§ 10.5 p.m.
§ Lord McIntosh of Haringeyrose to move, That the regulations laid before the House on 14th February be approved [20th Report from the Joint Committee].
The noble Lord said: My Lords, the effect of these regulations is to increase the fees for certain, microfiche based products provided by Companies House. The reason for doing so is that the demand for such products is declining steadily. New electronic search services available from Companies House are taking over as the primary medium for searching company records. Indeed, the increase in demand for the electronic services can be seen as a significant achievement in progressing the Modernising Government agenda.
As Companies House is an executive agency with trading fund status, it is obliged to recover the costs of the services it supplies through the fees it charges. The declining demand for microfiche products does not correspondingly reduce the costs for updating them and running the necessary processing and computer systems to ensure their proper storage, maintenance and retrieval. Consequently, the unit cost for producing a microfiche will rise significantly as demand falls.
On the current fee of £6.50, Companies House is making a loss estimated at £2.50 per microfiche. The predicted cost for next year is estimated at £11.50. As explained above, this is an untenable situation given the trading fund status of Companies House and the requirement that it recover its costs through fees charged for its services. In addition, Companies House has to fund future development programmes from fees it charges for its services. It is vital that the agency invests in new and up-to-date technology to provide more efficient and flexible services to its customers.
We therefore intend to increase the cost of a microfiche from £6.50 to £9. This represents a significant increase but it has to be set against a decline in volume from 600,000 units in 2000–2001 to around 300,000 anticipated for 2002–2003. Other options were considered, including that of doing nothing. However, that is not acceptable within the trading fund rules as it would mean Companies House making a substantial loss on its microfiche products. A second option was to increase the price by more, but that is unlikely to increase revenue as demand would be likely to drop even more than predicted as a consequence of demand and price elasticity. Increasing the fee by a lesser amount would simply mean the need for a further increase in the short term in order to ensure that Companies House recovered its costs.
The final alternative is to end microfiche availability completely and this is something that Companies House is looking at currently. It is, however, unlikely to be possible in the immediate future, but microfiche will in time become a specialist product for forensic 652 analysis or historical research, and be priced accordingly. Companies House proposes to stop updating microfiche records at the end of this year.
The House was warned of the possibility of the likely increase in microfiche fees when a similar order was presented just over a year ago. This may well be the last such increase. More and more people are turning to the electronic information services now available from Companies House. These are becoming increasingly comprehensive and easier to access, as well as progressively cheaper. For example, since October last year, searchers have been able to purchase copies of company documents over the Web using their credit cards. The demand for such services is continuously increasing and this in turn will lead to lower prices for conveniently accessible, high quality, electronic information.
We are increasing these fees by regulations under Section 708(1) of the Companies Act 1985. Companies House also uses Section 708(5) for setting charges for the new electronic, same day and other specialised services. The flexibility afforded by Section 708(5) is vital for the pricing of new products whose development costs and take up may be uncertain or variable.
To conclude, Companies House is the key statutory registry for companies and company information in Great Britain. In modernising its services in line with government targets it has seen the demand for traditional microfiche products decline significantly while running costs remain broadly the same. I hope that the House will accept my explanation for the increase in these fees. I commend the regulations to the House. I confirm that, in my view, the regulations are compatible with the European Convention on Human Rights.
Moved, That the regulations laid before the House on 14th February be approved [20th Report from the Joint Committee].—(Lord McIntosh of Haringey.)
§ Baroness Miller of HendonMy Lords, the previous occasion on which I spoke in your Lordships' House on the question of companies' registration fees was as a new Back-Bencher, when I sat on the Benches opposite. I complained then that the fees for registering annual returns were excessive and a burden on small businesses. On that occasion, I am happy to say that the registry reduced the fee from £32 to £18, and has since reduced it further to £15. It is a little strange to find myself saying that in the way of things such an increase is inevitable. Having listened to the Minister's lucid explanation, it seems odd that because fewer people use the service, those poor unfortunates who need to use it have to pay more. Having said that, we support the regulations.
§ Lord Shutt of GreetlandMy Lords, these figures seem appropriate.
§ Lord McIntosh of HaringeyMy Lords, I had hoped to have a chance to say how awful microfiches are. Have any noble Lords ever done a microfiche search? It is an absolute nightmare. One gets these little 653 photographic things, puts them in a machine, turns the light on and scrabbles around trying to find what one wants. It is an awful business, and I do not recommend it to my worst enemy.
The answer to the noble Baroness, Lady Miller, is that there is a combination of fixed and variable costs. The fixed costs do not change when demand declines and the variable costs are insignificant. That is why the price has to go up.
On Question, Motion agreed to.