Companies House

Companies House Forecast Model

The forecasting model (PDF 17KB) has been derived using activity based costing principles using a mature software product. Direct operational costs are driven directly onto the product groups with which they are associated. For example, teams associated with processing incorporations are grouped into cost centres specific to that task, and the costs are driven directly to those incorporation products. Other overhead costs are allocated using generally accepted accounting rules such as by floor area, number of employees etc.

Volumes assumptions are derived using historical trend analysis, PESTLE principles, and application of known policy. These are assessed quarterly by a cross-directorate team and on an annual basis to assist with the formal business plan. Volume assumptions have proved extremely accurate over the past ten years, which has reduced any volatility in the fee setting process.

The main assumptions applied are:

1. that cross-subsidy must not arise between input and output services;
2. that fees should underpin the strategic direction of Companies House, such that the added efficiencies of electronic services are passed on to customers as soon as possible through lower fees; and
3. the model has been constructed in line with the principles of Managing Public Money.

The model has proved to be extremely robust in previous years. The volume assumptions made, along with the tight control over our cost base and efficient working methods, has enabled us to predict our fees requirements accurately. This has allowed Companies House to provide its services at stable prices through a period of significant change in processes, law, and electronic transformation.

The model was assessed in 2006 by the Office of Fair Trading as part of a Report on “The Commercial Use of Public Information (CUPI)*. This report highlighted CH as a good example of applying cost allocation consistently when setting fees for its products and services.

*OFT Publication reference: oft 861