My Lords, I beg to move that the Companies (Fees) Regulations 1980 laid before the House on 25th November be approved. The purpose of these regulations is three-fold: first, to raise the fees for public search and related services; secondly, to prescribe fees for the re-registration of companies under the Companies Act 1980 and, thirdly, to consolidate all the fees for the statutory services provided by the Company Records Office.The Companies Registration Office, which is the responsibility of my right honourable friend the Secretary of State for Trade, is charged with the initial registration of certain documents which such companies are required to deliver to the Registrar, and for providing means of public inspection of those documents. The register now contains almost 800,000 companies, and the Registrar receives about 2 million documents each year. The public search facilities are used extensively by many sectors of industry and commerce, with over 10,000 inquiries being received each day. I think it right to emphasise to your Lordships that, although the workload of the office has increased considerably over the last five years with 20 per cent. growth in the number of companies on the register and a comparable increase in the number of documents handled, the number of staff has hardly changed and, indeed, has already been reduced during the last 18 months. This increase in productivity, to which I pay tribute, is particularly noticeable in the field of public search, where, with ultimately the same resources, approximately 30 per cent. more inquiries are dealt with than in 1976. The principal objective of these regulations is to ensure that the costs of maintaining the Companies Registration Office are covered by its revenue. Although the costs of the main services—incorporating companies, registering their documents, and providing public access to that information—have increased in recent years, such annual increases have been matched by increased revenue from the greater numbers of companies being formed and delivering documents for registration. Although the most recently published figures (contained in the Annual Report on Companies for the year ended 31st December 1979) showed a surplus of £2·8 million, derived from costs of £10·6 million set against revenue of £13·4 million, in the current financial year that surplus has been significantly reduced and in 1981–82 the office would incur a deficit of some £600,000 on the basis of present fees. The increases now proposed will enable a reasonable surplus to be maintained at least in the coming financial year. It is necessary, in any event, to prescribe at this time the new fees required for the re-registration of companies under the Companies Act 1980. Part I of that Act comes into operation on 22nd December of this year, creating a new category of companies called Public Limited Companies (PLCs). The fees proposed are in line with the existing fees for registration and re-registration under the 1948 Act. The reason for increasing the particular fees covered by the regulations is that we believe that, in each particular service provided by Government, charges should reflect reasonable costs. For many years, the facility for inspecting company records has been heavily subsidised by the fees paid by companies for the privilege of incorporation and their subsequent filing of statutory documents. It was not until the Companies Act 1976 came into operation, however, that certain fees (such as that for the public inspection of documents) could be changed without amending primary legislation. Although, as already stated, it has not previously been necessary to look for any change, we have taken the opportunity provided by the need for this review to go some way to redress the balance between the various fees. Nevertheless, none of the increases now proposed will fully reflect the costs likely to be incurred in providing these services. I hope your Lordships will bear with me if I now outline the increases in the particular fees. First, the search fee has remained unchanged since 1844 and it represents nowadays the cost of producing a set of what are known as microfiche copies—of which I have an example here—of almost all documents delivered since the company was incorporated. The average cost of producing these little microfiches is about £1·30; the proposed fee of £1 is, we believe, reasonable in the circumstances. But I noted with interest that the equivalent to the value expressed by one shilling in 1844 is now £1·17, and while the fee for entry to a place which I am sure will be familiar to many of your Lordships—the London Zoo—was also one shilling when it opened in 1847, that charge is now £2·75. I hope your Lordships will not think that I compare animals in the zoo to company lawyers, but on that basis we consider that the service provided by the Companies Registration Office, which now attracts over 2½ million inquiries a year compared with under ½ million inquiries five years ago, still represents exceptional value for money. In future 16 per cent. of revenue will be derived from search and related fees, which compares with 1·5 per cent. at present, although these services will still account for over 26 per cent. of the total costs. We are considering means, however, to provide a partial search service at some future date, for the benefit of those individuals—or, indeed, their agents, who account for over 60 per cent. of the total inquiries—who do not need access to the full record of a company. Indeed I am told that as a result of a sample that was taken in July this year it was found that 114,000 separate searches were made in some depth and that approximately 55 per cent. of persons who required access to accounts just required the current accounts—one set of accounts—and that is why we believe this partial search will provide a relevant and cost-effective service. The second type of service which is rendered are things called certificates of fact, and these currently attract three separate fees of 25p, 50p or 75p according to the amount of information which is required. These fees were fixed many years ago—indeed well into the 19th century—and the cost of producing such a certificate is today estimated at just under £3, to which must be added the cost of obtaining the company's record. It is for that reason that we propose to introduce a flat rate of £3·50 for the first such certificate supplied on any one occasion and £2·50 for any subsequent one relating to the same company supplied on the same occasion. This fee includes the fee for extracting a copy of the company's records in order to provide the certificate, although this would be refunded if the inquirer had already made such a search. Thirdly, we come to certified copies provided by the Registrar, a service which currently attracts a fee of 3 pence, three new pence, per page. This will be increased to 30 pence per page together with the search fee if the Registrar has to extract the company's records in order to produce and certify a copy of the document. The remaining statutory fees remain unchanged because the income received in respect of each service covers the costs involved. The fees for registering a company or for changing its name were fixed in 1973 and the fee of £20 for registering a copy of an annual return was fixed in 1975. Although the costs of the services concerned have also increased, increased efficiency will enable these fees to remain unchanged for the time being. My Lords, this has been a fairly long and complicated explanation. I am very grateful to the House for bearing with me. I beg to move.
Moved, That the regulations laid before the House on 25th November be approved.—( Lord Lyell.)
My Lords, the House will be grateful to the noble Lord for having given such a lucid explanation of the statutory instrument. Perhaps it is proper for me to declare an interest, in that my own firm, Halpern and Woolf, have a direct financial interest, however moderate, in the subject matter of the debate.The practice seems to have grown up in recent years for changes in company fees to be accomplished by statutory instrument. They were established in 1948 under the Companies Act, Schedule 3, and they were changed some 19 years later in the Companies Act 1967. So for 19 years the fees remained unchanged. Since that time there has been almost a spate not of Acts but of regulations. There was one in 1973, No. 2062, another one in 1975, No. 596, and another one which is now before your Lordships. The use of statutory instruments does have certain disadvantages in that of course one can reject or accept them but not amend them. It is for consideration whether, after reviewing all the circumstances in regard to the company position in this country, it might have been possible to have brought in some amendments, but obviously one cannot do it with a statutory instrument. It seems rather on the face of it that the idea of the provision of a service to the industrial and commercial community at large which would in the normal way attract at any rate some contribution from the taxpayer has now been completely abandoned. The declared objective is to make the company registration service and all the ancillary offices that go with it self-supporting. Well, my Lords, it does not apply in every department, because in 1975—I am well aware under an administration of my own party persuasion—the fees for filing of annual returns of companies were moved upwards from £3 to £20. With some 750,000 companies on the register as at the end of November, this means that the Government have received revenue to the tune of some £15 million. I am quite certain that the cost merely of storing annual returns of companies, of which the overwhelming mass are private companies, certainly does not amount to this amount of money. Therefore, those, mainly private, companies that are filing annual returns, for which the charge in 1948 was very much less, some 25p, are subsidising the maintenance of the entire records office to a very considerable degree. This is something I should have thought the Government of the day would have looked at again before they came out with this regulation, because of course this does weigh extremely heavily on small businesses. Twenty pounds per annum may not appear to be very much, but when it is added on to other expenditure it does amount to quite a fair sum. However, it remains £20 in the regulations. As to the inspection charge, which has now gone up from 5p to £1, of course what the noble Lord says is true—it has been there a long time. I would only say that it remained unchanged for a century, from 1847 to 1948. So the effective change so far as we are concerned is from 1948 onwards, and that means an increase of some twenty times. I am well aware that these matters are not of very considerable financial moment, but they all add up and they do amount to a burden, particularly on the small firms with which the Government profess to be very much concerned. I am bound to say that the changeover from the registry in London to Cardiff has not been without its difficulties. I have made very careful inquiries as to what happens now when one goes along in London to get the microfiche. I am told that on average it takes about half an hour longer per company to get the information that one wants as compared with the old days when the records were here. Moreover, the microfiche does suffer from one disadvantage. Whereas when the original documents were available for inspection, one could get the information even though in some cases it was only faintly written on the documents admitted to the registry, now, when the microfiche is used, you find a very large number of cases where, owing to the defects in the original documents, which would have been seen on direct visual inspection, one no longer gets the same degree of clarity from the microfiche. The noble Lord did say that there had been an increase in productivity in the Companies Registry Department owing to the fact that staff had to some extent been run down, I do not know whether by dismissal or by way of natural wastage. I am bound to say that I think that the putting of the old Companies House service under undue financial constraints is possibly a little shortsighted. The service that one gets at the moment is not as good as it was previously, even though it is steadily improving and I would not wish to cast any aspersions upon it. I would question the desire to make it self-balancing, on the basis that it receives either from the companies concerned or from the public. Very often today, and particularly in these times of financial constraints and uncertainties, large numbers of creditors find it necessary in regard to individual companies to go along and use the search facilities. Very often they are people to whom every pound counts, and one does not, therefore, look with any favour upon the endeavour to raise these fees too far. I thank the noble Lord for the extent of his reply and the very lucid way in which he explained the contents of the regulations. I personally—and I can speak only for myself in this instance—am not entirely happy with the way in which this matter has been dealt with. I would have much preferred a regulation which gave some relief to small companies. But, on the whole and in view of the findings of the Joint Select Committee that the matter really was not of sufficient consequence to be brought to the attention of your Lordships, I entirely support what the noble Lord has said.
My Lords, we are very grateful for the reception by the noble Lord, Lord Bruce of Donington, of these regulations. The noble Lord mentioned the microfiches. I noticed that during the course of my remarks the microfiches even found their way over to the noble Lord. I hope that they have all come back, because I should not like it to be a self-fulfilling prophecy of what the noble Lord was worrying about—perhaps the reduction not only of staff, but also of microfiches in Cardiff. Apparently they are all back, but we can deal with that matter later.I should like to reply to some of the points raised by the noble Lord, Lord Bruce. I take, and indeed the department takes, very seriously, as he put it, the spate of regulations amending fees. I think that the House would agree that this is the third occasion in seven years when we have altered the fees. I believe, for that reason, that the House would agree that it would be better that we should try to amend the fees in, one might say, a block. That would mean that we would be doing it in the form in which I have presented it this afternoon. But we do, of course, note the point raised by the noble Lord, Lord Bruce, that it is very difficult, if not impossible, to amend statutory instruments. The noble Lord mentioned the question of the large income derived from registering and, indeed, maintaining records of private companies—I think he said that the vast majority of companies in the registration office at Companies House, Cardiff, are, indeed, private companies. I think that it is accepted by the business community—small companies, small businesses, large businesses and the commercial world at large—that incorporation for limited liability is, to some extent, a privilege. I believe that businesses and the commercial world accept that, and that we should, as far as possible, try to cover the costs of supplying this service in this way. Does the noble Lord, Lord Bruce, wish to make a quick point?
My Lords, I was referring to the annual returns rather than the fees payable on the registration of the company.
My Lords, I am so sorry. The noble Lord was typically precise—and I apologise if I have been less precise than I should have been—but I think he will accept "one of the many fees" as spelled out in the regulations. I think that it appears on page 2. I called it the "fees", and I am sorry if I was not precise.We noted the remarks of the noble Lord about the disadvantages of the microfiche and especially the defects in ordinary documents which were readily discernible by the naked eye when we used to go to Companies House and pull out the thick files. However, we would stress to the noble Lord, and indeed to the House, that it takes no longer to get hold of records now than previously in the old Companies House in London. Indeed, under the old system one out of five searches was abortive or even extensively delayed because other searchers were using the files which the searcher wished to obtain. I understand that microfiche records can be, and are, in the large majority of cases kept and retained by searchers. But the House will note that even those of your Lordships with eagle eyesight would find it rather difficult to obtain any meaningful information from these little microfiches, and, indeed, a special machine is required to use the microfiches. However, that kind of equipment is extensively used in commerce these days, and I understand that users of the information obtained from Cardiff are ready and willing to have such visual aids. So, the microfiche records can be of great use to them. We believe that the complaint rate is higher than it need be. The rate is now 0·1 per cent. as regards searches with the new system in Cardiff, and I understand that the complaint rate in London, when the thick files could be pulled out and we could go and inspect the original documents for ourselves, used to be in the region of 8 per cent.—that means that one search in 12 was the subject of a complaint. That is why we would suggest that the new system is making use of the technology available to us, and we hope that it will not be another 136 years before the search fee goes up again. Indeed, that is a span of years which is little more than applies to some of the more long-lived Members of your Lordships' House! I hope that I have answered the points raised by the noble Lord, Lord Bruce. If I have missed any, I shall write to him. On Question, Motion agreed to.