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The noble Baroness, Lady Blatch, told us about who had been involved in the decisions. She indicated that the Government had accepted that there was a case for considerable change. She referred to the work of the deregulation task force. The only thing missing from her speech was any reference to the discussions we had in Committee on the Charities Bill when we were applying our minds to exactly those issues we are debating today; namely, whether we should give trustees greater authority to make their own investment decisions.
I am sure that the noble Baroness will be astonished to learn that the noble Earl, Lord Ferrers, was wholly opposed to that amendment and the Government were defeated on the issue. In future perhaps the noble Baroness will pay tribute to the work of your Lordships' House on that issue because if the Government's view had been accepted by the Committee we should not be in the position in which we are today.
As I indicated, I have no difficulty with the central thrust of the proposal. The only point I wish to make is as regards the explanatory note. There are two sentences, the first of which consists of 110 words. It is almost wholly unintelligible. I say "almost wholly unintelligible"; it is wholly unintelligible. Its purpose is to tell trustees what are to be their powers. It seems quite unacceptable that the best the Government can do is provide such an unsatisfactory explanatory note. I cite it as an example of how not to do it. The next order we are to debatethe Contracting Out (Functions in relation to the Registration of Companies) Orderhas a wholly admirable explanatory note which explains clearly what are the proposals in the order. I hope that in future the Home Office will do rather better.
I wish to make only three points in response to what has been said. First, the order does not apply to charitable companies because, as I am sure the noble Lord, Lord McIntosh, knows, the Trustee Investments Act does not apply. I have given an indication that there will be consultations as regards taking that matter further. As regards the Financial Services Act 1986, the order has no power to introduce requirements for that Act in relation to advice. But the point which the noble Lord made is well taken. This is not the measure through which to address that point.
I shall not respond to what the noble Lord, Lord Harris, said about my noble friend Lord Ferrers because I do not know the context in which he opposed the amendment or whether any consultation had taken place.
The noble Lord, Lord Harris, referred to the explanatory note. I often agree with the sentiments of what the noble Lord says. The explanatory note does not seem to qualify for the plain English award. I should perhaps say in defence of it that it explains the "legalese" contained within the order. The department goes further than that and issues what I hope is plain English guidance which goes a long way towards helping the charity world and the voluntary sector to understand what is very often extremely complex legislation. We shall continue to do all we can to help to make sense of legislation. I commend the order.
The noble Lord said: My Lords, the order is made under Section 77(2) of the Deregulation and Contracting Out Act 1994. This is the first use of the important power which enables certain statutory functions to be discharged by contractors where at present they may only be discharged by public servants.
The power was introduced as part of the Government's drive to ensure improvements in the quality of public services and efficiency in their delivery. The Government's "Competing for Quality" programme has produced a sea change in the way such services are delivered, ensuring better value for money for the taxpayer and higher standards for customers.
Companies House has been part of that success story. Since it became an executive agency in 1988 and achieved trading fund status in 1991, it has shown continuing improvements. In 1992 it received the Charter Mark for excellence in the provision of public service. In 1988 it used to take 30 days for a document to be processed and made available to the public; nowadays it takes less than five. Similarly, the proportion of companies which meet their annual filing
Noble Lords will be aware that it is standard practice to review the status of each agency periodically. The review into the future of Companies House was undertaken to see how best to build on its record.
The Government's decision following the review was announced by my right honourable friend the President of the Board of Trade on 20th December 1994. We have concluded that the best way of achieving further improvements is through the closer involvement of the private sector in the running of Companies House.
However, the business information industry is in the early stages of a major technological change as microfiche is replaced by digital technology. We therefore plan to proceed on a progressive basis. Companies House will remain an executive agency and work in partnership with the private sector to develop the new technology. At the same time it will work through a programme of contracting out a number of specific areas, putting each out to tender to private providers. I envisage that some 270 jobs out of a total of about 950 will have transferred to the private sector by 1996. Just over 100 of them will be in Cardiff, the rest mainly in London and Edinburgh.
The programme involves a number of statutory functions, which is why the order is necessary. They are presently carried out at Companies House London, the satellite offices in Leeds, Birmingham and Manchester, Companies House in Edinburgh andin the case of postal searchat Companies House Cardiff.
In London and the satellite offices, the statutory functions are to provide facilities for inspecting company records and to receive documents for filing. The offices also undertake same day incorporation and changes of name of companies. The Edinburgh office carries out the full range of Companies House functions in Scotland, including the recording and retention of company information.
It may help the House if I briefly explain the purpose of the main articles in the order and their supporting schedules. First of all, I turn to England and Wales. Article 3 enables any function of the Registrar for England and Wales which is listed in Schedule 1 to be contracted out. A number of different Acts require documents to be delivered to the Registrar of Companies. Schedule 1, paragraph 1 ensures that they can be delivered to a contractor.
Paragraph 3 covers functions in relation to the delivery of documents and the making of them available for public inspection. It has been framed to ensure that, while the receipt and dissemination of information may be carried out by a contractor, decisions as to how the relevant functions should be undertaken are retained by the registrar. For example, the decision as to which medium is used to make information available, presently microfiche, will still be up to the registrar. The paragraph will enable a contractor to run the search room services provided by the London and satellite offices. It also covers the postal search activity carried out from Cardiff, which is included in the contracting out programme. Paragraphs 4 to 8 of Schedule 1 cover duties conferred under other enactments, particularly the provision of certified copies of documents.
I move now to Scotland. Article 4 of the order permits the Registrar for Scotland's statutory functions to be contracted out, with the exceptions of those listed in Schedule 2. The exceptions are limited. They consist of two types of power. First come powers to seek a court order against a company. Those functions are exercised only rarely by the registrar. They entail the exercise of discretion as to whether to commence legal proceedings. We believe it right that they should be retained by the registrar. Secondly, there are powers to decide how functions should be undertakenfor example, decisions as to the form in which documents are presented for registration or the form of numbers allocated to registered companies. Decisions like this, which are fundamental to the design of the companies registration system, will be retained by the registrar.
In addition to the registrars' statutory functions, there also also a number of functions conferred on the Secretary of State which are exercised by Companies House. They apply to Great Britain as a whole. Article 5 of the order and Schedule 3 enable a limited number of those functions to be contracted out. They are ones where the activities concerned can be set out clearly in guidance to a contractor, in line with well established current practice.
As noble Lords may be aware, applications for incorporation or a change of name are checked against a list of restricted words, which are set down by the Secretary of State through regulations. Registration of names which include those words requires the approval of the Secretary of State. In addition, the registration of certain other names which might constitute a criminal offence or be misleadingfor example, "pharmacist" or "bank"is allowed only if the relevant body (such as The Pharmaceutical Society of Great Britain or the Bank of England) confirms that the applicant is entitled to use the name.
Subparagraph 1(a) would enable the contractor to consider applications for incorporation or re-registration against the criteria set for each restricted name and, if the criteria had been met, to incorporate the company. But decisions on which words should be added to the list of restricted words, and on the criteria which would need to be met before confirming an incorporation, will
Paragraphs 2 and 3 relate to the approval of business names. Approval is necessary for business names which contain a restricted word. They are assessed in the same way as company names. Inclusion of paragraphs 2 and 3 will enable a contractor to approve business names which meet the criteria set out by the Secretary of State. Subparagraphs 1(b) and (c) relate to the extension of periods allowed for laying and delivering accounts and reports. That is relevant only to the Edinburgh contract. The function is exercised regularly there and the procedures are well established. The contract will lay down precise guidelines.
The order, therefore, sets out the statutory functions which the contractor may be employed to carry out. But it is by no means the whole story. In the first place, under Section 72 of the Deregulation and Contracting Out Act, in all cases where statutory functions are contracted out, the registrar or the Secretary of State, as the case may bewill remain legally responsible for anything done, or not done, in connection with that function.
Secondly, the extent to which particular functions will be delegated and the procedures and guidance which the contractor will be required to follow will be set out in the contracts. They will also specify the levels of service which a contractor would be required to provide; for example, setting out opening hours and the speed with which activities should be carried out. There will be effective monitoring procedures so that we can be sure that a contractor is performing his duties properly.
Thirdly, the fees and charges to users of Companies House services will continue to be set by the Secretary of State through statutory instrument (subject to affirmative resolution by Parliament if they are increased) whether the services are carried out by the agency or through contractors. Obviously, the contractor will not, therefore, be able to set his own fees for statutory services.
I should also emphasise that contractorisation is a process of testing. Potential bidders will be required to demonstrate that they can offer and deliver better value for money than would be achieved if the activity were not contracted out. By value for money, I do not just mean low prices. It is essential that the contractor maintains and, where possible, improves current levels of service. Unless that can be demonstrated, contracting out will not go ahead.
Our intention is to make rapid progress with the programme and to have completed it by 1996. We expect to issue an information memorandum and invite expressions of interest in respect of the contract for the London and satellite offices soon after the making of the order, with the invitation to tender following before the summer. Details of the contract for postal search and Edinburgh will follow later this year. The information memoranda for the other, non-statutory activities in Cardiff will be published during the spring and summer. Those activities include things like building management and cheque processing.
As I said, we believe that the contracting-out programme offers the best way of building on the excellent record of Companies House. The agency plays a crucial role in the commercial system of this country. Our aim is to ensure that it operates as efficiently as possible and that, as taxpayers and users, we get the best possible value for money.