense, and to introduce some easement of their burdens. At nearly a quarter to two o'clock in the morning, I shall not detain the House by reading through the new clause. However, I should explain what it does.

The new clause would relieve the smallest limited company of the need to file its accounts. It defines such a company as a company with 18 employees, or fewer, which is not a subsidiary of another company, not a holding company and not one which has outside shareholders. The new clause would not relieve the need to produce annual accounts for the inspector of taxes. It is concerned only with the filing of accounts.

The reason for the new clause is that the Bill seeks to treat the large public company in exactly the same way as the small village grocer who trades with limited liability. Thus whether it be Imperial Chemical Industries or Slater Walker, for which we would entirely approve of disclosure, filing of accounts and all the other paraphernalia in the Bill, we do not feel that Bloggs and Company Limited, village grocers, should be treated in the same way.

Mr. Clinton Davis

Perhaps it will shorten the debate if the hon. Gentleman is not able to answer this question. How can this be reconciled with the EEC's first directive on company law, which was accepted by this country on its accession to the Community and which requires that companies incorporated with limited liability in Great Britain should file accounts?

Mr. Mitchell

I intended to come to that point later. Perhaps I may do so in my own time.

I was saying that the Bill treats large and small limited liability companies alike. However, in the case of ICI, or some company of that sort, a large public company, there is a public investment. Therefore, the public have a right to know a lot more. In the case of a large company, there is its effect on the economy and social conditions in the areas in which it operates. It is significant to the economy of those areas. In the case of Bloggs, a village grocer, that is not so.

1.45 a.m.

When I refer to "Bloggs and Company Limited, village grocer", I have in mind the small engineering works at which somebody who has oily fingers has to go and wash in order to sign documents, or the butcher who has been chopping meat and has greasy hands. I mean Whitehall Gift Stores round the corner from here, or St. Stephen's Buttery Limited. What on earth is the value in such companies filing accounts? Their activities affect no one else. Their business is their own affair. It used to be true that an English man's home was his castle. Small businesses should be entitled to say "Go away and mind your own business, and we shall mind ours".

Small businesses are collapsing under the burden of paper work. The Government's proposal in this respect cannot be taken in isolation. It has to be con- sidered along with price controls and census returns, along with the employment protection, contracts of employment and fair trading legislation, as well as hire-purchase regulations and the rest. It goes also with the 640,000 questionnaires send out by the Department of Industry last year requiring answers from business. Only today I learned that a Mr. Eric Grove, the managing director of James Grove and Sons Limited, is to be prosecuted on 26th November for failing to fill up a census of production form. If he had filled it up saying "Three French hens, two turtle doves" and however the rest of it goes, nobody would have minded.

There is an excess of burdensome work falling upon small businesses, and the Bill adds to it. It is all very well for the Minister to look askance as though it does not. I was grateful to him for his Freudian slip in Committee, when he said that he would be sending out guidance notes in a simplified form, illustrating clearly what new burdens—I mean new requirements—will be imposed …".—[Official Report, Standing Committee C, 6th July 1976; c. 1281 He corrected himself, but all too clearly the truth shone through, showing that new burdens were to be thrust upon the small business.

Apart from the burdens, there are to be serious penalties for those who do not fulfil them. The trouble is that the Government are trying to treat two wholly different animals as though they were alike. Of course, ICI must have an annual general meeting with its shareholders. But when Bloggs and Company Limited holds its annual meeting, the directors are Bloggs and Mrs. Bloggs, and they hold its across the kitchen table. To legislate as the Government intend in respect of companies of that kind is ludicrous. It is a waste of time for the company. It is irksome and time consuming. It is a waste of time also for the Companies Office, for the section of the Department for which the Minister is responsible. It has to process, to check and to chase those who fail to comply.

Four months ago, there were no fewer than 245,000 companies in this country which were late in the filing of their accounts. There is all the work of checking up on Bloggs and Company Limited to see whether it has filed its accounts, when it employs only half a dozen people. It is ludicrous that this should go on. I discovered that 10,000 reminders a week are being sent out from the Companies Office chasing companies which fail to file their accounts.

These are small companies. It is not ICI which fails to file its accounts. It is the little grocer, butcher or engineering workshop. Such people ought not to have to do it.

Perhaps I should declare an interest, since I am secretary and file the accounts for three companies. One of them has a turnover of less than £10,000 a year. Who on earth is interested in a company whose total sales are less than £10,000 a year? Yet, all the paraphernalia has to be tackled year after year. Nobody is interested, nobody looks at it, it is a worry to directors, it is expensive for them and the Government. What possible interest is the position of Bloggs and Co.? The principal beneficiaries will be clerks, papermakers, printers, accountants and the endlessly expanding Civil Service which has to cope with the increasingly smaller number of productive workers in industry.

The Secretary of State has half accepted our case because in Clause 1 he provides for unlimited companies to be exempt. Why the difference between the unlimited and the limited? What is there about "limited" which requires disclosure? The argument is that it is because creditors are entitled to know the risk involved. That is balderdash because nobody actually looks at accounts before he gives credit, and if he did he would be up to ten months out of date. As everyone in business knows, people ask other suppliers and the bank for references. Nobody has to extend credit to anyone if he does not want to. The onus is on the person who wants credit to prove that he is worthy of it. He can offer copies of his accounts. There is no need for public filing of information for that purpose.

I turn to the question of the Common Market and the issue raised by the Minister. I was grateful to my hon. Friend the Member for Kensington (Sir B. Rhys Williams) for his comments in Committee. He said that the Common Market is moving towards two animals in terms of companies—the public company that must disclose and a statutory form of incorporation similar to the old exempt private company with no, or limited, disclosure. That is the way in which the Government should be moving and I urge the Minister to accept the new clause. If he cannot accept it in its present form, he must tell us the way in which we must move to help the mass of small companies and to save them from the irksome and burdensome regulations he has put forward.

Mr. Farr

I support my hon. Friend and agree with his remarks. I remind hon. Members of a parallel subject which I raised in the House on 2nd April in relation to a small firm in my constituency which was literally snowed under with paper work and form filling. The business reached its position over 30 years through sheer efficiency but then it was inundated with paper work and flooded by form filling. In one week 283 pages of Government documentation had to be absorbed. The company was faced with changing from a highly competitive and efficient small industry to a less efficient and less competitive one by the necessity of employing one extra person in the office—thus increasing the office staff from three to four—simply to cope with the burden of paper work.

On 2nd April I raised this matter in the House. I shall not weary the House by repeating what I said, but what the Minister of State, Department of Industry, told me in reply is highly significant. Replying to my criticisms and my picture of the difficulties of Wilbury Engineering, with its few employees, he said: I have always said in as much as I am responsible for these things, that I am against the issuing of unnecessary documentation. I am against the issuing of unnecessary forms. On the question of form filling, I assure the hon. Gentleman that whenever these matters have come to my attention in my Department, which deals particularly with industry, I have questioned persistently the need for any documentation of any kind that comes before me. I am certain that it is for the good of the country that the amount of bureaucratic inquiries should be reduced to the minimum necessary for the purposes of good government. I assure the hon. Gentlemen of that. That was a refreshing assurance. The Minister went on to give me an equally encouraging assurance about the Government's intentions. He was not speaking only for himself and his Department when he said: I assure the hon. Gentleman that it is Government policy to minimise the burden of documentation and of form filling which rests on firms. I attach very great importance to this. Ministers have made clear recently … that all forms are kept continuously under review, with a view to reducing the burden wherever possible."—[Official Report, 2nd April 1976; Vol. 908, c. 1872–3.] The Minister of State then described what action the Government had taken in relation to the report of the Bolton Committee of Inquiry on Small Firms, which reported in November 1971. One of its significant recommendations was an extension of the powers of the Survey Control Unit of the Central Statistical Office to object to all statistical surveys not considered by it to be essential in character and explicitly justified. The Minister added that a system had been established by this Government whereby all Departments were required to report as early as possible to the Survey Control Unit all new plans in this respect. Has the unit been approached about the necessity of this burden being placed on the tiny firms which are so important to the country? If so, will the Under-Secretary give the House a summary of the reply to his inquiry?

2.0 a.m.

Mr. John Loveridge (Upminster)

The clause relates only to very small businesses, those with 18 or fewer employees. It does not affect their duty to prepare accounts for the Inland Revenue, but merely relieves them of the need to provide information given to a third organisation.

The Minister raised the question of the EEC directives, but do those directives require two sets of accounts to be deposited with two different Government Departments? Surely the Inland Revenue has a look at the accounts. If it wishes to keep a copy of them it can do so. That should be adequate for the requirements of the directive.

However, there are many thousands of small businesses which would be grateful to be relieved of any obligation. They are told by the Prime Minister to look for new markets abroad. If successful they are hit by higher taxes and threats of ministerial investigations. They are beset by new laws, and are subject to multiple amendments year upon year and to threats of more laws to come.

The business men, their solicitors and their accountants, and, I suspect, we in this House, cannot readily understand what those laws are. The firms are asked endlessly to fill in forms, some of them stupid forms, and they are threatened with prosecution if no figures are forthcoming, even when no figures are possible.

Mr. Clinton Davis

On a point of order, Mr. Deputy Speaker. This clause relates specifically to the question of accounts affecting small businesses. The Opposition have repeatedly sought to enlarge the whole scope of the debate. May I suggest that the scope of the clause is narrow and that hon. Gentlemen should confine their remarks to what is on the Amendment Paper?

Mr. Deputy Speaker

The clause refers to copies of what is required to be included in the accounts of the company. Perhaps hon. Members will bear that in mind. That is the core of the clause.

Mr. David Mitchell

Further to that point of order, Mr. Deputy Speaker. The phraseology in the clause relating to documents has been taken from the Bill where it deals with unlimited companies which do not have to file their accounts. I trust that that is not in dispute and that the Minister will accept that that is what we are discussing.

Mr. Deputy Speaker

I believe that to be so.

Mr. Loveridge

I wish to show how New Clause 7 goes to the very heart of the matter we are discussing. We are talking here about the need for greater simplicity for the smaller companies. As long as they keep sound accounts, why clog up one storage room after another when the storage and recovery systems are paid for and kept by the Government?

This is not a new matter for the House. In the last century the old wooden tallies which were accountany records were kept in this House. When they were destroyed because they were no longer needed there were so many that their burning set the House on fire and it burnt down. Are we to see the same again, or are the Government to collect so many forms that there will be insufficient oxygen for burning to take place?

These small firms desire to make a living, to create and to sell what they make. They want to be good employers, to build up profits, to pay their debts, and to pay their just taxes to help improve society. But they are beset by regulations which destroy their initiative and their capacity to fulfil these purposes. They are threatened by regulation following regulation. They cannot read all the new rules, let alone understand them. Forms follow forms. I quote from the Daily Telegraph of Tuesday referring to a case involving one of the 640,000 forms referred to by my hon. Friend the Member for Basingstoke (Mr. Mitchell): The director of a printing firm yesterday described a 15-page questionnaire sent out for completion by the Business Statistics Office of the Department of Industry, as an 'absolute farce'".

Mr. Clinton Davis

On a point of order, Mr. Deputy Speaker. How is this in order? This relates to the Department of Industry and has nothing to do with the new clause.

Mr. Deputy Speaker

Perhaps the hon. Member for Upminster (Mr. Loveridge) would confine himself more closely to the amendment.

Mr. Higgins

Further to that point of order, Mr. Deputy Speaker. The Opposition are happy to leave these matters to the judgment of the Chair. The object of the proposition is to reduce the burden of form filling and the general submission of papers by small businesses. Therefore, it is appropriate to refer to the burden on small businesses.

Mr. Deputy Speaker

The new clause specifically refers to copies of documents required to be comprised in the accounts of the company That is the intention of the provision.

Mr. Loveridge

I am grateful to you. Mr. Deputy Speaker, for your kindness. I gather that the same principle will apply to accounts put in for storage as will apply to the "absolute farce" described in the Daily Telegraph.

It is said that there is a need to check the credit-worthiness of firms and that that is why these measures are needed. But how is that checking done in prac- tice? Busy people do not go crawling around archives trying to interpret filed accounts that are already out of date. For that purpose any historical account is too late.

What is the purpose of asking for a banker's or trader's reference? The purpose behind this depositing of paper has never been truly revealed. It is filing for filing's sake. It reminds one of the woman who went to a psychiatrist and said "I like cornflakes". The psychiatrist replied "That is all right, you are quite sane—I like them too". The lady said "Come and see my collection. I have 500 boxes of cornflakes under my bed".

In the same way the Government seem to love collecting paper. Just as the ancient governments of Mexico believed that people's hearts must be cut out in sacrifices to make the sun rise, the present Government believe that they must collect pieces of paper from every business to prevent the pound from sinking.

The new clause is designed to relieve business men of some of the effects of the Government's mental aberration in their passion for the paper chase. Of course, even the smallest firms must keep books and accounts in good order and have them available for the Inland Revenue. But why must yet another organisation be asked to collect them as though they were precious works of art to be preserved? They are a waste of money, time and storage space, and do no good to anybody.

Why not give this small token of relief from regulation to the very small firm? Thousands of firms have not yet registered but the Government want to make every one register. New penalties have been introduced with that in mind. The fact that such a vast number of firms have never been registered without giving rise, to anyone's knowledge, to any incommoding of business life is an indication of how unnecessary it is. Surely that makes it all the more unnecessary to tack this burden on to the very smallest firms.

We are often told that the public disclosure of accounts is the price that companies are required to pay in exchange for limited liability. We know that that is true, but what those who are dealing with companies want to know is whether they can pay their debts. They do not learn that from the filing of accounts. The published accounts of large companies do not always prevent unanticipated bankruptcy. Not even the Government's public accounting system has adequately signalled the growing threat that we may not be able to pay our way in the world.

Why will all the extra filing and depositing help? It will not help. This is not the way to ensure that people know that a firm or company is solvent. If someone wishes to do business with a company, the proper thing is for him to have confidence in its record of debt repayment in the past and in its present capacity. That confidence can be founded only through a banker's reference. A company or a nation that was solvent a few months ago can so conduct itself in folly that an historical record is of little help if one wants to discover whether it is worth doing business with it in future.

I ask that these small firms be given this small measure of relief. There is also the fact that small firms, especially if they produce only one product, are natural prey to having their products undercut by larger businesses, possibly foreign based, which only want to put them out of business and then lift prices. They need privacy to protect themselves from such aggressor tactics. The evil predator competitor is much more likely to search the archives than potential suppliers of goods.

We ask for exemption not from the keeping of accounts but from the piling up of more and more Government storage. Give the small man a chance and accept the clause.

Mr. Michael Shersby (Uxbridge)

I support the spirit of the new clause moved by my hon. Friend the Member for Basingstoke (Mr. Mitchell). I do so because there are many small firms in my constituency, in common with the constituencies of every other hon. Member, which suffer from the problem of having to provide undue statistical information.

I shall quote a passage from the Bolton Report, which is relevant to the problem of having to file accounts. In page 256 attention is drawn to the fact that the Northern Economic Planning Council said: 'the burden of form-filling has increased relentlessly in recent years and falls particularly heavily on the small business with a sole proprietor, who, more often than not, is a practical rather than a commercial man.' The root of the problem is that in most small firms the scarcest resource of all is management time, because as we have said in so many contexts, this usually means the time of a single hard-pressed man. His clerical and office staff is quite properly kept as small as possible and is therefore capable of dealing only with routine functions; any enquiry that is outside the ordinary, or which requires knowledge and understanding of the business as a whole, must be handled by the boss. The point of that observation is very clear. I end with the statement in page 257 that there must clearly come a point at which the cost of collecting better statistics … desirable though they may be, outweighs their value. That is the nub of the question. I support the spirit of the new clause.

2.15 a.m.

Mr. Peter Morrison

I must begin by declaring an interest as a director of a company which employs fewer than 18 employees. My hon. Friends have put the point so ably that I need not detain the House for long. My hon. Friend the Member for Basingstoke (Mr. Mitchell) pointed out that there is a substantial difference between ICI or GEC and the smaller businesses. The most important difference, with particular reference to this clause, is simply that ICI and GEC have large accounting departments to provide the necessary statistics. The smaller business does not. That is most relevant.

The Minister made a Freudian slip in Committee in referring to the further "burden" which would be forced upon smaller businesses. The weight of bureaucracy—and the clause is trying to relieve some of the weight—is enormous. I am sorry that the Under-Secretary with responsibility for small businesses has not seen fit to stay for the remainder of the debate, especially since I had warned him—[Interruption.] I see that he has entered the Chamber once more. We are delighted by his return.

I must congratulate the hon. Member on his appointment. I hope he will realise that the greatest problem of these businesses is that of bureaucracy. We are attempting to cut that down. These concerns have had enough of paper work, particularly when it has to be done late on Sunday evenings because there is no other time during the week to do it.

The Minister said that if the clause were accepted it would not be compatible with our obligations to the Common Market countries. He must understand that several of his hon. Friends are constantly saying to him and his right hon. Friends "Cannot we change the EEC rules?" The Common Market is a flexible instrument. It must be possible, within the confines of our negotiated agreement, to change the rules so that smaller businesses are excluded in this respect. I beg the Minister to think about this. Whatever he may say, these people have had enough of bureaucracy.

Sir B. Rhys Williams

I congratulate my hon. Friend the Member for Basingstoke (Mr. Mitchell) on his initiative and persistence in insisting on holding this debate at this hour. We have to seize every opportunity for drawing attention to the problems of the rapidly dwindling number of small businesses which still contribute so much to the British economy. Though I welcome my hon. Friend's initiative, I have told him that I cannot entirely support the clause in the form in which it is drafted because it is possible that firms with small numbers of employees could achieve a high turnover or a dominating position in their area. Therefore they ought not to be completely excluded from filing accounts.

I believe that we have to insist that we create a simplified type of company law for firms with very small capital, turnover and staff. I am sure that there is nothing in the EEC directive which makes it impossible for us to devise a simplified form of company law for these small concerns. They do not need to go to the lengths required by this Bill in the presentation of their accounts, or to the lengths required by the 1967 Act, which most people agree went undesirably far in insisting on disclosure in dealing with small and very small businesses.

These small firms need urgent relief. The Government must take note of this, otherwise there will be collapses on all sides among small businesses which cannot carry on with the burden of paper work and the presentation of returns. The mere labour of carrying through the "pay as you earn" routine each week with a small number of employees work- ing varied amounts of overtime is a serious burden in itself.

I hope that the Minister has taken note of the examples which my hon. Friends have given and that, in formulating their plans for company law reform for the coming Session, the Government will bear in mind that we must introduce a special form of company law for the very small concerns.

Mr. Higgins

I suppose that we reach a time of the day when the only people still awake are those of us who are debating this Bill and small business men who are coping with the mass of paper work thrust upon them by the present Government.

It is the case that on many occasions in Committee we debated the problems of small businesses on a number of specific amendments relating to the contents of the Bill. But I rise to express my views on the points made by my hon. Friend the Member for Basingstoke (Mr. Mitchell), who is a major champion of the small business man and is well known for the way in which he unremittingly and with great enthusiasm stresses the need for help to be given to them.

The Under-Secretary was ill-advised to rise on points of order when a simple and entirely relevant point was being made that the total burden on small businesses needed to be alleviated and that my hon. Friend thought that his new clause was one way in which this could be achieved. For reasons which I shall come to presently, I do not think that this is the ideal way to do it.

I listened to the sedentary intervention of the Under-Secretary of State for Industry. We shall be happy to welcome him to our debates and, if he wishes to participate in this important discussion, I am sure that he will succeed in catching your eye, Mr. Deputy Speaker. I can think of only one case in which an appointment has been less appropriate than that of the hon. Gentleman to look after small businesses, and that is the appointment of the right hon. Member for Huyton (Sir H. Wilson) to the Royal Commission which is to look into the City. I thought that appointments of this kind went out with the right hon. Gentleman's departure from the Prime Ministership, but clearly that is not so.

I addressed a meeting of 400 or 500 self-employed small business men a few days ago, and the reality is that burden of bureaucracy this is no laughing matter. These people are desperately anxious about the burden being placed upon them. Small business men tend to carry a considerable degree of risk. If they are successful in their businesses, they pay a very high rate of tax. The more successful they are, the higher the rate of tax that they pay. On the other hand, if they are unsuccessful, they carry the losses and not the Government. The burden has been growing more and more.

It may be inappropriate for me to refer to some of the other provisions in addition to this one of filing accounts, but there is no doubt that the multiple rate of VAT has added a very big burden. I cannot forbear a reference to a matter which is also relevant to the Department of Trade and which came to my attention only today. I understand that the Government have bought 12,000 Japanese calculators for their staff, the calculators being of the "Vatman" type. This shows the extent to which Government bureaucracy is increasing and the extent to which it is necessary to refer to calculators to enable civil servants to cope with it. But they are engaged in that. The small business man is not. He is concerned with trying to run his business. I shall be interested to see the extent to which the introduction of computers enables the number of civil servants to be reduced, but perhaps we can probe that on another occasion.

The fundamental point is that the small business man is very important as a source of innovation, as a source of employment and as a source of production and output remarkably free, compared with other sections of industry, from restrictive trade practices.

I think that the new clause goes somewhat too far. There are various EEC provisions which, although they can be amended and may need to be amended, are none the less in existence.

There were proposals in the recent Conservative document "The Right Approach on the filing of company accounts and the burden of company law on small businesses. We made clear that a new deal is needed for small businesses, an important element of which should be a new legal status for small firms—which we described as proprietary firms—in which the owners of the equity and the directors are the same people, with, we should hope, provision for employee participation.

There seems to be a need for a distinction as there is in corporation tax law to take account of the varying sizes of firms. The Government have failed to do this in the Bill. We shall shortly be putting forward our proposals in anticipation of the General Election which will, no doubt, come soon.

My hon. Friend the Member for Basingstoke was right to have raised this matter. My hon. Friends have made a number of important points about the present position of small businesses and it is unfortunate that the Government have not shown a more sympathetic approach to the problems caused by the tremendous burdens imposed on small businesses and amended company law to help them. One cannot treat a massive multi-national company in the same way as the village shop or a small business.

I hope that the Minister will at least consider these points and see whether legislation could be introduced to reduce the burden on small firms, which is now more onerous than ever.

Mr. Clinton Davis

At one point in the speech of the hon. Member for Upminster (Mr. Loveridge), I was so emotionally moved that I thought I would not be able to bring myself to reply to the debate.

My hon. Friend the Parliamentary Secretary to the Law Officers' Department, who will be making his debut in tonight's proceedings soon, remarked during the speech of the hon. Member for Worthing (Mr. Higgins) that he was not sure whether the hon. Member was suggesting that my right hon. Friend the Member for Huyton (Sir H. Wilson) should look into the problems of small businesses while my hon. Friend the Member for Keighley (Mr. Cryer), the Under-Secretary of State for Industry, should be investigating the City of London. Perhaps the hon. Member for Worthing might apply his mind to that proposition.

The speech of the hon. Member for Worthing—like so many of his contributions on this issue—was ambivalent. He is full of support for the ideas of the hon. Member for Basingstoke (Mr. Mitchell) but when it comes to the crunch, he pours cold water on them. The hon. Member for Worthing knows the realities of the situation. This is just a propaganda exercise in which they engage from time to time.

There is a price to pay for limited liability and the hon. Member for Basingstoke is not prepared to recognise that fact. Limited liability confers considerable benefits on those who take it. That is why so many firms form themselves into limited liability companies. There is nothing to stop them from remaining as partnerships or adopting unlimited liability status. They opt for limited liability for obvious reasons which I do not need to rehearse. That is something which the hon. Member for Basingstoke and his hon. Friends apparently fail to assimilate and certainly fail to articulate in their speeches.

2.30 a.m.

I do not consider that we can make concessions on the lines suggested by the hon. Member for Basingstoke. Indeed, his hon. Friend the Member for Worthing does not think that concessions on those lines should be made. I submit that the clause is wholly misconceived.

The hon. Member for Kensington said that the activities of these small businesses—undefined, in effect, because the definition that he seeks to apply is wholly unrealistic—affect no one else, that a man's home is his castle, and that therefore they should be free of these requirements. I think that on reflection the hon. Gentleman will recognise that that is nonsense.

We have always expressed our willingness to ensure that the Bill does not impose on small companies a burden which is out of all proportion to the benefits gained. I have said that time and again. Indeed, we have made provision regarding the filing of accounts. The requirements recognise the more limited resources of private companies by allowing them three months longer to file accounts. We felt it appropriate to take action in that regard. We drew a distinction between the requirements for private and public companies. It would be impossible to draw that distinction in this area, as I hope to demonstrate.

We take the view that, whatever the size of the company, it is essential that it should disclose its accounts promptly for the reasons that I have already adduced relating to the status of limited liability. Public disclosure of accounts is of benefit to creditors, notwithstanding the somewhat derogatory remarks in that respect made by the hon. Member for Basingstoke. Indeed, disclosure is of wider interest. I demonstrate that by referring to the number of searches of files made during 1975—nearly 2 million. They are not all predators—that was the expression used by one hon. Gentleman—who make searches of files. The hon. Member for Upminster said that no one uses the files. That is palpably false in the light of the figure which I have just quoted.

What the hon. Member for Kensington is seeking to do is in blatant contradiction of what is permitted under the first EEC directive which the Conservative Government accepted on accession to the Community and to which the hon. Gentleman willingly gave assent as a great supporter of the Common Market. That directive requires all companies incorporated with limited liability to file accounts. That is the law, that is an inescapable fact, and that has not been answered by any hon. Gentleman tonight.

Reference was made to the Bolton Committee. What did that Committee have to say about this issue? The hon. Gentleman skated over that aspect. The Bolton Committee on small firms, which reported in 1971, was unable to persuade itself that the 1967 Act had been harmful to small private companies. Indeed, it did not recommend that there should be a restoration of the exemption which had been granted under that Act. That Committee was unable to persuade the Conservative Government to do anything about the matter in 1973. Nothing was done by the hon. Gentleman's colleagues at the Department of Trade and Industry who were engaged in drafting the 1973 Bill. There was not a word on this matter. This is all gloss, propaganda, and nonsense, and the Opposition know it.

Those dealing with limited liability companies have a right to information about the financial dealings of such companies. A company may be a private company and have only two or three employees but may also be operating on a very large scale financially, and creditors and other third parties dealing with it are entitled to access to its accounts even if they may be in arrears.

In our philosophy on this aspect, we concede that the provisions of the Companies Acts—we said this long before "The Right Approach", which is the wrong approach—generally are not all necessarily appropriate for some of the corporate organisations which come to be registered under them. For instance, there is the question of the associations of residents of flats. There is a case there for looking at differential treatment.

In the longer term, we are giving serious consideration to the establishment of a new form of incorporation for certain small bodies, but for the moment we have to look at the company legislation as it is, and all the Companies Acts provisions, and this Bill, can in practice only be applied to all companies, subject to some variations along the lines I have mentioned. There can be no doubt, therefore, that New Clause 7 is wholly misconceived, so I hope that the hon. Member for Basingstoke will not feel it appropriate to divide the House on it. Clearly, if he does, he cannot have the support of his own Front Bench.

Mr. Farr

Before the Minister sits down—

Mr. Deputy Speaker (Mr. Bryant Godman Irvine)

Order. The Minister has indicated that he has sat down.

Mr. David Mitchell

When stripped of the peripheral comments which were not relevant to the central issue, the Minister's argument was that, whatever the size of the company, it was essential that there should be disclosure. That is disproved by his own Bill, which provides for unlimited companies not to have disclosure, whatever their size.

Secondly, the hon. Gentleman said that the price to be paid for limited liability was disclosure. He must have forgotten the history and purpose of limited liability—to enable capital to be raised by those not actively involved in the management of a business, to enable in- creased investment to be carried out in British industry. That was to the benefit of the community, including the creation of jobs. The Minister should be looking not at how he can extract a price from the business community but at what he can do to help increase the viability of the business community and increase employment. I can only express extreme disappointment at his attitude.

Question put and negatived.

Mr. Higgins

I beg to move That further consideration of the Bill, as amended, be now adjourned. I am grateful that the Government Chief Whip is in his place. For some years it has not been so frequent as it used to be, when we had Finance Bills taken wholly on the Floor of the House, to move the motion which I now seek to persuade the House to accept, but this Bill is every bit as technical as some of the Finance Bills we have had over the years, and I am sure that the Under-Secretary of State will concede that in some respects it is more complicated than many Finance Bills.

We have had a number of good debates since we began the proceedings of the Bill at 10.18 p.m. yesterday.

Mr. Clinton Davis

Repetitive.

Mr. Higgins

The Under-Secretary says that they have been repetitive. I do not think, with respect, that they have been. Apart from his own speeches, the speeches have been remarkably short. We make no complaint, because he has complex matters to propose and to answer. But I do not think that the charge can be levied that we have in any way been repetitive. We have played the various amendments for exactly their full value, seeking to explore the details and the arguments in each case.

When we voted at 10 p.m., a number of the minority parties voted in favour of continuing. Although there is one member of a minority party on the Benches now, there has not been one for very long stretches of the debates, and no one from a minority party has taken part for some considerable time. They may well consider, on reflection, if they are still here, that they ought to vote in favour of the motion.

My own feeling, as I suggested at the outset, is that it is rather absurd to press on with legislation of this kind, and debates on it, at this hour. Although I fully accept the point that the Under-Secretary made at the beginning—and it seemed to us more sensible to take what the Government proposed in the order in which we have taken it—none the less the proceedings on the measure which preceded this were much longer than one might have expected. We cannot have a situation in which two full days' business is compressed into one day and still hope that the measure will receive the proper consideration that it ought to have.

I recognise that the Government are in a dilemma. They have no leeway, as is normally the case and has always been the case in the past, between Prorogation on the one hand and the State Opening on the other. This very greatly reduces their flexibility. Obviously, this is the result of the way in which they have managed their affairs and have been determined to push one piece of controversial legislation after another through the House, regardless of whether it is guillotined or properly considered. The Government are now up against it. We understand it and recognise that this is the situation.

We have had a number of Government amendments and new clauses of great complexity introduced at this very late stage. It has been done at a much later stage than it normally is done in this House. This is, of course, a House of Lords Bill at Report stage. Many of the amendments and new clauses have been introduced at very short notice and with inadequate time to take proper consultations outside. I may wish to refer to that at a later point.

I do not believe that anyone outside the House would understand why we are proceeding on matters of this degree of complexity at this hour of the night. I suggest to the Government Chief Whip and to the Under-Secretary that we have made very considerable progress. It is true that we have covered only seven out of the 36 debates, but the last four or so are largely drafting amendments, so that it is not quite as bad as it looks. I suggest, therefore, that we might make better progress if we were to adjourn at this stage and return to the Bill on a later occasion.

There is, I understand, the likelihood of the Insolvency Bill being before the House very soon. The Report stage of that Bill has still to be taken. Those of us who are engaged on this Bill are much the same as those engaged on the Insolvency Bill. Certainly the Under-Secretary is the same. I should have thought that it would be convenient to take this measure and the Insolvency Bill one after the other.

The traditional exercise in proposing this motion is twofold. On the one hand, it is to ask the Government quite clearly what their intentions are, and whether they intend to press on, in which case we can consider them. On the other hand, if the answer is not felt to be satisfactory, we can vote on the Question. On a matter of this kind the Government are pushing the House of Commons beyond what can reasonably be expected. That is not wise and it is not likely to speed up business because, inevitably, as hon. Members become more and more tired their speeches inadvertently tend to become longer and longer.

2.45 a.m.

I hope that we shall have a forthcoming reply from the Minister and that he will accept that we have done a useful job so far on the clauses that we have considered, particularly his complex new clauses. I think it would be appropriate for consideration of the Bill to be adjourned at this point.

The Parliamentary Secretary to the Treasury (Mr. Michael Cocks)

I am most obliged to the hon. Member for Worthing (Mr. Higgins) for the courteous way in which he has moved his motion. I appreciate the points he has made and I understand the complexity of the Bill. In fact, as an amateur in this field I would hesitate to make any comment at all on its intricacies.

The hon. Gentleman in fact answered his own argument. He has outlined in detail the Government's difficulties over their programme. It is with some regret that I must advise my hon. and right hon. Friends to resist the motion.

My understanding was that the Bill was generally welcomed by the Opposition. I would have thought that the Government's determination to see it through would be a matter of reciprocal congratulations. We must therefore resist the hon. Gentleman's motion and hope to make substantial progress tonight—in fact even completing all the remaining stages.

Question put:—

The House divided: Ayes 11, Noes 75.

[For Division List No. 336 See col. 1415]

Question accordingly negatived.

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