COMPANIES
HOUSE REVIEW
SUMMARY
OF STAGE 1 REPORT
The Review
All Executive
Agencies and Non-Departments Public Bodies (NDPBs) are subject
to review every five years. The last review of Companies
House took place in the mid 1990s and culminated in the contractor
provision of postal search and the central enquiry unit and of
the mainframe computer operation from 1996.
The current
review was launched formally by the Minister for Competitiveness
on 16 February 2000. Stage 1 of the review, which has now been
completed, considered Companies House’s past performance, the
need for the functions carried out by Companies House and whether
the required functions are best delivered through the mechanism
of an Executive Agency or an alternative organisational structure
(merged with another body, privatised, contracted out or market
tested).
Consultation
In accordance
with Cabinet Office guidance, views were sought from a sample
of customers and major contractors to Companies House, trade associations
and government departments, and from all staff at Companies House
on how the Agency had performed up to now, what services would
be required in future and how these could best be delivered. In
addition the Review Team interviewed managers from all functions
in Companies House in Cardiff, a number of customers and contractors
and relevant Government Departments and Agencies; attended meetings
of Companies House User Groups; held focus groups with staff across
Companies House; visited the Edinburgh, London and Manchester
offices; and met the Companies House Trade Union Side on four
occasions. We are extremely grateful to all those who gave their
time to help us with the Review, particularly for the positive
and constructive spirit in which they approached the exercise.
Their contributions were invaluable to us in completing this Stage
of the Review. Where comments related to issues to be covered
in Stage 2 of the Review, they will be picked up then.
Performance
The Review
found that:
Companies
House is performing well both in meeting its own objectives
and targets and in contributing to the achievement of wider
Government objectives such as the e-Government strategy. It
has generally met or exceeded the operational and financial
targets set for it. Its standards of customer service are
high, as shown for example by the award in 1998 of its third
Charter Mark;
Companies
House has already made significant strides in the introduction
of e-commerce methods into its services. It is on track to
have all its services capable of electronic delivery well
in advance of the Government target of 2005. The CH Direct
service, run in partnership with a private sector company,
offers electronic access to images of all documents dating
back to 1995 and earlier images will be added as requested.
All the major returns (except accounts) can be filed electronically.
Plans are well advanced to introduce facilities to incorporate
new companies electronically and to simplify the process for
e-filing generally, following the enactment of the Electronic
Communications Bill, expected shortly. Companies House forms
are accessible on the Companies House website and via the
"business portal" being developed by SBS (Direct
Access Government);
Companies
House has achieved external recognition for its success in
developing electronic services for filing documents and provision
of information. Its achievements in developing innovative
websites as an integral part of its business were highlighted
by a recent NAO report and CH Direct received an award for
Business Impact in the 1999/2000 PricewaterhouseCoopers awards
for Innovation and Risk Management in the Public Sector;
While
they do see areas in which performance could still be improved,
Companies House customers are generally satisfied with the
service they receive and consider the Agency is performing
well, delivering a good service at relatively low cost.
Need for
the Functions
The Review
confirmed that there is a continuing need for the functions carried
out by Companies House - the incorporation of companies, registration
of information about their continuing operations and provision
of information to the public - both to comply with domestic policy
objectives and with EU legislation on the regulation of companies.
Corporate status confers privileges on companies, in particular
in relation to taxation and, in the case of limited companies,
limiting the liability to creditors of the members of the company
(shareholders) to the amount of capital subscribed. In return
for these privileges, third parties such as potential creditors
(customers, suppliers, lenders, public authorities etc), shareholders
and employees are entitled to access to basic information about
the company, its directors and its assets to enable them to make
informed judgements about its affairs, and the risk of entering
into any dealings with the company.
Organisation
Companies
House should continue as an Executive Agency. There are significant
legal, regulatory and market/competition obstacles to privatisation
or contracting out of Companies House as a whole. Extensive regulation
of a private sector provider or providers, including restrictions
on services and prices, would be needed to prevent any abuse of
the monopoly Companies House has of input information and to ensure
that quality and continuity of service were maintained. This means
that neither privatisation nor wholesale contracting out would
be likely to bring customers real advantages of cost or quality.
Nor have we identified any other body with which there would be
any obvious advantage in merging Companies House. Although there
are a number of bodies involved in different kinds of registration
activity (eg the Land Registry) or in dealing with companies on
other issues (eg the Insolvency Service), the nature of the work
and the skills required are very different to Companies House
so there is unlikely to be any significant operational synergy;
The Review
endorses the continuing role of the private sector in the delivery
of Companies House services. Companies House already makes significant
use of external contractors, for example in IT and support services,
and should continue to do so wherever this offers greater effectiveness
and value for money.
The Future
The issue
now is how Companies House can perform even better in future.
Companies House needs to continue to improve the quality of its
services, setting and maintaining high standards of customer service
and responsiveness to customer needs. Customers rightly look to
Companies House as a reliable source of accurate and up-to-date
information and the Agency must ensure that it meets those expectations.
Companies House will need to modernise to improve the quality,
range and flexibility of its services.
The Review
found that:
There
is a clear demand from customers for Companies House to do
more to check the validity of the information provided to
it before entering it onto the register, even at the expense
of some delay in making the information available. Some also
want more sophisticated search options, 24 hour services and
better links with information held by other public bodies.
The possible range of services and the demand for them should
be considered further in the context of Stage 2 of the Review
and of scoping new systems; and taken forward in a way which
meets the considerable concern about the potential for abuse
of monopoly if Companies House were to get into the business
of "adding value" to the raw information;
Companies
House’s operation is increasingly based on electronic interaction
with customers, rather than the processing of paper and this
trend will continue in line with the increasing use of e-commerce
throughout the economy. Its operations depend on a mainframe
system (STEM) which dates back to the mid 1980s and was designed
to support a very different working environment. While this
system continues to provide an effective basis for current
processes, it is relatively expensive to maintain and lacks
flexibility, which inhibits improvements in processing and
in the quality, range and flexibility of services. It will
therefore need to be replaced. The replacement should provide
for a modern, flexible system to facilitate those improvements
and ensure that CH can continue to keep pace with the developing
e-government agenda.
In addition
to the basic replacement of STEM, Companies House should consider
the introduction of work flow and customer relationship management
software to improve tracking of documents and quality of service
to customers; and, as a major component of this, scanning
or keying in data on arrival for documents submitted on paper
to allow more data validation.
The transition
to new systems will need to be managed carefully and taken
step by step to ensure that there is no interruption in the
business. Substantial investment in IT will be required over
the next three years or so to achieve this. Funding will be
available from the cash reserves Companies House has built
up during its period as a Trading Fund. Companies House will
need to consider as part of the transition how it manages
the declining market demand for microfiche products, whilst
ensuring that customer requirements continue to be met.
Stage 2
Stage 2 of
the Review is now starting and will be completed in the Autumn.
As announced in February, this second stage will consider whether
any changes should be made to the way in which Companies House
operates, including its aims and objective, targets and financial
controls. It will also consider in more detail the costs and funding
of the investment in new systems.
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