HL Deb 19 December 2002 vol 642 cc861-4

4.21 p.m.

Lord McIntosh of Haringey

rose to move, That the draft regulations laid before the House on 21st November be approved [3rd Report from the Joint Committee].

The noble Lord said: My Lords, the regulations will apply to England and Wales and Scotland, but not to Northern Ireland which has its own company registry and sets its own fees. The order was debated and approved on 4th December by the standing committee on delegated legislation in another place.

The effect of the regulations, which are mainly required for technical legal reasons, is to repeal the statutory fees for microfiche-based services produced by Companies House.

Companies House, an executive agency of the DTI with trading fund status, has successfully achieved the Government's modernising agenda of providing access to basic company information electronically. Falling demand and the take-up of electronic search services have rendered microfiche products uneconomic to produce. The number of microfiche-based searches has fallen from 2 million in 1995–96 to an estimated 250,000 by the end of this year—a fall of 90 per cent in seven years. This has occurred in parallel with Companies House developing and delivering its electronic search services to meet customer demand. All customers can now obtain electronic company information in convenient ways that suit their needs.

I told the House on 11th March this year that Companies House was looking to shift from microfiche services to electronic services to satisfy demand for basic company information by the end of this year as a consequence of the fall in demand. Companies House is now at this point. The organisation will stop updating microfiche-based company records on 31st December 2002. However, the frozen microfiche will still be available to searchers as an archive product.

To provide its electronic service, Companies House has scanned all the documents it has received since April 1995 to give a comprehensive company record. It also has a programme to capture images from older microfiche for the more commonly searched companies and has the ability to scan any other document held on microfiche and deliver it electronically.

However, we recognise that a few customers will not have access to appropriate computer equipment to receive and view electronic images of company information. The regulations cater for this by setting a statutory fee for a postal, paper-based document information service to complement electronic information delivery services. This service is not new but replaces the previous statutory paper-based service that was set when microfiche was the primary source of company information.

If Companies House were to retain the existing microfiche services, it is estimated that the cost of the basic product would have to increase to a prohibitive £20. This is because the costs of producing microfiche are large, with insignificant variable costs. Therefore volumes of searches significantly influence unit costs. I believe that such a high price would be unacceptable even to those who traditionally use microfiche.

Companies House has put considerable effort into informing customers about this change to its services. Since the beginning of the year it has undertaken a communications campaign, including advertisements in the national press and relevant trade publications, direct mailing to all known microfiche customers and leaflets in Companies House information centres. The campaign also includes information posted online on the Companies House website and the Companies House Direct service. Companies House has also managed to re-deploy all its staff involved in the production of microfiche.

The Companies House Executive Agency remains a key statutory registry with an enormously important role in company information provision. In October 2000, the agency's website was launched with a capability of delivering information anywhere in the world at the touch of a button. This can only be to the benefit of the British economy as a whole.

I confirm that these regulations conform to the European Convention on Human Rights. I hope that my explanation has been helpful. I commend the regulations to the House.

Moved, That the draft regulations laid before the House on 21st November be approved [3rd Report from the Joint Committed].—(Lord McIntosh of Haringey.)

Lord Hodgson of Astley Abbotts

My Lords, noble Lords on these Benches are grateful to the Minister for having explained a complex subject most clearly. We accept what appear to be the two key conclusions of these regulations; namely, that microfilming will end with effect from the 31st December next. We have to accept that microfilm is yesterday's technology, and that there is a lower demand for it. Secondly, we accept that Companies House must earn a return on its activities, but as its return last year was 9 per cent as opposed to a target of 6 per cent. I have a question to which I shall return shortly. However, we accept that there has to be an increase in the fees chargeable.

I should like raise a few points with the Minister. Under the new regime, can the noble Lord say whether the public will still be able to access microfilm directly'? Alternatively, will people be able to obtain a printed copy only via the postal service? I ask that question because deterioration can occur in the quality of such material when photocopies are made. In my experience, it is all too often the case that the piece that one most wants to read is the one that has faded to invisibility. I have in mind notes to accounts where the print is quite small, which means that you cannot actually read it when you receive the printed copy through the post. I should like to know whether people can obtain direct access to the microfiche.

I turn to the position in Northern Ireland, which, as the Minister said, is not covered by these regulations. Are the fees charged comparable with those of the Companies Registry in London? Further, can people gain access to Companies House via Belfast? If that is possible, presumably there is an opportunity for arbitrage in terms of the examination of records.

With regard to the rate of return being 9 per cent. I noted in the debate in another place that Ms Melanie Johnson, the Parliamentary Under-Secretary of State for Competition, Consumers and Markets, said that the excess over the target—that is to say, 3 per cent in excess of 6 per cent—was due to a higher than expected level of company registrations. I presume that that condition will no longer persist with the tighter economic conditions around the country. If the return remains above the target of 6 per cent. will the Minister bring forward reductions in order to reduce it to the target level of return?

Finally, I have a slightly wider question, but one which has perhaps assumed a greater relevance and importance as we move to an entirely electronically-based system of data retention. The noble Lord will know from debates in the House, and from his commercial experience, that boards of directors are increasingly being asked to focus on the key risks faced by their businesses; indeed, under the new combined code, they are required to do so. Key among those risks are those classified as "interruption of business"—fire, flood, loss of power supply, and the corruption of electronic records.

Companies address those risks by what is normally called a "disaster recovery programme", which inter cilia requires: first, duplication of records, one copy of which is then held off site; secondly, alternative facilities, which the staff can use to provide at least a skeleton or nominal service until normal business can be resumed; and, thirdly, a plan for who does what and when if disaster strikes.

Companies House is a key part of our market-based system, on which I know the Minister is keen—I heard him espouse it during the Committee stage debate on the Enterprise Act 2002. It would be helpful if the noble Lord could let us know a little more about the disaster recovery programme, and the precautions that are being taken at Companies House in this time of political uncertainty. Subject to satisfactory replies on the points that I have raised, noble Lords on these Benches are happy with these regulations as made.

4.30 p.m.

Lord Roper

My Lords, on behalf of these Benches I welcome the regulations. First, however, I must declare a personal if not a financial interest: I hate microfiche. I think that it is the most difficult and disagreeable way of accessing data, and I have always found it very difficult to manipulate. The move to electronic data which will be much more accessible is therefore a step in the right direction.

I pursue the issue raised by the noble Lord, Lord Hodgson, about the specific fees in the regulations and the return on the activities of Companies House. Companies House should of course cover its costs; I think that all noble Lords will agree that that is the right principle. However, how often are the fees reviewed to ensure that the return on the facility is not excessive? Companies House provides an extremely useful facility to the whole of society, but it would be wrong for the Government to take a higher than expected return. We need an assurance that the fees are occasionally reviewed to ensure that excess profits are not being generated.

Lord McIntosh of Haringey

My Lords, I am grateful to both noble Lords for their reception of the regulations, and I shall seek to answer the questions directly. The noble Lord, Lord Hodgson, asked whether microfiche will continue to be available directly. Yes, it will. He asked about the fees for the Companies Registry in Northern Ireland. I am afraid that we do not have information on that as it is a separate registry. That is what devolution means.

The noble Lord asked about the 9 per cent return as against the target of 6 per cent. The 9 per cent figure arose because there was an exceptionally large number of company registrations in that period. Contrary to what he expects, there continues to be a large number of company registrations. Therefore, if we did not take any action at all, there would probably be a higher rate of return than the target. However, we have the flexibility administratively to vary a number of the fees.

The fact that this is an affirmative resolution is a nonsense. I should not be taking up the time of the House today. It arose from a time when we were insufficiently aware of the value of the time of the House and the undesirability of having continuing amendments. I can reassure the noble Lord on that point, however, because the House of Commons committee on statutory instruments queried whether it was right for us to be doing this in this piecemeal way. In response, we have undertaken to prepare a consolidation order which will bring all of the changes into effect. However, some of the fees still require statutory approval. That is a matter which can be addressed in companies legislation in the longer term.

The noble Lord asked me about a disaster recovery programme. Companies House has a comprehensive disaster recovery programme and has recently undertaken considerable risk management assessment. I am sure that that means that there is adequate backup for the circumstances with which he is concerned.

I agree with the noble Lord, Lord Roper. Having run a business information company for a number of years and having to use microfiche myself, I hate microfiche: I hate searching, I hate the heat, and I hate the spiky metal on them. I do not want to see a microfiche reader again. However, he can rest assured that those who insist on microfiche can have it. There are microfiche readers in all of the Companies House public offices. It has been noticed, however, that they are very much less used than they were in the past.

On Question, Motion agreed to.