Government bureaucracy

It was a 124-year-old Welsh family business which took five generations to build up, yet a blunder over a single letter was all that was needed to cause its collapse, leaving the government with a £9 million legal bill.

A High Court ruling has found Companies House liable for the demise of Taylor & Sons Ltd, after they erroneously recorded that the Cardiff engineering firm had been wound up.

In fact it was another, entirely unconnected, company – Taylor & Son Ltd – which had actually gone bust.

By the time Companies House, an executive agency of the Department of Business, Innovation and Skills, tried to correct its mistake three days later, it was already too late for the Cardiff engineering firm.

“They [Companies House] had already sold the false information to the credit reference agencies,” said Philip Davison-Sebry, 57, former managing director and co-owner of Taylor & Sons Ltd.

Welcome to the Courageous State.

36 thoughts on “Government bureaucracy”

  1. Note that there was no dispute the mistake had been made.

    Rather CH was trying to argue that the fact that they had shown that the company was in liquidation had no effect on its credit rating, that the mistake was unique (? aren’t all murders unique as far as the victim is concerned?) and the scale of the damages was too high.

    As in all State sponsored terror organisations, CH wanted to make this go away by throwing millions of pounds at it, in the vain hope it would go away. With most small companies it does, because the owner runs out of time, money and willpower. Thank God, this one didn’t, but unless Taylor’s get costs, they’ll probably just break even.

  2. “….leaving the government with a £9 million legal bill.”
    So, leaving taxpayers with a £9 million pound legal bill.
    Or can it be deducted from the pay of everybody in BIS?

  3. “Why “everybody in BIS” rather than the person or people who f*cked up at Companies House?”
    Fair question. Partly because I doubt that anybody there is paid enough to pay if off, and partly because I suspect that mistakes like this would be less likely if government stuck to it’s core tasks (of which Companies House may well be one) rather than running around like hyperactive but not very bright puppies trying to get involved in everything we do. And I see BIS as one of those puppies. Only not as cute.

  4. Where will the £9m come from? Don’t be surprised when the annual filing fees go up next year. They never understand that the process is the punishment, whether that punishment is deserved or not.

    No doubt the peon who made the cock-up in the first place is still there, perhaps after a few hours extra training on how to push buttons.

  5. The thing that surprises me is that all these other companies just acted immediately on the credit agency data. If you thought a major business connection had gone into liquidation, wouldn’t you bother to check first?

  6. It is astounding that the damage was irreversable after three days. It strikes me that Companies House’s real mistake isn’t the one-letter reading error — these things do happen — but selling the information so damn quickly. Trying to fix a simple paperwork error three days after it happened would actually be considered bloody fast by the standards of most bureaucracies and private companies. Structuring your activities in such a way that that fast is still catastrophically too slow is insane.

  7. Bloke in North Dorset

    Tim,

    This wasn’t a failing of the Courageous State, just the opposite. It was the failing an Executive Agency and those are the spawn of neo-liberalism set up to undermine the Courageous State.

    If CH had been under direct control of the the Courageous State none of this could have happened because because the omniscient ones would have been in charge.

    On a more serious note, its difficult to know what to do here. Mistakes do happen but we can’t have State Agencies sitting on information that a company has been wound up as that in itself could have serious consequences for someone.

    There’s obviously a systems failure and someone should carry the can. I see from their Organagarm that at the top they are all “Directors of” so they don’t carry any legal obligations. Anyway, I suggest that the “Director of Customer Delivery” should carry the can for this one along with the “Head of Delivery Services and Compliance” and “Head of Customer Services”. Its their jobs to make sure this kind of fuck-up doesn’t happen and pour encourager les autres in other Executive Agencies.

    If it was shareholders in a private organisation paying for this one we can bet there would be calls for heads to role, accompanied by the usual suspects on the left so I don’t see why we shouldn’t have the same for Agencies.

  8. Do credit reference agencies have any liability?

    Yes, they’ll just say “we only publish what we’re given”, but so do newspapers.

    Also, how was the £8.8m damages figure arrived at? I don’t understand that at all. Tata Steel alone is worth £4.8m a year.

  9. This doesn’t make sense at all. It’s not the company name you act on: it’s the registration number and registered address.

    The one letter mistake would be irrelevant – none of the other identifiers would match. Unless of course the court that put the real company into administration simply send CH a letter saying [company name], in which case the court authorities and probably also the liquidator is probably also on the hook for negligence.

    This is really basic stuff.

  10. Squander Two,

    I’m also wondering how this happens. It sounds like the users use the same search form on name and can just select a company, which is poor design when you’re doing any sort of update.

    If you’ve got a “wind up the company” letter coming to someone, they should have a number on it (preferably with a check digit) and if you want to be safe, you don’t show them the postcode, but request they enter the postcode when clicking a “confirm” button as a double check.

  11. It all sounds like it could be corrected easily enough. Companies House can update their system and send out correction letters. The credit agencies would simply be obligated to remove the erroneous data rather than simply attach amendments. After all the DPA allows for correcting errors.

    Sure a big mistake but no simple mistake like this should cause all those issues.

    I doubt this is the first time as well. Most people just wouldn’t take it to court.

  12. What about “Taylor & Son Ltd”? Were they able to continue getting credit/supplies etc, even though they had (secretly!) gone bust?

  13. What Ian B said.

    Surely a quick phone call to one of your major suppliers would be sensible before cancelling orders and finding a new source?

  14. Why “everybody in BIS” rather than the person or people who f*cked up at Companies House?

    This was a system-wide failure. The QA at Companies House must have failed to spot not just the that the company’s name was wrongly entered but also that its registered address and number were wrong. And the credit reference agencies accepted without question a company’s instantaneous transition from a century plus good rating to insolvent, a fantastically unlikely event.
    So we’re looking at a fucked up Companies House and three fucked up credit ratings agencies.
    Companies House is state run, so we should expect incompetence. But the credit agencies live in the market (albeit with nice little state bungs like unrestricted access to the electoral register). The company’s shareholders should go after them too.

  15. Back in the days of valleys full of factories belching smoke, Britain’s dimwits could be found employment working on a production line. Now all those factories are gone, where do you think Britain’s dimwits now all work? In our wonderful “customer service” factories, that’s where. Be they private or public organisations, anything related to the handling of data and performing actions based on that data is turned into a dog’s dinner nine times out of ten. Our factories produced shite, and their successors are producing much the same.

    I ordered something from House of Fraser the other day. When it arrived it was the completely wrong item. Even a simply quality control task to make sure the right item goes in the right box seems beyond the wit of what passes for modern management. Ask yourself, did you ever meet a bright young person who said “I want to work in Companies House and manipulate the data?” 300 years ago this lot would have been cleaning barnacles off the Royal Navy fleet.

  16. Additional attack point for the injured parties: go after the credit ratings of the credit ratings agencies,

  17. “Welcome to the Courageous State”

    That phrase should be stuck to any article on state fuck ups like this, anything on Venezuela or similar just to associate Ritchie with as much of this as possible.

    Probably a bit late now that book is done, so just best to tag as much as possible now with “that’s the Joy of Tax”.

  18. GlenDorran,

    > Surely a quick phone call to one of your major suppliers would be sensible before cancelling orders and finding a new source?

    To be fair, if they really were going bust, they might well lie about it.

  19. To paraphrase Worstall, “It’s not the dangerous climate change that that worry me. It’s what the fuckers will do in the name of protecting me from dangerous climate change that scares the shit out of me.”

  20. To be fair, if they really were going bust, they might well lie about it.

    But as you are probably paying on account, do you care? If you get the goods and they are t-u before 30 / 60 / 90 days, you then just pay the administrator rather than the company.

    Okay, if you are some sort of J-i-T organisation, you may see a hit the second the supplies stop arriving.

    But, the minute you are liquidated, your bank accounts aren’t yours any more. Instant cashflow desert, no matter how cash-poor or rich you were before the error.

  21. One could say of the Courageous State thus:

    ‘the design is wicked, immoral, impious,oppressive. But it
    Is spirited and daring. It is systematic. It is simple in its principle. It has unity and consistency and perfection. In that country, entirely to cut off a branch of commerce, to extinguish a manufacture, to destroy the circulation of money, to violate credit…. Does not cost them a moment’s anxiety…..’

    A better summary of their outlook would be hard to find….

  22. Something doesn’t quite ring true about this, I wonder that we are missing some germane fact(s).

    Should a company suddenly find itself erroneously declared bust, then they should be on the phone quickly to all the customers and suppliers, ensuring that they all know that its a mistake. CH and the credit agencies (presumably) would provide errata letters, get them out to everybody quickly. This should not cause the death of the firm.

    And how the hell was it that boss found out when a supplier phoned him in the Maldives? He should have been told and immediately by whoever was running the show in his absence and got the first plane back.

    Suppliers don’t want to lose customers, they would love to hear that it was a misunderstanding and they can continue to supply a creditworthy customer as per. Customers want what they do so badly that they pay money for it, they too would love to hear that it has all been a mistake.

    Disasters happen to firms, they have to be dealt with, seems this disaster was not dealt with, why not?

  23. > And how the hell was it that boss found out when a supplier phoned him in the Maldives? He should have been told and immediately by whoever was running the show in his absence and got the first plane back.

    Given the timescale, I think that was him being told immediately.

  24. This was a horrendous error, which shouldn’t have happened, but…

    The enforcement of debts is a state function, and so is the administration of limited liability. How can there not be a state-run register of limited-liability companies and their trading status? Are things done much differently in other countries?

    If there’s an organizational problem here, I suspect it’s not having a Companies House to administer these things, it’s requiring Companies House to be self-financing. That may make it rather too beholden to its Credit Agency customers.

  25. Hmm. The company that has suffered was in big trouble. The judgment leaves blank whether it had a long term future. It might have survived, it might have gone bust anyway. Which leaves us with the question “why did the treasury solicitor fight this, at a cost of £1 million (or whatever).”

    Why not say, yes we fucked up, we’re liable, we damaged your business, but you were about to go bust anyway. They’ve spent over £1million without addressing the question “was this co fucked anyway?” Clue, the steel business in Wales is not something you’d choose to go into right now. So I’d blame the treasury solicitor as much as Companies House. (I’ve lost the link to the actual law report).

  26. This reminds me of the military saying “amateurs talk about strategy, professionals about logistics.”

    Amateurs get excited about liability (“Who’s fault is it?, can I run to the papers?”), professionals worry about quantum (“yes, maybe we fucked up, but you’d have gone bust anyway”).

Leave a Reply

Your email address will not be published. Required fields are marked *