Regulator of Community Interest Companies

Lord Razzall Excerpts

Monday 11th March 2024 Lords Chamber

[Lord Johnson of Lainston (Con)]

I congratulate the noble Lord, Lord Harris of Haringey, if I may, on his work to oversee the Fundraising Regulator. The comments he has made and recent example that he has just given are things that we take very seriously. I have communicated with the registrar at Companies House today and she is also ensuring that she is available for further inquiries relating to this particular situation. However, without giving too long an answer, community interest companies are a fabulous idea. They allow social entrepreneurs to take up opportunities in their community, to distribute dividends back into the company and to incentivise people to invest in social benefit. Communities across the country have benefited from these fabulous concepts, and we want to do more. They have been growing in number every year—we now have just over 30,000; I think that they have doubled in the past four years—and, frankly, this Government will do everything we can to see them continue and flourish.

[Lord Razzall (LD)]

My Lords, first, to follow on from the noble Lord’s question, bearing in mind that this has been going on—as the Minister indicates—for over 20 years, does the Minister not think that it might now be time to update the community interest test with clearer guidelines, which might meet some of the points that the noble Lord, Lord Harris, has made? Secondly, does the Minister not think that this might be an opportunity to increase the annual turnover test to encourage small companies to become CICs and to register accordingly?

[Lord Johnson of Lainston (Con)]

I am grateful to the noble Lord for his input in this important area. These principles absolutely need to be kept under review. I have looked into this myself in great detail; only 38 complaints were made last year about these entities, which, considering there are 31,000, is not a significant amount. I do not believe that any CIC has been struck off the company register. We have updated the procedures around Companies House—director verification, statements of accounts, and so on—which will also apply to CICs. I am therefore very hopeful that we will see continuing reforms. I refer back to my original comment about the work that the noble Lord, Lord Harris, is doing to regulate fundraising. That is a separate point that is not necessarily related to company law, and we fully support his efforts in trying to make sure that it is properly regulated and ordered.