Second Standing Committee on Statutory Instruments, &c.


Tuesday 16 June 1992


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The Committee consisted of the following Members:

Chairman: MR. ROY HUGHES

Ancram, Mr. Michael (Devizes)

Bell, Mr. Stuart (Middlesbrough)

Boswell, Mr. Tim (Daventry)

Bruce, Mr. Malcolm (Gordon)

Churchill, Mr. Winston (Davyhulme)

Dickens, Mr Geoffrey (Littleborough and Saddleworth)

Fry, Mr. Peter (Wellingborough)

Gorst, Mr. John (Hendon, North)

Gunnell, Mr. John (Morley and Leeds, South)

Hamilton, Mr. Neil (Parliamentary Under-Secretary of State for Corporate Affairs)

Hayes, Mr. Jerry (Harlow)

Hoyle, Mr. Doug (Warrington, North)

Hutton, Mr. John (Barrow and Furness)

Legg, Mr. Barry (Milton Keynes, South-West)

Marlow, Mr. Tony (Northampton, North)

Moss, Mr. Malcolm (Cambridgeshire, North-East)

Mowlam, Ms. Marjorie (Redcar)

Wright, Dr. Tony (Cannock and Burntwood)

Mr. R. J. Rogers, Committee Clerk

3 Second Standing Committee on Statutory Instruments, &c. Tuesday 16 June 1992

[MR. ROY HUGHES in the Chair]

Company and Business Names (Amendment) Regulations 1992

10.30 am

The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. Neil Hamilton): I beg to move, That the Committee has considered the Company and Business Names (Amendment) Regulations 1992 (S.I., 1992, No. 1196). This statutory instrument effects straightforward amendments to the Companies and Business Names Regulations 1981. The original regulations prescribe words and expressions that require the approval of the Secretary of State before they can be used in a company or business name. We have recently become aware that although the terms as they appear in the schedule are prescribed and require approval, their plural and possessive forms are not. That is undesirable. The purpose of the regulations is to afford the public protection against the misuse of terms that imply a certain status or specific function. The anomaly reduces the effectiveness of that protection. The first amendment, therefore, is to enact that the regulations apply equally to the plural and possessive forms of the terms prescribed. The second amendment relates to the word "University". Prior to submitting an application to the Secretary of State for the use of the word in a company or business name, applicants had to seek a letter of non-objection from the Department of Education and Science, the relevant body responsible for commenting on such applications. As a result of the Further and Higher Education Act 1992 this responsibility is being transferred to the Privy Council. Therefore the second amendment is to substitute "The Privy Council" for "Department of Education and Science". The final amendment is to remove the expression "Building Society" from the schedule. As the use of the word is already controlled by other legislation, namely the Building Societies Act 1986, there is no requirement for it to be prescribed as requiring the approval of the Secretary of State.

Ms. Joyce Quin (Gateshead East): I do not believe that hon. Members on either side of the Committee will have difficulty with this as it is largely concerned with uncontroversial matters. The Labour party supports the supervision and scrutiny of company names as a necessary aspect of consumer protection and an important factor in avoiding the misleading of consumers who deal with such companies. Can the Minister tell us why the changes are necessary now? He implied that his advice showed that there might be a loophole regarding plurals and possessives. Has there been a problem with specific companies, or has a theoretical weakness been spotted in the existing arrangements? What is the justification for the transitional arrangements? Is the Minister satisfied that they will not 4 lead to problems concerning the fraudulent practice or misuse of the names in question? Can his Department estimate how many people or companies are affected by the transitional arrangements? Are there further loopholes? Has there been a wide-ranging review of the system? Is this order the likely last word, or will there be continuing reviews to determine whether other loopholes might permit variations of controlled names to be exploited? As some new Members of Parliament are present today, can the Minister tell us more about the system of reviewing the names? Are there plans to amend the list? Although I have been a Member for some time, this is the first time that I have looked closely at the list of controlled names. I was interested to see what they were. I notice that "English", "Scottish", "Welsh" and "Irish" are names that are controlled, but that regional variations are not. What about companies that claim to represent the highlands of Scotland or the whole of the midlands? Are there any plans to amend the list or would the examples that I have given be included in the system for scrutinising and controlling company names? The Opposition have no difficulty with the proposals, which, on the whole, we welcome. However, can the Minister prove those further clarifications before the end of our proceedings?

10.35 am

Mr. Tony Marlow (Northampton, North): I am concerned by the word "community". Is it one of the words about whose inclusion in business names Government decisions will have to be made? Or will a higher authority than the Government have to make decisions about it? If not now, will the word "community" have to be assessed and passed by a higher authority when the Maastricht treaty is ratified? What is the Government's position with regard to the Maastricht treaty? Is it likely to be ratified?

The Chairman: Order. The hon. Gentleman is going wide of the instrument.

Mr. Marlow: I am, indeed, concerned about what will happen to the word "community" under the regulations. If the Maastricht treaty is unlikely to be ratified, some anxieties about the word may not apply. If anyone wishes to incorporate the word "community" in a business name, would that person have to apply to a higher authority?

Mr. Michael Ancram (Devizes): May I ask my hon. Friend the Minister why it has taken six years to realise that the term "Building Society" is otiose?

Ms. Quin: The hon. Member for Northampton, North (Mr. Marlow) raised a matter that I considered mentioning, but I decided that it would be kinder not to allow dissension to break out among Conservative Members about the words "community" and "European". "European" is included in the list. How much is the word "community" scrutinised? Its scope can be confusing: it can refer to the European Community or to something wider. When I was a much-travelled Member of the European Parliament, a Euro-exhaust centre was set up locally. I believed that it might be a health farm for Members of the European Parliament. Is the word "Euro" included in the list?


Mr. Hamilton: I am grateful for the opportunity of enlightening my colleagues, who have shown a surprising interest in the details of the regulations. We welcome the hon. Member for Gateshead East (Ms. Quin) to the Committee. Such is her enthusiasm for the cause that she is here even though she was not appointed to the Committee. Perhaps she is here to encourage the new Back Benchers present to be similarly assiduous in their duties and the interests of their party in the years to come. The hon. Lady asked why the amendment was not made earlier. The short answer is that I was not a Minister in the Department of Trade and Industry in 1981 and the matter was not spotted by my predecessor. My hon. Friend the Member for Devizes (Mr. Ancram) asked why it had taken six years to spot that the term "Building Society" was unnecessary. The answer is that I have just arrived at the Department of Trade and Industry. I spotted those deficiencies immediately upon my arrival, so I bring the regulations to the House with the greatest despatch. The hon. Lady asked why transitional arrangements are necessary. It is normal to allow a short time to elapse before statutory instruments become applicable in practice. If there were no transitional period, there would be no time for companies affected by the instrument to become aware of their new obligations. The hon. Lady may well have noted that two transitional periods are prescribed in the regulations. We are introducing the regulations earlier in respect of the amendment on the word "University", because the Privy Council needs to examine some applications in respect of universities, which, in some instances, are in the form of companies. We have, therefore, decided to bring the regulations into operation a week earlier for the convenience of those bodies. I am afraid that I cannot tell the hon. Lady how many companies are likely to be affected. That would be very difficult to estimate. Nor can I say whether further loopholes will arise. I have not had time to examine the entire corpus of legislation for which the Department has responsibility. Therefore, I cannot guarantee that lacunae will not arise that need to be filled. I promise the hon. Lady that if any come to our notice, we shall consider how best to deal with them. The hon. Lady also asked whether we carry out a regular review of the words specified in the schedule and whether we would seek to amend the list if we thought it necessary. The answer is that we keep these matters permanently under review. If an abuse were drawn to our attention that merited an addition to the list, we would certainly consider it. One might be rather surprised that some words do not appear on the list. I do not know whether hon. Members have conned the list. Although the use of the word "Duke" requires the permission of the Secretary of State, the word "Duchess" does not. My hon. and noble Friend the Member for Devizes may well wonder why "Earl" and other degrees of the peerage do not appear on the list. I cannot give an authoritative answer to that. Should 6 someone seek to form a company with a name such as The Earl of Ancram Ltd, there could be scope for considerable abuse. I draw attention now to that potential future difficulty so that my hon. Friend may take action against it. Now to the tour de force—if I may use that foreign expression—of my hon. Friend the Member for Northampton, North (Mr. Marlow): It is certainly true that "community" does not appear in the list. If my hon. Friend is so keen on the European Community that he feels that there is potential for abuse, the Department is prepared to consider adding that word to the list on his application. We do not wish to underestimate his attachment to the European cause.

Mr. Marlow: Does my hon. Friend share my view that the word "community" is an abuse?

Mr. Hamilton: My hon. Friend asked me earlier what was the position of the Government on the Maastricht treaty and on European matters generally and what were my views. I have no personal opinions. I am a member of the Government and no Minister has any personal views; we all agree with one another in the Government. There is not a wafer thin area of light between me and the Prime Minister, members of the Cabinet, junior Ministers and anyone else who has the honour to serve in Her Majesty's Government. With those few words, I hope that the Committee will endorse the regulations so that we may recommend it to the House.

Ms. Quin: I do not want to prolong the Committee unnecessarily, but the Minister's replies were rather vague. Was the new provision concerning plurals and possessives put forward by him or his Department in response to a particular problem or was it a theoretical loophole?

Mr. Hamilton: I am not aware that there has been a particular problem. It might be thought that the Interpretation Act 1978 would apply in these circumstances so as to allow the masculine to embrace the feminine and the possessive form of words to be deemed applicable. Sadly, the problem is that in the Interpretation Act 1978 those formulations apply, unless a contrary intention appears. The schedule to the regulations contains words such as "Prince" and "Princess", using both the masculine and the feminine form. It was thought that that was an indication of contrary intention. Therefore, we are making it absolutely clear that in cases where we do not specify a female form and a male form—for example, "Duchess" and "Duke"—we are covered against abuse. This is a prophylactic measure.

Question put and agreed to.

Resolved, That the Committee has considered the Company and Business Names (Amendment) Regulations 1992 (S.I., 1992, No. 1196).

Committee rose at fourteen minutes to Eleven o'clock.



Hughes, Mr. Roy (Chairman)

Ancram, Mr.

Boswell, Mr.

Dickens, Mr.

Fry, Mr.

Gorst, Mr.

Hamilton, Mr. Neil

Hutton, Mr.

Legg, Mr.

Marlow, Mr.

Moss, Mr.

Wright, Dr.

The following also attended, pursuant to Standing Order No. 101(2):

Quin, Ms. Joyce (Gateshead, East)