HC Deb 26 February 1999 vol 326 cc703-10

Order for Second Reading read.

1.54 pm
Mr. Andrew Lansley (South Cambridgeshire)

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

I am grateful for the opportunity to share in the good fortune of the hon. Member for Stourbridge (Ms Shipley) in the ballot, albeit in a much more humble position. I present a Bill that the House will recognise to be of a lower priority than that introduced by the hon. Lady, but I hope that, on reflection, Members will none the less find it an important and useful measure that should secure their support.

I should first declare a past interest. Some 10 years ago, when I was deputy director of the British Chambers of Commerce, I was made aware of the difficulties involved in the control of the title "chamber of commerce", which give rise to the Bill.

The Bill follows one that was introduced last year by my hon. Friend the Member for Windsor (Mr. Trend). During discussions at the time, I was grateful for the support of and the interventions by the Financial Secretary to the Treasury, the hon. Member for Hornsey and Wood Green (Mrs. Roche), then the Minister responsible for small businesses. As a result of our exchanges, many potential difficulties have been ironed out of the Bill that we are now discussing.

To put the Bill in context, chambers of commerce have transformed themselves over the past 10 years. Accreditation, approval of chambers and the establishment of a system of quality service have led to the creation of a network of more than 230 approved chambers of commerce. Some 95 per cent. of companies and businesses in Britain now have reasonable access to the services of chambers of commerce, which cover national and international trade, export support services, information services, representation of business and access to training sources. In the latter context, some 16 chambers of commerce have recently merged with training and enterprise councils, adding another important aspect to the work of those organisations which are led by the private sector and work in partnership with the public sector.

The increased integrity and comprehensive character of the chamber of commerce network increases the need to ensure that those who seek the support of a chamber of commerce receive the standard of service that they should expect. The difficulties and the scope for abuse in the system fall into two categories. First, persons without the essential characteristics of a chamber of commerce seek to describe themselves as such. I shall not delay the House by giving too many examples, but, particularly after the collapse of the former Soviet Union, there were a number of opportunities—happily as part of the growth of freedom and capitalist enterprise in those countries—for people to establish themselves as chambers of commerce of a bilateral character, working between the United Kingdom and some former Soviet republics. It was not always the case that people who sought to use such a title were genuinely representative of the business community in the countries concerned.

As hon. Members may know, chambers of commerce around the world often occupy not only a significant position in the business community and as providers of services, but a statutory position. As a result, those who deal with them expect a service that is of a disinterested character. That would not be the case in respect of the bodies to which I referred, which did not have the backing of their local business communities. In one case, a sole trader might have been seeking to gain a preferential trade advantage with companies that were not aware that they were not dealing with a chamber of commerce, as the term applied in their own country.

The second problem arises within the United Kingdom and relates to the geographical description of chambers of commerce. It is important that people dealing with a chamber of commerce understand which business community it represents. Its title should accurately reflect its responsibilities. For example, a chamber of commerce in the west of Wiltshire that represented a small geographical area sought to describe itself as the Wessex chamber of commerce. Another chamber of commerce in West Yorkshire sought to describe itself as the West Yorkshire chamber of commerce, although there were chambers of commerce that had been established for more than a century and a half in other major cities in West Yorkshire. It is important that bodies that describe themselves as chambers of commerce, even though they may properly be chambers of commerce, do not do so on the basis of an inappropriate geographical description.

Mr. Eric Forth (Bromley and Chislehurst)

I suspect that I shall pre-empt my hon. Friend by what I am about to say, but, just in case I do not, may I ask him whether he intends to describe—however briefly—the mechanisms and bureaucracy that he thinks will be required to fulfil the purposes of the Bill?

Mr. Lansley

My right hon. Friend is right; I was proposing to come to that. I shall happily address it now, if it will help him.

The Bill's structure closely matches that of the Companies Act 1985 and the Business Names Act 1985, under which any company or person seeking to carry on a business is able to apply for the use of a name. Therefore, there should be no increase in the compliance cost to a person seeking to register as a chamber of commerce or any other related title. That person will apply in the normal way, in recognition of the essential characteristics of a chamber of commerce, which the Secretary of State will be able to stipulate. The Secretary of State will undertake consultation with a relevant representative body—the British Chambers of Commerce or the Scottish Chambers of Commerce—and determine whether to approve registration.

Like my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth), I do not want to create a structure that will increase the compliance cost for bodies that want to describe themselves as chambers of commerce. On the other hand, I am anxious to introduce a measure that secures benefits for the business community and, on balance, is therefore desirable to it.

The business community as a whole has a substantial vested interest in ensuring that businesses beyond those that subscribe to a system of approved chambers of commerce understand that chambers of commerce fulfil a role and operate services to a standard, and that a chamber of commerce with which they deal has all the essential characteristics—in effect, they see what they get.

My right hon. Friend the Member for Bromley and Chislehurst has helped me by allowing me to move on to describe the essence of the Bill. It works on quite a narrow basis. It seeks to support an essentially private sector body, which operates in areas where the Government often require it to participate in partnership. Chambers of commerce, not least in the light of recent mergers with training and enterprise councils and the establishment of business links, are increasingly the leading private sector vehicle for achieving a shared public sector-private sector objective. It is therefore important to recognise that the Bill is designed to give such private sector initiatives support and additional status.

Clause 1 requires the Secretary of State to include chambers of commerce and related titles—I could happily instance what sort of titles I have in mind, although I will not delay the House by doing so—in controlled titles stipulated in the Companies Act 1985 and the Business Names Act 1985. Clause 2 ensures that, before determining whether to approve registration under the Companies Act, the Secretary of State consults the British Chambers of Commerce or the Scottish Chambers of Commerce, with provision to consult other relevant representative bodies, which we shall come to later. Clause 2 also provides that the Secretary of State may publish guidance concerning which factors he will take into account in determining whether a body might appropriately use such a controlled title.

Clause 3 parallels the structure determining the use of any company title, but relates specifically to the Business Names Act. Therefore, under clause 2, the Secretary of State undertakes the consultation process in relation to factors for companies; under clause 3, he does so in relation to business names.

Clause 4 defines the bodies that the Secretary of State should consult. I mentioned the British Chambers of Commerce and the Scottish Chambers of Commerce, but there is further provision to allow the Secretary of State to add further relevant representative bodies. The specific example that I have in mind is the Training and Enterprise Councils National Council because, as mergers between chambers of commerce and TECs are increasing, it is important that the nationally representative body should be in a position to exercise a consultation role in relation to the granting of a title to such a body.

Clause 5 relates to commencement, at the discretion of the Secretary of State, and extent. Hon. Members may note that Northern Ireland is not included in the extent of the Bill. That is normal practice for companies legislation; comparable provisions have, in the past, been made and introduced in Northern Ireland by subsequent order, not incorporated into primary legislation. It is intended that, in a like fashion, if Ministers are willing, the Bill will be followed by a statutory instrument.

To sum up, the Bill is not designed to be retrospective; it is not designed to challenge the use of any title by any existing chamber of commerce. It does, however, address itself to where there is scope for improvement—there have been difficulties with the present system—and it strengthens the administration of the control of titles for companies and for those carrying on a business, and removes scope for abuse.

The Bill gives an opportunity to reinforce the very positive move that chambers of commerce have made towards the provision of approved and accredited services to the business community, and it does so without shifting the status of chambers of commerce in this country towards the public law systems that pertain especially on the continent, which would lead us to a mandatory system for chambers of commerce, with levies on their turnover and so on. My hon. Friends—I believe, from conversations, hon. Members on both sides of the House—would regard such a system as undesirable.

If we can reinforce a private sector-led, voluntary organisation that is trying to improve its service to the business community substantially by its own efforts, and if we can do so by changing the administration of the Companies Act 1985 and the Business Names Act 1985 in ways that will help it, there is everything to be said for that. I hope that hon. Members on both sides of the House, including the Minister, will express support for the Bill today.

2.8 pm

Mr. James Cran (Beverley and Holderness)

I congratulate my hon. Friend the Member for South Cambridgeshire (Mr. Lansley) on the clarity with which he explained his Bill, and on his luck in the ballot. I have been in this place for considerably longer than he has, and I have never come close to being successful in the ballot. [HON. MEMBERS: "Ah."] I am very grateful for the response of my colleagues on the Benches behind me.

A private Member's Bill is a double-edged sword, but I do not think that that will be the case with this Bill, as I can confirm that the Opposition support its provisions, as we did when we cantered round this course about this time last year. We share the conviction of my hon. Friend the Member for South Cambridgeshire that there is scope for abuse at present; he eloquently outlined why it occurs. People who are not representative of the business community as a whole, or who are pursuing a private commercial interest, will none the less seek to incorporate the chamber of commerce title, knowing that it gives credibility. Undoubtedly, the title "chamber of commerce" lends valuable assistance to any organisation. In my experience that is most certainly the case, and especially in international trade matters.

At one time I was associated with the Confederation of British Industry. These days, I disagree with one or two of the CBI's policy stances. However, when I was associated with it, I was frequently written to by international organisations which had the title "chamber of commerce". I had to check extremely carefully that it was bona fide, that it was in reality exactly that which it purported to be. It is clearly important that the use of such a title, including the geographic description, is accurate and is applied only to a body that generally meets all the criteria for the proper description of a chamber of commerce.

We accept that the Bill is intended to address weaknesses in existing legislation. When Companies House receives an application for the incorporation of a chamber of commerce, it considers, of course, whether the application will result in a genuine chamber of commerce. The problem is that no benchmark exists for making such a judgment. I have been advised by lawyers that in law—I should say that I am not a lawyer, for which I think I am grateful—there is no definition that would constitute a chamber of commerce, and that there is no criterion for approval as a chamber of commerce. The Bill will help in that situation as it will provide objective—that is the important word—criteria to be used in determining which bodies should be able to use the title chamber of commerce.

When an application for incorporation is received, the current defences, as I have already said, are simply not good enough. In effect, as others have said, anyone can set up a chamber, canvas for members and sell services under a chamber trade name. I recall that some organisations with which I used to deal did not even have members. They claimed the title and then sold services, which is not acceptable. I think that we all accept that, including the Government. In practice, not a great deal can be done at present to stop this process. That is why my hon. Friend's Bill is extremely valuable.

Although no evidence exists of wide-scale abuse, we may see in future further examples of businesses attempting to sell services under the title "chamber of commerce". In effect, that is all that they are doing. That is why my hon. Friend is correct in what he is trying to do.

I wish to emphasise that existing legislation has not been applied badly. It is important to say that. Robust procedures within the present system have been followed by Companies House and the British Chambers of Commerce. Therefore, we do not regard my hon. Friend's Bill as a criticism in any way of Companies House. The Bill will help that organisation to do its job more effectively. For those reasons and the many others that my hon. Friend has outlined, we wish him well. We, for our part, will do all that we can to ensure that the Bill becomes law.

2.14 pm
Mr. John Butterfill (Bournemouth, West)

I shall be brief because I know that other hon. Members wish to speak. I start by congratulating my hon. Friend the Member for South Cambridgeshire (Mr. Lansley) on introducing the Bill. It is an excellent measure and I think that it will produce a much-needed improvement in the law. I do not think that it is necessary for me to reiterate all the arguments in favour of the Bill which my hon. Friend has adduced.

My constituents are fortunate in that we have two excellent chambers locally: the Bournemouth chamber of trade and commerce and the Dorset chamber of commerce and industry. Both chambers perform an extremely useful local function.

I have one or two detailed concerns about the Bill which I shall flag up in case they may be dealt with in Committee. First, there is nothing in the Bill to provide for deregistration. That seems to be a defect. We have already heard from my hon. Friend that there have been turf wars on occasion in North Yorkshire and in east London. In future, an existing chamber may fall into desuetude and not enjoy the support of the majority of local businesses. If that were the case, an alternative chamber might be proposed by local business men who felt that they could do better than the existing chamber. There ought to be a mechanism by which a chamber can be deregistered. That is not present in the Bill, and I hope that my hon. Friend turns his mind to it.

In clause 2(2), the responsibilities on the Secretary of State to publish guidance are merely permissive—he "may publish guidance". In this day and age, there ought to be a mandatory responsibility for the Secretary of State to publish guidance, and I hope that that can be incorporated in the Bill. Similarly, he may publish guidance with respect to factors which may be taken into account in determining whether to approve the registration —but when?

The Bill does not refer specifically to chambers of trade—a description commonly used by many chambers. I have checked the relevant statutory instrument, the Company and Business Names Regulations 1981, and I see that the word "trade" is included. It may reassure members of the public—and existing chambers of trade—if the word "trade" is included in the Bill.

I now refer to the Secretary of State's responsibility in terms of the relevant representative bodies in clause 4. The bodies that he must consult are the "British Chambers of Commerce" and the "Scottish Chambers of Commerce". He can add or delete, but in dealing with local disputes, there should be a responsibility for the Secretary of State to gain some local knowledge.

The British Chambers of Commerce may know the national position, but not the local position in every part of the country. Therefore, there ought to be an obligation on the Secretary of State to consult local people where the registration is applied for—whether that should be the local authority, or even local Members of Parliament, I do not know. Having said that, I very much welcome the Bill and wish it well.

2.18 pm
Mr. Nick St. Aubyn (Guildford)

I am pleased to support the Bill, and I was a supporter of the Bill proposed by my hon. Friend the Member for South Cambridgeshire (Mr. Lansley) in the previous Session. One day, he may be in a position to support one of my Bills—if I am lucky enough to come as high in the ballot as he has.

I support chambers of commerce. My local chamber of commerce in Guildford, and the Surrey chamber, support the Bill. I support chambers of commerce because they stand up for the little guy. As big business reaches out across the world, it is harder for small companies to export. The role of chambers of commerce in helping exports is significant. They organise hundreds of overseas trade missions, securing nearly £1 billion a year of additional business for those who go on them. They also assist smaller companies with export documentation.

In other European Union countries, chambers of commerce are taken more seriously and have more power. As the single market develops, and with it opportunities for foreign companies over here, we must have a strong system of chambers of commerce to help our smaller companies develop their business opportunities across Europe and the rest of the world.

Some hon. Members are concerned about a bureaucratic burden. There is a role for the chambers of commerce in protecting smaller businesses and alerting them to the bureaucratic burden that has been the unfortunate penalty and consequence of the single market, which causes problems for many of our small businesses. We fought the good fight in my constituency to enable a small business in Cranleigh to carry on selling its brandy butter. In the past month, we have finally won that battle against the might of the European Commission. I look forward to the day when we have the help of stronger, even more vibrant chambers of commerce in Guildford and throughout the country when fighting such battles.

2.21 pm
The Minister for Energy and Industry (Mr. John Battle)

I thank the hon. Member for South Cambridgeshire (Mr. Lansley) for bringing forward the Bill. He began by declaring an interest. I hope that he was proud to declare it, because he brings welcome and valuable experience to the Bill. The Government support the Bill. The speeches that have been made suggest that there is a consensus in the House in support of the Bill.

The term "chamber of commerce" and some other related titles are already declared sensitive under the Companies Act 1985. Their use is at the discretion of the Secretary of State. The British Chambers of Commerce is concerned that Companies House has no legal requirement to consult it on new applications for use of the title, although I understand that in practice that happens. The Bill will ensure that the Secretary of State consults the British Chambers of Commerce or the Scottish Chambers of Commerce when determining whether expressions such as "chamber of commerce", "chamber of trade" or "chamber of commerce, training and enterprise" may be used as part of a registered company or business name. The Bill provides for the names to be specified by statutory instrument under existing companies and names legislation. The link will help to advertise more widely to the business community that it needs to seek approval before a relevant name can be used for a company or business.

The term "chamber of commerce" comes from French. I understand that we are not allowed to speak French in the House and I shall not try to imitate a French accent. The term "chambre de commerce" was introduced in 1601. It came into the English language when the first chamber of commerce was founded in Jersey, the nearest territory to France, in 1768. The Glasgow and Belfast chambers were set up in 1789, with another chamber in Edinburgh and one in my city of Leeds—of which I am rather proud—in 1785. I received letters and petitions from the Leeds chamber of commerce inviting me to support the Bill. I am sure that other hon. Members received similar letters from their local chambers. I hope that all hon. Members will get behind their chambers of commerce and the hon. Member for South Cambridgeshire.

The Government support the Bill because it will provide a clear link with existing companies and business names legislation in providing that the Secretary of State will consult before determining whether to agree to the use of the titles, including the phrase "chambers of". The Bill also provides that the Secretary of State may publish guidance setting out the factors that he will take into account in reaching his decision. No existing organisations using the titles will lose the right to call themselves a chamber under the Bill.

The British Chambers of Commerce is working hard to ensure that standards among its members are high through an accreditation scheme, which I believe was introduced three years ago. A programme of quality and performance improvement has led to the creation of a core of 60 effective approved chambers, each of which meets stringent accreditation standards. I understand that only a few small and localised chambers continue outside the BCC. I encourage them to join the accreditation scheme, because it is vital to the competitiveness of the UK that the business community at local and national level can recognise quality services designed to enhance business competitiveness.

The role played by chambers of commerce at the local level cannot be underestimated. There are 120,000 business members in chambers nationally. Some 75 per cent. of them are in the five to 500 employee range and some 40 per cent. of them are exporters. They have the largest representative base of SME businesses in the country.

The Government fully recognise the work of the British Chambers of Commerce and see it as a valuable partner in the work that we are doing in progressing the competitiveness agenda that we set out in the White Paper just before Christmas. The chambers work at local level but, through their local work, they advise the Government, at the national level, on the complex and varied interests and issues that concern business on the ground, and their contribution is vital in Departments across Whitehall. They are a major partner in the business link network, which is a key deliverer of business support services, and are fully involved in the drive to ensure that high-quality, appropriate and effective business support is available to all businesses.

The national campaign for enterprise, led by the BCC, is an exciting and valuable exercise in spreading the enterprise message to produce a rather more entrepreneurial culture, which also gives advice on where to go for the best advice and back-up.

A major part of the BCC's work centres around increasing the export potential of UK companies, and chambers of commerce nationally are involved in over 170 missions to over 100 countries each year, which have resulted in follow-up business of over £745 million. That is a major contribution to the economy. We hope that they will participate fully in the setting up of the regional development agencies—they have work to do there.

The Government are happy to support the British Chambers of Commerce through the Bill, which will provide a clear link with existing legislation on the protection of business and company names. It is encouraging that the Bill is receiving support from all parties and, I hope, all hon. Members. The chambers of commerce are seriously valued as a contributor to the Government's initiatives. They have worked continually and enthusiastically to introduced accreditation systems. The Bill echoes steps that the Government are taking to ensure that businesses receive the representation and assistance needed to ensure increased competitiveness in our economy.

Statutory recognition of the title "chamber" will give a moral boost to the cause of quality support to businesses. We owe thanks to the hon. Member for South Cambridgeshire for his patient efforts in developing the Bill and tackling this small but vital matter.

Question put and agreed to.

Bill accordingly read a Second time, and committed to a Standing Committee, pursuant to Standing Order No. 63 (Committal of Bills).