Product Security and Telecommunications Infrastructure Bill (First sitting)
Tuesday 15th March 2022
(2 years, 1 month ago)
Public Bill CommitteesRead Full debate Product Security and Telecommunications Infrastructure Act 2022 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 15 March 2022 - (15 Mar 2022)
The Chair
We are now sitting in public and the proceedings are being broadcast. I have a few preliminary announcements. If hon. Members with speaking notes could email them to hansardnotes@parliament.uk, that would be very helpful to Hansard. Similarly, officials in the Gallery should communicate with Ministers electronically. All electronic devices should be switched to silent mode. Unlike in Select Committees—although these proceedings are similar—tea and coffee are not allowed during sittings. Date Time Witness Tuesday 15 March Until no later than 10.25 am Protect & Connect; The Country, Land and Business Association; The National Farmers’ Union Tuesday 15 March Until no later than 11.25 am The IoT Security Foundation; The Internet of Secure Things Alliance; techUK Tuesday 15 March Until no later than 2.40 pm Professor Madeline Carr, University College London; Copper Horse Limited Tuesday 15 March Until no later than 3.40 pm Openreach; CityFibre; Speed Up Britain Tuesday 15 March Until no later than 4.20 pm BUUK Infrastructure; The Internet Service Providers’ Association Tuesday 15 March Until no later than 5.00 pm Which?; Refuge
We will first consider the programme motion on the amendment paper, and then a motion to enable the reporting of written evidence for publication, and a motion to allow us to deliberate in private about our questions before the oral evidence session. In view of the time available, I hope that we can deal with these matters formally. We discussed the programme motion last week at the Programming Sub-Committee.
Ordered,
That—
1. the Committee shall (in addition to its first meeting at 9.25 am on Tuesday 15 March) meet—
(a) at 2.00 pm on Tuesday 15 March;
(b) at 11.30 am and 2.00 pm on Thursday 17 March;
(c) at 9.25 am and 2.00 pm on Tuesday 22 March;
(d) at 11.30 am and 2.00 pm on Thursday 24 March;
(e) at 9.25 am and 2.00 pm on Tuesday 29 March;
2. the Committee shall hear oral evidence in accordance with the following Table;
3. proceedings on consideration of the Bill in Committee shall be taken in the following order: Clauses 1 to 66, the Schedule, Clauses 67 to 78, new Clauses, new Schedules, remaining proceedings on the Bill;
4. the proceedings shall (so far as not previously concluded) be brought to a conclusion at 5.00 pm on Tuesday 29 March.—(Julia Lopez.)
Resolved,
That, subject to the discretion of the Chair, any written evidence received by the Committee shall be reported to the House for publication.—(Julia Lopez.)
The Chair
Copies of written evidence that the Committee receives will be made available in the Committee Room and circulated to members by email. I would usually call on the Minister at this stage to move the motion for the Committee to sit in private, but I do not think that the Front Benchers on either side want to move into a private session, so we will continue sitting in public and the proceedings are still being broadcast. Before we start hearing from the witnesses, do any hon. Members wish to make declarations of interest in connection with the Bill?
Ruth Edwards (Rushcliffe) (Con)
I am a former worker in the cyber-security industry, and have worked for a couple of the witnesses giving evidence today. One is techUK; I have also worked for BT, which of course owns Openreach. I also draw the Committee’s attention to my entry in the Register of Members’ Financial Interests: I undertook some work in cyber-security for MHR between May and December last year.
The Chair
Thank you. The Clerks will note that declaration from Ruth Edwards; and Ruth, if you wish to refer to it later in the proceedings, do so.
James Grundy (Leigh) (Con)
This is slightly tangential, but better declared than risked. The Grundy family farm has a mobile phone mast, for which my father receives yearly payment.
The Chair
Thank you. The same applies.
Examination of Witnesses
Anna Turley, Dr Charles Trotman and Eleanor Griggs gave evidence.
Chair
I welcome the witnesses to the meeting, and thank you for your time. Before calling the first Member to ask a question, I remind all Members that questions should be limited to matters within the scope of the Bill and that we must stick to the timings in the programme motion to which the Committee has agreed, so this session will end at 10.25 am sharp, or earlier if we run out of questions. I ask the witnesses to introduce themselves briefly.
Anna Turley: My name is Anna Turley and I am chair of the Protect and Connect Campaign.
Eleanor Griggs: I am Eleanor Griggs, land management adviser for the National Farmers Union, representing about 47,000 farming members.
Dr Trotman: I am Charles Trotman, chief economist at the Country Land and Business Association. We represent 28,000 members across England and Wales. I am also chair of the rural connectivity forum, which represents rural organisations to industry and Government.
The Chair
Thank you. Let us move first to the Minister to ask any questions that she may have.
The Minister for Media, Data and Digital Infrastructure (Julia Lopez)
Q
Anna Turley: Thank you for meeting us to discuss our campaign. I should have mentioned at the outset that we represent all the site owners around the country who host telecoms communication infrastructure on their land.
I am afraid that we are not seeing the same tailing off of difficult cases; a number of cases are continuing to come to us where leases are up for renewal, yet telecoms companies are behaving in quite an appalling way. We have cases of rent reductions, often starting at 90% to 95%, and that is par for the course—it is not a small handful of extreme cases. In a large number of cases across the country telecoms companies are coming in often with very aggressive legal notices, which are quite intimidating and making people feel that they are being steamrollered by those large companies. People feel that they have no ability to participate in the legal process, and are obliged to take those cuts of 90% to 95%. If you are small community group, a church or a sports club, the difference between £4,000 and a couple of hundred is huge and has a great impact, especially when you believed that you had that income for the next 10 years. The impact on people has been huge and it has been pretty devastating since 2017.
Our frustration with the Bill is that it fails to address the root causes of that problem. The valuation issue is affecting people deeply, and the Bill will not deal with that. Those cases will continue to arise, and in fact the Bill will expand the number of people who will be affected by the 2017 code through the Landlord and Tenant Act 1954 and the Business Tenancies (Northern Ireland) Order 1996. Between another 3,000 and 4,000 people in Ireland will be affected by the 2017 code changes, as well as thousands of others across the UK. Those cases will not diminish, nor will the huge drops in rent, and that is having a devastating effect on a lot of small landowners and property owners around the country.
Julia Lopez
Q
Anna Turley: I would say that we are dealing with in the region of a few thousand. I have a number of case studies from Members’ constituencies around the country. I am afraid that I do not have a total overall figure, but there are 33,000 site owners around the country who are affected by this. Thousands of affected people have come forward to us via social media and lobbied their MPs. I would be happy to write to the Committee with a full number, but as I said, it is in the thousands. This is not a small number of unique people; this is par for the course. Colleagues here will represent their members in such cases, too. They are not a small minority that we have cherry-picked; this is happening across the board.
The campaign was set up because there was no way for, say, a church in Scotland, a rugby club in Wales and a farmer in Surrey to come together to stand up for their rights as landlords, to talk about how this was affecting them, and to have their voice heard by Government. Legislation was continuing to be developed, through pressure from mobile operators, which have long-standing and strong connections with Government through their large lobbying organisations. The views of ordinary people about the impact of the legislation on them were not being heard.
Chris Elmore (Ogmore) (Lab)
Q
Anna Turley: Absolutely. Someone in Cambridgeshire wrote to us who has two masts on their farm:
“I have recently gained Planning Approval for 5 Houses on my land Immediately next to the mast positions. Not only do I appear unable to refuse to renew the Lease…their current offer is derisory at £750 per annum which is less than 10% of the current rent.”
Another, in Peterborough, said:
“It’s been two and a half years out of lease, they had agreed all the new terms of the lease, just about to sign off. Then all change and they pulled out, and offered £500 per year and not heard anything since. These tower operators make dodgy used car salesman seem like Saints.”
We have hundreds and hundreds of those. Churches, for example, are saying that they can no longer keep to their plans for the upkeep of their buildings. Sports clubs say that they will have to ask parents for more, so that their kids can play on the team. The impact of a rent cut from £4,000 to just £350 is devastating for small community groups and small businesses. They feel that nobody is standing up for them or listening. The impact of the new legislation will make that even worse.
Chris Elmore
Q
Anna Turley: The first recommendation would be to go back to the Law Commission proposals of 2013. The Law Commission suggested a market-based valuation approach that was closer to the previous approach but still delivered savings to the operators. That was widely accepted as a very positive way forward. If that were taken as the approach to valuation, it would deal with the root causes of the issues and the imbalance brought by the 2017 changes, which essentially gave all the power to the operators.
As for the Bill, a number of further changes will damage and affect smaller landlords. For example, the Bill brings in backdated payments. Again, that could have a devastating impact on a small community group that is being asked not only to accept huge cuts in their rent, but to backdate their bills. There are issues on the definition of “occupier”, which others will talk about. That could give operators the opportunity to change or modify agreements that were entered into in good faith and still have time to run. We would like more protections for landlords, to protect them against poor behaviour by operators. For example, alternative dispute resolution should be mandatory. There should be the power to impose fines on operators for bad behaviour. We would like a statutory code of practice for them as well.
We are also very concerned about changes to the Landlord and Tenant Act 1985. We do not believe the reforms to valuation should be extended to the new legislation. That could set a huge precedent for all kinds of things such as wind turbines, and could bring the 2017 changes into effect for thousands of people who previously were not covered.
We would also like to see an evidence base; that is one of the most important things. Five years after the changes were brought in, there has been no full impact assessment of the 2017 changes. There is no evidence base, but it was promised, during the passage of the Bill in 2017, that there would be a full assessment by 2022. We have not got a clear enough sense of the impact of those changes. Here we are again, bringing forward new legislation without having a proper evidence base for those 2017 changes.
Finally, we would also like more reporting requirements on the operators. We have no evidence that the money they have saved since 2017 has gone back into building new infrastructure. Everybody wants connectivity. All our members want better connectivity and wi-fi, but the reality is that money is not being invested back into the infrastructure. It is disappearing into the profits, and there is no onus on operators to show where that money is being saved and how it is being used. We would like there to be more reporting requirements on them.
The Chair
Before Chris Elmore asks another question, let me say to the other two witnesses, who are appearing virtually, that if at any stage they wish to add anything to what has been said, please indicate that to me, and I will call you.
Chris Elmore
Q
Dr Trotman: No, it does not. The Minister hit the nail on the head: you need balance in the market. What the 2017 changes did and what the part 2 changes will do in this Bill is further skew the marketplace. As Anna said, if the Government had taken forward the Law Commission’s recommendations back in 2013, we would not be in this situation. We would be moving far faster towards universal coverage, which we all want, and which, as the covid-19 pandemic proved beyond all reasonable doubt, we all need. The problem we have is that this element of distrust between site providers and operators has shifted clearly in favour of the operators. The market is not working as it needs to.
As far as the CLA and I am concerned, it is incumbent on the industry, rural organisations, telecom companies and trade associations to come together and work out the differences. It is the role of the Government to assist in that process. If we cannot get the balance right, effective deployments will be delayed. That delay will severely limit the ability of rural communities to increase social inclusion, and reduce the ability of rural businesses to pick up and recover from the pandemic, and from the cost of living crisis that we are likely to face in the next six to 12 months. We need to get the balance right, and we still have not got it right.
Chris Elmore
Q
Dr Trotman: No, it makes it worse. That is our concern. We have an opportunity here to bring the industry together. Unfortunately, what part 2 of the Bill does is pull the industry further apart. The sector and the market was beginning to settle down after the 2017 changes. The Government then decided that the changes were necessary. We do not know why—as Anna said, there has been no real assessment of the impact of the changes on the market place.
On the case numbers that the Minister was talking about, you have to bear in mind that a lot of these agreements are placed under non-disclosure agreements, so we do not have the information we need to assess how wide the problem is. Given all the cases we have, it is clearly a very serious problem. The key is for the industry to get the balance right and for the Government to assist.
Chris Elmore
Q
Dr Trotman: If the Government could give us the assurances and safeguards that we need that a voluntary system would work, I think that would be satisfactory. However, we have not seen that so far in our discussions with Government officials. If it is going to work as effectively as we want it to, it will have to be a mandatory mechanism.
If the ADR system works, it will reduce tensions in the market, because it means that site providers, for example, who are in dispute with the operators, would not be threatened with going before the courts. There would be an opportunity to negotiate under the premise of an arbitration process. However, we must ensure that that is available. That is where we need the safeguards. If we have those safeguards, and they are clear and consistent, then a voluntary system may be appropriate. However, from what we have seen so far, that will not be the case. We are not certain that the Government’s guarantees will work—that is the key point—so it has to be a mandatory system.
Chris Elmore
Q
Eleanor Griggs: My opinion is very similar to Charles’s, really. As it stands, I cannot see any option other than to make it mandatory to protect our members, who do not necessarily have that negotiating power, given the statutory powers that operators have, which could potentially be increased should the Bill, as introduced, go through.
Chris Elmore
Q
Eleanor Griggs: Yes, a lot of members have contacted us over the past few years, including quite a few recent cases. Obviously, those are under the 2017 changes. Many do focus on the rent, because that seems to be the trigger point, but then, when you look at the 90% decrease in rent, and then at the further terms that operators are trying to claim on renewals, those too are very unfavourable. They are not included within the code—they are not code powers—and have the impact of limiting what members can do across not just a small area contained within the deeds, but sometimes much larger areas, and sometimes an entire farm.
On the valuation itself—the reduction in rents—at a time when agriculture is seeing the loss of its EU subsidy payments under the common agricultural policy, it needs to be looking at alternative income streams. That, in itself, means that they will not be looking at mobile phone masts, as they did pre-2017, to get those income streams, but—this is leading on to the second part of the question—farmers will be looking to try to get income streams from every little piece of their land now. That will mean that there will not be any scope for something that does not pay very much money, but also does, or potentially could, include quite a lot of hassle through behaviours of operators and contractors when they are on land. It is not a very attractive prospect to have an operator on land now.
The Chair
Thank you. Will any Members wishing to ask questions please indicate that? Ruth Edwards.
Ruth Edwards
Q
Anna Turley: That is in total.
Ruth Edwards
Q
Anna Turley: Well, we know that a third of them have had reductions of around 90% or 95%; that is from our own survey approaches. Going back to the Minister’s first question, I could write to the Committee afterwards with the exact number. Thousands of people have written to us through social media and email, and have responded to our website. I do not have a total number for all those who have contacted us, but there are thousands of case studies across the country.
Ruth Edwards
You must have a rough idea. Is it something like 10% or 50%?
Anna Turley: I would say that probably about 4,000 people have reached out to us, but again, people have to be aware of our campaign. They have to have found us—come across us on social media. They have to have been engaged with us. It does not mean that there are not an awful lot of people sitting and suffering in silence. Part of the reason for setting up this campaign was that there were people who were just in despair and really struggling. Our campaign was set up to give them a voice and to give them access. I think this is really important. When the legislation was made previously, you were hearing only from mobile operators—those on the other side. There is no roll-out and no connectivity without people hosting a site on their lands. These people are fundamental to us hitting our targets, and we need to make sure their voices are heard in this campaign.
Ruth Edwards
Q
Anna Turley: I am not sure about that, but I know that internationally we compare very well. Our rents pre-2017 were not significantly higher than those in other countries, like Germany, Spain, Italy and others that are substantially ahead of us in the roll-out. I do not believe, and evidence does not suggest, that cutting these rents has actually increased our roll-out and our connectivity.
If you want to make the comparison with other utilities companies, the issue for all of those is that they are very tightly regulated industries, whereas there is very little regulation, and very little accountability and transparency, on the telecoms industries. If they are to become an essential utility—that may be the way we go, down the line—it is fundamental that the same kind of transparency, accountability and regulation is placed on them as is placed on utilities at the moment. That is not the case. We have no idea whether the savings that have been made through this have been reinvested in new infrastructure. There is no onus on these companies to do that. The Government are continuing to subsidise them with things like the shared rural network. It seems to be money after money towards these companies, without any indication of whether that money is actually being invested in helping us to achieve our connectivity outcomes.
Ruth Edwards
Q
Anna Turley: We are funded by an organisation called APW, which is a company that is a telecoms—sorry, a company that owns a land infrastructure itself. But as I say, we are supported by colleagues like the NFU, the CLA and others who back our campaign, and we represent all the site owners that have contacted us over this time to get their voices heard.
There are huge organisations, like Speed Up Britain and Mobile UK, that have very good connections with Government and are able to lobby and present their side of the argument. Until Protect and Connect was set up, there was no collective voice—no unified way in which site owners could speak to Government and tell their story. I think it is really important that we hear about this. I have examples here of constituents of your own who are saying, “We have telecoms masts. In view of the impact on our rent, I would certainly not have allowed the siting of masts on my property.” A number of people and organisations around the country would not have had this voice if we were not providing this campaign.
Ruth Edwards
So that’s the phone mast lease investment firm?
Anna Turley: Yes.
Ruth Edwards
What’s their interest in this?
Anna Turley: Obviously they are a site provider—
Ruth Edwards
So they would stand to gain substantially financially if we increased rent valuations.
Anna Turley: They have been losing substantially since 2017, so, yes, of course there is a financial interest. The point of the campaign is that they, by themselves, do not have a voice, and without their funding this campaign neither would all the other affected organisations—charities, community groups and others. If a representative of Speed Up Britain were here, you would recognise that there is a financial interest for mobile operators as well.
We have been very clear about the issue. Of course, the valuation is important and the money is important. I am a member of the campaign because bad policy has been developed over the past few years that has basically put all the power in the hands of a large number of mobile operators. Ordinary people around the country have been absolutely hammered by that and have not had the opportunity to express the impact on their lives and livelihoods. The campaign is a really important one to address that balance.
Ruth Edwards
Just to be clear, I do not think that there is anything wrong with APWireless lobbying for their interest; like you say, big telcos would as well. For clarity and transparency, however, I think it is important for people to note that Protect and Connect does not just represent small landowners and community groups; it also represents APWireless, which describes itself as one of the world’s leading mast lease investment firms, with thousands of leases in 21 countries across the world. I think it important that we have that on the record.
Anna Turley: Absolutely; no problem with that.
The Chair
I remind Members that we should confine ourselves to questions, not to straightforward dialogue.
Kevin Brennan (Cardiff West) (Lab)
Q
Anna Turley: Yes, I think that is the case. The fact that we are back here again shows that roll-out has not improved, nor has connectivity. We have had further subsidies through the shared rural network. More than 300 cases going through court have been bogged down, whereas prior to the 2017 legislation barely a handful of cases went to court. That has resulted in a huge amount of litigation and conflict between site owners and operators, which simply did not arise before. That is holding back our roll-out and affecting GDP. We are falling behind our international competitors. The changes in the 2017 code mean that there is now so little incentive for people to host sites on their land that we are at risk of further jeopardising our connectivity goals and achieving the outcomes that we all want.
Kevin Brennan
Q
Anna Turley: Going back to your point about the Bill, that was not what was envisaged at the time. The impact assessment predicted a reduction of around 40%. Even Speed Up Britain has said that the average reduction is around 67%. We would dispute that, but without the evidence it has been incredibly difficult to show that. We have a huge number of cases where the operators have come in at a 90% to 95% reduction. That is par for the course.
There is an incentive for the operators to take cases to court to try to push for the biggest cuts that they can, because they can apply that across the board. The frustration is that we see them come in with large rent reductions, often bullying small landowners, families, small charities and community groups. Those people are having to accept cuts of between 90% and 95% because they simply do not have the wherewithal to go through lengthy legal processes to combat the huge strong legal arms of those organisations. They are simply having to submit to that.
To go back to your point about outliers, we have also tried to get information about the impact on local authorities, because a huge number of local authorities host these sites, as well as a number of hospitals and other public buildings. Again, we are seeing 80% to 85% cuts to local authorities. Leeds City Council, for example, has taken a reduction of 85%. That is thousands of pounds lost to local authorities. At the same time as we have heard that dairy and other farmers are being encouraged to expand and diversify their income, or local community and charity groups are being told to be entrepreneurial and to diversify their income, local authorities have had huge cuts over the past decade, as we know, and they are trying to get their income wherever they can. It seems crazy for them, essentially, to be subsidising private companies that might be making £10 billion in profit last year. That is money taken away from our local authorities, small charities and community groups, and it is not a small handful of them; this is happening across the board.
Kevin Brennan
Q
Dr Trotman: First, we have to understand what the Government’s levelling-up agenda is to begin with. If we look at the levelling-up White Paper, out of 332 pages, there are only 39 references to “rural”, so maybe the Government’s objectives do not relate to rural areas. There needs to be a levelling up not just of north and south, but of rural areas compared with urban.
We have always said—I said this earlier—that, as far as we are concerned, our overall objective is universal coverage, because we can see the benefits. The very fact that I am Zooming into this meeting at the moment illustrates the benefits of effective and affordable broadband connections. We understand what the benefits are and we want to see faster deployment, but we also want to see both parties playing fair. This is where I said that the ADR mechanism is a workable solution, if we can get it right.
We have to look at the positives of this as well. There is one big positive in terms of rural wayleaves on fixed-line infrastructure. With the NFU, we secured from Openreach and Gigaclear—the two big infrastructure providers for fixed-line connectivity—a wayleave agreement. We have had that since 1 October 2018, and it works. If we can get it right for fixed-line rural wayleaves, what I do not quite understand is why we cannot get it right for fixed-line urban wayleaves—Anna’s point about local authorities is a good one—and in the mobile sector.
The major criticism that we have of the 2017 changes and of this Bill is the fact that we are talking about mobile infrastructure. We are also talking about the tactics being employed by mobile operators, which at the beginning of 2018 were not that conducive to effective negotiation. Basically, it was, “We’ll offer you a little carrot, but if you don’t agree, we will hit you over the head with a big stick.” Hopefully, we are getting away from that, but again, it underlines the point that we have a major market imbalance, which we have to get right if we want to get to the point of universal coverage.
The Chair
Before I bring in Rebecca Long Bailey, Eleanor Griggs, did you wish to say something?
Eleanor Griggs: I have just a couple of points. If statutory powers are given, there needs to be some sort of accountability on the part of operators, with, essentially, sanctions if those powers are abused or not used responsibly. That sort of thing needs to be considered, because at the moment there does not seem to be any comeuppance for the poor behaviour that my members have had to endure. Are we looking at consensual agreements that are reached by negotiation, or are we looking at consensual agreements that are reached because somebody cannot afford to defend their position or get slightly more favourable terms at tribunal? It is quite cost-prohibitive, certainly for the smaller individual landowners. I do not know about the monopoly landlords that the Bill’s impact assessment talks about quite a lot, but it is quite prohibitive for our smaller members.
I would also like to make the point that the NFU has an annual digital technology survey. The most recent figures—we have not quite had the 2021 figures in yet—are the 2020 figures. Going back to 2015, 29% of our members reported that their outdoor mobile signal was reliable. By 2017, that had risen to 42%. Obviously, that is a really big increase from 29% in 2015 to 42% in 2017. By 2020, it was still at 42%, so no advances have been made from the introduction of the code, essentially; that is quite important. Various other figures mirror that—smartphones with access to 4G and things like that. It just shows a stagnation from 2017 onwards. We just need to be careful that that does not continue or, in the worst case scenario, get any worse.
Rebecca Long Bailey (Salford and Eccles) (Lab)
Q
Anna Turley: That imbalance of power is absolutely something that we see throughout our case studies. If I may, Ms Long Bailey, there is someone in your constituency who has had a mast and a hub on their property for 25 years, and EE is now trying to force a rent reduction of around 86%. They said:
“On this basis we will not renew any lease”
and that they will do everything in their power
“to have the site removed, all land owners near us are aware of the situation and will not entertain the idea of situating on their property.”
That goes exactly to the heart of it; people just feel powerless. Many often cannot have the site removed even when they want to, because of the legislation. It is having the knock-on effect that people do not feel incentivised, or do not want to have the site on their land, not only because of the lack of income, but because of the disparity in power and the threatening legal pressure from those companies. It is a David and Goliath issue. People are having to take on huge companies with huge legal arms, and they just do not feel that they can compete with them. That is a real issue.
We have suggested a few ways in which the Bill could at least make the negotiations fairer by making the ADR mandatory so that operators are obliged to undertake that. There ought to be fines for poor behaviour. There ought to be more scrutiny and a code of practice to put an onus on better behaviour from the operators in the way they deal with site owners. We think that would go a long way to addressing that balance, as well as putting some reporting requirements on them.
Eleanor Griggs: Yes, I would say pretty much what Anna has said. For us, it is about looking at the Landlord and Tenant Act and how it will affect a lot of our members who are currently on landlord and tenant leases that are due to expire or perhaps already have. According to the figures from Mobile UK that were used in the impact assessment, there are just over 7,000 expired leases, with another 2,000 due to expire within one year. Bringing the Landlord and Tenant Act valuation for renewals in line with the code removes the transitional provisions that were intended to ease landlords into the new 2017 code. It means that the holders of the leases that are going to expire will have no time to prepare financially for the sudden income loss that they will face. We would look at removing that proposed amendment to the Landlord and Tenant Act.
We would also look at the interim rents side of things. As Anna has alluded to, there are potential issues that could mean that a small landowner would end up having to pay back rent to a large operator. We have a member in Mr Double’s constituency who had a lease that was due to expire that was achieving a rent of £3,500 a year. The renewal figure that he received was £17.50 a year. If the operator were to apply for an interim order and that order took a long time to come through, or the court took a long time to make that order, our member would still receive the £3,500 in the meantime. Then, if that took a year, he would have to pay back almost £3,500. Operators could use the proposed interim arrangements for indefinite periods of time, rather than looking to eventually get to either a court or tribunal-imposed agreement, or a consensual agreement. There are implications for landlords.
Rebecca Long Bailey
Thank you. Dr Trotman?
Dr Trotman: There are two things here. First, we understand that there is a lack of awareness as to what the code is, what it is meant to do, how it actually operates and the various tactics that are used, whether they be operators or site providers. Secondly, leading on from the lack of awareness, there is a lack of education. We are not just talking about on a wider scale—the general public, or site providers who may be in your constituency or anywhere across the UK; there is a lack of understanding and a lack of awareness within the industry itself. That is an important point.
One of the key fundamentals in resolving that issue is to have a code of practice that actually works, which we have from the 2017 revision of the code. At the moment, the code is doing absolutely nothing. Eleanor and I were part of a working group that drafted the initial form of the code of practice. What we have now—how it actually works in practice—is not worth the paper it is written on.
If we are going to have a code of practice and that is going to be a requirement of the revised code, let us make sure that that code of practice has some legal teeth. The only way it can have legal teeth, at the moment, is if it is appended as an annex to a code agreement. Very few site providers would understand that, and from what we have seen it is likely that very few agents and solicitors who deal with the code agreements understand that either.
Again, it is a case of getting the information out there, getting people educated as to what the code is and how it works and increasing the level of awareness. By doing that—again, going back to the point I made right at the beginning—you are creating a balance in the marketplace; you are having a more equitable system as we move forward. That then leads to faster deployment, and our ultimate objective of universal coverage. With what we are doing, if we have a deadline of 2025 or 2030, it is highly unlikely that those will be met, because there are too many problems and complexities within the system as it operates at the moment.
James Grundy
Q
Anna Turley: That is a really interesting question. We have not seen particular companies standing out any more than others. I think that they all have strong legal arms and come in with a very strong approach. However, what we have seen change, even since the 2017 code changes, is the development of tower companies, which I think is an interesting thing that has not really been taken into account when looking at the new changes.
These middlemen have been created, where tower companies will now rent the site from the landlord and use the code to cut the rent that they are paying, but will continue to charge high amounts of money to the telecoms companies—Vodafone, EE, Three, and others. The savings are not actually going back to those original companies, but somebody is making money in the middle. I think that is an important change in the market, partly, I think, because of the 2017 changes, which has not been properly explored.
Again, I think that we should be looking at that before we change this legislation, because the development of tower companies has distorted the market even further. It has not resulted in reinvestment in infrastructure, and is essentially creating middlemen who are profiting off the changes brought in to essentially accelerate 5G roll-out, and that money is not going back into the development of infrastructure.
James Grundy
Q
Anna Turley: Yes, that is when we started to see them emerge. They are a recent phenomenon.
James Grundy
Q
Anna Turley: I think that they are certainly playing a role in it. We have seen examples where, as I said, they have continued to charge, say Vodafone, £17,000 a year for a site, but then slashed the rent to the actual site owner to a few hundred pounds. That is absolutely a huge driving force, coming from profiteering, from those guys in the middle.
The Chair
If there are no more questions, I thank our three witnesses for a very informative session, and for giving us their time. Thank you very much.
Examination of Witnesses
John Moor, Dave Kleidermacher and Dan Patefield gave evidence.
The Chair
Q
Dan Patefield: Good morning, everyone. I am Dan Patefield. I lead the cyber-security programme at techUK, which is the national trade association for the digital and technology sectors.
John Moor: Just before I introduce myself, let me say that it is an honour to be here. This represents a milestone moment for me, seven years in the making. Seven years ago, I set out on this journey to understand what IoT cyber-security was about and its challenges, so I am honoured to represent our membership and the executive steering board. I am John Moor, managing director of the IoT Security Foundation.
Dave Kleidermacher: Hi, everyone. My name is Dave Kleidermacher; hopefully you can hear me okay. I am the Google vice-president of engineering responsible for the security and privacy of the Android operating system, the Google Play app store, and “Made by Google” products including Pixel phones, Nest smart home products and Fitbit wearables. I am responsible for security and privacy, including the certification strategy for the company—how we assess and demonstrate compliance with security standards and privacy standards.
Julia Lopez
Q
John, you rather touched on the challenge: this is an area that is very dynamic. All of us are learning what the security risks are, and in Government—which often moves very slowly—it is a particular challenge to manage such a dynamic, changing picture. That is why in this legislation, we have set out some broad principles and basic requirements, but a lot of this has to be secondary legislation so we can keep up to speed with all the changes that are going to be happening to connected devices, and some of the risks that will come with that. I think it would be very helpful if you could set out for the benefit of the Committee how this picture has changed over the past few years, where you think things will be moving, the extent to which connected devices will be in our homes in future, and some of the security risks that will present.
John Moor: When I started out seven years ago, I was invited to take a look by the chairman of the organisation I was working for at the time, the National Microelectronics Institute. He was the CEO of an IoT company. I confess, I had not seen what the challenge was, so when he invited me—“John, go and take a look at IoT cyber-security”—I thought, “Why me? What’s the challenge? Isn’t this thing just a tiny part of a well-established body of knowledge about cyber-security, and why me?” My background is in electronic engineering—semiconductors.
As it turned out, when I went and had a look, it did not take me very long to realise, “My goodness, there is a real problem here.” I remember that at the time, a word I was using often was “egregious”. As effectively a student coming into it, trying to understand the space, I looked at the evolution of computing, broadly speaking. In one era, we had computers—desktops, laptops—and we connected them up, and the security around those was pretty dire at one point, but we started to get on top of that. It is not perfect now, but it is a lot better than it used to be, and we are all very familiar now with doing security updates. The next phase was mobile. Mobile was not quite as bad as the era of PCs. It was better—still a few problems, but much, much better. Then we got to this thing called IoT, and it took a complete reset. It was totally egregious.
I come from the world of embedded systems engineering, and one of the first events we did was a summit we ran at Bletchley Park in 2015, just to do a landscape piece—just to try to understand it from chips to systems, bringing in the regulator. We had a representative of what was then the Communications-Electronic Security Group, but is now the National Cyber Security Centre, to try to understand where the issues are. Part of the problem, I think, is what I learned there as an embedded systems guy. We had a pen tester there, and he said, “If a researcher comes knocking on your door, don’t turn him away.” I thought, “That is a really interesting thing. What is he talking about?” We were talking about vulnerability disclosure. For someone who comes from embedding air gap systems, security was not a thing. It does not take you long to realise that when you start connecting things up, suddenly you expand this thing called an attack surface. Attackers can come from many sources, not in proximity to the thing that you are working on. Suddenly, you have this massive attack surface.
The whole idea about IoT—internet of things—is about connecting things up, so by its very nature, you are vulnerable. These things can come at you from many angles. What does that mean? It means different things to different people. I tried to understand what this thing called security was about. I immersed myself in the security community and straight away I realised there were different groups. If people start talking to me about data, they are usually coming from a data security or information assurance-type background. If they talk to me about availability of systems—keeping systems up—they usually come from an operational technology. What I mean by that is the sort of things we find in industry—process and manufacturing.
Then we have this thing called IoT. One of our board members expressed it very well. He called it the “invasion of IoT”. What I took from that is that this technology is coming at us, ready or not. We established in those early days that we needed to have a response. The need is now. We could not wait for new standards and regulation, which is why we set up the IoT Security Foundation. Our centre of gravity is in best practice. It is saying, “Can we help manufacturers who do not yet see that the very fact that they are starting to connect things up poses a risk?” They did not, but now we are in a much better state. The body is developing.
I am delighted to be here to talk about this regulation. More needs to be done, without a doubt. A seminal moment for me was at the very first summit that I talked about. We had the chief technology officer of ARM, a chap called Mike Muller, give a talk in which he said, “The ugly truth is this: you will get hacked.” That was quite an epiphany for me, because coming from an engineering background, we engineer our systems to be virtually perfect, but what we are witnessing now is that security is a movable feast that evolves. Out in the wild, things change. New vulnerabilities are discovered. Yes, you can do all you can to engineer it up front, but guess what? Once it is in the wild, this thing called resilience is so important. What that means, especially in terms of this regulation, is the software updating part and especially the vulnerability disclosure. They are absolutely essential parts. That is part of what I have learned on the way.
I come to refer to IoT security as a “wicked challenge”. By that I mean that I do not think we will ever perfectly fix it, because it is always moving, but we can address it. We can mitigate the risks to a level that we are comfortable with and can accept. Again, another phrase I learned is, “Don’t let perfect be the enemy of the good.” This is all good. This is progressive. This is what the world needs. Being part of the regulatory process to get here today, it became apparent that getting regulation right is so difficult. It is so easy to get it wrong, but going through the process, this is a regulation that we can wholeheartedly back. We think it is absolutely the right thing. It takes a step; it gets us on that security journey. We often talk about an on-ramp of security. It is about maturity. In terms of regulation, this is a fantastic first step, but more will come. The way it has been set up is exemplary. We can evolve it over time as we have to ratchet up the security for the benefit of consumers and society. I hope that little ramble gives you some idea about my journey and where I think we are at.
Julia Lopez
Q
Dave Kleidermacher: Let me start by saying I am so appreciative of the leadership role that the UK Government have taken to help us get to a better place for IoT security. I have been working closely with the Department for Digital, Culture, Media & Sport and NCSC for the past couple of years leading up to this. I have worked on how to measure security in digital technology for almost 20 years, and I believe that the lack of transparency in what the security ingredients are for digital technology has been one of the headwinds facing the entire digital world, even before the IoT was called the IoT. Of course, the IoT has made it much more urgent that we address this.
I agree that the minimum requirements we are talking about here are a really good starting point, but as we move forward and look at the secondary legislation, the really big challenge is how we scale this. The question about smaller developers is something that I am quite concerned about. At Google, we build our own first-party products but we also develop global-scale platforms. On Android, we have many manufacturers of devices across all different price points. We have millions of app developers across the world with whom we connect and work in all sorts of different environments.
One of the biggest challenges is how to monitor and measure these requirements, and how to make that work for small businesses in particular. That is the area I have personally been putting a lot of time into over the past couple of years. How do we build and establish an actual practical mechanism or scheme for measuring security at scale? There are a lot of details that go into that, but at the end of the day, we need a hub and spoke model. I can give you an example of a failure mode. The UK is, again, taking a leadership role, but many countries are looking at similar kinds of ideas and legislative concepts. The problem is that if every single country decides to create its own testing scheme for how to measure this, imagine how difficult it would be to have, say, a webcam or smart display, and then go to each country and provide documentation, provide the test results, explain how it works and go through a testing mechanism for every country.
As an example, for our Nest Wifi products, Google has had public commitments and transparency about our desire to have third-party independent security labs to test the products and assess compliance to these common-sense requirements. We have been doing that for a while now. We certify all of our products that way, but then a couple of countries at the leading edge of this started to ask us to certify again their schemes, and we did. That was a lot of work, to test to one scheme and certify and then do the same for another country with a different set of rules. The product did not change at all; it did not get any better because we were already certifying it. However, the work and the cost of doing that were significant. If we scale that to the full IoT, to all the countries which are interested in this—they all should be—then you can imagine how quickly it breaks down.
The hub and spoke model is looking at how we can work together to build a public-private partnership where there are non-government organisations, typically well-regarded international standards bodies, which take the great standards that we are developing, such as the ETSI EN 303 645 international specification on security requirements, which the UK has led in developing, and translate that into a practical conformance regime. An NGO can take that specification and the test specification—a sister specification, ETSI TS 103 701—and test a product once to have it certified for use in all of the different nations which adopt the same standard. That is the trick to this—the hard part that has to be solved as we move forward.
Dan Patefield: I think John and Dave have already mapped out the ever-growing risk landscape, so I will not reiterate that. From an industry perspective, there is clearly strong support for the ambitions of the Bill we have been discussing today, in implementing a minimum baseline that everyone should work to. Certainly, large swathes of industry are going beyond that, as Dave has outlined. I think I would join the other panellists in commending DCMS on the leadership that it has shown in developing the framework, not just with this legislation, but with the code of practice in 2018. I also commend it for playing a key role in developing the globally recognised standard in this space, EN 303 645—I always get that number wrong. The challenge that we have, and I am sure that we will come on to this, is that the code of practice—we supported its development and engaged industry in it—created an outline for best practice. However, it was never prescriptive; it was broadly focused. The practical challenge now is translating that into regulation that is workable for industry and consumers. I am sure we will move on to that, so I will leave it there.
Julia Lopez
Q
Dan Patefield: Going back to the code of practice, I am confident that across all 13 of those areas many companies have made good progress, and will continue to develop best practice that goes far beyond those requirements. I think it is a good approach to start with the three requirements that are included in the Bill; it is not the case that industry will be surprised by what comes out in secondary legislation. The practical challenge is translating the non-prescriptive code of practice into something that will be more prescriptive by definition.
There are a number of areas where I think there is more work to be done to smooth the path to compliance, if you like. We have got various elements. We have got the standard—that is not going to be a surprise. We know the security requirements—they are not a surprise. What we have not got is the boring bit—the technical specification that people in compliance teams within manufacturers are worried about. Quite often they have to then communicate that to their HQs—which are often in different parts of the world—and say, “We have got legal certainty that this is how it is going to work and this is how we achieve compliance”. That is the bit that we have not yet got.
Julia Lopez
Q
Dave Kleidermacher: It is a really important distinction, as we look at the so-called security ingredients in digital products. The analogy to food is a good one—but it also has its limits. What is good about it is that consumers deserve to have information at their disposal to be able to make better decisions about their health; in the case of food, that is their physical health, but in the case of digital technology it is their digital health. The concept that a consumer should easily be able to get a sense of the security status of a product is a very good idea. However, the main challenge is that food contents do not typically change—there can be a printed label that works okay. However, in the digital world, it could happen that you ship a product today and then there is a severe critical vulnerability, perhaps a hardware problem, that cannot effectively be mitigated or even patched. If that happens in the future, even a day after you have shipped it—this is a worst-case scenario—then if you try to put an attestation on the static label that the product is “secure” or meets these requirements, that attestation could be immediately incorrect. In fact, it could be dangerously misleading, and give consumers a false sense of security, so I believe that, while the ingredients label is essential, the user needs to have transparency. The consumer needs to have visibility here.
That label needs to be a live label. A simple example would be a QR code on packaging, although I am not sure how much consumers really go back to their packaging. We should also stress in-product experience wherever that is practical. It will not be practical in the case of every electronic product, but there is typically an app to manage many of our consumer IoT products. The app can provide an experience where the consumer can get the real-time, current status. That status can be as simple as a link that takes you to the certification page. As I mentioned earlier, we can have NGOs that establish the conformance programmes that we need to help to measure the security. It could just take you to the certification page to see the real-time status. If a product is deemed unsafe for use, it will become decertified, and the user will then know it.
Chris Elmore
Q
Dan Patefield: There are two points on the timescales. There is the point at which the grace period will begin. For industry, we strongly think that that should be when the regulatory framework is confirmed and we know who the regulator is. That is the point at which that countdown should start. There are different views in industry on how long an appropriate grace period would be. Obviously, DCMS has confirmed that it will be no less than 12 months. Once we see that technical specification, a lot of parts of industry will have interpreted the code of practice in such a way that complies, so that will not be a problem for them, but some might have an interpretation that the compliance framework rules out—for example, around passwords. They might have to go back, certainly for security requirement 1, and make a hardware change. For a lot of these products, the supply chains are enormously long. Take a projector coming over from Malaysia. That will be 15 weeks in transit, and eight weeks getting through the broader supply chain in the UK through distributors and re-sellers. That already reduces the 12 months to seven months for manufacture and design. That is the difficulty that some manufacturers might face.
To the obsolescence point, there are two points again. In terms of when this comes in, we have to communicate it to consumers in such a way that it does not cause them to think that any devices that they currently have are obsolete in any way. That is a communication piece. It is about DCMS and the Government broadening that out, and helping consumers to understand what the legislation is for. More broadly, I am sure that we will come to the timescales for security updates but we do not want that to turn into some kind of perceived sell-by date. That is the minimum we will give you security requirements for, but the device is not useless after two or three years. Both those elements might lead to an increase in electronic waste and the kind of things that we want to avoid in a practical framework.
The Chair
Do either of the other two witnesses wish to comment?
Dave Kleidermacher: I would like to make a quick comment. Especially as we look forward in time, beyond the minimum requirements to the larger set that are codified into the ETSI EN 303 645, and extended requirements even beyond that, in different vertical markets there will be a desire to have additional requirements. For example, on the Android side, a Google-certified Android device already meets baseline requirements, so we are working with NGOs on how to define higher levels. For example, the strength of a biometric is really important on a smartphone, and that is not currently covered by the baseline requirements.
As we go forward, there will be an increasing set of requirements, and there is a way to balance that challenge. You will always hear of some manufacturers, including smaller ones, that have more difficulty meeting a certain requirement in a certain timeframe, and one way to help balance that is by focusing more on transparency about whether the requirement is met, versus requiring that all those requirements be met. I like to say that transparency is the tide that raises all boats. That is the key.
To go back to our analogy with food, it is not that on a label it says that you cannot have more than 50 grams of something; it is that you can compare the number of grams of carbohydrates and other ingredients between products. If you look at EN 303 645 and all its provisions—there are many—you could ask manufacturers simply to attest as to whether those are met. Yes, I still believe that there are minimum requirements that are critical, but in as much as we run into some difficulties on timeframes, you could just ask them to state whether they meet those requirements. That transparency will still be really valuable for consumers. Again, the NGOs that are setting up those conformance schemes can take the attestations of yes or no across the requirements and translate that into a health score, if you will, to help consumers make better decisions.
The Chair
Thank you. John, did you wish to add anything?
John Moor: Yes, I have a few points to make. First and foremost, most of my comments are about the here and now: what we are looking at, what is in front of us and the three requirements that are coming. Our assumption and that of our members is that, as we add to that, there will be an equally robust and rigorous process to determine what might follow. That is essential.
The labelling question is really interesting, along with certifications and attestations. All we can say about certification is, under these conditions, on this day, in these tests, those conditions were satisfied. I have heard the discussion about food labelling schemes come up time and time again as a “We ought to do something like that”, but in our view that is not really practical.
One of the things that I had to get my head round when I came into this space was some people talking to me, saying, “Safety and security are the same, aren’t they, John?” I had never had to get my head around that in the past, but I thought about it for about an hour, and I concluded, “Actually, they are not the same.” They are not the same because safety is much more determinable. You can define the situation, the operating environment, the characteristics, the materials, etc., and you can figure out, “This is safe under these conditions.” The difference in security is that it is dynamic—there is a changing environment, there is a human adversary at the other end. We might consider something to be safe today, as David said, but that changes over time.
Where do we place our trust? Do we place it in the product? I do not know that we do. Do we want to be looking up thousands of products to see what the certificates are? Where we really place our trust is in the companies that provide those products. It is interesting that, of the three provisions that we are talking about, only one is really related specifically to the product, and that is passwords. The other two are really about the processes that are involved in the providers of the technology—vulnerability disclosure and keeping the software updated.
I do think that certification is useful, but it is not a panacea; it only goes so far. What we are really looking for is something that we would term “continuous assurance”. How do you do continuous assurance? That is the question for the industry to answer going forward, but some of the mechanisms that we have done in the past do not map well into a future world that is changing rapidly.
That is on the labelling front. It should be as simple as possible for consumers and for the producers of the technology. There is a discussion about whether we need another label. Certainly, many of our members favour integrating this into something that is already known. For example, could it become part of a CE labelling scheme, so that we add the security elements too? Those processes are well known.
Some of the discussions among our members about keeping software updated come down to considering what is a reasonable time to keep software updated. If you make it too short, that process is almost meaningless, and means that consumers probably will not buy a product if the update is, let’s say, after only six months. If that update is too long, the company is carrying a financial legacy burden. What is the right point? I think we will find that out. Is it three years, five years, one year? We do not quite know yet. My own view is that it should be a length of time that is beyond the life cycle of the product. In that regard, it is variable and I do not know how that would quite be implemented, but that is what we have in front of us. For the here and now, this is what we are talking about; as for the future, we are assuming the rigorous.
In my view, security is an awful lot like quality. As we go into the digital world, we will see profound changes not only in the way that we use products, but how they are produced. We already know that: among our membership whole engineering teams have been reconstructed. The selling of physical products must be reviewed too, because are we buying a physical product? Often we are not, often we are buying a service. Do we actually own it? No, we don’t.
Those are things that we will be working out as we go forward. We must understand those limitations as we do that, because we do not want to be taking the past into the future when the future looks quite a lot different from the past.
Chris Elmore
Q
Dan Patefield: I will lead on that question. techUK would be happy to give more thoughts on that in a written submission, but it is not an area I focus on. Internally, we split the Bill; I lead on the cyber-security element and another colleague leads on telecoms infrastructure. I am happy to get that question answered in a written submission.
The Chair
If there are no other questions from Committee members, I thank our witnesses for their time and contributions. I am sure that when Committee members come to consider the Bill in detail they will find those comments very helpful. Thank you.
Ordered, That further consideration be now adjourned. —(Steve Double.)
Product Security and Telecommunications Infrastructure Bill (Second sitting)
Tuesday 15th March 2022
(2 years, 1 month ago)
Public Bill CommitteesRead Full debate Product Security and Telecommunications Infrastructure Act 2022 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 15 March 2022 - (15 Mar 2022)
The Chair
We are now sitting in public and the proceedings are being broadcast. We will start this afternoon’s session with oral evidence from Professor Madeline Carr, professor of global politics and cyber-security, and David Rogers MBE, the chief executive officer of Copper Horse and an Internet of Things Security Foundation board member. We have until 2.40 pm for this session. May I ask the witnesses to introduce themselves for the record, please?
Professor Carr: Good afternoon. Thank you for having me. I am a professor of global politics and cyber-security at University College London in the computer science department, though I am actually an international relations academic, so I blend those two. I am also the director of the Research Institute in Sociotechnical Cyber Security, and I am the deputy director of REPHRAIN, the National Research Centre on Privacy, Harm Reduction and Adversarial Influence Online, which looks specifically at protecting citizens online. It is a big consortium.
David Rogers: I was the original author of the code of practice and the lead editor during the process that is the basis for the legislation. I also chair the fraud and security group at the global mobile industry association, the GSMA. As you mentioned, I am also on the board of the IoT Security Foundation.
The Chair
Thank you very much. Members of the Committee will ask you questions in turn, but we will start with the Minister.
The Minister for Media, Data and Digital Infrastructure (Julia Lopez)
Q
Professor Carr: That is a very good question. In terms of international alignment, aligning these kinds of laws across jurisdictions is a challenge. I want to say from the outset that regulating emerging technology is understood to be a deeply problematic and challenging area. It is something that the UK in many ways has led on. A lot of thought leadership has come out of the UK on this. As David said, the work that has led into the Bill has been going on for many years in the UK, and has been funded by the UK Government through universities and industry. A tremendous amount of background work has gone on. There is the PETRAS—privacy, ethics, trust, reliability, accessibility and security—consortium, which was originally the cyber-security of the IoT consortium. We have worked on that for many years with David and others. The UK really has led on this. When we look at what is happening here and now, you would have to say that this is a country that is able to confront those kinds of difficult challenges and think about ways through them. No one is saying that it is easy; it will not be, but this is a very good start.
When it comes to looking at international alignment and the impact on industry, and particularly the manufacturers of these devices, there is already a lot of alignment. I have been doing some work through the World Economic Forum, where I am chair of the Council on the Connected World. On 15 February, we launched a global statement that spoke to the three initiatives that are being considered here, and an additional two in terms of IoT consumer devices. That statement has been endorsed by more than 110 organisations around the world, including Microsoft, Google, Qualcomm, DCMS, RISCS—my institute—and indeed David’s organisation. There is a tremendous amount of international support for these initiatives and more. A lot of them are big industries, so I do not think there is necessarily a disconnect between governance of emerging technology and what is helpful for industry actors; I think there is actually a lot of alignment.
David Rogers: I will just point to some specifics. There is work ongoing in India, Australia, Singapore, Turkey, and the US, and many of those countries—and many I have not listed—base their work on what was originally the UK code of practice. The UK’s code of practice was taken to ETSI, the European telecoms standards body, and was made into a European norm. That really, I think, has given the confidence for other countries to be able to adopt that as a scrutinised and good piece of work.
That is obviously not in isolation. ETSI is an industry-led organisation, and a lot of the work that has gone into that in advance, including through DCMS and NCSC, has been about looking at industry-based best practice. Organisations such as the GSMA worked on this in 2014, and, prior to that, in the smartphone world, have been building in hardware security and other measures, which have hardened connected consumer devices, so that work is certainly not in isolation. We are really standing on the shoulders of giants here, because a lot of the work is done; it is in endorsing good practice, and I think that is what the other countries are seeing, and they really have seen leadership from the UK in this space.
Julia Lopez
Q
David Rogers: I will address that. The beauty of the IoT is that there are all these fantastic things being developed. When we started to look at what we could do, and a code of practice, we wanted to ensure that we did not constrain innovation by mandating specific technical measures that might prevent some fantastic product being created. That is why we took quite a high-level outcome-based approach.
That also meant that it was measurable, even by consumers. If you look at the top three guidelines of the code of practice that have made it into the draft legislation, a consumer can look at those things, which I would call “insecurity canaries”. If you see that a manufacturer does not have a vulnerability disclosure policy—so hackers and security researchers, for example, cannot report things to them—that is a big red flag, and I would not be buying that product. It is the same if the product does not have software update support, and so on.
We took a proportionate approach to the code of practice, and I think that that also led to the industry endorsement of it. This morning, I heard the techUK gentleman saying it is not specific enough; well, actually, the ETSI EN 303 645 is quite specific, and the compliance specification that goes with it is even more specific. For some bad practices, I do not think that we could be more specific than saying “Don’t have default universal passwords”. We want to get rid of “admin” and “admin”. That is a ridiculous situation, in some parts of the market, that is unacceptable, and we must eliminate it from the market.
Julia Lopez
Q
Professor Carr: Just to say that we cannot anticipate all of the new devices that will come on to the market, of course. I think what David is saying is that it is necessary to have that kind of flexibility to adapt and accommodate those, as they come on to the market. However, it is really long overdue that we do something about this.
There are two types of security in these devices that we understand at this point, which need to be taken into account. The first is the security of the data that flows through them. Although they are very different devices, that is, in many ways, a common problem in securing data—particularly, of course, personally identifiable data. The second issue arising from IoT devices is that many of them have an impact in the physical world. That then begins to blur cyber-security with safety, and we have very different ways of approaching cyber-security and safety. What we tend to do with safety is test things, over and over again, until they break; then we know how they need to be built or constructed. That kind of homogeneity in an approach to design is very bad for cyber-security, because that is what gives us vulnerabilities across the whole landscape. Those are the kinds of issues that we need to grapple with. The devices themselves will continue to emerge and evolve, but the problems that we are grappling with now are common across devices, in a way. Legislation such as this will go some way towards addressing those problems.
Julia Lopez
Q
David Rogers: Yes, originally there was a “secure by design” committee set up with various companies—Madeline and I were on that committee. There were various discussions about the best way forward. I remember one suggestion being that all we needed to do was to educate consumers. After I banged my head on the table quite a lot, I think that in the end we realised that it should not be on consumers. They are not the ones who are creating the insecurity in the product and they are not in a position to do anything about it either—they are mainly victims. It was recognised that a lot of those issues have been in products for many years; I go back to the default password issue, but there are many issues around things such as lack of support for software updates.
I drew up the original code of practice and worked closely with National Cyber Security Centre and the Department for Digital, Culture, Media and Sport. I also worked with academia and the security research community, who are hackers from around the world who have been campaigning for those issues to be dealt with for years, because they are seeing it directly in their work. We spent a lot of time getting it right; we worked at the Information Commissioner’s Office on some of the elements related to GDPR.
A voluntary code was published in 2018. However, manufacturers were put on notice at that point. By 2018, it was made public that this was the expectation; we expected the industry to improve. Some quarters were probably already compliant; you heard from Dave Kleidermacher this morning, who led the way in security improvements on mobile devices—from their perspective a lot of the stuff in the 13 requirements was already done. However, many parts of the industry have done nothing. It seems to me that they are quite happy to sit back and do nothing. That is why I think this work is necessary; there is a need for the big stick of enforcement, to be honest with you. They have been given plenty of chances, and not just since 2018—it is since the 1990s. It seems acceptable to them to carry on doing the same things that they have always done, such as buying in the really cheap software that is completely open and has old protocols and legacy issues that should have gone years ago. I am entirely supportive of taking action now— they have been given enough time. They should not wait for the 12 months—or whatever it is—for certain things to become mandatory. They should be doing this because it is the right thing to do for their customers.
My company carried out some research for the IoT Security Foundation on vulnerability disclosure. Again, that is something that is very visible; you can go to the website and see whether that company is open to security researchers and hackers reporting security issues to them. There is then a process that has been ISO-defined since 2014; it is dealt with and then the issue is made public once it is fixed so that consumers are secure. We discovered that about one in five of the companies that we surveyed—there were about 330 companies from around the world, representing thousands of products—was actually providing that to security researchers. That means that four in five IoT manufacturers did not have any way for security researchers to contact them. That is totally unacceptable, so we do need to take action. The companies have been given enough chances.
Julia Lopez
Q
Professor Carr: I think the element that will impact consumer decision making the most will be the length of time for which the product will be supported. I remember having the conversation in a room in DCMS all those years ago about how we could possibly be expected to spend £1,000 on a phone that will not work in 18 months, that the company knows will not work in 18 months—it will not be supported—and to not have access to that knowledge. This is not just about putting labels on things; it is about the fact that we could not find out even as an informed consumer. I think the length of time for which the device is supported will have a major impact on consumer decision making and probably more than the other two things, because a lot of people do not care about passwords and a lot of people do not know what a vulnerability disclosure agreement is or what that means. Knowing for how long the device will be secure is like having an expiry date put on it.
That is an example of where a kind of market driver can impact consumer decision making, but one of the things that we know about cyber-security more generally is that, very often, market drivers do not work in this space. There is not really, to be honest, all that much of a market for cyber-security, as people do not really care about that. That is why we need to think about moving beyond the dominant narrative over the last 50 years that Governments stifle innovation. Even if we go right back to the beginning of digital technologies and the ARPANET and DARPANET, those things were wholly supported by the US Government. They were funded by the US Government; they were invested in by the US Government for decades before the private sector came on board. So there are these points where it is absolutely necessary for Governments to be involved and for governance to happen, because we cannot see the future. If people begin to lose confidence in these devices and they begin to fear—“I don’t want my child to have something like that. I don’t want Alexa in my house. I don’t want people listening to my conversations etc.”—all the incredible benefits that we can extract from those technologies will go by the wayside.
I will give just one very clear example of this. If you think about the huge effort that the banking sector put into making sure that people felt confident about banking online, spending money online and tapping their card—“When something goes wrong, the bank will take care of you”—the reason, the logic, behind that was that if people began to think, “It’s not safe to bank online; it’s not safe to use my card in these little shops,” they would stop doing it. It was that investment in regulating it, locking it down and making sure it was safe that has allowed us to get to this extraordinary situation where you can walk around with no wallet and just a phone. It is that thinking that is important now.
David Rogers: I think the transparency point is fantastic. This work is not done in isolation. There is lots of work going on about lengthening software updates for lots of types of products, and there are different regulations happening in Europe and so on. Consumers should not have to know about the details. Madeline has said this. They have an expectation, a very reasonable expectation, that they will not be arbitrarily hacked into. We have all read the stories about things like baby cams being hacked into. That is totally unacceptable, because at the end of the day the company that created and sold that product that was insecure at the time it was created is responsible for it. Of course, they did not hack into it, but they left all the doors open, and they sold that product and made money and profit from it.
Yes, I believe that consumers should know that they are being looked after, and the length of time that that is provided for helps them to make an informed decision—it is a free market. Also, security should not be a luxury for the rich. You should not be required to replace your iPhone, for example, just because the support ends. At the end of the day, we are all impacted by security issues. The Mirai attack, for example, was an extremely large distributed denial of service attack, which basically took down large parts of the internet. It was all those small IoT devices, routers and things that had been taken over. The attack did not discriminate between who had those devices, those older devices or whatever, but the impact and scale of that attack was the problem.
That is why we need to ensure on an ongoing basis that, as the technology develops, we can put new requirements through the standards bodies and endorse them. This is the start of that lifecycle, to ensure that those products do not enter markets like the UK.
Chris Elmore (Ogmore) (Lab)
Q
In that vein, is there something in the idea of a reporting mechanism—either by the Department or some sort of regulator, annually or however long is appropriate—for whether these organisations and manufacturers are working to the standards that you so strongly set out? They have had years to deal with the standards, but many are still not doing it. I am suggesting naming and shaming, if you will, to give consumers better informed decisions.
A lot of people borrow money to buy these devices. On Second Reading, I expressed a concern that many people will look in a retailer or online, and go, “If that doesn’t exist for this much time—if it only has two years on it and the loan is three years—why am I bothering to purchase it if it is obsolete in that time?” That is a concern that many people have. Consumers potentially do not know what this or that means, but they know what “security” means, and if they think something is not secure, then, as Professor Carr mentioned, they think, “Well, I won’t bother having that product, because it isn’t safe”, because that is how they view the word “security”, which is logical, but not necessarily the best option given what they are looking for. There are several questions in there, forgive me, but they are interconnected with what the Minister was saying.
Professor Carr: I will try to answer as many as I can, as well as I can. I am sure that David has comments as well.
On educating consumers, that question of “Will the loan outlast my device?” is a very astute one, because consumers do not need to understand—they never will—all the ins and outs of phone or device security, but that is a very pragmatic response: “What actually am I buying? I am spending for three years to buy two years of a phone.” That type of consumer education will snowball when people are presented with information on how long the device will last and asked, “Is that what you want?”
I guess online markets are already regulated. There are things that we cannot buy in the UK and that cannot be shipped here. It would certainly have to be a consideration that, ideally, devices that did not meet UK standards were not able to be shipped to the UK, but I guess that is the case with many consumer goods that we cannot buy online. There is a tendency to blame business in this scenario and to see manufacturers as careless or irresponsible, which surely some of them are. However, it is also the reality that businesses have to make a careful calculation on how they invest. If it costs more to produce a product and they are answerable to shareholders, they have to have a conversation about why they are spending more on a device that is already selling well and returning a profit. I am not saying that that is the way it should be, but that is the way the free market works.
Look at what happened with GDPR. In my work, we work a lot with senior business leaders and talk to them about how they respond to cyber-security regulations. They did not push back against GDPR or see it as terribly negative; they saw that it unlocked budget for them to use, because they could quantify what percentage of their global turnover a data breach would cost or what the fine could amount to. They can take that calculation to the board, and say, “Right—we mustn’t have a breach or it would cost this much. How secure do we feel we are?” That is where such regulations can have a very positive effect on industries that would like to comply but cannot just invest in all the different aspects of a device without some justification. This gives that justification. It unlocks that funding in those board conversations about where investment in products should go.
David Rogers: Just to address the Amazon/eBay question, I have seen all this stuff. I have bought some of it to have a look at. A lot of counterfeit and substandard—the Chinese call them Shanzhai—products are available. I have conversations in which people say, “This is about buyer beware. You’d never buy a £9.99 smart watch. You should know that that’s going to be dodgy,” but as you said, people cannot necessarily afford it. There is a peer pressure element to it, and there is a sort of endorsement by the brand. If you go to Amazon, you expect it to be a quality product, so people are lulled into that sense of security that what they are getting is quality. In some cases, that is not the case. I fully agree that the companies that are retailing this stuff cannot just lay the blame at the door of the companies that are stocking and selling it. If it is on Amazon Prime, surely Amazon has a responsibility over that.
Earlier, Dave mentioned different regulatory regimes and that there may be some fragmentation around the world. I actually think that there is probably a lot of alignment and harmony. There has been a lot of work between DCMS and the National Institute of Standards and Technology in the US, so there is a broad understanding of what good looks like. If, either through some self-declaratory measure or by some endorsed mechanism of compliance, those companies are told to come up with a compliance statement, that helps the likes of Amazon and eBay to select their suppliers appropriately and then to remove them from their stores more easily. At the moment, it is kind of a wild west. They do not have any questions or answers.
Ruth Edwards (Rushcliffe) (Con)
Q
Professor Carr: I think the Bill would be a hugely positive step. There is a lot more to be done in terms of regulating emerging technologies. As I said earlier, the UK is a country at the forefront of thinking about these issues and taking action. It is new territory, because we are not used to legislating about these things; it seems somehow interventionist, or that it stifles innovation. Actually, digital technologies have become so integrated into every aspect of our lives, from the most personal level to infrastructure, and we have not caught up with that in what we see as the acceptable responsibility of the Government, of individuals and of industry.
There has very much been a narrative that Governments need to stay out of this area. I think that is very dangerous and wrong, because that is how we have ended up in the situation we have been in. It is certainly a balance between those parties—Government, civil society and industry—but we are a long way from having that balance right. Governments are beginning to see that there is a mandate and that they have a responsibility. We see that not just in the UK, but certainly in the US, Australia, the EU. But there is a long way to go.
Ruth Edwards
Q
Professor Carr: I would like to see the range of devices extended—in particular, where it talks about toys and safety devices. There is a whole category of other devices that should be included, particularly when we think about children. There is a market emerging now for tracking devices for children, or these phones, which are not really phones but communication devices. I think the scope of the devices should be expanded.
If I had a magic wand and it was up to me, I would say that devices had to be supported for a minimum time. Otherwise, you end up with the very distasteful scenario that we were just talking about, where people who are less resourced are buying less secure devices and living less secure lives. I would like to see a minimum time that devices had to be supported.
I would say those two; I would go much further, but it is a good start.
Ruth Edwards
Q
“Current proposals risk unintended consequences for manufacturers and consumers”.
It points particularly to security requirement 2, which is to implement a means to manage reports of vulnerabilities, and notes:
“On vulnerability reporting, not all reports/vulnerabilities will require intervention. The Enforcement Body needs to carefully consider when to alert the public about security risks to ensure associated devices are not viewed as obsolete or that vulnerabilities yet to be mitigated are advertised to threat actors.”
What is your response?
David Rogers: I will be frank: I think they have misunderstood what vulnerability disclosure is. As I mentioned, there is an ISO specification for this. The security research community and the hacking community have been campaigning for this for years and years. It is well established. A lot of the bigger tech companies have recognised that this is the right way to deal with things. I am sure that you understand vulnerability disclosure, but the process is that if a security researcher or hacker discovers a vulnerability, they have an easy way to report that to the company confidentially. That process typically takes anything from 30 days to 90 days. At the end of that process, a fix is issued, if that is possible. It may even extend for a longer time if it involves other companies. Then the security researcher is able to go public with their work, but that is only after a fix is issued. This has been fought out over a long period, and is the right way of doing things. It is agreed between the hacking and the tech communities.
There may be some education work to be done for those manufacturers who do not understand that this is the right thing to do. They should be implementing vulnerability management schemes internally anyway. I think John Moor mentioned this morning that it is about quality. It is about good software quality measures and good software design. We have seen some really catastrophic problems caused by vulnerabilities that have been sitting there for years. That is the old world. We need to move on from that. The new world is about continuous software updates and a continuous product security lifecycle. People cannot just ship and dump products on to the market and leave them there.
The Chair
Can I bring in Kevin Brennan, as we only have four minutes before this panel comes to an end?
Kevin Brennan (Cardiff West) (Lab)
Q
Professor Carr: Yes, I would.
Kevin Brennan
Q
Professor Carr: No.
Kevin Brennan
Why not?
Professor Carr: Because I do not trust them. There we go. I will not have one, because I do not trust it.
Kevin Brennan
Q
Professor Carr: No, to be honest.
Sally-Ann Hart (Hastings and Rye) (Con)
Q
Professor Carr: It is impossible to answer that. That is what makes this type of legislation difficult. We do not know how the threats will emerge or change. A couple of years ago we could not have imagined that ransomware would be the threat that it has become, but the fact that we cannot anticipate the future with certainty does not mean that we cannot act now. Nothing will be sufficient to fix the insecurity of the digital world that we live in. No Bill will change that, but small bits of legislation beginning to address these vulnerabilities is the right way to go. I do not think that anyone should be afraid of doing this. This is the beginning of the future. Governments will not stand by forever and watch the damage and destruction that can be done by digital devices. We have to start somewhere, and I think that this is it.
David Rogers: I am coming from a slightly different position, but obviously I would like to see all 13 requirements implemented. I think that it does provide future proofing, because this provides the foundation of future trust for everything. Everything that we have written in there provides future underpinnings. If we are allowing industry-based organisations such as the European Telecommunications Standards Institute to maintain the specification for the future, that allows organisations to improve and add things. I think Dave mentioned biometrics, for example. They can go to ETSI and add to it, and let’s allow industry to develop that. Organisations such as NCSC and DCMS are also there to input into those standard bodies. I think it is a really strong start.
The Chair
Thank you. That brings us to a slightly premature end of this evidence session. I thank the witnesses, on behalf of the Committee, for their evidence.
Examination of Witnesses
Catherine Colloms, Simon Holden, Mark Bartlett and Juliette Wallace gave evidence.
The Chair
Good afternoon. We will now hear oral evidence from Catherine Colloms, MD for corporate affairs at Openreach; Simon Holden, the group chief operating officer at CityFibre; Mark Bartlett, director of operations at Cellnex UK, appearing on behalf of Speed Up Britain; and Juliette Wallace, also of Speed Up Britain.
We have until 3.40 pm for this session. Will the witnesses introduce themselves briefly for the record, please, before I turn to the Minister? We will go left to right.
Simon Holden: I am Simon Holden. I am the group chief operating officer of CityFibre.
Catherine Colloms: I am Catherine Colloms. I am the corporate affairs director at Openreach.
Mark Bartlett: My name is Mark Bartlett. I am the operations director at Cellnex UK, representing Speed Up Britain.
Juliette Wallace: I am Juliette Wallace. I am the property director at MBNL, which is a joint venture between EE and Three. I also represent Speed Up Britain.
Julia Lopez
Q
Mark Bartlett: On behalf of Speed Up Britain, we very much believe that the changes proposed in the Bill are needed to speed up the roll-out of digital connectivity across the country. Therefore, we believe that changes are required.
In that sense, though, we need to look back to before 2017 to understand the policy behind the changes originally made, and to understand that those were made in order to achieve the outcomes that the Government were already trying to establish. Without the changes in the policy of 2017, this ambition will not be met. Speed Up Britain continues to support the policy ambitions as laid out in 2017, but the fact is that the law as put down at the time is not working and created loopholes, which have been exploited, and that has meant that we have been unable to proceed at the pace we wanted.
Catherine Colloms: To give you a bit of context, Openreach is the national broadband network. We are in the process of upgrading the existing network, which is a hybrid copper-fibre network, to a new full-fibre network. The ambition is to build 25 million full-fibre homes and businesses by the end of 2026. That is a hugely ambitious target. It underpins the Government’s 85% manifesto commitment, but we have to get to a ramp of building 4 million premises a year.
We are currently building at 50,000 premises a week, so we are heading up towards the 3 million a year kind of ramp, but from pretty much a standing start in about 2017, as there was very limited full fibre in the UK at that stage. We had finished building the old network and had not transitioned through. It is a really serious challenge. If you think about the pace of build and what we are trying to achieve, being able to do things really rapidly and operationally simply becomes incredibly important.
For us, the two big pieces that the Bill can potentially help us with enormously and help supercharge that fibre build is around access, that is access to multi-dwelling units—the approximately 6.1 million blocks of flats in the UK—and access to rural parts of the UK. There are some urban as well, but if you think about how we build, we have a duct infrastructure but we also have a very extensive pole infrastructure. For most of our rural build—we have committed to building 6.2 million commercial rural, which goes beyond the Project Gigabit programme that the Government are talking about to the hardest-to-reach areas—we are going to have to do most of that over our existing pole network. At the moment, the Bill makes some changes that are helpful and which progress us forward by allowing us access to upgrade our current infrastructure on underground ducts. What it does not do is allow us to upgrade the infrastructure we have in place, either over the pole network or in those blocks of flats.
If you think about what we have in place today, we have our existing network, so we have the ubiquitous either copper or hybrid copper network that is there today in pretty much all of these premises, all across our poles. We are trying to upgrade that network to full fibre as rapidly as possible and to do so, it would be incredibly helpful if we were able to upgrade our existing infrastructure. The Bill at the moment allows us, as I said, to do that through underground ducts. It is not going to allow us to get into either MDUs to upgrade more rapidly—we estimate that something like 1.5 million MDUs could be at risk based on our experience of unresponsive landlords and our inability to get in—and it also does not allow us to automatically upgrade our property and the infrastructure that we have over the pole network.
To give you a bit of context, we have 1 billion metres of cable over poling at the moment. The vast majority of the rural network is served over poles, so for us it is really important to be able to deliver those 6.2 million commercial rural, but also potentially the Project Gigabit programme. We have been working in Scotland on the R100 programme—the “Reaching 100%” Scottish Government programme. We need one wayleave for every 16 premises, to give you the sense of scale. We are finding the ramp very challenging and because of the scale and pace that we are trying to build at, what we really need is ease of access, ease of upgrade and that is the opportunity we think with the Bill.
Simon Holden: I think we are talking about two different sets of infrastructure here, which is worth explaining. We are talking about mobile and then we are talking about fixed-line fibre access. CityFibre is rolling out a fibre access network, mostly to consumers in the home. We are doing that across a footprint of 8 million households in the UK. The reason I wanted Catherine to go first is because we are utilising Openreach’s duct and pole infrastructure for three reasons. First, because it will allow us to go faster because we do not have to dig up the streets and lay ducts ourselves or put many more telegraph poles down. Secondly, because we are reusing and so can lower our cost, which means ultimately lower prices for the consumer. Thirdly, because it is just much more environmentally friendly if we can reuse those assets.
We are in favour of that, but at the moment we have this split between pre and post-2017 access. Our view at the time was that that made a lot of sense. Five years on from that now, it is a somewhat arbitrary split. So we think dealing with that is the right thing to do. In particular, the draft Bill’s proposals on ducts look fine to us. We would echo the point about poles. For us, poles are really important in rural, but also in Scotland. It turns out that in Scotland there are a lot of poles sitting in people’s backyards and just being able to access those to put our infrastructure on means that we can accelerate getting fibre access to all those homes. In our footprint, there are probably up to about 200,000 homes that we can access quickly if we can get that right, so we think that there is a real advantage to doing that.
For us rolling out fibre, there is a balance that you have to have here between access all the way through into the home, back to the public domain where, as a code operator, we can build in the public domain. I think we would say that our experience of getting landlords to come to the table is mixed and that the alternative dispute resolution mechanism proposed here is a good one to push that timetable down, so we can get to an answer.
I would also say, however, that when we get into the home, into a block of flats, the tenants really want the service. We have found that, once we have got the landlord and the landlord has given us the wayleave so we can connect into the front door of the block of flats, then wiring up inside is not particularly an issue. We are concerned a little with somehow grandfathering old wayleaves inside buildings, first because it does not seem balanced, but also because it will entrench the people who have those, which I would say is mostly Openreach.
In trying to promote competition and accelerate growth—to your question earlier, Minister, about whether growth has accelerated—the answer is that growth has clearly accelerated in rolling out fibre. That is absolutely happening. We have vibrant competition now, with billions of pounds being invested in this sector. Here is an opportunity to make it go faster, for us all to benefit with a frankly lower-cost solution.
We feel that what is on the table with that landlord dispute resolution mechanism is good. We do not feel that we need to go inside the building, frankly because once tenants have access to it, landlords are more than willing to give that connectivity, because they have happier tenants as a result. We have not found that that is a real impediment to us.
Julia Lopez
Juliette, did you want to add anything? You do not have to.
Juliette Wallace: I was not going to add any more to what Mark said on behalf of mobile.
Julia Lopez
Q
Mark Bartlett: Speed Up Britain represents the MNOs: Cornerstone, MBNL, Cellnex, which is a towerco, and DMSL, WIG and the industry as a whole. I will put some facts, some numbers, on the table to help us understand what we are doing.
Since 2017, we have completed about 1,000 agreements, of which 85% have been consensual and reached without any recourse to any of the processes associated with the legislation. Over and above that, 14.5% approximately required some form of exchange of letters of notice, but then moved quickly to agreement, and only 0.5% of any of those discussions ended up in the tribunal. In my experience, those that ended up in the tribunal have been the industry—us—versus the industry, or land aggregators, to be blunt.
The facts speak for themselves. In the main, as an industry, we run over 30,000 towers, which are visited frequently in order to upgrade, to maintain and to support the connectivity of the country. We do not see a landowner community, a landlord community, our partners as such, in a wall of non-co-operation, but almost the opposite. We speak to our landlords very frequently, we interact with our landlords very frequently, and therefore I do not recognise the characterisation as stated this morning.
Catherine Colloms: I am happy to talk from a fixed perspective. Generally, we have pretty good relationships with a large number of our landowners. Fibre and the copper and duct infrastructure we have is not a revenue generator for most landlords. You will have heard Charles Trotman this morning, from the CLA. We have agreements and rate cards, which were negotiated with the CLA and the NFU. We work closely in particular with those kinds of rural players to ensure that we have those in place. They are very effective and seem to work very well.
Just to give some kind of context for fixed, we do not tend to have these kinds of disputes, to the extent that you are not going to make a ton of money, frankly, by having a few poles on your land. A pole rental is between £10 and £20 a year, so even if you had a couple hundred poles, which would be unusual, that would mean only a couple of grand. If you think about ducting and cabling going through, that is anything from 19p to 49p a metre, so it is not a revenue generator per se. For us, the conversation with landowners is predominantly about access.
To Simon’s point, we find that we do have quite a lot of issues when it comes to MDU access, especially given the scale at which we are trying to build. We obviously have a machine of people who sit behind to try to negotiate, wherever possible, consensual agreements or wayleaves, but we would genuinely need an army of people to try to get stuff done.
For example, some of you will know that a couple of years ago we fully fibred Salisbury, which became one of the first full-fibre cities in the UK. We tried experimenting to test the limits of access and find out what would or would not be a problem with the roll-out. After two or three years of really concerted effort, including with John Glen, the local MP, being super-supportive and with loads of local PR, we could still get into only about 79% of MDUs, because of non-responsive and non-communicative landlords. If we were to scale the MDU team that we had for dealing with the amount of time it would have taken to tackle those unresponsive landlords, we would effectively be scaling from a team of about 17 to over 300.
As Simon says, the ADR processes are helpful predominantly when there are larger landowners, such as housing associations or local authorities. They are less helpful when it comes to the hundreds of thousands of wayleaves that we need in order to get into all the individual MDUs. That is why we think that the ability to upgrade the existing infrastructure, and therefore to give tenants the connectivity they deserve, is still the right mechanism to try to ensure that we can get the upgrade as quickly as possible.
Juliette Wallace: We do recognise, as the operator side of the industry, that in the very early days of the code—early 2018, for instance—the interpretation that we were trying to explore may have been a little too over-enthusiastic, shall we say. A lot of time has passed and we have learnt from that. I think that a lot of the examples that are provided to try to support the allegation of a David and Goliath approach are from very early in 2018, and they do not exist today. I think that we have moved on a lot, but we cannot be stuck with all the allegations of the past as well.
I do not agree that the David and Goliath approach is correct. As Mark said, to the extent that it is, what we are finding with the tribunal element of the approach is that it is actually industry arguing with industry; it is not small farmers, necessarily, who are behind that negativity. It is not David and Goliath; it is Goliath and Goliath.
Julia Lopez
Q
Catherine Colloms: The current target of 25 million full-fibre premises by 2026 did bake in some assumptions about access, particularly in relation to the upgrade rights in clauses 59 and 60, through MDU and through poles. On the impact of not having it, I think there is a kind of overarching impact. If you think of the challenges of the build and the scale of what we are trying to do, the harder it is to build and the slower it is, the less we can do. We are having to re-phase and re-look at the build that we are currently targeting, as a result of potentially not getting some of the elements in the legislation.
If I take the MDU point in particular, we have re-phased some of our MDU work to the back end of the 2026 target, the reason being that at the moment we just feel we are not going to get the access. As I said, our experience is that up to 1.5 million of those total 6.1 million MDU premises will be at risk. We are seeing that in a day-to-day aspect as we build, so we have re-phased 300,000. That will go to the end of the build, which means it does not count towards the 2025 manifesto target. It will still be planned within our build, but I think what will happen is we will just have to build different bits.
When we are building this rapidly, we cannot afford to sit and wait—wait to negotiate a wayleave, wait for an unresponsive landlord to come back, wait for an ADR process. Even though we have some of these mechanisms in place, we frankly do not use them, because there is not the time and we do not have the scalability to be able to wait for all these landlords, so while we are trying to build at such pace and scale, we effectively move on. What will happen in the short term is that we will still aim for our big 25 million target, but you will get a different mix, and we are already seeing that you will have less MDU in the mix. Obviously, the concern with that is that MDU is often urban and is often local housing or in more deprived areas, so there is a risk of creating a new digital divide—in particular, if you happen to live in a block of flats versus not—because of the access issues.
On rural land, we have this ambition to get to 6.2 million. Effectively, the way that we plan and build the network is we will pick an exchange, and we will survey that area and have a plan to build, but if we cannot get the wayleave, we will not build to the village that is beyond the wayleave. We will still get to our target, but you will get more pockets left behind in different places as we build, because instead of being able to build to 80% or 85% of an exchange area, one landlord might potentially be blocking the access that gets you to the village that is over there. If you cannot cross the land, the expense of having to circumvent it and go all the way around it means that that village build is prohibitive.
The Chair
Can I ask witnesses to please keep their answers shorter? I have had a number of Back-Bench Members already indicate that they want to come in.
Catherine Colloms: Sorry. I think it just changes the mix, effectively.
Simon Holden: I might just add that if Openreach is the Goliath and CityFibre is the David—certainly in rural—we would like to go into rural. This would be really helpful for us in order to make sure we can move at speed and at a sensible cost, and take advantage of the opportunities the Government are providing to accelerate growth there, so we would be in favour of that.
Juliette Wallace: On the mobile side, you asked about rural connectivity. Predominantly, that is going to come from new sites, and the code is actually working quite well with new sites—new land build-out. Our biggest challenges come from renewing the agreements that have expired on existing sites. That is where we need the changes in the code that this Bill addresses, and also the amendments to how the Bill is drafted so that it actually addresses the Government’s ambitions that came out as a response to the consultation.
Chris Elmore
Q
This is for Mr Bartlett. Forgive me if I am misquoting you, but I think you said 1,000 contracts have been negotiated since 2017. I am assuming those are all new sites, or are some of them renewals as well?
Mark Bartlett indicated assent.
Chris Elmore
Q
Simon Holden: We, CityFibre, are in cities. Probably 10% to 15% of our build is in multi-dwelling units. We are typically in underserved areas around the UK, and I would say that we have a disproportionate share of things like social housing that sit under our built portfolio. No. 1, we think that it is really important to be able to access those properties. I would say that big social housing landlords are embracing that, but it is patchy and we would value having the ability to accelerate negotiations as we are having them and have a really clear process where we can make sure that we get everyone to the table, with a fair resolution at the end of it.
Once you get access to the building, I think it is up to the building landlord and the tenants, obviously, as to how you are going to do the in-building wiring. As I said before, we found that once you have got hold of the landlord and you have agreed it, that does not tend to be a particular problem. What we are concerned about is that if you extend this back to historic wayleaves, all you are doing is effectively entrenching the people who have already got those, which most of the time is Openreach. We would think that that is not helpful for competition. That would be our observation, but in terms of accessing those properties, it is super key to us for our business model to be successful and, of course, for society to benefit from getting the best digital infrastructure to as many households as possible.
Catherine Colloms: As Simon says, most multi-dwelling units tend to be in towns and cities, so looking at the constituencies represented around this table, I can tell you, Chris, that you only have 3%. Hornchurch, in the Minister’s constituency, has 13%, and I think Hastings has 24%. They are very concentrated, classically, in urban areas, as Simon says, and often in potential areas of deprivation or areas which are less socially inclusive.
In terms of the access point, you are right. The idea of automatic upgrade would give us the right to do that. You still have to have a relationship with the landlord. That is still always the intent, but it comes down to the obligation. At the moment, there is no obligation for the landlord to do anything. New build legislation obligates them to put in a full-fibre connection, and there is a slightly different conversation you can then have that allows you to proceed with the wayleaves.
Mark Bartlett: To answer your question, first of all the current legislation is not working. At least over a half of all sites are stuck, so the landlord says that they are not renewing or getting new ones. Of those that are under renewal, there are absolute rights in the current legislation for landlords, if they wish to do so, to redevelop at the end of the lease and we have to leave. My estate would be measured in tens a year where it is their right and we move on.
In the current legislation there are also absolute rights for the operators to maintain that equipment if there is no redevelopment need. That is, obviously, very positive, because when we lose a site or a rooftop, whatever the infrastructure might be, that is serving hundreds of people in the community. Therefore, quite naturally, both the investment that we have made and the utility to the public need to be maintained, unless, as I said, the landowner has a genuine need to make that redevelopment, and that is enshrined in legislation, both today and in that passed pre-2017.
Shailesh Vara (North West Cambridgeshire) (Con)
Q
Mark Bartlett: I think that would be human. I have never met anybody who wants to take a reduction in the amount of money that they are paid by anyone—that is not something that people work on. However, the policy was put in place to reduce the costs to the industry to allow investment in 5G, which is happening right now for the good of the country.
On the valuation point, it is a fact and a process that if we do not behave properly and that ends up in a tribunal, we would be penalised by the tribunal for the amount of money we have paid, and the judgment would fundamentally go against us, so there is a protection for the landlord there. Secondly, normally—in almost 100% of cases, in fact—we always offer more than the valuation criteria say we should. That results, normally, in a payment of several thousands of pounds, not several tens or several hundreds of pounds.
It is my experience that the majority of people understand that the law has changed and that, like when things change in how you pay your bills, things have fundamentally moved on. So long as we, as an industry, are fair and do not attempt to be over-enthusiastic, as Juliette put it, 85% of people do sign up and say, “Okay, I get it. I am still happy with those several thousands of pounds, and I am willing to make an agreement of that sort.” That is not everyone; 15% of people do not feel that, and we have a further conversation with them, and we come to an agreement with the vast majority of them as well.
I would also point out that this is often characterised as an individual change of an agreement—x to y. We often pay incentive payments to achieve an agreement as well. I would like to put that on the record. It is not just about a reduction in rents. I would also point out that, on average, it is a 63% reduction in rent, not the high 90%-type reduction, that has perhaps been characterised, by the industry.
Shailesh Vara
Sixty-three per cent. is still a significant sum for a small farmer who is counting every penny in his budget. The Committee can understand your reasoning in terms of policy and so on, but as far as the individual is concerned, I maintain—we will have to agree to disagree—that the 85% figure is somewhat misleading if taken in its individual context. I have made my point. Thank you.
Kevin Brennan
Q
Catherine Colloms: That is the current target.
Kevin Brennan
The manifesto target was for full gigabit by 2025, but that was dropped to 85% in November 2020, wasn’t it?
Catherine Colloms: I think you are right.
Kevin Brennan
Q
Juliette Wallace: When the new code came into effect, it set out how sites should be valued for the use of mobile infrastructure. Previously, there was no mention of how sites should be valued. Pre-2017, we had an industry that had been built up over the previous 20 years or so and that had got somewhat out of hand. Rather than paying a fair price to install infrastructure on land, a fair price being one that recognises what else the landowner could rent the land for—
Kevin Brennan
Q
Juliette Wallace: We have learned from the past. My comment about being over-enthusiastic related to the suggestion of David and Goliath with respect to the valuations. The valuations that were proposed very early, in 2018, were much lower than we are going out with now. As this Bill does not intend, currently, to adapt the valuation methodology, there should be no reason to think that the valuations that are currently being offered will change.
Kevin Brennan
Q
Mark Bartlett: It was 63%.
Kevin Brennan
That is the average. Could you tell us some of the figures for those who were worst affected? If 63% is the average, what were some of the biggest drops in income for people affected?
Mark Bartlett: At this point I obviously do not know—
Kevin Brennan
Would anybody have suffered a 90% reduction?
Mark Bartlett: I was about to say that at this point I can only talk about Cellnex UK, because obviously I am not aware of the commercial agreements of any other members of Speed Up Britain. I can be clear that there have, in a handful of cases, been—we have been open about this—90%-plus reductions in rent. But in the main, that normally means the rent itself was over-rented at the point of agreement—that is, we were paying drastically too much. On average, 63% is in line with the Cellnex UK achievement. We have to understand that we have an ongoing relationship with our landlords above and beyond a renewal. There is no interest in the industry for us to behave in a way that alienates our landlords.
Kevin Brennan
Q
Juliette Wallace: I was going to pretty much echo the Cellnex example. We have a handful that are towards 90%—in that sort of area. We also have some sites where the rent has gone up as a result of the new code.
Kevin Brennan
But the average has been a reduction.
Juliette Wallace: The average is a reduction, but it is creating a fair environment that says, “We will reimburse you for the land that we’re utilising.” As I say, we have a lot of sites where there has been no reduction and we have a small number where the rent actually increased.
Kevin Brennan
Thanks. I think everyone understood there was going to be a reduction, but I cannot remember those sorts of figures ever being mentioned at the time of the 2017 Bill.
Sally-Ann Hart
Q
Catherine Colloms: Effectively—let me take a multi-dwelling unit and then I will take a pole—we need to put a new fibre cable over some of these pieces of infrastructure. I actually have my kit behind me, which I can show you in a second. With an MDU, there is often fibre outside a premises; we will build to the curtilage. What we have inside an MDU is the existing cable—the existing hybrid fibre—that is going up inside the risers. You basically cannot see it. It then kind of pops on to a room. We would reinstall the new part of the full-fibre kit in the classic plant room downstairs, so that it is all with the maintenance bits. We then need a new small cable—this one is basically it; it is called InvisiLight—which we would run up through the risers. This is what you would see, or not see, running through corridors or along the wall. When you put this on a wall, you cannot find it because it is absolutely tiny. This cable has all the fibres running through it.
Sally-Ann Hart
The visual impact is going to be minimal.
Catherine Colloms: It is minimal. You often need a very small box that just sits on the top of someone’s door and you effectively put this cable inside someone’s flat to a new box. That is for an MDU.
For a pole network, it is similar in the sense that you need slightly more than this amount, because we will probably have some more cables in it. Over the existing pole infrastructure, you will have a new cable that basically has fibres in it. As you can see, this cable is absolutely tiny compared with copper, and it will serve hundreds of premises, as opposed to the copper, which needs to be a different size. You would effectively need a cable that is slightly larger than the one that I have here—because it would be protected—that runs across the existing infrastructure. You sometimes need some termination points, so there might be a few pieces of black plastic, which is effectively where you put various bits of the access network.
Sally-Ann Hart
On the telegraph pole.
Catherine Colloms: On the telegraph pole, but not every pole. It will be only on a few of the access poles, but we try to minimise the impact and keep it as small as we can.
Simon Holden: We are using exactly the same process and procedures, and the ducts and poles that are available, so my answer is the same.
Sally-Ann Hart
Q
Catherine Colloms: At the moment, the way that clauses 59 and 60 are drafted, they talk about “no adverse impact” as opposed to minimal adverse visual impact. The existing code under which we are currently operating talks about “minimal adverse impact”, which is why we have been able to put infrastructure in as we are doing today. That has not been transposed in the Bill. We are suggesting that if we could change the definition to “minimal adverse impact” as opposed to “no adverse impact”—with, for example, the MDU having something like this cable—that would allow us the ability to go in and upgrade with minimal adverse impact where we currently have the infrastructure.
Sally-Ann Hart
Q
Catherine Colloms: For me, it is the critical clauses 59 and 60. If we could extend the measure to multi-dwelling units, that solves your urban problem, but, critically, if we can extend it over the pole network, that is what will make the difference in rural areas. As I was explaining to the Minister, it is not necessarily that the target changes, because we will still try to do everything we can to meet the target, but the danger of not being able to upgrade existing infrastructure over poles is that you end up with pockets that are excluded as you upgrade. We are effectively trying to avoid getting all these pockets of digital divide in MDUs and cities, but also the little pockets as we are upgrading through rural areas at the same time.
Simon Holden: I would add one administrative point. The way that the Bill is drafted at the moment means that the main operator, which would typically be Openreach, has to notify the private landowner. The fact of the matter is that if we wanted to use it, we could equally notify the private landowner. What I do not want to do is either to burden Openreach with lots of my administration, or for that to become a bottleneck to the speed of my roll-out. We would propose that if it is the main operator or the new operator that has utilised that infrastructure, it could give the noticing. By the way, we are giving noticing to local authorities for works all over the place; we have a process for doing that. That would actually accelerate things from our perspective and not create an inadvertent administrative bottleneck from a process perspective. We can provide you wording on that.
Sally-Ann Hart
Q
Mark Bartlett: First of all, towercos have been around in the industry since the start. The BBC became National Grid became Crown wireless became Arqiva became Cellnex, and so on. This is not a 2017 phenomenon. Secondly, Cellnex itself has invested billions of pounds in the UK over the last couple of years and invests hundreds of millions of pounds a year, whether that is in connecting the Brighton main line or providing DAS, small cells, tower upgrades or new towers. To describe a huge enabler of connectivity across the UK as a middleman is, I think, a step too far. Fundamentally, we are an industry that is bringing connectivity to the whole of the UK; we are part of it, and we believe that these changes are needed to deliver it.
Rebecca Long Bailey (Salford and Eccles) (Lab)
Q
Mark Bartlett: That is a good question. First of all, do we collaborate as an industry to use shared infrastructure? We are required to do so under planning laws. In fact, towercos’ reason for being is to create efficiencies and share infrastructure, to the benefit of the community. We are, through the planning process, not allowed to stick one tower next to another. Those sorts of things protect the community, but also make sure that we exploit the infrastructure that we have today to maximum effect.
Secondly, in terms of sharing upgrade rights, obviously we have existing towers. At the point at which we need to upgrade for 5G, often we need to put more equipment on those towers, so it is important that we are able to do that without having to negotiate higher costs under the old regime, and that we are able to do that very quickly. To Catherine’s point, where we do not get agreement to upgrade a tower, it simply means—the local community around that tower is much further than 500 metres; depending on which technology you use, it might be 500 metres, but I will not go into that, and one big tower serves many hundreds of people—that that tower does not get upgraded and the money is spent on a different tower in a different community.
The power of the individual to affect the outcomes of the community is very high in the process that we have today, especially where the legislation does not work. To be frank, that is why the changes are required. It is not necessarily to overcome some battle with a land agent. We are simply attempting to create this connectivity solution across the UK as fast as we possibly can, and having the simplicity—while remaining fair to the landlord—of legislation that works and an operational process that works is going to enable that.
Is there anything else you want to add, Juliette? If I may, I will refer to Juliette on the technical—
Juliette Wallace: I do not think there is anything particular to add, other than to say that the shared rural network absolutely relies on the ability both to roll out new sites to new areas that are total notspots at the moment and to roll out sharing and upgrade capability on existing sites. If we do not get the changes in this Bill, we are going to be seriously reduced in our ability to effectively roll out, share and upgrade those existing sites. There are some sites where currently we have no mechanic to be able to renew those agreements. As Mark said, the power of the individual to frustrate the roll-out of new technology or increase technology to a geographical area is huge currently.
Rebecca Long Bailey
Q
Mark Bartlett: With respect, I am unable to answer that question as part of Speed Up Britain, because that is often commercially sensitive, but we can write to you. Mobile UK is part of Speed Up Britain, and they are the best people to ask. I will ask them to write to you directly to give you that clarity.
Rebecca Long Bailey
Q
Simon Holden: We architect what we call polygons, which basically go around our cities, and our objective is basically to cover every premise in the city polygon that we build. That is a commercial decision that we have made. We think that super-high-density fibre networks are the best way to cover a population and offer the best marketing opportunity to end customers. By the way, they allow you to do the densest 5G networks overlay on those.
In our architecture—which does not follow the Openreach architecture; it is our own—we use a series of ducts and poles in rings going around, and then run off coming from that. We plan, in our builds on our city polygons, not to have notspots. Sometimes we cannot go down a private road, because we need a wayleave and there is a process to go through to get that, but our policy is to try to cover as much as we possibly can. Typically, we cover 85% to 90% in what we call the first pass of the build, and then we start going back to do infill around that. At least where we are building today, we do not have that as a problem.
In rural areas, I think that will be affected by the BDUK process and the roll-out—we would like to participate in that—but our expectation is that we would be building and connecting from our cities all the way out to the deep rural areas, picking up the small towns and villages on the way. In those commuter towns, we would look to cover all those premises; if we are there building, we would rather just build it once and cover everyone. That is the best commercial opportunity that we see.
I do not think that we see what you are describing as a problem that we would be planning in to avoid; it would only be because we could not get particular wayleaves or particular access, a little bit as Catherine described, that we would end up trying to go around that. That is why this legislation will help us.
Catherine Colloms: If you think about the existing architecture—obviously, we have the existing architecture; we are still building new, but we are trying to reuse wherever we can, because that is cheaper and avoids digging up all your constituencies as we go—it is true to say that there is a greater proportion of underground ducting in urban areas, which this legislation, as drafted, would allow us to upgrade more easily than over the pole network or in multi-dwelling units. We have a much denser proportion of poles in suburban and rural areas, so at the moment, as the Bill is drafted, it is harder to upgrade rural areas than it might be to use the existing underground infrastructure, which is predominantly in urban areas, as you say.
The Chair
If there are no further questions from Members, on behalf of the Committee I thank the witnesses for their evidence. I hope I have not hurried you along too much.
Examination of Witness
Till Sommer gave evidence.
The Chair
Q
Till Sommer: I am Till Sommer, head of policy at the Internet Service Providers’ Association. We are basically the trade body for the fixed-line ISP sector in the UK. We represent a whole range of companies, from the largest infrastructure providers that you heard about from the previous panel, such as Openreach and CityFibre, to the smaller start-up companies and ambitious alternative network providers who roll out their own networks in urban or rural areas. Some of them are focused on Wales, and others are focused on England and Scotland—there are a whole variety.
Then, on top of that, we have a lot of companies in our membership that provide services across these networks. That includes some of the household names, such as Sky Broadband, but also smaller challenger brands or business-focused providers. So it is a really diverse sector and a very ambitious sector. There is a lot of competition in the sector and quite often that gets overlooked when you just look at the sector from the outside and you see a few large companies. As I said, there is a lot of variety in the sector.
Interestingly, because there is so much competition in the sector, our members hardly agree on anything; they always bicker about policy positions. And wayleaves is actually one of the few things where every single member who builds networks is saying, “This is the single biggest barrier to rolling out broadband for me.” That is one of the few areas where literally every single ISPA member says, “Something needs to change.” That is unique. On almost everything else, I could tell you a variety of views, and this is one of the few areas where everybody says, “Something needs to change.”
Julia Lopez
Q
Till Sommer: Yes, sure. The Bill basically does three different things: it is access to third-party land in rural areas; it is the alternative dispute resolution mechanism on a voluntary basis; and the third area is upgrade rights. Upgrade rights, as you heard from the previous panel, is one area where there is slight disagreement because, depending on how you fix that, it might give one set of providers a competitive advantage over the others. For that reason, I do not want to go into too much detail there.
At the basic level, we want more upgrade rights, because it helps to use the infrastructure that is already there, rather than digging up the road again, putting up new telegraph poles or, as was said, just not doing something at all because the money is not there to build in that area if you cannot reuse the infrastructure. Beyond that, I do not want to go into too much detail, or I will get into trouble with my members and they will all talk to you separately.
I will take the other two areas, including access to third-party land. We have a few members who are specifically focused on rural areas. They are effectively going at the moment where Openreach does not have a strong build. They are very ambitious. They have told us quite early on that this Bill is game-changing for them. Access to third-party land in rural areas is simply the one thing that will unlock additional properties in their roll-out plans.
The reason for that is that this part of the Bill effectively mirrors something that was done a year ago for multi-dwelling units in urban areas, because it looks at a problem that our members face; I will use a very simple example. Let us say they want to reach a rural hamlet and there are three routes to it—one across a farmer’s field, one across a railway line and one across a hilly area. The most economical route is across the farmer’s field, but that field might be owned by someone who is not living in the UK, or who does not look at their emails or their post; that farmer just does not respond. At the moment, there is no mechanism to get any sort of forward movement in that situation.
So, what happens is that the provider either moves on, because they decide that it is not economically viable to take one of the other routes to that hamlet, or they say, “Actually, no, we do go across the railway line, but we descope parts of the hamlet. The money just isn’t there any more to connect every single house. It’s still economically viable to go there, round the field, but it doesn’t quite reach the whole village.”
Third-party land access provides a mechanism to get access to wayleaves, or access to land, for a limited period in those very limited circumstances. That will unlock those properties that at the moment are at risk of missing out. I am sure some of you will have seen in the past an announcement from a broadband provider—you might have even done a press release with them—saying that they are building out to x number of houses in the constituency. Then, after two years—after the roll-out programme is done—the number is not quite there. Quite often the reason for that is because the build has been more difficult than expected, there have been unresponsive landlords and the money that was allocated for that area does not quite match the ambitions.
It is worthwhile keeping in mind that roll-out is privately funded. There is Government support for the hardest-to-reach areas and we appreciate that, but outside of that it is privately funded infrastructure, with a return on investment over 20 or 30 years. We need to make an investment case. The companies, our members, need to make the investment case for their investors, for their shareholders and for their owners, that they will at some point get that money back. That is why we sometimes need to make those difficult decisions where stuff is being descoped. That is why the Bill is so important; it helps avoid those areas and unlock that bottleneck.
I mentioned alternative dispute resolution; some of our members are a bit sceptical about it, and that is largely because they roll out on a very large scale. Having to deal with thousands and thousands of ADR processes can be quite daunting, time-intensive and costly. For that reason, we believe it is good that it is done on voluntary basis, with the clear incentive provided in the Bill that the tribunal will take ADR into account. It will help a lot when it comes to negotiations with large landowners; that can include local authorities, where our members often have to negotiate a headlease or a head wayleave agreement. That can be super-complicated, because there is part of the local authority that is really keen on getting broadband, but the people dealing with the wayleave stuff do not really care because it is not in their portfolio. There are then mixed messages coming from the local authority. On the one hand they are saying, “Can you please roll out broadband as quickly as possible,” but on the other hand there are people saying, “It takes another year to negotiate the agreement.” ADR will be really useful to make progress in those very large wayleave cases.
Julia Lopez
Q
Till Sommer: Yes, that is exactly right. If you cannot use existing infrastructure but you are still going to roll out the network, you need to dig up the roads. I assume you have all received lots of letters about roadworks and the problems that they cause. You either dig up the roads or put up new telegraph poles, which is more expensive and is another element of visual impairment and disruption. For that reason it is much more economical—and from a visual aspect, less intrusive—to reuse existing infrastructure.
Julia Lopez
Q
Till Sommer: We do. Basically, a key bit that our members provide to your constituents—their customers—is a router, plus other equipment, that is classed as an internet-connected device under part 1 of the Bill. We are in regular contact with your civil servants on that, to clarify timelines and how the Bill might bite. We do not have any concerns about the idea. We support the idea of the Bill; it is more about the implementation, and ensuring that the supply chain is aware of the new provisions that are coming in.
I have heard from a lot of our members that they have started to talk to their supply chain to say, “By the way, in a year, or in one and a half years, depending on when the Bill will be done, we need to ensure that your products comply with these rules.” Because a lot of the manufacturers are overseas, they are not yet aware of them. Anything that can be done to raise awareness among consumer product providers would be welcome. There are a couple of other bits that go very much into the detail around associated software, when it comes to parental controls, which could be affected. I am happy to write to you on that if you want, but we will talk with the Department about it anyway. It is very much nitty-gritty stuff.
Chris Elmore
The Minister took my last question on part 1, so I am happy to give my time to Back Benchers.
The Chair
Do any Back Benchers have further questions for Mr Sommer? In that case, I thank you very much on behalf of the Committee, Mr Sommer, for the evidence that you have given, and we will move on to the next panel, somewhat ahead of time.
Examination of Witnesses
Rocio Concha and Jessica Eagleton gave evidence.
The Chair
Good afternoon. We will now hear oral evidence from Rocio Concha, director of policy and advocacy at Which? and Jessica Eagleton, senior policy and public affairs officer at Refuge. We have until 5 o’clock for this session if needed, but as we have started ahead of time I am sure that nobody will mind if we finish ahead of time. Please could the witnesses introduce themselves for the record? Then I will turn to the Minister to ask the first question.
Rocio Concha: I am Rocio Concha, director of policy and advocacy and chief economist at the consumer group, Which? Thank you for the invitation to provide evidence. The Bill is quite important for consumers. We have been very supportive of the work that DCMS has done in the Bill. That is very good, and I hope that I will have the opportunity to explain how the Bill can be improved to achieve its objectives.
Jessica Eagleton: Good afternoon, everyone. Thank you for inviting me to give evidence. I am Jess Eagleton, senior policy and public affairs officer at Refuge, which is the country’s largest specialist provider of gender-based violence services. We provide a host of services including refuges, community outreach and a specialist tech abuse team. I am here today to speak to you about technology-facilitated domestic abuse.
Julia Lopez
Q
Jessica Eagleton: Of course. The first thing to say is that we are seeing technology-facilitated domestic abuse becoming ever more prevailing. Technology in all its varieties is providing domestic abusers with a host of new means and methods to perpetrate abuse—to monitor survivors, track their whereabouts, harass them and stalk them—so much so that, as I said, we set up a tech abuse specialist team a couple of years ago. Of the women and children who we supported last year, 59% said that they experienced abuse involving technology, so we are seeing a growing threat.
The specific devices that we are talking about, which are covered by part 1 of the Bill, offer a whole host of ways for abusers to abuse. I am thinking about home security cameras and home security devices such as doorbells, which provide almost 24/7 oversight of a survivor’s movements in the home. Camera and microphone functions can be used to listen in on survivors and capture intimate images without consent, which can then be used later to threaten and coerce the survivor. There are also things such as smart plugs and smart thermostats, which can be remotely accessed and used to frighten survivors—for example, by turning alarm systems on, or putting blaring music on, in the middle of the night. That is happening in the relationship and after it as well, so we are seeing remote access being used in that way.
Some of our concerns about devices relate to access. Thinking about the power imbalance in a domestic abuse relationship, it is the perpetrator who often sets up such devices. They have the password and full admin access, which means that the survivor therefore has limited ways to access a device. We have had some difficulty when talking to companies to try to support survivors to take back control of devices, particularly once a relationship has ended and a survivor has fled. Where they have devices in their home to which the perpetrator still has full admin access, it is particularly difficult to get companies to override that. That is something that we would welcome further work on, in terms of companies taking steps to support survivors to make changes to settings.
Julia Lopez
Do you have anything to add?
Rocio Concha: Your question was on whether the Bill will help consumers to understand these issues, and it will. As you know, one of the principles in the Bill is transparency—when you buy these products, you will know for how long they will be supported. That will help with awareness. There is a lot more that can be done to raise awareness of these issues. There is a limit on what consumers will know about how to protect themselves, so the direction in the Bill about banning default passwords is quite important, as is the point of contact for security vulnerabilities.
Jessica has explained very clearly the harms. There is an opportunity for the Bill to be more assertive. At the moment, the Bill says that the Secretary of State “may” include baseline security requirements. We know that these are not the right baseline security requirements, so the Bill should be clearer that they will be included. We also think that the Bill needs to list the three security requirements, which would give a clear steer to the industry that they are to be introduced. We are worried that the Bill as drafted could lead to more delays in introducing things.
If we want the Bill to achieve its objective, we must be careful to ensure that online marketplaces are within scope. I would argue that they have to be because, as a consumer, it makes no difference whether you buy your smart product on the high street or from Amazon, eBay or AliExpress; you assume that the product is compliant with the regulations in the UK, so it is important that the Bill also covers that area. Otherwise, you know where the bad actors will go—they will be selling insecure products on those online platforms.
Julia Lopez
Q
Rocio Concha: On enforceability, if you do not include online marketplaces, you are leaving a big gap, because these products can come from any country in the world when they are being sold in these online marketplaces.
Another area that is not clear in the Bill is how consumers can get redress. As part of the transparency requirement, suppose that you buy a product that says that it will be supported with security updates for four years, but two years down the line, the manufacturer decides to change its mind and to support the product for only two years. Where would the consumer go in that instance? They bought the product on the basis that it would be supported for a set amount of years.
The other thing that is not clear is who the regulator enforcing this will be. Obviously, we need to make sure that the regulator has the skills, powers and resources to enforce it.
Chris Elmore
Q
Jessica Eagleton: Perhaps I can take your second question first. You are right that we are seeing concerns about these types of products being used to stalk and to monitor. In terms of concrete measures and what the Bill can do in this respect, we welcome some of the security requirements, particularly around the vulnerability disclosure scheme, as a step forward. For example, in the work that we do to support survivors, having that public point of contact and an easily contactable place for a company to go, when we are reviewing these products and putting forward recommendations to companies, is definitely a step forward.
We would have some concerns about situations where companies might publicly disclose security flaws and perhaps not take steps first to address them. We have that concern because that could, in essence, alert an abuser to a new way to abuse a victim. It could alert them to a device that they could purchase or that is already in their home that would provide a new way of compromising, so we would like to see companies taking all reasonable steps to address and action some of these security flaws before there is that public disclosure.
On your second point about services, our tech abuse team is a unique service in the country in providing specialist frontline support to tech abuse survivors, but it is a chronically under-resourced service. Perhaps in the context of this Bill, we would really like to see thought given to a percentage of the fines that the regulators collect for non-compliance by companies going, for example, to fund some specialist support services. I think that would fit within the wider ecosystem of enforcement as well. If we have specialist services that survivors can go to and ensure that they are sustainably funded and able to support survivors, that would contribute to the wider enforcement regime and awareness.
Chris Elmore
Q
Jessica Eagleton: It is not always thought about that the devices can be used in this way. A lot of the focus of companies in this space has been on how to prevent devices from being compromised by unknown third parties—hackers from overseas, for instance—rather than in the context of domestic abuse. Thinking about things like passwords and default passwords is a welcome step, but in the kind of relationships that we are talking about and dealing with on a daily basis, the perpetrator will force the survivor to divulge the passwords to their devices and all their online accounts. That is not necessarily always thought about by these companies.
However, we are engaging with the companies as much as we can on what we are doing as a smallish team. Thinking through what can be done in future, it is about continuing to place emphasis on and put work into safety by design, which means ensuring that, from the get-go, product manufacturers and designers are thinking about how these products could be misused by domestic abusers. It also means working in collaboration with specialist violence against women and girls services to ensure that those features are designed out as far as possible.
Chris Elmore
Q
Rocio Concha: In terms of the Bill, an example could be to change or tighten the definition that you have of distributors. In terms of implementation, online marketplaces are the gateway between the consumers and the manufacturers of these products. They are the ones that have the power to make sure that these products comply with the law. Let me give you an example. We routinely do product tests to identify security vulnerabilities with these products. Often when we go to the online marketplaces, we get the answer that, because there is no regulation, they cannot take these products out.
We need the regulation to be clear that any smart product needs to comply with these baseline security requirements. Also, we need regulation to put responsibility on the online platforms to make sure that they are monitoring proactively which products are being sold on their platforms. That is key, and I feel that it is not optional. It is quite clear what is going to happen. There are bad actors out there, manufacturing products that are not going to comply with the baseline requirements. They know that there are not going to be the necessary checks in there by the online marketplaces, but the consumer does not know. It is impossible for the consumer to make an assessment of whether the product will be secure or not. Unless we put in regulation, you can see where all these bad actors are going to go.
Sally-Ann Hart (Hastings and Rye) (Con)
Q
Rocio Concha: I personally think that yes, the Government should provide information to consumers so that they are aware of this. Organisations such as ours also play a role, and we play it. We continuously publish our findings on security vulnerabilities and the sorts of things that consumers can do to protect themselves. There is a need for more information for consumers in general so that they can be aware that when they put these products in their homes, unless they take certain steps and buy products that meet the regulations that we hope will soon be introduced, they are putting themselves at risk.
Jessica Eagleton: I would agree with what my fellow panellist has said. When we think about tech abuse, we see that awareness of it is quite low among the general public. In fact, in a survey we ran last year the results were that two thirds of women did not know where to go for information if they thought that a device in their home was compromised. There is a role there for that awareness piece. At Refuge, the approach we tend to take is to empower survivors to use technology safely and to take back control of their products and technology. We have developed a range of resources to do that, but we would welcome more work and more efforts on this more widely.
Sally-Ann Hart
Q
Jessica Eagleton: The national domestic abuse helpline is the gateway to a wide range of domestic abuse services across the country. If she phoned the national domestic abuse helpline, we would be able to help her there, and help her with safety planning and next steps. We have some resources on our website and have recently developed a home safety tool that talks you through various devices in the home and gives tips on how to secure them.
Kevin Brennan
Q
Rocio Concha: Yes, we would support that. If it is not possible to include it in the Bill, we would ask that the Bill allows for it to be included in secondary legislation in the future. We would be very supportive of introducing minimum supporting periods for products.
Kevin Brennan
Q
Rocio Concha: No, we have not, but we have provided amendments in other areas. We have provided an amendment to allow the Bill to introduce this through secondary legislation in the future, and there is an amendment there. We would be happy to discuss that in more detail.
Kevin Brennan
Q
Rocio Concha: It depends. On these baseline security requirements, we firmly believe that the Bill should list them and be very clear that they will be included. In terms of the minimum security periods you provide to different products, it will depend on the different products and we do not want to delay the legislation to get to the bottom of that. It would be preferable to allow that legislation to be introduced as secondary legislation.
Kevin Brennan
Q
Jessica Eagleton: Some of the most common devices we see reported to us include your smart home hubs, smart voice assistants, smart TVs, plugs, light switches and fitness trackers. Those are some of the most commonly misused. I myself have various different connected products at home.
Perpetrators quite often set up a host of different devices in the home. Recently, we supported a woman whose former partner had bought a whole host of devices, including smart cameras, a smart doorbell, a smart thermostat—all those kinds of things. She and her child felt like they were constantly being monitored; they talked about how exhausted they were by that constant surveillance.
Kevin Brennan
Q
Jessica Eagleton: It is definitely a big consideration. That is why we advise that people get in touch with us and then we can help with safety planning. If a perpetrator has access to those devices and a survivor moves to take back control of them and change the settings, that can be detected by someone with that access. We would work with a survivor to safety-plan how to control her technology.
Kevin Brennan
Q
Jessica Eagleton: My fellow panellist may have some thoughts here as well, but that could certainly be useful for industry. Thinking about the general low awareness of tech abuse, it could be useful to provide industry with some certainty. It could play into that broader awareness piece, as well.
Ruth Edwards
Q
Rocio Concha: Is this about the length of time a product will be supported for? That information should be provided clearly at the point of sale, before you make a decision, so that you know you are going to buy something that may be supported for only two years, versus another product that may be supported for longer. That will hopefully provide everyone with the incentive to extend the number of years for which a product is supported.
We also need to make sure that that information is very clear. We should avoid “up to three years” and “for the lifetime of the product”, which do not really mean much for the consumer. For the consumer to be able to act on that information, it has to be very clear and easy to find when they are making that decision. That is what I would say.
On changing the security, I am a little worried about the industry saying that it may change the period during which a product will be supported. If that change is to extend that period—great; if it is to reduce it, that is very bad. At that point, the consumer has made a decision and bought a product because that product was going to be supported for longer.
If someone was told that a product would be supported for four years, and they later found out it was two years, that product would not be fit for purpose. Under the Consumer Rights Act, you have a right on the same grounds as the Consumer Protection Act 1987.
The Chair
If there are no further questions from Committee members, that brings today’s sitting to a close. On behalf of the Committee, I thank the witnesses for their evidence this afternoon. The Committee will meet again on Thursday at 11.30 am in Committee Room 14 to begin line-by-line consideration of the Bill.
Ordered, That further consideration be now adjourned. —(Steve Double.)
Product Security and Telecommunications Infrastructure Bill (Third sitting)
Thursday 17th March 2022
(2 years, 1 month ago)
Public Bill CommitteesRead Full debate Product Security and Telecommunications Infrastructure Act 2022 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 17 March 2022 - (17 Mar 2022)
The Committee divided: - Ayes: 4 / Noes: 8 - Question accordingly negatived.
The Committee divided: - Ayes: 4 / Noes: 7 - Question accordingly negatived.
The Committee divided: - Ayes: 4 / Noes: 7 - Question accordingly negatived.
The Committee divided: - Ayes: 4 / Noes: 7 - Question accordingly negatived.
The Committee divided: - Ayes: 4 / Noes: 7 - Question accordingly negatived.
The Chair
We are now sitting in public and the proceedings are being broadcast. Before we begin, I have a few preliminary announcements. Hansard colleagues would be grateful if Members could email their speaking notes to hansardnotes@parliament.uk. Please switch electronic devices to silent. Tea and coffee are not allowed during sittings, but I have no guidance on jelly babies.
We now begin the line-by-line consideration of the Bill. The selection list for today’s sitting is available in the room. It shows how the selected amendments have been grouped together for debate. Amendments grouped together are generally on the same or a similar issue. Please note that decisions on amendments do not take place in the order in which they are debated, but in the order in which they appear on the amendment paper. The selection and grouping list shows the order of debates. Decisions on each amendment are taken when we come to the clause to which the amendment relates.
The Member who has put their name to the leading amendment in a group is called first. Other Members are then free to catch my eye to speak on all or any of the amendments in that group. A Member may speak more than once in a single debate. At the end of debate on a group of amendments, I shall call the Member who moved the leading amendment again. Before they sit down, they will need to indicate if they wish to withdraw the amendment or seek a decision. If any Member wishes to press any other amendment in a group to a vote, they need to let me know.
Clause 1
Power to specify security requirements
Chris Elmore (Ogmore) (Lab)
I beg to move amendment 6, in clause 1, page 1, line 17, at end insert—
‘(2A) The Secretary of State must exercise the power in subsection (1) so as to specify security requirements which make mandatory each of the first three guidelines in the Code of Practice for consumer IoT security published by the Department for Digital, Culture, Media and Sport on 14 October 2018 (“no default passwords”, “implement a vulnerability disclosure policy” and “keep software updated”).”
This amendment would set out the three security requirements expressly in Part 1 of the Bill rather than it being defined in future regulations.
The Chair
With this it will be convenient to discuss the following:
Clause stand part.
Clauses 2 and 3 stand part.
New clause 3—Report on security risks to UK consumer connectable products—
‘(1) The Secretary of State must prepare a report on the security risks to UK consumer connectable products—
(a) within the period 3 months beginning with the day on which this Act receives Royal Assent, and
(b) every 12 months thereafter.
(2) Any report prepared under subsection (1) must be laid before Parliament.’
This new clause would require the Secretary of State to lay before Parliament a report on the security risks to UK consumer connectable products.
Chris Elmore
It is a pleasure to serve under your chairmanship, Mr Stringer.
This important legislation establishes, through regulations, three core security requirements for “connectable products”. The requirements derive from the voluntary 2018 “Secure by Design” code introduced by the Department for Digital, Culture, Media and Sport. The inclusion of these three requirements is, without doubt, a step that the Opposition welcome. However, we believe that the legislation can be improved, and that the three security requirements, rather than being defined in future regulations at the discretion of the Secretary of State, should be expressly set out in the Bill. That would be beneficial for two reasons. First, it would give manufacturers and distributors a greater understanding of the legal obligations that they face, thus speeding up the entire process. Secondly, it would ensure that the consumer was better protected, which I am sure we all agree would be a good thing. The consumer rights group Which? emphasised that when it gave oral evidence on Tuesday.
New clause 3 would require the Secretary of State to publish a report on the security risks to UK connectable products. On Tuesday, Madeline Carr, professor of global politics and cyber-security at University College London, said that she does not have an Alexa in her house because of the security risks that those devices, and others like them, pose. Tellingly, she also said that the Bill as constituted would not give her sufficient confidence to purchase one. Given that, and given the tragic scenes unfolding following Russia’s invasion of Ukraine, and the willingness of that rogue regime to engage in state-sponsored cyber-warfare, the Opposition believe it is in the public and national interest to understand how secure our connected products really are. We are becoming more reliant on smart devices in our daily life, both professionally and personally. It is imperative that the security of these devices is routinely monitored and reported on.
As I stated on Second Reading, the Opposition support the Bill, but believe it can be strengthened. Amendment 6 and new clause 3 would ensure that consumers were better protected and more aware of the threats facing their connected devices. As such, I believe that all Committee colleagues should support amendment 6 and new clause 3.
The Minister for Media, Data and Digital Infrastructure (Julia Lopez)
It is a pleasure to serve under your chairmanship, Mr Stringer. I apologise for giving you a dilemma about the advice on jelly babies. I will start with a few words about the importance of the Bill. As we heard from our panels of witnesses this week, and as we know from our increasing dependence on technology, improving protection for consumers and networks from a range of harms associated with cyber-attacks is incredibly important. In the first half of last year, there were 1.5 billion attempted compromises of internet of things devices—double the 2020 figure for the same period. Voluntary standards, such as the 2018 code of practice for consumer IOT security, are not being adopted quickly or consistently enough. That is why we need legislation to progress security in the design of consumer connectable products.
Before turning to amendment 6, I thank the hon. Member for Ogmore for the constructive and helpful way that he has approached the legislation and for the Opposition’s broad support of it. As this is the first Bill that I am taking through the House in its entirety, I am particularly grateful for that constructive approach. It may reassure him that the Government are committed to introducing security requirements based on the first three guidelines through regulations at the earliest appropriate opportunity. We have consulted on those security requirements and have communicated them extensively.
We have not been vague on the matter. In April 2021, we published our response to the call for views on consumer connectable product security legislation. We stated in detail how the three security requirements would work. When the Bill was announced by Her Majesty at the start of the Session, we repeated that commitment. Indeed, as hon. Members will see in the Bill’s explanatory notes, we have again committed to those three requirements. We made that clear from the start for an important reason: we need industry to act and prepare for implementation. We do not want surprises for manufacturers, importers or distributors. They know what they have to do.
Amendment 6 is unnecessary, but might also be dangerous. We are keen to ensure that the legislation retains flexibility, so that it can adapt to and reflect the changing threat landscape, and the security requirements needed to address it. What might seem like a no-brainer security requirement today might become a security threat or barrier to security innovation in years to come.
Amendment 6 reaches back to 2018, when our code of practice was first published. Security requirements have developed since then. When the Bill is implemented, we do not think it should be constrained by what was appropriate five years ago. The requirements we will introduce are based on the first three guidelines in the code of practice, but they also contain necessary improvements. They are up to date, more detailed and have been translated into practical requirements that businesses can implement to get the right security outcomes without unnecessary burden. Stakeholder engagement and impact assessment work conducted since 2018 ensures that the guidelines are nuanced, and are in a robust and enforceable statutory framework that delivers optimal security outcomes.
Finally, hon. Members may not be aware that because this new legislation will impact on manufacturers globally, we have given notice of the Bill to the World Trade Organisation. We invited comments on our proposals two years ago, and when the Bill was introduced to Parliament, we gave notice again. We have worked to ensure that all manufacturers understand our intentions. Amendment 6, if accepted, would cause confusion by taking us back to 2018, and away from the more developed position we have reached on the three principles. That would cause market confusion, require new notification to the WTO, and potentially delay this vital regime from coming into force. With those reassurances, I hope the hon. Member will feel able to withdraw his amendment.
Clause 1 is needed to provide the Government with the necessary powers to specify and mandate security requirements, through secondary legislation, that businesses must comply with. There is a common notion that Governments are behind the curve when it comes to regulating technology. not in this case. By establishing a flexible and futureproof regulatory framework in this way, the Government can be agile and proactive in amending and introducing security requirements through regulations, in lockstep with tech innovation. Parliament will be able to scrutinise any future security requirements designated through the secondary legislation process and, as new threats emerge and international standards develop, we can act and set new security requirements, keeping consumer connectable product security up to date and fit for the future.
The purpose of clause 2 is to provide further detail about how the Secretary of State’s power to specify security requirements can be used. Clause 3 is essential because it provides the Secretary of State with powers to specify circumstances in which a person is deemed to have complied with the security requirements. The clause, when exercised, would provide more than one route to compliance and would provide the necessary flexibility to accommodate and recognise international standards and mutual recognition agreements where appropriate.
I turn to new clause 3. In practice, it would commit the Government to reporting on a fixed basis on the security risks posed by products affected by the Bill. Those reports would be laid before Parliament. Cyber-security is definitely not an area where the Government hold back on publishing information. If we are to raise the cyber-resilience of the nation, we need to ensure that everyone is clear about the threat. In December, we published our national cyber strategy. The Government will continue to publish regular reports on our progress on that strategy, as we did with regard to the previous strategy. The Government also publish an annual report that surveys cyber-breaches across the economy. This report, together with others, forms a key part of the evidence base used to inform organisations about action to take to raise security standards. Indeed, the breaches survey meets the quality threshold to be managed as a set of official statistics.
Our National Cyber Security Centre is also a model of transparency. It is there to advise businesses, and guide them towards better managing cyber-threats. It publishes an annual report, and for those who want to focus on consumer connectable products, it provides specific advice on those, too. Parliament is already regularly kept informed of cyber-security matters; our regular publications are placed in the Library. Our national strategy, implemented with £2.6 billion of investment, is overseen by the Public Accounts Committee. The Intelligence and Security Committee and the Joint Committee on the National Security Strategy provide further oversight. Also, there are mechanisms for holding the Government to account in the manner intended by the provision, such as regular parliamentary debates and questions.
Cyber-security is a fast-moving and sensitive topic. A fixed-period reporting clause that imposes an obligation to report on security risks may duplicate existing activity. Such a system would also lack the agility necessary to enable us to report quickly when threats are identified. It may reassure the hon. Gentleman to know that the Secretary of State will be required to review the effectiveness of the Bill’s enforcement regime; they, or the designated enforcing authority, will be required to report on that to the relevant departmental Select Committee after Royal Assent. The enforcement authority will also report its activity and findings, where appropriate. The measures already in place will likely meet the intention behind new clause 3. For the reasons that I have set out, I do not accept the need for the new clause.
I turn to the points that the hon. Gentleman raised about Dr Carr’s concerns about Alexa, which I also found eye-catching. A lot of secondary legislation comes with this Bill, and that will hopefully reassure Dr Carr. I also note the comment made by a lot of our witnesses: we can never have 100% security with those devices. I therefore commend clauses 1 to 3 to the Committee.
Kevin Brennan (Cardiff West) (Lab)
Good morning, everybody. Happy St Patrick’s day to everyone. I congratulate the Minister on her first Bill. I have been through the process many times, and it is an exciting and proud moment to lead on a Bill for the Government for the first time. When I did it, my father, who was from West Cork, said, “Not bad for someone from the peat bogs of West Cork.” I am sure that the Minister’s family are equally proud of her achievement.
I want to raise a couple of general issues, as we are debating the first three quarters of the Bill in this grouping. I congratulate the Minister for providing such a comprehensive impact assessment on the Bill. I was slightly confused by the figure for the cost of business, which is set at net present value, and is put at “£1,246.9.9” million. That figure looks like a typo. I wondered what the correct figure was, and if the Minister could provide it. I suggest it is just the one “point nine”.
This is a very significant piece of legislation, given the impact it will have on consumers and business. It is very technical. Page 8 of the impact assessment details the Government’s key assumptions about how the Bill will impact on businesses. Businesses will have to dispose of devices that no longer satisfy the criteria that the Minister is likely to set. The impact assessment’s optimistic assessment of what percentage of devices will have to be disposed of is 5%. Its working assessment is 45%. The figure it is using, however, for the impact on business is that 10% of devices will have to be disposed of by businesses.
Julia Lopez
I thank the hon. Member for Cardiff West for his contribution and his kind comments. I will have to get back to him on the precise figures that he identified in the impact assessment. However, in relation to the breadth of the impact assessment, he will know from this legislation that we are taking a broad range of powers. As we debated earlier, that is very deliberate because this is a fast-moving area. Technology is developing faster than Parliament can regulate it, which is a major challenge for Governments around the world. The Bill will help us to be nimble and agile in how regulate that technology.
A lot of the issues that the hon. Gentleman has concerns about will be something for secondary legislation, which we will be developing hand in glove with businesses so that we understand what is changing in the technological world and what impact that will have on matters such as the disposal of devices. I share his concerns about the environmental impacts if we get the regulations on that wrong—none of us wants to see a lot of technology become redundant.
We are trying to help consumers have more information so that if someone buys a device, they do not necessarily have to dispose of it simply because the period for which the manufacturer says it is covered has expired. It will be up to the consumer to decide whether to keep that device if they think it is less secure than it otherwise might be. It has been controversial to take these broad powers. We understand the concerns that any Parliament would have about the level of scrutiny it will have. However, the Government think that this is right because, as I say, we have to maintain that agility.
The hon. Member for Cardiff West referenced the points raised by Dr Carr. As I said earlier, I share those concerns. What we are trying to do is raise the level of security overall; we want to help consumers and manufacturers to understand this as an issue. This was initially a voluntary code, which did not do enough to make manufacturers take the cyber obligations seriously. There was an interesting discussion on the panels earlier this week when one contributor—I cannot remember who it was exactly—said that the legislation will give boards the spark or impetus to discuss and get funding for these kinds of cyber-security requirements for their products. If it is voluntary, it is very hard for anybody to make the case within their company that they need to take cyber-security seriously.
We hope that the secondary legislation will allay some of Dr Carr’s concerns. We will never have 100% security, but we hope that these provisions will raise the bar overall and help to raise consumer and manufacturer awareness of cyber as a whole. I hope that those comments will reassure the hon. Gentleman. I also assure him that we will look at how to get the balance right in the secondary legislation, and we will be in close contact with businesses as we do so.
Chris Elmore
I listened to what the Minister had to say, in particular in relation to amendment 6. I take her at her word; it is a probing amendment, so I will withdraw it on the basis that she will bring forward secondary legislation in relatively short order. As she mentioned, cyber-security is a fast-paced and changing environment, so it is important that we do not wait a number of years for additional improvements to legislative competence.
On the basis of what the Minister said, I am also happy not to move new clause 3. However, I wonder whether she could write to me setting out the reporting periods that she mentioned, particularly in terms of the DCMS Committee, following Royal Assent—assuming that the Bill gets Royal Assent, which I am sure it will—as well as the other reporting obligations that she says the Secretary of State or reporting officer will have. The new clause seeks to place a requirement on the Secretary of State specifically in this new legislation. If the Minister feels that those things are already in train or are part of the reporting process, that is fine, and I am happy not to move the new clause. However, it would be good to have that list for future understanding—particularly if reporting does not take place, in which case the Opposition will hold the Government to account.
Julia Lopez
I am happy to write to the hon. Gentleman and offer those assurances. A new body will also be set up, which will probably have its own reporting requirements in relation to this legislation. These things will be developing, but I am happy to offer him the assurances he requested.
Chris Elmore
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clauses 1 to 3 ordered to stand part of the Bill.
Clause 4
Relevant connectable products
Question proposed, That the clause stand part of the Bill.
Julia Lopez
Clauses 4 to 6 define the products to which the new regulatory regime will apply. Clause 4 introduces the terms “internet-connectable product”, “network-connectable product” and “excepted product”. Clause 5 defines the terms “internet-connectable” and “network-connectable”. It is a pivotal clause in capturing the necessary products that make up a huge part of the internet of things threat landscape. Any network is only as secure as its weakest link, and that could be a single consumer connectable product.
Focusing on a product’s capabilities—instead of attempting to exhaustively list all consumer connectable products—is part of our agile, future-proof approach. We are ensuring that the Bill will remain relevant and effective by capturing new consumer technologies that come to market, based on their capabilities and the risks they present.
Many products captured by the Bill are capable of connecting to the internet, exposing them to remote access and attack. Those are “internet-connectable products”, such as routers, smartphones and certain smart appliances. Some products captured by the Bill are not able to connect to the internet directly, but can connect to other products. In doing so, they can form, and contribute to the formation of, networks, meaning that vulnerabilities in those products can open the door to cyber-attack. Those are “network-connectable products”, such as certain smart lightbulbs, smart home products, and headphones.
Clause 6 defines the term “excepted product”. It allows the Secretary of State to except products from the scope of the Bill via regulations. The Government intend to except products from the scope of the Bill where inclusion would subject them to double regulation or be disproportionate to their risk profile. The Government have consulted on that approach. Products such as electric vehicles, medical devices and smart meters will be excepted from scope because they are already, or soon will be, covered by alternative regulation. I therefore commend clauses 4 through 6 to the Committee.
Question put and agreed to.
Clause 4 accordingly ordered to stand part of the Bill.
Clauses 5 and 6 ordered to stand part of the Bill.
Clause 7
Relevant persons
Chris Elmore
I beg to move amendment 7, in clause 7, page 5, line 24, at end insert—
“(5A) A person who provides an online facility through which a distributor makes a product available in the United Kingdom is also a distributor.”
This amendment would ensure that online marketplaces are considered to be distributors and are thus subject to the security requirements of the Bill.
Chris Elmore
The amendment itself is fairly self-explanatory. However, I will take the opportunity to speak briefly on it in the hope of persuading Conservative Members—and indeed the Minister—to support it.
Clause 7 defines the relevant persons subject to the security requirements as being manufacturers, importers and distributors. Crucially, however, online platforms such as eBay and Amazon are not defined as falling under any of those categories. To my mind, that is both deeply concerning and preposterous, given that, under any definition, online platforms such as the two I have just mentioned are without doubt distributors themselves.
I am sure everyone in this Committee has either sold or bought something through eBay or Amazon. The oversight in the Bill has real-world consequences, as products sold on those online platforms will not be policed in the same way. That is problematic, as research by groups such as Which?—which we heard evidence from earlier this week—has consistently shown that online marketplaces are flooded with insecure products, while the Bill would do nothing to increase the legal responsibility online marketplaces have for the safety and security of products sold through them.
In tabling the amendment, we are merely expanding the number of organisations that the security requirements would apply to, in order to better protect all our constituents, which is the expressed aim of the Bill according to the Minister’s opening remarks and indeed those of the Secretary of State at Second Reading. I therefore urge the Minister and all Committee members to support the amendment.
Kevin Brennan
I support my hon. Friend in pressing the amendment to a vote. As we heard from the Minister, the Bill covers quite a lot of different devices. The examples given by the Government in their impact assessment include the following:
“Smartphones; connectable cameras, TVs and speakers; connectable children’s toys and baby monitors; connectable safety-relevant products such as smoke detectors and door locks; Internet of Things base stations and hubs to which multiple devices connect; wearable connectable fitness trackers; outdoor leisure products, such as handheld connectable GPS devices that are not wearables; connectable home automation and alarm systems; connectable appliances, such as washing machines and fridges”
and, as we have heard, “smart home assistants”, including things such as Alexa-type smart speaker products.
Julia Lopez
I thank the hon. Members for Ogmore and for Cardiff West, and I am happy to address their concerns. The Bill covers obligations on manufacturers, importers and distributors, but I will provide a bit more detail.
Clause 7 specifies which relevant persons will be responsible for ensuring that the security requirements are properly complied with. In that regard, a “relevant person” is defined as a manufacturer, importer or distributor of a relevant connectable product. As a result, amendment 7 is wrong to suggest that online marketplaces are exempt from this new legislation. Online marketplaces do not just offer products on behalf of third parties, but are often acting as the retailer, so in those cases the full security requirements apply. I accept that there may be instances in which the online marketplace is not the distributor. None the less, it is necessary for the third party operating in the marketplace to comply with the security requirements, and it is not just that one party who carries liability under the Bill: the manufacturer and importer also have responsibility. We think we have taken a belt-and-braces approach in that regard.
We have also worked closely with industry to make sure the regulation is proportionate and fits the wider regulatory environment for product safety. Manufacturers care a great deal about these regulatory requirements. On Tuesday, we heard from a representative of Google, who described how it works to comply with requirements in many different jurisdictions. Over the past three years, hundreds of manufacturers have engaged with my Department through the many public consultations and industry discussions we have had. The hon. Member for Ogmore gives the impression that amendment 7 would provide consumers with a vital line of defence, but that is not the case: there are already multiple lines of defence in this Bill.
It is also worth noting that consumers can never be 100% protected by regulation—a point that we have already discussed this morning. We need to have a broader approach to raising national cyber-resilience, which is why in December we published our national cyber strategy. The Cyber Aware campaign is ongoing—hon. Members may have seen the advertisements last weekend, or the ones on the radio and online this week. We also have a range of school programmes designed to reach parents and teachers in order to raise cyber-security awareness, and the Home Office, the police and the NCSC run regular campaigns at a local level in every region of the country. In relation to the comments made about Ukraine, the point is even more important because of the context in which we are operating.
Kevin Brennan
Just to be clear, if, for example, I purchased a connectable baby monitor online through Amazon, but it came from a third-party supplier—which is quite common when customers are given that list of products to buy—how would the Bill impact on that device and its availability in the UK?
Julia Lopez
As I say, we are putting requirements on not just manufacturers, but the importer. The importer would be under an obligation to check whether the product fulfilled some of the requirements we would have for it, as would the distributor. I would hope that, along the chain, that product would have been checked several times to make sure it complies.
We have done a lot of work on general cyber-resilience. I will take this opportunity to add that it is also important that we as Members of Parliament try to make our constituents aware of the increasing challenges we face with cyber-resilience, and that we all need to have our own cyber-hygiene in that regard.
The amendment is well intentioned—we understand where the hon. Member for Ogmore is coming from—but it is drafted in a way that would have a much broader reach than just online marketplaces. It would impose security requirements on businesses that cannot comply with them, such as advertising platforms and website hosting services. Distributors use many online facilities offering a vast array of cloud services to support e-commerce to make their products available. As drafted, the amendment would extend duties beyond what is intended.
The Government have carefully considered the amendment. It is clear that our intention is to secure consumer connectable products in the most effective and proportionate manner, without hindering business growth and the online retail facilities enjoyed by consumers. For the reasons I have set out, I am not able to accept the amendment. I hope the hon. Gentleman will consider withdrawing it.
I turn now to chapter 2 of the Bill and clauses 8 to 25. These clauses place duties on businesses in the supply chain of a consumer connectable product to comply with security requirements. Compliance is fundamental to the operation of the regulatory regime. Under these clauses, manufacturers, distributors and importers must prepare, or ensure the presence of, a document to accompany the product that states that, in the opinion of the manufacturer, it has complied with the security requirements, before that product is made available in the UK. I note the point that was made about baby monitors. I hope that, in that process, there would be clear information and a record provided with the product that stated compliance.
The clauses in chapter 2 also require that businesses take all reasonable steps to investigate a compliance failure or potential compliance failure. That is vital to hold businesses accountable for complying with their security requirements and to mandate investigation of potential compliance failures. If compliance failure has occurred, businesses in the supply chain must take all reasonable steps to prevent the product from reaching UK customers and remedy the compliance failure. The measure is needed to ensure that insecure products do not remain on the market and that those that have not yet reached UK customers are prevented from doing so.
Finally, the clauses in chapter 2 require manufacturers and importers to retain records of compliance failures and investigations for at least 10 years. The Secretary of State is able to request this information to investigate and to enforce the legislation. These duties encourage ongoing compliance and accountability. The records will allow a clear audit of the importer’s and manufacturer’s activities, so that we can have effective enforcement.
Chris Elmore
I have listened to the Minister. The Opposition are not in any way suggesting that the Government do not do an awful lot on cyber awareness-raising. All Governments could do more—that is the nature of teaching and learning and of being able to get our constituents to understand the cyber-security space and the impact that it can have on their homes.
In response to my hon. Friend the Member for Cardiff West, the Minister mentioned the belt-and-braces approach. However, organisations such as Which? say that there is an exemption for online marketplaces such as Amazon and eBay. The Online Safety Bill has of course been published today, and there are economic crime impacts linked to this. If this is a belt-and-braces approach, as the Minister says, surely another level of protection would be to include the online marketplaces. She says there are three stages that could be protected—importer, product design and distribution—but there is this gap through which some products could come. Therefore, I am not minded to withdraw the amendment and would ask the Committee for a decision.
Question put, That the amendment be made.
Julia Lopez
Clause 26 gives the Secretary of State responsibility for enforcing the product security provisions in the Bill, and clauses 27 to 52 create the regime. This allows the Secretary of State to authorise another person, and pay them, to carry out enforcement functions. The provisions provide powers to issue enforcement notices—including compliance notices, stop notices and recall notices—as well as powers to forfeit products and issue monetary penalties.
Additional enforcement powers include the power to seize and detain products, publish information about compliance failures and the details of the enforcement action taken, recall products, and disclose information as necessary to conduct enforcement activity. The Bill includes two offences—the offence of failure to comply with an enforcement notice and the offence of purporting to act as authorised to exercise enforcement function—as well as adopting within the PSTI regulatory regime the offences found in schedule 5 to the Consumer Rights Act 2015. I commend the clauses to the Committee.
Question put and agreed to.
Clause 26 accordingly ordered to stand part of the Bill.
Clauses 27 to 52 ordered to stand part of the Bill.
Clause 53
Guidance
Question proposed, That the clause stand part of the Bill.
Julia Lopez
Clauses 53 to 56 cover guidance and interpretation of the Bill. They allow for guidance to be issued to support relevant operators to meet their obligations. They also set out the technical terms and interpretations of the commonly used terms throughout the Bill. I commend the clauses to the Committee.
Question put and agreed to.
Clause 53 accordingly ordered to stand part of the Bill.
Clauses 54 to 56 ordered to stand part of the Bill.
Clause 57
Meaning of “occupier” in relation to land occupied by an operator
Question proposed, That the clause stand part of the Bill.
Julia Lopez
It is crucial that, where telecoms operators have apparatus installed on land, they can request new or additional code rights, allowing them to maintain, expand and improve their existing networks, improving service and connectivity, to the direct benefit of consumers. I hope we all wish to see that. At present, this is not always possible. There are some specific scenarios in which operators with apparatus already installed on land, such that they occupy the land, are unable to obtain new code rights or follow an existing statutory process to have an agreement that has run its course replaced by a new agreement, which I will refer to today as a renewal agreement.
For example, in some cases the parties might have an existing agreement that, for whatever reason, proceeds on a more informal basis and is not set out in writing, or otherwise does not meet the necessary criteria for it to be renewed under an existing statutory process. The operator is therefore still authorised under the existing agreement to keep their apparatus on the land, but under the current legislative framework cannot pursue a renewal agreement through an existing statutory process.
Kevin Brennan
The Minister says that the Government might revisit the clause, perhaps in the other place. If somebody who is operating equipment on the land is potentially deemed legally to be the occupier, under the provisions in the clause would the person who would then be asked to consult about further extending any arrangements be the landowner? Is that the assumption in the clause, in most instances?
Julia Lopez
As I said, this is a very complex and technical area. I do not want to provide the hon. Member with an incorrect answer, because this is one of the issues on which we are still in discussions with industry to ensure that we get it right. I believe that is the intention, but I will have to get back to him.
Kevin Brennan
Some inspiration might come to the Minister during the course of the debate. It seems to me quite an important question. I thought that what she meant was that, in an instance where somebody is deemed to be the operator on the land, because they have the equipment there, they obviously cannot grant themselves an extension of permission, and so it would be sensible for there to be a way to go to the landowner in order to achieve that further agreement. If that is not the case, that is quite important, because who will they go to in that instance? She said that if the landowner or interested party could not be identified, it would be people with a principal interest. What sorts of people would that be? Would it be the local community, or neighbours of the land involved? Even if she cannot offer an explanation now, it is quite important that the Committee at least has a grasp of what is intended by the clause.
Julia Lopez
This is tricky, because I wish I could provide greater clarity, but I cannot, which is obviously an unsatisfactory position to be in. In this case, I think the court would be approached to make a decision if the landowner was not in a position to grant those rights and they could not get a position out of the landowner. The intention, I think, would be for it to be decided at a legal level. I apologise that I cannot provide clarity.
Without the clause, there is a gap in the legislation that prevents operators who need code rights from being able to obtain them. This has potentially adverse consequences for consumers and businesses, with the risk of service disruptions and unnecessary delays in the delivery of improved capacity and enhanced services. As we all increasingly rely on digital services, it is important to address this situation. This is an area of active discussion, because we want to make sure we get it right. I believe it would be the case that, if the landowner were not in a position to offer the rights, the operator would go to the court to seek redress.
Kevin Brennan
I understand the difficulty the Minister faces, but it would be helpful if there was official support for her at times when technical questions are asked. It is important that the Committee gets a full explanation before agreeing to a clause. The sensible thing to do in this instance would be for the Government to revisit the clause—possibly on Report. It would certainly be of help if, by then, a clearer view as to the intention could be given to Members of the Committee and people interested in the Bill. I am sure there is a fairly straightforward answer to the question, so we should make note of the fact that it needs to be dealt with at some point.
Julia Lopez
I acknowledge that this is legally a very complex area. It is something that we have not entirely settled on, and it is under active consideration. We will come back to the Committee if we believe we have not got the policy intention correct. I am sorry that I was unable to address the hon. Member’s point in greater detail, but I am reluctant to provide information that might not be correct.
Question put and agreed to.
Clause 57 accordingly ordered to stand part of the Bill.
Clause 58
Rights under the electronic communications code to share apparatus
Julia Lopez
I beg to move amendment 1, in clause 58, page 41, line 25, at end insert—
‘(4A) In paragraph 13 (access to land)—
(a) in sub-paragraph (1)(a), for “paragraph 3” substitute “paragraph 3(1)”;
(b) in sub-paragraph (2), for “paragraph 3” substitute “paragraph 3(1)”.
(4B) In paragraph 38 (right of landowner or occupier of neighbouring land to require removal of electronic communications apparatus), in sub-paragraph (3), for “paragraph 3(h)” substitute “paragraph 3(1)(h)”.’
This amendment is consequential on the amendment made by clause 58(2)(a) to paragraph 3 of the electronic communications code.
Julia Lopez
Clause 58 deals with the sharing of telecommunications apparatus between operators within the electronic communications code. It inserts a right to share apparatus into paragraph 3 of the code, which sets out a list of rights that are statutory “code rights.” The code rights in paragraph 3 must be conferred on an operator by an occupier or imposed by a tribunal. The 2017 code reforms introduced paragraph 17 automatic rights, allowing operators to upgrade or share their apparatus without the need for an agreement. Those automatic rights are separate from the paragraph 3 code rights and are subject to strict limitations.
Since their introduction, there has been confusion about the interaction between the paragraph 17 automatic rights and the paragraph 3 code rights. In particular, while “upgrading” is a paragraph 3 code right, sharing is not. Clause 58 addresses this by making apparatus sharing a paragraph 3 code right that an operator—the “first operator”—can request to be included in an agreement to which the code applies. Clause 58 also amends the statutory purposes in paragraph 4 of the code to include sharing activities.
Apparatus sharing is a cost-effective way for operators to extend their networks without having to build extensive infrastructure themselves, helping to deliver greater coverage, capacity and consumer choice, while reducing impacts on the environment and disruption caused by installation works. As with the other code rights, if agreement on rights to share cannot be reached consensually, an operator may ask a tribunal to impose the requested rights. In those circumstances, the tribunal will apply the public benefit test and the statutory valuation regime, as it already does for other code rights.
If the right to share is a statutory code right, the factors that a tribunal will consider in deciding whether such a right should be imposed—and if so, on what terms—will be the same as those for all other code rights. Including a right to share apparatus in the paragraph 3 code rights will therefore provide greater certainty for all parties and support smoother negotiations.
Code rights can only be obtained in relation to land. Consequently, the new right to share apparatus can be requested only by the first operator that is keeping apparatus installed on, under or over land. A second operator that wishes to share the use of that apparatus will not be able to request from an occupier a paragraph 3 right permitting them to do so. Instead, once the occupier has conferred such a sharing right on the first operator, the second operator will need to negotiate the sharing of the apparatus with the first operator.
The first operator’s right to share their apparatus will, like other code rights, be exercisable only in accordance with the wider terms of the agreement. It will therefore be important for the first operator to consider carefully any terms that it may need included in its agreement with an occupier, such as additional access rights, to enable any subsequent sharing of the apparatus with other operators. To that end, clause 58 inserts corresponding code rights for the first operator to enter and carry out works on the land for the purpose of such apparatus sharing.
Finally, it should be emphasised that the new right to share introduced by clause 58 is entirely separate from the automatic rights to share that are currently available under paragraph 17 of the code, and to the rights introduced by clauses 59 and 60. Those are automatic rights—subject to specific conditions—that do not need to be agreed with a landowner or imposed by the courts. The rights in clause 58 cover situations where the operator wants rights to share over and above those automatic rights.
Government amendment 1 is a consequential amendment that reflects the restructuring of paragraph 3 provided for by clause 58(2)(a) of the Bill. It replaces cross-references to paragraph 3 of the code with cross-references to sub-paragraph 3(1).
Clause 58 introduces rights to share apparatus to the menu of code rights that is currently set out in paragraph 3 of the code. In doing so, new sub-paragraph 3(2) will be inserted into the code, setting out who can obtain a right to share apparatus. The current paragraph 3 will therefore become sub-paragraph 3(1) of the code. As there are references to paragraph 3 in other parts of the code, consequential amendments are necessary so that anyone reading the code is referred instead to the new sub-paragraph 3(1).
Amendment 1 agreed to.
Clause 58, as amended, ordered to stand part of the Bill.
Clause 59
Upgrading and sharing of apparatus: subsisting agreements
Chris Elmore
I beg to move amendment 9, in clause 59, page 41, line 42, after “agreement” insert
“other than with a private landlord”.
This amendment, together with Amendments 10, 11 and 12, would apply a different regime under the Electronic Communications Code to private landlords, giving automatic upgrade rights for operators to properties owned by private landlords subject to the condition that the upgrading imposes no additional burden on the other party to the agreement.
The Chair
With this it will be convenient to discuss the following:
Amendment 10, in clause 59, page 43, line 26, at end insert—
“5B (1) This paragraph applies where—
(a) an operator (‘the main operator’) keeps electronic communications apparatus installed on, under or over land, and
(b) the main operator is a party to a subsisting agreement in relation to the electronic communications apparatus.
(2) If the conditions in sub-paragraphs (3), (4) and (6) are met, the main operator may—
(a) upgrade the electronic communications apparatus, or
(b) share the use of the electronic communications apparatus with another operator.
(3) The first condition is that any changes as a result of the upgrading or sharing to the electronic communications apparatus to which the agreement relates have no adverse impact, or no more than a minimal adverse impact, on its appearance.
(4) The second condition is that the upgrading or sharing imposes no additional burden on the other party to the agreement.
(5) For the purposes of sub-paragraph (4) a burden includes anything that—
(a) has an adverse effect on the person’s enjoyment of the land, or
(b) causes loss, damage or expense to the person.
(6) The third condition is that, before the beginning of the period of 21 days ending with the day on which the main operator begins to upgrade the electronic communications apparatus or (as the case may be) share its use, the main operator attaches a notice, in a secure and durable manner, to a conspicuous object on the relevant land.
(7) A notice attached for the purposes of sub-paragraph (6) must—be attached in a position where it is reasonably legible,
(a) be attached in a position where it is reasonably legible,
(b) state that the main operator intends to upgrade the electronic communications apparatus or (as the case may be) share its use with another operator,
(c) state the date on which the main operator intends to begin to upgrade the electronic communications apparatus or (as the case may be) share its use with another operator,
(d) state, in a case where the main operator intends to share the use of the electronic communications apparatus with another operator, the name of the other operator, and
(e) give the name of the main operator and an address in the United Kingdom at which the main operator may be contacted about the upgrading or sharing.
(8) Any person giving a notice at that address in respect of that electronic communications apparatus is to be treated as having been given that address for the purposes of paragraph 91(2).
(9) Any agreement under Part 2 of this code is void to the extent that—
(a) it prevents or limits the upgrading or sharing, in a case where the conditions mentioned in sub-paragraphs (3), (4) and (6) are met, of any electronic communications apparatus to which the agreement relates that is installed on, over or under land, or
(b) it makes upgrading or sharing of such electronic communications apparatus subject to conditions to be met by the operator (including a condition requiring the payment of money).
(10) Nothing in this paragraph is to be read as conferring a right on the main operator to enter the land which the main operator would not otherwise have, when upgrading or sharing the use of the electronic communications apparatus.
(11) References in this paragraph to sharing electronic communications apparatus include carrying out works to the electronic communications apparatus to enable such sharing to take place.
(12) In this paragraph—
‘the relevant land’ means—
(a) in a case where the main operator has a right to enter the land, that land;
(b) in any other case, the land on which works will be carried out to enable the upgrading or sharing to take place or, where there is more than one set of works, the land on which each set of works will be carried out;
‘subsisting agreement’ has the meaning given by paragraph 1(4) of Schedule 2 to the Digital Economy Act 2017.”
This amendment, together with Amendments 9, 11 and 12, would apply a different regime under the Electronic Communications Code to private landlords, giving automatic upgrade rights for operators to properties owned by private landlords subject to the condition that the upgrading imposes no additional burden on the other party to the agreement.
Clause stand part.
Amendment 11, in clause 60, page 43, line 38, after “land” insert
“not owned by a private landlord”
This amendment, together with Amendments 9, 10 and 12, would apply a different regime under the Electronic Communications Code to private landlords, giving automatic upgrade rights for operators to properties owned by private landlords subject to the condition that the upgrading imposes no additional burden on the other party to the agreement.
Amendment 12, in clause 60, page 44, line 47, at end insert—
“17B (1) This paragraph applies where—
(a) an operator (‘the main operator’) keeps electronic communications apparatus installed on, under or over land owned by a private landlord,
(b) the main operator is not a party to an agreement under Part 2 of this code in relation to the electronic communications apparatus, and
(c) the electronic communications apparatus was installed before 29 December 2003.
(2) If the conditions in sub-paragraphs (3), (4) and (6) are met, the main operator may—
(a) upgrade the electronic communications apparatus, or
(b) share the use of the electronic communications apparatus with another operator.
(3) The first condition is that any changes as a result of the upgrading or sharing to the electronic communications apparatus to which any existing agreement between the operator and the landlord relates have no adverse impact, or no more than a minimal adverse impact, on its appearance.
(4) The second condition is that the upgrading or sharing imposes no additional burden on the landlord.
(5) For the purposes of sub-paragraph (4) a burden includes anything that—
(a) has an adverse effect on the person’s enjoyment of the land, or
(b) causes loss, damage or expense to the person.
(6) The third condition is that, before the beginning of the period of 21 days ending with the day on which the main operator begins to upgrade the electronic communications apparatus or (as the case may be) share its use, the main operator attaches a notice, in a secure and durable manner, to a conspicuous object on the relevant land.
(7) A notice attached for the purposes of sub-paragraph (6) must—
(a) be attached in a position where it is reasonably legible,
(b) state that the main operator intends to upgrade the electronic communications apparatus or (as the case may be) share its use with another operator,
(c) state the date on which the main operator intends to begin to upgrade the electronic communications apparatus or (as the case may be) share its use with another operator,
(d) state, in a case where the main operator intends to share the use of the electronic communications apparatus with another operator, the name of the other operator, and
(e) give the name of the main operator and an address in the United Kingdom at which the main operator may be contacted about the upgrading or sharing.
(8) Any person giving a notice at that address in respect of that electronic communications apparatus is to be treated as having been given that address for the purposes of paragraph 91(2).
(9) Nothing in this paragraph is to be read as conferring a right on the main operator to enter the land which the main operator would not otherwise have, when upgrading or sharing the use of the electronic communications apparatus.
(10) References in this paragraph to sharing electronic communications apparatus include carrying out works to the electronic communications apparatus to enable such sharing to take place.
(11) In this paragraph ‘the relevant land’ means—
(a) in a case where the main operator has a right to enter the land, that land;
(b) in any other case, the land on which works will be carried out to enable the upgrading or sharing to take place or, where there is more than one set of works, the land on which each set of works will be carried out.”
This amendment, together with Amendments 9, 10 and 11, would apply a different regime under the Electronic Communications Code to private landlords, giving automatic upgrade rights for operators to properties owned by private landlords subject to the condition that the upgrading imposes no additional burden on the other party to the agreement.
Clause 60 stand part.
Chris Elmore
These amendments would apply a different regime to private landlords under the 2017 electronic communications code, giving operators automatic upgrade rights for properties owned by private landlords, subject to the condition that the upgrading imposes no additional burden on the other party to the agreement.
When we talk of the digital divide in our telecommunications infrastructure, we often speak of it in terms of a divide between rural and urban areas. Indeed, it is true that a divide exists between rural and urban areas in levels of connectivity, and the Bill has been designed to help reduce the rural-urban connectivity gap, which the Labour party wholeheartedly supports.
However, a division also exists within urban areas themselves. Catherine Colloms, the managing director of Openreach, said in evidence that it is particularly difficult for Openreach and similar organisations to upgrade properties that are owned by private landlords to full fibre. Openreach alone currently has 55,802 multi-dwelling unit premises on hold. Based on this, it is forecast that 1.5 million MDU premises could be unserved by the end of the commercial roll-out.
Julia Lopez
I thank the hon. Member for tabling these amendments. I represent an urban constituency and, as the Minister for digital connectivity, I am very alive to any concerns about the digital divide. I have tested the legislation to make sure that we are not exacerbating that. The amendments relate to circumstances in which an operator can upgrade or share the use of their apparatus without specific permission from a landowner or a court order. Crucially, the amendments relate to rights that the Bill grants retrospectively to agreements that are already in place. The amendment seeks to expand those rights in circumstances where apparatus is situated on, under or over land owned by private landlords.
Retrospective legislation must take particular care to strike a balance between impacts on individual rights and any public benefit that the legislation aims to deliver. The Government believe at this time that expanding retrospective upgrading and sharing rights in the way these amendments suggest would not be justified. Upgrading and sharing electronic communications apparatus offers a wide range of substantial benefits. Those are benefits that the Government specifically recognised in their 2017 reforms, when limited automatic rights were introduced for operators to upgrade and share their apparatus. The exercise of the new upgrading and sharing rights was made subject to certain conditions. Those conditions were intended to strike the right balance between the rights of individual landowners hosting apparatus and the public benefits delivered by operators upgrading and sharing their apparatus.
The changes made in the 2017 reforms therefore permit upgrading and sharing to take place without a landowner’s specific consent only where any impacts on that individual will be limited. However, it was recognised that any use of those rights could have some impact, albeit very limited, on individual landowners.
Ruth Edwards (Rushcliffe) (Con)
I remind the Committee of the declaration of interest that I made: I have worked for a number of providers, including BT and techUK, that will be affected by the legislation, and I carried out cyber-security consulting for MHR last year. I agree with the Minister about the need to seek a balance between the rights of landowners and the rights of operators. However, we cannot lose sight of the fact—this is a point she has been making powerfully—that we must get behind upgrading our digital infrastructure as fast as is practicably possible.
I am aware that we are about to debate amendment 8, which would make it more expensive for operators to access land, and put them at a disadvantage compared with other utility companies. Does the Minister agree that adopting amendments 9 to 12—and then 8—would risk sending a mixed signal to the market? On the one hand we are making it more expensive and difficult for our operators to access land, but on the other hand we are rolling back the scrutiny that they have to access private property at the moment.
The Chair
Before I call the Minister, I will take this opportunity to say that interventions should be relatively short and to the point. It will not be difficult for hon. Members to catch my eye to make points in a debate if they wish to.
Julia Lopez
I thank my hon. Friend for her intervention. I know that she has considerable expertise in this field. It is a difficult balance to strike, ensuring that we are protecting landowner rights while making sure we are giving telecoms operators the powers they need to make sure all of our constituents have the digital connectivity that they demand—and will increasingly need—going forward.
For the reasons I have set out and will be setting out in further detail, I do not think the amendments will have the desired effect. It was interesting to hear the oral evidence this week, because there was no consensus among the telecoms operators about what powers are required. We have to ensure that we do not give commercial advantage to one player or the other, as that would also trample over some landowner rights.
The changes made in the 2017 reforms permit upgrading and sharing to take place without a landowner’s specific consent only where any impacts on that individual will be limited. However, it was recognised that any use of those rights could have some impact—albeit a very limited one—on individual landowners. The new rights were not applied retrospectively and had no effect on landowners who had entered into agreements before the legislation was passed. The key difference is that agreements made after that date would be completed in the knowledge that the upgrading and sharing rights would apply. Since the 2017 reforms, however, the public need for robust and up-to-date digital services has continued to grow, and was thrown into sharp relief by the recent pandemic, when many of us were reliant on access to those services at unprecedented levels.
Upgrading and sharing apparatus has a more important role to play than ever before. In the light of this and other market developments, we have revisited the position on upgrading and sharing where the rights introduced by the 2017 reforms do not apply. Introducing specific upgrading and sharing rights for such equipment can play an important role in improving coverage and capacity, and amendment 9 appears to agree with that conclusion. However, we need to ensure that the rights of individual landowners are adequately protected. As I said, agreements after the 2017 reforms will have been concluded in the knowledge that they will give rise to automatic rights for apparatus to be upgraded or shared. That is not true of apparatus that is not covered by an agreement concluded after the 2017 reforms. As such, it is only right that any automatic rights to upgrade and share those types of apparatus should be subject to different conditions.
The amendments suggest introducing specific conditions for retrospective upgrading and sharing rights where private landlords are concerned, and those conditions partly reflect those contained in the rights established by the 2017 reforms and those set out in the Bill. However, the conditions in the new rights that we are proposing have been carefully developed to work as a whole; they are intentionally more restrictive and give rise to more limited rights than those available for agreements reached before the 2017 reforms. Taken together, the conditions mean that the operator will have automatic rights only to carry out upgrading and sharing activity that will have no adverse impact on the land or that will put no burden on a relevant individual, but this will still allow activities, such as crucial upgrading work, to be undertaken in relation to historical copper cables installed underneath land.
Sally-Ann Hart (Hastings and Rye) (Con)
I wonder if the Minister could provide some clarity. Underneath the ground, there are ducts that operators can run cables through. We heard in this week’s evidence session about telegraph poles. Operators can go to the bottom of the telegraph pole, but will the Minister provide some welcome clarity on whether they can go up to the top and across? It is really important that they can use existing infrastructure and not have to pay to go around because they cannot use the overhead.
Julia Lopez
We are looking at rights that will provide easier access to underground and over, but not on. These are very techy points. If my hon. Friend feels that that does not answer her question precisely enough, I would be happy to ask officials to get in touch with her.
The measures in the Bill as drafted ensure that apparatus installed under agreements concluded prior to 2017 can be upgraded and shared quickly and cost-effectively. At the same time, the specific conditions that we are introducing will ensure that the right balance is maintained between the interests of private individuals and the wider public benefit, which is a difficult balance to strike. We are concerned that the amendments would not maintain that balance. I hope that gives the hon. Member for Ogmore assurance that the provisions in the Bill regarding retrospective rights to upgrade and share represent a balanced approach, and I ask him to withdraw his amendment.
Clauses 59 and 60 are vital clauses that support and encourage greater upgrading and sharing of existing apparatus. The 2017 code reforms provided operators with limited automatic rights to upgrade and share their apparatus, subject to certain conditions. However, the 2017 changes did not introduce paragraph 17 upgrading and sharing rights for subsisting agreements, which are agreements completed before the 2017 reforms came into force. This means that a significant proportion of the UK’s existing networks cannot be upgraded or shared without specific permission, despite the fact that apparatus can be upgraded and shared in many situations with no adverse impacts on any individual or private land.
Clause 59 therefore inserts new paragraph 5A into schedule 2 to the Digital Economy Act 2017 in order to introduce rights for operators to upgrade and share apparatus installed under a subsisting agreement. These rights differ from those contained in paragraph 17. They are available in more limited circumstances and will be subject to stricter conditions and specific notice requirements. Taken together, the measures in the clause will ensure that apparatus installed under a subsisting agreement can be upgraded and shared quickly and cost-efficiently, and do so in a way that takes into account both the interests of individuals and the wider public benefit.
Clause 60 deals with the same issue of upgrading and sharing apparatus, but in this case in relation to apparatus installed before 29 December 2003 where there is neither a subsisting agreement nor an agreement concluded after the 2017 reforms. It is right that upgrading and sharing rights should be available for all apparatus installed before the 2017 reforms came into effect. Clause 60 therefore inserts proposed new paragraph 17A into the code, conferring rights to upgrade and share apparatus installed under land before 29 December 2003, where the operator who owns that apparatus is not a party to an agreement under part 2 of the code.
Kevin Brennan
I have listened carefully to the Minister and I do not agree with the Government’s position on rejecting the amendment. She is right that large swathes of the Bill are about the difficult balancing act between private property rights and the public interest. It seems to me, in the case put forward by my hon. Friend the Member for Ogmore in support of the group of amendments, that this is an instance where the public interest is overwhelmingly clear, while the private property interest that the Minister defended in her response is not.
My hon. Friend put forward the problem that has been received by the Committee in evidence, which is that many blocks of flats are not updated with their internet connections and so on. There is a huge public policy interest in the digital divide, which we all know about across the country, and in ensuring that the people who live in those kinds of premises have excellent access—as good as someone living with the best infrastructure available in an urban setting. He mentioned the rural-urban divide, but I am talking specifically about the case he made about blocks of flats.
I think what the Minister was saying was that because what is being proposed represents a retrospective change, a higher standard should apply to protecting those private property interests than would apply in the case, for example, of equipment that was installed post 2017. That, however, does not make a jot of difference to a poor child living in a block of flats who does not have good internet access to do their homework. That is a pretty clear judgment for the Government to make, because they have made no real or clear case that any compelling property rights are being imperilled, or that there is any compelling cost—other than minor inconvenience, perhaps—to the landowners who might be affected by the amendment.
There is, however, an overwhelming public policy case for wanting to do everything possible to assist children living in such block of flats. There is an overwhelming public policy case that a child in that block of flats with pre-2017 infrastructure should not be treated any less equally or favourably than a child who lives in a neighbouring block of flats that happens to have equipment that was installed post 2017. I urge the Minister and the Government to rethink their position for those reasons, unless I have misunderstood their case.
Julia Lopez
I reassure the hon. Gentleman that we do not disagree with the ambition. We all want children in such blocks of flats and other difficult-to-reach premises to have excellent digital infrastructure. As the Member for an urban constituency, I certainly want that. We have been testing this extensively, from legal team to legal team of operators. Some operators tell us that the additional rights are not necessary to be able to access buildings in the way that they hope; others say that they are. As I say, we have been testing this. Some of the suggestions would give greater legal access to property than law enforcement has. We have to get the right balance and we have to test whether this proposal will ultimately speed up the roll-out.
Kevin Brennan
That seems to be rather a weak argument. If law enforcement were entering someone’s property, it would probably be to search it, make an arrest or something like that. A telecoms operator entering a property to install some cable is a very different proposition, is it not?
Julia Lopez
It is a difficult balance to get right, between having a roll-out and ensuring that somebody’s property rights are respected. If we are considering giving greater powers to an operator than to law enforcement, we have to ask whether that is necessary. Operators have told us that that is not necessary to get access and to increase roll-out. On balance, therefore, we are not minded to support the amendment.
Chris Elmore
I have listened to the Minister and the debate that followed her speech. The argument is slightly confused, because in the oral evidence sessions, CityFibre and Openreach were in agreement on the need to address the issue. They were also in agreement on the huge deficit in meeting the Government’s targets because of issues in gaining access to flats and properties through leaseholders and site owners.
In answer to the question about the response of tenants or property owners inside the flats, the providers said that it was overwhelmingly positive; they wanted to gain fibre roll-out. As I mentioned in my opening remarks, nearly 56,000 MDU premises are on hold through the roll-out, so what is the plan? What is the solution to deal with the digital divide that is forming in cities and towns across the UK? It was mentioned in evidence that my Ogmore constituency has only 3% MDUs. If I recall correctly, the hon. Member for Hastings and Rye’s constituency was above 13% or 14%—higher again, she is indicating. The numbers increase depending on the area. How will we solve that problem?
Equally, I agree with my hon. Friend the Member for Cardiff West. We cannot simply say that, as we move to more online learning, and more remote working or working from home—business is supportive of that following the pandemic, even if the Government are asking everyone to come back to the office—people now have far greater understanding of their broadband, including its bandwidth, who installed it, who runs it and the costs, than they ever did before the pandemic because everyone needed to use Zoom and Teams; although, personally, there are days when I would rather not use them ever again.
I am minded to press the amendment to a Division, for the reasons that I and my hon. Friend set out. I am not hearing from the Minister what the plan is to rectify the problem. According to Openreach and other providers, the figure for premises on hold is going up year after year, and therefore the target will be missed, despite the Government reducing it at least twice since 2019.
Question put, That the amendment be made.
Product Security and Telecommunications Infrastructure Bill (Fourth sitting)
Thursday 17th March 2022
(2 years, 1 month ago)
Public Bill CommitteesRead Full debate Product Security and Telecommunications Infrastructure Act 2022 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 17 March 2022 - (17 Mar 2022)
The Committee divided: - Ayes: 4 / Noes: 7 - Question accordingly negatived.
Chris Elmore (Ogmore) (Lab)
I beg to move amendment 8, in clause 61, page 45, line 37, at end insert—
“(4A) Where the assumptions in subsection (4) cause the market value of a landlord’s agreement to decline, the rent payable under a new tenancy granted by order of the court under this Part of this Act shall not decline by more than 40%.”
This amendment would provide a legal guarantee that site providers’ rents fall by no more than 40% under any new agreement.
The Chair
With this it will be convenient to discuss the following:
Clause stand part.
Clauses 62 to 65 stand part.
Chris Elmore
The Government introduced the electronic communications code in 2017 and promised at the time that reductions in rent would, in reality, be no more than 40%. However, as we heard from Protect and Connect during Tuesday’s evidence session, there have been thousands of cases in which small tenant farmers, sports clubs and community organisations that host masts have seen their rents fall by vastly more than that, with many facing reductions of more than 90%. That was confirmed during the evidence session, when a question was asked about the average, followed by questions from other Members, including me. That clearly showed that there had been far higher reductions for some organisations and owners. One such case is James, a 71-year-old sheep farmer who has maintained a mast on his farm for 15 years, normally receiving £2,900 a year in rent. In 2020, James received a letter informing him that he was now being offered £200 a year under a new agreement. That was a reduction of 93% and a huge overnight shock to his personal and professional finances.
The average reduction for contracts negotiated by Cellnex UK, as Mark Bartlett informed us on Tuesday, has been 63%—a decrease that would cause a huge dent in the finances of all the kinds of organisation I have referred to and a figure well above what the Government promised in 2017. I am sure that members of this Committee would not be best pleased if a significant stream of their income fell by 63%.
I know that the Minister said at Second Reading that valuations pre 2017 were much too high, but surely she must recognise, after the oral evidence we heard on Tuesday, that the race to the bottom that we are seeing is not sustainable and that the level of reduction in rent that is occurring will deter other landowners from agreeing to host infrastructure in the first place, thus slowing the roll-out that this very legislation is designed to speed up.
Rather than leaving reductions to chance, the Opposition have tabled amendment 8, which would enshrine in law that rents under any new agreement fall by no more than 40%. That would strike a much fairer balance between operators and site providers by ensuring that what is a significant income stream for many individuals and community groups is not wiped out overnight. It would also contribute significantly to a faster roll-out of telecommunications infrastructure, as site owners would be more willing to engage. Speeding up the roll-out of new telecommunications infrastructure is the express desire of the Bill. I hope that Members from across the Committee will stand squarely behind their constituents by supporting this amendment.
Kevin Brennan (Cardiff West) (Lab)
I rise briefly to support my hon. Friend in pushing the amendment, in order to hear what the Minister has to say in response. The amendment goes to the heart of what a lot of the Bill is about: balancing the rights of private property owners and the policy requirement to speed up the roll-out of digital infrastructure.
This morning we debated an instance in which there would be no real financial cost to the private property owners from doing the right thing. In that instance, the state was ensuring that their properties could be accessed to put in the necessary infrastructure to roll out digital infrastructure in an urban setting—big blocks of flats, where lots of people might not have very good access to the internet and so on. In that instance, the Government were not prepared to accept our amendment, even though it would not have had any significant detrimental impact on the private property owners. In other words, they took the view that in that instance the private property owners, even if they would be only marginally inconvenienced, had to have their property rights protected, because this was a retrospective imposition and they would not have given permission.
In this instance—in fairness, I think this was not intended in 2017—private property owners have suffered, or might suffer, significant detriment to the income they can acquire through somebody else’s use of their land with the state’s assistance. In those circumstances, it is not unreasonable to say that the balance should be to ensure that they are not affected in a way that causes a massive reduction in the income they can earn from the use of their land.
If that was not a strong enough argument in itself, which perhaps it is not, the way the market has reacted to what happened after 2017 and the problems that there have undoubtedly been, with people reluctant to get involved with rolling out the infrastructure we need for the future, which we all want to achieve through the Bill and by other means, is further evidence that an adjustment perhaps needs to be made. The Minister could discuss with the Committee whether that adjustment is exactly what is contained in the amendment, but whether something should be done to address the arguments and concerns that have been expressed to us by those who own land on which such infrastructure is sited is certainly worth further consideration.
The Minister for Media, Data and Digital Infrastructure (Julia Lopez)
I thank the hon. Members for Ogmore and for Cardiff West for their contributions and for the amendment. I acknowledge that this is a tricky issue. There have been problems between both parties since the 2017 reforms, but we maintain that the 2017 valuation provisions created the right balance between the public need for digital communications and landowner rights. I think there is agreement that the prices being paid for rights to install communications apparatus before that date were simply too high. With digital communications becoming an increasingly critical part of our daily lives, that needed to be addressed.
The new pricing regime is more closely aligned to those for utilities such as water, electricity and gas. We think that that is the correct position. As I said earlier today, we are not seeking to take sides. We are on the side of good digital connectivity for our constituents, and we firmly believe that landowners should still receive fair payments that, among other things, take into account any alternative uses that the land may have and any losses or damages that may be incurred. I was alive to the concerns expressed to me by the Protect and Connect campaign, but also to those raised by individual Members about tricky constituency cases. When I came into my role in September, I met individual Members to discuss those cases. I also met Protect and Connect.
I tested the cases that were brought to my attention and asked for further details, which often were not forthcoming. There was a catch-all excuse that a lot of them were under non-disclosure agreements and the precise amount of rents settled at could not be disclosed. My broad view is that there were initial concerns and difficult cases where the mobile network operators were too aggressive in their negotiations—I think that was effectively acknowledged in the panel discussions earlier in the week—but we seem to have found an equilibrium now, helped partly by some of the cases that have gone through the courts.
We now have a body of case law that can be referred to in some of these tricky negotiations. We are also trying to deter people from going to the courts in the first place, by introducing more alternative dispute resolution mechanisms. I say that to reassure Members. There were problems initially. As far as I can tell from my case load, the correspondence coming in, the discussions that I have had with Members and the lack of additional noise on the subject in the Chamber, a better equilibrium has now been found between the mobile network operators and the landowners. If that is not the case, I am happy to look at those cases again, and we are introducing mechanisms to provide better negotiations between parties via the legislation.
Turning to the amendment, I am not sure why the hon. Member for Ogmore thinks that a specific limit should be imposed on the percentage by which rent can be reduced when the rental payment is determined by a court. Further, it is unclear why he has chosen arbitrarily to apply a figure of 40%. We have strongly resisted specifically regulating the amount of rent payable under a code agreement. Our preference has been to allow the parties to freely negotiate the amount payable under an agreement, based on a statutory framework either in the code, the Landlord and Tenant Act 1954 or the Business Tenancies (Northern Ireland) Order 1996. Even where the parties cannot reach an agreement and the court has to impose its terms, including the rent to be paid, the court has the freedom to reach its own conclusions using that framework, rather than having its discretion restricted by statutory rent controls. As I said, my understanding is that we now have a much better equilibrium, in that we have amounts of rent that both parties are much more content with.
I understand the concerns about whether this has stymied roll-out. If operators cannot get their infrastructure on to land, I imagine that they would start paying more to try to incentivise landowners to take it on. I think we have also seen cases where it has been in the landowner’s interests to try to drag the process out so that they are on the old rents, rather than the reduced, new rents. I think that has also contributed to some of the delays.
If the amount of rent is controlled in the way suggested in this amendment, we will be heading closer to a regime that will apply reductions on a blanket basis, rather than take into account the broader range of relevant circumstances, as permitted by the legal framework. I suspect that that is something that both site providers and operators would be keen to avoid.
I am aware that it has been alleged that the Government expected rents to fall by in the region of 40% following the 2017 reforms. It is unclear whether it is on that basis that the hon. Member for Ogmore chose the statutory cap of 40% in his amendment. At the time of the 2017 reforms, which I confess predate me, the fact is that the Government were unsure what the level of rent reductions would be. We were clear that that was the case. Independent analysis contained in the impact assessment that accompanied those reforms predicted that reductions could be 40%, but that was never a Government prediction nor a target.
Chris Elmore
I did say in my opening remarks where the 40% comes from. Just to help the Minister, it does relate to the 2017 change, but also the Government’s own analysis from the time. I do of course accept that she was not the Minister, but her party was in government, and those are her own Government’s figures.
Julia Lopez
That certainly is a fair point to make, and I apologise for not picking that up in the hon. Member’s comments.
A cap is likely to be even more detrimental to constituents in rural communities, who will benefit from the increased connectivity and reliability that we hope the Bill will bring.
As I have explained, agreements to which the code applies can currently be renewed in various ways, depending on the type of agreement and where in the UK it was entered into. The intention of clause 61, along with clause 62, is to create a clearer and more consistent legislative framework under which agreements are renewed. Central to that is ensuring that, no matter where in the UK an agreement is renewed, the financial terms are calculated in the same way. That will help to ensure that there is not a digital divide across the UK, with one country receiving additional investment at the expense of others because operating costs are cheaper.
The amendment suggests limiting any reduction in rent that may be imposed by the court when agreements are renewed under the 1954 Act. While that proposal is well intentioned, we do not believe that it should be allowed to proceed. It is vital that there is fairness throughout the UK. The Bill as drafted provides a clear framework, which will not only result in all payments being calculated in the same way, but in the ability to renew agreements quickly and cost-effectively. We think that will expand the digital network.
Kevin Brennan
I take what the Minister said about the figure of 40%, but it was contained, as my hon. Friend the Member for Ogmore said, in a previous Government’s impact assessment. I remind her that, when Ministers issue impact assessments, they sign them, as she did with this one, saying:
“I have read the Impact Assessment and I am satisfied that, given the available evidence, it represents a reasonable view of the likely costs, benefits and impact of the leading options.”
When her predecessor signed the impact assessment on behalf of the Government to say, “This is the Government’s official view of what is likely to happen,” their official view was that rents would drop, probably by 40%.
Julia Lopez
I accept the point that the hon. Gentleman is making. I also accept that in some cases rent reductions were much greater than expected. As we discussed earlier in the week, some of those were the result of overly aggressive behaviour by mobile network operators. We need to address some of the challenges that were raised by some of the changes that were made. In the body of case law, we now have a better equilibrium between landowners and operators, which should help to address some of those cases.
On some of the more emotive cases that have been raised with me over my tenure, I have sought to understand the details. Those cases are not always as has been presented, and I am led to believe that, in terms of a lot of the initially very difficult cases that came after the 2017 reforms were initially introduced, we are now in a very different place.
It is vital that there is fairness throughout the UK. As drafted, the Bill provides a clear framework that will not only result in all rental payments being calculated in the same way, but in the ability to renew agreements quickly and cost-effectively. We hope that will help us expand the digital network across the whole of our country. In those circumstances, I ask the hon. Member for Ogmore to withdraw his amendment.
I will now turn to clauses 61 to 65, which deal with the renewal of agreements to which the code applies that have expired or are about to expire. There are several ways in which such agreements can be renewed, depending on the type of agreement and where in the UK it was entered into. The aim of the clauses is to make all the routes to renewal as clear and consistent as possible, so that the process is the same across the UK.
Chris Elmore
I listened to the Minister’s remarks, and she acknowledges some of the historical cases, but I refer her to this Committee’s first sitting, where I asked Eleanor Griggs of the National Farmers Union about reductions in recent cases. Ms Griggs said that in in recent times, the NFU had made representations in cases in which farmers had received 90% decreases. Later, she referred to a farm in the constituency of the hon. Member for St Austell and Newquay where there was a significant reduction, from £3,500 to £17.50 a year.
We have to acknowledge the impact on many organisations, including farmers, churches, and particularly community groups. I have examples in my constituency of community groups that run scout halls or guide huts losing 60%, 70%, 80% or 90% of the income they use to balance their budgets and ensure that they can run services for children and young people throughout the year. The Minister has committed to review even more of the cases that come through for her personal intervention, but I think there should be a minimum threshold of 40%, which the Government committed to previously in their impact assessment, as my hon. Friend the Member for Cardiff West pointed out. I am therefore not minded to withdraw the amendment. I also hope that their lordships will consider it as part of any future scrutiny in the other place.
Question put, That the amendment be made.
The Chair
With this it will be convenient to discuss the following:
Government amendments 2 to 4.
That the schedule be the schedule to the Bill.
Julia Lopez
I am afraid I have to tell the Committee that this does not get any more inspiring.
The clause creates a bespoke process for telecoms operators to seek access to certain types of land where a person repeatedly fails to respond to requests for access to install apparatus under or over land for the purposes of providing an electronic communications service. The clause sets out that process by inserting into the electronic communications code new part 4ZA, which makes provision for a court to impose an agreement where the operator needs that person, “the landowner”, to confer or be bound by code rights. Part 4ZA will apply in situations where an operator intends to provide an electronic communications service and to achieve that must install electronic communications apparatus under or over, but not on, relevant land. “Relevant land” is defined as land that is not covered by buildings, and that is neither a garden, a park nor a recreational area. The provision also takes a power for the Secretary of State to specify through regulations further types of land that may be “relevant land”, but may only do so following consultation.
The provisions will require an operator to have given two warning notices, followed by a final notice. Those three notices all follow an initial request notice, giving a total of four. The Bill sets out that there must be a period of 14 days between the giving of each notice. For the landowner to fall out of scope of proposed new part 4ZA, all that is required of them is to respond to any of these notices in writing, before the operator applies to the court under part 4ZA. If any response is received, the operator will no longer be able to apply for a part 4ZA order and must either negotiate for a code agreement or apply for rights to be imposed by the courts in the normal way.
If granted, a part 4ZA order will impose an agreement between a landowner and an operator, conferring the rights requested in the initial notice. The terms of that agreement are to be specified in regulations. It may reassure the Committee that those regulations will be subject to the affirmative procedure. Furthermore, before the regulations are made, the Bill expressly obliges the Secretary of State to consult with a range of parties.
Importantly, the provisions impose a six-year maximum time limit on the period for which rights conferred under a part 4ZA order may last. I emphasise that detail, because it forms an important part of the Bill’s safeguards for landowners’ property rights. This clause provides a much needed process that will play a large part in ensuring that homes and businesses benefit from the national gigabit broadband upgrade and are not left behind.
I will now turn to the amendments tabled in relation to clause 66, all of which are technical amendments. Amendments 2 and 3 have been tabled in order to make a minor clarification to the text of the electronic communications code, to avoid any possible unintended interpretation of the legislation. Amendments 2 and 3 clarify that the right mentioned in paragraph 26(8) and paragraph 27G(4) of the electronic communications code to require the removal of apparatus applies in relation to apparatus placed under or over land. By inserting the words “under or over” into paragraph 26(8) and paragraph 27G(4) of the code, these amendments clarify that part 6 of the code may be used by a landowner to require the operator to remove apparatus installed “under or over”, as well as on, the land.
Without amendments 2 and 3, paragraph 26(8) and 27G(4) as currently worded may be interpreted to mean that while equipment installed on land under the “interim rights” or “unresponsive occupier” process could be removed via the part 6 process, equipment installed under or over land under these processes might not. That is not the policy intention, and as such this amendment is being introduced to clarify the policy position.
Amendment 4 makes a minor amendment to remove a provision which has been found to have no effect. The provision in question—paragraph 3(9) of the schedule to clause 66 in the Bill—was intended to ensure that part 5 of the code does not apply to the process created by clause 66 in the Bill. Part 5 of the code sets out that code rights may persist even after the agreement which underpins them expires. It was never intended that part 5 should apply to rights gained through part 4ZA, due to the importance of the time limits I have mentioned. The Bill provision that this amendment removes was intended to ensure that part 5 did not apply to rights gained through part 4ZA. However, we are satisfied a different part in the code already ensures this. As such, paragraph 3(9) in the schedule of the Bill has no real effect and ought to be removed.
In practical terms, there is no legal or policy change effected through this amendment, beyond increasing the clarity of legislation. This amendment simply removes a provision which had no effect in the first place, and thus tidies the legislation. I hope that everyone will accept that that is beneficial.
Chris Elmore
I want to make clear the Opposition’s support for clause 66. From all my conversations with industry, it is quite clear that where there is an unresponsive landowner, it is extremely complicated to then meet the public’s demands. If the Bill is about improving digital activity for all our constituents, particularly in some of the most rural and hard to reach communities—I find it hard to believe that includes my own constituency, but it does—then this is an important and welcome change.
Kevin Brennan
Despite the very thorough explanation that the Minister gave of what is a technical clause, I understand what the difference is between something being placed over or under land, but I am not sure what the difference is between something placed over or on land. There must be a technical reason why it is there; does she know the answer to that?
Julia Lopez
I think it being on land is a much more intrusive process. For instance, we could be talking about a cable that happens to be going over somebody’s land, and therefore to do something to it would not require a great deal of intrusion. Similarly, if it was the matter of being able to dig at the side of a road, it is technically access land, but only underneath the surface of the land—I hope this makes sense. It is much less intrusive process. I think it is a process that could be objected to far less by a landowner; they are not being asked if somebody can drive over their land, put something unattractive on it or inconvenience them in any way. We are talking about underground works and cabling works that objectively would have no real impact on their land.
Question put and agreed to.
Clause 66 accordingly ordered to stand part of the Bill.
Schedule
Unresponsive occupiers: consequential amendments
Amendments made: 2, in the schedule, page 66, line 17, at end insert—
“(c) in sub-paragraph (8), after “placed on” insert “, under or over”.”
This amendment clarifies that the right mentioned in paragraph 26(8) of the electronic communications code to require the removal of apparatus applies in relation to apparatus placed under or over land.
Amendment 3, in schedule, page 66, line 18, after “sub-paragraph (4)” insert—
“(a) after “placed on” insert “, under or over”;
(b) ”
This amendment clarifies that the right mentioned in paragraph 27G(4) of the electronic communications code to require the removal of apparatus applies in relation to apparatus placed under or over land.
Amendment 4, in the schedule, page 66, line 20, leave out sub-paragraph (9).—(Julia Lopez.)
This amendment removes the amendment to paragraph 30(3) of the electronic communications code. The amendment to paragraph 30(3) is unnecessary because paragraph 30(2) would not in any event apply to a code right conferred by virtue of an order under new paragraph 27ZE of the code.
Schedule, as amended, agreed to.
Clause 67
Arrangements pending determination of certain applications under code
Question proposed, That the clause stand part of the Bill.
Julia Lopez
The clause deals with situations where once an agreement to which part 5 of the code applies has run its initially agreed course, one of the parties wants it to be terminated, modified or replaced by an agreement with different terms. In those circumstances, the matter can be referred to a tribunal if the parties cannot resolve matters themselves. It can take time for such disputes to be dealt with, and paragraph 35 of the code deals with the circumstances in which an interim order can be requested, which will apply until the full dispute is heard.
Our policy intention for interim orders is to allow any specific priority aspect of a dispute to be looked at, so that temporary arrangements can be imposed where appropriate. At present, however, paragraph 35 of the code is restricted, so that only a site provider can ask for an interim order, and they can do so only in relation to the consideration paid by an operator. The clause widens that provision so that either party can ask for an interim order and can do so in relation to any term of the former agreement. That will enable specific issues to be dealt with at a much earlier stage of the dispute. In particular, it will mean that operators are given the same opportunity as site providers have to ask for the financial terms of an agreement to be reviewed on an interim basis. This will help ensure that once an agreement to which part 5 of the code applies has run its initially agreed course, there are no unnecessary delays to the valuation framework of the code being applied to new financial arrangements.
It will also provide the courts with greater flexibility to look at situations where a party needs an urgent change to any term of their agreement. We think that will be particularly helpful where an operator needs urgent changes to terms so that they can upgrade or continue using an existing site. There are likely to be situations where this will also benefit site providers. However, the clause is not to be used as a way of circumventing the usual negotiation process. Parties will be expected to negotiate in the usual way before making an application to the court, and to comply with the ADR requirements that the Bill introduces.
We think the clause will help many operators benefit from the full code framework at a much earlier stage, which will allow them to take advantage of provisions to upgrade and share apparatus and the code valuation framework as introduced in 2017. That will result in more investment in the expansion and upgrading of digital networks, ensuring that consumers receive the best coverage and connectivity possible.
Question put and agreed to.
Clause 67 accordingly ordered to stand part of the Bill.
Clause 68
Use of alternative dispute resolution
Question proposed, That the clause stand part of the Bill.
Julia Lopez
I will now speak to clauses 68 and 69, which introduce measures on alternative dispute resolution and complaints relating to the conduct of operators. The purpose is to encourage more collaborative discussions between landowners and telecoms operators, and to ensure that litigation is used only as a last resort where an agreement cannot be reached.
Clause 68 sets out two new requirements for operators and one new requirement for courts. Together, they will encourage the greater use of alternative dispute resolution processes. The requirements are as follows. First, when a request notice is sent for access to land or other rights under the electronic communications code, all operators must inform the landowner of the availability of ADR processes if the landowner is unhappy with the offer made. Secondly, in cases where an agreement cannot be reached operators must consider using ADR processes before applying to the courts. If the matter relates to modification of an expired agreement, either party must consider ADR before applying to the court. Finally, when awarding costs, the courts will be required to take into account any unreasonable refusal to engage in ADR by either party.
Some landowners and their representatives have told us that they find negotiations for code rights difficult. In some cases, landowners have felt pressured to accept any terms offered, to avoid the risk of being taken to court—this relates to the David and Goliath situation that we discussed earlier in the week. The measures in clause 68 address this issue by encouraging the use of ADR in order to minimise the risk of landowners feeling such pressure, and to facilitate co-operative discussions between landowners and telecoms.
Clause 69 inserts new subsection (ca) into paragraph 103 of the electronic communications code, which lists the issues that Ofcom’s code of practice must deal with. Subsection (ca) adds to the list
“the handling by operators of complaints relating to the failure of operators to comply with the code of practice”.
Landowners and their representatives have reported to the Government that, in some cases, they are reluctant to enter into code agreements because they are concerned about how the operator or their contractors will behave when they access the relevant land. The clause works to address the issue by requiring Ofcom to prepare guidance, following consultation, regarding operators’ handling of conduct. To complement that, we will bring forward secondary legislation to introduce a new statutory requirement for operators to have a complaints process for code matters, enforced by Ofcom.
Question put and agreed to.
Clause 68 accordingly ordered to stand part of the Bill.
Clause 69 ordered to stand part of the Bill.
Clause 70
Power to impose time limits on the determination of code proceedings
Julia Lopez
I beg to move amendment 5, in clause 70, page 60, line 15, at end insert—
“, and
(b) amend or repeal any of the following provisions (which provide signposts to those regulations)—
(i) paragraph 2A of Schedule 3 to the New Roads and Street Works Act 1991;
(ii) section 107(1A) of this Act;
(iii) paragraph 97 of Schedule 3A to this Act;
(iv) section 69(5A) of the Marine and Coastal Access Act 2009;
(v) section 27(6A) of the Marine (Scotland) Act 2010.”.
This amendment ensures that the power conferred by the new section 119A of the 2003 Act includes power to amend or revoke certain signposts in primary legislation which might otherwise be rendered otiose by the exercise of that power.
Julia Lopez
It is clearly desirable that legal disputes relating to code rights be dealt with as quickly as possible; that will minimise delays to network deployment and expansion in a number of ways.
Fast dispute resolution will make sure that, where the public interest test is satisfied, operators can get the rights they need for network deployment and expansion as soon as possible. It also means that where that test is not satisfied, that is identified promptly, so that operators know they have to explore different options. Finally, fast dispute resolution is in the best interests of all parties. Protracted legal proceedings take time, cost money and harm ongoing stakeholder relationships.
However, while we recognise that fast dispute resolution has a lot of benefit, it is important that there be no undue interference with the judicial process and the ability of courts to deal with cases justly. Time limits should not, for example, interfere with a court’s ability to provide the parties with sufficient opportunities to identify, locate or produce evidence. Any statutory provisions relating to the time within which disputes must be determined therefore require careful consideration and close scrutiny.
Legislation already makes limited provision for certain applications relating to new code rights to be heard within six months, but this provision sits outside the code; it is in the Electronic Communications and Wireless Telegraphy Regulations 2011. It was introduced in the course of our transposing European legislation, rather than as a specific element of the domestic code framework.
The new power in clause 70 will enable the Secretary of State to make regulations that are broader in scope, and can specify a period within which a full range of code-related disputes must be determined. As the clause makes clear, regulations made under it may amend or revoke provisions made under the 2011 regulations. That gives the Secretary of State flexibility to consider a full range of approaches, including having no time-limited period at all, if appropriate.
Other, wider measures that we are introducing in the Bill, and potentially in subsequent secondary legislation, will affect court resources. In many cases, the changes will ensure that caseloads are more evenly distributed, particularly between the first-tier and upper-tier tribunals. Rather than seeking to make changes relating to dispute time limits now, we are therefore putting in clause 70 a power permitting the Secretary of State to make regulations on this issue in future. That will enable the Government to revisit the measures as a whole, once the other measures in the Bill come into force, so that their overall impact can be assessed when considering whether changes are appropriate. We will, of course, work closely with the Ministry of Justice and the Northern Ireland and Scotland Governments before making any further proposals on this issue.
Amendment 5 provides a very limited power for the Secretary of State to amend a specified list of provisions in primary legislation. The provisions signpost to regulations about time limits for disputes on code rights. It is clearly desirable that legal disputes relating to code rights be dealt with very quickly. Any statutory provision relating to the time within which disputes must be determined requires careful consideration. The amendment ensures that, if changes are made to the existing regulations, corresponding amendments can be made to legislation that signposts those regulations.
Chris Elmore
This point also relates to previous clauses, but I think links best to clause 70. The Minister mentioned that the Secretary of State would review dispute resolution at a later date. Throughout the oral evidence sessions, there were calls from the NFU, Protect and Connect and other organisations for the dispute resolution to become compulsory. If resolutions were slowing down, and decisions were not being reached, would the Minister consider introducing, through secondary legislation, a compulsory element, so that we can avoid some of the concerns raised by the witnesses, particularly those representing landowner and club groups and so on?
Julia Lopez
I think it is implicit in what I said that we will keep all of this under close review, because we do not want any of the changes we make to slow the roll-out. We hope that the changes have their intended effect, which is ultimately not about any particular group’s interests, beyond their getting better digital connectivity. We are always happy to keep this under close review. We do not think a mandatory ADR would serve our overall goal. If problems come up over the next few years, these powers will enable us to make changes.
Amendment 5 agreed to.
Clause 70, as amended, ordered to stand part of the Bill.
Clause 71
Rights of network providers in relation to infrastructure
Question proposed, That the clause stand part of the Bill.
Julia Lopez
Sharing infrastructure in the roll-out of gigabit-capable networks can greatly reduce the cost of deploying networks, increase the pace of roll-out and reduce the frustrating need to dig up streets, preventing unnecessary disruption to the local populations we represent and reducing carbon emissions. The Communications (Access to Infrastructure) Regulations 2016 enable sharing of information about access to physical infrastructure across the utility, transport and communications sectors. They include the right to access that infrastructure on fair and reasonable commercial terms and conditions. The 2016 regulations were implemented in the UK, following the European broadband cost reduction directive, to reduce the cost of deploying high-speed electronic communications networks.
We recently published our response to a call for evidence on a review of those regulations. We set out that there may be areas where the 2016 regulations could be made easier to understand and use. We said we would legislate to allow future changes to the 2016 regulations via secondary legislation, rather than having to rely on primary legislation. This legislation would be subject to a further consultation with Ofcom and such other persons the Secretary of State considers appropriate. It would also be scrutinised in the Parliament through the affirmative procedure.
Clause 71 grants the Secretary of State the power to make provisions, through regulations, conferring rights on network providers in relation to infrastructure for the purpose of developing communications networks. These provisions include the power to amend, revoke or replace the 2016 regulations. The clause details the areas in which provisions may be made by the Secretary of State through regulations. These areas include: provisions relating to grants of access to relevant infrastructure; the carrying out of work as specified; procedures and forms of request by network providers for rights conferred by the regulations; and disputes under the regulations.
Question put and agreed to.
Clause 71 accordingly ordered to stand part of the Bill.
Clause 72
Power to make consequential amendments
Question proposed, That the clause stand part of the Bill.
Julia Lopez
Clause 72 confers on the Secretary of State a power to make any changes to other legislation that are required as a consequence of part 2 of the Bill coming into force. By way of example, changes may be needed to ensure that legislation that references the electronic communications code continues to work correctly after the Bill is passed. The power can be used to amend any legislation. In the case of primary legislation, it is limited to legislation passed or made before the end of the parliamentary Session in which the Bill is passed.
Clause 72 requires that any regulations made using this power that amend or repeal primary legislation be subject to the affirmative procedure. The negative procedure will apply to any other regulations made using this power. Where any changes are required to devolved legislation, the UK Government will work with the devolved Administrations to ensure that the wider legislative framework operates as intended. Clause 73 provides a straightforward explanation regarding references in this Bill to the electronic communications code.
Kevin Brennan
As the clause impacts the devolved Administrations and gives Ministers the right to interfere with primary legislation that is being passed by the devolved Governments, what consultation there has been with the Senedd, Scottish Parliament and Northern Ireland Assembly about this power of the UK Government?
Julia Lopez
We have official-level contact frequently, in case something has to be changed. I would like to reassure the hon. Gentleman that I have met my counter-parts in the Scottish and Welsh Administrations, including one of his colleagues in the Labour Administration. I will continue to have those meetings, in case changes that would have any meaningful impact are required as a result of the legislation.
Question put and agreed to.
Clause 72 accordingly ordered to stand part of the Bill.
Clause 73 ordered to stand part of the Bill.
Clause 74
Power to make transitional or saving provision
Question proposed, That the clause stand part of the Bill.
Julia Lopez
Clause 74 allows the Secretary of State to make transitional or saving provisions. This is required to provide for a smooth introduction of the new legal framework by, for example, specifying grace periods before the legislation comes into force. Clause 75 makes provision about a number of technical matters that regulations made under the Bill address, and enables such regulations to be exercisable by statutory instrument.
Clause 76 sets out the extent of the provisions of the Bill. Both cyber-security and telecommunications are reserved matters, and, for the most part, the Bill extends across the UK. Clause 77 sets out the commencement. Clause 27, on matters of enforcement, comes into force on Royal Assent, and the remaining clauses come into force via commencement regulations made by the Secretary of State. Clause 78 is the short title of the Bill.
Question put and agreed to.
Clause 74 accordingly ordered to stand part of the Bill.
Clauses 75 to 78 ordered to stand part of the Bill.
Ordered, that further consideration be now adjourned.—(Steve Double.)
Product Security and Telecommunications Infrastructure Bill (Fifth sitting)
Tuesday 22nd March 2022
(2 years ago)
Public Bill CommitteesRead Full debate Product Security and Telecommunications Infrastructure Act 2022 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 22 March 2022 - (22 Mar 2022)
The Committee divided: - Ayes: 4 / Noes: 9 - Question accordingly negatived.
The Committee divided: - Ayes: 4 / Noes: 10 - Question accordingly negatived.
The Chair
We are now sitting in public and proceedings are being broadcast. Before we begin, I have a few preliminary announcements. Hansard colleagues would be grateful if Members could email their speaking notes to hansardnotes@parliament.uk. Please switch electronic devices to silent. As you all know, teas and coffees are not allowed during sittings.
New Clause 1
Power for operator to upgrade or share apparatus
“(1) The electronic communications code is amended as follows.
(2) In paragraph 17, in sub-paragraph (1), for the words ‘sub-paragraphs (2) and (3)’ substitute ‘sub-paragraphs (2), (3) and (4A)’.
(3) After sub-paragraph (4) insert—
‘(4A) The third condition is that, where a site is provided by an emergency service, before the beginning of the period of 21 days, ending with the day on which the main operator begins to upgrade the electronic communications apparatus or (as the case may be) share its use, the main operator provides written notice to the site provider.’”—(Chris Elmore.)
This new clause would require operators with agreements under the code that are not subsisting agreements to provide written notice to site providers that are an emergency service before the beginning of the period of 21 days (with the 21 days ending the day the operator begins upgrading the apparatus).
Brought up, and read the First time.
Chris Elmore (Ogmore) (Lab)
I beg to move, That the clause be read a Second time.
Good morning to you, Ms Nokes, and to all members of the Committee.
The new clause is self-explanatory, but I will speak to it in the hope of persuading colleagues of its considerable merits. It would require operators with agreements under the code that are not subsisting agreements—agreements that came into force before the code was agreed—to provide written notice to site providers that are an emergency service before the beginning of the period of 21 days, ending on the day that the operator begins upgrading the apparatus.
This uncontroversial new clause would simply mandate operators to give advance notice to sites that provide and deliver emergency services, such as hospitals, for example. Due to the sensitive and life-saving nature of the work that is carried out daily in those buildings, it would make sense for providers of emergency services to be given advance notice of when work is going to be undertaken, in the hope that work will then be able to go ahead as smoothly as possible. The new clause would reduce the delay and interference for both the site owner and the operator.
Under this Government, broadband roll-out targets have been reduced time and again—from full fibre to full gigabit, and now down to 85% gigabit. The new clause would speed up the roll-out of telecommunications infrastructure, which the country needs. We hope that this constructive new clause will have cross-party support, and I urge Members on both sides of the Committee, including the Minister, to support it.
The Minister for Media, Data and Digital Infrastructure (Julia Lopez)
I thank the hon. Gentleman for tabling the new clause, which relates to the automatic rights for operators to upgrade and share existing apparatus. To be clear, those rights are already contained in the code, and apply only to agreements completed after the 2017 reforms to the code came into force. The new clause suggests the introduction of a 21-day notice requirement for operators that want to exercise these rights where apparatus is situated on land owned by an emergency service provider.
I very much appreciate the intention behind the new clause, and am grateful to the hon. Gentleman for briefly sharing with me last week some of the instances that he has in mind. Of course, it is important that emergency service providers are aware of work on their sites that may have an impact on their daily activities; I am sympathetic and alive to that. I have tested the issue with officials in the last week, and they suggest that in that context, it is crucial to look at the scope of the paragraph 17 rights, which authorise only activity that will have no more than a minimal adverse impact on the appearance of the apparatus and will impose no additional burden on the other party to the agreement. Clearly, the rights are therefore available only in very limited circumstances.
Of course, operators may need to upgrade and share apparatus that will have a greater impact on a site provider than paragraph 17 permits, and they should be able to do so, but in those circumstances they must obtain the site provider’s agreement or seek to have the required rights imposed by the courts. In contrast, the automatic rights in paragraph 17 are available only in very limited circumstances. The conditions in paragraph 17 specifically exclude activities that would impose an additional burden on a site provider. Activities that disrupted a site provider’s daily business, or created new health and safety risks, would be very unlikely to satisfy that requirement.
Operators that upgrade or share their apparatus in ways that go beyond the paragraph 17 rights, and which do not have a site provider’s permission or court authorisation, will be acting outside the parameters of the code. As such, they may be liable to any legal remedies or sanctions that are applicable to their actions. If an operator is in doubt as to whether the paragraph 17 conditions are satisfied, it would be sensible for it to discuss the planned works with the site provider. I am not aware of any instances in which an operator has relied on its paragraph 17 rights to carry out upgrading and sharing activities that have gone beyond the scope of what that paragraph allows, but if the hon. Gentleman is aware of occasions when that has happened, I would welcome further details and information about them.
At present, we think that the scope of activities permitted by paragraph 17 is so narrow that a specific notice regime is not required. Putting one in place would undermine the policy intention of the rights, which is to enable limited upgrading and sharing works to be carried out as quickly and efficiently as possible. I therefore hope that the hon. Gentleman will withdraw the new clause.
Chris Elmore
In the light of what the Minister has said and, crucially, her offer to hear the examples that I will provide her with, I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 2
Review of the changes to the Electronic Communications code
“(1) The Secretary of State must conduct a full economic review of the effect of Schedule 1 of the Digital Economy Act 2017 (The Electronic Communications Code).
(2) The Secretary of State must prepare and publish a report on this review within two months of the passage of this Act and must lay a copy of the report before Parliament.”—(Chris Elmore.)
This new clause would require the Secretary of State to outline the economic impact of the 2017 introduction of the Electronic Communications Code.
Brought up, and read the First time.
Chris Elmore
I beg to move, That the clause be read a Second time.
This new clause would require the Secretary of State to conduct a full economic review of the effect of the electronic communications code since 2017, and to publish a report on that review’s findings. When the code was introduced in 2017, the Government promised that they would publish a review of its impact by 2022, but I am afraid to say that we are still waiting. The Committee should note that this is not a new request; we are merely holding the Government to account on promises that were made in 2017.
The review should look into issues including, but not limited to, the impact of the legislation on investment into mobile networks, the number of new sites provided, the speed of infrastructure deployment, changes in rent to site providers, and the total legal costs that have been borne by the judiciary as a result of litigation. The Department’s vague responses to parliamentary questions show that it is unsure of how much money has been saved by rent reductions since 2017. That suggests, in turn, that the Department is also unaware of how much of that money has been reinvested back into the development of telecommunications infrastructure, which was the express purpose of the legislation.
The impact assessment for the previous legislation is clearly overdue, and the testimonies that we heard on Tuesday last week suggested that a review needs to take place sooner rather than later. The Minister was keen to suggest that only a small number of rent reductions were of more than 90%, but testimonies from witnesses last Tuesday suggested otherwise. The Minister also said that the number of legal cases was decreasing, but there have been over 300 since the introduction of the code, compared with just a handful prior to its introduction. Once again, we are hearing mixed messages from the Government while the message from those on the ground who have been adversely affected by the rent reductions is crystal clear.
The simple truth is that we are currently unable to make a clear and objective assessment of the effectiveness of the electronic communications code because its impact has not been reviewed. A review was promised, as I will continue to reiterate, when the legislation was first introduced; I accept that it was not this Minister who made that commitment, but it was this Government. Such a review would give us a better understanding of where we were in 2017, of where we are now in 2022, and of what we need to do to improve the situation in the future, as we increase our reliance on digital connectivity.
Technological progress and innovation will define the success of the United Kingdom in the 21st century, and any progress will be underpinned by how quickly and effectively we are able to roll out digital infrastructure projects such as 5G and gigabit-capable broadband. It is firmly in the national interest to get a better understanding of whether the changes we have made so far have been effective, and what lessons can be learned to ensure that our country thrives in the technological and digital spheres in the years ahead.
For the reasons that I have outlined, I hope that colleagues on both sides of the Committee will support the new clause and ensure simply that the Government are held to account on commitments made when the 2017 code was published.
Julia Lopez
I thank the hon. Gentleman for tabling the new clause and, again, I appreciate the intention behind it. It would require the Government to carry out a review of the 2017 legislation that updated the electronic communications code, which is the overarching legislation that the Bill amends and that we have been discussing in Committee.
I appreciate that the intention behind the new clause is to better understand the impact of the 2017 changes to the code but, unfortunately, such a review clause would have unintended consequences. We are particularly concerned that there might be a chilling effect on the market while the review is carried out, which would lead to delays not just in implementing the measures in the Bill, but in wider deployment. When the 2017 code came into force with reduced rents, a lot of cases went through the courts because operators were still on higher rents as long as negotiations were ongoing. We do not want to see a similar challenge in this case.
If a review takes place, stakeholders will likely delay entering into agreements to enable the deployment of infrastructure. Only when the review has concluded and it is clear whether further changes are to be made to the code will parties be prepared to make investment or financial commitments. That will have a profound effect on our connectivity ambitions, despite our desire to move as quickly as possible to level up the country with world-leading connectivity. It will also have an adverse impact on consumers and businesses, many of whom want to access higher speeds and the latest technologies such as 5G.
The Bill focuses on a few issues that prevented the 2017 changes from having their full impact, such as speeding up deployment while protecting the rights of landowners and site providers. Wider changes to the code will halt all progress made and will risk bringing deployment to a standstill. That would leave many homes and communities without the upgrades to connectivity that they badly need, which I am sure the hon. Member will agree would not be the desired outcome.
Let me clarify what was said in 2017 about reviewing the changes to the code. In the impact assessment that accompanied the reforms, the Government said that they would review the policy by June 2022. They did not say that they would carry out a full economic review of the impact of the reforms on the rental agreements. We have reviewed the policy. Officials have held regular meetings with stakeholders since the 2017 reforms came into force, including facilitating workshops between stakeholders to encourage more collaborative working. My predecessor, my right hon. Friend the Member for Maldon (Mr Whittingdale), held a series of roundtable meetings with stakeholders from both the operator and the site provider communities so that he could understand the situation better.
Since I have been in post, I have been testing some of the concerns of the hon. Member for Ogmore in Parliament to ensure that we are beyond some of the initial challenges that we all accept existed when the code changes were made. Regular engagement and the issues highlighted directly informed last year’s consultation, which preceded this Bill, and led to the provisions in the Bill that are needed to realise the benefits of the 2017 reforms. I hope that this gives the hon. Member reassurance that we have reviewed the policy as a whole, and I ask that he withdraw his amendment.
Chris Elmore
I have listened to the Minister and I accept that there are challenges with any review, but the only way in which we learn is by reviewing what we have done previously. There are some nicks in the system that are still not rectified. There is no reason why a Government review would mean that the industry would need to stop rolling out fibre broadband, improving broadband more generally, 5G roll-out or anything else. The process could be done with industry to ensure there is an efficient and effective way of reviewing, so that we can learn from what has happened and improve moving forward. I am keen to push the new clause to a vote.
Question put, That the clause be read a Second time.
Chris Elmore
I beg to move, That the clause be read a Second time.
During the oral evidence session last Tuesday, we heard a number of concerns about part 1 of the Bill, which were outlined particularly eloquently by Madeline Carr, professor of global politics and cyber-security at University College London, who tellingly stated that she does not currently own an Alexa due to a lack of trust, and that the Bill as it currently stands would not give her sufficient confidence to go out and purchase one. Her Majesty’s Opposition value the contribution and knowledge of experts such as Professor Carr, and we have tabled new clause 4 on that basis.
The clause would require the Secretary of State to undertake a consultation on the imposition of a minimum period during which relevant connectable products would need to receive security updates. That would allow the Secretary of State to consult with academics such as Professor Carr, among others in the field, to establish the best way of making those connectable products, which have the potential to bring huge benefits to our lives, as safe as possible for as long as possible.
I presume the Minister might retort by saying that increased regulation of this sphere might stifle innovation, but that is exactly the opposite of what we heard last Tuesday. What we heard was that without strong, strategic Government intervention, there is not much desire for, or a market for, cyber-security. That is why introducing a minimum period for which connectable products would be subject to security requirements is so important: without Government intervention, increased security for British consumers will not come about.
Another reason that implementation of the new clause is so vital is that it relates to the digital divide and the ability of those who are the most financially vulnerable to have access to secure products. We do not want the less well off to be purchasing items that are subject to security updates for a much shorter period, thus making them more vulnerable to cyber-attacks than those who are more financially secure. I raised that issue on Second Reading and, dare I say it, there was some pushback from Members in the Chamber, but the issue was highlighted by Professor Carr and David Rogers, who was the lead editor during the process that is the basis for the Bill.
The party that I am deeply proud to represent was founded to represent the interests of working people, and it is ultimately my responsibility to ensure that working people across the country do not lose out with respect to the pace of technological change and as the threats facing that technology continue to increase. We acknowledge that no Bill can anticipate all threats that we will face in the future and the varying types of product that will come to the market, but we do have control over ensuring that we do our utmost in legislation to best protect the citizens of the United Kingdom. As we heard from a number of industry experts, one of the best ways to do that is to introduce a minimum period for which these products should be subject to security updates. For that reason, I hope the Committee will support the new clause.
Julia Lopez
Again, I thank the hon. Member for his suggestions, and I always appreciate the intention behind what he is trying to do. On this matter, we have been consulting with experts throughout the development of the legislation. As he will be aware, a lot of the details about how we shall regulate these products will come in secondary legislation. Here, we are taking broad powers so that, as the technology develops, we can tweak them as things change. We are also considering a wide number of products that will be in scope.
We do not want to take specific powers at this stage, and, as I mentioned in relation to the hon. Gentleman’s amendment 6, which we debated last week, it is important that the legislation retain the flexibility to adapt to and reflect the changing threat and technological landscapes. We have consulted widely on the legislation, and will continue to do so where new requirements are appropriate, but committing the Government to working on requirements framed using terminology that may seem appropriate today could limit the security benefits of such a requirement in the future.
As I reassured the hon. Member last Thursday, we are committed to introducing security requirements based on the first three guidelines of the internationally recognised code of practice for consumer internet of things security. Those will include a requirement for manufacturers to be transparent about the time for which products will be supported with security updates. At its core, that approach demonstrates a shift towards clear transparency that can inform the consumer when purchasing a relevant device. We know that many consumers are security conscious, but, as things stand, not enough manufacturers make that information readily available to them.
Data from Which?, which the Committee heard from last week, highlights that less than 2% of assessed products had clear information on the length of time for which they would receive security updates. We are using legislation to increase the availability of information to UK consumers, so that they can make their own purchasing choices with a clear understanding of security. As consumers learn more, they will expect more, and we hope that that will drive the market approach to embedding minimum periods for security updates. Last week, the Committee heard from Which? that some consumers might be continuing to pay for their devices even after security updates are available to them. That is exactly the kind of thing we want to avoid, and we think that transparency is the key to raising consumer awareness.
As manufacturers raise the bar to the appropriate level, we anticipate that more and more will do the same as a result of that shift to transparency. Should manufacturers fail to respond in that way, the Government may, in the future, consider that there is a case for setting out a requirement for certain products to be covered by minimum security periods. That is all part of the flexible approach we are keen to take to legislation to ensure that our requirements reflect the realities of technologies and the wider market.
Additionally, I have concerns that the new clause would commit the Government to unnecessary work that would only need to be repeated following the implementation of the initial requirements, before a substantiated case for this additional requirement could be made.
For those reasons, I am not able to accept the new clause. We are taking broad powers and a lot of details will be looked at when we consider secondary legislation. We will be looking at this issue as these products develop. If we think that a requirement for the hon. Member’s minimum period comes about, we will look at the issue again. At this stage, though, I hope he will consider withdrawing his new clause.
Chris Elmore
I have listened carefully to what the Minister has said. For the record, I agree with her about increasing the availability of security information for consumers. I am concerned that the figures are so low regarding the public’s understanding of the cyber-security arrangements when buying goods, whether that be a smart toothbrush—that was an education to me a few months ago when I was being lobbied on the Bill—or what data our smart fridges hold on us. Such information is a revelation, although I should probably know better as the shadow Minister.
The new clause is about a consultation for minimum periods and I accept that there is secondary legislation linked to that. However, as the Opposition, we have an obligation, particularly following the evidence from Professor Carr, to make clear what we think should happen regarding a simple consultation by the Secretary of State on the imposition of minimum periods for purchasing; and the Committee can make that clear in a separate decision.
Question put, That the clause be read a Second time.
Chris Elmore
On a point of order, Ms Nokes. I thank all Committee members for a constructive and cordial debate throughout, including in the evidence sessions. I thank the Clerks, particularly for answering my team’s never-ending questions. As new members of staff for me who have been flown into a new Bill, James Small-Edwards and Alex Williams have been superb. I thank you, Ms Nokes and Mr Stringer, for your chairpersonship across the sessions—and, of course, the Doorkeepers, who have spent all their time running through the room as I am calling for Divisions.
Question put and agreed to.
Bill, as amended, to be reported.
Product Security and Telecommunications Infrastructure Bill
Wednesday 25th May 2022
(1 year, 11 months ago)
Commons ChamberRead Full debate Product Security and Telecommunications Infrastructure Act 2022 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Consideration of Bill Amendments as at 25 May 2022 - (25 May 2022)
14:57 - The House divided: - Ayes: 163 / Noes: 280 - Question accordingly negatived.
The Minister for Media, Data and Digital Infrastructure (Julia Lopez)
I beg to move, That the clause be read a Second time.
Madam Deputy Speaker (Dame Rosie Winterton)
With this it will be convenient to discuss the following:
Government new clause 2—Jurisdiction of First-tier Tribunal in relation to code proceedings in Wales.
Government amendments 1 to 3.
Amendment 14, in clause 59, page 42, line 11, after “agreement”, insert
“other than with a private landlord”.
This amendment, together with Amendments 15, 16 and 17, would apply a different regime under the Electronic Communications Code to private landlords, giving automatic upgrade rights for operators to properties owned by private landlords subject to the condition that the upgrading imposes no additional burden on the other party to the agreement.
Amendment 15, page 43, line 39, at end insert—
“(5B) Paragraph 17 of the new code (power for operator to upgrade or share apparatus) applies in relation to an operator who is a party to a subsisting agreement with a private landlord, but as if for sub-paragraphs (1) to (6) there were substituted—
‘(1) This paragraph applies where—
(a) an operator (“the main operator”) keeps electronic communications apparatus installed on, under or over land, and
(b) the main operator is a party to a subsisting agreement in relation to the electronic communications apparatus.
(2) If the conditions in sub-paragraphs (3), (4) and (6) are met, the main operator may—
(a) upgrade the electronic communications apparatus, or
(b) share the use of the electronic communications apparatus with another operator.
(3) The first condition is that any changes as a result of the upgrading or sharing to the electronic communications apparatus to which the agreement relates have no adverse impact, or no more than a minimal adverse impact, on its appearance.
(4) The second condition is that the upgrading or sharing imposes no additional burden on the other party to the agreement.
(5) For the purposes of sub-paragraph (4) a burden includes anything that—
(a) has an adverse effect on the person’s enjoyment of the land, or
(b) causes loss, damage or expense to the person.
(6) The third condition is that, before the beginning of the period of 21 days ending with the day on which the main operator begins to upgrade the electronic communications apparatus or (as the case may be) share its use, the main operator attaches a notice, in a secure and durable manner, to a conspicuous object on the relevant land.
(7) A notice attached for the purposes of sub-paragraph (6) must—
(a) be attached in a position where it is reasonably legible,
(b) state that the main operator intends to upgrade the electronic communications apparatus or (as the case may be) share its use with another operator,
(c) state the date on which the main operator intends to begin to upgrade the electronic communications apparatus or (as the case may be) share its use with another operator,
(d) state, in a case where the main operator intends to share the use of the electronic communications apparatus with another operator, the name of the other operator, and
(e) give the name of the main operator and an address in the United Kingdom at which the main operator may be contacted about the upgrading or sharing.
(8) Any person giving a notice at that address in respect of that electronic communications apparatus is to be treated as having been given that address for the purposes of paragraph 91(2).
(9) Any agreement under Part 2 of this code is void to the extent that—
(a) it prevents or limits the upgrading or sharing, in a case where the conditions mentioned in sub-paragraphs (3), (4) and (6) are met, of any electronic communications apparatus to which the agreement relates that is installed on, over or under land, or
(b) it makes upgrading or sharing of such electronic communications apparatus subject to conditions to be met by the operator (including a condition requiring the payment of money).
(10) Nothing in this paragraph is to be read as conferring a right on the main operator to enter the land which the main operator would not otherwise have, when upgrading or sharing the use of the electronic communications apparatus.
(11) References in this paragraph to sharing electronic communications apparatus include carrying out works to the electronic communications apparatus to enable such sharing to take place.
(12) In this paragraph—
“the relevant land” means—
(a) in a case where the main operator has a right to enter the land, that land;
(b) in any other case, the land on which works will be carried out to enable the upgrading or sharing to take place or, where there is more than one set of works, the land on which each set of works will be carried out;
“subsisting agreement” has the meaning given by paragraph 1(4) of Schedule 2 to the Digital Economy Act 2017.’”
This amendment, together with Amendments 14, 16 and 17, would apply a different regime under the Electronic Communications Code to private landlords, giving automatic upgrade rights for operators to properties owned by private landlords subject to the condition that the upgrading imposes no additional burden on the other party to the agreement.
Amendment 16, in clause 60, page 44, line 4, after “land”, insert
“not owned by a private landlord”.
This amendment, together with Amendments 14, 15 and 17, would apply a different regime under the Electronic Communications Code to private landlords, giving automatic upgrade rights for operators to properties owned by private landlords subject to the condition that the upgrading imposes no additional burden on the other party to the agreement.
Amendment 17, page 45, line 14, at end insert—
“17B (1) This paragraph applies where—
(a) an operator (‘the main operator’) keeps electronic communications apparatus installed on, under or over land owned by a private landlord,
(b) the main operator is not a party to an agreement under Part 2 of this code in relation to the electronic communications apparatus, and
(c) the electronic communications apparatus was installed before 29 December 2003.
(2) If the conditions in sub-paragraphs (3), (4) and (6) are met, the main operator may—
(a) upgrade the electronic communications apparatus, or
(b) share the use of the electronic communications apparatus with another operator.
(3) The first condition is that any changes as a result of the upgrading or sharing to the electronic communications apparatus to which any existing agreement between the operator and the landlord relates have no adverse impact, or no more than a minimal adverse impact, on its appearance.
(4) The second condition is that the upgrading or sharing imposes no additional burden on the landlord.
(5) For the purposes of sub-paragraph (4) a burden includes anything that—
(a) has an adverse effect on the person’s enjoyment of the land, or
(b) causes loss, damage or expense to the person.
(6) The third condition is that, before the beginning of the period of 21 days ending with the day on which the main operator begins to upgrade the electronic communications apparatus or (as the case may be) share its use, the main operator attaches a notice, in a secure and durable manner, to a conspicuous object on the relevant land.
(7) A notice attached for the purposes of sub-paragraph (6) must—
(a) be attached in a position where it is reasonably legible,
(b) state that the main operator intends to upgrade the electronic communications apparatus or (as the case may be) share its use with another operator,
(c) state the date on which the main operator intends to begin to upgrade the electronic communications apparatus or (as the case may be) share its use with another operator,
(d) state, in a case where the main operator intends to share the use of the electronic communications apparatus with another operator, the name of the other operator, and
(e) give the name of the main operator and an address in the United Kingdom at which the main operator may be contacted about the upgrading or sharing.
(8) Any person giving a notice at that address in respect of that electronic communications apparatus is to be treated as having been given that address for the purposes of paragraph 91(2).
(9) Nothing in this paragraph is to be read as conferring a right on the main operator to enter the land which the main operator would not otherwise have, when upgrading or sharing the use of the electronic communications apparatus.
(10) References in this paragraph to sharing electronic communications apparatus include carrying out works to the electronic communications apparatus to enable such sharing to take place.
(11) In this paragraph ‘the relevant land’ means—
(a) in a case where the main operator has a right to enter the land, that land;
(b) in any other case, the land on which works will be carried out to enable the upgrading or sharing to take place or, where there is more than one set of works, the land on which each set of works will be carried out.”
This amendment, together with Amendments 14, 15 and 16, would apply a different regime under the Electronic Communications Code to private landlords, giving automatic upgrade rights for operators to properties owned by private landlords subject to the condition that the upgrading imposes no additional burden on the other party to the agreement.
Amendment 12, page 45, line 18, leave out clause 61.
This amendment removes clause 61 of the Bill, which gives operators the ability to calculate rent based on ‘land value’ rather than ‘market value’ when renewing tenancies to host digital infrastructure on private land.
Amendment 13, page 46, line 42, leave out clause 62.
This amendment removes clause 62 of the Bill, which gives operators the ability to calculate rent based on ‘land value’ rather than ‘market value’ when renewing tenancies to host digital infrastructure on private land in Northern Ireland.
Amendment 9, in clause 68, page 58, line 38, leave out from “must” to “one” in line 39 and insert “use”.
This amendment, along with Amendments 10 and 11, seeks to ensure that operators engage in the alternative dispute resolution process by making it mandatory.
Government amendments 4 to 7.
Amendment 10, in clause 68, page 59, line 12, leave out from “must” to “one” in line 13 and insert “use”.
This amendment, along with Amendments 9 and 11, seeks to ensure that operators engage in the alternative dispute resolution process by making it mandatory.
Amendment 11, page 59, line 34, leave out from “must” to “one” in line 35 and insert “use”.
This amendment, along with Amendments 9 and 10, seeks to ensure that operators engage in the alternative dispute resolution process by making it mandatory.
Government amendment 8.
Julia Lopez
It is a pleasure to be making such good progress on this Bill, which seeks to deliver world-class connectivity to our constituents and to improve the security of the devices that we all rely on. I will start by explaining the need for the Government amendments tabled in the name of the Secretary of State, as those amendments are relatively straightforward. I will then move on to the more substantial matter of the remaining amendments, which I suspect right hon. and hon. Members are keener to discuss.
Beginning with new clause 1, as I explained on Second Reading, some operators with apparatus on land are currently unable to follow an existing statutory process to renew their agreement once it comes to an end. These operators also cannot use the code to get an entirely new agreement, because only the occupier of land can grant code rights. An operator already occupying land clearly cannot enter into an agreement with itself. Clause 57 was intended to ensure that operators could obtain code rights from another party in these circumstances, but subsequent engagement with stakeholders has made it clear that the clause as drafted would not cover all scenarios and that a more focused approach is required. Some operators would still find themselves effectively stuck once their agreements ended, with no means of renewing their agreement and no reasonable or practical means of obtaining a new code agreement. This can have negative consequences for consumers, and as such it is unacceptable. New clause 1 therefore replaces clause 57.
The new clause will ensure that all operators in exclusive occupation of land who do not have a statutory renewal option can still seek a code agreement. The person who can grant those code rights will usually be the owner of the land, although the new drafting makes provision for less straightforward situations. As well as resolving the problem of “stuck” operators, new clause 1 also assists operators with an existing, ongoing agreement. Where such operators need additional code rights that are not already provided by their current agreement, the new clause ensures they can seek such rights. Currently, some such operators are unable to do so because they are in occupation of the land.
John Redwood (Wokingham) (Con)
Will my hon. Friend confirm that operators still need to get the agreement of the landowner or someone else who is empowered to grant that right, so that there is no muddle or confusion?
Julia Lopez
Yes. They will be allowed to take out a new agreements, but they still have to be under the existing regime.
To be clear, this will not let an operator unilaterally change, or ask the court to impose a change to, the terms or duration of their current agreement. It allows an additional code right to be conferred on the operator via a new, separate code agreement.
Dave Doogan (Angus) (SNP)
I think we all accept the need to be able to protect continuity of service, but my constituent, Mr Ramsay, is on the receiving end of some very strong tactics by Telefonica, which is looking to reduce the value of his lease agreement by about 90%, by £5,000 from about £7,000. What does the Minister suggest my constituent do under the weight of that corporate might? It is a David and Goliath situation.
Julia Lopez
I thank the hon. Gentleman for raising the case of his constituent. I would be grateful if he took it up with my officials, as I am keen to look into it. Throughout the passage of the Bill, individuals have raised cases with me. It is fair to say that the number of cases has declined substantially as the Bill has progressed through the House, so I am content that the position is getting much better, but if there are outstanding cases of situations that any MP feels is unfair, I will be grateful if they are brought to my attention.
To return to the case I was making for new clause 1, as with an initial agreement, if a consensual agreement cannot be reached about the additional right needed, operators will be able to ask the court to impose an additional agreement conferring the additional right. Of course, in those circumstances an operator would still have to satisfy the court that its application meets the requirements of part 4 of the code, including the public interest test.
Let me give an example of how the Government intend this to work. An operator may have an existing agreement which contains a code right to install a 3 metre high mast. Subsequently, the operator realises that it needs to install a 5-metre high mast on the same piece of land. That could enable the operator to install 5G technology or to improve or expand its network. The original agreement allowing the 3-metre mast will continue to run for its remaining term, and the operator will ask the site provider to enter into a second agreement, which contains a code right allowing it to install the 5-metre high mast.
Advances in technology occur at pace, whereas a code agreement can last for a number of years. If an operator has to wait until the term of its code agreement is about to expire before being able to obtain additional code rights, it will be unable to install the latest technology on its apparatus, meaning our constituents will be deprived of faster, more reliable services such as 5G and, in time, 6G. We think that the new clause is also vital to give UK businesses access to the technology they need, enabling our economy to thrive. I hope Members will therefore agree that it must be made.
Turning to new clause 2, we want to ensure that disputes relating to the electronic communications code can be dealt with as quickly and efficiently as possible. Currently, paragraph 95 of the code allows the Secretary of State to make regulations that confer jurisdiction on either the first-tier tribunal or upper tribunal in relation to England, but only the upper tribunal in relation to Wales. The current regulations made under paragraph 95 state that all code disputes must commence in the upper tribunal, although in England, appropriate cases may then be handed down to the first-tier tribunal. The first-tier tribunal has greater administrative resources and more judges than the upper tribunal, meaning that code disputes can be processed and heard more quickly.
Moving forward, the Government are therefore considering a greater role for the first-tier tribunal in hearing code disputes, including making further regulations using the power in paragraph 95 of the code where appropriate. The new clause provides the necessary powers so that we can do just that. In future, the Secretary of State will be able to make regulations conferring jurisdiction on both the upper tribunal and the first-tier tribunal in Wales.
The final set of Government amendments is amendments 4 to 7. They have been tabled to make a minor clarification to the text of clause 68 to avoid any unintended interpretation of the legislation. Clause 68 currently makes it clear that an operator can, at any time, give notice in writing to a person from whom they are seeking code rights, stating that the operator wishes to engage in alternative dispute resolution, often known as ADR. However, nowhere is it set out that such a notice can be sent from that person to the operator. The amendments clarify that when an operator seeks code rights from a person, either the operator or that person may give notice to the other expressing a wish to engage in ADR at any time.
Sir Desmond Swayne (New Forest West) (Con)
I certainly welcome the movement that the Minister has made. I went to table exactly those amendments and was pleased to find that she had beaten me to it. Can I tempt her to go further with respect to my amendment and amendment 4 and require the operator, which has such disproportionate power against the landowner, to engage as a requirement in the alternative dispute procedure from the outset?
Julia Lopez
I am afraid that my right hon. Friend cannot tempt me, and I will say why shortly.
I thank the hon. Member for Hackney South and Shoreditch (Dame Meg Hillier) for bringing forward amendments 14 to 17 to clauses 59 and 60. They would expand retrospective rights to upgrade and share apparatus in buildings owned by private landlords, such as blocks of flats, also known as multiple dwelling units or MDUs. I begin by saying that I have considered this issue carefully. I have been lobbied extremely heavily on it by one operator in particular, and I have tested the proposition with my officials, legal advisers and other operators.
I would not like to pre-empt what the hon. Lady might say as to why she tabled the amendments and their perceived need. However, I reassure her, and any others considering supporting them, that as a fellow London MP with many MDUs in my seat I am concerned about the dangers of a digital divide emerging, and I am doing what I can to avoid that circumstance. If I thought that the amendments genuinely helped on that front, I would do all I could to incorporate them, but there is a glaring lack of consensus among the telecoms industry about their need. Indeed, only one operator has contacted me in support of them, while four separate operators and representative bodies have strongly opposed the amendments, arguing that they are anti-competitive. I will talk a little more about that in a minute.
Andrew Percy (Brigg and Goole) (Con)
I welcome the Minister’s rejection of those amendments. In my area, we have KCOM, which is a strong local performer. Had it not been for KCOM, most of my constituents, who are on the dual network, where it can be KCOM or Openreach, would not be anywhere near to getting gigabit broadband. We therefore do not want to see any changes that will give BT Openreach an advantage or preference over other providers, such as KCOM, which have got their acts together and got gigabit broadband delivered to our homes.
Julia Lopez
I thank my hon. Friend for raising the great work of KCOM and the importance of competition and how it is driving roll-out. It is changing the dynamic in the market, very much for the better. I am mindful of how we drive extra competitiveness in this field, because that is what is getting us the roll-out and the digital connectivity that our constituents need and demand.
Amendments 14 to 17 are, I think, identical to the proposals tabled in Committee. As I explained then, upgrading and sharing electronic communications apparatus offers substantial benefits. We specifically recognised that in our 2017 reforms and in the new upgrading and sharing rights that clauses 59 and 60 will create. However, as I also explained, any legislation concerning work affecting private land has to take careful care to strike the right balance between public benefit and individual rights. The automatic rights introduced in 2017 were developed to maintain that balance.
Even more careful consideration is needed for legislation that applies retrospectively. It is for that reason that clauses 59 and 60, which have retrospective effect, include tighter restrictions on the rights they confer on operators. Under those clauses, operators will have automatic rights to carry out only limited activities that will not have adverse impacts on the land in question or impose any burden on anyone with an interest in the land. However, conferring these rights will facilitate activities such as crucial upgrading work on cables installed underneath land. Industry stakeholders have confirmed that this has significant potential to provide homes and communities with gigabit-capable connections at pace. The public benefits are therefore substantial, with little to no impact on private individuals.
Further expanding these retrospective measures, as proposed by the amendments, would require us to revisit two fundamental points: first, what would the public benefit be, and, secondly, what would the impact be on individual landowners’ rights? We have considered that carefully, and we do not think that the case has been made for the changes that the amendments propose.
Looking first at the impact on landowners’ rights, if apparatus can be upgraded or shared without material alteration to land or property—for example, if works are carried out solely on or within apparatus, such as a duct—impact on the land can be negligible. Upgrading equipment in a building almost always involves some direct impact, however small, on the building. We think that works that have an impact on property should require either agreement from the landlord or imposition by the courts through the processes provided for in the code.
In any event, if an automatic right of the kind envisaged was introduced, operators would still have to successfully engage with the landlords for logistical purposes, such as to arrange access to the property or to discuss any potential health and safety issues or need for repairs. If these conversations must take place, and we think that they should, it seems sensible that the operator should at the same time ask permission to carry out the works. That brings us again to the question of whether the expanded automatic rights, as proposed by the amendments, would be proportionate. There are other ways that operators can upgrade equipment in multi-dwelling units. They can already ask for the rights to do so, and measures are being introduced that will enable them to resolve matters quickly and cheaply.
Finally, what of the public benefit? Members made the point in Committee that residents in blocks of flats urgently need gigabit-capable connections, particularly if we are to meet our levelling-up ambitions in urban areas, as well as in rural communities. I have explained that the code already contains provisions that would enable operators to seek rights to upgrade apparatus in buildings. In contrast, an automatic right could have adverse impacts that have perhaps not been fully explored. Members suggest that there is consensus in industry that these changes are needed, but that is not the case. I have received direct representations from many fibre providers that strongly oppose these proposals. They say that the proposals would create an unfair advantage for operators with equipment inside buildings, with potentially anti-competitive effects.
I hope that gives the hon. Member for Hackney South and Shoreditch assurance that the provisions in the Bill on retrospective rights to upgrade and share represent a balanced approach, and that there are substantial measures in place and under way to connect residents of multi-dwelling units. I therefore hope that she will not press her amendments to a Division.
Finally, I will address the amendments tabled by my right hon. Friend the Member for New Forest West (Sir Desmond Swayne). First, amendments 12 and 13 seek to remove clauses 61 and 62 from the Bill. This is another matter that I am familiar with. Indeed, as I suggested in response to an intervention, I have had conversations with him and other hon. Members about particular cases, as well as with the campaign group that represents landowners on the issue.
The Government recognise that, since 2017, there have been problems between some landowners and telecoms operators, and a level of discontent about the result of the valuation regime change, but we want to bring that regime more in line with that of other utilities, and we believe there are significant benefits to doing so. I must say that I have found little evidence in recent weeks and months to suggest that the regime requires a radical overhaul.
I have encouraged more collaborative discussions between operators and landowners. I have looked into specific cases, and concluded that the measures that we are introducing to encourage more collaborative negotiations will help to tackle many of the problems that I have seen. Significant information about cases has not always been forthcoming when asked for, but if hon. Members would like to discuss constituency cases, I am always happy to receive the details. Fundamentally, we need a legislative framework that keeps costs low, so that we can encourage investment and protect consumers from price increases. The code valuation framework to calculate the sums payable to landowners by operators, which was introduced in 2017, aimed to achieve that. We maintain that the overall framework creates the right balance between the public need for fantastic digital infrastructure and making sure that landowners receive a fair payment for allowing their land to be used. The purpose of clauses 61 and 62 is to make sure that the valuation framework applies consistently across the UK and to all agreements the code applies to.
John Redwood
I certainly support the Minister in the belief that the more competitive the industry, the better the results that we will get. Has she had representations from people who would like to enter the market about whether the change would make them more likely to do so?
Julia Lopez
Most of the people I have spoken to are already in the market and believe that the change will make a big difference to how they roll out. It is a very competitive market with many new entrants. I am not aware of anybody who is just dipping their toe in the water; because it is so competitive, people are already aggressively in the market. We think that the change will really help to accelerate the roll-out to our constituents of fantastic digital infrastructure of the kind that we all understand is fundamental to driving productivity gains, and to reducing the divide between areas that do and do not have that connectivity.
From the contribution of my right hon. Friend the Member for New Forest West on Second Reading, I understand that his concern relates to the effect of clauses 61 and 62 on landowners who already host telecoms apparatus on their land. I recognise that, ultimately, these changes are likely to lead to reductions in the rent received by landowners with a tenancy protected by the Landlord and Tenant Act 1954 or the Business Tenancies (Northern Ireland) Order 1996. I appreciate that that might not have been expected by those entering into such tenancies at the time they were created, but it is also fair to say that market values change over time, and there is never any guarantee that rents received by a landlord will remain constant or increase.
We have also given careful consideration to the effect of clauses 61 and 62, and have balanced the impact that they might have on landowners with the wider, substantial public benefits that we are pursuing. It is also important to recognise that the changes will not happen until any ongoing agreement expires and comes to be renewed. Furthermore, clauses 63 and 64 introduce separate provisions allowing the landowner to recover compensation for any damage to their land, reduction in its value or reasonable expenses resulting from an operator exercising their code rights.
Clauses 61 to 64 ensure that the 2017 framework will apply to all future agreements. It must be remembered that the code has an underlying purpose, which is to support the delivery of robust digital networks. Our constituents increasingly rely on those networks for critical digital services. Only recently, the National Farmers Union’s digital technology survey found that poor mobile signal and unreliable internet access are hampering farming businesses. We know that rural connectivity is a problem for many organisations, and addressing it is one of our priorities as a Government. The Bill, including clauses 61 and 62, aims to address those issues.
I am sure that my right hon. Friend had only noble intentions when tabling his amendments, but although they may benefit some landowners, they have the potential to penalise entire communities by keeping network costs unacceptably high. Clauses 61 and 62 will help to reduce the digital divide between different parts of the country, as they will help to prevent deployment being cheaper in one area than another.
Finally, I turn to amendments 9 to 11 tabled by my right hon. Friend, which would require a party to use alternative dispute resolution processes before making certain applications to a court under the electronic communications code, including where an agreement granting rights under the code is being sought. The provisions on ADR processes in the Bill aim to create more collaborative discussions between landowners and telecoms operators to ensure that litigation is used only as a last resort. I suspect that that is what the amendments seek to ensure as well. Although I sympathise with the intention behind these amendments, the Government oppose them—first, because they are unnecessary; secondly, because ADR is not appropriate in every situation; and thirdly, because they would be counterproductive to the amendments’ overall intentions.
The Bill requires operators, when requesting rights under the code, to inform the landowners of the availability of ADR. Crucially, it also creates a requirement that if an application is made to a court, the court will be required to take into account any unreasonable refusal to engage in ADR when awarding costs. Those requirements strongly incentivise the use of ADR without the need to make it mandatory. The Government therefore believe the amendments to be unnecessary.
It is also important to note that ADR may not be suitable in certain cases, such as where a disagreement is based on differing interpretations of the law. Such points of law must be resolved in the courts, and mandatory ADR would add cost and time to that process without offering any benefit.
The Government also believe that the amendments would be counterproductive to their own goals. If ADR were compulsory, some parties would be compelled to participate in an ADR process they do not want to be involved in, and so would be less inclined to actively engage in the process. That would increase the risk that ADR would fail, which would mean that parties would have to go to court anyway. If that were the case, all that compulsory ADR would have achieved is to add an additional layer of time and costs for landowners, such as charities, sports clubs and farmers. It should also be noted that, when consulted, a clear majority of stakeholders were not in favour of compulsory ADR. I hope that I have given my right hon. Friend assurance that the provisions regarding ADR in the Bill already represent the most effective way of encouraging its use, and I hope that he will not press his amendments to a Division.
Chris Elmore (Ogmore) (Lab)
You will be aware, Madam Deputy Speaker, that I have spent at least the last five and a half years as an Opposition Whip encouraging brevity, so I do not intend to keep the House too long. I will keep my remarks short and hopefully to the point. As I said on Second Reading and in Committee, I will not pretend that the Opposition do not support the wider principles of the Bill. I thank the Minister for the constructive way in which she has engaged on it with me from the outset.
I turn to the new clauses and amendments. New clause 1 is an improvement on the Government’s first attempt to change the definition of “occupier”, but the changes put forward are still not watertight when it comes to preventing unintended consequences. The new clause does not address the underlying issue that operators could theoretically use it in situations other than when existing agreements have expired, which could lead to financial consequences for small site providers who have been hard done by since the electronic communications code review in 2017. More work is needed when the Bill moves to the other place to ensure it does not unintentionally punish site providers further. We have no issue with the proposal in new clause 2 that grants the Secretary of State power to make regulations that provide for a function conferred by the code on the court to be exercisable in relation to Wales by the first-tier tribunal.
I will speak to amendment 14 on behalf of my hon. Friend the Member for Hackney South and Shoreditch (Dame Meg Hillier). She sends her apologies to the House; she is chairing the Public Accounts Committee. We have checked with the Clerks and the Speaker’s Office to check that that is appropriate. That amendment, and the consequential amendments 15, 16 and 17, seek to apply a different regime under the electronic communications code to private landlords. They would give operators automatic upgrade rights in respect of properties owned by private landlords, subject to the strict condition that the upgrading imposes no additional burden on the other party to the agreement.
The growing digital divide in our towns and cities has only been exacerbated by the pandemic. The Government’s broadband target has been downgraded twice, and the Digital, Culture, Media and Sport Committee doubts that the current 85% gigabit target will be met. The backlog is due to the difficulty in accessing a high number of properties, a disproportionate number of which are flats, whose absentee landlords have little to no incentive to respond to requests to upgrade and improve connectivity.
Ruth Edwards (Rushcliffe) (Con)
I have complete sympathy with the intention behind the amendments and with what the hon. Gentleman is trying to do, but many providers whom we have spoken to throughout the Bill’s passage oppose them on the grounds that they will give the incumbent provider an advantage. Is he concerned that an unintended consequence of his amendments might be to make it more difficult for new competitors to enter the market and provide our constituents with the services that they need?
Chris Elmore
I welcome competition in the market, but I would say to the hon. Lady that we now have broadband blackspots in parts of central London, and 15% of the constituency of the hon. Member for Hastings and Rye (Sally-Ann Hart) has these MDU blackspots. This is affecting constituents up and down the land, and the demand from all our constituencies, particularly because of the pandemic, is that we require the very best sector-leading broadband. It cannot simply be the case that some operators say this must happen and some say it should not happen, therefore nothing is resolved.
Sir Desmond Swayne
May I take it therefore that, if Madam Deputy Speaker is minded to allow separate decisions on my amendments, the hon. Gentleman will support them?
Chris Elmore
I can tell the right hon. Gentleman that we supported this in Committee. Sadly, the Members on his own side did not. I would be very glad if he pushed the amendments, through your good offices, Madam Deputy Speaker, and if he did so, I am sure we would all row in behind him. What the Minister and the Government Whips do could be a different conversation altogether, but I do not think that worries him anymore.
I now turn to Government amendments 4 to 7 and the right hon. Gentleman’s own amendments 10 and 11. We welcome amendments 4 to 7 to ensure that a person with whom an operator is seeking a code agreement may at any time give the operator notice that they wish to engage in alternative dispute resolution in relation to a prospective site-sharing agreement. While the pace of new agreements between landowners and operators has slowed down in recent years, small landowners have been unable to afford the cost of going to a tribunal to try to defend their property rights. When the Bill moves to the other place, we hope that a debate can continue on the possibility of making ADR mandatory, as suggested by amendments 10 and 11, for telecoms operators before threatening to take landowners to court for an agreement to be imposed.
As I have said from the start and certainly many times in Committee, we are not against this Bill, which is a welcome step in the right direction. However, there are certain areas that need to be tightened and improved, and I hope their lordships will have a full debate and bring forward much-needed amendments to ensure that we deliver the very best broadband roll-out right across the United Kingdom.
Sir Desmond Swayne
My amendments 9 to 11 are designed to address what was made clear in the House on Second Reading, which is that there are examples of egregious bullying by the operators and that there is a complete disproportion of power between those operators and the landowners. The Minister has spoken of her demand for more collaborative working and collaborative negotiation, but we are asking for the process of alternative dispute resolution to be a requirement from the outset precisely because the operators know that they have the power to overawe and frighten landowners with the threat of legal action.
The purpose of my amendments 11 and 12, which was spelt out very well by the Minister, is to return to the status quo ante 2017. Until 2017, compensation was based on market value, and in 2017 the new code changed it to land value, notwithstanding the explicit advice of the Law Commission not to do so. As was entirely predictable and as was predicted, the market dried up as a consequence and there were far fewer agreements. One of the purposes of this Bill is of course to address that problem of the reduction in agreements. Therefore, the obvious remedy is to restore the position as it was and return to market value, but far from doing that—far from seizing this opportunity to remedy the situation—the Government are compounding their error by wanting to make agreements previously made under the old regime renewable under land value, actually making the problem significantly worse as a consequence.
I do not know why the Government appear to have adopted the anarchist principle that property is theft. On the contrary, these measures, by denying landowners proper compensation on the basis of market value—compensation arrived at by a free and open market—and coercing them accordingly to give up their property rights, strike me as theft. These provisions in the Bill are in effect a conspiracy to promote theft: it is stealing. I just cannot understand how a Conservative Government have brought themselves to bring this measure before the House, changing the law retrospectively and so damaging property rights. I just assume that Ministers simply have not realised the enormity of the change they are making. Accordingly, I believe these amendments are vitally necessary for the Bill.
Madam Deputy Speaker (Dame Rosie Winterton)
I call the SNP spokesperson.
Owen Thompson (Midlothian) (SNP)
It is worth saying from the start that this Bill certainly takes aim at some of the key gaps in how we regulate product security, so I am genuinely grateful that the Minister is seeking to address some of the issues that have been raised. I put on record my thanks to my hon. Friend the Member for Ochil and South Perthshire (John Nicolson) for leading on Second Reading and in Committee, as well as for getting the phrase “malevolent toaster” into Hansard.
I have warned the Chamber a number of times about the various threats from technology and online spaces. For instance, I have campaigned for tougher action against so-called cyber-troops—organised malevolent forces that weaponise misinformation against our democracy. I definitely think that there has been major progress in building public awareness about the importance of cyber-security, and the experience of the botched Brexit referendum and Trump’s time in the White House was a crash course in taking online safety seriously.
However, we do remain a bit behind when it comes to the so-called internet of things, which encompasses the many household objects we now connect to the internet, from security systems to smart fridges and, indeed, toasters. This is a real Achilles heel. Last year, there was a total of 1.5 billion attacks on the internet of things—up 100% in the first half of the year. When Which? set up a fake smart home, it found that it was exposed to 12,000 attacks a week, yet our slowness in recognising that threat has got us to a place where only one in five “internet of things” manufacturers are believed to embed strong security in their devices.
Discussions around the Online Safety Bill have shown as clear as day that many companies, and especially those in the big tech sector, need to be dragged kicking and screaming to implement the bare minimum level of safety for users, whether that is to age-regulate graphic content or to stop scammers. Of course, there are some exceptions, but in any such situation where the private sector prioritises profit over protection, the Government need to step up to protect users with at least a bare minimum level of safety. The Government’s decision to do so by enshrining the principle of security design is therefore very welcome on the SNP Benches.
It is also absolutely right that we embed the idea in the law that the onus should be on the manufacturers to provide security in the design of their products, bringing the UK framework into line with the Scottish Government’s cyber-resilience strategy, which has enshrined security by design as a foundational principle in Scotland’s cyber-landscape. And yet, oversights abound. I am sad to say that oversights were raised with the Government on Second Reading and in Committee, but a number still remain. Some of that points to the Government trying to push the Bill through at breakneck speed, but the Minister should caw canny about putting speed over consumer safety as that will only cause us all headaches further down the line.
One such oversight on Second Reading was the requirement for manufacturers to declare publicly security flaws in their products without requiring that fixes are carried out when the flaw is announced. Nor is there a requirement for automatic fixes to be in place. One without the other essentially has the effect of drawing a big red circle around the product’s flaws for hackers without giving users the tools to shore up their defences. We cannot expect users to be skilled in product patching, so a laissez-faire approach would be a serious mistake. Nobody should be fixing those flaws but the manufacturers, and nobody but the Government can require them to do so.
On Second Reading, the Minister was urged to implement a requirement for automatic patching or one for manufacturers to have a solution in place by the time that the product flaws are disclosed publicly. It is frustrating that no progress has been made on that front. I hope that the Minister can see that that is an urgent issue for public safety and that we all have to get it right. There has also been no progress in plugging the gaps in products left out of the Bill’s scope such as internet-connected ovens, medical devices, routers and second-hand products. On top of that, the Government have justified the exclusion of laptops and desktops by arguing that there is already a developed security software market. That may be the case, but only 58% of people in the UK use antivirus software. With home working on the rise, it is crucial that the Minister recognises the growing risk of laptops and desktops.
The somewhat unclear definition of “distributors” in the Bill also means that online marketplaces such as Amazon and eBay could argue that they are platforms or services, which would leave them outwith the Bill’s scope. That is a major oversight considering the number of unsafe products found on those sites. Closing that loophole would be a simple case of tidying up the language and explicitly including online marketplaces.
Although it is welcome that future regulations will require manufacturers to provide transparency on how their products receive security updates, leaving that up to the regulators feels like a bit of a cop-out. The Government have given no clarity on exactly what level of transparency will be required. Why not give us the details so that we can debate them fully in this place? Without those details, how can we expect enforcement to be in any way achievable?
Which? has been campaigning heavily on those two points, and I applaud its efforts to keep consumer protection at the top of the Government’s agenda. I urge the Minister to heed Tech UK’s call for the Government to undertake work to communicate the new framework to consumers. We risk causing a surge in electronic waste if the Bill causes consumers to perceive that their old devices are obsolete, so an effective comms strategy is needed to prevent an adverse environmental impact.
Before I wind up, I repeat the point made by my hon. Friend the Member for Ochil and South Perthshire on the Bill’s enforcement mechanisms. Clause 26(5) makes it clear that the Secretary of State will not be able to bring proceedings in Scotland, but the Bill will still establish enforcement mechanisms and a body to carry out enforcement. As the Scottish courts and legal system will have to manage enforcement action brought in Scotland, and as oversight of the Scottish legal system is devolved, it is only right that the Scottish Government should have a role in developing the enforcement mechanism. That is honestly just a bit of tidying up, and it is a bit tiring to have to remind the Government constantly not to treat Scotland as an afterthought, but sadly we are here again. What consideration has been given to the Scottish Government’s call for the inclusion of a duty to consult relevant Scottish Ministers when developing the enforcement mechanism and the security requirements to be enforced? On the topic of the devolved nations, I would appreciate it if the Minister set out what impact the Bill’s passage will have on the Scottish Government’s power to regulate products in Scotland, particularly in the light of the United Kingdom Internal Market Act 2020.
Andrew Percy
It is interesting to follow the comments of the SNP spokesman, the hon. Member for Midlothian (Owen Thompson), particularly on disinformation and misinformation. If he wants to see some examples of excellent disinformation and misinformation, I refer him to some of the fake content that occasionally goes out from cybernats.
My only interest in this legislation is in what it will do for my constituents in Brigg and Goole. Some hon. Members might remember me banging on, many times in previous Parliaments and over the last few years, about the poor mobile and broadband coverage in my constituency. I used to refer to our broadband speed as two megabits a fortnight. I therefore welcome the general principles and direction of the Bill, which are so important to speeding up the roll-out of proper gigabit broadband.
In my intervention on the Minister, I highlighted my belief that it is competition that has delivered a massive increase in the roll-out of fibre-to-the-premise, gigabit-enabled broadband in my constituency. In East Yorkshire, we have a mixed network: large parts of East Yorkshire have no BT network at all and are entirely on the Kingston Communications system—now known as KCOM. That is why there are no red telephone boxes; we have white or cream telephone boxes locally. When I worked in America, someone bought me a postcard of red phone boxes to remind me of home, but of course they were entirely alien to me as I grew up in the piece of East Yorkshire where red phone boxes and BT did not exist.
In parts of East Yorkshire, we have the KCOM network. In other parts, including the part that I live in and represent, we have the BT Openreach network and we also increasingly have the Kingston Communications network. That is why I am concerned about some of the amendments tabled by the hon. Member for Hackney South and Shoreditch (Dame Meg Hillier), to which the shadow Minister spoke on her behalf, and about anything that potentially gives an anti-competitive advantage to one provider over another.
I do not have a particular problem with BT Openreach, which did a reasonably good job in the first fibre roll-out—the fibre-to-the-cabinet 24 megabit roll-out—across North Lincolnshire and my part of the East Riding of Yorkshire, which was generally delivered on time and in line with the contract. However, that is obviously not sufficient now, some years on. People increasingly demand and require proper full fibre to the premises, and I am afraid that that is where BT Openreach has not done its job. It has been left to Kingston Communications to roll out proper gigabit broadband to Goole, Broughton and, increasingly, Brigg and other communities in my constituency. We welcome that. As I said, it is purely competition and the work of Ofcom which has enabled us to have that.
Despite my praise of KCOM, those works have not been without some difficulties locally. Some of its pavement and streetworks leave something to be desired, and it has occasionally set fire to a number of residents’ hedges, which is awkward for residents and KCOM. Those problems and troubles aside, we now have significant roll-out of gigabit broadband to the premises as a result of that competition. Indeed, that is why the UK, having languished at the bottom of the full fibre league tables for some time, has begun to rise to a more respectable position.
As I said in my intervention on the Minister, I have some concerns about the amendments that seem to give preference to BT Openreach in some places. As I say, I have no problem with BT Openreach, but the Minister needs to look at some of its investment decisions. For years, it refused to provide full-fibre broadband to most parts of my constituency, including Goole. KCOM came along and did one part of it, leaving Old Goole. We put a town deal bid together to try to roll out full gigabit broadband to Old Goole, and then all of a sudden—I am sure it was entirely unconnected— BT Openreach gave notice that it planned to upgrade the exchange in Old Goole, but could not confirm whether it planned to roll out to premises. That leaves us in a quandary: should we proceed with our town deal, using public money on that project? I am sure it is all a coincidence, but it is important that the Minister looks at how many coincidences there are, where there is investment by one alternative provider and suddenly the behaviour of BT Openreach around that provider seems to take a certain pattern. As I say, I am sure it is all a complete and utter coincidence.
Sir Greg Knight (East Yorkshire) (Con)
My hon. Friend is making a very good speech. Does he accept that the point he is making about competition goes wider than Brigg and Goole? The more competition we see across the country, the better the provision will be.
Andrew Percy
Indeed, but as my right hon. Friend will know, Brigg and Goole is of course the most important place in this country, and I am therefore particularly exercised by what happens there. He is absolutely right, though: that competition, which is also seeing the KCOM network expanded and rolled out in his constituency in the northern bit of East Yorkshire, is really very important. That is not to say that BT Openreach does not have an incredibly important role to play—of course it does, and I praise it for its work in getting gigabit broadband expanded across the country, but some of its behaviour raises questions.
The shadow Minister, the hon. Member for Ogmore (Chris Elmore), who moved amendment 14 and spoke to the group I am referring to, brushed aside concerns about private property rights and the claims that BT Openreach and others will potentially have greater powers than the police to enter private property. He said that that would all be on the basis of no loss or damage. Well, that is all fine, but it is a fairly high bar in loss of personal property rights—or a low bar, depending on how you want to think of it. I was not exactly comforted by his dismissal of people’s legitimate concerns around one provider having particular rights to access property that others would not have. On that basis, I urge the Government to reject and oppose those amendments.
Julia Lopez
I am grateful to all Members who have spoken in this debate, to the Opposition for their support for the Bill, and to the hon. Member for Ogmore (Chris Elmore) in particular for the very collaborative approach he has taken throughout and his acknowledgement of the improvements we have made. I shall test officials on the further points he makes. I am also grateful to the hon. Member for Midlothian (Owen Thompson) for highlighting the product security parts of the Bill. Some of the detail he seeks will be in secondary legislation. Goods sold in online marketplaces, for instance, are not out of scope, because manufacturers, importers and distributors are covered. I would be happy to come back to him on some of the other points he raised.
On criticism of our roll-out, we are making substantial progress on our gigabit roll-out. We are now up to 68% coverage, up from 9% in 2019. I am open to any proposal to make roll-out go even faster. I have set out why competition is so important to that dynamic and why I think the amendments on MDUs are not the right way to go and could even slow the roll-out. I note the comments on BT Openreach. Other providers tell me that they have great teams negotiating wayleaves, that this is a straightforward process and that extra help on MDUs of the kind envisaged is simply not needed. I am grateful to my hon. Friend the Member for Brigg and Goole (Andrew Percy) for using KCOM as a great example of that, and for highlighting not only some of the good work that Openreach does, but the interesting example of his town deal, which I shall take away with me.
My right hon. Friend the Member for New Forest West (Sir Desmond Swayne) made a typically fruity and passionate speech. We believe our legislation incentivises greater collaboration. I set out in detail earlier why that is the case. We believe that rents were too high. As the need for digital infrastructure increases, we think rents need to become more akin to those for utilities. I should never wish to be accused of seeing property as theft. Indeed, I confess to taking umbrage at my right hon. Friend’s assertion on Second Reading. That is why I have tested his proposition—
Julia Lopez
I thank my right hon. Friend. I am glad that I have convinced him of the case. [Laughter.] As I say, I tested his proposition to death and concluded that there may be a case of creative hyperbole. I am glad he has also acknowledged that.
Question put and agreed to.
New clause 1 accordingly read a Second time, and added to the Bill.
New Clause 2
Jurisdiction of First-tier Tribunal in relation to code proceedings in Wales
In paragraph 95(1) of the electronic communications code (power to confer jurisdiction on other tribunals)—
(a) in paragraph (a), at the end insert “or the Upper Tribunal”;
(b) in paragraph (aa), for the words from “, but only” to the end substitute “or the Upper Tribunal”;
(c) omit paragraph (b).”—(Julia Lopez.)
This new clause gives the Secretary of State power to make regulations providing for a function conferred by the code on the court to be exercisable in relation to Wales by the First-tier Tribunal.
Brought up, read the First and Second time, and added to the Bill.
Clause 57
Meaning of “occupier” in relation to land occupied by an operator
Amendment made: 1, page 40, line 11, leave out Clause 57.—(Julia Lopez.)
This amendment is consequential on NC1.
Clause 58
Rights under the electronic communications code to share apparatus
Amendments made: 2, page 41, leave out lines 23 to 25 and insert—
‘(4) In paragraph 9 (conferral of code rights), after sub-paragraph (2) (as inserted by section (Persons able to confer code rights on operators in exclusive occupation)) insert—”
This amendment is consequential on NC1.
Amendment 3, page 41, line 26, leave out “But”—(Julia Lopez.)
This amendment is consequential on NC1.
Clause 59
Upgrading and sharing of apparatus: subsisting agreements
Amendment proposed: 14, page 42, line 11, after “agreement”, insert
“other than with a private landlord”.—(Chris Elmore.)
This amendment, together with amendments 15, 16 and 17, would apply a different regime under the Electronic Communications Code to private landlords, giving automatic upgrade rights for operators to properties owned by private landlords subject to the condition that the upgrading imposes no additional burden on the other party to the agreement.
Question put, That the amendment be made.
Julia Lopez
I beg to move, That the Bill be now read the Third time.
The Romans built the roads, the Victorians built our canals and railways, and our generational challenge is to make sure that the UK has world-class digital infrastructure. That is not just about the needs of today, when we depend on reliable connections for online meetings, television streaming or calling friends and family. We are rolling out, at breakneck speed, full-fibre networks that will last for decades and cater for tomorrow’s needs, alongside more extensive wireless infrastructure to end the frustration of terrible signal and slow downloads.
The Bill is one tool that we need to deliver great connectivity for everyone, and I am grateful for the cross-party recognition of the importance of our task. The Government also recognise that greater connectivity brings the greater threat of harm to individuals, organisations and networks through an increased risk of cyber-attack. If networks and devices are not secure or trusted, we undermine their potential benefit to people and businesses.
I thank the consumer group, Which?, for its campaign that supported the development of our Bill. Not only are our measures important to protect people’s online security when enjoying the benefits of technology, but they will help to protect people’s personal safety. I particularly thank Jessica Eagleton of the domestic violence charity, Refuge, for her compelling evidence at the Public Bill Committee. The Bill is backed by industry experts and I thank them for their input. Other countries are already following suit, and with this Bill, the first domestic piece of legislation in the world to introduce security requirements of connected products, we are global leaders in the cyber-security landscape.
In short, this Bill is vital to the success of our digital economy in the decades ahead. Once passed, its measures will make the UK a better connected place and more resilient against cyber-attacks. Before it moves to the other place, I extend my thanks to the departmental officials for their work preparing the Bill; to the Opposition for their pragmatic and collaborative approach; to the members of the Bill Committee and the witnesses for their commitment; to the parliamentary Clerks, without whose efforts we would not be attending this debate; and to Members from across the House, including my Parliamentary Private Secretary, my hon. Friend the Member for Clwyd South (Simon Baynes), for the scrutiny and support they have provided. I look forward to seeing this important piece of legislation come into force. I commend the Bill to the House.
Madam Deputy Speaker (Dame Rosie Winterton)
I call the shadow Minister, Chris Elmore.
Chris Elmore
I do not intend to detain the House for long. Her Majesty’s Opposition recognise that the first duty of any Government is to keep their citizens safe. That is why we are supporting the security elements of the Bill, which were developed by the Department in conjunction with the National Cyber Security Centre. As the digital sphere becomes ever more integral to our lives and livelihoods, it is of the utmost importance that citizens across the United Kingdom are protected from malign actors. We believe that the Bill will make some significant progress in that regard.
Although we think that measures in part 1, such as the ban on default passwords, are of paramount importance and will no doubt bring benefits, we have concerns about a number of other areas. The legislation establishes, through regulations, three core security requirements for “connectable products”. Rather than those three security requirements being left to be defined in future, we believe that they should be expressly set out in the Bill. That would speed up the entire process and ensure that consumers are protected sooner rather than later.
Similarly, we would like the Secretary of State for Digital, Culture, Media and Sport—it is a pleasure to see her in her place—if she is not too busy trashing another one of our great British institutions, to prepare and publish a report on the security risks to UK connected products. During an oral evidence session on the Bill, Professor Madeline Carr, a cyber-security expert, told us that she would not have an Alexa in her house due to the security risks and that there is nothing in the Bill that would change her mind. Due to that statement by an industry expert, and the prominent role that cyber-warfare is playing throughout the conflict zones of the world, we think that it is very much in the national interest to know how secure our connected products are, and we call on the Government to go much, much further.
The Prime Minister came into office promising “full-fibre” broadband by 2025. Due to a lack of application and grip from the Prime Minister and the Government that he leads, that target was quickly downgraded to full gigabit broadband by 2025. In what was a surprise to absolutely no one who follows this Administration closely, the target was downgraded again to 85% gigabit-capable broadband by 2025. There are still huge doubts—voiced by the Digital, Culture, Media and Sport Committee, the Public Accounts Committee and industry—that even that twice-reduced target will yet be achieved, selling Britain short at every opportunity.
I take no pleasure whatever in pointing out those failures. Indeed, I believe that they are hugely damaging to the future economic potential of our country and to the UK’s social fabric. That is because a digital divide exists in our country and it is only getting worse. One such divide is the fact that, when it comes to digital connectivity, many communities in rural and semi-rural areas, including my Ogmore constituency, are being left behind completely. With the increase in working from home and schoolwork being done over the internet since the pandemic, the Government urgently need to get a grip on this critical issue.
In detailing the Government’s failings when it comes to our telecommunications infrastructure, I think of our own Sir Tim Berners-Lee, who had a vision of the internet being “for everyone”. However, the Government’s inaction is ensuring that that is currently not the case. In 2010, the Labour party left behind a world-leading sector for communication and mobile phone roll-out. The Government have stagnated and stalled over the past 12 years and have failed to build on Labour’s success.
I repeat what I have said throughout the passage of the Bill: I support the Bill’s aim of both increasing the security of our connected devices and speeding up the roll-out of our telecommunications infrastructure. Our point of contention is that the Bill, as currently constituted, does not do either as well as it could. It does not deliver what people in this country desperately need: improved broadband.
As the Bill makes its passage to the other place, we hope that the issues raised about it can be taken up by their lordships to ensure that the improvements can be made and, hopefully, some amendments won. I echo what the Minister said about the constructive nature of our debates—I am not sure that we will be able to continue that with other Bills that she and I may spar over in the months ahead, but I am sure we will try.
I thank the Clerks and all House staff who worked so diligently during the Bill Committee, including the evidence sessions. I thank the witnesses for their expert advice, which was truly valuable. I thank my staff, including Alex Williams and James Small-Edwards, who did an enormous amount of work—I do not have the luxury of civil servants, but perhaps one day soon—[Interruption.] The Secretary of State says “Dream on”. She has certainly been having a few dreams of her own of late that are not working very well, particularly for the Prime Minister. I pay tribute to my staff, who have worked diligently during this process, and I thank all the Members who have played such an integral part in ensuring that the Bill passes through the House with civility and good humour throughout.
Madam Deputy Speaker (Dame Rosie Winterton)
I call the Scottish National party spokesperson, Owen Thompson.
Owen Thompson
I echo much of what the hon. Member for Ogmore (Chris Elmore) said. My comments on Second Reading remain. In particular, my points about enforcement will need further attention, but as I have said all the way through, we support the principles behind the Bill. Despite the requirement for tweaks—if I may put it that way—where we would like to see things go a bit further and done slightly differently, that does not take away from the principles behind the Bill, which we are happy to support.
Question put and agreed to.
Bill accordingly read the Third time and passed.
Product Security and Telecommunications Infrastructure Bill
Thursday 26th May 2022
(1 year, 10 months ago)
Lords ChamberRead Full debate Product Security and Telecommunications Infrastructure Act 2022 Read Hansard Text Amendment Paper: Consideration of Bill Amendments as at 25 May 2022 - (25 May 2022)
Product Security and Telecommunications Infrastructure Bill
Monday 6th June 2022
(1 year, 10 months ago)
Lords ChamberRead Full debate Product Security and Telecommunications Infrastructure Act 2022 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Consideration of Bill Amendments as at 25 May 2022 - (25 May 2022)
The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Lord Parkinson of Whitley Bay) (Con)
My Lords, Her Majesty’s Government want the UK to be a science superpower. Two key planks in achieving this are security and digital connectivity. The UK already influences and shapes global cyber standards and we have committed huge investment to counter cyber threats and to meet our digital infrastructure targets. Back in 2016, we invested £1.9 billion to bolster our cybersecurity, setting up the National Cyber Security Centre and investing in economic resilience, innovation and skills. Now we have gone further, with an additional £2.6 billion being invested over the next three years. The National Cyber Security Centre has stopped 2.7 million online scams in the past year alone, and the new National Cyber Force will proactively counter cyber threats that we face.
Our investment in innovation has seen more than 40 tech unicorns—that is, start-up businesses now valued at over $1 billion—grow outside London, with 100 more in the pipeline. We have invested significantly in superfast broadband, bringing it to 97% of premises, and are now driving investment in gigabit broadband, with over 68% of premises now able to access this technology. But we need to keep investing in emerging technologies to secure ourselves against future threats and realise the opportunities of a digital economy. Monthly broadband use has doubled in four years and continues to rise every year. Cyber threats are proliferating and technology is not always secure by design. That is why we have introduced this Bill.
We want to fulfil our commitment to delivering faster digital connectivity and to ensure that, as we grow, our technology is secure. The Bill will facilitate the extension of futureproofed gigabit-capable broadband and 5G networks, and improve the protection of people, networks and infrastructure from the harms caused by insecure consumer-connectable products. I will start with the telecommunications measures, explaining why they are necessary and what their intended effect is. Following this, I will turn to the product security measures and outline why it is important to consider digital infrastructure and cybersecurity in conjunction.
The Government are committed to delivering digital growth by building a stronger, more connected and more secure UK. This is even more vital as we build back from the pandemic. We have seen rapid growth in the availability of gigabit broadband, from less than 11% of homes and businesses at the end of 2019 to more than 68% today, but, to deliver much-needed connectivity, we must have a legal framework which encourages and enables the deployment of digital networks.
To that end, we are making good progress through a package of measures. Last year we passed the Telecommunications Infrastructure (Leasehold Property) Act to address one of the key barriers to the deployment of gigabit-capable broadband in blocks of flats. We have also committed to legislate to mandate gigabit connectivity in new-build homes. These regulations will be laid as soon as parliamentary time allows. We continue to work closely with the Department for Transport to ensure that street works support deployment of broadband while protecting the road network.
We are working with industry to support its investment and have committed £5 billion of public funding to ensure that no part of the United Kingdom is left behind. We aim to reach a minimum of 85% gigabit-capable broadband coverage by 2025 and to get as close to 100% as soon as possible. We have also agreed a £1 billion deal with the industry to deliver the shared rural network, which is already delivering improved 4G coverage across the UK. The operators and the rest of the industry remain confident that their combined coverage is expected to be delivered to 95% by the end of 2025. We also aim for the majority of the population to have 5G coverage by 2027.
To improve connectivity, in 2017 we implemented reforms to the Electronic Communications Code, which regulates installation agreements between landowners and telecommunications operators. Some noble Lords here today will have been involved in the scrutiny of that legislation. The aim was to make it easier and more cost effective for digital networks to be installed, maintained and upgraded. However, there is still more to be done. We need to go further to realise the Government’s ambitions for digital connectivity and levelling up.
The Bill before us will update the Electronic Communications Code, among other pieces of connected legislation, to deliver these ambitions. Specifically, the Bill aims to optimise the use of existing infrastructure. It encourages collaborative relationships between telecommunications operators and site providers. It gives operators the ability to obtain new rights, which will enable them to take advantage of new technologies and pass the benefits on to customers. It builds on previous measures to tackle the issue of unresponsive landowners and ensures that the price paid to host telecoms apparatus is calculated in a consistent way across the country, preventing a digital divide.
Making optimum use of existing cable and fibre networks has a key role to play in upgrading services and increasing competition. The Bill introduces a new automatic right for operators to upgrade or share apparatus installed before the 2017 reforms. This will be subject to specific conditions to ensure that it will not adversely affect landowners. The measures have been considered carefully to deliver significant benefits to the public while ensuring that there will be little impact on landowners.
Furthermore, the Bill rationalises the way in which expired code agreements are renewed. Currently, an operator has to use one of three different statutory renewal routes. The Bill ensures that, whichever route an operator uses, the terms of the renewed agreement will more closely align with the code as it was reformed in 2017. As a result, there will be greater consistency in how agreements are renewed across the UK.
Making better use of existing infrastructure through upgrading and sharing, and a more consistent and efficient renewal process, will not only improve digital services but reduce the need for new installations. This means less disruption from street works and fewer mast installations in both rural and urban settings, which I am sure will be welcomed in all parts of your Lordships’ House.
We are also introducing measures to facilitate greater use of alternative dispute resolution when parties are negotiating the terms of an agreement to install telecommunications apparatus. This is to ensure that disputes are resolved more quickly and cost-effectively, and that litigation is used only where absolutely necessary. We anticipate that this will encourage constructive dialogue between network operators and potential and existing site providers. It will address situations where landowners may feel compelled to accept terms offered by operators by giving them alternative means of resolving disputes without the need for lengthy and costly litigation.
Finally, in situations where landowners are not responsive, we are creating a new court process. This process will provide a quick and inexpensive route for operators to gain time-limited rights to access certain types of land. Again, these measures have been developed to strike the balance between protecting landowners and ensuring that everyone across the UK has access to reliable and quick digital infrastructure.
I turn now to the product security provisions in the Bill, since the demand for faster broadband is driven by the increasing number of devices we are all installing in our homes. Increasingly, we are streaming more programmes on smart televisions and using telephones and tablets for video calling; half of all homes have a smart speaker, smart watches continue to rise in popularity and smart doorbells and cameras are appearing on every street. The average UK household now has nine internet-connected devices, and over 50% of all UK households purchased an additional consumer connectable product during the pandemic.
With this increased ownership and use of consumer connectable products, there comes a heightened risk of cyberattacks. Cybercriminals have taken advantage of consumer vulnerability during the pandemic, and increasingly target consumer connectable products. In the first half of last year alone, we saw 1.5 billion attacks on connectable products—double the figure of the year before. Thousands of people in the UK have been victims of cyberattacks, leaving many with significant losses of money or private data. As we have seen recently, cybercriminals can now use compromised connectable products to attack large infrastructure. In 2016, the Mirai attack disabled internet access across much of the east coast of the United States of America; we still see variants of Mirai-using botnets attacking businesses and infrastructure today. We have made significant progress to develop the UK’s cybersecurity to tackle threats such as these. In 2018, the Government published a code of practice for manufacturers to improve the security of consumer devices. The UK is a world leader in this area, and our code has since been used by Australia and India, among other countries.
Of course, this progress needs to keep up with the ever-evolving cyber landscape—hence the need to legislate now to ensure that our people and networks are better protected. Taken together, the telecoms and product security measures in the Bill work to create a reliable fast broadband network, and to support the growth of more secure consumer connectable products. The Bill will enable the Government to specify mandatory security requirements to ensure that manufacturers, importers and distributors of smart devices work harder to protect consumers from cyber risks. These requirements will be set out in regulations and are supported by experts, industry and our international partners, with whom we continue to work closely to ensure that everyone is well aware of the initial three requirements.
The first is a ban on universal default passwords. Too often, consumer connectable products come with an easy-to-guess password; this makes them vulnerable and risks compromising a user’s privacy and security. The second is that a manufacturer of consumer connectable products must have and maintain an accessible vulnerability policy, obliging them, as a minimum, to receive and respond to reports of security issues in their products. This is important to ensure that manufacturers can be made aware of, and quickly address, any shortcomings in their products, and to foster good practice to protect society as a whole. Finally, manufacturers will be required to be transparent about the minimum length of time for which a product will receive security updates. This should enhance consumers’ awareness, enabling them to consider the security of products before they purchase them and, in so doing, foster market competition towards enhanced security update periods. Where those three security requirements have not been complied with, businesses will not be allowed to make these products available in the UK. We will be able to monitor, investigate and take enforcement action where necessary.
These are the first steps towards a change in the security landscape for consumer connectable products. We have created this Bill to reflect the need for resilient and adaptive measures to protect consumers and our vital infrastructure. Both the product security and telecoms infrastructure measures in the Bill will be of benefit to the public. We have brought the Bill forward to ensure that, as our digital infrastructure evolves and as we become more connected to the internet, we protect consumers from the dangers which come with this. I hope that noble Lords from across your Lordships’ House will support the Bill, and I look forward to discussing it in detail as we scrutinise it.
Lord Fox (LD)
My Lords, the Product Security and Telecommunications Infrastructure Bill is another snappy portmanteau Bill from this department—or perhaps I should say, in sporting parlance and in deference to the department, it is legislation in two halves. As we heard from the Minister, it is the second half that has attracted most attention in the Commons and, frankly, from the various lobbying organisations—and it is easy to understand why. Bringing connectivity to a reasonable level across everywhere in the United Kingdom is an aim I am sure all noble Lords share in this House, as do all the MPs at the other end. However, as the Minister alluded to, there are balances that need to be brought into play when we bring this objective forward.
I shall start with the first part of the Bill, the security bit. As the Minister outlined, it is designed to enable us to face up not just to the present but to the internet of things or the network of everything, safe in the knowledge that our appliances are safe from hacking. It is not a future problem, as the Minister outlined: it is with us here and now. The consumer organisation Which? very clearly brought this to bear. It tested a range of devices, from baby monitors to smart speakers, with its ethical hackers and found 37 vulnerabilities with those test devices, including at least a dozen rated as “very high risk” and one as “critical”.
At the heart of this problem is that some of these products may have had inadequate security against threats in the first place, or that they have not been effectively upgraded by the manufacturer during the life of the product, which is why they are at risk of being hacked, as the Minister well knows. The Bill is supposed to make provision to enable the Government, via regulations, to require manufacturers, importers and distributors to make sure that their consumer-connectible products meet some minimum standard of cyber requirement before they are placed on the market. This is the problem that I face with the Bill: the majority of this part of it will come through secondary legislation, so it is hard to see at this point the Government’s objective for consumer rights.
I have looked through the Bill—I have tried very hard—and neither the Long Title nor the text of the Bill sets out what a consumer might reasonably expect from consumer-connectible products in their house. What might they be able to expect through the life of that product in terms of security and hacking? Assuming that there is no such thing as absolute security, following the implementation of the Bill and all its, as yet, unseen statutory instruments, what level of security should the UK consumer reasonably expect for their household, and what is their recourse in the event that that is not met?
The Government’s response appears to be a sort of micromanaging process—for example, as the Minister set out, mandating password protocols. The Government are, in essence, pitching the ingenuity of the department and the support that the department gets against the ingenuity of the criminals and hackers and, to a large extent, micromanaging how those device manufacturers respond to that threat. In a sense, that absolves them of being the innovators; it absolves the manufacturers of responsibility for delivering a security rather than meeting a requirement set out in a statutory instrument. In short, they will need only to follow the letter of the process that the department comes up with through its statutory instrument rather than deliver a level of security. In the view of this Bench, there ought to be a minimum standard of security that consumers can expect. From our perspective, we are looking at the wrong end of the telescope with this legislation. At the very least, there should be an up-front clause that sets out what that minimum expectation should be. Then, rather than micromanaging it, it would be up to the supply chain to deliver security, which would be a legal expectation.
That takes us to the subject of policing. Assuming that the Bill stays as it is, I am interested in Chapter 3, on enforcement. Once again, the meat of this provision awaits secondary legislation. The Secretary of State is responsible for enforcement, but it is not clear to me how she will do it. Perhaps the unit will do this and perhaps a new unit will be set up in the department. Could the Minister explain how enforcement will be managed in light of the 20% reduction in departmental head count being enforced on all departments by the Chancellor of the Exchequer? There will be 20% fewer people to do, yet again, a bigger job. Unless the Minister can set out a plan for enforcement, it is safe to assume that consumers in fact will not be safer when the Act comes into play.
Turning to the infrastructure part, as the Minister said, the Government’s commitment is for there to be a minimum of 85% gigabit-capable broadband by 2025. The Levelling Up White Paper of course talks about maximum coverage later on. The Minister talked about there being 100% coverage as soon as possible. What does that mean in reality—or does it mean nothing? The Minister also spoke about a majority of the country having 5G by, I think, 2027. Does that mean 51% or a larger number? There are lots of parts of the country still chasing 4G, never mind 5G. Can the Minister use this Second Reading to update us further about—and perhaps set out in writing—where the country is in implementing both gigabit and 5G across the whole country, rather than use a percentage? To give a percentage of users is slightly misleading because there are less well-populated areas where users remain very much underserviced. I also ask the Minister to update your Lordships’ House on progress in eliminating Huawei hardware from the 5G network. We are interested to know where that is going and when it might be achieved.
As I expected, the Minister portrayed this legislation as a vital piece in meeting the installation target but, before we get to that, can he tell us how the other pieces are going? As I have said, my recent travels to Devon, Cornwall and my home county of Herefordshire indicate that network coverage remains poor at best and is sometimes not there at all. Given that these are some of the more rural parts of the United Kingdom, I take that to be the standard that most rural communities are surviving through. What extra is being done to get better coverage in these places, rather than focusing on the big numbers—the big conurbations, cities and towns? To date, the evidence suggests that this is not successful. It seems to me that the issues in the Bill are not the issues preventing this happening.
The Bill is about access—I think the Minister was a Whip at the time of the last pass on this. Somewhere in the dog days between two of the Covid lockdowns, my noble friend Lord Clement-Jones and I were climbing through the niceties of multiple-occupancy access and wayleaves in the then Telecommunications Infrastructure (Leasehold Property) Bill—another of the Minister’s snappy Bills. Perhaps this should be the starting point. The Minister mentioned it today but, taking that previous Bill as a template, when it comes to access, what worked and what did not work? I get a sense that access is piece of string that the telecoms operators will keep on pulling for ever, so what has sparked this new Bill, and what did not work under the previous ones? Their briefings seek to raise this as a key issue, but is that really the case? Is the lack of access that I described earlier the overwhelming impediment to the rate of installation, or is it something else? Is it perhaps the rate of investment, the skills available or the capacity to do so many projects overall? I suggest that all three are key elements in the rate at which the installation we need is happening. Can the Minister balance those issues with the issue of access, which is the only issue being addressed in the Bill?
Changing access regulations is also an opportunity to drive down costs. If they are being passed on to consumers, that is no bad thing—but are they? Speed Up Britain, a cross-industry organisation, is campaigning for the Government to close the loopholes—very much in the way that they are—and points to benefits. Other campaigners highlight a potentially catastrophic drop in income faced by local community organisations and local authorities in the rent-to-host infrastructure, such as mast licences, which was caused by the last Bill and will be further enshrined by this Bill; those campaigners estimate up to a 90% drop in income. In a meeting, the department puts the fall at around 60% to 65%. Either way, this is a big fall in income for, say, a local football club.
So who is benefitting from the drop in operational costs? Many of the mobile towers are now owned and operated by towercos which sit between the landowners and the telcos. I suspect that changes in the use of shared apparatus, as heralded by this Bill, will drive more of that intermediate role for towercos or similar. Are these towercos passing the savings through? To date, I think it is very hard to see that consumers have seen any benefit from that fall in cost.
The other delicate balance that has to be weighed carefully is the role of BT Openreach and the need to foster genuine competitivity across the sector, rather than having a collection of niche operators and a 500-pound gorilla. Can the Minister please tell your Lordships’ House how the market for full-fibre and gigabit-capable broadband is currently split, and what analysis his department has of how that will be affected or otherwise by this Bill? There is a possibility that the nature of the changes proposed in the Bill will disproportionately benefit the dominant player in the market, so that analysis will be very important.
As we have said, there are two parts to the Bill: there is a serious danger that the second half activates a series of unintended consequences, while I fear that the principal danger in the first half is that it has very little consequence at all. We look forward to working with the Minister on improving the Bill in Committee.
Baroness Harding of Winscombe (Con)
My Lords, I support the Bill. This is very technical legislation, but technical does not make for unimportant, even today. In fact, my experience in business is that it is in the detailed technical and operational delivery that businesses succeed or fail—and when it comes to building national infrastructure, the same is true.
The strategy is relatively easy. I spent seven years as the chief executive of a telecoms company and, during that time and in the five years since, I have not found any community, business or politician who wants a different outcome. Everyone wants ubiquitously available, safe to use, affordable and, above all, high-speed connectivity at home, at work and on the move, on an ever-increasing number of devices, everywhere. The direction of travel is not up for debate. What is are the technical details to get us there as effectively as possible, which is what this Bill is about. As technical and detailed as it may be, it is none the less extremely important. It is in the shaping of these detailed laws and regulations that we determine whether we have the effective digital connectivity that we are all so agreed upon.
I am supportive of both parts of the Bill and will speak very briefly on the first half, which, as the noble Lord, Lord Fox, said, is, I suspect, less contentious. I will then speak in more detail about the second half.
I am pleased to see in Part 1 a clear framework for regulating the security of connected devices. I have been involved in a related area of digital regulation—child internet safety—for over a decade, and that experience has taught me that it is necessary to put regulation on to a legal footing. For far too long, technology companies have tried to persuade us that self-regulation is the right route for the digital world, yet we are seeing in every area of digital, as here, that self-regulation leads to no regulation and that we need to do our job as legislators and set the rules of the game. The digital world is really no different from the physical world, where responsible capitalism works best when we set legal guardrails and encourage commercial creativity and innovation within them. As such, I welcome Part 1.
Turning to Part 2, even those stakeholders concerned about it are united in their agreement that enabling the rapid and effective build-out of mobile and fixed digital connectivity is an essential part of modern society. The devil really is in the detail here. I believe the Bill strikes the right balance between protecting property owners’ rights and the broader benefits to the whole of society of speeding up the delivery of faster connectivity.
Again, we should take our cues from the physical world. The Government are right not to move away from the changes in valuation methodology made in 2017, bringing telecoms infrastructure in line with other much older physical utilities, and right to extend this approach to renewals. I appreciate that this has meant a material reduction in rent, but as telecoms matures, surely it is fair to consumers, and ultimately landowners, to treat it in the same way as other essential utilities.
It is also important that, wherever possible, we enable rather than restrict competition in the building of these telecoms networks. When I first came into the industry in 2010, BT was not investing at all in building full-fibre networks. For the best part of a decade, the UK lagged behind many other countries because BT preferred to upgrade its copper, in large part because there was no credible threat to its Openreach-monopoly copper infrastructure. We are in a very different position today, with several alternative fibre providers building scale networks, which is providing consumer choice and spurring on Openreach to invest. It is in the detailed changes to telecoms regulation that this has been made possible; among other things, by forcing Openreach to make its ducts and poles open to alternative providers.
This physical infrastructure access—or PIA, to those of us in the industry—is a very important ingredient in speeding up the rollout of fibre broadband. It has enabled competition, which in turn is driving investment. As currently drafted, the Bill extends the effectiveness of PIA by allowing the sharing of existing ducts under private land, which will significantly speed up and extend rollout, and resolves the anomaly of different rules for cable duct infrastructure if built before or after 2017. However, it is not clear how telegraph poles are treated. This is where the detail starts to really matter. I ask my noble friend the Minister to clarify that operators cannot only lay cable to a telegraph pole and string fibre in the air between poles but can roll fibre up the pole itself. That may seem obvious, but if we do not get this sort of detail right in regulations, you cannot build the connectivity.
Another key area where we need to be careful about protecting competition is in access to multiple-dwelling units, or MDUs. I have huge sympathy with Members of the other place who have proposed amendments aimed at making it easier for Openreach to fibre-enable blocks of flats where it is having trouble contacting landlords. It is so important that we do not exacerbate existing non-digital inequalities in the digital world, which is exactly what happens when the fibre rollout goes past blocks of flats in many communities across London and other cities.
But—and it is a big “but”—there is a very big difference between the cabling in multiple-dwelling units and the ducts and poles in rural areas. Ducts and poles are now part of the PIA regime I mentioned earlier, so competing fibre providers can all use them. Openreach’s existing copper cables in multiple-dwelling units are its to use alone, so relaxing the rules for Openreach in MDUs such that it does not need permission from the landlord to upgrade to fibre is not only an extraordinary power of entry—one we do not even give the police—but gives Openreach a huge competitive advantage. Tempting though it might be in the short run, relatively recent history shows that embedding an infrastructure provider’s monopoly—in fact, embedding this infrastructure provider’s monopoly—is never good for consumers in the end. I encourage my noble friend the Minister to resist similar amendments should they be brought to this place.
With the not inconsiderable challenges our economy faces as we emerge from Covid, we need detailed supply-side changes such as this Bill that will help drive growth across the country via digitally enabled, safe, secure and competitive markets. As such, I am pleased to support it.
Lord Vaizey of Didcot (Con)
My Lords, it is a delight to follow my noble friend Lady Harding, and a great pleasure to be in the Chamber with her. When I was a Minister, I worked closely with her when she was the chief executive of TalkTalk, so it will be enjoyable to respond, to a certain extent, to some of the points she made.
I begin briefly by outlining my interests. I work as an adviser to a US bank called LionTree, which has advised a UK alt-net provider called Hyperoptic. I am also, amazingly, the patron of the Institute of Telecommunications Professionals. I have no idea how that came about, as I know nothing about telecoms and I am not a professional. I was also chairman of Speed Up Britain, which is one of those lobby groups that the noble Lord, Lord Fox, pointed out in his remarks. It competes against Protect and Connect in trying to persuade your Lordships to take alternative views on how to reform the Electronic Communications Code, but I am no longer its chair; I just wanted to put that in context.
But, obviously, the reason I wanted to take part in this exciting debate—which is really where the action is today—was because of my six years as the Minister for Broadband, where I suffered the slings and arrows of outrageous fortune of people constantly telling me to hurry up and deliver exactly what my noble friend Lady Harding was talking about, which is what everybody wants: ubiquitous broadband everywhere, for as many devices as possible. It was a hard slog, but we made progress.
Like everyone else who has spoken, I will take the Bill in two parts. Starting with product security, I do not think this is a controversial part of the Bill, so it can be skimmed across relatively quickly. I doubt that there will be any amendments to it at all; it is a necessary piece of legislation in an age of digital technology where cybersecurity is at the forefront of our minds. We know that the Government recently published their national cybersecurity strategy. To give this Government, and recent previous Governments, credit, they have invested absolutely correctly in cybersecurity, both at the national security level and in encouraging businesses to take cybersecurity seriously, so the Bill is very welcome.
Like all other noble Lords who may be taking part in this debate, I have read the briefings that have come in to me from both Which? and a company called NCC Group, and they all seem to make extremely valid points which may well be worth exploring in Committee. For example, Which? has suggested that online marketplaces should be covered so that products that are sold on them reach a minimum standard; that there should be a minimum time period in which a company guarantees to update the software on a connected device; and that connected devices fall within consumer rights law. NCC Group has suggested that there should be some form of third-party verification of online devices to ensure that they are compliant. That seems eminently sensible. It also has a minor obsession, which I cannot really understand, with e-scooters, so my simple question to the Minister is: is an e-scooter a connectable consumer product? I think it probably is, but they can of course be hijacked and the brakes put on remotely. A very interesting and worthy point of debate is the amendment to the Computer Misuse Act to see whether there is a public interest defence to ethical hacking. Those are just some points to put on the record which I would be willing to explore with other noble Lords in Committee, should they be minded to table amendments.
But let us now turn to telecoms infrastructure, where I carry the scars on my back, as it were. In fact, it is probably my fault that we are here debating this at all, because I was in charge of the first reform of the Electronic Communications Code. But as he has not made it to this place yet, let me firmly blame Oliver Letwin for everything that went wrong there, because the minute he got hold of it, it became an All Souls seminar, and it took about three years to get it through Whitehall. However, we did deliver some changes. I make no apology for the changes that were made because, at the time, obviously, the relationship between the infrastructure provider—whether it was a mobile infrastructure provider or a fibre infrastructure provider—was very unequal with the landowner. If you wanted to get your mast or to lay some fibre across somebody’s land, the landlord had all the bargaining chips in their bag, and—quite rightly, of course—they extracted generous rents to provide for their land.
Contrary to what some people may think, the telecoms business is not overly lucrative. For example, the margins for mobile telecoms providers in this country are about 1% or 2%; it is a very fiercely competitive marketplace. In fact, my noble friend Lady Harding is partly to blame, because TalkTalk has ensured that the prices that consumers are prepared to pay for broadband and mobile phones are far lower than you would be prepared to pay on the continent. It is a relatively low-margin business, and there is no doubt that the high rents that landowners were charging were hindering the rollout of infrastructure.
There is an argument—and Protect and Connect put this—that the pendulum swung too far the other way when the Electronic Communications Code was reformed and rents dropped far too precipitously but, if I had to take a side, I would much rather lower rents and investment in infrastructure and quicker rollout than the higher rents that were in place before we reformed the Electronic Communications Code. The simple fact is that if we want mobile and fixed connectivity, it is all about the planning. The technology is actually a complete sideshow; the real pain is getting the planning. I will go off on a slight tangent here. The extraordinary lack of joined-up thinking in many local authorities is a wonder to behold. I was talking to a mobile phone company the other day which, obviously, wanted to put in small 5G masts and was told by the lamp-post department of a London council that the lamp posts were not to be touched, so the lamp-post department was stopping the other departments in the council fast-forwarding 5G in the local authority area.
I was lucky enough to get full fibre broadband in my small village in Oxfordshire, Sparsholt. I wonder how that happened. I pay tribute to Craig Bower from Oxfordshire County Council—I am sounding a bit like an MP here—Martin Crutchley from Openreach and local resident Maia Sissons, who got everyone in a row. I saw over the five to 10 days how much planning, extraction, digging and so on had to take place to fibre up simply a rural hamlet of 100 homes. That is happening all over the place. Whether it is a TalkTalk, CityFibre or Openreach engineer, we are very lucky to have people doing this work. It is difficult, time-consuming and takes a great deal of planning.
If we are to move forward, we must keep that in focus, which is why I would support amendments on the points to do with both telegraph poles and multi-dwelling units. I am told by Openreach that a letter has gone to the Minister setting out a way by which telegraph poles may be brought into the scope of the Bill, which is a very exciting development. If that way can be found, I would certainly support an amendment that would allow telegraph poles to be upgraded. Again, just as a point of interest, in both my home in London, in Shepherd’s Bush, and my home in Oxfordshire, the fibre cables are delivered on a telegraph pole, so telegraph poles are important. Openreach says there are something like 1 billion miles of fibre on telegraph poles all over the country.
I part company with my noble friend Lady Harding on multi-dwelling units. This goes to the heart of some of the issues to do with infrastructure rollout and a problem I had when I was the Minister. I was constantly berated for putting all my eggs in the Openreach basket and asked why I was not fostering competition and all these extraordinary alternative providers, such as TalkTalk and CityFibre, which could really hold the candle to BT Openreach and really take it on. Funnily enough, when broadband came to my village in Oxfordshire, I was alerted by an alt.net provider, and I rang the provider up. I said, “I would love to get broadband from you: I will go through the front door.” It said, “No, sorry, it was a mistake. We put the flyer in but, actually, we’re not interested in fibering up your village.” If you want as much connectivity as quickly as possible to as many homes as possible, you have to put Openreach at the centre of your strategy.
It is a misplaced intellectual argument to say that Openreach cannot upgrade multi-dwelling units where there could be many people living on low incomes who will depend on digital connectivity because, somehow, it is anti-competitive. I also think it is a slightly spurious argument to say that Openreach has greater powers than the police to enter your premises thanks to this legislation. It is not as if someone from Openreach is going to get into your flat and make themself a meal of spaghetti Bolognese while it busily upgrades the telecoms infrastructure in your multi-dwelling unit.
We all know that getting hold of, identifying and getting a response from landlords in multi-dwelling units can be extremely difficult. Making a simple upgrade to increase the connectivity for dozens of people living in those flats seems eminently sensible to me. The argument that it will prevent alt-net providers providing fibre rollout has long since gone. Only yesterday, CityFibre raised £5 billion in debt to continue its expansion. The fact is that alt-net providers have very rich pickings in central parts of our urban environment, whether it is London, Manchester, Bristol, Newcastle or anywhere else where they can put their networks into flats. Where I live, in Shepherd’s Bush, we have had three or four fibre providers digging up the road, one after the other, because they know that it is a competitive enough environment for them to put in an investment.
My next point was mentioned in, I think, the speech from the noble Lord, Lord Fox; although I am obviously not the chair of Speed Up Britain, it is quite clear where my sympathies lie. It is worth pointing out that Protect and Connect is supported by what is known as a land aggregator, an invention from the US, where so many of these clever financial wheezes are invented. It buys up the land where mobile sites are—a sensible business approach—and so ends up having thousands of sites all over the country. It is then clearly in its commercial interests, but frankly not in the interests of UK plc, to ensure that the rents extracted from those sites are as high as possible.
I urge noble Lords to get behind this Bill. I will certainly look at supporting amendments to make it easier to upgrade existing infrastructure in multi-dwelling units. I also hope that my noble friend Lady Harding and I can work together on the specifically denoted “telegraph pole amendment”.
I want to finish on one important point. It is now traditional in these speeches for me to lavish extraordinary praise on our Minister. I note that I have not even mentioned him so far in my speech. In conclusion, therefore, let me say how pleased I am to see the Minister on the Front Bench. I do not know how long he will be there, given what is happening across the way—he may be our Prime Minister in a week’s time, voted in by application—but to see this Renaissance man move from Raphael to Open RAN, from Modigliani to mobile and from Botticelli to broadband is always a wonder to behold. I look forward to his concluding remarks.
Lord Hunt of Wirral (Con)
Wow. My Lords, may I first draw attention to my interests as set out in the register, in particular as a partner in the global commercial law firm DAC Beachcroft.
It is a privilege to follow my noble friend Lord Vaizey of Didcot, who has accomplished a tremendous amount in the area we are now discussing. I pay tribute to him. Whether or not I express some dissatisfaction with having to agree to cookies, which I think had something to do with him, I must acknowledge that, as he stressed, access to reliable, high-quality telecommunications infrastructure is now an essential service. This has never been felt more keenly than in the past two years, with so many of us being reliant on our mobile and broadband connections to work from home and connect with our loved ones.
The intention of the reformed code in 2017, as my noble friend Lady Harding of Winscombe explained, was to bring rents in the telecommunications sector down so that they would be more in line with other utilities such as gas, power and water. The explanation to the noble Lord, Lord Fox, as to why things went wrong is simply this: the market had become inflated and leasing arrangements ever more complex, leading to a significant and deleterious impact on improvements in connectivity. The code, as it stands, is just not working, so the proposed modifications in the Bill are to be greatly welcomed. I just want to concentrate on telecommunications infrastructure.
Under the current system it seems that, too often, operators and landowners are left with little choice but to argue over technical legal points of interpretation, which comes at a cost to both sides in terms of the financial and wider impact of dealing with formal litigation. I have to say that this is of great benefit to solicitors and professional advisers, but benefits no one else.
We have also seen, as my noble friend Lord Vaizey just pointed out, the emergence of large-scale and well-funded intermediary landowners, who he described as “land aggregators”, opportunistically buying up thousands of leases with a view to leveraging them for their own profit. A significant number of the technical legal arguments that seem to be emerging over the existing code are the direct consequence of their intervening influence as they seek now to resist the new valuation regime.
The emergence of this sector is all about profit and, as far as I can see, serves no useful social purpose whatever. I am reminded of the claims management companies—other noble Lords may also recollect them—that sought to create a compensation culture until they were effectively regulated. The market has created this situation, which others are seeking to exploit. Such behaviour undermined them and now undermines civility in society.
The purpose of these further modifications to the code, as I understand them, is to try to avoid these pointless skirmishes by simplifying and clarifying the statutory regime and by ensuring that every existing telecommunications installation has a clear and relatively straightforward road to renewal and a consistent basis of valuation. Without these modifications there is a real risk that existing sites will have to be removed and an application to rebuild them made, with all the consequent costs and delay of removal and reinstatement, as well, of course, as the break in coverage for the end users—in other words, unnecessary cost and inconvenience all round. That would make a mockery of the stated intention of the code and these modifications, which is to speed up connectivity.
I stand between my noble friend Lord Vaizey and the Minister, to whom a lot of tributes have been paid. I echo them, but the Minister now has a heavy responsibility to justify our faith in him. As he knows, I believe that further tweaks to the drafting may be needed to ensure that the intention to speed up connectivity is crystal clear in the Bill and, in due course, the Act. We must not miss this golden opportunity to get the code into good order so that the focus can rightly be on building world-class infrastructure and connectivity, as opposed to further endless litigation and delay. I therefore strongly support the Bill and look forward to participating in all its stages.
Baroness Hodgson of Abinger (Con)
My Lords, it is a pleasure to follow my noble friend Lord Hunt. I begin by thanking my noble friend the Minister for introducing the Bill so ably today. I declare an interest: I was on the Select Committee for the Rural Economy and through that connected with Openreach, which kindly provided us with broadband in our home in the country.
I have to confess that I am no tech expert, and I recognise that there are many speaking today in this debate who have far more expertise than me. However, I wanted to speak today because I recognise that this is a very significant Bill which has the ability to make important changes and a real difference to so many people. Today, technology is central to our world. We all need to be connected—it is hard to function without that. However, it is not just about being connected but being able to access fast, reliable and secure broadband and mobile phone connection.
Connectivity is key to today’s world, whether it is for running a business, for children’s learning or for being socially connected. We have to have secure connectivity. I should think that most of us have received emails through a friend who has been hacked, asking for money. We need to prevent malign access to emails, contacts and files, whether they are personal, corporate or government. The importance of all this has been heightened by the pandemic, with many people now choosing to work from home and having meetings on Zoom, Teams and similar programs. If they do not have good, fast connections, they are at an enormous disadvantage.
Although I understand that connectivity is reasonably good in most urban areas of the UK, country areas are often less well served. So, as part of the levelling-up agenda, it is important that we ensure that all households that wish to be connected are able to be, and that it is possible to run a business from the depths of the country in the same way as it is for those who live in a town or city. However, just being connected is not enough. We have all suffered when broadband is down, or when it is going like a snail and everything takes for ever. Therefore, it is important that, through the Bill, we support full-fibre deployment in town and country alike.
I understand that the Government have set a manifesto commitment on the UK’s broadband connectivity, aiming to reach 85% of homes by 2025. Openreach tells me that its ambition is to pass 25 million premises with full fibre by December 2026, including at least 6.2 million properties in very hard-to-reach areas. I understand that, so far, it has reached 7 million homes and businesses, including more than 2 million in hard-to-reach areas, so in five years it aims to treble this. However, as we have all heard, one of the particular challenges it faces is in securing wayleaves. I understand that the Government have recognised this and, after consulting on the Electronic Communications Code, have proposals in the Bill to amend the regulations.
Fulfilling Openreach’s goal is not just about new connections; it will need to upgrade some of its existing infrastructure. Although the Bill will amend the ECC to retrospectively add automatic upgrades to existing wayleave agreements, it crucially limits these only to apparatus that is installed underground, and it is more restrictive than the existing provisions for upgrade rights within the ECC, which would apply to new wayleaves it agrees.
As we have heard, these changes will not help deliver upgrades to full fibre to blocks of flats, nor help in rural areas where most of the network is built overhead on poles—I absolutely hear what my noble friend Lady Harding said about going up the poles as well. However, although I understand that there is a debate to be had about the rights of property owners, we are talking about properties where wayleaves have already been granted. Again, I absolutely take my noble friend’s point about competition, but surely it is a balance between competition and quick rollout. For me, the pendulum swings to quick rollout.
Thus, in its present form, this Bill is surely missing an opportunity to really turbocharge the rollout of full fibre to deliver the manifesto commitment. In welcoming the Bill, I hope that consideration will be given to retrospectively apply automatic upgrade rights to existing wayleaves, in line with those that already exist in the code. Through this Bill, I hope that we can help everyone across the UK, including all those in remote areas, to access fast, secure and reliable broadband.
Lord Holmes of Richmond (Con)
My Lords, it is a pleasure to follow my noble friend Lady Hodgson and to speak in this Second Reading debate, so perfectly introduced by my noble friend the Minister. There can be no levelling up without universal high-speed connectivity that is safe, secure, reliable and available 24/7, like power, energy and water.
If our citizens do not have the skills, comfort or confidence to interact, transact and feel safe and secure online, we can lay as much fibre and have as much connectivity as possible, but we still will not optimise all the economic, social and psychological potential across the nation. At this Second Reading, will the Minister briefly set out in his response what the Government are doing on digital inclusion, which is so important? It is often caricatured as the soft element of this, but it is critical if we are to get the benefit of what is seen as the hard part of it—not the least of which is the fibre which we are discussing today.
Similarly, does this Bill offer us the opportunity to look carefully and reconsider the Computer Misuse Act and the provisions therein? My noble friend Lord Vaizey asked about this. The Act was passed when there was no internet and no smartphones, and the computers of 1981 looked, felt and operated very differently from everything we have in our pockets in 2022. There are many issues within the Computer Misuse Act and many of them are finely balanced. This seems an opportune moment to see whether we have the balance right and whether we are giving everybody who we rely on to keep us safe and secure online everything that they need. Will the Minister give us his views on the Computer Misuse Act?
On the Bill, many of the issues I was going to cover have been extensively and beautifully covered, not least by my noble friends, but I shall touch on a few. When it comes to an individual living in a block of flats, it cannot be right that she or he is in a materially different and potentially disadvantageous position compared with someone who is living in an individual dwelling. On the rural versus urban debate, will the Minister say more on how the Bill will ensure that there are not disadvantages wherever one resides? To echo many of the points that have been raised, I am tempted to say that if it looks like a duct and it works like a duct, we can certainly have shared services through that duct, as the Bill provides. When it comes to poles—one million of them, largely over rural England and urban Scotland—there cannot be a different approach by the very nature of how that fibre goes across the land and comes into all of our, hopefully well-connected, devices.
On the timing of negotiations around wayleaves, how will the potential differences between the provisions in this Bill and those set out in the TIL be resolved with, in some circumstances, a difference of six years as against 18 months? What is the situation on fragmentation around wayleaves? How will the Bill resolve those issues, which are often at the trickiest end of the wayleave debate?
Finally, I welcome this Bill, as have other noble Lords, and I intend to take part in all stages and get alongside many of the amendments that will be put down. We have a unique opportunity to connect our nation and enable individuals, citizens, communities and companies to be connected safely and securely and able to interact and transact for economic and social good. I welcome the fact that the Minister is leading this Bill. I think we would all agree that with his sartorial elegance and political eloquence he is a highly connected, smart device.
Lord Bassam of Brighton (Lab)
My Lords, I feel that I am trespassing in this debate—on this rather light-hearted blue-on-blue banter over the way there—but I fear that I ought to join in because this is an important and necessary piece of legislation and, like several of the Bills in the Queen’s Speech, it has been much delayed and is long overdue.
For the most part, we on these Benches support the Bill and wish to help it on its way to the statute book. However, we have concerns over its effectiveness and in places we think that it is wrong and in need of amendment. Part 1 of the Bill, as the Minister set out, relates to powers to introduce mandatory security requirements for consumer connectable products such as smartphones, smart televisions and connected speakers. Historically, the UK has relied on European law to help regulate security requirements. We are now in a position where we are likely to follow where the EU leads on product security. What surprises me is that the Government have been so slow to make progress with their own legislation, given how increasingly important cybersecurity has become.
The other obvious and important point is that, given how quickly technology is evolving in this field, we are always likely to be playing a form of catch-up with legislation. I wonder, therefore, whether the eloquent Minister tell us what plans the Government have to future-proof the legislation, apart from relying on bringing forward regulations following on from the Bill. For example, is work being undertaken with tech companies and manufacturers to anticipate changes to products that will change or weaken, in any way, current levels of cybersecurity? Given that the Government consulted in 2019 on introducing mandatory security requirements for connectable products, and given that legislative proposals were consulted on in 2020, do they think that the current list of products is right, and will they be keeping those excluded under review?
We particularly welcome the move to bring forward a ban on default passwords, a requirement for products to have a vulnerability disclosure policy—whereby security weaknesses in a product are identified and notified—and the requirement for transparency about the period for which a manufacturer will provide security updates for the product. However, I wonder what guarantees consumers will have that these policies will be adequately policed and that enforcement will be effective. Will additional resource be committed, and how quickly will this regime be introduced? Surely the failure of the 2017 code suggests that action is needed now if product security is to be taken seriously.
Part 2 of the Bill covers the rollout of sites to extend and improve the digital network—something that we are all signed up to—and to ensure that it is capable of delivering digital connectivity to a level and standard which a modern economy demands. The Government’s approach so far raises questions about their judgment on the balance of power between landlords providing sites for installations and the network providers. Clearly, something is not right when companies can almost unilaterally determine the level of rent that they are prepared to pay for sites, regardless of earlier agreements. We are not convinced that the arrangements set out in the Bill get the balance right. Landlord-tenant relationships are complex matters, subject to laws that are often open to wide interpretation. What appears to be missing here is a process for dispute resolution that takes into account the original agreements and accurately reflects the value of the site to the network providers. We will no doubt, with others, seek to probe this during the course of the Bill, ensuring that principles of fairness and equity are properly written into the legislation and, in particular, that the many charitable and sporting organisations that benefit from rental income are not disadvantaged.
This is legislation worthy of support from these Benches and, like others who have been involved in the debate this afternoon, we look forward to bringing forward practical changes and improvements to the Bill which will ensure that, when it is on the statute book, this legislation is effective and assists in rolling out our digital connectivity in a way which will greatly benefit our society. We are happy to engage in that process.
Baroness McIntosh of Pickering (Con)
My Lords, I add my congratulations to my noble friend the Minister on so eloquently and effectively introducing the Bill. I, for one, will welcome anything that can improve connectivity, especially in rural areas. Not only is it a fact that local businesses are being held back from participating in and improving the rural economy, but there can also be safety aspects, particularly as regards mobile networks in rural areas where no phone boxes exist and there is a very poor mobile signal.
It is absolutely vital that a high standard of rural connectivity is achieved. Improving digital connectivity in rural areas will boost the rural economy and allow farmers to create jobs, improve their productivity and make full use of new technology to further reduce the environmental impact of food production. But, at the same time, the Government need to get the balance right between making it easier for telecommunications companies and operators to obtain the rights to acquire new sites for digital infrastructure, and to upgrade and share existing sites, and the rights of landowners. As a number of noble Lords have expressed this afternoon, this is an area where the infrastructure is largely borne in rural areas; we have to keep the landowners onside and ensure that the rights they currently enjoy are not reduced.
Will my noble friend therefore look at investigating why, when a number of telephone operators have put masts in very challenged areas of connectivity such as the North Yorkshire moors, these masts are not operational? That is surely extremely wasteful and frustrating, not just for the shareholders and those who have paid to have the masts put in place but even more so for the local residents who are unable to use them. I can give my noble friend and his department examples of this. Will he take this opportunity to investigate to make sure that this will stop immediately and that those masts will be put to good use straightaway in those areas that, he has accepted, are the remaining 5% hard to reach?
I pay tribute not just to my noble friend the Minister but to my noble friend Lord Vaizey, who was a star turn as a witness when I chaired the Environment, Food and Rural Affairs Select Committee. I hope we did throw too many brickbats at him—he acquitted himself extremely well—but his evidence went to show how many obstacles still remain in place. I accept that the Bill is the next in line to improve those, but I thank my noble friend for taking the opportunity to share his expertise with us at that time. I will not go on to say what the fortunes of the chairmen of that Select Committee have turned to, given recent events since I left that position.
There are issues in the Bill that I will wish to explore as it progresses. One of those is the balance between operators and landowners that other noble Lords have alluded to this afternoon. Perhaps it has shifted too far in the interests of the former, to the detriment of the latter. I have heard that the interests of the consumer have been quoted. When the Government looked to introduce the 2017 Electronic Communications Code reforms, changing the way in which new sites were valued, they stipulated that landowners should be paid based on land value, not market value. The Law Commission at the time advised against that change, arguing that it would lead to a fall in rent for landowners and therefore a c in the number of agreements reached between landowners and operators to host digital infrastructure.
Its prediction was absolutely correct. Rents offered to landowners are up to 90% lower for new or renewal agreements made under the new 2017 valuation scheme. Before that code came into force, landowners assessed hosting mobile phone masts in the same way as they would other diversified activity. The rent to be received and terms of the agreement are carefully built into business models or other financial plans such as a pension or loan. For the most part, I would hazard a guess that this is affecting private, non-commercial landowners and farmers in a way that was simply not anticipated.
As the 2017 code has resulted in fewer new sites being agreed due to much lower rents being paid by operators, I urge my noble friend the Minister to look at this and not to bring further renewals under the new code, but to leave them under the Landlord and Tenant Act 1954. I would certainly like to explore that as the Bill proceeds through this place. Has my noble friend received representations to this effect, and will he give us an undertaking this afternoon to address this as part of the passage of the Bill?
I would like to flag up to my noble friend another concern about why operators are not moving from calculating rent based on land value to market value, to which I just referred, and whether this will be the barrier to hosting future digital infrastructure on private land—a fear I share.
The Bill includes an alternative dispute resolution mechanism, which I welcome, but I ask my noble friend: why is using it optional for operators? Currently the Bill does not properly address the imbalance between the resources of operators—which seem to have limitless resources to contest a disagreement before the tribunal—and landowners, many of whom find resisting a claim before a tribunal simply beyond their means.
I end with my noble friend’s opening reference to the increasing existence of and potential for cyberattacks. I witnessed one in North Yorkshire on a company which, sadly, was not given any helping hand from the Government. It was advised not to pay a ransom but was told that if it did not pay the ransom, it probably would not have its systems back in place. Is there any opportunity through the Bill to extend more help to companies to ensure that any such future attacks will see more assistance offered to address the cyberattack and help companies get their systems back without paying a ransom? I think it ran into millions when it was the clothing company FatFace.
Many cyberattacks operate below the radar and do not enter the public domain for very good reason—because it is not good for business. Obviously, if a company is not insured before the cyberattack, it will certainly not get insurance after a cyberattack. I hope my noble friend will look favourably on a plea to ensure that more assistance is given, to prevent not only cyberattacks but the payment of ransoms when they happen.
I shall support the vast majority of the Bill, but I will be raising all these issues through it. I look forward to ensuring that my noble friend and his department will act as smartly as the devices we are hoping to use.
Lord Arbuthnot of Edrom (Con)
My Lords, for a technical Bill, this has been a fascinating and most enjoyable debate. I am lucky follow my noble friend Lady McIntosh, whose comments on the rural economy are always of genuine importance. The Bill addresses two important matters, both arising from market failures. The first is the security of the internet of things. That is what I want to concentrate on. The second, a highly polarised dispute between mobile providers and landowners, has been dealt with by noble Lords much more expert than me.
I will therefore concentrate on the internet of things, which opens up huge opportunities and huge vulnerabilities. I declare my interests as chairman of the Information Assurance Advisory Council, chair of the Thales UK advisory board and chairman of Electricity Resilience Ltd. I am also on the advisory panel of the Electric Infrastructure Security Council in the United States.
For a long time, I have hoped that we might be able to come up with a security solution driven by market forces. How wonderful it would be if the market required product manufacturers to make goods that were secure—actually, if the market required companies to have a secure and resilient infrastructure of governance. If anybody could come up with a business plan to achieve that, they would be able to name their price for it, but experience shows us that this is an area of market failure. A company that spends little money on secure products or secure practices is able to sell those products or services more cheaply than those that take security and resilience seriously. Therefore, this is a field in which the Government have to help so that every product manufacturer has to be put on a level basis and everyone can block a hole in our collective security that would otherwise invite attack from malign actors.
These vulnerabilities are indeed serious. A blogger named Jeff Jarmoc once said:
“In a relatively short time we’ve taken a system built to resist destruction by nuclear weapons and made it vulnerable to toasters.”
I am not sure whether internet-connected toasters exist and I cannot think why anybody would want one, but the point remains. The internet is fundamentally insecure because its security model is end-to-end. It was supposed to be a basic tube for a research network for a small group of trustworthy experts—a tube connecting smart devices—but it expanded too far and too fast, and many devices attached to the internet today are not smart at all. Even when they are smart, users can undo their security with unsmart passwords including the ones assigned at the factory and contained in the instruction booklets, which are available online.
There is a problem here. Mankind will do almost anything for convenience. In the Bill, which I very much welcome, we need to cater for those moments when multiple engineers will need to have access to an internet-connected system. They will need to know what to do when something goes wrong, and often they will need to be quick about it to avoid disaster. Without the Bill, often a default password would be the solution to that problem; with the Bill, organisations will have to come up with new ways of addressing it. We also need to cater for that large mass of the population who are neither expert nor in the slightest bit interested in security. Why would I buy a secure internet-connected toaster if I know nothing about security and can get a cheaper one that is not secure?
I note the Government’s intention that
“manufacturers and others should implement a security vulnerability disclosure policy to ensure that such weaknesses are monitored, identified, rectified and reported to stakeholders”,
but I am not sure this works. GDPR, another welcome bit of legislation, to which my noble friend Lord Hunt referred briefly, requires companies to tell you what their cookies are doing, but how many of your Lordships read the terms and conditions you sign up to regularly? I do not, and I bet that not even my noble friend Lord Vaizey reads them. We need the products themselves to be secure by design, in exactly the same way as cars nowadays make it easier for the driver to drive safely.
I make one final point, raised with me by the CyberUp Campaign, and touched on by my noble friends Lord Vaizey and Lord Holmes. The vulnerabilities that I have been talking about mean that cybersecurity researchers need to be encouraged to look for and disclose those vulnerabilities. The Government’s response to the consultation on these proposals mentions the importance of legal certainty for these security researchers. But the CyberUp Campaign suggests that, without a statutory defence in the Computer Misuse Act—and I remember taking part in Committee during the passage of that Act more than two decades ago, in another place—
Lord Arbuthnot of Edrom (Con)
Three—well, that is also more than two decades ago. Cybersecurity researchers can still face spurious legal action for reporting a vulnerability to a company. They cite as an example Rob Dyke and his civil legal battle with the Apperta Foundation. They suggest that the Government should go further to reform the Computer Misuse Act and put in law a basis from which cybersecurity researchers can defend themselves. I should be grateful if the Minister, who introduced this Bill with such eloquence, could, in winding up, say something about the Government’s thinking on this.
I welcome this Bill and look forward to its further progress in your Lordships’ House.
The Earl of Devon (CB)
My Lords, I, too, welcome the Bill and I look forward to adding a Cross-Bench voice during its passage through this House. While my principal focus will be on Part 2, I offer a few thoughts on Part 1 and product security. As an IP and technology litigator both in California and here, I have represented a number of consumer electronics firms in both jurisdictions, and I am aware of the remarkable technological opportunities presented by smart technology and the internet of things, as well as the risks inherent in such ground-breaking technology being admitted into our homes, our most private and domestic spaces. Who has not been thrown by Alexa or Siri offering an answer to an innocuous question directed to a family member? They are always listening.
I note the Government’s aim to ensure that smart technology becomes available in a way that is safe for consumers, but I am also mindful of the law of unintended consequences, as referenced by the noble Lord, Lord Fox, and the danger of government intervention to control and/or manage such technological advances. Such intervention must not become a drag on innovation; we do not want the UK to become the safest place to interact with modern technology simply because there is no cutting-edge technology with which to interact. Can the Minister explain what co-ordination there has been with other jurisdictions on this legislation? Will the UK be an outlier in introducing these product security requirements, or is this consistent with requirements due to be introduced elsewhere? Is it sensible to go it alone? The obvious risk is that cutting-edge consumer products simply will not be introduced to the UK market, causing us to fall behind in a key technological sector. I note that the legislation is specific as to what technology is to be included and what is to be exempted. How do the Government intend to ensure that these provisions are kept up to date in such a fast-moving industry? How will the legislation capture nascent technologies and new means of connectivity?
I note that the legislation and its enforcement powers extend to relevant persons, as defined in Clause 7, such as manufacturers, importers and distributors. How does the legislation impact the second-hand and grey market in consumer electronics? Does it impact products acquired by consumers overseas and brought to the UK and sold here? Also, how do the Government intend to deal with existing products on the market that may not satisfy these legislative requirements? Will they be allowed to become obsolete through the passage of time? One of the major concerns of consumers is how quickly consumable technology products become obsolete. Will this legislation increase that speed of obsolescence, with the requisite cost, both financial and environmental?
Turning to Part 2 of the Bill, on telecoms infrastructure, I note a number of further interests. In my capacity as a technology lawyer, I represent a number of infrastructure providers, mostly in the south-west of England. As the Earl of Devon, I am a champion of rural connectivity and the vital need to end the discrimination experienced by the dispersed population of Devon. I am surprised by quite how many friends and neighbours living in the middle of our local village, only five miles from Exeter, are unable to receive any mobile signal whatsoever in their homes. However, I am also a farmer and a land manager and, in that capacity, I inherited a telecoms mast tenancy of an area of woodland granted by my father some years ago under the 1954 Act. This tenancy has for some time been due for renewal, but it has been stuck in protracted and thus far incomplete negotiations due to the crippling uncertainty caused by the 2017 amendments to the Electronic Communications Code which is only compounded by this pending Bill. As a local resident frustrated by a lack of signal, I am keen as mustard to encourage more masts and better coverage. As a lawyer representing telecoms companies, I see the benefit in strengthening their hand in renewing leases and saving them money. However, as a site provider, if I were ever asked to grant further leases, I would likely decline, as I simply would have no confidence that the rights granted would be honoured or that the rent negotiated would ever be paid.
Therefore, I see the complicated issues raised by the telecoms infrastructure provisions of this Bill first-hand and from pretty much all sides. The one thing of which we can be certain is that the current legislative structure and the 2017 amendments in particular are simply not fit for purpose. As we have heard, some site providers record telecoms operators seeking to decrease rents by up to 90%. There has clearly been a breakdown in trust between operators, providers and their respective professional advisers. Unfortunately, I am not sure that Part 2 of this Bill will do anything to fix that, and it may even make it worse.
As I think we have all stated, our principal concern must be to ensure that the rollout of mobile connectivity across the country is completed as quickly and efficiently as possible to ensure that hard-to-reach communities do not fall further and further behind. The 2017 amendments sought to achieve this by, in part, seeking to decrease the rent payable for telecoms infrastructure and so to decrease the cost to consumers. The actual impact of the 2017 amendments has been the exact opposite: as telecoms companies have sought to renegotiate leases entered into on the open market, at dramatically decreased rents, the take-up of new masts has slowed. The market for telecoms infrastructure has largely ground to halt as property owners—be they farmers, sports clubs, community centres, charities or churches—think very hard before renewing and/or granting new leases in such an uncertain market. The provisions of Part 2 will only exacerbate this problem, causing property owners to withhold their consent and to terminate already-granted leases where possible. The Government’s laudable aim of increasing connectivity will be frustrated if this legislation, in its current form, is passed—to the detriment of us all: communities, telecoms companies and proprietors alike. This is a return to the law of unintended consequences.
A broad array of stakeholders has questioned the wisdom of this legislation, from the NFU and CLA, to the CAAV, the BPF and the Law Society. Of particular concern are the changes in Clause 61 to the way land is valued under telecoms leases, so that they are no longer at market value but now merely bare land value. By these provisions, the Government will be intervening in long-standing existing leases, freely negotiated between willing participants, to dramatically decrease rental values, often years after the fact. That is no way to encourage the rollout of digital infrastructure, and it takes a sledgehammer to existing property rights.
The Law Society noted that the 2017 reforms
“have tilted the balance of rights too heavily in favour of operators to assist them in securing site facilities”.
The result has been many site providers
“reacting with obstruction, unwillingness to cooperate and litigation.”
Despite this, it appears that the Government have failed to assess the impact of the 2017 reforms at all. What analysis has been conducted prior to seeking to extend those controversial reforms to historic leases, as proposed?
I note that the Government consulted in 2021 on changes to the ECC but did not consult on the issue of valuation and compensation to providers. The Government recognised
“that the 2017 Code reforms had an impact on … providers’ willingness to agree or renew Code rights.”
They also noted that changes to the valuation provisions
“have made entering these agreements significantly less attractive for site providers.”
Despite this, the Government’s policy position has not changed. Why?
The Government identified other reasons for lease negotiations failing including, as I said, lack of trust and poor communications between advisers. They are therefore focused on achieving faster and more collaborative negotiations but this entirely misses the point. If the financial underpinnings of those negotiations remain as one-sided as they are, no amount of ADR will help. The Government state that they wish with these provisions to make it easier for digital networks to be installed and encourage stronger and more collaborative relationships between telecoms operators and site providers, but the fact that they seek to backdate claims to rental discounts and permit the ability of operators to add infrastructure to existing sites fundamentally undermines the collaborative relationships that were well established before 2017.
These retrospective amendments ensure that any prospective site provider, properly advised, will be reluctant to grant such telecoms leases, frustrating the Government’s well-intended ambitions. This cannot be in anyone’s interests.
Baroness Stowell of Beeston (Con)
My Lords, it is a pleasure to follow the noble Earl, Lord Devon. I too congratulate my noble friend the Minister on introducing the first of his four Bills in this Session. My noble friend is going to be busy. I also thank the range of organisations which have provided briefing for this Second Reading, whether in written briefing that they have sent us by email or in the various meetings that have been scheduled.
I should start by declaring an interest as chairman of the Communications and Digital Select Committee but also acknowledge the expertise of other speakers in today’s debate. I pay particular tribute to my noble friends Lady Harding of Winscombe and Lord Vaizey of Didcot, both of whom are members of the Select Committee and whose expertise and professional knowledge I rely on a lot.
Like everyone else today, I welcome the Bill. I recognise the importance of full-fibre broadband rollout, both in its benefits to the economy and its importance to levelling up. I want to address just three main points. I support the greater clarification in the Bill so that all providers have the right to access telegraph poles to upgrade the fibre wires run on overhead poles, as so ably described by my noble friend Lady Harding. I recognise the importance of that being clarified in the Bill, because it will be of benefit to all the providers participating in making sure that we have full broadband rollout in the UK.
What I do not support, however, is extending the exclusive rights of Openreach to upgrade its existing network in blocks of flats, or multi-dwelling units. The reason I would not support an amendment brought forward to that end would be because of it embedding an unfair competition. As my noble friend Lady Harding so expertly already explained, it is the arrival of competition that has done most to accelerate the rollout in this country, so we need to keep Openreach on its toes. That would be to the benefit of flat owners and residents, of whom I am one.
The issue which troubles me most is that of resolving the dispute between site providers and mobile network operators over significant falls in rental income and land value. Other noble Lords have already described these falls, which range from 60% at best—I think that is the Government’s estimate—to, at worst, 90%. The noble Earl, Lord Devon, has just described this in some detail.
I am grateful to Speed Up Britain for its briefing and have some sympathy with its argument comparing the value of what we are discussing to that for other utilities, which is the position that the Government have taken in this legislation. However, I also know that the land-value regime for other utilities was established at a time of state ownership and monopolies and that some argue that the regime for utilities is out of date, although I am not suggesting that we revisit that.
I also understand and share the view that the most important gain—and the prize we must all keep our eye on—is faster rollout, especially for these remote communities and those who are currently not served well. However, according to the other lobby group that has already been mentioned today, Protect and Connect, many site owners remain concerned and feel a sense of injustice and unfairness in the way in which they are treated. It seems to me that site owners are being asked to make sacrifices for the benefit of their local communities, but they fear that what is in fact happening is that they are being asked to give up income for the benefit of commercial providers gaining profit. I recognise that both sides are represented by vested interests—my noble friends Lord Vaizey and Lord Hunt referred to land aggregators buying up leases from landowners to gain their own profit. That is why transparency is so important.
As I understand it, the site providers were told that a reduction in their rental income would be reinvested by the mobile network operators in the rollout. Without the economic impact assessment that the Government promised in 2017 and said would happen by June 2022—ie, this month—those site providers who have been most affected are being asked to take on trust that their loss is not another commercial provider’s gain. The noble Lord, Lord Fox, has already outlined the impact of this on bill payers, whose bills are not going down as a result of this, so there are quite a lot of people who want a better understanding of what is going on. I see that the Government rejected a request for such an economic impact assessment during the passage of the Bill in the Commons, and I should be grateful if my noble friend the Minister would explain why. Also, if that is not something that the Government are willing to carry out, what else will they do to provide the confidence that some of these site providers are looking for so that there is not any unnecessary delay to rollout, as has been described is happening because of their sense of events?
As I say, I think that everyone recognises the urgency and importance of rollout, but if this is for the greater good—I believe it is—the Government cannot afford to ignore those who feel that it is happening at unfair expense to them. As I have said on many occasions in your Lordships’ House, levelling up is not just about infrastructure that brings economic equality; it is also about fairness. It seems wrong that a Bill designed to level up is making some of those affected feel that they are losing out. I hope that my noble friend the Minister can do what is necessary to address their legitimate concerns.
Lord Clement-Jones (LD)
My Lords, I start by thanking the Minister for his comprehensive introduction. We have had a really well-informed debate today; it has, in the words of the noble Lord, Lord Arbuthnot, been enjoyable to hear the expertise displayed around the House. As the noble Baroness, Lady Harding, made clear, a lot of the Bill will involve arguing about technical issues. I look forward to many happy hours talking about ducts and poles as we proceed.
As many noble Lords have said, the Bill clearly falls into two distinct parts. The first is a very welcome but overdue addition to the security of connected products; the second concerns a telecom infrastructure element which makes yet more changes to the Electronic Communications Code. The product security elements are a welcome follow-on to the original 2018 Code of Practice for Consumer IoT Security. As the noble Lord, Lord Arbuthnot, also said, the internet is fundamentally insecure. I pay tribute to Which? and the PETRAS National Centre of Excellence for IoT Systems Cybersecurity for highlighting security issues in connected devices, and we welcome the proposals in the Bill.
As techUK says, demand and consumer appeal rose across all categories during the pandemic, and Covid-19 saw UK consumers buying 21.8 million smart home devices—a 22% rise in volume compared with 2019. People overwhelmingly assume these products are secure, but only one in five manufacturers have appropriate security measures in places for their connectable products. While there are strict rules about protecting people from physical harm such as overheating, sharp components or electric shocks, there are currently no such rules for cyber breaches.
My noble friend Lord Fox mentioned some survey work by Which? that found that a home filled with connected devices could be exposed to more than 12,000 hacking or unknown scanning attacks from across the world in a single week. There is, however, a series of issues in this area that will require amendment to the Bill. I am very sorry to disappoint the noble Lord, Lord Vaizey, in this respect—I do not know whether I should say he is from Vivaldi to Velasquez, but maybe we can continue with that later.
As my noble friend Lord Fox emphasised, at the very least there should be an upfront clause that sets out the purpose of the Bill. It should set out the minimum expectations for what a consumer should enjoy with respect to security because the danger, otherwise, is that these requirements are simply treated as a tick box. Which? has called for the three security requirements to be set out expressly as well, in Part 1 of the Bill or an appropriate schedule. At the moment, they are promised in secondary legislation without any draft being available. Will the Government supply this during the passage of the Bill so we can be vouchsafed what these three principles are going to look like? Why are only three out the six principles set out in the original guidelines covered, including minimise exposed attack surfaces and securely store credentials and security-sensitive data—can the Minister explain why these are not going to be included in the legislation?
The noble Lord, Lord Arbuthnot, raised some very interesting points about products being secured by design and access by engineers, and the noble Earl, Lord Devon, raised the very important issue about compatibility with international standards. The proposed mandatory requirements need to be matched with strong enforcement arrangements ensuring that consumers are able to get effective redress when they purchase devices that fail to meet security standards, and there need to be sufficient measures to keep people safe from harms caused by the weak security of these products. At present, the Bill gives the Secretary of State enforcement powers with the ability to delegate to a regulator. What are the Government’s intentions in this regard? What is the regulator going to be?
There are further amendments which we agree with Which? should be made to the Bill and which we will be advancing. We want to ensure that every individual device has a unique or user-set password that meets effective complexity requirements; there should be very clear provision of vulnerability disclosure policy information; and there is a variety of other aspects, such as ensuring that intermediaries, such as listing platforms, online marketplaces and auction sites, are covered as well.
The noble Lord, Lord Bassam, also mentioned the question of exemptions, and these include medical devices. These are increasingly common, and the data captured is sensitive but the regulations covering these are outdated. If they are going to be excluded, what assurance do we have from the Minister that conformity requirements are being updated for these devices to the latest security standards?
As the noble Lords, Lord Vaizey, Lord Holmes and Lord Arbuthnot, said, we have difficulties surrounding the ability to report flaws in device security. The CyberUp campaign has made the case that, without a statutory defence in the Computer Misuse Act 1990, cybersecurity researchers can still face legal action for testing and reporting a vulnerability to a manufacturer—the noble Lord, Lord Arbuthnot, raised the case of Rob Dyke. Can the Minister respond on this very important aspect—will the Government put forward an amendment during the passage of this Bill?
With the latter half of the Bill, we all seem to be trapped in a time loop on telecoms, with continual consultation and changes to the ECC and continual retreat by the Government on their 1 gigabit per second broadband rollout pledge. In the Explanatory Notes we were at 85% by 2025. Can the Minister confirm that that should now read 2026? My noble friend Lord Fox asked the Minister a number of questions about the detail, where we were talking about fixed on the one hand and broadband on the other. I very much hope he will come back on that. But how long will all those targets stick? They seem to be changed just about every six months.
There has been so much government bravado in this area, but it is clear that the much-trumpeted £5 billion announced last year for Project Gigabit, bringing gigabit coverage to the hardest to reach areas, has not even been fully allocated, and not a penny has been spent. As the noble Lord, Lord Hunt, said, this is despite the increased importance of connectivity through the pandemic and the importance of digital exclusion, as the noble Lord, Lord Holmes, mentioned.
The changes to the ECC in the Digital Economy Act 2017 were meant to do the trick. Then the electronic communications and wireless telegraphy amendment regulations 2020 were heralded as enabling
“stronger emphasis on incentivising investment in very high-capacity … networks”,
promoting “efficient” use of spectrum, and
“ensuring effective consumer protection and engagement.”
Then we had the future telecoms infrastructure review and the Telecommunication Infrastructure (Leasehold Property) Bill, where we argued about the definition of “tenant” and “rights of requiring installation” and “rights of entry”. Sadly, we were not able to include a clause that would have required a review of the Government’s progress on rollout—and of course now we know why. Even while that that Bill was going through in 2021, we had the Access to Land: Consultation on Changes to the Electronic Communications Code. That has now resulted in this Bill. It is an extraordinary saga of chopping and changing to the ECC. After all this, we are no further forward on the extent of the universal service obligation, which is so frustrating for rural areas.
Where in all this, as my noble friend Lord Fox and I have asked each time we debate these issues, are the interests of the consumer, especially the rural consumer? How are they being promoted, especially now that the market review is only once every five years? As my noble friend Lord Fox said, the big question is what has and has not worked in all these changes. I fully join with the point made by the noble Baroness, Lady Stowell, that we have not had the promised impact assessment to see where we are on the ECC and the impact it has had.
Regarding the changes to the ECC made by the Bill, we have heard a great deal from, and many noble Lords have mentioned, the Protect and Connect campaign, which represents land and property owners, including sports clubs, churches, farms and country parks. Personally, I found what the noble Earl, Lord Devon, had to say extremely persuasive. Contrary to what the noble Lord, Lord Hunt, said, and as described by the noble Lord, Lord Bassam, and the noble Baroness, Lady McIntosh—I think the phrase the noble Earl, Lord Devon, used was “taking a sledgehammer” to existing property rights—the campaign says that those it represents have been severely impacted by the changes to the Electronic Communications Code made by the Digital Economy Act 2017. It appears that, since 2017, site providers, with rent reductions of up to 90% as opposed to the anticipated 40%, have lost more than £200 million per year in income, including £60.5 million of lost local authority money, while in some cases the capex of some operators has fallen. The Protect and Connect campaign believes that the
“push for massive rent reductions, compared with existing agreements, trample over property rights, and place farmers, small land and property owners, community organisations, charities, and other site providers, who have come to rely on this rental income, in financial peril, not least because it may unfairly result in these groups being forced to refund or repay operators thousands of pounds”.
I can give the Minister some very powerful case histories. It is noteworthy that work by the Centre for Economics and Business Research shows that the 2017 changes have led to a slowdown in rollout and the current government proposals will not remedy this. What is the Government’s assessment of that CEBR response?
We have also heard support for Openreach’s position on achieving easier upgrade rights as regards installation of broadband in MDUs. Like the noble Baroness, Lady Stowell, these Benches are not yet persuaded that this will not give Openreach an unfair competitive advantage, but we look forward to having that debate during the course of the Bill.
My noble friend Lord Fox had no time to raise the implications of the Hackitt report into building regulations and fire safety, and the aspect of broadband installation. We will raise this in Committee, because we believe that could provide a solution to the MDU contact issue by providing a single point of responsibility.
That was a bit of a gallop, but I look forward to the Minister’s reply.
Baroness Merron (Lab)
My Lords, I am grateful to the Minister for introducing the Bill—perhaps not the most snappily named one this House will ever deal with but nevertheless extremely relevant to our daily lives—and to noble Lords who have participated in this debate, all of whom, like me, are keen to ensure that it does the job it is here to do. One thing I am sure we can agree on across all sides of the House, as the noble Lord, Lord Arbuthnot, observed, is that it has been an enjoyable, enlightening and educational debate. I hope it will contribute to improving the Bill from its current form.
This is a very important debate because, despite some steps forward, the issues around product security and telecommunications infrastructure are not entirely in the right place, so we have another opportunity before us to improve that situation. We also find ourselves dealing with the very complex nature of regulation in this field. This is perhaps highlighted by the very nature of the Bill: it runs to nearly 70 pages, yet its scope is relatively narrow. Given the pace of change in this sector, as the noble Earl, Lord Devon, observed, it is quite possible that parts of this legislation will need updating before we have even got to the end of the process of which we are in the beginning stages.
On Part 1, improving the security of so-called smart products is a sensible and long-overdue step. We have all been aware of the risks associated with these products for some time. While some are theoretical, many are extremely real. We are witnessing an increasing number of attempts to take control of smart devices to commit fraud, carry out surveillance or initiate other forms of cyberattack. The Government’s previous commitment—I believe from 2016—was to ensure that a “majority” of these products would be “secured by default” by 2021. I would be grateful if the Minister could comment on whether he believes that target has been met.
As a wider observation, until now the Government have very much been relying on voluntary codes over and above statutory duties. Given the risks to both personal and national security, this seems a light-touch approach to take with producers, importers and sellers. Surely, these things should not be left to chance.
As I alluded to previously, we have concerns that the Bill might not capture new waves of technology, some of which are already making their way into homes across the nation. Given the considerable efforts to future-proof the Online Safety Bill, can the Minister comment on whether it is possible to do the same in respect of this Bill and its provisions? As noble Lords have expressed during this debate, we will no doubt need to use Committee to better understand how the new system will operate, but it is important to say that I can confirm from these Benches that we generally support Part 1 of the Bill.
However, the Minister will not be surprised to hear that, like other noble Lords, we have rather less enthusiasm for Part 2. There are many concerns around the rollout of new broadband and 5G networks. The Government are lagging behind their target, even though that target has repeatedly been watered down, from full-fibre nationwide to gigabit-capable connections for 85% of homes. The Minister has asserted that the Bill will improve the situation but we remain unsure whether it will do so. If anything, we fear that some of these measures—particularly the tensions that they will create within the sector—will slow the process down.
The Bill does nothing to improve the rollout of infrastructure in communities where commercial viability is in doubt. This problem is by no means new, yet seemingly no answer to it has been provided in the context of the Bill we are debating today. Indeed, to give one example, the Minister in another place suggested that the best way to avoid an entrenched urban/rural digital divide is for MPs to provide lists of streets with access issues. This does not seem an all-embracing strategic approach; I think we are all aware that any good constituency MP worth their salt will have been doing that in any case for many years. However, there has been little to no improvement on the ground. If there is no money to be made, operators are not interested in providing fibre cables in remote villages or erecting mobile masts to cover not-spots.
The last time DCMS made major changes to the Electronic Communications Code, back in 2017, telecoms companies were allowed to reduce the rents paid to landowners who host phone masts and other pieces of equipment. Ministers believed that these rents, which were often only a couple of thousand pounds per year, were too high. Promises were made that reductions would not exceed 40% but the reality is that many landowners have seen rents cut by 90% or more. The result is that many community centres, sports clubs, churches, farmers and local authorities are being deprived of the sums they believed they were entitled to and had planned for. These individuals and organisations entered into the agreements in good faith, yet the law forbids them taking the masts down when payments are slashed.
The impacts of this have been felt, even in the Prime Minister’s own back yard. Hillingdon NHS Trust used to receive nearly £2 million per year from telecommunications rental fees. Following the 2017 reforms, that not only fell to £211,000 but Vodafone demanded a £300,000 repayment. Although not all the sums involved are so large, they are nevertheless significant in their impact. For example, Billericay Rugby Club was being kept afloat thanks to an annual rent of £8,500. It now receives £750 a year. It would be helpful to know from the Minister how this can be explained to local people who use facilities such as those at Billericay Rugby Club.
After all, hosting telecommunications equipment means providing 24/7 access to property, which surely deserves adequate remuneration. It is hard to believe the argument that global companies such as EE and Vodafone were unable to pay the higher charges, despite having done so for years with no issues. I would welcome the Minister’s comments on this.
As we have heard in the course of this debate, the number of legal challenges has grown exponentially, but rather than addressing the legitimate concerns of landowners, it seems that the Government’s answer is to introduce a new layer of bureaucracy. At a time when we need new infrastructure, Ministers should be incentivising the involvement of small landowners, not making enemies of them. Will the Government undertake an urgent review of this situation and commit to bringing forward sensible changes to the code in due course?
I know that the Government say that the revised valuation guidance is fair, so it would be very helpful—I hope that the Minister can do this—to see the department publish the evidence base so that we can all see it. Of course, DCMS committed to carrying out a broad review of the 2017 reforms, but as far as I am aware, that information has not been made public. Can the Minister provide an update today? If the department is so convinced of its position, what is the harm in producing the evidence, so that we can see it, in the interests of transparency?
Of course, it is not just the rents fiasco that is holding us back. There are still practical and legal issues around the provision of new or upgraded equipment for multiple-dwelling units, as my noble friend Lord Bassam referred to. The Government sought to address this several years ago by introducing new rights for tenants in leasehold properties. We welcomed that Bill, and it has no doubt helped some, but it has not proved to be a silver bullet.
It is ludicrous in this day and age that many people living in flats have worse digital connectivity than those living in houses, as the noble Lord, Lord Holmes, referred to. The type of property that we rent or buy should not determine the extent to which we can receive digital services. Noble Lords will know that this matter was subject to amendments in another place which served to highlight the level of disagreement among service providers themselves. This is no doubt an area we will explore in Committee, but in the meantime can the Minister share the Government’s current thinking on this? If operators cannot agree on a way forward, what is going to be done about it?
To conclude, I think we all want to achieve the same things. We need to have the highest possible safety standards for the broadest range of products, and we want government and industry to combine to provide the fastest, most reliable networks for the largest number of people—but we do not believe that the Bill as drafted achieves these aims. There will be areas, of course, where the Government are able to convince us otherwise, but I hope that there will be areas where the Minister will see fit to work with us to make sensible changes. We stand ready to play our part in ensuring a fair, successful and secure rollout of fibre and 5G.
Lord Parkinson of Whitley Bay (Con)
My Lords, I am very grateful to all noble Lords for their contributions to what I agree has been a very enjoyable debate this afternoon. I am sure these contributions will form a prelude to some further interesting and enjoyable debates in Committee and later stages of the Bill. I am grateful, too, for the excessively generous compliments from my noble friends behind me, which I am sure are an illustration of the great harmony and mutual affection for which the Conservative Party is, today of all days, renowned.
As my noble friend Lady Harding of Winscombe rightly said, this is a technical but important Bill, and I am pleased that all noble Lords from all parts of your Lordships’ House are in agreement that people from across the country should be able to benefit from faster digital connectivity and the assurance that their technology is secure. The Bill therefore comes at an opportune time, when cyberattacks are on the rise and when digital connectivity is increasingly important for all the reasons that my noble friend Lady Hodgson of Abinger and other noble Lords set out. We have heard examples in today’s debate of the benefits which will accrue to communities, urban and rural, right across the country.
I am conscious that in Committee we will go into greater detail in some of the areas which noble Lords have alluded to, but I want to respond to some of the points which they have raised in today’s debate. The noble Lord, Lord Fox, began in general terms by asking whether we ought to set out a clear explanation in the Bill of what consumers can expect in terms of product security. The fundamental purpose of the Bill, as set out in its first clause, is to embed security requirements to protect and enhance the security of connectable products and their users. That is the measuring stick against which the impact of the Bill and future regulations will be assessed.
As I alluded to in my opening remarks, there are no silver bullets in cybersecurity. Thousands of people in the UK have been victims of cyberattacks, and cybercriminals are using connectable products to attack large infrastructure as well. Our approach to connectable products lies in both the UK and wider international expertise. Our own 2018 code of practice is the foundation of the first international standard for consumer security and there is an international consensus behind this standard. We are also, through the Bill, the first to embed these protections in legislation. At the moment, some security-conscious manufacturers address these threats, but through the Bill we will now make sure that all manufacturers follow best practice in future.
The noble Earl, Lord Devon, rightly spoke of our international standing. The UK has established global leadership in this area. We have worked closely with our international partners and have seen evidence of other countries and organisations embedding the approach that we have taken in their own codes. In my opening remarks I mentioned Australia and India, which have published codes of practice with the same 13 principles which we published in 2018, but Singapore, Germany and Finland among others have made their own domestic interventions which also align with the UK’s code of practice. The European Commission has also published its intention to explore regulation for connected devices through the cyber resilience Act.
On Part 2, the noble Lord, Lord Fox, in general terms asked why we were revisiting and changing the code again. As noble Lords noted, it was substantially reformed in 2017, following the important and substantial work undertaken by my noble friend Lord Vaizey of Didcot when he was the responsible Minister. A key aim of those reforms was to make it cheaper and easier for digital infrastructure to be deployed, maintained and upgraded. The Government recognised that this would mean telecommunications site providers receiving lower payments than had previously been the case. However, those changes were introduced only following an extensive period of consultation and research and were considered necessary to reduce operator costs and to encourage the industry investment required for the UK to get the digital communications infrastructure that it needs.
The Government intended that the 2017 reforms would speed up deployment and reduce operator costs, and indeed the changes have borne fruit. However, since the changes have come into force we have also received feedback about how they have worked in practice and about some of the ongoing challenges which people face. The Bill aims to tackle those problems and to ensure that the aim and the ambition of the 2017 reforms is realised. To give an example, both operators and landowners have pointed to problems regarding negotiations, with operators saying that they take too long and landowners saying that they face too much pressure to accept certain terms. This is one of the areas we will address through the Bill.
A number of noble Lords spoke about the valuation work which came from the 2017 reforms. The new pricing regime is more closely aligned to those for utilities such as water, electricity and gas, and we think that is the correct position. Landowners should still receive fair payments which, among other things, take into account any alternative uses that the land may have and any losses or damages that may be incurred. We think that the measures in the Bill will support greater collaboration between operators and landowners and help agreements to be completed more swiftly.
The prices being paid for rights to install communications apparatus before 2017 were too high and reflected the rapid explosion that was taking place in demand for digital services; it was right that they were addressed. The 2017 reforms were intended to strike a balance between ensuring that individual landowners are not left out of pocket and making network deployment and maintenance more cost-effective.
The noble Earl, Lord Devon, and others asked about reviewing the impact of the reforms made in 2017. We recognised when the 2017 reforms were introduced that the market would need time to adapt and settle, and it would be premature to carry out a full assessment of the 2017 reforms at this time. There is not enough evidence about agreements which were completed after they came into force for a properly robust and comprehensive analysis to be made—not least, of course, because of the impact of the pandemic. However, the evidence and feedback we have received provides a compelling case that the changes we are making in this Bill will ensure that the 2017 reforms have their intended effect. Making these changes now will help to deliver the Government’s 2025 connectivity target of at least 85% of homes and businesses having access to gigabit broadband. That is not to say that we think the 2017 reforms failed. Much progress has been made. We simply think that more can and must be done to maximise their impact.
The noble Lord, Lord Clement-Jones, and the noble Baroness, Lady Merron, asked about impact assessments. The impact assessments which accompanied the 2017 reforms did not state that the Government would undertake a full economic review of the code’s impact on rents, but in that document the Government committed to reviewing the 2017 reforms as a whole by June 2022—this month. The Government have met this commitment through their continuing engagement with interested parties, including holding monthly access to land workshops. This engagement and the issues which have been highlighted through it prompted the 2021 consultation and the measures in the Bill, which we think are needed for the aims of the 2017 reforms to be fully realised.
Lord Clement-Jones (LD)
That sounds a bit feeble. DCMS has had workshops but has not produced a review. That does not sound like any sort of review.
Lord Parkinson of Whitley Bay (Con)
The noble Lord perhaps thinks we committed to more in 2017 than we did. We have met the commitments we made in 2017 through our engagement with the industry. The points it made have informed the Bill before us. I am sure we will debate—
Lord Clement-Jones (LD)
May I suggest that if the passage of the Bill is to be smooth, any information the Minister is able to provide about the impact, past or expected, would be extremely helpful? Otherwise, we are all going to be arguing about suppositions.
Lord Parkinson of Whitley Bay (Con)
Certainly. I pointed out that the time that has elapsed since 2017 has perhaps not given us as much real data as we would have had, were it not for the pandemic, but of course we will be influenced by what have seen as we scrutinise the Bill in Committee and later.
We have heard a range of views on multiple dwelling units. The Government are aware of calls from parts of the industry for greater automatic rights to upgrade existing infrastructure in multiple dwelling units. The Government are not convinced that granting those rights is proportionate, because we must strike the right balance between private property rights and public benefits. There are other ways that operators can arrange to upgrade equipment in multiple dwelling units. They can ask for those rights and if landlords fail to reply, they will be able to use the process created through the Telecoms Infrastructure (Leasehold Property) Act 2021. If landlords refuse, operators can ask the courts to impose additional rights to upgrade existing equipment if their agreement with the landlord does not already provide them with those rights.
Other measures in the Bill encourage the use of alternative dispute resolution to support more collaborative negotiations. The Government are also considering further changes through regulations to help code disputes be dealt with more quickly. Finally, it is important to stress that there is no consensus from the industry on this issue, just as there was no consensus in our debate today. In fact, many operators have opposed the proposal on the grounds that it would create an unfair advantage for operators who already have equipment inside buildings and could therefore have anti-competitive effects.
My noble friend Lady Harding of Winscombe asked about telegraph poles. It is important that any automatic rights in relation to apparatus on, under or over private land strike a fair balance between any interference with private property rights and any public benefits that can be delivered. We think that the measures in this Bill on rights to upgrade and share apparatus under land achieve that balance. However, we have seen some evidence that further public benefits might be achieved if telecommunications poles sited on private land could be upgraded and shared more easily. Operators already have statutory rights to fly wires between these poles and it is obviously important that the legislative framework supports the effective use of these rights; we are looking into this matter closely.
A number of noble Lords touched on what is and is not in scope of Part 1 of the Bill. The Bill sets out what types of products should be treated as “consumer connectable”. This includes products that can be connected to the internet, such as routers, smart TVs, smart home products and connectable toys. I can tell my noble friend Lord Arbuthnot of Edrom that toasters are indeed in scope, although the idea of an internet-connected toaster makes me think of Wallace and Gromit. I share his bafflement at why people might want to do it, but they are in scope.
The powers in the Bill will allow the Government to update products that are in scope where changes to the wider regulatory, technological or threat landscape render this appropriate. The Government also intend to remove some products from scope where their inclusion would subject them to double regulation or where that would be disproportionate to the level of security risk. An example of such an exception is automotive vehicles, which I can tell my noble friend Lord Vaizey of Didcot include e-scooters; other examples are medical devices and smart charging points.
My noble friend Lord Arbuthnot talked about the vulnerability disclosure process. Of course, manufacturers will not see every vulnerability in their own products. Increasingly, the people best placed to spot them are everyday users and designated security researchers; but the potential point of failure here is the process for reporting those vulnerabilities to the manufacturer, which is often difficult to navigate. The security requirement will mandate a clear point of contact and the policy for the manufacturer to receive such reports and take meaningful action to address them. That is an important step forward, which, I am pleased to say, has widespread industry and expert support.
The noble Lords, Lord Clement-Jones and Lord Bassam of Brighton, the noble Baroness, Lady Merron, and others asked about future-proofing. There is a common notion that Governments are behind the curve when it comes to regulating technology, but not in this case. As well as setting the stage to introduce the regulations to which we have already committed, this Bill establishes a flexible and future-proof regulatory framework so the Government can be agile and proactive in amending and introducing security requirements in step with technological innovation. That is exactly why we have not included the three security requirements on the face of the Bill. By design, the Bill not only addresses the current problem but looks beyond it to ensure that UK consumers can be protected no matter how technologies and threats change and emerge.
My noble friend Lord Holmes of Richmond asked about the Computer Misuse Act. Colleagues at the Home Office are currently taking forward work to identify whether the proposals made in response to the review of that Act, which was launched in May last year, will assist in helping to protect the UK from cybercrime, or whether they are addressed under other programmes of work. We will provide an update to your Lordships’ House in due course, but this Bill will enhance protection for consumers and networks from the range of harms associated with cyberattacks. It equips the Government with the necessary powers to set and update security requirements within a fast-growing area of emerging technologies.
Lord Clement-Jones (LD)
I am sorry to interrupt the Minister again, but I am frightened that he is not going to tell us who the regulator will be, explain why we are covering only three of the many principles covered in legislation in other territories, or provide us with a glimpse of the secondary legislation.
Lord Parkinson of Whitley Bay (Con)
The noble Lord is eager to hear answers to questions to which I may yet turn; on some of them I will write. Work has been done to identify the regulator, but it would not be right to refer to that person at this stage and ahead of Royal Assent. I will write to the noble Lord on the other points he mentioned. I talked just now about our approach, through secondary legislation, to future-proofing and the reasons for not setting out the first three principles in the Bill. We have set out what those standards will be up front.
My noble friend Lord Holmes of Richmond spoke about the important issue of digital inclusion and skills. We run programmes to give young people the opportunity to learn digital skills and to improve their cybersecurity. More than 100,000 young people have participated in these programmes. We have expanded that with a new online training platform, Cyber Explorers, which aims to engage 30,000 young people, and DCMS funded the creation of the UK Cyber Security Council to create professional standards and pathways for cybersecurity.
The noble Lord, Lord Fox, asked about Huawei equipment in our infrastructure. The Government have undertaken a consultation with the industry on the designation of Huawei as a high-risk vendor and proposed directions relating to Huawei goods and services. The responses we receive will inform any final post-consultation decision on whether to issue the designation notice and direction. The Government have also undertaken a public consultation on a set of draft electronic communications security measures regulations and a draft code of practice, the outcome of which will be published in due course.
Lord Fox (LD)
It was the “in due course” bit that I was interested in. In other words, what is “in due course” in this case—months, weeks, days, years?
Lord Parkinson of Whitley Bay (Con)
I am afraid I am not able to elaborate further than “in due course” at this point, but if I am able to before Committee I will come back with more particulars. The final regulations and code of practice will be laid in Parliament later this year using the negative procedure, as required by the Telecommunications (Security) Act.
The noble Baroness, Lady Merron, asked about the knock-on effect of telecoms operators’ reduced rental payments on the funding of community organisations. It is important to note that the funding for such organisations should not be reliant on telecommunications. There are many funding streams, not least from the Government, to support them and their important work. The National Lottery Community Fund is the largest non-government funder of community activity in the UK and one of the largest arm’s-length bodies that DCMS sponsors. Officials at the department work closely with the National Lottery Community Fund to ensure that it continues to support the evolving needs of civil society organisations. Over the last five years, the fund has distributed £3.4 billion.
The noble Baroness talked particularly about sports clubs. The Government very much agree that sports and physical activity are critical for our mental and physical health, which is why we provided an unprecedented £1 billion of financial support to sport and leisure organisations during the pandemic. We will ensure that community groups continue to get the support they need.
I shall write to the noble Lord, Lord Clement-Jones, on the points that he highlighted that I have not addressed today. I would, of course, be very happy to speak to any noble Lords who would like to talk about any of the issues in the Bill in further detail. I am very grateful to my noble friend Lord Hunt of Wirral and to the noble Baroness, Lady Merron, and the noble Lord, Lord Bassam of Brighton, as well as the noble Lords, Lord Fox and Lord Clement-Jones, for the engagement that we have had in detail already. I would be more than happy to hold further discussions and talk in greater detail between now and Committee.
My noble friend Lady McIntosh of Pickering offered to furnish me with the details of some of the unused masts in North Yorkshire, and I would be very glad to receive them and take them forward to discuss with officials.
Product Security and Telecommunications Infrastructure Bill
Tuesday 21st June 2022
(1 year, 10 months ago)
Lords ChamberRead Full debate Product Security and Telecommunications Infrastructure Act 2022 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 16-I(a) Amendment for Committee (Supplementary to the Marshalled List) - (20 Jun 2022)
“General principles relating to product security
(1) The provisions in Part 1 of this Act should be read alongside the general principles relating to product security as outlined in subsection (2).(2) The principles are—(a) in regard to the security of internet-connectable products and products capable of connecting to such products, manufacturers, importers and distributors have a duty of care towards their customers to secure their privacy and safety;(b) customers are entitled to have a reasonable expectation that manufacturers, importers, and distributors make sure their consumer connectable products meet minimum cyber security requirements before they are placed on the UK market;(c) manufacturers, importers, and distributors should be able to demonstrate an understanding of emerging security threats and a proactive, ongoing support programme to mitigate these risks and ensure that their products are safe by design.(3) In making regulations under Part 1 of this Act the Secretary of State must have regard to the principles outlined in subsection (2).”Member’s explanatory statement
This amendment would introduce a set of principles relating to product security into the bill.
Lord Fox (LD)
My Lords, I rise to move Amendment 1 in my name and that of my noble friend Lord Clement-Jones, who is sadly unable to be here today. Should your Lordships feel at times that I am going on a bit long, just think of the alternative: it could have been both of us.
I should first say in the spirit of co-operation that the aim of this amendment is wholly positive; it is designed to firmly support the intentions of the first half of this Bill—support which we heard right across your Lordships’ House at Second Reading. While introducing this part of the Bill, the Minister set out a clear need for improved security. He told us:
“The average UK household now has nine internet-connected devices, and over 50% of all UK households purchased an additional consumer connectable product during the pandemic.”
The danger to individuals is getting worse. As the Minister also said:
“In the first half of last year alone, we saw 1.5 billion attacks on connectable products—double the figure of the year before.”
With this rise in connectable devices, the Minister said:
“Thousands of people in the UK have been victims of cyberattacks.”—[Official Report, 6/6/22; col. 1033.]
I suggest that this is understating the situation—it must be tens if not hundreds of thousands—but frankly, we just do not know.
This is an international business, which preys on poor security and badly configured devices. Further, our household devices can be co-opted by sophisticated criminal or political hackers to present significant threats to our national infrastructure. That is why this part of the Bill is important; I think we all agree on that. For a connectable device to be secure, it needs to be set up right but then supported throughout its active life to meet the changing environment of security threats. We are all used to updating our laptop security regularly, but how many times have we updated other household-connectable devices? A baby alarm, for example, is never updated.
At Second Reading, I described my fruitless search within the Bill for a definition of the security support that a consumer might reasonably expect for consumer-connectable products in the house. This Bill takes the secondary-legislative route. Rather than set out what consumers should legally expect in terms of through-life product security support, we were promised some SIs, and we heard what the focus would be.
In a letter sent last week, the Minister gave the Government’s reasons for choosing those three areas; I will come back to them briefly. He wrote:
“we are starting with a focus on the three security requirements that will make the most substantial change to consumer device security at a proportionate cost to business”.
But why just these three? The Bill is heavily based on the Code of Practice for Consumer IoT Security, in which 13 security issues were highlighted. To be clear, the first two—“No default passwords” and
“Implement a vulnerability disclosure policy”—
match those of the Minister. Interestingly, on the third one, there is a big difference in language between the Bill—which mentions providing transparency on how long, at a minimum, the product will receive security updates—and the code, which says, “Keep software updated”.
But there are 10 other major areas. I will not list them, but the fourth is:
“Securely store credentials and security-sensitive data”.
The eighth is
“Ensure that personal data is protected”.
Why are those two not as important as the other three? I cannot fathom why those have been left out and the previous three selected. So, given the choice of 13—the Minister can look them up—what was the logic in choosing just those three and dropping the fourth and eighth in particular?
There is also the issue of changing technology. Without a set of principles, the Government’s aim is to chase technological development with a string of statutory instruments, simultaneously keeping up with the world’s most innovative companies and pitting their ingenuity against the world’s top criminals. Life is moving fast—for example, a recent issue of Wired announced the beginning of the end for passwords:
“At Apple’s Worldwide Developer Conference yesterday, the company announced it will launch passwordless logins across Macs, iPhones, iPads, and Apple TVs around September of this year. Instead of using passwords, you will be able to log in to websites and apps using ‘Passkeys’ with iOS 16 and macOS Ventura. It’s the first major real-world shift to password elimination.”
On that basis, this legislation will be partially obsolete before it is enacted.
I have one further technical problem for the Minister to explain. Once again, different bits of government are moving in parallel. A seemingly entirely different exercise—a consultation on app security and privacy interventions—was published in May this year. The suggested interventions include
“a voluntary Code of Practice for App Store Operators and Developers that is intended as a first step.”
Other possible future options set out in the document include
“certification for app store operators and regulating aspects of the Code to help protect users.”
The document then says:
“These proposals link into the National Cyber Strategy through requiring providers of digital services to meet appropriate standards of cyber security and developing frameworks to secure future technologies.”
No mention of this legislation is made.
So where does a connected device end and an app start? Where does the Bill stop and this new code of practice start? If I install my temperature control system, it will involve connected hardware and an app; which of these two pieces of government activity will cover my system, and how are they connected? The Government have not joined this up, and, once again, two things are going on with no connection to each other.
So, I borrowed some of the Code of Practice for Consumer IoT Security for this amendment, which sets out some of the principles. Proposed subsection 2(a) sets a simple obligation for “manufacturers, importers and distributors” to demonstrate a “duty of care”. Proposed subsection 2(b) sets out that
“customers are entitled to have a reasonable expectation that manufacturers, importers, and distributors make sure their consumer connectable products meet minimum cyber security requirements before they are placed on the UK market”.
Proposed subsection 2(c) calls for
“manufacturers, importers, and distributors … to demonstrate an understanding of emerging security threats and a proactive, ongoing support programme to mitigate these risks and ensure that their products are safe by design.”
The Minister would be hard-pressed to argue against these—and his planned SI on accessibility vulnerability is close to proposed subsection 2(c) anyway.
I would like to hear that the Government recognise the benefits that having clear principles in the Bill can deliver. I am sure that the Minister can see these benefits. Secondly, I am not proprietorial over the exact wording. We can use the time between Committee and Report to fine-tune and wordsmith those principles, but I hope that this is a constructive and helpful start.
Baroness Merron (Lab)
My Lords, I restate these Benches’ support for Part 1, which introduces a range of important powers and processes relating to the security of consumer-connectable products, including smart TVs, smartphones, connected baby monitors and connected alarm systems, all of which we use in our day-to-day lives. For me, the legislation that we seek to improve today is much needed and needs to move with the times and the way we live. For example, in 2006 there were just 13 million of these devices but in 2024, there is likely to be more than 150 million in the UK alone—a huge projected rise.
I am grateful to the noble Lord, Lord Fox, for introducing this sensible amendment, and to the noble Lord, Lord Clement-Jones, whose name is also on it. It seeks to introduce or suggest some guiding principles relating to product security. For me, the key principles are that manufactures, importers and distributors have a responsibility and a duty of care to meet minimum cybersecurity requirements and look forward to emerging security threats. It seems wise and sensible to include these, so I hope the Minister will take them into account. As the noble Lord, Lord Fox, said, the exact wording of the amendment does not have to be used; it is about the principles. Indeed, it is about not just principles but practice: the message given to consumers as well as to manufacturers, importers and distributors.
I know that in other legislation the Government are often nervous about using the phrase “duty of care”, but, as the Minister knows, there are very real concerns about data collection and privacy. I suggest that this is the very least that consumers should be able to expect. While it may be said that the other principles are not necessary to include, there have been several cases of manufacturers knowing about, yet failing to act on, significant security flaws. I feel this is something we need to guard against.
The Earl of Erroll (CB)
My Lords, I want to say just a couple of words because, having read this and listened, I think the amendment has a very good point. I like the concept of a duty of care, because if we do not have that, who are we worrying about? In fact, Clause 7, on “Relevant persons”, is all about the manufacturers, importers, distributors, et cetera, with nothing about the customer, the poor person who is going to get hit by it. It is a very good idea to put that in at the beginning, setting down some principles and duties, because the other trouble is that by the time that we have done all these bits and pieces, made the regulations and the provisions, we are always acting after the event. What we need is a bit of proactivity, and we get that in this suggested new clause, because manufacturers, importers and distributors would have to make sure that products met certain minimum requirements. They would need to understand what “emerging security threats” there were; in other words, thinking ahead to the next stage and not just saying, “Oh, well, it complied with those things last year”, by which time the horse has bolted and we are far too late. So, I like it.
The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Lord Parkinson of Whitley Bay) (Con)
I am grateful to the noble Lord, Lord Fox, and, in his absence, the noble Lord, Lord Clement-Jones, for their Amendment 1 and for the wholly positive intention with which it has been tabled. I was grateful to have had the opportunity to talk to them about it before Second Reading as well. As the noble Lord set out today, he has argued that customers deserve some high-level principles setting out the security protections they should expect when purchasing consumer-connectable technology. In fact, Amendment 1 goes further, as noble Lords have noted, and would require manufacturers to owe their customers a “duty of care” to protect them. We are not as keen as the noble Earl, Lord Erroll, on that.
The first problem we have with a duty of care is that it could give consumers a false sense of security. If consumers buy well-designed technology products which meet the best standards, it considerably lowers risk, but with cybersecurity there is no such thing as zero risk: the most aggressive and well-resourced hacker will find a way. Somebody may have a quality product, but have they secured their wi-fi router? Do they have some legacy technology on their network? Manufacturers of a single device do not control the whole range of apparatus which constitutes the attack surface so cannot always provide an absolute security warranty, and they cannot always predict the next attack vector.
The second problem we have is that we have learned that the security of devices is best served by standards rather than principles. If one sets standards, one can send a device to a laboratory and assure oneself that those standards have been met. If one sets principles, that does not apply. That is why the Bill is designed to give force to standards. Those standards, developed here in the UK and now adopted by Governments and jurisdictions across the globe as well as by international standards bodies, are widely recognised significantly to lower risk for consumers.
Of course, we believe that the responsibility for the security of connectable products most effectively lies with the manufacturer. We expect manufacturers to take security seriously, to implement measures to develop and maintain an awareness of the security of their products, and to be up front with customers about the security support they can expect. We have tried voluntary compliance, with our code of practice which was published in 2018. We now need mandatory requirements, and that needs specific security requirements that can be independently assessed. The legislation must enable the Government to keep pace with market dynamics and the changing technological landscape—as the noble Baroness, Lady Merron, said, it is important that we move with the times. The flexibility to be able to set different security requirements for manufacturers, for importers and for distributors is key to this.
Amendment 1 in the form drafted would place an equal weight on the duties of each of these three groups to secure products. Compelling the Secretary of State to have regard to this general duty could constrain the Government’s ability to set specific security requirements in the future. Crucially, these principles could restrict the use of powers in this part of the Bill, working against the Government’s ability to bring this regime into force and impeding our ability to keep that regime future-proof. I should also say to noble Lords that industry and consumer groups have not raised the need for general principles such as this. Our efforts to engage and communicate our intentions have been clear, and the requirements we have set out for the relevant persons have been widely understood and are in line with international standards.
The noble Lord, Lord Fox, asked why the Government have chosen these three specific security requirements rather than others. During the consultation in 2019, we explored a number of options including mandating that all consumer-connectable products meet all 13 guide- lines in the code of practice. They are all important, but the majority of respondents supported the option that the top three security requirements represented the most appropriate baseline, by balancing the important requirements that are testable, being applicable across a range of devices and creating the right incentives to improve security in these products. That is why the Government are initially mandating the implementation of security requirements that will make the most fundamental impact on the risks posed by insecure consumer-connectable products for consumers, businesses and the wider economy.
The noble Lord also asked about where products end and apps begin. The powers in Part 1 allow Ministers to set out requirements that include products and software. The proposals in the consultation he mentioned relate to those who operate app stores. So, while I acknowledge the good intentions behind it, I hope I have been able to set out why the Government feel that this amendment—
Lord Fox (LD)
I thank the Minister for giving way. That does not answer the question of where an app starts. If I am downloading Nest for my heating system, I am getting it from an app store, so where is the regulation coming? Is it the app that is coming from the app store, or is it the connectable device law that is coming through here? In which case, I think some explicit connectivity between the apps that run the connected devices needs to be written into the Bill.
Lord Parkinson of Whitley Bay (Con)
Perhaps, if the noble Lord is happy, we can explore this. The example he gives, as he knows, includes software and technology. Perhaps we can have a detailed discussion where we can work through some of those examples. I would be very happy to talk to him about them because on the question he poses the line is drawn in a different place depending on the product and its nature.
The Earl of Erroll (CB)
The Minister talked about standards a moment ago. If we are going to rely on standards, who is writing them? I presume that he is talking about British standards; to write a standard will take a year or two. I hope that the Government are going to fund it. We got no help from them in trying to fund stuff around age verification, even though that was core to the Digital Economy Act. If we are going to elevate it to an international standard, that will take another year or two, so we will not see any action for a long time if we are going to rely on externally written standards. I have chaired two BSI standards so far, and it does not happen just like that.
Lord Parkinson of Whitley Bay (Con)
Some of the standards in this area have been set in the UK and have already been adopted by other jurisdictions, so I hope that we can give the noble Earl some reassurances. While I acknowledge his point about the time it takes for these to be adopted internationally, in some areas the UK is setting the way, and these are being picked up across the globe.
As I said, while I note the good intentions behind Amendment 1, these are the reasons why the Government are unable to support it. However, I am very happy to pick up the questions about apps and products with the noble Lord and others who wish to join that conversation. I hope that, for now, the noble Lord will be content to withdraw his amendment.
Lord Fox (LD)
My Lords, while that was a relatively disappointing response, I am pleased that we can have the discussion about apps. I thank noble Baroness, Lady Merron, and the noble Earl, Lord Erroll. I think he put his finger on it. If we are to keep pace with the speed of change only through a standards regime without making the companies delivering these products in some way responsible—whether through a code of practice or a duty of care, I am not quibbling—there is no way that a standards regime can keep pace with the innovative speed that international crime is running at on cybercrime.
The idea that we can chase this down the road is wholly wrong. I ask the Minister to sit down with the department and perhaps we can come up with a different way of doing it. I am totally agnostic about how we go about it, but some sense that we are not just chasing this needs to be in this Bill, otherwise it is going to be after the fact. That said, I am happy to beg leave to withdraw Amendment 1.
Lord Bassam of Brighton
Member’s explanatory statement
This amendment strengthens the duty on the Secretary of State to publish regulations introducing security requirements.
Lord Bassam of Brighton (Lab)
My Lords, I am happy to move Amendment 2 in this group and will speak also to Amendment 4. I am grateful to the noble Lord, Lord Fox, for signing up to our Amendment 2. Part 1, as we have said, represents a step in the right direction on product security. The Bill is, as is increasingly the case with this Administration, a general framework Bill which will have much of the detail filled in later by regulations—a point that the noble Lord, Lord Fox, among others, has persistently made, and we have made from our Benches.
Noble Lords might say that Amendment 2 is a rather crude way of discussing the processes and timescales attached to the regulation-making powers in this part of the Bill but, as was mentioned in the previous group, we need much more information about when these regulations are going to be brought forward. Have some already been drafted? If so, can we see them in advance of Report and certainly before Third Reading? If not, why not? Do any of them need to be consulted on, and if so, what implications will this have on the implementation of new rules and systems? This is, as we have heard before, a time-critical Bill so the regulations are time critical as well and, we argue, need an early airing.
Colleagues in the Commons expressed concern that it has taken too long to get to this stage. We, too, regret that the Government have not worked to introduce some of these measures at greater speed and that more of the detail is not in the legislation, a point which the noble Lord, Lord Fox, eloquently made earlier. Surely it would have been possible to do this, given that the Bill was carried over from the previous Session.
Turning to Amendment 4, it
“seeks to place certain product security minimum standards, including the prohibition of so-called ‘default” passwords, on the face of the Bill.”
We think this is an important amendment. I credit Which? as where it draws its inspiration from. It is right that we have some core security principles in the Bill. We know that the Government have form on overpromising and underdelivering. Surely these important security matters should not be left to the whim of the Secretary of State at an undetermined point in the future. This process provides a perfectly good opportunity for us to enshrine the requirements in primary legislation, whether in the form of Amendment 4 or Amendment 5 or something else. We believe that there is a strong case for action
Lord Fox (LD)
My Lords, I will speak to Amendments 3 and 5 and in support of the other two amendments in this group. All these amendments refer to Clause 1 and seek to add some specificity to its general nature. The first amendment in my name and that of my noble friend Lord Clement-Jones is Amendment 3. This inserts a new paragraph (c) into Clause 1(1), adding the text
“children where they are not primary users of products but are subjects of product use”.
Why is this necessary? Here I am indebted to a report on cybersecurity, the UK Code of Practice for Consumer IoT Security produced by the PETRAS National Centre of Excellence for IoT Systems Cybersecurity. Noble Lords may be aware of this group; it has a very strong record in this area. It is a consortium of leading UK universities dedicated to understanding the critical issues of the privacy, ethics, trust, reliability, acceptability and security of IoT. I commend this organisation to the small number of noble Lords in this Chamber interested in this area.
This report highlighted, among other things, the importance of children’s connected toys receiving the necessary scrutiny, due to the implications of embedded cameras and microphones, with the aim of ensuring the child’s and the parents’ protection and right to privacy. Such devices include a wide range of everyday artefacts with internet connectivity intended for use by children or in caring for them, such as interactive toys, learning development devices and baby or child monitors.
These connected toys and tools have the potential for misuse and unauthorised contact with vulnerable minors. The British Toy & Hobby Association has responded by offering a range of guidance notes and by interpreting the code of practice, but with SMEs manufacturing most of these devices, there is much more to be done to ensure that those organisations are sufficiently informed and equipped to produce and market toys that are secure.
Security is not straightforward, as the Minister has already pointed out. While these devices offer a range of advantages through their connectivity, they also potentially expose children and their families to risks that have not yet been fully articulated to many of the consumers who are buying these toys.
A real-life example is that the toy giant Mattel launched Hello Barbie. The Minister may be familiar with it—I do not know. This was as far back as 2015. It was a very innovative toy which it launched with a start-up business called ToyTalk. The principle of this toy was that it could converse using internet connectivity with speech recognition, so as well as talking it could listen. Hello Barbie also allowed parents to log in later and eavesdrop on their children’s conversations with their toys. I will leave your Lordships to decide the ethics of that.
But this connectivity raised some concerns, primarily around who could listen in and record these devices and store conversations and behavioural and location data, and for what purpose this data could be used. Toys like these are now prevalent and they raise significant questions about the appropriate support and guidance for the toy manufacturers, which understand an awful lot about conventional safety—they know how to make physically safe toys—but do not have a track record on developing informationally and data-safe toys because they have never been asked to do that before. This is a new venture for them, and it requires a totally new set of skills and standards, as the Minister might say.
As technology evolves hacking is increasing in sophistication, so it is necessary to keep moving forward. The challenge for cybersecurity in remaining ahead of the risks is inevitably a technological one, and the Minister may remember that the Hello Barbie toy, having been launched and lauded for its security, was ultimately found at some point to have serious security issues. Even that toy, from a very large manufacturer, fell foul of the progress of information crime.
Nevertheless, it is clear that today some toy manufacturers are releasing connected toys without adequate safety and security features. This is a competitive and dynamic marketplace—a lot of it is to do with price—and first movers are rewarded. In addition, the skillset and knowledge base, as I have just said, for conventional toy safety is mismatched with these new toys and we need to find a way of addressing that divergence. This is going to require investment and new learning and will not happen unless the toy manufacturers are required to do it.
Secure software development and cybersecurity are novel demands on this sector. However, the fact remains that these toy manufacturers are potentially placing consumer safety and privacy at risk. It does not matter whether this occurs due to the immaturity of the sector, market pressures or the lack of sectoral attention to the problem.
In the view of the Petras report,
“there are no indications that this will be addressed through market forces. Instead, the certainty of legislation to maintain standards would level the playing field and make clear for SMEs where they need to invest to make their toys market ready.”
Thus, more than the technological challenge of staying ahead of hackers, what is salient here are the challenges to the implementation of basic security features in manufacturing such as basic authentication and encryption, without which children’s safety and security is at risk.
This amendment explicitly places child security front and centre in this Bill. In other legislation involving the internet and digital issues, such as the Online Safety Bill, the Government have imposed more onerous duties on those delivering services to children than to adults. This amendment would be entirely consistent with that approach—very much in the spirit of understanding that our children and young people are more vulnerable and therefore need more protection from harms.
I turn next to Amendment 5. The eagle-eyed among your Lordships will spot that it is very similar to Amendment 4, proposed by the noble Baroness, Lady Merron, and set out very elegantly by the noble Lord, Lord Bassam. In fact, I would suggest that, largely, its construction is better than ours because they managed to do the same thing in fewer words. I will speak to Amendment 5 but my comments apply to Amendment 4 as well.
Amendment 5 seeks to ensure that:
“Regulations under this section must include provision that all security requirements specified in accordance with this Act are included as essential requirements in statutory conformity assessments and marking procedures under the Radio Equipment Regulations 2017 … and in any other such assessments and procedures applicable to relevant connectable products.”
I am speaking to the spirit of both these amendments. Amendment 5—similar to that of the noble Lord, Lord Bassam—follows on from the advice and help of Which? I thank that organisation, which has really been at the forefront of the consumer issues involved. In essence, the amendment picks up on three of the issues that the Minister tells us will be dealt with in SIs as soon as the Bill becomes an Act, but it takes the rather stronger approach of placing them in the Bill.
Paragraph (a) of proposed new subsection (2A) goes further than the general principle in specifying that passwords are not to be weak. As Which? explains, many smart products push the user to create a password themselves, rather than use a default password. However, they then allow weak and easily guessable passwords to be created, meaning that the risk of compromise stays high.
One of the outcomes of this amendment would be the introduction of a requirement for responsible password policy guidance to be adopted by the industry to ensure that security liability is not simply passed from the device manufacturer to the consumer. The Bill and associated guidance should be amended to clarify that every individual device must have a unique or user-set password that meets effective complexity requirements.
Paragraph (b) of proposed new subsection (2A) seeks to avoid the risk of disclosures going into a black hole or taking many years to fix. The Bill and associated guidance should be amended to make clear what is required of manufacturers, importers and distributors on provision of disclosure policy information, particularly around vulnerabilities. The appointed regulator should also clearly define and distribute a risk assessment framework for vulnerabilities that removes any sense of subjectivity and ensures that the response is effectively mandated.
Paragraphs (c) and (d) of our proposed new subsection concern the length of time a product is supported. The Government should introduce mandatory minimum support periods for smart products and consider whether these periods should reflect how long consumers, on average, continue to use such products. There is a precedent here. New ecodesign and energy labelling requirements came into force in England, Scotland and Wales in 2021. They include a requirement for electronic display items, including televisions, to be provided with firmware and security update support for a minimum of eight years after the last unit of a model has been placed on the market. A consistent approach to support periods for a range of products therefore needs to be considered, and it has already been considered in this other legislation.
Customers need absolute clarity on the support period manufacturers will offer, so that they are able to make more informed purchasing decisions. There must be a clear definition of what the “point of sale” means and how this relates to the definitions of “supply” in Clause 55. Without clearer specifications on what form the transparency requirements will take, there is a risk that this information could be hidden, obfuscated or even mislead. This amendment is designed to probe the Government’s thinking on these very important issues.
Finally, and very briefly, as a signatory to Amendment 2, I give it my full support.
Lord Parkinson of Whitley Bay (Con)
I am very grateful to noble Lords for setting out the cases for Amendments 2, 4 and 5. Since January 2020 the Government have been clear on introducing security requirements based on the three guidelines to which I referred in the previous group.
The commitment to set requirements has been made in response to consultations, published strategies and indeed to the Explanatory Notes to this Bill. Our notification to the World Trade Organization also contained reference to some of these documents. We have put manufacturers, trade bodies and industry representatives on notice. Supply chains are long and surprises unwelcome, so the Government have been very clear on whither we are heading.
Amendment 2 would remove any discretion the Secretary of State has to make regulations. I appreciate that the intention behind tabling it is to explore this issue, and I hope I can assure noble Lords that it is not needed. The regulations will be made, and swiftly. Indeed, we have already consulted on them, in 2020, which I hope gives noble Lords some reassurance that we intend to move swiftly in this area.
Amendments 4 and 5 would insert specific security requirements into the Bill. As several noble Lords mentioned at Second Reading, it is important that technology regulation enables the Government to respond to changes in threat and technology, and to the regulatory landscape. That is precisely why the Bill does not contain details of the requirements that the Government have assured industry they will set out.
Lord Fox (LD)
Perhaps the Minister should consult whoever drew up the legislation that managed to mandate that televisions should be updated for firmware and software for up to eight years after they have stopped being manufactured. Clearly, those people managed to find consensus among the industry—or decided to ignore consensus—and deliver something. If it can be done for electrical display devices, such as televisions, I do not see why it cannot be done here if there is a will to do it. However, I think the Minister is telling us that there is no will to do it.
Lord Parkinson of Whitley Bay (Con)
The noble Lord referred to mandatory minimum support periods for electronic display items and the Ecodesign for Energy-Related Products and Energy Information Regulations 2021. It is not quite correct to say that those requirements are applicable. They ensure that the last available security update continues to be available for at least eight years after the last unit of a product has been placed on the market but the requirement does not ensure that manufacturers continue to provide new security updates over that period to ensure that the product remains secure in response to changing threats.
Lord Fox (LD)
I did not say that those requirements are applicable; I implied that they are analogous. Frankly, the fact that there is some mandating of security support after the product has stopped being manufactured is a heck of a lot better than the situation for all the connectable devices we are currently talking about, where there is no requirement at the moment.
Lord Parkinson of Whitley Bay (Con)
I do not think that they are quite analogous. As I say, it is about the requirement to keep the last available updates available to consumers for eight years rather than evolving them. We do not yet consider that there is sufficient evidence to justify minimum security update periods for connectable products, including display equipment—certainly not before the impact of the initial security requirements is known.
It is important to stress that, as consumers learn more, they will expect more. This will drive industry to respond to market pressure. If the market does not respond to this effectively, the Government have been clear that they will consider the case for further action at that point, but we think that consumer expectation will drive the action we want to see in this area.
Amendment 3, tabled by the noble Lords, Lord Clement-Jones and Lord Fox, refers to children. All noble Lords will agree, I am sure, that protecting children from the risks associated with connectable products is vital. I assure noble Lords that the security requirements we will introduce are designed with consideration for the security of all users, including children, alongside businesses and infrastructure. The Bill already gives the Government the flexibility to introduce further measures to protect children, whether they are the users of the products or subject to other people’s use of a product. We therefore do not think that this amendment is necessary as this issue is already covered in the Bill.
The Bill, and forthcoming secondary legislation, will cover products specifically designed to be used by or around children, such as baby monitors and connectable toys; they include Hello Barbie, which I was not familiar with but on which I will certainly brief myself further. However, we recognise that the cyber risks to children are not limited to the connectable products in the scope of this Bill; indeed, a lot of the issues referred to by the noble Lord, Lord Fox, were about the data captured by some of the technology, rather than the security of the products themselves. That is precisely why the Government have implemented a broader strategy to offer more comprehensive protection to children—including through the Online Safety Bill, to which the noble Lord, Lord Bassam, referred.
I hope noble Lords will agree that Amendment 3 is not needed to make a difference to the Bill’s ability to protect children from the risks associated with insecure connectable products—this is already provided for—and will be willing either to withdraw their amendments or not move them.
Lord Bassam of Brighton (Lab)
My Lords, this has been a useful and interesting exchange.
In my lordly world, “may” and “must” are sort of interchangeable; they were a useful peg on which to hang our discussion about the statutory instrument nature of this piece of legislation. I am somewhat reassured by what the Minister had to say about that, and acknowledge that some of the regulations were brought forward and consulted on at an earlier stage. However, we on this side of the House—I am sure that I speak for the noble Lord, Lord Fox, as well—want to see increased transparency throughout this process. So much of what is in front of us will be in secondary legislation; it is essential that we, the industry and the sector are properly consulted so that we understand exactly what we are dealing with. I make that plea at the outset.
I was pleased to hear what the Minister said about children as the primary users of particular products. I am glad that we have got beyond the “Peppa Pig” world that the Prime Minister occasionally occupies and are giving this issue proper, serious consideration. It certainly needs to be that way.
I am not entirely convinced by what the Minister said on Amendment 4. I look at our amendment; it is pretty basic, actually. It is hard to argue against setting out a particular prohibition in legislation. The ones that we have picked out for prohibition and restriction are quite important and essential. Of course, the Minister is right that those subjects will change and technology will overtake the words we use. We understand that point but we are trying to secure some basic minimum standards and protections here. Clearly, we will retreat with our amendment and give it some further thought before Report, but we may need some further persuasion on this. That said, I am quite happy to withdraw Amendment 2 and not move Amendment 4.
Member’s explanatory statement
This amendment would mean regulations with the power to deem compliance with security requirements were subject to the affirmative resolution procedure, as recommended by the DPRRC.
Lord Fox (LD)
My Lords, in his response to the Minister, the noble Lord, Lord Bassam, talked about transparency. The Minister said that he hoped we were reassured by the presence, and indeed the draft, of particular regulations. More specifically on the point made by the noble Lord, Lord Bassam, we would be reassured if the Minister were prepared to share those drafts with Her Majesty’s loyal Opposition and those of us on this Bench, but the Minister has set his face against pre-publishing draft regulations so that we can have a chance. That trust will come if we are trusted in this process, but it does not come for nothing.
I rise to speak to these—whatever the collective noun for amendments is; perhaps a raft or a shedload—amendments, all of which are around delegated powers and secondary legislation, and to move Amendment 6. As we have discussed, in Part 1,
“The core provision is clause 1, which allows the Secretary of State to make regulations specifying the requirements that are to apply for the purpose of protecting or enhancing the security of internet-connectable products made available to consumers in the UK. The security requirements can be applied to … relevant persons.
Clause 3 allows the Secretary of State to make regulations providing that a relevant person is to be treated as complying with the security standard if specified conditions are met. No limits are imposed on the circumstances in which this power would be capable of being used. Subsection (2) provides that the specified conditions may include, “among other things”, compliance with specified standards. But this does not limit the circumstances in which this power may be exercised.
The explanation for the power is given in paragraphs 20 to 22 of the memorandum. The point is made that improving the security of connectable products is a critical global issue”—
which we have discussed,
“and therefore it is likely that many other countries and international standards bodies will introduce standards similar to or aligned with the security requirements imposed under this Bill. The purpose of the power is to allow products which meet these alternative standards to be excepted from the regime under this Bill, provided that those standards achieve equivalent security outcomes and do not weaken the regime established by the Bill.”
Are noble Lords still with me? The Bill’s
“powers will also facilitate mutual recognition agreements and therefore help the UK to avoid placing an undue burden on industry by restricting the free flow of international trade.”
I think we all can see this. I agree with the Delegated Powers and Regulatory Reform Committee,
“that this provides a reasonable explanation for the power contained in Clause 3, it does not explain why it is considered necessary or appropriate for the power to be at large and not limited so that it can only be used where a product is subject to an alternative security regime imposed outside the UK”
and that the Minister needs
“to explain whether the failure to limit the powers in this way is inadvertent; and, if not, why (whether by reference to technological change or otherwise) it is considered necessary to draw the powers more widely than indicated in the memorandum.
Regulations under Clause 3 are subject to the negative resolution procedure. That is based in part on the fact that the regulations will not reduce the effect of the legal framework. But that assumes that other international standards will apply instead.”
This amendment puts forward the DPRRC’s recommendation that
“the affirmative resolution procedure is more appropriate if the width of the regulation-making power is to be retained.”
The alternative is for the Government to narrow that regulation power.
Amendment 9 focuses on regulations under Clause 9(7), which are subject to the negative resolution procedure. This amendment implements the DPRRC recommendation that
“the affirmative resolution procedure is more appropriate if there are to be no limits on the circumstances in which the duty under clause 9 to provide a statement of compliance may be waived.”
Then we have tabled an amendment that removes Clause 9 altogether. Clause 9 is designed to take power to except manufacturers from the duty to provide a statement of compliance. The clause
“requires manufacturers to provide a statement of compliance when a product that is subject to security requirements is made available to the UK. Subsection (7) of clause 9 confers a power by regulations to provide that a manufacturer is to be treated as complying with this requirement if specified conditions are met.
The explanation in the memorandum links this power to the power in Clause 3 to treat a relevant person as complying with a security requirement.
‘Where the government has recognised another standard as being equivalent to compliance with a security requirement using the provisions of clause 3(1), it may be appropriate under certain conditions, for instance where the government has entered into a mutual recognition arrangement with another regime, for the duty to ensure that a product is accompanied by a statement of compliance to be waived for relevant persons in relation to products that meet that standard.’
However, this limitation on the circumstances in which the power will be used is not reflected in clause 9(7) itself, which simply confers a power to treat the manufacturer as complying with the duty to provide the statement of compliance ‘if specified conditions are met’, without any indication of or limit on what those conditions might be.”
As such, the purpose of giving notice of our intention to oppose the question that Clause 9 stand part of the Bill amendment is designed to get to the bottom of the issue and to get the Minister to explain whether the failure to limit the power, as described in the memorandum, is inadvertent; and, if not, why it is necessary to draw the power more widely than indicated in the memorandum.
Baroness Merron (Lab)
My Lords, I am grateful, as ever, to the Delegated Powers and Regulatory Reform Committee for its very helpful report on this Bill. It would be fair to say that, in general, this Bill has fared better than most Bills, so that gives some comfort. Nevertheless, it is also true to say that the committee has raised a number of concerns and has put forward a very helpful range of recommendations, which are encapsulated in this suite of amendments. I thank the noble Lord, Lord Fox, for his detailed canter through what might be called a veritable feast of amendments.
As I say, this group of amendments very much reflects the concerns of the committee. I should also put on record that as the amendments were tabled at a relatively late stage, these Benches have not signed them. I say to the Minister that there is nothing to deduce from that, because I can confirm that we hope that he will take the concerns that are seriously and sensibly set out in this group and will look at revising the scope of procedures relating to certain powers when it comes to Report stage.
Lord Parkinson of Whitley Bay (Con)
The feast of amendments in this group aim to implement the recommendations of your Lordships’ Delegated Powers and Regulatory Reform Committee. We welcome the committee’s report and are considering its recommendations, as we always do. It will infuriate the noble Lords who have asked detailed questions when I say that, ahead of setting out our response to the committee, I will not be able to cover all the issues they have pressed the Government on today. I am happy to say that we will set out our response in writing ahead of Report. Perhaps once we have done that, and noble Lords have seen the Government’s full thinking in their response to the committee, it might be helpful for us to speak in detail.
The legislation has been designed to protect people, networks and infrastructure from the harms of insecure consumer connectable products, while minimising the unnecessary regulatory burden on businesses. It does so in the context of rapid technological and regulatory change, evolving cybercriminal activities and a growing impact on people in businesses, all of which require us to ensure that the legislation can evolve quickly and effectively. The UK, as I have noted, is leading the world with its approach to regulating connectable products. As other jurisdictions increasingly turn their attention to this important issue, we will use this flexibility to achieve alignment with equivalent regulatory regimes, avoiding unnecessary duplication. These powers, and the others conferred by the Bill to make delegated legislation, are crucial for it to remain effective. We have carefully considered the number, scope and necessity of these powers, and believe we have struck the right balance between the need for that flexibility and the importance of Parliamentary scrutiny, which noble Lords rightly stressed again today.
We welcome the report of your Lordships’ committee and are considering its recommendations. I am afraid I cannot, at this stage, pre-empt our response, which has to be made while considering the recommendations’ impact on the broader framework. We will return to these matters on Report, and I am very happy to have a detailed conversation with the noble Lords about our response after we have responded to the DPRRC.
The noble Lord, Lord Fox, focused on Clauses 9 and 11. I am happy to confirm that nothing about how the powers are drawn in Clause 9 is inadvertent; this was our intent. Clause 9 contains four delegated powers; they will be used predominantly to provide administrative detail deemed too technical for primary legislation. For example, they will explain what must be included as a minimum in a statement of compliance, what steps must be taken to determine compliance, where appropriate, and for how long a manufacturer should keep a statement of compliance. They will also provide flexibility to respond swiftly to changes in the market. In addition, the delegated powers in this clause may be used in the future to provide that the statement of compliance is equivalent to certain product markings, or external conformity assessments, such that a manufacturer may be deemed to have provided a statement of compliance where such markings or assessments have been made or completed. This is dependent on regulatory changes to product markings and on the development of the assurance sector for product security.
At this stage, and awaiting our response to your Lordships’ committee, I hope noble Lords will agree that it goes without saying that the Government feel these clauses should stand part of the Bill.
Lord Fox (LD)
I sort of thank the Minister for his response, which is really no response at all. He did say that it would infuriate me and he is fairly accurate about that.
As correctly noted, I am merely a cipher for the DPRRC, a very serious committee that does not produce these reports lightly. The point it is making, particularly on Clause 27, is front and centre to this Bill. Who is going to enforce it? Who decides who will enforce the Bill, and how will Parliament know if the Secretary of State decides not to tell it, under the current regulations? These are very serious matters and not ones that your Lordships’ House should step back from. I am sure that the Minister will, on reflection, understand that the DPRRC has a very important point to make. The others are important points, particularly around Clause 3, but the Clause 27 piece is absolutely central to the future of this Bill. That said, I beg leave to withdraw Amendment 6.
Lord Bassam of Brighton
“(5A) For the purposes of subsection (5), a person who provides an online facility through which a distributor makes a product available in the United Kingdom is also a distributor.”Member’s explanatory statement
This amendment brings online marketplaces which allow relevant products to be listed for sale within scope of the security requirements outlined in the Bill.
Lord Bassam of Brighton (Lab)
My Lords, Amendment 7 is also in the name of my noble friend Lady Merron. This amendment, as the notes to the Bill’s amendments set out, brings online marketplaces which allow relevant products to be listed for sale within the scope of the security requirements outlined in the Bill. We wish to express again our gratitude to Which? and others for their work in relation to online marketplaces, including, but not limited to, Amazon and eBay, which facilitate the sale of many of these products.
Research suggests that a significant number of products listed on online marketplaces could have security and privacy risks. This is prior to the introduction of the new rules for producers, importers and distributors, but it does highlight the importance of ensuring that marketplaces are subject to at least some of the new measures. Following Second Reading, the Minister kindly wrote to noble Lords, as he promised he would, and suggested that in many cases these websites will fall under “at least one” of the categories and, even if they do not, earlier parts of the supply chain will be subject to the new duties. On that basis, the Government say they will not explicitly bring marketplaces within scope of these measures but will keep the matter under review. It is disappointing that the Minister decided to rule out this change without even having this Committee debate. I hope the Minister’s response will go into more detail than the letter, and he will outline exactly what this review process will look like. Importantly, if it becomes apparent that obligations need to be imposed on these businesses, can he outline the process for achieving this? Can it be done under existing powers, or would it require an additional, albeit simple, piece of primary legislation?
This may not be a gaping hole in the Bill, but it does feel like a gap that needs to be addressed. We hope the Government will be persuaded of that in the run-up to Report stage. It is important because we do not often get legislation on this subject and we do not often get the opportunity to deal with issues such as this. I say to the Minister that we need considerable reassurance on this point because of that very fact. The Minister may say that it is all going to be down to regulations. That is not really a complete answer but we look forward to hearing his response.
Lord Fox (LD)
My Lords, I rise to speak to Amendment 8 in my name and that of my noble friend Lord Clement-Jones. These are two ways of doing the same thing so I support the spirit of Amendment 7, about which we have just heard from the noble Lord, Lord Bassam.
This amendment adds the following wording to Clause 7:
“Any person who is a provider of an internet service that allows or facilitates the making by consumers of distance contracts with traders or other consumers for the sale or supply of a relevant connectable product is to be regarded as a distributor for the purposes of this Act, if not a manufacturer or an importer of the product.”
This amends the language that defines a distributor in the scope of the Bill. Online marketplaces are a mainstream form of today’s retail. Which? research in 2019 found that more than 90% of the UK population had shopped through an online marketplace within the month it was polling. That has increased during the pandemic. However, its research also consistently highlighted how online marketplaces are flooded with insecure products. It has previously demonstrated issues with the lack of legal responsibility of online marketplaces for the security and safety of products sold through their platforms.
The Government have recognised the problem, in their response to the call for evidence on product safety, that current safety rules were designed to fit supply chains as they operated before the world of internet shopping. In the realm of product safety, the Government have acknowledged that this can result in the peculiar situation where no actor is responsible for ensuring product safety. This has resulted in organisations such as Electrical Safety First repeatedly finding unsafe and non-compliant products listed on online marketplaces. Therefore, the traditional conception of actors in the supply chain is now outdated.
The Bill defines “distributor” as
“any person who … makes the product available in the United Kingdom, and … is not a manufacturer or an importer of the product.”
At present, it seems unlikely that certain online marketplaces, including eBay, Amazon Marketplace and Wish.com, will be included within the scope of that definition of distributors in the Bill. This will leave, without overstating it, a sizeable gap in the regulatory scope of this market.
Given the amount of insecure tech readily available on online marketplaces, it is paramount that these platforms are given obligations in the Bill to ensure the safety and security of the products sold on their sites, regardless of whether the seller is a third party. However, the Clause 7(5) definition of “distributor” in terms of making products available on the market is in line with existing product safety law, so we know that certain marketplaces are not classed as distributors and hence not obligated to take action. Amazon Marketplace, Wish.com and eBay are marketplaces where other people are selling; this is the issue.
This amendment seeks to expand the definition of distributors in Clause 7 to include appropriate online retailers, such as listings platforms and auction sites, including eBay, Amazon Marketplace and AliExpress. I feel sure that the Minister did not intend for the legislation to miss these marketplaces out; rather than risk this loophole going any further, we will work with the Minister and Her Majesty’s loyal Opposition to come up with some wording that absolutely iron-clads the Bill to ensure that these sorts of marketplaces are also included.
Lord Parkinson of Whitley Bay (Con)
I am grateful to noble Lords for speaking to their amendments in this group, both of which seek to make online marketplaces a “distributor”. It is vital that all products offered to consumers are secure, including those listed through online marketplaces, and we want to ensure that this is achieved in the most efficient way.
The explanatory statement for Amendment 7 suggests that products listed on online marketplaces might not be protected by the security requirements set out in the Bill. I reassure noble Lords, particularly those who tabled Amendment 7, that the security requirements will need to be met for all new connectable products offered to consumers in the UK, including those offered through online marketplaces. These marketplaces often act as a manufacturer, importer or distributor and, in those cases, they are subject to the same duties and security requirements as those three types of economic actor. If, however, the online marketplace does not fall into one of these three categories, the manufacturers, importers and distributors of those products are all still fully responsible for complying with security requirements.
Lord Fox (LD)
This has piqued my interest; how does this exercise relate to the Bill? This process of dealing with the online acquisition of unsafe products would seem to be what the Bill is doing front and centre, so what is that process? How do the two connect?
Lord Parkinson of Whitley Bay (Con)
They are complementary; the new product security framework sits alongside existing legislation on product safety, which is why we want to conduct a review of the safety framework and publish the consultation. I am certainly happy to write and endeavour to explain.
The noble Lord asked whether products sold through online marketplaces fall into a gap in the Bill. The Bill requires in-scope products offered for sale through online marketplaces to customers in the UK to be as secure as in-scope products sold, for example, in physical stores. We are mindful of the variety of services offered by different online marketplaces. Some act only as advertising platforms, while others facilitate transactions and store and ship products on behalf of the seller. As noble Lords have noted, this changes all the time. This must be carefully considered to ensure that businesses can comply with their legal obligations and that any regulation is necessary, appropriate and proportionate to provide the best protection to consumers.
Lord Fox (LD)
I am sorry to keep popping up; being a practical person, I will try to give the Minister a scenario and, if he cannot answer straightaway, he can write. I have bought a product through an online auction that turns out to be unsafe; I go back to the auction site, which tells me, “Not my problem. You have to return to the international manufacturer which made this product”, which turns out to be a brick wall and nothing comes back. First, is that online auction site correct in handing me over to the international manufacturer, which turns out to be a dead end? Secondly, if that site is correct, to whom do I go? Do I go to my local council trading officer or to the person who, under Clause 27, has been mysteriously made the enforcer for the Bill? I may or may not know who they are. How do I seek redress, and from whom?
Lord Parkinson of Whitley Bay (Con)
I will try answer the noble Lord’s question, and I am happy to write with further detail. Products sold on online marketplaces are covered by the Bill. All products sold to customers in the UK will have to comply with the security requirements set out under this framework. Where a product is sold on a third-party online marketplace, the seller will be responsible for ensuring that it is compliant. Third-party sellers who sell new products directly to customers on those platforms will also be covered under the “distributor” definition. I will happily write to the noble Lord with further detail ahead of Report but I hope that, for now, that goes some way towards addressing his question.
Lord Lucas (Con)
My Lords, I would be grateful if my noble friend included me in his replies and letters. Is he aware of the lamentable performance of Her Majesty’s Revenue and Customs when it comes to trying to enforce VAT in similar circumstances, and the enormous difficulty it has had with third-party sellers operating out of the Far East in particular? It is extremely difficult, and the volume of VAT lost runs into the billions. This is a large-scale enterprise and it will easily channel a large volume of unsatisfactory products into the UK if we do not take effective action.
I hope that the Government, in their new consultation, which I look forward to learning about, will be taking a robust attitude towards the platforms. For instance, it is entirely unsatisfactory that there should be a way in which unsafe toys can get into the hands of children at Christmas, and for which there is no effective means of prevention or redress. In other jurisdictions, these online marketplaces have proved amenable to a forceful approach by government. I very much hope that we will be joining in with that.
Lord Parkinson of Whitley Bay (Con)
I am happy to include my noble friend in the replies and the letter I send. This touches on work which falls under the Department for Business, Energy and Industrial Strategy, and the points he raised, of course, fall to Her Majesty’s Revenue and Customs. We will make sure that, having consulted officials there, we provide some details of the work those departments are doing as well.
Lord Bassam of Brighton (Lab)
My Lords, I am looking forward to the correspondence on this; I fancy that the noble Lord’s civil servants will have a tricky job on their hands. I do not think I quite got a response to what the nature of “being kept under review” really meant, but I await word in the future.
I have been reading the Explanatory Notes, as the Minister will probably be unhappy to hear, and I can see the difficulties. In trying to ensure that the legislation is focused, rightly, on the producers, manufacturers, importers and distributors, it is hard to work round that and not capture people who are simply installers of a product. On the other hand, there are circumstances where installers are primarily responsible for the effectiveness and working of the product, and if it was not for the way they install it, it would not be effective. The terms of the contract are such that it makes that difficult.
I can see the difficulty here, but for now I am happy to withdraw our amendment. In doing so, we are equally supportive of the amendment in the name of the noble Lord, Lord Fox, because the two are contiguous in their formulation.
Product Security and Telecommunications Infrastructure Bill
Tuesday 21st June 2022
(1 year, 10 months ago)
Lords ChamberRead Full debate Product Security and Telecommunications Infrastructure Act 2022 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 16-I(a) Amendment for Committee (Supplementary to the Marshalled List) - (20 Jun 2022)
“Amendments to consumer protection legislation
(1) In section 9(3) of the Consumer Rights Act 2015 (goods to be of satisfactory quality), after paragraph (e) insert—“(f) compliance with security requirements.”(2) In Schedule 2 to the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (S.I. 2013/3134), after paragraph (x) insert—“(y) where applicable, confirmation of compliance with all security requirements as set out in regulations made under section 1 of the Product Security and Telecommunications Infrastructure Act 2022.”(3) In section 2(2) of the Consumer Protection Act 1987 (liability for defective products), after paragraph (c) insert—“(d) in relation to a relevant connectable product within the meaning of Part 1 of the Product Security and Telecommunications Infrastructure Act 2022, any person who is a distributor of the product within the meaning of that Act.””Member’s explanatory statement
This amendment would clarify the relationship between proposed provisions in this Bill and those already in law under the Consumer Rights Act 2015 and other consumer legislation. This would include defining a security issue as a fault for the purposes of consumer law and ensuring the liability for a defective connectable product is properly defined.
Lord Fox (LD)
My Lords, this group contains two amendments that have been tabled by my noble friend Lord Clement-Jones, and I rise to move Amendment 14 and to speak to Amendment 14A on his behalf and my own. These are probing amendments to understand consumer law with this and other legislation.
It seems that the Government’s intention is that consumers will be entitled to redress under the Consumer Rights Act 2015 for breaches of the product security requirements in Part 1 of this Bill and the requirements of related future secondary legislation where breaches amount to a product not being of satisfactory quality as described or fit for purpose. However, for clarity, this will require the specific inclusion in this Bill of amendments to the CRA and other related consumer legislation. So I ask the Minister to clarify how redress will work in practice. As Which? has strongly urged in relation to the current consultation on reform of consumer law generally, collective redress should also be available for groups of consumers that have suffered breaches of the CRA relating to product security.
To help your Lordships, let us look at a typical scenario where the consumer reads a report about a security issue with a product that they own and considers it insecure and hence faulty. They try to take the product back to the retailer as redress, as per CRA 2015 rights, but under the CRA, after the first six months of ownership, the burden falls on them to prove that the fault was not of their making. It is unclear what burden of proof would be required at this stage for the consumer to get redress for security faults as described in this Bill.
The CRA places the primary obligation on retailers—as “traders” concluding contracts with consumers—not manufacturers, to remedy products found to be in breach. Due to the unique nature of security faults, it is currently unclear whether a retailer would have the ability to verify reports of faults to facilitate effective redress. Experience has shown that it has been hard when reporting security issues to retailers, and that can often result in pushback. There is a risk that the consumer will find it very hard to enact their CRA rights in practice to get redress on insecure products. In that regard, proper legal guidance for what classifies a security fault is absolutely vital for redress to work effectively.
At present, it is unclear how security updates—and hence a commitment to fix security faults that occur with smart products—interact with the CRA 2015. For example, a manufacturer could claim that it will provide four years of updates on a product at the point of sale but then renege on that; perhaps because it has gone out of business or some such reason. The product then develops a security fault that the manufacturer will not fix. It is unclear what the consumer rights would be in this scenario.
Moreover, it is unclear if the Bill effectively waters down consumer rights under the CRA. If the manufacturer claims that it will give four years of support in which it will fix security faults, how does this impact on a claim that a consumer may have under the CRA to have faults addressed—which they may be able to bring for up to six years from when they purchased the goods? If the Government are not willing to mandate minimum support periods for at least six years, this could become a commonplace problem to consumers seeking redress. The Bill must make it clear how it interacts with the CRA 2015 and associated consumer legislation in a way that gives maximum protection to consumers and does not water it down.
Finally, under the CRA 2015, after the first six months of ownership, the burden falls on the consumer to prove that a fault was not of their making. Consideration should be given to extending this period and making it easier for consumers to obtain redress for insecure products. The 2019 EU sale of goods directive has extended the burden of proof in EU member states to one year—extendable to two years by member states—from delivery of the goods. For goods with digital elements supplied on a continuous basis, the burden of proof for conformity is on the seller in relation to any non-conformity that becomes apparent during a minimum of two years, or the period of supply where longer than two years, effectively providing a minimum of two years of security support. The directive also has specific provisions requiring sellers to keep consumers informed about and supplied with updates, including security updates. Similar protections should be introduced for UK consumers.
So there is a whole heap of issues here, and these two amendments try to get some clarity. Amendment 14 seeks to clarify the relationship between the provisions proposed in the Bill and those already in law under the Consumer Rights Act 2015 and other consumer legislation. This would include defining a security issue as a fault for the purposes of consumer law and ensuring that the liability for a defective connectable product is properly defined. Amendment 14A would ensure that the provisions of the Bill will not conflict with any existing legal rights regarding the enforcement of consumer law, ensuring that redress for defective connectable products can be sought by individual consumers, as opposed to solely leaving the redress procedure to the designated enforcement body to ensure compliance.
We await detailed exposition on all this, either now or in a letter from the Minister. I beg to move.
Baroness Merron (Lab)
My Lords, I am grateful to the noble Lords, Lord Clement-Jones and Lord Fox, for tabling these amendments, which seek to clarify how the new measures in the Bill will interact with existing consumer legislation. In a practical sense, they are about how comfort can be given to the consumer and redress made available where necessary.
We in your Lordships’ House know that consumers have had to fight hard over many years to secure important statutory protections, including rights of redress when products do not live up to the standards that people rightly expect of them. I say to the Minister that the new measures in the Bill are certainly welcome and will improve certain aspects of the consumer experience, but it is also right to probe how this new regulatory regime interacts with consumer rights and protections enshrined elsewhere.
I feel that Amendment 14 seeks to update the state of play to refer to compliance with security requirements, but that needs to be an area where consumer protection is enshrined in legislation. To me, it goes with the sweep of the Bill, which is to bring us into today’s world and able to cope with the new and constantly evolving situation. Amendment 14A is also interesting, in that it seeks to maintain the right of individual consumers to seek redress in relation to defective connectable products rather than leaving these matters to a particular enforcement body or to collective legal action.
We would appreciate it if the Minister could clarify some of these matters in the Bill itself. If that does not prove possible, this is another area where we would very much like rather more information to be made available by the department so that we can seek to protect the rights and interests of consumers.
The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Lord Parkinson of Whitley Bay) (Con)
I am grateful to the noble Lord and the noble Baroness for probing through Amendments 14 and 14A as tabled by the noble Lords, Lord Clement-Jones and Lord Fox. The amendments seek respectively to amend consumer protection legislation and clarify the relationship between this Bill and consumer protection legislation.
The Consumer Rights Act 2015 requires goods and services to be of a satisfactory quality, and the Consumer Protection Act 1987 imposes liability for defective products. Breaches of this Bill that meet the criteria of these Acts already entitle consumers to the protections they provide. This Bill focuses on the supply chain and what it needs to do to protect and enhance the security of products and their users. The security requirements will relate to processes and services, not just to the hardware of a product as the product safety framework does. It is not appropriate to retrofit the security requirements of this Bill’s regime into the existing framework of consumer protection legislation, which was generally designed to ensure that consumers have rights when products are unsafe—although, as I said, I appreciate the probing nature of these amendments.
Some security requirements will require ongoing action from manufacturers after they make a product available. It would be inappropriate to require traders to confirm one-off compliance with such requirements before contracts become binding. I acknowledge that existing consumer rights legislation will not always enable consumers to seek redress for breaches of the security requirements. I reassure noble Lords that this is not a gap. The evolving technological landscape means that the threats to consumers change, and we need flexibility to protect and compensate customers where that is necessary. The Bill, together with existing consumer rights legislation, already offers this.
The Earl of Erroll (CB)
The Minister said earlier that the whole point of the Consumer Rights Act was about unsafe goods. I think that he means “unsafe” as referring to physical harm. Actually, a major security breach could render serious physical harm to someone because having all their money removed from their bank account could affect their mental state and result in the breakdown of their marriage, suicide, failure of business, all sorts of things. Therefore, it may have just as damaging physical effects on someone, though not immediately apparent. Although they are different they are equally unsafe, so this has more merit than he is suggesting.
Lord Parkinson of Whitley Bay (Con)
At the risk of a philosophical debate on the nature of security versus safety, I accept some of the points that the noble Earl makes. There are distinct differences between our approach to product security and existing product safety as set out in consumer legislation, but I will address myself to that philosophical point in the letter, if I may. For now, I ask the noble Lord to withdraw Amendment 14.
Lord Fox (LD)
I hope that the Minister will take some time to read my speech in Hansard and address the issues that I have raised, because there are some specific points that have not been touched.
A lot of this has come from Which? whom I thank for its help. Which? is an extraordinarily experienced organisation, with some of the country’s most experienced consumer lawyers dealing with the sharp end of customer consumer problems. The fact that it has gone to the trouble of raising these issues should raise a red flag. It is not doing it out of mischief or political intrigue, but because it cares about the future of consumers. For that reason, the department needs to take this seriously.
If the Minister requires a meeting with Which? I am sure that I, the noble Lord, Lord Bassam, or the noble Baroness, Lady Merron, will be very happy to broker one. We could then go through some of these consumer issues. This is an organisation dedicated to protecting the needs of consumers. It has gone to the trouble of flagging up this and several other issues. For that reason, for the future of this Bill, it would be very sensible to take Which? seriously.
That said, I beg leave to withdraw Amendment 14.
Lord Arbuthnot of Edrom
“Offences under the Computer Misuse Act 1990: defence
Notwithstanding anything contained in the Computer Misuse Act 1990, it is not an offence for a person (“A”) to test the conformity of a relevant connectable product with all or any of the security requirements, without consent of the person entitled to control access to the product (“B”), where—(a) A reasonably believes that B would have consented to that testing if B had known about the the circumstances of it, including the reasons for performing it,(d) A is empowered by an enactment, a rule of law, or an order of a court or tribunal, to carry out the test, or(c) the test was necessary for the detection of crime.”
Lord Arbuthnot of Edrom (Con)
My Lords, Amendment 16 proposes a statutory defence for ethical hackers. I am grateful to the noble Lord, Lord Clement-Jones, and to the CyberUp campaign, for their help. Again, I declare my interests as chairman of the Information Assurance Advisory Council, chairman of the Thales UK advisory panel and chairman of Electricity Resilience Limited.
The Computer Misuse Act 1990 criminalised unauthorised access to computer systems. The methods used by cybercriminals and cybersecurity professionals are often identical, which is one of the things that makes the drafting of this amendment rather problematic. Usually, criminals do not have permission for what they do, and cybersecurity professionals do, but I am told by the CyberUp campaign that there are occasions on which that permission is difficult or impossible for a cybersecurity professional to get.
At Second Reading, I cited the case of Rob Dyke, who has been through a legal tussle with the Apperta Foundation, which has since been in touch with me to put its side of the story. It is clear that it feels strongly that it was right to pursue Mr Dyke until he gave undertakings that allowed it to drop its litigation. I do not know the rights and wrongs of that, but the Apperta Foundation supports the principles put forward by CyberUp for a legal defence for offences under the Computer Misuse Act.
In any event, the Government are carrying out a review into the 1990 Act. CyberUp’s submission to it sets out that many in the cybersecurity profession do not know whether what they are doing is legal. This is because legislation in 1990 came in before much of what now happens with computers had been thought of—so it inevitably created ambiguities. In the 1990 Act, no consideration was given—I remember because I was there—to web scraping, port scanning or malware denotation, and people are not sure that they are legal. Some of us are not sure quite what they are.
This is why there needs to be certainty for cybersecurity researchers; they need to be able to do things for the public good. We cannot rely on the National Cyber Security Centre for everything, because even the Government cannot keep up with the speed of technological development, as has been mentioned. The CyberUp campaign recognises that legislation also cannot keep up with the speed of change, so it has helped with drafting this amendment not with a view to seeing it enacted—my noble friend will resist it for a number of good reasons—but with a view to eliciting from the Government a statement about how they are getting on with this aspect of the review of the Computer Misuse Act.
One suggestion that the CyberUp campaign makes is that
“legislation to mandate the courts to ‘have regard to’ Home Office or Department for Digital, Culture, Media and Sport … guidance on applying a statutory defence that would, ideally, be based on the framework”
of principles. This includes, first, the prospective benefits of the Act outweighing the prospective harms; secondly, reasonable steps being undertaken to minimise the “risks of causing harm”; thirdly, the actor demonstrably acting “in good faith”; and fourthly, the actor being “able to demonstrate … competence”. Here we may come back to the standards/principle discussion that we had on the first group.
So I expect my noble friend to reject this amendment, but I should be grateful if he could say where the Government’s thinking on the matter is.
Baroness Neville-Jones (Con)
My Lords, I speak in support of this amendment. My noble friend has just said that he doubts that the Government will adopt it, but, like him, I want to know where their thinking has got to.
The Computer Misuse Act is one of the first bits of legislation passed in the cyber era. It is old and out of date, and it is fair to say that it contains actively unhelpful provisions that place in legal jeopardy researchers who are doing work that is beneficial to cybersecurity. That is not a desirable piece of legislation to have on the statute book.
Last year, before the consultation that closed over a year ago, I corresponded with my noble friend Lady Williams. The common-sense reading of her reply was that the Home Office was quite aware that the Computer Misuse Act needed updating. I confess that I am a bit disappointed that, a year after the consultation closed, there still has not been a peep from the Government on this subject—either a draft or a statement of intention. It would be good to know where the Government are going, because it is quite damaging for this legislation as it stands to remain on the statute book: it needs modernisation.
Like my noble friend, I recognise that actually getting the drafting right is tricky and complex. Drafting language that strikes the right balance is not all that easy. But inability to find an ideal outcome is not a good reason for doing nothing, so I live in expectation, because the best must not be the enemy of the good. If the Government do not intend to produce legislation that updates that Act, I should like to see something in this legislation, taking advantage of it, at least to move the dial forward and protect ethical hackers to a greater extent than is the case at the moment.
If the Government are concerned about our drafting, I am sure we would be willing to listen to suggestions on a better formulation. In the absence of that, perhaps the Minister will say when and how the Government intend actually to modify a piece of legislation that has served its time and now needs to be superseded.
The Earl of Erroll (CB)
My Lords, very quickly, I remember well during the passage of the Computer Misuse Act and the Police and Justice Act 2006 trying to tidy up language about hacking tools and so on. It became very complicated and no one could quite work out how to do it, because the same thing could be used by baddies to do one thing and by good people to help maintain systems, et cetera. In the end, I think it went into the Act and they just said, “Well, we won’t prosecute the good guys”. Everyone felt that was a little inadequate. I do not know quite what we are going to do about it but it needs to be looked at. Therefore, this is a good start and I would welcome some discussion around it, because we need something in law to protect the good people as well as to catch the criminals.
Lord Fox (LD)
My Lords, this amendment is countersigned by my noble friend Lord Clement-Jones. I know he will be very disappointed not to be able to speak to this, because it is an issue he feels particularly strongly about, as do I. Also in their absence are the auras of the noble Lords, Lord Vaizey and Lord Holmes, who spoke at Second Reading on this issue—it is a shame they are not here, but I think they have been ably replaced by the noble Baroness, Lady Neville-Jones, and the noble Earl, in their speeches. I will try not to duplicate the points that have been made by the three speakers before me. At the heart of this, as the noble Baroness confirmed, is the need to address the UK’s outdated Computer Misuse Act to create fit-for-purpose cybercrime legislation to protect national security. Clearly, that is not easy, as she pointed out, but that does not mean we should not do it at some point.
The Computer Misuse Act, as we know, was created to criminalise unauthorised access to computer systems or illegal hacking. It entered into force in 1990, before the cybersecurity industry as we know it today had really developed in the UK. Now, 32 years later, many modern cybersecurity practices involve actions for which explicit authorisation is difficult, if not impossible, to obtain. As a result, the Computer Misuse Act now criminalises at least some of the cybervulnerability and threat intelligence research and investigation that UK-based cybersecurity professionals in the private and academic sectors are capable of carrying out. This creates a perverse situation where the cybersecurity professionals, acting in the public interest to prevent and detect crime, are held back by the legislation that seeks to protect the computer systems: it is an anomaly.
As noble Lords will know, under the guidance that will be introduced following the passage of the Bill, manufacturers of consumer-connectable products will be required to provide a public point of contact to report vulnerabilities. This could be an important step forward in ensuring that vulnerability disclosures by cybersecurity researchers are encouraged, leading to improved cyber resilience across these technologies, systems and devices.
Lord Bassam of Brighton (Lab)
My Lords, this has been a far more interesting debate than I initially surmised it would be—
Lord Bassam of Brighton (Lab)
No, I give credit where it is due. I congratulate the noble Lord, Lord Arbuthnot, on his amendment because the issues that he raised and the questions posed by the noble Lord, Lord Fox, in particular, are legitimate ones.
Although this is not the place to amend or change the Computer Misuse Act 1990, as the noble Lord, Lord Fox, said, it certainly is the place to raise concerns. After all, we are talking about product security and safety. It is vital that we have appropriate safeguards in place to prevent and, if need be, punish cyberattacks and other forms of hostile behaviour online.
However, as we seek to make smart devices safer, clearly there is a role for researchers and others to play in identifying and reporting on security flaws. They need to be able to do this within the safe zone of concern, knowing that they are not themselves going to be captured by those who are responsible for cybersecurity. As I understand it, exemptions exist in similar legislation to ensure that academics and other legitimately interested parties can access material relating to topics such as terrorism. The amendment before us today raises the prospect of granting a similar exemption and defence in this particular field.
I am conscious that the noble Lord, Lord Fox, raised the spectre of auras in the form of the noble Lords, Lord Vaizey, Lord Clement-Jones and Lord Holmes of Richmond—as well as the intent of the noble Baroness, Lady Neville-Jones, who is of course very knowledgeable about the business of security and has had both professional and political responsibility in that field. However, I think that, when those auras and his own say that this is an issue of concern, we as the Official Opposition reflect that concern.
I hope that the noble Lord will engage with the noble Lord, Lord Arbuthnot, and others following Committee on this—I am sure he will—because it is a very important subject. A campaign backed by such an esteemed cross-party group of colleagues in the Committee and in another place cannot be entirely wrong. The Computer Misuse Act 1990 is the framework we have got, but it is right that it is reviewed and that something fresh is brought before us to protect us from cyberattacks in the future.
Lord Parkinson of Whitley Bay (Con)
I am very grateful to my noble friend Lord Arbuthnot of Edrom for representing the other three signatories to this amendment. I was glad to meet him and the noble Lord, Lord Clement-Jones, to discuss this yesterday.
The role of security researchers in identifying and reporting vulnerabilities to manufacturers is vital for enhancing the security of connectable products. The good news is that many manufacturers already embrace this principle, but there are also some products on the market, often repackaged white label goods, where it is not always possible to identify the manufacturer or who has the wherewithal to fix a fault. The Bill will correct that.
As noble Lords have noted, there are legal complexities to navigate when conducting security research. The need to stop, pause and consider the law when doing research is no bad thing. The Government and industry agree that the cybersecurity profession needs to be better organised. We need professional standards to measure the competence and capabilities of security testers, as well as the other 15 cybersecurity specialisms. All of these specialists need to live by a code of professional ethics.
That is why we set up the UK Cyber Security Council last year as the new professional body for the sector. Now armed with a royal charter, the council is building the necessary professional framework and standards for the industry. Good cybersecurity research and security testing will operate in an environment where careful legal and regulatory considerations are built into the operating mode of the profession. We should be encouraging this rather than creating a route to allow people to sidestep these important issues.
As noble Lords have rightly noted, the issues here are complex, and any legislative changes to protect security researchers acting in good faith run the risk of preventing law enforcement agencies and prosecutors being able to take action against criminals and hostile state actors—the goodies and baddies as the noble Earl, Lord Erroll, referred to them. I know my noble friend’s amendment is to draw attention to this important issue. As drafted, it proposes not requiring persons to obtain consent to test systems where they believe that consent would be given. That conflicts with the provisions of the Computer Misuse Act, which requires authorisation to be given by the person entitled to control access. As the products that would be covered by this defence include products in use in people’s homes or offices, we believe that such authorisation is essential. The current provisions in the Computer Misuse Act make it clear that such access is illegal, and we should maintain that clarity to ensure that law enforcement agencies do not have to work with conflicting legislation.
The amendment would also limit the use of such a defence as testers would still be subject to the legal constraints that noble Lords have described when reporting any vulnerability that the Government have not banned through a security requirement. If a new attack vector was identified that was not catered for by the security requirements, the proposed defences would have no effect. The amendment would not protect those testing products outside the scope of this regime, from desktop computers to smart vehicles. If we consider there to be a case for action on this issue, the scope of that action should not be limited to the products that happen to be regulated through this Bill. None the less, the Government are listening to the concerns expressed by the CyberUp Campaign, which have been repeated and extended in this evening’s debate.
The Home Secretary announced a review of the Computer Misuse Act last year. As my noble friend noted, the Act dates back to 1990. I do not want to stress too much its antiquity as I am conscious that he served on the Bill Committee for it in another place. His insight into the debates that went into the Bill at the time and the changes that have taken place are well heard. The evidence which is being submitted to the review is being assessed and considered carefully by the Home Office. It is being actively worked on and the Home Office hopes to provide an update in the summer.
I hope, in that context, that noble Lords will agree that it would be inappropriate for us to pre-empt that work before the review is concluded and this complex issue is properly considered. With that, I hope my noble friend will be content to withdraw his amendment.
Lord Arbuthnot of Edrom (Con)
My Lords, I was six at the time. It has been a useful debate and I thank all those who have taken part. I am particularly grateful to my noble friend Lady Neville-Jones, who made it quite plain that we understand the problems in the way of the Government in legislating on this but we are getting impatient. With everything that is going on in the world, out-of-date cybersecurity legislation is becoming more dangerous day by day. That said, I beg leave to withdraw the amendment.
“Rights in occupation
(1) The electronic communications code is amended as follows.(2) In paragraph 21 (test to be applied by the court), in sub-paragraph (4), at the end insert “the terms of any existing agreement, and any other method of statutory renewal available.””Member’s explanatory statement
This amendment seeks to ensure that any new agreements which are made with reference to Clause 57 of the Bill and using paragraph 20 of the Electronic Communications Code must have regard to the terms of the existing agreement to ensure continuity and fairness.
Lord Fox (LD)
My Lords, once again I am a substitute for the noble Lord, Lord Clement-Jones—
Lord Fox (LD)
I know. I rise to move Amendment 17 in his name. I am grateful for the tuition that I have also had from the noble Earl, Lord Lytton—more about him shortly. Unfortunately, we are missing his huge expertise, but do not worry, I will be here to channel some of his thoughts.
This amendment seeks to ensure that any new agreements made with reference to Clause 57 and using paragraph 20 of the Electronic Communications Code must have regard to the terms of the existing agreement to ensure continuity and fairness. It aims to address outstanding concerns with the way rights are assigned when there are operators in occupation at a site. This is a complex issue and I am aware that the Minister and his colleagues at DCMS have been grappling with it as the Bill has been developed, but it is vital that the Government get this right.
The issue that the Government are trying to address was brought about by a confusion in the 2017 code. There have been some issues where operators have been prevented from getting the code rights they need to support their networks because they are already in occupation of the land and they cannot grant themselves rights.
The Government’s original consultation response and the first draft of the Bill tried to address this by changing the definition of “occupier” in the Bill. This was at Clause 57 in the original Bill. The stated policy intent made it clear that the change is intended only to address the issue that we have outlined and to ensure that when operators are in occupation of land they are able to obtain new code rights.
However, it was made clear to the Minister and his colleagues at DCMS that the original draft would in fact have much greater implications and would potentially allow operators to misuse Clause 57 as it was originally set out to modify or cancel agreements mid-term. This would be in the operators’ interest, since they could break a contract that had been agreed in good faith and move the new contract on to a new valuation basis under the 2017 “no scheme” provisions for consideration.
The Government tried to address this by removing the original draft of Clause 57 and replacing it with the new Clause 57 that we have before us today. Instead of changing the definition of “occupier” in the Electronic Communications Code, it creates a more specific code right to deal with the underlying problem.
Lord Fox (LD)
I say to the noble Lord, Lord Bassam, we are coming to the Landlord and Tenant Act 1954.
The residential security of rent control caused a seizing up of the private rented sector for the next 25 years. This is something that the Landlord and Tenant Act 1954 avoided doing in the business sector by providing security of tenure, but on market rental terms. The word of warning here from the noble Earl is that Government should be careful what they wish for and how they go about any significant transition in dealing with human sentiment against actuarial robotics, and be aware of whose voices they lend their ears to.
There are apparently three routes to lease renewal: the 1954 Act, which the noble Earl believes is effectively overwritten in some instances by the 2017 code revision; the immediate pre-2017 code for non-LTA leases; and the situation that pertains for agreements following the 2017 changes. This seems a recipe for confusion, and if the noble Earl is confused, where does that leave the rest of us?
There is a lot of detail in quite a short amendment, but this is an issue. I understand, and I think my noble friend Lord Clement-Jones and the noble Earl, Lord Lytton, understand, that there needs to be some clarity over which measures apply where, and whether the Government really want to sanction wholesale renegotiations of the nature that the noble Earl, Lord Lytton, has set out. I think that is a law of unintended consequence, and it will slow down the implementation of what we want to be implemented rather than allow it to happen more quickly.
The Earl of Erroll (CB)
My Lords, I would add that I completely trust my noble friend Lord Lytton on these affairs and issues. I have talked to him, particularly when discussing burying fibre and things like that, and he knows a lot about it.
Baroness Merron (Lab)
My Lords, this is of course the first of a number of amendments that deal with Part 2 of the Bill. The amendment refers to telecoms infrastructure. This is far from the only debate that we will have on broad issues around property rights, operators, access to land and so on but, as a general point, it is worth restating our belief that this country needs access to better digital infrastructure. Our concern is that the Government have not been hitting their targets for the rollout of gigabyte-capable broadband. There have also been issues around the rollout of 5G technology. Although we want to see decent infrastructure, we also want to see fairness in the system, and that is what this amendment speaks to. It seeks to ensure a degree of continuity and fairness as new agreements are made to replace existing ones.
The principles cited by the noble Lord, Lord Fox, and in the amendments tabled by the noble Lord, Lord Clement-Jones, are reasonable. Again, they are principles that I am absolutely sure we will return to next week, as we have ever-more detailed discussions about rents, dispute resolution and so on.
As has been outlined in this debate, the court is not currently bound to consider the terms of an existing agreement. This feels like a significant oversight. Perhaps the Minister can inform us about what actually happens in practice and what will happen in practice. Both operators and landowners have, or should have, certain rights and responsibilities within this process. I look forward to the Minister’s response to Amendment 17 and to moving some of our own amendments during day two of Committee.
Lord Parkinson of Whitley Bay (Con)
As the noble Baroness says, this begins to anticipate some issues to which I know we will return on the second day of Committee, but it is useful to begin them tonight.
Amendment 17 seeks to insert a new clause after Clause 57 of the Bill. Its purpose is to add an extra element to the test at paragraph 21 of the code, where an operator enters into a new agreement because of the provisions in Clause 57. This is likely to be in circumstances where an operator in occupation of the land on which its apparatus is installed has an existing agreement but wishes to seek an additional code right. The code currently provides that operators in exclusive occupation of land are unable to obtain additional code rights until their existing agreement is about to end or has ended. This is because the code currently provides that only an occupier can grant code rights, and the operator clearly cannot enter into an agreement with itself.
Clause 57 remedies this position and allows an operator to obtain code rights where it is in exclusive occupation of the land. The test at paragraph 21 of the code is often referred to as the public interest test and sets out what a court must consider when deciding whether to impose a code right on a landowner. Paragraph 23 then sets out how the court should determine the remaining terms of the code agreement. Clause 57 simply gives an operator the ability to obtain a new code right or rights that they do not already have. The clause does not allow an operator to force changes to its existing code agreement or to compel the other party to modify any of its terms—for instance, to attempt to reduce the amount of rental payments. Furthermore, the clause does not enable an operator to bring an existing agreement to a premature end in order to take advantage of more favourable terms. Any existing code agreement that the operator has will be expected to continue and operate alongside the agreement relating to the new code right.
Amendment 17 seeks to expand the test at paragraph 21 so that the court also has to consider the terms of any existing agreement and any other method of statutory renewal available. We are, however, of the view that the court can already take such matters into consideration when deciding whether to make an order under paragraph 20 of the code, and again when applying the test at paragraph 23 to determine what terms the code agreement should contain.
This is a topical issue. Clause 57 rectifies an issue in the code that currently prevents operators who are in exclusive occupation of the land being able to obtain new code rights. As I said, three cases have touched on this issue, all of which were heard in the Supreme Court earlier this year, and the Supreme Court is due to hand down its judgment tomorrow.
At present we believe that Clause 57, as drafted, achieves its intended objective, but we recognise that this is a complex and technical area, on which the noble Lord, Lord Fox, valiantly conveyed the expert view of the noble Earl, Lord Lytton, and it is imperative that any unintended consequences are avoided. We will of course look closely at the Supreme Court’s judgment and carefully consider whether further amendments are needed, engaging with interested parties as required to ensure that the aim of the clause is fully realised.
I too am very conscious that the noble Earl, Lord Lytton, with whom we have already had some discussions on this and broader aspects of the Bill, will want to join those discussions, so I am sure he will be following the official record. But I am very happy to meet the noble Lords who have spoken, as well as the noble Earl, to discuss this issue in further detail, particularly once we have seen the judgment. For now, I urge the noble Lord to withdraw the amendment.
Lord Fox (LD)
I thank the Minister for his response, during which he said that the department is of a view. When I was speaking for my part, rather than for the noble Earl, I made it clear that there were quite strong opinions that that view might not be correct. Three cases are to be judged tomorrow, before this Bill is enacted, so although it may have some relevance, it will potentially —and in the views of the people we have spoken to, almost certainly will—end up back in the courts.
We share the objective of the noble Baroness, Lady Merron, that the rollout be accelerated, not inhibited. We also share the view, as expressed in the not very veiled threat in the part of my speech on behalf of the noble Earl, Lord Lytton, about what the 1963 rent Act did, which was clog up the system. We do not want to do that—we cannot afford to clog up the rollout. There are strong suspicions that, without giving the legal certainty we need to avoid getting tangled up in the courts, we will be back there again, notwithstanding the judgments of tomorrow. That said, I beg leave to withdraw Amendment 17.
Product Security and Telecommunications Infrastructure Bill
Wednesday 29th June 2022
(1 year, 9 months ago)
Lords ChamberRead Full debate Product Security and Telecommunications Infrastructure Act 2022 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 16-II Second Marshalled list for Committee - (27 Jun 2022)
“(5) In paragraph 74 (power to fly lines), after sub-paragraph (4) insert—“(5) References in this paragraph to installing lines include carrying out works to install, maintain and keep such lines and other reasonably associated apparatus.””
Baroness Stowell of Beeston (Con)
My Lords, if my noble friend Lady Harding is not in the Chamber—I was not expecting to do this—I will move the amendment on her behalf. I look to other noble Lords whose names are on this amendment to introduce it more comprehensively than I can. I just want to get this debate going, because I know that there is broad support across the Chamber for Amendment 18. Noble Lords may remember that I expressed my support on this matter when it was referred to at Second Reading, because it is of benefit to all telecoms operators. With that, I beg to move.
Baroness Harding of Winscombe (Con)
My Lords, I apologise. I rise to speak to Amendment 18 in my name, and I thank my noble friend Lord Vaizey, the noble Baroness, Lady Merron, and the noble Lord, Lord Fox, for putting their names to it. I apologise—I am slightly breathless, as the noble Lord, Lord Fox, gave us a little bit of disinformation about today’s Order Paper.
Lord Fox (LD)
I beg your Lordships’ pardon—the moving of the Statement on the Metropolitan Police was not communicated to several of us.
Baroness Harding of Winscombe (Con)
Many apologies. I also thank my noble friend Lady Stowell, who I was not expecting to see, but who has been extremely helpful already this afternoon. I promise I will be brief. The aim of this amendment is to address an issue that other noble Lords and I raised on Second Reading: ensuring that the Bill enables the sharing of pre-2017 poles on private land without requiring an additional wayleave, just as it does for ducts on private land. This may sound very detailed—it is—but will substantially speed up the rollout of full-fibre broadband, on which we are all agreed.
There are an estimated 1 million-plus telegraph poles on private land. Access to them is particularly important in accelerating fibre rollout in rural England and urban Scotland. As with ducts, these poles are regulated under Ofcom’s PIA mechanism. That means that any operator is able to access those poles, so extending the provision to pre-2017 poles on private land would allow all operators to speed up their rollout equally. Without this, operators will have to dig up streets or put up new poles, which will slow down the rollout in the very parts of the country that suffer some of the slowest broadband speeds, based on copper.
There is clear consensus across the industry that the Bill needs to make this possible. I understand that the Digital Infrastructure Minister recently received a letter from all the major operators and trade bodies, asking that this issue be resolved and clearly stating the public benefit that doing so would bring. There is cross-party support for the amendment, and at Second Reading my noble friend the Minister was clear that he was keen to look into the matter very closely. However, as drafted, the Bill does not actually solve the problem. There is no explicit right in the Bill to access the pole or install equipment on it. My amendment is relatively simple and seeks to set that straight. It is limited in scope.
By extending the rights granted under the existing paragraph 74 of the code, these powers would be a code right and therefore apply equally to all operators. That is a really important principle in maintaining the Government’s pro-competition policy. By explicitly including the right to carry out
“works to install, maintain and keep such lines and other reasonably associated apparatus”,
this amendment ensures that there is a right for limited works only and apparatus that is associated only with flying lines between poles. It will not allow large, unsightly or unassociated apparatus to be put on the poles, so there would be very limited visual impact. In fact, it is important to remember that technology is getting smaller all the time; a number of these telegraph poles already have equipment on them, so this would most probably reduce the visual impact rather than increase it.
This amendment also protects the rights of landowners. It grants limited additional rights for operators on how they use the poles. It does not give operators additional rights to get to the pole in people’s back gardens. Landowners would still need to give their consent—that could be a simple verbal agreement—to allow an engineer to enter the property. This amendment does not intend to change that.
With over 1 million poles on private land today, this small and straightforward amendment would significantly increase the rollout of full fibre, on which we all agree. I ask my noble friend to tell us that he agrees that the Bill must be amended to do this. I am not precious about the specific wording or the exact amendment. I understand that DCMS lawyers have some concerns about whether the wording achieves our aim of going up the pole and putting the necessary equipment on it, but I have not seen any alternative proposals. I hope my noble friend will take this amendment in the constructive way in which it is intended. If he has concerns about the specific wording, I hope we will be able to work together between Committee and Report to bring back an amendment that delivers the outcome that I believe we all agree on.
Lord Vaizey of Didcot (Con)
My Lords, a cup of tea lies gently cooling in the tea room, unpaid for as I sprinted to move my amendment—and failed to arrive in time. It would never do for me to blame the Liberal Democrats for the mess that I find myself in; I take entire responsibility for not following with due care the moving of the Statement on the Metropolitan Police. Although the finely crafted Amendments 17A and 17B will not be debated, I have the chance to address at least some of the issues they raise in my response to my noble friend Lady Harding’s excellent exposition of Amendment 18.
We are talking about the ability to upgrade telecoms infrastructure. It is worth taking a step back to think about what the Bill is about in its focus on telecoms infrastructure and reform of the Electronic Communications Code. As I pointed out at Second Reading, when I was a Minister I had the opportunity to change the Electronic Communications Code, and I freely admit that I did so after extensive representations from infrastructure providers of all kinds who made the point that the rents that they were being charged by landowners, both in the countryside and on buildings, were extremely high and were affecting their ability to invest in infrastructure. The time had come to redress the balance so that the rents charged were proportionate to the investment being made in infrastructure. However, in the Bill we are trying to revise it further so that the infrastructure can be upgraded much more easily. We find ourselves in a slightly invidious position where, every time a telecoms provider wants to upgrade the existing infrastructure, in theory it has to start all over again on how it negotiates the rents.
Amendment 18, and, had they been moved, Amendments 17A and 17B, address essentially the same issue, which is existing infrastructure and the ability to upgrade it with as little fuss as possible. All of us in this House know that telecoms infrastructure is constantly being modernised and changed. Indeed, sometimes political issues come into play: for example, the decision to remove Huawei from our telecoms infrastructure will require a great deal of changes to existing infrastructure.
It is quite clear that all the infrastructure providers and indeed the Government support some kind of amendment that will allow infrastructure providers to upgrade infrastructure on telegraph poles. That is without dispute. The question we face is whether we can craft a suitable amendment that balances the rights of landowners and infrastructure providers to allow that to happen as smoothly as possible. What I find strange is the fact that multi-dwelling units do not attract the same support. However, I think I understand why telegraph poles are uncontroversial and multi-dwelling units controversial. That is because of a perceived monopoly of Openreach in multi-dwelling units but not telegraph poles. As my noble friend pointed out, telegraph poles fall under the public interest infrastructure access regulations, which means that a telegraph pole that is, as it were, owned by Openreach but on somebody’s land can still be accessed by a competitor, whereas a multi-dwelling unit cannot be accessed where Openreach has its infrastructure.
I ask the Minister again to take a step back and think about the purpose of the Bill and what he and his colleagues are trying to achieve in terms of the £5 billion subsidy to support the upgrading of infrastructure to full fibre, particularly in rural areas. As I said on Second Reading, this is all about planning, not about technology. It is trying to remove as far as possible all the obstacles that exist when it comes to planning. The Minister must ask himself: what is the reality on the ground? It is that Openreach is indeed present in many premises where its competitors are not. There are something like 1.5 million multi-dwelling units in this country that are at risk of not being upgraded because people cannot get access. Openreach tells me that there are something like 620,000 flats to which it has not been able to gain access and 165,000 flats where it has had no response from landlords at all for six months. Those flats will be left out if we do not consider the position of multi-dwelling units. That is not the subject of this amendment but I posit that it is exactly a parallel case.
Lord Fox (LD)
I want to again apologise to the noble Lord, Lord Vaizey, for causing him not to be here—and I will of course pick up the cost of his cup of tea.
He brought up the changed landscape of altnets, and we need to remind ourselves as we talk through the amendments that the old picture, as we looked at the telecoms market as it was—the copper world of a huge company and nothing much else—has passed. The fibre sector is a different sort of market. The fixed and full-fibre network infrastructure supplied by the independents, the altnets, reaches about 11.5 million premises with, at the end of 2022, an estimated 1.5 million live connections. That is separate to Openreach and Virgin, so there really is a big change in that market supply, to which I think the noble Lord was alluding. Had the noble Lord finished, by the way, or did he give way to me?
Lord Vaizey of Didcot (Con)
I was giving way to an excellent intervention to save me from the poor quality of my speech.
Lord Vaizey of Didcot (Con)
The whole Committee stage debate has already become surreal, and we are only about 20 minutes into it.
If I can take noble Lords back to the tea room, where I was this morning, we were discussing the lack of intervention in debates in the House of Lords, which is apparently seen as a Commons trait and discouraged in your Lordship’s House. In fact, I was told by a very senior chair of a committee—who is in the Chamber—that on no account was one to take an intervention at Committee stage. But I felt that as the noble Lord, Lord Fox, had already transgressed so badly in detaining two eminent Conservative Peers in the tea room, I would simply allow him to continue to flout convention and break the rules. I also felt that my speech was going so badly that, just as I used to do in the other place, giving way at an opportune moment to gather one’s thoughts was sensible.
Baroness Stowell of Beeston (Con)
I am very grateful to my noble friend for giving way. I shall make just two points to him and the rest of the Committee. Of course it is permissible—indeed, it is encouraged—for us to engage in interventions during debate, but they should be brief and to the point. I take this opportunity to also remind my noble friend that his amendments have not been moved and we are in danger of debating his amendments, instead of the amendment which another noble friend moved—or indeed, which I moved on her behalf, and she then expanded on my introduction.
Lord Vaizey of Didcot (Con)
I take the comments from the chair of my own committee in good heart. Clearly, I am on a learning curve in a very public way.
I simply reiterate that this Bill is about making planning as simple as possible, balancing the interests of landowners and infrastructure providers. The mood of this House is that we support Amendment 18, to allow the upgrade of telegraph poles. We understand that the Government will also support such an amendment if it is appropriately drafted. We look forward to the Minister’s comments on why this is a sensible way forward.
I merely add as an aside that the purpose of the Government’s funding and broadband rollout is to bring broadband to as many premises as possible. We all know from our own experience where the altnets are going. Quite understandably, they want a return on their investment, so they are going to cities and laying fibres in areas where Openreach is already present, where they know that they can get a return. There will be many other areas of the country where, understandably, they will not be able to afford to put in infrastructure. For the Government simply to turn their back on thinking hard about how to upgrade the many multi-dwelling units in different parts of the country simply because it is perceived to be an Openreach problem and not a problem for all telecoms providers is a missed opportunity.
The Earl of Lytton (CB)
My Lords, I cannot follow the amusement factor of the noble Lord, Lord Vaizey. As this is my first contribution on the Bill, due to force of circumstances, not least because on our first day in Committee I could not attend due to disruption on the rail system, I declare my interest as a chartered surveyor—still practising, just—with about 47 years’ experience in the public and private sectors. I hope that I can bring some of that to the debate.
As I understood it, in addition to being able to attach things to existing telephone poles, Amendment 18 would provide a right to create new overhead facilities of one sort or another. As a person who, from time to time, has occupied heritage property, I have a particular aversion to overheard telephone lines and to generations of cables being stuck to the outside of buildings—new ones are added but nobody ever removes the old ones. That is the first point that I would question.
The second point goes beyond this amendment but begins to address some of the points mentioned by the noble Lord, Lord Vaizey, on the use of existing facilities. These might be underground ducts. There is a bit of a problem when you get to blocks of flats, because there is a cut-off point at which the rights of, for instance, BT or Openreach end, at which point the wayleave or easement does not pertain. When you get into blocks of flats, there are other criteria. There are many instances of cables being run up, willy-nilly, through communal service risers, with firestopping material being removed and not put back correctly, and so on. No building manager in a block of flats will willingly allow someone from Openreach, who comes with a quite different set of instructions for what they are doing, to just get in there, willy-nilly, as of right. There must be safeguards somewhere along the line.
Further explanation is needed on other things. On numerous occasions I have come across situations where overhead cables have been put underground, perhaps because they were in the way or because it was convenient for visual or other reasons. But you then find that there is no easement or wayleave in relation to the underground bit—the easement or wayleave stops at the last pole, where it goes into the ground. That has certain disadvantages because every time somebody from Openreach wants to do some reconnection or give somebody a better service, they have no drawings of the underground system. I am told that this is an issue where new developments take place and the roads and common areas do not get adopted; they are retained not by the developer but are passed on to some management entity. We have all heard of the fleecehold, where the maintenance of that common realm is then jacked up and recharged through a rent charge.
I absolutely take the point that is being made, but if I am correct a raft of other issues needs to be resolved, including powers to take possession and use of things that are not currently within the existing wayleave horizon. I just flag up the difficulties associated with that.
Lord Fox (LD)
My Lords, I remind the noble Earl that Amendment 44 deals explicitly with the safety issues. He might want to reconfigure those points when we get there.
Taking the point from the noble Baroness, Lady Stowell, that we are focusing on Amendment 18, I will not seek to embellish the comprehensive and excellent speech from the noble Baroness, Lady Harding, but we should remind ourselves that the Bill allows for the sharing of historic wayleaves to share BT infrastructure under private land. It does not currently explicitly allow operators to use telegraph pole infrastructure on private land above ground. For places such as Herefordshire, where I come from, pole access is absolutely central to the rollout of fibre and a huge proportion of those poles sit on private land, so this matters quite a lot. I think 50% of premises in Scotland are connected by poles on private land.
As we have heard, the Bill as drafted would allow operators to use existing ducts to reach the base of such a pole, while existing provisions in the code allow for the flying of lines between poles, but no explicit right exists to access the pole itself or place apparatus such as small boxes—in practice, smaller than what is already there—on it. This amendment seeks to remove any ambiguity and make sure that what we believe to be the Government’s objective is fully written into the Bill, and that is why I am a co-signatory.
Viscount Stansgate (Lab)
My Lords, I will take advantage of the flexibility of debate outlined by the former Leader of the House to say that, although we are debating the amendment moved by the noble Baroness, Lady Harding, I for one would be interested to know whether the amendments that were to be debated, but for this very unfortunate cup of tea, will be moved on Report. It would help my fuller understanding of how debate on the Bill might progress.
Baroness Stowell of Beeston (Con)
I can respond to that, since that question is being put to me. There is nothing procedurally to prevent my noble friend tabling an amendment on Report that would cover the same issues.
Lord Vaizey of Didcot (Con)
I will take advantage of the flexibility in the Chamber to say that, notwithstanding the intervention of a cup of tea, my amendment will be moved on Report.
Lord Clement-Jones (LD)
My Lords, following that very provocative statement from the noble Lord, Lord Vaizey, I will not go into great detail about Amendments 17A and 17B because they have not been moved, although by a side wind the noble Lord mentioned MDUs and various other aspects. All I can say is that if they are moved on Report they will be very firmly opposed from these Benches. There are many reasons for that, which I will not go into, but we look forward to the debate on Report. In the meantime, we will keep our powder dry.
The noble Baroness, Lady Harding, made an extremely good case for her Amendment 18, as has my noble friend. I do not think that the noble Earl, Lord Lytton, is a great fan of poles, but we will just have to live with that. Amendments such as this would ensure that an explicit right exists to access the pole itself or place apparatus on it. That amendment is supported by all operators. It is good that we have one amendment that is almost unanimously supported by the operators.
Baroness Merron (Lab)
My Lords, I was very pleased to put my name to the amendment tabled by the noble Baroness, Lady Harding. As she says, this is simple, limited in scope and extremely practical. It is a clarification of and an improvement to this aspect of the Bill, which works for all parties. I hope the Minister will agree, even if what we end up with is not the exact wording that we start with today.
As the noble Baroness, Lady Harding, explained, poles, like ducts, are regulated under Ofcom’s PIA mechanism, so extending this provision to pre-2017 poles on private land would allow all operators to speed up their rollout equally. That is the essence of what we are talking about in the Bill: extending provision and allowing fair access. This amendment will greatly assist us, not least because if the reforms in the Bill do not work properly we will see more streets being dug up, which is never popular, and in this case might perhaps require the installation of new poles—again, something we could do without.
I hope that when the Bill is amended we will drastically contain the time, cost and disruption caused by the rollout. Although people want to see the rollout, the practical effects in communities create unwelcome disruption. This amendment is needed to confirm that sharing pre-2017 poles on private land needs to be included in the Bill. It will speed up the deliver of rollout and it is welcomed by all across the industry.
I shall briefly refer to the comments by the noble Lord, Lord Vaizey. I do not want at this stage to dwell on the amendments we did not have the benefit of discussing properly, but perhaps the noble Lord can look forward to Amendment 48, which we have tabled. It takes a different tack from the noble Lord’s amendments and puts the onus on government and the industry to find a way forward. I hope that when we get to that amendment the Minister will be open to detailed, cross-party discussion before Report on how we resolve the issue that we were not able to attend to earlier in the debate. I support this amendment and hope the Minister will feel similarly.
The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Lord Parkinson of Whitley Bay) (Con)
My Lords, I think the whole House is grateful to its former Leader, my noble friend Lady Stowell, for moving Amendment 18 and keeping us on the right procedural track. Amendment 18, spoken to by my noble friends Lady Harding of Winscombe and Lord Vaizey of Didcot, the noble Lord, Lord Fox, and the noble Baroness, Lady Merron, who signed it, concerns rights to upgrade and share telegraph poles.
Clauses 59 and 60 will help to optimise use of the UK’s extensive duct networks through greater upgrading and sharing, but ducts and cables under land do not represent our entire digital network, as noble Lords have reminded us today. Telecommunications lines flown over land play a substantial role too. These lines are dependent on the telegraph poles that support them. Over 1 million such poles are installed across the UK, as noble Lords have noted, providing coverage and connectivity to entire communities, particularly in rural parts of England such as Herefordshire, as the noble Lord, Lord Fox, will know, and urban areas of Scotland.
Since the Bill’s introduction, the Government have been called on to introduce measures to facilitate the upgrading and sharing of poles. We understand that there are substantial public benefits in coverage, connectivity and consumer choice, so we welcome the attention that this amendment has drawn to the significance of poles and lines in network delivery, but as I anticipated at Second Reading, we have concerns as to whether the amendment would deliver material change.
I take on board fully my noble friend Lady Harding of Winscombe’s point about the constructive spirit in which the amendments are brought forward and agree that we must look beyond the drafting of this specific amendment, but as the noble Earl, Lord Lytton, says, this is a legally complex matter. For example, it is not clear whether this amendment would permit pole sharing or allow operators to carry out works beyond those needed for a line to be flown. That might exclude upgrade works that would allow a pole to be used for fibre rather than copper lines.
It is important to note that paragraph 74, to which this amendment refers, deals with land adjacent to or in the vicinity of that on which poles are situated. We need to think about works that might involve the land on which that pole is placed. The Government are looking closely at ways to optimise the use of telegraph poles, but we must ensure that if changes are made in this area, they not only deliver public benefits but include sufficient protections for individuals with poles situated on their land. We will continue to look closely at this issue, but I am not able to accept this amendment today. I repeat the assurance I made at Second Reading that we are actively looking at this issue, and we will continue to consider it ahead of Report.
In response to some general points about requests from the industry, we certainly agree that operators should be able to obtain the rights they need to install and maintain the apparatus needed for robust network coverage throughout the UK. The department undertakes regular engagement with the industry and, if we receive compelling evidence that the Bill can be improved, we are happy to consider whether there is a good case for going further. When doing so, however, the Government will always consider the effect that any potential changes could have on landowners.
My noble friend Lord Vaizey inventively asked why telegraph poles were less contentious than multiple dwelling units, the subject of the amendments lost to today’s debate. We must also bear in mind that a good regulatory framework encourages competition and investment, which are both crucial in delivering consumer choice and supporting deployment to hard-to-reach areas. Measures beneficial to one operator may not always encourage the market competition needed to deliver better outcomes for customers. Indeed, it is important to stress that there is no consensus from the industry on this issue. In fact, many operators have opposed the proposal on the grounds that it would create an unfair advantage for operators that already have equipment inside buildings, and so could potentially have anti-competitive effects.
Lord Vaizey of Didcot (Con)
Now that I am in the swing of things, does my noble friend genuinely believe that outside the main metropolitan areas there is genuine competition between telecoms providers? Is it his view that he should support measures from the competitors of Openreach to prevent the rollout of broadband in rural areas, simply to protect their interests in the main metropolitan areas?
Lord Parkinson of Whitley Bay (Con)
As I am explaining, we think that the views from other operators point out that my noble friend’s amendment, which was not moved, would create an unfair advantage for operators who already have equipment; that would itself be anti-competitive. Given that the amendment was not put and, as I hope he has heard, would have been resisted in any case—certainly from the Liberal Democrat Benches—perhaps it may be best if he and I discuss it over a cup of tea, which he can add to his tab, between now and Report. I hope that he will not feel it necessary to bring these amendments back on Report.
On Amendment 18 regarding telegraph poles, while reassuring noble Lords that we will continue to look at this actively, I hope that my noble friend Lady Harding —or my noble friend Lady Stowell, who moved it—will be happy to withdraw that amendment for now.
Baroness Harding of Winscombe (Con)
I rise, somewhat hesitantly, having consulted the oracle that is the former Leader of this House, to respond. I thank my noble friend for that response. As a brief aside, I am pleased to hear his conviction and belief in competition before we come back on Report, if we do, to the amendments that have not been debated.
I am cautiously optimistic that we will find a solution to this. I was slightly worried when I heard my noble friend say “if” we bring something back, rather than when. I would feel considerably more optimistic about solving this problem if I had heard him say “when”. I would also feel a bit more optimistic if I had heard him say that he and the department will be considering alternatives, rather than observing and watching. We have been observing and watching since Second Reading, and the department has proposed no alternatives to my amendment. I look forward to some more active discussions about alternatives to the amendment but, on that basis, I am happy to withdraw it.
Lord Bassam of Brighton
“Requirement for operators to notify emergency service sites prior to upgrading or sharing apparatus
(1) The electronic communications code is amended as follows.(2) In paragraph 17, in sub-paragraph (1), for the words “sub-paragraphs (2) and (3)” substitute “sub-paragraphs (2), (3) and (4A)”.(3) After sub-paragraph (4) insert—“(4A) The third condition is that, where a site is provided by an emergency service, before the beginning of the period of 21 days, ending with the day on which the main operator begins to upgrade the electronic communications apparatus or (as the case may be) share its use, the main operator provides written notice to the site provider.””Member’s explanatory statement
This new Clause would require operators with agreements under the code that are not subsisting agreements to provide written notice to site providers that are an emergency service in advance of apparatus being upgraded or shared. This would allow relevant emergency services to plan around service outages or other forms of disruption.
Lord Bassam of Brighton (Lab)
My Lords, I speak on behalf of my noble friend Lady Merron, who has tabled this amendment. The proposed new clause in Amendment 19 would
“require operators with agreements under the code that are not subsisting agreements to provide written notice to site providers that are an emergency service in advance of apparatus being upgraded or shared”.
This would obviously allow “relevant emergency services” to plan better around things such as
“service outages or other forms of disruption.”
We have tabled this amendment because some hospitals have reported instances where telecoms engineers have arrived to inspect or upgrade equipment, having provided little or no notice of their visit or the need to turn broadband and other data connections off for its duration. As I am sure the Minister will be aware, this amendment was tabled in the Commons and, at that point, the Government insisted that the clarification was unnecessary. The Minister, Julia Lopez, said that paragraph 17 rights authorise a visit only where there is no adverse impact, which probably brings us back to earlier debates.
For visits that go beyond paragraph 17 rights, the Government insist that operators need to obtain permission in advance or potentially face legal repercussions. However, hospitals and other emergency services have far more important things to do than pursue complaints and court orders while they are running important services. The Minister also claimed that introducing this clarification
“would undermine the policy intention of the rights”.—[Official Report, Commons, Product Security and Telecommunications Infrastructure Bill Committee, 22/3/22; col. 121.]
Perhaps the Minister can outline exactly how.
Baroness McIntosh of Pickering (Con)
My Lords, I am delighted to speak to the amendments in my name and that of the noble Earl, Lord Devon. I thank him for his support. We are having a short debate on why Clauses 66 and 72 should stand part of this Bill. I will briefly take each in turn.
As the noble Lord set out in moving Amendment 19 from the other Benches, the problem we are dealing with is getting on to land where people have possibly not had notification that their land is going to be entered. It also raises the possible cost of applying to the court in such circumstances, which begs the question: if, eventually, those who own the land are made aware, would the alternative dispute resolution procedure apply? I am not sure which of my noble friends is replying, but if my noble friend Lord Sharpe could kindly take that and give me a response, I would be most grateful.
The powers that we are allowing to the department and the Government in Clauses 66 and 72 are very wide ranging. Will Parliament have the right to scrutinise these regulations and at what stage? Do the Government intend that the regulations will be widely consulted on? At what stage would we have the right to scrutinise regulations under both clauses, as the devil will be in their detail?
Regarding Clause 66, I am most grateful to the noble Earl, Lord Lytton, for sharing the briefing we received from the Central Association of Agricultural Valuers, which has been extremely helpful in helping us prepare for today’s debate. In relation to Clause 66 and the issue of unresponsive occupiers, it sets out:
“Understanding the point of this Clause, it should require the operator to have taken particular efforts to establish direct contact with the proposed grantor rather than allow this to be a convenient route to impose on off-lying land by the use of a succession of notices.”
It hopes that discretion is provided to the court by new paragraph 27ZE of the code inserted by Clause 66. That would allow it to regulate the use of this power appropriately and recognise what might be particular personal circumstances. It refers in particular to the 2020 case of EE v Cooper and notes that the tribunal felt that it had to deny an operator’s application for “interim rights” when it pleaded an unresponsive occupier, as it considered that the operator needed to show that
“far more had been done to contact the occupier than has been done in this case, where there has not even been an attempt to knock on the respondents’ door”.
It appreciates the compensation provisions set out in new paragraph 27ZG of the code.
In sum, I felt that it was necessary to ask why it is right that Clauses 66 and 72 should form part of the Bill primarily because we are granting the Government extensive powers that are not set out in the Bill, so we should reserve the right to consider them when they are set out in regulations. I would like confirmation that that is the case. Even more substantially and significantly, I am concerned about the lengths that an operator will be forced to go to before it is deemed to call an occupier an “unresponsive occupier”. I look forward to my noble friend the Minister’s response.
The Earl of Devon (CB)
My Lords, I will speak briefly in support of the two proposals from the noble Baroness, Lady McIntosh, to which I have added my name, that Clauses 66 and 72 do not stand part of the Bill. As I noted at Second Reading, I am a landlord to a telecommunications mast, granted by my father under the 1954 Act. The renewal of this has been complicated considerably by the 2017 reforms and the huge uncertainty that has followed.
Just last week, the Supreme Court ruled on a group of three cases involving the last set of amendments to the Electronic Communications Code. The lead case was Cornerstone Telecommunications v Compton Beauchamp. The court ruled that, among other things, a landlord under a “subsisting agreement” is entitled to insist on renewal under the 1954 Act and the operator cannot insist on a code renewal by application to the Upper Tribunal. It seems ironic timing that, just as the highest court in the land has finally got to grips with those 2017 amendments and provided a little clarity, we are seeking to make yet further changes and further confuse the issue.
Since Second Reading, I have been in contact with a number of groups representing site owners, and all have reported incidents of unprecedented dispute and considerably challenging renewals. As I said at Second Reading, this cannot have been the intention of the 2017 amendments and should not be the result of this legislation either, which is why I put my name to the proposals that Clauses 66 and 72 do not stand part.
I think that we all agreed at Second Reading that we wish Project Gigabit to succeed, and my intention is to ensure that landlords and site owners are encouraged to grant leases to telecoms masts and other infrastructure. The recent soundings of the market suggest that this is not currently the case and that the granting of new leases has slowed considerably since the 2017 amendments and the decrease in rents and increase in disputes that have resulted.
On these clauses, the draconian access provisions for unresponsive occupiers and the rights of network providers in relation to infrastructure are simply too broad and uncertain and, as the noble Baroness, Lady McIntosh, stated, they will serve only to discourage the granting of leases for further network infrastructure. I do not think that that is in anyone’s interest.
Specifically on Clause 72, the noble Baroness, Lady McIntosh, raised the regulations. I note that new subsection (7) says:
“Before making regulations under subsection (1) the Secretary of State must consult … OFCOM”
and
“such other persons as the Secretary of State considers appropriate.”
In responding, can the Minister clarify who that would be, because surely representatives of the site providers should be consulted? We should get an opportunity to understand exactly what these regulations will entail; otherwise, we seem to be providing Ofcom carte blanche to do whatever it likes. As we have seen, whatever it likes has not resulted in a satisfactory outcome for connectivity.
Lord Clement-Jones (LD)
My Lords, I want to mainly talk about Amendment 19 put forward by the noble Lord, Lord Bassam. Before doing so, I say that I have some considerable sympathy for the noble Baroness, Lady McIntosh, and the noble Earl, Lord Devon, because one of the themes we are very much going to come to with the coming amendments is this steady shift in the bargaining power away from site providers towards the operators over a period of years, which started in 2017 and culminates in the current Bill. We had a number of debates on unresponsive occupiers when we last debated this on the then Telecommunications Infrastructure (Leasehold Property) Bill. As the noble Earl said, it is ironic that the cornerstone case has decided what it has, yet here we are changing the legislation away from that decision. I hope the Minister will be able to answer some of the questions that have been put to him.
On these Benches, we support Amendment 19. As the noble Lord, Lord Bassam, said, it would mandate operators with agreements under the code that are not subsisting agreements—namely, agreements that came into force before the code was agreed—to give advanced notice to sites that provide and deliver emergency services, such as hospitals, fire stations and ambulance stations. It is clearly important for providers of emergency services to be given advance notice of when work is going to be undertaken, so that they can take appropriate action to ensure that they are not affected.
The noble Lord, Lord Bassam, mentioned the Minister’s response in the Commons; she prayed in aid the rights under paragraph 17 of the ECC,
“which authorise only activity that will have no more than a minimal adverse impact on the appearance of the apparatus”.
However, this takes no account of the fact that, while the works may involve minimal adverse impact, it may actually involve disconnection at the time of installation. The Minister said that she was,
“not aware of any instances in which an operator has relied on its paragraph 17 rights to carry out upgrading and sharing activities that have gone beyond the scope of what that paragraph allows”.—[Official Report, Commons, Product Security and Telecommunications Infrastructure Bill Committee, 22/3/22; col. 120.]
However, that is not the right question. The right question is: what kind of resilience and risk planning do the emergency services have in those circumstances? If they do not know that there is a risk of disconnection, how can they plan for it? This seems an extremely sensible amendment which will allow the emergency services to have notice and to be able to plan for circumstances when they may be disconnected.
Lord Vaizey of Didcot (Con)
My Lords, this is an interesting debate on these proposals, which are potentially linked and will develop into a theme which perhaps redresses the balance.
When commenting on the amendment to notify emergency services, it must be acknowledged—by those of us who regard our telecom infrastructure providers as providing an extremely important service to the country, doing difficult, tedious and time-consuming work with private investment—that they do not always get it right. I again remember—this will become a theme of my speeches—that, in my time as Minister, one would have local authorities refusing to give permission to broadband providers to put in place infrastructure because of the mess they had left behind from their previous work. The most notorious and, I thought, slightly irritating resistance came from Kensington and Chelsea Council, which did not like the design of the green cabinets—perhaps it wanted them designed by David Linley or someone like that. Both the noble Earl, Lord Lytton, and this emergency services amendment highlight the fact that, too often, when infrastructure providers are allowed in to upgrade their apparatus, they do not take account of the knock-on effects of their work, either by not taking into account building safety regulations or by not notifying the occupiers that there might be disruption. The amendment is well placed to raise these points and for this House to remind infrastructure providers that they must continue to improve on this.
What I find interesting, from the perspective of landowners, is the balance between wanting, obviously, a reasonable rent for the disruption and visual intrusion that telecoms equipment can bring when it is placed on one’s land—certainly one’s property rights should be sacrosanct and no one should be allowed simply to arrive without notice and put infrastructure where they please—and the point about bringing huge benefit to a local community where one’s land is situated, and indeed to one’s own operations when infrastructure provides the connectivity. I can never get my head around that.
Lord Sharpe of Epsom (Con)
My Lords, I thank all noble Lords who have spoken in the short debate on this group, particularly the noble Lord, Lord Bassam, for introducing Amendment 19, also signed by the noble Baroness, Lady Merron, and the noble Lord, Lord Clement-Jones. The amendment proposes the introduction of a 21-day notice requirement for operators who want to exercise code rights where apparatus is situated on, under or over a site provided by an emergency service provider. It is of course important that emergency service providers are aware of work on their sites which may have an impact on their day-to-day activities, as all noble Lords have noted. In this context, it is crucial to look at the scope of the paragraph 17 rights. They authorise activity that will have
“no more than a minimal adverse impact”
on the appearance of the apparatus, and impose
“no additional burden on the other party to the agreement.”
Given the limited activities that paragraph 17 permits, we do not consider a notice regime necessary. To put one in place would undermine the policy intention of these rights, which is to enable limited upgrading and sharing works to be carried out quickly and efficiently. Operators may need to upgrade and share apparatus that will have a greater impact on a site provider than paragraph 17 permits. We think that they should be able to do so but, in those circumstances, they must obtain the site provider’s agreement or seek to have the required rights imposed by the tribunal.
In contrast, the paragraph 17 conditions exclude activities that would impose an additional burden on a site provider. Activities that disrupted a site provider’s day-to-day business, or created new health and safety risks, would be unlikely to satisfy this requirement. I am not aware of any instances where an operator exercising their rights under paragraph 17 has caused any issue in relation to an emergency service site. I note, however, that the noble Lord, Lord Bassam, mentioned one example and I am very happy to discuss that further; perhaps we could join the group cup of tea.
Lord Clement-Jones (LD)
My Lords, the Minister is making exactly the same case as the Commons Minister, Julia Lopez, made on this there. What about the circumstances that I mentioned, where you might be within paragraph 17, but where it may involve minimal adverse damage but nevertheless involves switching off the service for a period, however short or long that may be? Surely that is something that the emergency services involved on site should have notice of.
Lord Sharpe of Epsom (Con)
My Lords, I think that they should have notice, but the point is that the paragraph 17 conditions exclude activities that would impose an additional burden on a site provider, as I have just said, and activities that disrupted their day-to-day business or create new health and safety risks would not satisfy the requirement. I honestly think that answers the point.
I think that I have answered most of the questions; I will obviously check Hansard and, if I have not, I will come back. In the meantime, I hope that the noble Lord, Lord Bassam, is prepared to withdraw this amendment.
I move on to Clause 66, as probed by my noble friend, Lady McIntosh of Pickering, with the support of the noble Earl, Lord Devon. It creates a bespoke process for the court to impose an agreement where an operator needs a person, to whom I shall refer as “the landowner”, to confer or be bound by code rights and that person fails to respond to repeated requests for such rights.
The provisions require an operator to have sent an initial request notice and two warning notices, followed by a final notice, to the landowner. There must be a period of 14 days between the giving of each notice, meaning that the landowner will have been given a minimum of 56 days in which to respond to the operator. For the landowner to fall out of scope of Part 4ZA, all that is required of them is to respond to any of the above notices in writing before the operator applies to the court. If granted, a Part 4ZA order will impose an agreement on the landowner and operator. The terms of that agreement are to be specified in regulations made following stakeholder consultation.
My noble friend asked about situations where landowners are non-responsive. If they are unwilling to engage, for example, in alternative dispute resolution processes, it will remain open to the operator to apply to a court under Part 4 of the code to seek an order to impose an agreement granting code rights. These provisions impose a six-year maximum time limit on the period for which rights conferred under a Part 4ZA order may last. I emphasise this detail because it forms an important part of the Bill’s safeguards on landowners’ property rights. This clause provides a much-needed process that will play a large part in ensuring that homes and businesses benefit from the national gigabit broadband upgrade and are not left behind. I therefore commend Clause 66.
Baroness McIntosh of Pickering (Con)
I think both the noble Earl, Lord Devon, and I asked whom, following court rulings in this regard, but also in terms of regulations, do the Government or the department intend to consult? Will they ensure that the occupiers are on that list? It is not clear from the drafting of the Bill that they will be included.
Lord Sharpe of Epsom (Con)
If my noble friend will permit, I will come to the points she raises on consultation shortly.
Clause 72 will allow the Secretary of State to amend the Communications (Access to Infrastructure) Regulations 2016. Sharing infrastructure in the concentration of gigabit-capable networks can greatly reduce the cost and increase the pace of deploying networks, and can reduce the need to dig up streets, preventing unnecessary disruption to the local population and reducing carbon emissions. The 2016 regulations enable sharing of information about access to physical infrastructure across the utility, transport and communications sectors. They also include the right to access that infrastructure on fair and reasonable commercial terms and conditions. The Government published our response to the call for evidence on a review of these regulations last year. We set out that there may be some areas where they could be made easier to use and to understand.
In addition, we said we would legislate to allow future changes to the regulations via secondary legislation rather than relying on primary legislation. That legislation would be subject to further consultation with Ofcom and other appropriate parties. To expand on that a little, Clause 72 makes clear that
“the Secretary of State must consult … OFCOM; … such other persons as the Secretary of State considers appropriate”
before making such regulations. I cannot conceive of a set of circumstances where the landowner would not be one of the other persons that the Secretary of State considers appropriate—obviously, if I have that wrong I will write to noble Lords. In addition, any regulations made using this power will still be scrutinised as part of the affirmative resolution procedure. Clause 72 therefore grants to the Secretary of State a narrow power to make provision, through regulations, conferring rights on network providers in relation to infrastructure for the purpose of developing communications networks. These provisions include the power to amend, revoke or replace the 2016 regulations.
Finally, my noble friend Lord Vaizey raised some useful points about operator behaviour, which I think we may discuss in more detail in later amendments in group 6 on the Ofcom code of practice. I will leave it till then to address those, if that is acceptable.
Lord Bassam of Brighton (Lab)
My Lords, I am somewhat reluctant to let this go, I must confess. The emergency services in this country have a very difficult job to do, and I think they require better treatment than this.
I am not satisfied with the noble Lord’s explanation. I can envisage a time when an engineer turns up on the basic premise that the task they have to complete is smallish, but it turns out to be a rather larger problem—a bit like when you get a plumber in and they suddenly discover that there is something more fundamentally wrong with your boiler than the dial not working properly, and that it needs repressurising and a part needs to be brought up. This is a practical consideration, as it could cause considerable disruption to a service.
I was thinking of something that recently happened quite close to where I live. The road immediately in front of the local fire station was dug up; I cannot believe that the highways authority was not in contact with the fire station concerned, but I am not entirely sure that it was. I know that the people working in the fire station were put out for the period of time in which their ability freely to come and go in an emergency situation was seriously impacted.
For the purposes of Committee, I will withdraw this amendment, but the Government need to give this further thought. These behaviours can be highly disruptive. They can impact quite adversely on people’s personal security and safety; obviously, we want to make sure that there is a reasonably sensible way for providers to exercise their rights to repair, renew and so on, but we need to get the balance right and the Government need to think about this again. I beg leave to withdraw Amendment 19.
The Earl of Lytton
“(a) having regard to the terms of the agreement (other than those relating to the payment of consideration), that the holding might reasonably be expected to be let in the open market by a willing lessor,” Member’s explanatory statement
This amendment, along with the amendment to page 47, line 36 in the name of the Earl of Lytton, would ensure that the value of a consideration imposed by the court should take into account the land’s value if it were used for the provision or use of an electronic communications network (and other uses), if the consideration is governed by the Landlord and Tenant Act 1954 or the Business Tenancies (Northern Ireland) Order 1996. The disregards for assignment and sharing, brought in in 2017, would however be preserved.
The Earl of Lytton (CB)
My Lords, in moving this amendment I will also speak to the other amendments in my name in this group. I must first admit that I am a landowner, although I have not had any telecoms masts since 2017, when I sold a farm not very far from an area known to the noble Earl, Lord Devon—the uplands of Exmoor—on which I had three masts. One was a conventional commercial telecoms mast, one was an Airwave emergency services mast and the other was a community Airband mast under construction. I see this across the spectrum of what is necessary, what delivers something to the community—and to me—and is therefore of value and part of the incentive, and what fundamentally does none of the above.
The one that did none of the above was the commercial operator. I was encouraged to give consent on a piece of land because it had trees on it; an upland area was needed and the national park did not want the mast stuck in the middle of a piece of open moorland. That was fair enough, as the idea was that this would improve mobile communications in the area. It did nothing of the sort. Having set off with hope in one’s heart that that would happen, it was something of a delusion. Indeed, I used to have to walk up to the middle of a 30-acre field to pick up mobile phone signal from a different network—probably from south Wales on the other side of the Bristol Channel.
I thank a number of noble Lords from across the House who have been very helpful in formulating my views, as well as a number of external consultants whom I have spoken to. I thank the Protect and Connect campaign for its input and Jeremy Moody of the CAAV, which has already been mentioned, for his invaluable assistance. I also acknowledge the efforts and briefings of Speed Up Britain, although I do not agree with its explanations relating to site value or on matters of fairness and balance. I also ought to say that I am an ordinary subscribing member of the CLA, although I have not communicated with it directly on this Bill. So much for the declarations of interest and so forth.
For all the training and experience one has as a valuer—I am a registered valuer with the RICS—it is acknowledged to be an art, not a science. It is based on many constructs, including market sentiment, risk and a host of other internal and external factors, from which the valuer is seeking to interpret an end-result. They are interpreting what the market is doing and trying to codify and make sense of what is happening in what are sometimes quite random situations.
Lord Vaizey of Didcot (Con)
Is the noble Lord aware of the American import of site aggregators—companies which, I think, finance the Protect and Connect campaign? I should say I used to work for Speed Up Britain, so goose for the gander and all that. This American import of site aggregators is effectively buying up sites on land, and then negotiating with the mobile operators to extract valuable rents and increase the value of their companies.
The Earl of Lytton (CB)
I am indeed. I believe that one of the firms is based in San Diego, in California. One cannot help supposing—I think this is the sentiment in the market—that the driving down of rental figures has been part and parcel of what is actually a very substantial land deal to sell a package based on the profit rent that can be derived. But the crucial thing here is that there does not appear to be any reason why these aggregators—or for that matter the site companies or mast companies—should pass on any of the savings to the network operator and make it cheaper or more competitive for those of us who actually use the service. That is one area where there is a significant disconnect. These things are noted by those who are acting for owners or by the owners themselves.
The intention really is to get some sort of fairness. I understand that, and do not dispute the question of getting a fair balance. However, I am worried that this is beginning to put things into the hands of commercial entities—the aggregators are no different—that may be benefiting from code rights but do not necessarily have the code obligations to deliver for society. I wonder whether these entities are going to end up doing some sort of site-squatting operation, where they tie up as many of the sites as they possibly can, rather in the same fashion as residential property developers might option up bits of land on the outskirts of villages. That would worry me, because it would mean that a cadre of middlemen would effectively be holding things to ransom. I will get on to why that matters in valuation terms in a minute.
The land valuation solution espoused by the communications code and strengthened in this Bill, in terms of having changed from market value to something that looks and feels a bit like existing use value, is, I am afraid to say, the philosophical equivalent of two cans of beans connected by a bit of slack string. It is a very unsophisticated approach for dealing with the land issue which underpins the whole of what we are talking about in the rollout of better 4G and of 5G—both of which I support for the reasons I made clear earlier.
I will move to an overview of the amendments. Amendments 20 and 22 to 27 aim to address the issues of valuation, pure and simple, which is one of the most significant concerns with the Electronic Communications Code. Under the changes the code made in 2017 was the introduction of the no-network valuation methodology for valuing land, which allowed site providers to recover only the raw value of the land rather than receiving a market price. A new line was inserted into the code so that, when setting a site value, the court was prevented from taking into account a site’s potential use for the provision of an electronic communications network. This is notwithstanding that the Electronic Communications Code itself has a reference to market value at paragraphs 24(1) and (2) and sets out in sub-paragraph (2) the criteria—which I understand, as somebody dealing with valuations in terms of the standard RICS specification; the wording is familiar—but then inserts at sub-paragraph (3) a provision relating to the court’s jurisdiction which negates this.
Market value has an internationally recognised definition: it is the price one might reasonably expect in an arm’s-length transaction, following proper marketing, between a willing buyer and willing seller, in which the participants act
“knowledgeably, prudently and without compulsion”.
To include this definition in one part of the code but then to say in the bit that immediately follows that the court must disregard significant parts of it is, in linguistic and market terms—even if not in valuation practice statements—simply incoherent. There is no conceivable middle ground here. It is one thing or the other: remove one leg of the definition and the entire proposition unravels. Effectively, we are left with existing use value, which is not a useful or defined metric so much as a state and condition of land, normally only ever used in taxation and accounting for certain local authority assets.
At the same time, another change was made to the code’s valuation provisions to ensure that site owners could not charge ransom rents. Any valuation must assume that there is another site available to operators so that there is no monopoly in land provision around any site. This change was recommended to the Government by the Law Commission. It is quite an important one. It may be that legal minds can conceive of free markets in which the economics of supply and demand are simultaneously applied and negated, but you cannot then leave the free market to sort it out. It does not happen. It cannot happen, because you have just trashed the open market system.
I thank the Minister for the online meeting we had before Committee. Some mechanism for pegging rents, which I meant to mention, or else some other surrogate comparator, seems to me to be necessary. In the Rent Acts, when there was rent control and security of tenure, there was a person called the rent officer who was supposed to fix the rents on the basis that it was devoid of scarcity. To a degree, that worked. However, as the situation arose, the market, following the introduction of the Rent Acts in 1965, effectively imploded and collapsed. The law can state that one thing means another—that “chair” shall mean “table” and vice versa—but no lawyer in the land is going to alter their respective functional characteristics, nor in the real world of furniture sales will a buyer looking for a traditional chair be satisfied with getting a table instead. So we really need to sort it out.
In the other place, the Minister recognised that rent reductions have been much greater than expected—I do not know whether he admitted that this was the fault of aggressive behaviour by operators. This affects a wide variety of small businesses and others that we heard about at Second Reading and in the previous Committee debate. On the situation today, it seems to me that the Bill will make it easier to go to court while preserving the same valuation regime. As the Law Society said, this appears to be addressing the symptoms rather than the causes.
Plus, it skews the negotiations. If you make it easier for somebody to go to court and that becomes the default, what happens? The more powerful economic party rules it over the less powerful. You do not get equality before the law; you depart even further from a fair market position. Although provisions exist for alternative dispute resolution, there is in fact little or no compulsion for operators to use this, so they default to more costly alternatives, which are of course naturally seen as preferable to anybody aggressive and well-funded. The whole question of ADR can always be sidestepped on the basis that some point of law is at stake or the lessor has jibbed at the “take it or leave it” proposal put to them. It is very easy to avoid ADR in the majority of circumstances.
The Government said they were not going to revisit the valuation regime introduced in the 2017 reforms, but the Bill actually expands the no-network valuation regime into approximately 15,000 agreements governed by the Landlord and Tenant Act 1954 and the Business Tenancies (Northern Ireland) Order 1996. This will allow existing contractual agreements entered into in good faith to be dramatically changed. Bear in mind that rent is merely the financial end-product of a deal involving many covenants, conditions, undertakings and other criteria. The filleting out of consideration on the one hand from compensation on the other, demanding as it does the quantification of many interrelated, non-priced elements, is, I am afraid to say, a very suspect practice.
Baroness Stowell of Beeston (Con)
I am so sorry to interrupt the noble Earl, who is clearly giving us a sense of this important and wide-ranging matter. However, he will know that the Member introducing a group of amendments is asked to stick to 20 minutes maximum—and we are now over 22 minutes.
The Earl of Lytton (CB)
My Lords, I have a group of amendments here, all of them covering very technical bits and pieces and, rather than trying to deal with one at a time, disaggregate them and give an individual explanation for each, I felt it would be helpful for the Committee if I put them in context and dealt with in this way. I assure the noble Baroness that I shall be as speedy as I can, but I crave the Committee’s indulgence in that respect, and I should like to continue with what will be my principal contribution on the Bill.
I was talking about the question of fair value and had got to Amendment 24. This amendment would ensure that, where a site agreement is first renewed using part 5 of the code, the courts are unable to impose a rent reduction of more than 40% on the rents that fall under the existing consideration. This would ensure that the Government’s original expectation that rates would fall by no more than a maximum of 40% was delivered by legislation, and would prevent what I described to the Minister as the cliff edge that has occurred in the arrangements. Subsequent renewals under the code would then be made on a no-network valuation. It would also enable consideration of the effects of the policy on rollout and upgrade of sites and whether the objectives were being met.
Amendment 25 would require the Secretary of State to publish guidelines on the level of factors influencing the expected value of the imposed considerations. This would ensure some clarity about the Government’s expected policy. Amendment 26 would phase in the application of a newly fixed rental consideration imposed by the courts. The intention would be for the new consideration to become payable only, if it was a reduction, after 24 months from the date of the court order. Prior to that point, the operator would continue to pay the previous rent. Amendment 27 is similar to Amendment 26. This amendment would create a tiered phase-in period for the application of a new consideration imposed by the court.
The amendments fall under two options. The first tries, as far as possible, to remedy the effects that have occurred under the 2017 code. The second lot gives a sort of halfway house to build in what the Government say they are trying to do but, at the same time, ameliorate the effects with the same long-term result. I apologise for dealing with this at length. I beg to move.
Lord Clement-Jones (LD)
My Lords, on these Benches, we support the amendments introduced by the noble Earl, Lord Lytton, with his expertise both as a valuer and surveyor and as a site provider. I well understand why he has taken the trouble to take us through the amendments in the way he has, because they lie absolutely at the core of the Bill, of the relationship between site providers and operators over a long period, and of Protect and Connect’s campaign. It is quite reasonable to unpack the valuation system that has been in place and explain in some detail his proposals by way of the amendments for a new valuation system, or at least an alternative way to deal with the current one.
I start by quoting the Central Association of Agricultural Valuers:
“The tragedy of the 2017 Code is that, far from encouraging collaboration over sites assisting roll-out, some leading operators have made heavy handed, confrontational and attritional use of the powers and privileges they were given by it, very largely to reduce the cost of renewing existing agreements rather than winning new ones or make themselves attractive as tenants. The irony is that, as reported to November’s RICS Telecoms Conference, even if rents may now be much reduced, the overall cost of securing a site has doubled and timescales lengthened.”
That seems very paradoxical. This refers to the fact that, as the noble Earl said, under changes made to the code in 2017, a no-scheme or no-network valuation methodology for valuing land was introduced. As he also explained, this allowed site providers to recover only the raw value of their land, rather than receiving a market price. It did this by inserting a new line into the code that, when setting the value of a site, prevents courts from taking into account a site’s potential use for the provision or use of an electronic communications network.
At the same time, as the noble Earl has also explained, another change was made to the code’s valuation provisions to ensure that site owners cannot charge ransom rents. Any valuation must assume that there is another site available to operators so there is no monopoly in land provision around any site. As he also mentioned, this was recommended to the Government by the Law Commission. Operators have been able to use these changes to drive down the rents that they pay to site providers, often to peppercorn rents. In 2017, the Government said that they expected that rent reductions should be no more than an absolute maximum of 40%, and that has been cited at Second Reading and on many other occasions. However, we know from data cited by the operators that reductions have at best averaged at 63%, a huge sum for many of the people who rent their land to be used for telecoms infrastructure, and in many cases, as we have also heard, reductions have been much higher—in the region of 90%.
The Minister will be aware of the Protect & Connect campaign, and many Members around the House will have had communication with it. It cites the Fox Lane Sports & Social Club, which had a mast on its land for 12 years owned first by Orange and now by EE. The club was getting £7,800 a year but it has now been told that it will get only £794 a year from 2023. Billericay Rugby Football Club had a mast for over 20 years and allowed Vodafone—now Cornerstone—to attach infrastructure to the mast. It paid the volunteer-run club £8,500 a year. However, with the changes to the code, EE says that it will cut the rent by more than 90% to £750 a year. There are many such case histories worth looking into. The evidence is there.
Lord Vaizey of Didcot (Con)
Surely the noble Lord agrees that a mast on a community sports building, although it provides a generous rent, should not be regarded as some kind of lottery win. I return to my point that the benefit of that mast—the connectivity it gives to not only the sports club but the community around it—is to be considered, as well as the vast rent that was charged until the code revision.
Lord Clement-Jones (LD)
My Lords, I cannot believe that the noble Lord believes that it is reasonable to reduce the rent by 90%. There may be community benefits. However, I will come on to whether the consumer has had the benefit of these reductions, which is a very important point, and to the point about aggregators versus mast operators, which seems to be the battle of the behemoths. That is not a very happy situation but, in a sense, one caused by the changes that have been made to the ECC.
Protect and Connect estimates that providers have lost more than £200 million a year in income, including £60.5 million of lost local authority income, £44 million of lost agricultural rural site-owner income and, as the noble Earl, Lord Lytton, says, the Government’s legislation expands the no-scheme valuation regime into approximately 15,000 agreements governed by the Landlord and Tenant Act 1954 and the Business Tenancies (Northern Ireland) Order 1996. This would allow operators to ignore contractual agreements entered into in good faith, leading to more incomes being dramatically reduced.
I come on to the question of consumers. The noble Lord, Lord Vaizey, talked about the aggregators but my noble friend Lord Fox and I have brought up throughout the passage of the Bill the question of what is in the interests of the consumer. The benefit appears not to be coming down to the consumer. In fact, a great deal of money is being made in other parts of the forest. The Times yesterday reported that Digital 9 Infrastructure has bought 48% of Arqiva Group Ltd from the Canada Pension Plan Investment Board, using £300 million in cash and a loan note. Clearly there is money to be made, but is any benefit flowing through to the consumer? If the site providers are being heavily reduced in income, that is clearly not going through to the consumer.
Baroness McIntosh of Pickering (Con)
My Lords, I congratulate the noble Earl, Lord Lytton, on his Amendments 20 and 22 to 27. I am delighted to support them. I hope the Government will look favourably on them for the reasons he gave so eloquently.
I will briefly address the reasons why I have asked whether Clauses 61 and 62 should stand part of the Bill. In my view, it would be better if they were not part of it. As has been said, we seek a balance with the Bill, but, as I see it, the balance is shifting further away from the occupiers in favour of the operators. I have no particular interest in this other than as a consumer, although for a period I was the co-owner with my brother of two fields in the Pennines on which a mast was placed, so I presume I would have been in receipt of a modest fee for that infrastructure to be in place. Sadly, my brother bought me out and I no longer can claim that benefit or disbenefit.
My concerns are reflected in the amendments so ably spoken to by the noble Earl. The Bill proposes to change the way that land is valued so that it can be applied retrospectively to the renewal of some sites that were in existence prior to 2017. Secondly, the Bill includes provisions for an alternative dispute resolution mechanism, which I support, although, as I stated earlier, operators should not feel the need to engage with this mechanism if their resources marginalise the opportunity for a fair and equitable resolution for many landowners who simply do not have the confidence or means to contest them.
I will make a general point not dissimilar to that made by my noble friend Lord Vaizey and the noble Earl, Lord Devon, on the previous group. All of us who live predominantly in the countryside are providing a service for the rest of the community, especially those who live in country districts, by hosting on the land infrastructure owned by the occupier. That has to be recognised, and that is why I have great difficulty, considering the way the code has been applied since 2017 and under the terms of the Act, with the fact that the code will be applied more strictly.
I want to add a comment that my noble friend Lord Parkinson is familiar with, because I wrote to him about it. I am most grateful to him for his reply. Why can civilian use not be made of the emergency services network? He is aware that a number of masts have been placed and erected across North Yorkshire, particularly in the hills and the moors, where we have a very poor mobile phone frequency and very poor connectivity with broadband and wi-fi. If there is any possibility of us piggybacking on the emergency services masts for civilian use, that would be to the huge benefit of the wider community.
I go back to the time in 1997 when I was first elected to the other place as the Member for the Vale of York. We had a situation where the emergency services and the police could not be reached, which is why the emergency masts were put in place at some considerable expense to the taxpayer. I am sure there can be no security aspects that could not be dealt with to allow us to use them. I appreciate that that is a separate point.
I entirely agreed with the noble Earl, Lord Devon, when at Second Reading he set out, as did I, that we are moving to the situation which existed before 2017, with a regrettable consequence of potentially fewer landowners and occupiers permitting the infrastructure to be placed, or to continue to be placed, on their land.
I have given notice of my intention to oppose the question that Clause 61 stands part of the Bill, which gives operators the ability to calculate rent based on land value rather than market value when renewing tenancies to host digital infrastructure on private land. I think that is fairly self-explanatory. I have given notice of my intention to oppose the question that Clause 62 stand part of the Bill, as it gives operators the ability to calculate rent based on land value rather than market value when renewing tenancies to host digital infrastructure on private land in Northern Ireland.
The noble Lord, Lord Clement-Jones, quoted the useful briefing we have had from the Central Association of Agricultural Valuers, or CAAV. It states quite specifically that its understanding in relation to the renewal of business tenancies conferring code rights in Clauses 61 and 62 was that:
“The changes here were not understood to be part of the consultation”,
which we have heard about.
“The Government was understood to have made it clear in the 2021 consultation that it did not intend to revisit the valuation framework. Indeed, the government’s response to the consultation stated: … ‘the government does not intend to revisit the statutory valuation framework. This issue was therefore not within the scope of the consultation.’”
If that is indeed the case, I regret that we have perhaps not heard all that we should have heard from occupiers and landowners in regard to these provisions.
In relation to Clause 61, the CAAV concludes that
“Lord Lytton’s proposed amendments to both clauses would also in principle retain the market value basis for these first renewals but disregard the operator’s qualified Code powers to upgrade and share apparatus. If these clauses are retained, we support these amendments.”
I share the reasoning behind that, which is why I support those amendments. With those few remarks, I look forward to hearing what my noble friend makes of my proposals to delete Clauses 60 and 61.
Lord Northbrook (Con)
My Lords, I apologise for not being able to take part at Second Reading and in the first day of Committee. Like the noble Earl, Lord Devon, we all want Project Gigabit to succeed. I support my noble friend Lady McIntosh and the noble Earl, Lord Devon, in their proposals to delete Clauses 61 and 62. If they do not find favour, I would support cross-party Amendments 20 and 22.
I must first declare an interest as an NFU member and the landlord of two telecom masts. One rent review has already taken place. The original offer was a 95% rent reduction. I could probably have got rid of the mast, but as it borders the M3 I did not think that it was in the public interest. Having negotiated for 21 months, I got the reduction down to only 73%, but my legal fees in doing that exceeded my first year’s new rent, and it was quite stressful.
That is quite unimportant compared with the huge loss of income to community projects, clubs, churches, social clubs, hill farmers and others. As other noble Lords have mentioned, the organisation Protect and Connect, set up last year to give a voice to property owners in rural and urban communities who rent their land for mobile phone masts, has highlighted this real problem for these categories of landlords.
It is not just individual landowners who are affected. I quote a March 2022 cutting from the Daily Express, “Mobile masts firms branded ‘Goliath bullies’”:
“Thousands of churches, charities, hospitals and sports clubs face reductions in mast rents—and a social club popular with pensioners has had rent slashed from £3,500 to around £550 a year, an 85 per cent cut.”
The Daily Mail online said:
“Hundreds of sports clubs, farmers, charities, churches … and community groups with mobile phone masts on their property … have seen a drop in rents of … 90 per cent”.
In January 2022, the Sun said that thousands of churches, charities and social clubs face a cut of up to 90%. The headline in the Edinburgh Evening News was: “Edinburgh pastor fears for church’s future after ‘bullyish’ EE slashes mast rent by 96 per cent”. In Property Week it was: “Telecoms Bill set to enforce huge rent cuts for landlords”.
For these reasons, I believe that the amendments I have mentioned give a fairer outcome to the balance between landlords and tenants. As noble Lords have already heard, it is not only me who believes this. The respected Centre for Business & Economic Research has calculated that the 2017 reforms have not delivered a faster 5G rollout. As the noble Lord, Lord Clement-Jones, stated, providers have lost £200 million of income, including £60 million of lost local authority income and £44.2 million of lost agricultural or rural site income.
The Government’s proposed reforms would cause rents to fall by a further 41% from their post-2017 levels. On a 10-year basis, this is equivalent to a cut in local authority funding of £645 million and a cut to sports centres, social hubs and hospitality of £158 million. The CEBR says that site rental was not unfair before 2017 and that mobile operators have not used savings to invest in communications networks; nor do rent costs impact their profitability materially.
The noble Earl, Lord Devon, emphasised at Second Reading that a “broad array of stakeholders” oppose this legislation,
“from the NFU and CLA, to the CAAV, the BPF and the Law Society … By these provisions, the Government will be intervening in long-standing existing leases, freely negotiated between willing participants, to dramatically decrease rental values, often years after the fact.”—[Official Report, 6/6/22; cols. 1053-54.]
It is another blow to farmers’ diversified income and, in my experience, will further delay mast development. I will not want to go through 21 months of tortuous negotiation again for a new mast, particularly having just heard about the access issues in Clause 66. That is why I support a fairer method of rent calculation, as proposed in the amendments.
I am disappointed that a Conservative Government reject an amendment on market value and wish to proceed with extending the unfair 2017 Act to the Landlord and Tenant Act 1954 and the Business Tenancies (Northern Ireland) Order 1996.
The Earl of Devon (CB)
My Lords, I support the amendments from the noble Earl, Lord Lytton, and much appreciate his extensive exposition of them. I have also put my name to the stand part notices from the noble Baroness, Lady McIntosh.
I am grateful to the noble Lord, Lord Parkinson, for meeting me and the noble Earl, Lord Lytton, since Second Reading. I note from that discussion that DCMS was largely unaware of the impact of the 2017 amendments on the negotiation of lease renewals. I wonder whether that is, as the noble Baroness, Lady McIntosh, indicated, because no consultation was undertaken on them. It really is important for such considerable and important amendments to be consulted on.
I also noted earlier, in response to Amendment 18, as proposed by the noble Baroness, Lady Harding, that the noble Lord, Lord Parkinson, resisted it on the basis that he wanted to ensure sufficient protection for those with poles on their land. If this were the Government’s justification for resisting Amendment 18, why do they not have the same concern of providing sufficient protection for those with masts on their land, which are so considerably more impactful and damaging? Can the Government explain why they refused to consult on this?
Lord Vaizey of Didcot (Con)
My Lords, having followed this debate quite closely, I thought I would make a brief intervention. I want simply to put the case for the operators, since they have been hammered pretty much from all sides—surprisingly, from the Liberal Democrat Benches as well; they have now rediscovered their landed gentry roots and gone in to bat for them.
It strikes me that the mobile operators, in particular, are not charities. Much as it is a good thing that they were able to pay generous rents to local community rugby clubs, and much as I would not wish to stand in the way of such clubs receiving generous rents, those operators are commercial organisations. It is important to emphasise that the country benefits, as they have paid enormous amounts of money for the radio spectrum that they use. Famously, they massively overpaid for 3G but certainly paid substantial amounts for 4G and for the 5G spectrum that is now being rolled out. All that goes into the Treasury coffers and no doubt finds its way to various rugby clubs as well.
It is also a mistake to believe that the mobile phone companies in this country are particularly profitable. As I understand it, their margins are pretty low at between 1% and 2%. I always joke that that is entirely the fault of my noble friend Lady Harding, because of course it was TalkTalk that, as a company, got the British consumer used to paying low prices for mobile phones. The large cost of a monthly mobile phone bill often relates to the cost of the smartphone that the consumer is determined to have. I emphasise again to your Lordships that there is a balance to be struck between charging a reasonable rent and the benefits one gets—
Lord Northbrook (Con)
I am sorry to interrupt the noble Lord, Lord Vaizey, but Vodafone’s figures to March 2021 showed a pre-tax profit of £3.7 billion. That seems to be a reasonably profitable company.
Lord Vaizey of Didcot (Con)
We ought to remember that Vodafone is a global company and a great British success story. I congratulate the noble Lord, Lord Northbrook, on reading out the successful efforts of the Protect and Connect PR campaign in picking individual stories that appear to show rapacious mobile operators riding roughshod over small community organisations.
The key point is that, if you put a mobile mast in a rural area, it is not going to be a significant generator of revenue for you as a company because it will be used by only a few people. If the market is left entirely to its own devices, most of the masts—as with most of the fibre that is going into the ground—will go into our main metropolitan areas. That is why if you walk down Oxford Street, you will see a mast pretty much every 10 or 15 metres because that is where the revenue is generated. If one insists on charging very high rents in rural areas, we will slow down the connectivity and build-up of rural networks. I simply want to make the point that mobile operators do not exist, much as one would wish them to, to supplement the income of community sports clubs, much as I love and admire the work that they do.
The Earl of Lytton (CB)
In saying that mobile operators are very large and substantial companies, does the noble Lord accept that only part of what they do fulfils the same sort of social benefit commonly associated with a traditional utility company? A very large amount of what they do and propose to do is the selling of very large amounts of bulk data for all sorts of commercial purposes, not least streaming information to parts of the entertainment business. Why is the claim made that they should be treated in the same way as a utility, when a data centre, battery storage facility or even a wind or solar farm would not qualify in the same way? I put it to him that some of the arguments put forward, and which appear to have influenced government, do not stand up to scrutiny.
Lord Vaizey of Didcot (Con)
I do not want to be sidetracked into a debate on the classification of wind or solar farms, but I would describe mobile phones as an essential utility. The noble Earl himself pointed out what pleasure he got from having an emergency services Airwave mast on his land and how important that is. Rural connectivity is becoming absolutely essential, which is why the Government have put £5 billion into supporting the shared rural network.
My noble friend Lord Northbrook spoke about his row about the mast on the M3. What he should also have pointed out about the reduction in rents perhaps reducing the opportunities for farmers to diversify is that it is a complete red herring. The opportunities for farmers to diversify are provided by giving better mobile connectivity. Anyone who knows Jeremy Clarkson and has watched his incredible programme “Clarkson’s Farm”—maybe he is one of the 50 rumoured Peers who will be coming into this House shortly and will give us the benefit of his views personally—will know that what is really holding back diversification are small, conservative, small-minded district councils that will not give planning permission for much needed restaurants, car parks and farm shops.
Lord Fox (LD)
My Lords, I shall not enter the zero-sum game debate we appear to be having. However, the really salient point I ask your Lordships, particularly the Minister, to focus on is the one made by the noble Earl, Lord Devon: if there is no financial incentive to landowners to take masts, there will not be masts and we need those masts. Whatever happens, the formula has to deliver an incentive to the landowners. The evidence is clear; that incentive is vanishing to the point where it ceases to be viable. That is the point your Lordships should focus on in this debate, and the one I hope the Minister brings to bear in his response.
Baroness Harding of Winscombe (Con)
My Lords, may I make one additional comment? Despite my noble friend Lord Vaizey thinking I am personally responsible for mobile investment and pricing, I should like to put on the record that TalkTalk did not do anything to mobile pricing; it is a fixed-line broadband provider, not a mobile provider.
Regardless, I should like to make a serious point about competition. The noble Earl made the point that we should believe in a free market, which I definitely do. I firmly believe that competition will get to the right answer, but completely unfettered, unregulated infrastructure markets do not drive competition—they drive the opposite. That is one reason I am really concerned about the multi-dwelling unit amendment that we did not debate, because that risks the absence of competition.
In the same way, I support my noble friend Lord Vaizey because if we do not have a regulated approach to the valuation, we will find not the domination of big mobile companies but the monopoly control of individual landowners, particularly when there is already a mobile mast on their site, as they have a complete monopoly control of that site. It is important that we find a balance because there is power on both sides of this relationship. Big is not always the most powerful. I say that having learned that myself at TalkTalk. I support the comments of my noble friend Lord Vaizey. This is not as one-sided as this debate has perhaps felt.
Baroness Merron (Lab)
My Lords, the issue of valuation, as we have heard clearly today, generates one of the most significant ranges of concerns. Noble Lords have been extremely helpful in unpacking the issues, whichever side they may be on in this debate. I will focus on Amendment 21, which I am pleased to have tabled. It seeks to guide courts in relation to the appropriate reduction in rents paid by operators to landowners. The amendment seeks to ensure consistency with the Government’s previous indication that losses would be confined to something in the order of 40% maximum. I will confine my comments to that point.
When the Government reformed the code in 2017, Ministers indicated that, although landowners would lose out overall, they could expect to receive some 60% of the sum to which they had become accustomed. As we have heard in this debate, losing 40% of proceeds, despite exactly the same access rights being granted to operators, is quite a situation to contend with. As discussed at Second Reading, cases have been cited where reductions reached some 90%.
I am aware that the campaign group Speed Up Britain has objected to the quoted figure of 90%, citing industry figures that show an average rental reduction of 63%. However, even that is substantially higher than the 40% promised by the Government, which has led to many churches, village halls, sports clubs, farmers and even hospitals scratching their heads, trying to make sense of the situation.
We all know that we need the infrastructure; that was made clear by the noble Earl, Lord Devon. We want that infrastructure quickly, but we also want an appropriate balance of the rights and responsibilities of both telecoms operators and landowners. It is not a convincing argument that lower rents automatically mean higher investment in infrastructure. I am sure that is a discussion we will return to during the eighth group for debate today.
Our Amendment 21 is but one suggestion and the noble Earl, Lord Lytton, has brought forward a number of his own. I am grateful to the noble Earl for bringing his expertise to bear in addressing these issues. I certainly hope the Minister will engage in his usual considerate way with all the propositions put before the Committee. I also appreciate the amendments brought forward by the noble Baroness, Lady McIntosh, who is also seeking to ensure fairness and balance between the parties.
So I hope the Minister will address a point that he made at Second Reading and that is relevant today. He suggested that rent reductions were likely to be compensated for—not directly but as a matter of degree —by funds allocated under other DCMS schemes. It would be helpful if he could provide the figures to back that up; I realise that that requires considerable detail, so he could perhaps respond not today but subsequently, in writing.
The list of case studies grows day by day and, given this, many people are asking why the Government did not stand by their original commitment to a maximum reduction of 40%. I hope that the Minister will consider the amendments and respond to that question.
Lord Parkinson of Whitley Bay (Con)
My Lords, as we expected, we have had a lively and somewhat polarised debate on this group, which goes to the heart of quite a lot of what the Bill seeks to do. A number of amendments in it relate to the valuation regime, and they all seek to do slightly different things. I will certainly try to address all of them, although not in numerical order.
However, it might be helpful if I first set out some details about the current position. In England and Wales, agreements can be renewed in two different statutory ways: one is contained in part 5 of the code and the other is in the Landlord and Tenant Act 1954. The position in Northern Ireland is similar: agreements can be renewed using either part 5 or the Business Tenancies (Northern Ireland) Order 1996.
The main difference between the procedures at present is that they have different frameworks against which the financial terms of a renewal agreement are calculated. In the code, the consideration paid to a landowner is calculated on a no-network basis, as was helpfully explained by the noble Earl, Lord Lytton. But this framework does not currently apply to agreements renewed under the 1954 Act or the 1996 order, where rents are calculated on a different basis. The Government do not believe that maintaining this difference is right.
Clauses 61 and 62 will ensure that the approach taken to rent calculation for renewals under the 1954 Act or the 1996 order is consistent with the approach in the code. This means that the same approach will be applied throughout the United Kingdom, reducing disparities in deployment costs in different jurisdictions which could otherwise contribute to a digital divide.
Before turning to the specific amendments, I will pick up a few points raised by noble Lords. The noble Earl, Lord Lytton, mentioned the Central Association of Agricultural Valuers—CAAV—with which DCMS has engaged closely, both in developing the 2017 reforms and in our subsequent discussions regarding their implementation. We welcome the CAAV’s input on these and the wider initiatives aimed at embedding better working practices in the negotiation and completion of code agreements. I am grateful to the noble Earl for sending on further points from the CAAV; these were rather lengthy and detailed, and I do not think that it would be helpful, or do them justice, to discuss them in detail today, but I would be happy to write to him on those matters and copy other noble Lords in.
I welcome the noble Earl’s comments on the code valuation framework and ordinary market valuation principles, and I bow to his expertise in this field. I confirm that DCMS engaged closely with the Royal Institution of Chartered Surveyors in developing the 2017 reforms to the code. In 2019, it produced a specific guidance note for surveyors working in this field, and I understand that this makes clear the relationship between the code valuation framework and the red book global standards of valuation.
The noble Earl referred to independent infrastructure providers, which have a key role to play in the delivery of robust and resilient networks. They invest substantially in the deployment of new apparatus, which can then be shared by multiple operators, expanding coverage and extending choice for consumers. Their role was lauded during the passage of the 2017 reforms, both in another place and in your Lordships’ House, where the noble Lord, Lord Foster of Bath, referred to them having
“some of the most productive telecommunications facilities in the country”.— [Official Report, 31/1/17; col. 1181.]
So I was a little surprised to hear concerns expressed today about the possible disadvantages of this important part of the sector, but I would certainly be happy to discuss those concerns further if noble Lords would like to.
On whether independent infrastructure providers are passing on savings, we are not aware of situations where such providers who have secured new arrangements following the 2017 reforms have failed to pass on any decrease in costs to operators using their installations. It must be remembered that many independent infrastructure sites will still be subject to pre-2017 agreements and, as such, there may not yet be any consequential savings to pass on.
It has been suggested, including by my noble friend Lord Vaizey in his intervention on the noble Earl, Lord Lytton, that the code creates the potential for intermediaries to acquire sites cheaply, using the code valuation framework, and then to charge operators excessive sums to use them. It is important to note that, if such an intermediary has not installed apparatus on the land but is the occupier of the land for the purpose of the code, it would be open to a code operator to seek code rights to do so from that party. However, if the intermediary invests in infrastructure on the land, we think it right that they can agree commercial terms for the use of it with the operators. Naturally, if competitive terms are not offered, operators will go elsewhere.
My noble friend Lord Northbrook and the noble Lord, Lord Clement-Jones, referred to the report by the Centre for Economics and Business Research. I am conscious that we have much to cover, so I do not intend to discuss this in detail, but I will say that, generally, DCMS is aware of it and its findings. We note that it was commissioned by the Protect and Connect campaign, and our understanding is that it focused primarily on the valuation regime, rather than providing a broader view of how the code is working in practice, which is what DCMS aims to do in its engagement with interested parties and through the consultation that has informed the development of the Bill.
Turning to the amendments, I will first address those tabled by the noble Earl, Lord Lytton, the noble Lords, Lord Clement-Jones and Lord Thurlow, and my noble friend Lady McIntosh of Pickering, which relate to paragraph 24 of the code. These go to the crux of the argument regarding the valuation framework. Before the 2017 reforms, the amount of rent payable reflected the value of the site to the operator. Site providers were therefore potentially able to charge an operator thousands of pounds a year to house apparatus on small pieces of land that were otherwise of low or nominal value.
The 2017 reforms were intended to rebalance the relationship: operators would pay a fair rent that reflected the true value of the land, and site providers would remain able to receive additional sums to cover any loss or damage incurred as a result of the operator exercising code rights, or that may be incurred in future, including professional fees. To address a point made by my noble friend Lady McIntosh, those payments should take into account any alternative uses that the land may have and any losses that may be incurred, among other things.
As we have said throughout, and even following the helpful conversations that I have had with a number of noble Lords so far on the Bill, we continue to believe that this balance is right to ensure the cost-effective and efficient delivery of robust digital services. As was noted today, these are becoming ever more necessary in our daily lives, as was thrown into sharp relief during the pandemic.
In his admirably pithy contribution, the noble Lord, Lord Fox, asked whether we believe that incentives still exist for site providers and landowners to enter into agreements. We think that they do. We have been told that the amounts offered by some operators are now so drastically reduced that landowners are less willing to let their land be used, but we maintain that the 2017 valuation provisions created the right balance between the public need for digital communications and landowner rights. We were aware that the valuation framework would result in reductions to rental payments but, in our view, prices being paid for rights to install communications apparatus before 2017 were too high. With digital communications becoming increasingly important, that needed to be addressed.
The code still makes separate provision for landowners to recover compensation for loss or damages. We think that, taken together, the provisions on consideration and compensation mean that landowners should receive a fair payment for allowing their land to be used, despite the fact that overall amounts will normally be lower than they were before the 2017 reforms—but we believe that the incentive remains.
Amendment 23 seeks to amend the valuation framework, moving away from the no-network approach that was introduced in 2017. The amendment appears to us to be a retrograde step, taking the market away from the clear approach established by the 2017 reforms and moving back towards the status quo ante. This could reintroduce some of the problems that were addressed by those reforms, including a return of payments that were unfairly too high, and leave us with a dual approach to valuation on the renewal of agreements, potentially causing confusion for operators, site providers and courts. The Government, therefore, cannot accept this amendment.
Amendments 26 and 27 both relate to agreements renewed under Part 5 of the code. Amendment 26 seeks to phase in rent reductions in these cases through a two-year grace period during which site providers would continue to receive consideration at the previous level. Amendment 27 looks to introduce a tiered phase-in period that would last for three years. The code valuation framework was introduced in 2017 and there has been much publicity on how this has affected payments to landowners for hosting telecommunications apparatus on their land. I believe it has been relatively clear to interested parties for a substantial period that the market has changed significantly, and that, in most cases, reductions in rental payments are to be expected. For this reason, the Government do not think that it is necessary for additional time periods to be given, when the effect will be to increase operational costs and to slow down the rollout of 4G and 5G coverage that the population rightly wants and expects.
Amendment 25 would require the Secretary of State to issue guidance on how paragraph 24 of the code should be interpreted and the maximum permitted reduction in consideration. Statutory guidance can certainly play an important part in ensuring legislative measures achieve their intended aims, but this must be considered on a case-by-case basis. We have concluded that guidance in this area would not be appropriate; code agreements cover a hugely diverse range of circumstances, and the code sets out a clear framework approved by Parliament, which establishes valuation principles which can be applied across different scenarios. We think it is right that, when disputes arise, further interpretation of these principles should rest with the courts. Indeed, the courts have been doing this since the reforms were introduced in 2017 and a body of case law is now well established. We believe that introducing statutory guidance on valuation at this stage would undermine the progress that has been made in that respect, introducing uncertainty and confusion, not least because the status of the proposed guidance from the Secretary of State, and the degree of influence it would have on the courts, is unclear.
Instead, we consider it much better for a court to be able fully to consider all the circumstances of a particular given case and all the relevant evidence before it, and then to act in accordance with the statutory framework set by Parliament. For the same reason, we do not think a statutory cap on rent reductions is appropriate; this would fetter the parties and, ultimately, the courts from proper consideration of all the relevant circumstances. It is also important perhaps to consider non-legislative action that can be taken to promote better relationships: as well as the steps taken in this legislation, there are non-legislative steps the Government are taking to ensure that the code works well in practice. For example, the department’s Barrier Busting Task Force is holding monthly workshops with a broad range of groups with an interest in the code. Those workshops are attended by network operators, landowner representative groups and local authority representatives, as well as professionals and surveyors. The workshops aim to encourage greater collaboration in relation to code negotiations and agreements through identifying and implementing better ways of working. They touch on key issues which parties have raised with us; for example, stakeholders are currently working to agree on standard template wording for common clauses within code agreements.
Amendments 20 and 22 seek to disapply much of the valuation framework to agreements renewed under the 1954 Act and the 1996 order. The Government cannot accept those amendments, as they serve only to entrench the inconsistencies in the different renewal frameworks, which I mentioned at the outset. Were Amendments 20 and 22 to be accepted, some landowners would receive higher rental payments for longer. However, this would allow network costs to remain unacceptably high, penalising swathes of consumers and businesses who may face price increases for digital services, or may have to wait longer for the high-quality, reliable connections they need.
Lord Northbrook (Con)
I am sorry to interrupt the Minister. Would he be able to produce any written evidence of these improved relationships between landlords and operators for the Committee?
Lord Parkinson of Whitley Bay (Con)
My letter that was sent just before Committee outlined some of the engagement that the department has had and listed some of the groups with which we have spoken. That goes some way towards that, but I will certainly see whether there is anything further that I am able to share with noble Lords in addition to that table, which was appended to the letter I sent yesterday.
As I say, we believe that the measures in the Bill will address the complex areas that have led to protracted litigation and emphasise the value of collaborative relationships between operators and site providers. I therefore invite noble Lords to withdraw or not to press their amendments in this group.
The Earl of Lytton (CB)
My Lords, I thank the Minister for that detailed reply. I will obviously not try to cover everything he said, but just touch on one or two points.
The Minister referred to the RICS, and it is true that the RICS produced a guidance note in relation to code changes. It was of course produced in the light of those changes, rather than in an attempt to influence them, and it points out the strong likelihood of very low rents resulting from those changes. Of course, being a guidance note, it does not predict or advise on what the market outcomes are likely to be in practice. I have not had a moment to check, but it is my belief that the manual of valuation and appraisal—otherwise known as the Red Book—produced by the RICS and Institute of Revenues, Rating and Valuation, has made the valuation of mast sites an exception to the market value criteria within the Red Book. It is, if you like, a derogation from that market value principle.
I go back to the point that I made: you cannot have market value in the terms that I described it and the internationally recognised specification and then say that you disregard it and the matter gets to court. So what does that mean? You go to court because you can get it disregarded. Is that the way that the world functions? I am sorry, but I just do not get it—this is an oxymoron of a principle.
That apart, there still remains the fact that reducing rents to around about £750 or so per annum—if that is indeed what will happen, because all these things are hemmed in by confidentiality clauses so that the information does not get out, thus preventing any sort of transparency that would give rise to a market in those terms—calls into question the existence of willing participants, regardless of the valuation assumptions to the contrary. You can make all the assumptions you like, but the market will tell you what it is going to do. If you have people who are disengaged, then that is it.
The Minister is in denial that the market is moving towards, or is effectively at, a point at which it is bust. I hope that he will be able to produce some statistics to back what he says. While he says that, on one hand, the comments from organisations such as the CAAV may be regarded as apocryphal, I have difficulty in understanding that what he says his department is receiving is of any better or worse quality than that. We are in a land of the unknown, with people saying one thing and meaning another. We are effectively relying on a lack of evidence. That really is not good enough.
If we are getting to a stage where the market is not functioning, what then? How long will the Government wait before they decide that something needs to be done? And what will they do—more compulsion, more work for the law courts and legal profession, more time spent getting these masts in place and rolled out? I do not see it. I would really love to know what the greater vision is. The Minister referred to “greater collaboration”; I am sorry, but I do not see it. I see anything other than greater collaboration coming out of this. It takes two to tango—the old business about taking a horse to water may well apply.
I will not press these amendments and will withdraw them at this juncture; they can be resisted, but the real world outside will continue notwithstanding. It does not matter what sort of bubble you live in and what sort of vision you create—whether the commercial vision of code operators or the vision of what is happening from the point of view of the department that wishes to defend the policy that it has had in place since 2017—the situation on the ground will work out the way that it will work out. There is no changing that any more than one can change the basic DNA of transactional analysis in property markets. I beg leave to withdraw Amendment 20.
Baroness McIntosh of Pickering (Con)
My Lords, I will speak to the stand part notice in my name, on which I am delighted to have the support of the noble Earl, Lord Devon, opposing that Clause 63 should stand part of the Bill.
The new sections inserted by Clauses 63 and 64 make provision for all code agreements, when renewed by court order, including those made prior to 2017, to be made on land valuation terms consistent with the 2017 code. The new sections will apply to England and Wales or to Northern Ireland only. These measures, I understand, were a response to the consequence of the 2017 ECC reforms on the treatment of certain expired code agreements that are up for renewal, as had been set out in the previous consultation.
Again, Clauses 61 to 63 expand the agreements covered by the Digital Economy Act 2017 to extend to areas previously exempted from the renewal procedures of the 2017 Act, specifically those covered by Business Tenancies (Northern Ireland) Order 1996 and the Landlord and Tenant Act 1954. The clauses also insert the valuation provisions of the code directly into the older legislation so that consideration of compensation for site owners under these agreements is calculated in a similar way to that under the code, as we have heard, leading to lower rents.
Lord Clement-Jones (LD)
My Lords, I shall speak to Amendments 28, 29, 30, 31, 32, 33 and 34. This may well be another part of the Bill where we have differing views about the balance to be struck between site providers and operators, and whether the Bill’s provisions will actually hamper the rollout of 1-gigabit connectivity.
In the consultation response that accompanies the Bill, the Government stated explicitly that agreements could not be changed by court order during the course of a contract, but changing the definition of a person able to grant code rights to an operator is likely to allow the cancellation or modification of agreements that were agreed in good faith and still have years to run and impact every single relationship between site owners and operators. This is because of the changes made by Clause 67, which do not limit an application to a situation where the existing agreement has expired. Telecoms companies, the operators, will now be able to choose which method of renewal or modification they wish to use. Moreover, site owners are unable to remove operators from their land if negotiations break down. Given this, it is likely that operators will seek to review all contracts they have on their books, allowing for retrospective application of the changes.
Site owners and operators should have certainty of contract. If an agreement has been reached, the terms of this should be settled and respected until the end of the agreement. If they are to be changed, it should be by mutual consent and commercial negotiation rather than by this type of intervention. Rents should be changed only from the point at which courts have made a decision, respecting existing contracts. Site providers are routinely being taken to court by operators to reduce the prices they pay, using, as we have heard, the changes made in 2017 that inserted a no-scheme or no-network valuation methodology into the code. This tactic is used to drive down rents to the lowest possible level.
The Bill gives operators sweeping new powers, which would mean that when the parties to an expired agreement are unable to agree on the terms of any renewal agreement, operators can seek modified terms to code agreements on an interim basis, including reducing the level of rent they pay. This change is likely to lead to a substantial number of claims by operators as a matter of course, regardless of the state of negotiations in individual cases. If an operator is able to fast track a no-scheme reduction, there is little incentive to reach a consensual deal at a potentially higher level. What is more, when a case does get to court and a renewal agreement is subsequently imposed, the court will be able to retrospectively backdate any new financial terms of that code agreement to the date that an initial notice was made, not the date of a court judgment. Some of these notices could have been served years ago, leading to sudden, huge repayments from site providers to operators. This retrospective application of court-ordered rent reductions cuts against legal norms and a common understanding of fairness.
Many site providers already face severe financial pressure as a result of the 2017 reforms, as we have heard. This could lead to unnecessary financial difficulties or even bankruptcies, given the huge disparity between the market-based rent they have been receiving and the rent obtained through the courts. These amendments, however, are not intended to prevent courts imposing rent reductions in line with the workings of the code. In all situations, operators would still be able to obtain savings on rent payments. These are merely trying to ensure that these savings are not imposed retrospectively on contracts entered into in good faith by site providers.
Amendments 28, 29 and 32 to 34 aim to address in its entirety the issue of backdated payments made on the basis of interim orders. Amendment 28 would prevent courts retrospectively imposing rent reductions made on the basis of no-scheme valuation. Amendment 29 would mirror the impact of Amendment 28 of removing the risk of backdated payments being imposed on site providers by ensuring that operators are unable to seek interim orders simply to agree a lower rent. Amendment 34 is intended to apply to sites governed by the Landlord and Tenant Act 1954.
Amendment 30 would ensure that where interim orders are made and a consideration is imposed on the basis of the code, the retrospective application of the reduction in rent achieved does not automatically go back to the time at which the initial notice was made. Instead, it would go back to that point or a maximum of 12 months, whichever is the shorter.
Finally, Amendment 31 would ensure that where interim orders are made and a consideration is imposed on the basis of the code, the cumulative total of the retrospective application of the reduction in rent achieved is limited to £l,000.
These amendments are all designed, as I mentioned in opening, to redress the balance and make sure that this kind of retrospectivity is not taken advantage of by the operators against the site providers. I hope they commend themselves to the Committee.
The Earl of Devon (CB)
My Lords, I rise briefly to support the noble Baroness, Lady McIntosh, once more, and the noble Lord, Lord Clement-Jones. I note in response to the Minister on the last group of amendments that I am not parroting the words of lobby groups; I am reporting personal experience to your Lordships, and that of people personally known to me. I am not a mouthpiece of some body.
On the prevalence of litigation, the Minister pointed out in his last summation that it may be for the courts to provide definition. The Supreme Court ruled on three separate cases last week; clearly, there is far too much of this renewal debate going on in the courts system—that is coming from a litigator. The Supreme Court should not be ruling on three cases in one go. It should be possible to handle this in the marketplace, as the noble Earl, Lord Lytton, said. It is indicative of a broken system.
I reiterate in the context of this further valuation group a question I posed before that has not yet had an answer. Given that landowners have such a plethora of tradeable ecosystem services to provide from their landscape, why on earth would they commit these days to a telecoms lease, with all the nefarious impacts of these amendments—the access rights that have been given and the heavy burden of renewal requirements—when they have so many other options to consider? I would like an answer to that point.
The Earl of Lytton (CB)
My Lords, I support Amendments 28, 30, 31 and 34, to which I have added my name. I also express my support for the clause stand part amendment spoken to by the noble Baroness, Lady McIntosh. I have very little to add to the reasons the noble Lord, Lord Clement-Jones, so ably set out. The outcome of the Electronic Communications Code 2017, especially its retrospectivity, as he outlined, is to destabilise relationships. There is no question about that. These commercial relationships are important, as I set out earlier, because they relate to the rollout, consistency and security of site provision for these masts on which 4G and 5G will ultimately rest.
With a level of, say, £750 per annum—I believe that figure has been much put about—the other provisions of the lease may be the only things of real value left to the provider. The money, relatively speaking, may be a row of beans. If those provisions are set aside, the provider does not even have a reduced rent which the Government or code operators discern as being fair because that is the only use of the land—it completely annihilates the rest of any benefit in the deal. At these levels, that marginal element will be significant. I said earlier that the balloon has gone up; I suspect the message is being received loud and clear.
Lord Northbrook (Con)
Does the noble Earl not think it most unusual for commercial contracts to be interfered with in this way? Is it not almost unprecedented to have such retrospective actions on them?
The Earl of Lytton (CB)
There have been instances where contracts of all sorts have been interfered with by government—for example, the Landlord and Tenant Act 1954. There have been instances where rent control came in, nearly always for social reasons. I always like to compare the Rent Acts and rent control and security of tenure, which caused the collapse of the private rented sector for about 25 years, and the Landlord and Tenant Act 1954, where the contracts were largely left in place and statutorily continued, but at a market rent and the market was not interfered with. By and large, it worked and investment continued. Contrast and compare those two situations.
Lord Northbrook (Con)
My Lords, I will briefly support the clause stand part amendment and the amendments in the name of the noble Lord, Lord Clement-Jones. They appear entirely sensible, especially the restricting of rent reductions to the date on which a court order is made, rather than being retrospective. Like the noble Earl, Lord Devon, I am not a lackey of APWireless and have done my own negotiations with my solicitors on my contract, which were far from amicable.
Lord Bassam of Brighton (Lab)
My Lords, I shall be very brief. In general, I support the arguments of the noble Lord, Lord Clement-Jones. The arguments on retrospectivity, which the noble Earl, Lord Lytton, addressed, are sound; it surely cannot be right that we have a change that will penalise landlords in the way this does. A reform could lead to a sudden and significant sum of money being owed to telecoms operators by site providers. Some of those who provide sites could even end up in a form of bankruptcy, particularly if courts make a decision that goes back to a point at which the notice was served. Large sums of money will be involved.
Amendment 34, which we have signed, would ensure that interim rent payments could not be backdated to that point, prior to a court order being obtained. That would mitigate the risks of backdated payments causing site providers severe or significant financial difficulties. That is a reasonable and fair principle which should find its way into this legislation. We support the other amendments from the noble Lord, Lord Clement-Jones, in generality as well.
Lord Fox (LD)
My Lords, even more briefly, the Minister said in responding to the last group that the Government are clear that the cost of rent is too high and the purpose is to drive it down. In different comments, he stated that he felt these costs will eventually find their way to the consumer—I doubt that, but time will tell. What is the purpose of the retrospectivity and who will benefit? When will I receive my refund on my mobile phone bill for the retrospective repayment of this money? The answer is that I will not, so who will benefit from this and why are the Government causing it to happen?
Lord Sharpe of Epsom (Con)
I thank all noble Lords who have spoken to this group, which concerns both compensation and backdated payment. I shall start with the former. One of the main aims of the Bill is to ensure that where an agreement to which the code applies is renewed, there is a consistent approach in calculating the financial aspects and terms of that agreement.
Before I get on to the details, I will answer my noble friend Lady McIntosh, who strayed back into the general valuation principles. I note that my noble friend Lord Parkinson has committed to see what else can be distributed in terms of the evidence that she seeks. I reassure her that we have had extensive engagement with the NFU, but I will write to her with details of that.
The last group dealt with how Clause 61 does what I have just described in England and Wales, through changes to the 1954 Act that replicate the code valuation regime. This means that, when agreements are renewed under the 1954 Act, the new rent will be calculated in the same way as agreements renewed under the code. However, the 1954 Act deals solely with the rent that a landowner should receive from an operator. Under the code, this is not the only sum landowners can receive. The code also allows landowners to receive compensation from an operator. This compensation stands separately to the “rent” or consideration payable, and should cover any loss or damage resulting from the code operator exercising the rights that have been agreed or imposed.
There is no equivalent right to recover compensation within the 1954 Act. Clause 63 therefore inserts provisions into the 1954 Act that reflect the code provisions on compensation. This clause ensures that the amounts that landowners receive in compensation will be calculated in the same way, regardless of which statutory renewal mechanism is used and where in the UK that agreement was entered. Although the compensation provisions we are introducing will directly apply only if a renewal agreement is imposed by the court, it is inevitable that consensual negotiations can—and should—be influenced by the terms that might be imposed in those circumstances. This will influence consensual negotiations for agreements regulated under the 1954 Act, through which the parties can make adequate provision for compensation.
It was always the policy intention that the compensation provisions in the code should inform consensual negotiations for compensation in this way, and the same principle should apply to compensation provisions for the 1954 Act. We therefore want Clause 63 to stand part of the Bill.
Before I get on to the various amendments, I should say that the noble Earl, Lord Devon, referred to case law, on which I will expand a little. The courts have dealt with various points in connection with the Electronic Communications Code and the Landlord and Tenant Act 1954 and the matters we are discussing, and I do not think it would be necessarily helpful to discuss them in detail. We are happy to write to noble Lords or arrange a meeting if there are particular matters relating to case law that they would find useful to discuss, including in respect of the key judgment that was recently handed down by the Supreme Court, which is being considered carefully by department officials and legal advisers at the moment.
The Earl of Lytton (CB)
I ask the Minister to consider what happens if a contract under the 1954 Act contains a provision in relation to not increasing the height of a mast, or to an area where a mast operator is allowed to control the growth of vegetation—trees in particular—but then the operator demands rights to raise the mast, thus presenting a degree of visual intrusion to the farmhouse or whatever it happens to be. In a case I encountered, after 20 years of trying to establish a shelter belt at 1,400 feet up on Exmoor, the contractors for EE demanded to cut a swathe through the middle of this to get line of sight with another mast which was not in contemplation at the time the agreement was entered into. How would such an inconvenience be quantified in market terms? I suggest that there is no way of dealing with those sorts of situations under the code. The operator would simply turn round and say, “You’ve suffered no mercantile loss, and if your trees blow down we’ll give you a contribution towards re-planting them—and you’ve no right to a view anyway, so tough.” Could the Minister explain how he thinks those non-market aspects are going to be dealt with?
Lord Sharpe of Epsom (Con)
The noble Earl, Lord Lytton, raises some very specific and technical points, if I may say so. I am afraid I am going to have to write to him.
I turn to Amendments 28 to 33, tabled by the noble Lords, Lord Clement-Jones, Lord Fox and Lord Blunkett, and the noble Earl, Lord Lytton. These seek to amend Clause 67, which relates to interim orders where an agreement is being renewed under part 5 of the code. Paragraph 35 of the code covers situations where an agreement to which part 5 of the code applies has expired or is about to expire, and the parties are unable to agree whether that agreement should be terminated or what the terms of any new agreement should be. In those circumstances, proceedings may be issued so that a court can decide what terms should be imposed.
Such disputes can take time to be determined. The provisions in Clause 67 which amend paragraph 35 of the code enable either party to ask for an interim order in relation to any term of the current agreement. The benefit of this is that specific issues can be dealt with at a much earlier stage of the proceedings. The clause gives the court more flexibility than currently contained in paragraph 35 of the code, enabling it to look at situations where a party needs an urgent change to any term of their agreement. An example of this is where an operator needs amended terms to allow it to upgrade an existing site, to improve capacity and coverage for consumers. It also allows an operator to ask for the financial terms of the agreement to be reviewed at this interim stage. This ensures that the code valuation framework can be applied at an early stage in the proceedings, which may speed up negotiations on other areas in dispute.
It is the financial terms that the court could impose that have prompted the proposed amendments to Clause 67. These amendments seek to restrict an operator’s ability to apply for interim financial terms to be imposed, and fetter the discretion of the court when deciding them. The Government think it right that an operator can make an application for interim financial terms to be imposed, irrespective of whether other interim terms are sought. Allowing this to happen means that an operator can benefit from the code valuation framework at an earlier stage. This should give operators more capital to invest in the expansion and upgrade of their digital networks, which is of huge benefit—
Lord Clement-Jones (LD)
The Minister is saying that it is retrospective and therefore exactly the effects that I mentioned will take place—that a contract can effectively be torn up.
Lord Sharpe of Epsom (Con)
I am about to get on to the various backdating aspects of this, so I hope that will answer some of these more specific questions.
I think I got to this being of huge benefit to both business and consumers. There are concerns about the backdating of the consideration which the court may impose at this interim stage, and that this may cause site providers financial hardship. Clause 67 provides that the court may backdate the interim terms only from the date of the application. It is anticipated that these applications will be dealt with quickly by the courts. The Government intend to make changes that will assist in the resourcing of code disputes, particularly in light of other changes made by the Bill. For example, the Government intend to amend regulations so that, in England and Wales, court proceedings on code disputes can be commenced in either the Upper Tribunal Lands Chamber or the First-tier Tribunal. Currently, proceedings can be commenced only in the former, which has only two regular judges, while the First-tier Tribunal has over 100 who consider a range of property law disputes. This will lend much more flexibility to the Courts & Tribunals Service in its handling of code disputes.
Lord Clement-Jones (LD)
My Lords, I am sorry to intervene again, but of course I will not be responding at the end of the group. The Minister is saying that the whole idea is to get these hearings as quick as possible, so that the site provider is prejudiced as quickly as possible, but it all depends on the availability of lawyers by the sound of it, which is a somewhat tenuous argument.
Lord Sharpe of Epsom (Con)
As my noble friend the Minister has pointed out, lawyers do well whatever happens. I am coming on to expand a little more on the protections for site providers, if the noble Lord will please bear with me.
The time between the making of the application and it being determined should be relatively short. Officials will be working closely with Ministry of Justice counterparts and members of the judiciary to ensure that the right processes and so on are in place to support this. The landowner will be on notice from the date of the application that some of the amounts received from the operator may have to be repaid at a later date and will be able to plan accordingly. We hope that this will alleviate concerns.
Finally, Clause 67 gives the court discretion as to the date from which the interim order may have effect, providing that the court may provide for the order to have effect from the date of the application for the order. We do not believe there is the need to impose limits on what the court can decide, as it is already able to take into account what the effect would be on the site provider if consideration payments were backdated. Interim applications are usually heard quickly, and therefore the likelihood is that rent will be backdated only for a small amount of time.
The impact is potentially much greater in cases where the agreement is renewed under the 1954 Act, where interim rent can be backdated to the earliest date on which the tenancy could have been terminated where the landlord serves notice, and the earliest date on which the new tenancy could have begun where the tenant serves notice asking for a new tenancy. We have heard from stakeholders that, under the 1954 Act regime, some landowners have faced large claims from operators in respect of overpayment of rent where a lower rent has been backdated. We are listening to those concerns, and we will consider this carefully before the measures in the Bill are brought into force. Should we consider that something specific is required, this can be taken into account when developing any transitional provisions in respect of the Bill.
Lord Clement-Jones (LD)
First, is it the case that the Bill will be changed on Report, or are we talking about a new piece of legislation? Secondly, have the Government made any estimate of the number of cases that will now be brought as a result of this change?
Lord Sharpe of Epsom (Con)
I am afraid that the answer to both of those questions is that I do not know. It would be remiss of me to anticipate the sorts of concerns we are listening to and the subjects they may raise. I will have to write to the noble Lord on that.
Lord Fox (LD)
Sorry to labour the point, but the Minister just introduced the concept of transitional provisions. Where are these transitional provisions made clear? How will we know what they are going to be? Where will they be planned? Are they coming through by statutory instrument, or are they just going to be sprung on us by the department?
Lord Sharpe of Epsom (Con)
I read my brief very carefully, and I said “any transitional provisions in respect of the Bill”—I did not say that there will be transitional provisions—after listening to the various concerns I just outlined.
I now turn to Amendment 34 tabled by the noble Lords, Lord Clement-Jones and Lord Fox, the noble Earl, Lord Lytton, and the noble Baroness, Lady Merron. This is an amendment to the 1954 Act which seeks to prevent interim rent being backdated where an agreement is renewed under that statute. As we have discussed when talking about Clauses 61 and 62, it is the Government’s intention that the various statutory mechanisms for the renewal of agreements to which the code applies is as consistent as possible, and this amendment would increase inconsistency.
First, the amendment would create inconsistency within the 1954 Act itself. The ability to seek backdated payments of interim rent would be prevented only where the site provider had given notice to the operator under Section 25 of the Act. Where an operator had served notice under Section 26 of the Act, the ability to seek backdated rental payments would remain. Secondly, it would create inconsistency between the 1954 Act and the code. Clause 67 will allow payment of a modified rate of consideration to be backdated to the date of the application, whereas I understand that the noble Lords’ intention is to prevent rent from being payable at the backdated interim rent rate. It is difficult to justify such inconsistency.
Finally, the ability to seek an interim rent which is backdated is not a new concept. The parties would have been aware of this when entering into those agreements to which the 1954 Act applies. There is always a risk that the market will have adversely changed between the date on which the agreement was entered into and the time when the agreement is ready for renewal, and that the interim rent will be less than the amount currently paid. I appreciate that this may be exacerbated by the imposition of the code valuation framework on these agreements, but the Government will look at this impact when drafting any transitional provisions.
Absolutely finally, the point made by the noble Lord, Lord Clement-Jones, about picking and choosing, was covered by my noble friend Lord Parkinson on the first day of Committee in relation to Amendment 17, but if there are any outstanding questions on that, we would be very happy to discuss them separately. In answer to the question from the noble Earl, Lord Devon, about general valuations, my noble friend will deal with that in the next group. Under the circumstances, I hope that noble Lords will not press their amendments.
Baroness McIntosh of Pickering (Con)
I am most grateful for the debate we have had, and I hope that my noble friend will look warmly on the amendments that were so ably spoken to by the noble Lord, Lord Clement-Jones. I have to say that it was rather amusing, being a lawyer, to hear that this would be a good opportunity for lawyers. I would not have thought that would be something the noble Lord would pass down. I look forward to continuing the debate.
Lord Clement-Jones
Member’s explanatory statement
This amendment would mandate the use of Alternative Dispute Resolution schemes to resolve disagreements before either party could ask for a consideration to be imposed by the court.
Lord Clement-Jones (LD)
My Lords, I should just say that it is not my role to make friends among my colleagues in the legal profession; it is to try to get the right result out of the Bill.
I have just one observation on the previous group. It is interesting to note that the Government have some wonderful ways of resisting amendments. They say that it would be inconsistent with the Bill, but they are perfectly capable of passing amendments of their own which are not fully consistent, because that is what exceptions are—they are there because there would otherwise be an injustice.
The site providers are making and have made a very strong case that they need better protection against abuse by operators. Throughout this Bill, we are of course very mindful of the balance between site providers and operators. The Government believe that the provisions of the Bill are putting this in order, but many of us believe that they are putting it in disorder as a result. The Protect and Connect campaign has come up a number of times already during the course of debates on the Bill. It surveyed 116 site owners that host mobile telecoms masts and found that 23% have suffered damage to their property; 35% have had their sites upgraded without permission; 46% have found telecoms companies on their land without warning; and 50% have been threatened with legal action. That does not sound like very good behaviour on the part of the operators. In this context, Clause 68, on the alternative dispute resolution, is of great importance. It sets out the process by which an operator can request rights to land from an occupier, which will now include information about alternative dispute resolution.
The clause however requires operators only to “consider” the use of ADR for resolving disputes with site owners where “reasonably practicable”. It also permits courts to take an operator’s “unreasonable” refusal to consider ADR into consideration when deciding on remedies during a dispute. The ADR process that the Government are providing is therefore non-binding. Telecoms companies need only show that they have considered it in order to avoid costs.
To address this point, the Government should make ADR compulsory for any dispute and issue guidance about reasonable terms. Properly enforced, it would reduce the operators’ reliance on litigation through the courts and encourage better behaviour by both parties. It is important that there is greater onus on the operators to make use of this process, because the terms of the code are so heavily weighted in their favour and their ability to use the courts in general is far greater, befitting their corporate size compared to the average site owner. Given the potential benefits for both parties and the wider public interest, it is difficult to see the case for this process remaining purely advisory.
As regards Ofcom’s guidance, Ofcom has long provided guidance on the ECC, but to date it has not provided any real support for site owners experiencing problems. Amendment 39 is intended to force operators to give greater weight to Ofcom’s code of practice, which it is currently obliged to prepare under paragraph 103(1) of the ECC. Tribunals would be obliged to take into account an operator’s compliance, or lack thereof, when making costs awards. The purpose of this is to render Ofcom’s code of practice meaningful, rather than just optional guidance that is all too easily disregarded.
Amendments 40, 41 and 42 aim to address the issue of non-compliance with Ofcom’s code of practice. It is right that operators are held to standards in how they treat site providers, including measures such as the provision of information or the conduct of negotiations. However, there is a significant body of evidence that, despite the code of practice, site providers are not being treated fairly or with respect by the operators from whom they rent their land. The solution to the problem of non-compliance with the code of practice is to strengthen these measures, yet Ofcom has failed to invest adequately in this area and the Government have spent too long asking the industry to solve its own problems through stakeholder workshops, rather than showing direct leadership. These amendments will collectively place obligations on both operators and site providers. The intention here is not to place an asymmetrical set of requirements on either party in these negotiations or to these agreements.
Amendment 40 would create an obligation to follow the code of practice. It would create a maximum financial penalty for non-compliance of £1 million and require Ofcom to have regard to prior history of non-compliance when assessing the size of any penalty imposed. This amendment would provide a strong incentive for adherence to the code of practice. Moreover, it would require a previous history of poor behaviour to be taken into account. This means that operators or site providers would not be able to disregard the code of practice just because they think they can pay the fine, and poor behaviour would have increasingly impactful consequences. Amendment 42 requires that Ofcom include in its code of practice guidelines on when operators must pay compensation to those affected by a failure by the operator to adhere to the code of practice.
If the Government are serious about promoting consensus-based agreements and getting this market working again, having clear and enforceable guidance on the standards expected by the parties is essential. This is what these amendments try to achieve. I very much hope that the Minister will take all the amendments and their intention on board.
Baroness McIntosh of Pickering (Con)
My Lords, I shall speak to Amendments 36, 37, 38 and 39, and the proposal that Clauses 68 and 69 do not stand part of the Bill. I am delighted to have the support of the noble Earl, Lord Devon.
I am slightly stung by something my noble friend the Minister said earlier: that perhaps we are all paying too much heed to lobbyists. I think my noble friend knows me well enough now to know that I am of particular independence of mind. However, when an allegation is made by those seeking to brief us on the Bill that the Bill has swung too heavily against the interests of the landowners—of which I am not one; I have no particular interest in this other than as a consumer, as I said—and too heavily in favour of the operators and networks, that is something that I think he would expect us to explore. It is something we are encouraged to do when we are introduced. The Reading Clerk reads out that we are given a seat, place and voice in the councils, assemblies and Parliaments to enable us so to do. I take those responsibilities very seriously indeed.
The Earl of Lytton (CB)
My Lords, I have an amendment in this group but I will also briefly voice my support for the other amendments to which my name has been added. The noble Lord, Lord Clement-Jones, referred to ADR. As I see it, ADR is highly desirable but easily avoidable in the commercial world of disputes. I believe that the application of ADR under the code as it stands is asymmetric in its treatment of site providers as against operators, which is entirely regrettable. Therefore, there ought to be mandatory ADR, and the avoidance of ADR in litigation generally is sufficiently common to make it clear that that needs to be dealt with.
I very much support the comments made by the noble Baroness, Lady McIntosh. She referred to lack of confidence, which goes back to a key theme here. I agree, although I would use the term “overt mistrust” as being much nearer the mark to describe what is happening here.
I have put my name to Amendments 39, 40 and 41. The concern here is that Ofcom is a weak regulator in this field and the entire environment of regulation is not consonant with the changed balance between site providers and operators. That needs to be tightened up.
My Amendment 42A is a “see no evil” removal clause. The idea behind it is to mandate: the operator collating and reporting complaints and actions taken in consequence to Ofcom; that Ofcom has to consider this and have regard to it when dealing with its other functions as regards the operator; and that Ofcom must then publicise annually the outcome of that process. The purpose of this is to demystify this whole question of whether there are complaints and, if so, how many, where they come from and who is to blame for what. Let us get the facts. Let Ofcom, which is supposed to be regulating the sector, deal with the matter. It is one thing that would aid transparency. It was put to me that it might stir Ofcom out of its lethargy; I would not quite use those words myself but the sentiment would probably be well understood across the House. We need tough regulators to deal with quite a difficult emerging situation.
Lord Northbrook (Con)
My Lords, briefly, I support the amendments in the name of the noble Lord, Lord Clement-Jones, the noble Baroness, Lady McIntosh, and the noble Earl, Lord Devon, which would make ADR mandatory, noting the lack of confidence in the current situation and the overt distrust, as mentioned by the noble Earl, Lord Lytton. I hope this process might also speed up the whole 5G rollout.
Lord Fox (LD)
My Lords, while we were debating the previous group, the Government seemed to be getting ready to embrace an influx of court cases by going from two judges to 100. The intention of the large number of amendments here is to avoid that eventuality. If the Government Front Bench is not happy with the words, it should be happy with the spirit of driving the alternative dispute resolution process. It would be good to have some acknowledgement from the Government, when we get to their response, that this ADR process will be central to avoiding the sort of things we were talking about in the previous group.
Amendment 39 is intended to force operators to give greater weight to Ofcom’s code of practice, which it is currently obliged to prepare under paragraph 103(1) of the ECC. Amendments 40, 41 and 42 aim to address non-compliance with Ofcom’s code of practice, and Amendment 44 deals with building safety. That could have been separated out into another group. I will speak specifically just to Amendments 42 and 44, because they are in my name.
Amendment 42 requires that Ofcom include in its code of practice guidelines on when operators must pay compensation to those affected by the operator’s failure to adhere to the code of practice. This compensation is limited to 100% of the total value of the contract to which the dispute relates. We do not expect that this would be the standard award and we have intentionally left it to Ofcom to draft guidelines on this issue. In fact, as my noble friend Lord Clement-Jones set out, Amendments 40, 41 and 42 work together with the aim of promoting consensus-based agreements, and to have a market that works effectively and is not stuffed up with disputes—which comes back to my first point.
In a gear change, Amendment 44 focuses on building safety, raised by the noble Earl opposite in the context of a previous group. The amendment would place a duty on network providers to ensure that any work done on communications infrastructure does not compromise building safety. Specifically, we are concerned about the interaction of digital infrastructure installation with the findings of the Hackitt report into building regulations and fire safety, which followed the dreadful Grenfell Tower tragedy.
As the Minister will be aware, in her report on the Grenfell disaster Dame Judith Hackitt recommends that the
“creation, maintenance and handover of relevant information”
should be
“an integral part of the legal responsibilities on Clients, Principal Designers and Principal Contractors undertaking … work on”
high-rise residential blocks. This matters because when a telecoms operator runs internal cabling in blocks, each hole is potentially a breach of a firewall. It seems to us that installation of gigabit-capable cabling is one of the most likely modifications a multi-residence high-rise block could face, and operators need to be obligated to meet safety requirements. If the Bill remains in its current form, digital contractors will have access rights that exceed those of the blue-light services, so where do they sit regarding their obligations to the Building Safety Act and in fulfilling the aims of the Hackitt report?
The purpose of Amendment 44 is to probe where telecoms and broadband contractors sit in the new environment of the Building Safety Act. I understand that, as a consequence of that Act, statutory instruments would be brought forward to compel certain actions from utilities contractors. My understanding is that the Government do not regard digital infrastructure as a pure-play utility function. Therefore, will there be a statutory instrument specifically to target digital infrastructure? In responding to this, the Minister may want to explain what statutory instruments are expected, with reference to which bits of which Act.
Baroness Stowell of Beeston (Con)
My Lords, my noble friend the Minister will remember from my remarks at Second Reading that my main concern is about the sense of unfairness that exists between the site owners and the mobile network operators. Because of that, I hope the Government will agree to look at making some changes to the legislation. We will come to the economic impact assessment later this evening. I have some sympathy with the suggestion of a mandatory alternative dispute resolution in the way it is described in Amendment 35. As I say, this is just a general gentle expression of warmth towards that as a way of signalling to people who at the moment feel a sense of some unwillingness on the part of the Government to recognise that there needs to be some change. I look forward to hearing what my noble friend has to say.
Baroness Merron (Lab)
My Lords, the debate on this group raises a number of interesting points, but they are all on the same theme. They are about what happens should disputes arise. No one wants to be in dispute, but when one arises, it is crucial that everybody knows what the rules are and that the resolution creates an environment and practice which means that the same issues do not continually arise. The contributions from noble Lords today have talked a lot about fairness, respect and calling to heel those who need to be called to heel for fairness and respect to occur. It is about getting the balance of rights and responsibilities between the parties right. I hope the Minister will consider the valid points raised by this group.
In particular, it would be helpful to hear how the Minister feels about the present situation, where the operator must only consider the use of the dispute resolution system—and even then, only if it deems it is reasonably practicable to do so. Has that been satisfactory, because this set of amendments clearly suggests not? I was particularly struck by the words of the noble Earl, Lord Lytton, who spoke about such resolution being easily avoidable. That does not give us confidence. I therefore hope that the Minister will reflect on the spirit and intent and, perhaps, come to us with some practical measures to improve the current situation.
Lord Parkinson of Whitley Bay (Con)
My Lords, I shall first address points made by the noble Earl, Lord Devon, as well as my noble friends Lord Northbrook and Lady McIntosh, about some of the case studies. I certainly agree entirely with the noble Earl, who speaks from personal experience and makes the point that some of the lobby groups which have been vocal on the Bill are painting a very different picture to those directly involved, and with whom we have had extensive discussion. Your Lordships’ House benefits from having people such as the noble Earl and my noble friends who can speak from personal experience.
In particular, at Second Reading, the noble Earl showed how he speaks not just as a landowner and the litigator but as a consumer who shares the objective of wanting better connectivity. I am very happy to make absolutely clear that I understand that his point and those of other noble Lords are made in that spirit. I hope he can see that, for my part, we have been willing to listen and continue to be receptive to hearing contrary points; it is just that, in our discussions with the industry, we have had a clear picture painted.
The noble Earl asked a general but important question: why should site providers bother, given the other ways they could use their land? Without wishing to reopen the debate on valuation, we believe that the 2017 provisions created the right balance between the public need for digital communications and landowners’ rights. The code makes separate provision for landowners to recover compensation for loss or damages and, taken together, we think the provisions on consideration and compensation mean that landowners can still receive a fair payment for allowing their land to be used.
The new pricing regime is more closely aligned to those for other utilities, such as water, electricity and gas. We do not think it is less attractive than other comparable uses. As I said on a previous group in relation to a point raised by my noble friend Lady McIntosh, landowners should still receive their payments—which, among other things, take into account any alternative uses that the land may have and any loss or damage that may be incurred.
Turning to the amendments in this group, the purpose of Clause 68, as probed by my noble friend Lady McIntosh of Pickering and the noble Earl, Lord Lytton, is to encourage more collaborative discussions between landowners and operators and to ensure that litigation is only used as a last resort. We know that code negotiations can be difficult—my noble friend Lord Northbrook referred to that from his experience—and that, in some cases, landowners have felt pressured to accept any terms offered to avoid the risk of being taken to court. To address this, Clause 68 encourages the use of alternative dispute resolution to minimise the risk of landowners feeling pressured and to facilitate co-operative discussions.
At Second Reading, my noble friend Lady McIntosh suggested that alternative dispute resolution is optional for operators. I hope I can give her and other noble Lords some assurance on this matter, given the requirements for parties to consider use of ADR and for the courts to consider unreasonable refusal to engage in ADR when awarding costs.
ADR not being mandatory is a deliberate feature of this policy. That choice was made for two reasons. First, ADR may not be suitable in certain cases. For example, where a disagreement is based on differing interpretations of the law, this may have to be determined by a court. Mandatory ADR would add cost and time to this process without any benefit. Secondly, where ADR is appropriate, mandatory ADR would compel some parties to participate in a process they do not want to be involved in, making them less inclined to actively engage. This would increase the risk of failure, and the parties would then have to go to court anyway—only adding further time and costs for landowners. The clear majority of groups—including the Country Land and Business Association—opposed compulsory ADR when we consulted them.
I turn to Amendment 39, tabled by the noble Lords, Lord Clement-Jones and Lord Fox, and the noble Earl, Lord Lytton. This amendment would require evidence of a breach of Ofcom’s code of practice to be taken into account in ADR judgments. It should be noted that not all forms of ADR have judgments. Mediation is one such alternative. Furthermore, the Ofcom code of practice gives guidance on best practice; it does not set out specific requirements to be adhered to. As such, using the code of practice to underpin or effect decisions made in alternative dispute resolution risks creating further disagreements and disputes, rather than resolving them.
Finally, and most crucially, the amendment would undermine the open and collaborative approach on which successful ADR relies by forcing operators to enter any ADR process on a defensive footing. The outcome would be simply to blunt the effectiveness of alternative dispute resolutions and add to the administrative and cost burden for all parties. It is on this basis that I invite noble Lords not to press their amendments.
I turn to the Ofcom code of practice. We know that, in some cases, landowners are reluctant to enter into code agreements because they are concerned about how the operator or their contractors will behave when they carry out their works. Clause 69 addresses this issue by requiring guidance to be prepared by Ofcom, following consultation, regarding operators’ handling of complaints about their conduct. This guidance will be added to Ofcom’s code of practice. To complement this, the Government also intend to bring forward secondary legislation—in consultation with Ofcom and others where appropriate—to make regulations to achieve three things: first, to create a requirement on operators to have a complaints procedure in place to handle complaints relating to their conduct; secondly, to set out minimum standards which this process must meet; and, thirdly, to oblige operators to have regard for the Ofcom code of practice when handling complaints.
Amendment 40, tabled by the noble Lords, Lord Clement-Jones, Lord Fox and Lord Blunkett, and the noble Earl, Lord Lytton, would make adherence to Ofcom’s code of practice obligatory and make breaches of that code punishable by a fine of £1 million. As I mentioned in relation to Amendment 39, the Ofcom code of practice is intended to set out guidance. Deciding whether a particular course of action is a breach would be very subjective. The code of practice applies to both operators and landowners, and this amendment does the same. While some operators may have the resources to sustain such fines, very few landowners would.
We all want network rollout to proceed as quickly as possible. However, making compliance with the Ofcom code of practice mandatory and failure to do so subject to a heavy fine means that operators and landowners would be disincentivised from seeking to reach agreements at all. For those who might proceed, one can imagine them doing so as slowly and gingerly as possible to avoid the risk of breaching a code of practice that was never designed to be used in such a way.
Amendment 41, tabled by the noble Lords, Lord Clement-Jones and Lord Fox, and the noble Earl, Lord Lytton, and Amendment 42, tabled by the noble Lord, Lord Fox, set certain requirements regarding complaints handling, such as time limits for responding and compensation payable. As I noted earlier, Clause 69 will require Ofcom to amend its code of practice to include guidance on complaints handling. The Government also intend to make regulations to set out minimum standards for operators’ complaints processes. Both of these could feasibly include elements similar to those proposed in the amendments, and both will be developed through consultation. The Government firmly believe that this is the best way to encourage all parts of the sector to welcome and comply with the new procedure.
Also related to the code of practice is Amendment 42A, tabled by the noble Earl, Lord Lytton. Currently, for a private organisation to seek and exercise rights under the Electronic Communications Code, it must be the subject of a direction from Ofcom that the code applies to it. The first part of the noble Earl’s Amendment 42A would require Ofcom to reconsider each operator’s status as an operator for these purposes every five years, taking into consideration, among other things, complaints made against it for breaches of the code of practice. His amendment would make an operator’s rights to install, maintain and upgrade infrastructure potentially subject to adherence to a code of practice which, as I described just now, would serve only to disincentivise operators from extending their networks swiftly.
The second part of his amendment concerns obligations for operators to report to Ofcom about complaints that they receive, and for Ofcom to publish an annual summary of these reports. These are also the sorts of matters that will be considered when the Government make their regulations to set minimum standards for operators’ codes of practice, and when Ofcom amends its own code of practice.
Amendment 44, tabled by the noble Lords, Lord Fox and Lord Clement-Jones, concerns building safety. The importance of building safety is self-evident, and the Government are committed to doing everything possible to ensure that it is maintained at all times. None the less, the amendment is unnecessary since the code already contains ample protections to ensure that building safety is maintained. Paragraph 23(5) of the code requires that when a court imposes an agreement under part 4, that agreement must include terms for ensuring that the least possible loss and damage is caused in exercise of the rights. Such terms will provide significant building safety protections.
Paragraph 99 of the code makes it clear that the code does not authorise the contravention of laws passed before the code came into force. This means that legislation that was in place before the code came into force, including that on building safety, would not be superseded by measures in the code. Regulation 10 of the Electronic Communications Code (Conditions and Restrictions) Regulations 2003 requires that if an operator receives a report that its apparatus is in a dangerous state, it shall investigate and, if necessary, make the apparatus safe. Therefore, together these provisions already provide robust protections to ensure that building safety is maintained.
The noble Lord, Lord Fox, rightly mentioned Dame Judith Hackitt’s report, which places great importance on the clarity and simplicity of systems to ensure building safety. The Government believe that this amendment would add further unnecessary complexity to the robust protections that already exist in this area. Therefore, Amendment 44 is not needed.
Lord Fox (LD)
As I explained earlier, it is a probing amendment designed not to go into legislation but to get an answer, and the answer was not forthcoming.
First, the code is designed to comply with building safety that has come before it. The Building Safety Act is subsequent to the code so in this respect, that is not a helpful answer. Secondly, there are specific statutory instruments, as a result of the Building Safety Act, which deal with utilities. I asked a very clear question: will the Government be considering this function of digital infrastructure to be a utility? Also, will there be statutory instruments as a result of that Act which cover this issue, or does it need to be covered in another way? It is not covered in the answer the Minister has just given, so this must be specifically opted into the process that the Building Safety Act has ushered in as a result of the Hackitt review.
Lord Parkinson of Whitley Bay (Con)
The Building Safety Act received Royal Assent on 28 April, as the noble Lord knows. It will strengthen oversight and protections for residents in high-rise buildings, it will give a greater say to residents of tall buildings and it will toughen sanctions against those who threaten their safety. Its focus will help owners to manage their buildings in a better way while giving the housebuilding industry the clear and proportionate framework it needs to deliver more and better-quality homes.
Building regulations to be made under the new powers inserted by that Act will provide for more stringent requirements, separate from the Electronic Communications Code, regarding building work on high-rise buildings. People undertaking such work as employees or contractors of companies, including network operators, will have duties to ensure that their work complies with all the relevant building regulations. That will include the provision of information as part of the golden thread which will be handed over to accountable persons on completion of the building work.
I note also that the building regulations already include requirements to install infrastructure to support high-speed electronic communications networks in new buildings. DCMS has consulted on plans further to amend the building regulations to mandate gigabit-ready infrastructure and gigabit-capable connections to new homes. When such work is carried out it is required to meet all relevant requirements of the building regulations, include those for fire safety, so we do think that this is provided for already. I understand that it is a probing amendment; none the less—
Lord Fox (LD)
Without labouring the point tonight, the Minister can perhaps pander to my curiosity and come back with the specific statutory instruments that are expected to implement this. As I understand it, statutory instruments were laid and then withdrawn, and I do not think that they included digital infrastructure in the initial wording. I have a specific concern that there is a slight falling between the cracks. Perhaps the Minister can reassure me with some specifics in a letter.
Lord Parkinson of Whitley Bay (Con)
I am very happy to consult my colleagues at the Department for Levelling Up, Housing and Communities and to provide the letter the noble Lord requires. I invite him now to withdraw his probing amendment, and other noble Lords not to move theirs.
Baroness McIntosh of Pickering (Con)
Did I hear my noble friend correctly regarding the Country Land and Business Association? If so, I can put his mind at rest. It is most definitely in favour of the alternative dispute resolution being made mandatory. He should be aware of a briefing that was sent to us at a much earlier stage. This dates back to January, so I hope it is not still the case:
“Throughout the Government’s consultation on the Bill, the Department of Digital, Culture, Media and Sport has repeatedly refused to meet with our organisations”,
including the CLA and others,
“to hear the views of our members. The Bill was subsequently published without any economic impact assessment.”
I am slightly concerned that my noble friend appears to be unaware of something as fundamental as the difference between a mandatory and a voluntary ADR, and I wanted to correct him on that.
Lord Parkinson of Whitley Bay (Con)
I am sorry to disagree with my noble friend, but the CLA’s response to the consultation opposed compulsory ADR. I would be very happy to speak to her and triple check that with officials afterwards, but we clearly have different understandings of its position. I would be happy to speak to her afterwards to make sure that we can clarify that.
Lord Clement-Jones (LD)
My Lords, we clearly have some clearing up to do between Committee and Report on who said what and who supports what. I too was quite surprised to hear that the CLA would be opposed to compulsory ADR in these circumstances.
I thank noble Lords for their support for the amendments and the Minister for his very detailed reply. I do not think there is any dispute between us. We all want greater connectivity and to see 1-gigabit rollout. The whole question is whether we want greater trust—the word that I think the noble Earl, Lord Lytton, used. Quite frankly, across the Committee there is a view, on the valuation questions, on retrospectivity in the previous group and on the lack of compulsory ADR, that this will lead to more disputes. The Government seem to be going down this track where they plan for there to be more disputes so that more tribunals can be brought into effect and more lawyers will be employed, no doubt with rejoicing in various parts of the City. Everything in these amendments was designed to minimise the number of disputes, and to make sure that we had compulsory ADR and that Ofcom’s code actually bites.
It was very disappointing to hear what the Minister had to say. I hope that, between Committee and Report, he will reflect on some of the points made in this respect and that we can check to see whether landowners are unanimous on this, because using ADR as a filter would be a perfectly acceptable way of doing things. Once certain aspects are established as a matter of law then a dispute can of course be referred, but a mediator can, by agreement of the parties, refer it to a court to be determined. There is no impediment to using ADR as that initial filter, which would mean that there would be many fewer disputes. We would actually have faster rollout as a result and the Bill’s purposes would be entirely achieved.
I am sure that this will be a candidate for Report as well. In the meantime, I beg leave to withdraw the amendment.
The Earl of Lytton
“Reporting process for complaints
(1) The Communications Act 2003 is amended as follows.(2) In section 106 (application of the electronic communications code), after subsection (6) insert—“(6A) A direction has effect for five years, after which any renewal must take into account—(a) the extent to which the operator has complied with the terms of the direction,(b) the number and nature of complaints made against the operator for breaches of the OFCOM code of practice reported under paragraph 103 of the electronic communications code,(c) such other matters as OFCOM deems appropriate in determining whether that operator should benefit from a renewal of that direction, including the general conduct and ethical performance of the operator.”(3) In the electronic communications code, after paragraph 103 insert— “103A_(1) Each operator must report to OFCOM all complaints made to it in respect of alleged breaches of the code of practice under paragraph 103 in sufficient detail to make clear the nature of the complaint.(2) The report must contain an account of the actions taken by the operator in response to those complaints.(3) Reports must be made in each calendar year before 31 January following the end of the reference year or such other annually recurring date as may be determined by OFCOM in any given instance and to like effect.(4) OFCOM must publish an annual summary no later than six months following the end of the reference year setting out the performance in terms of—(a) complaints received,(b) actions taken, and(c) directions considered but not made,in pursuance of the reports from operators.””Member’s explanatory statement
The purpose of this amendment is to ensure that instances of poor behaviour insofar as they exist have a properly formulated reporting process and would thus serve to provide a factual basis; to make Ofcom the relevant repository of the complaints regime; and to ensure that Ofcom draws on this as part of its regulatory functions as well as publishing the relevant information.
The Earl of Lytton (CB)
My Lords, I shall be very brief. I was rather disappointed with the Minister’s response on Ofcom. This looks like minimal regulation—guidance only, no teeth. It is asymmetric with the rights and duties that will now be exercised against site providers. It is effective open season for coercive tactics. There is no government willingness to consider principles of balance or equity. The message that goes out on that will come home to roost later if the Government do not reconsider.
Product Security and Telecommunications Infrastructure Bill
Wednesday 29th June 2022
(1 year, 9 months ago)
Lords ChamberRead Full debate Product Security and Telecommunications Infrastructure Act 2022 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 16-II Second Marshalled list for Committee - (27 Jun 2022)
Lord Bassam of Brighton
“Local authority nominated persons
Within three months beginning with the day on which this Act is passed, the Secretary of State must lay before Parliament a statement outlining the steps Her Majesty's Government intends to take to ensure local authorities—(a) publish the contact details of an officer designated with responsibility for matters pertaining to the exercising of code rights, and(b) publish relevant updates to the information provided under paragraph (a) in a timely manner.”Member’s explanatory statement
This amendment is to probe whether the Government is taking any steps to ensure local authorities make the contact details of relevant officers publicly available, in order to assist telecommunications operators and other interested parties.
Lord Bassam of Brighton (Lab)
My Lords, on behalf of my noble friend Lady Merron, I am moving Amendment 43. This amendment is designed to probe the Government and work out whether they are taking any steps to ensure that local authorities make the contact details of relevant officers publicly available so that telecommunications operators and other interested parties can make relevant inquiries. What stimulated this is the simple fact that telecoms operators have said to us that they regularly encounter difficulties identifying the responsible officer in local authorities. That experience is not universal—some local authorities are very good at making contact details available—but where problems are faced, infrastructure rollout is slowed down considerably. DCMS has acknowledged that different authorities deal with digital infrastructure matters in different ways. This amendment is our way of asking the Minister what steps the Government might consider to ensure greater consistency.
Lord Fox (LD)
Incredibly briefly, I will speak to Amendment 46, which I have signed. The Government’s aim, Her Majesty’s loyal Opposition’s aim, and our aim is to speed up the rollout of infrastructure. This amendment as crafted by the noble Baroness, Lady Merron, and the noble Lord, Lord Bassam, which I was pleased to sign, is a very simple measure to help in that objective. If the Government have not already thought of it, they should embrace it. Whether it requires primary legislation or otherwise, an undertaking from the Dispatch Box that this will be done would be a very good way of speeding up infrastructure implementation.
Lord Sharpe of Epsom (Con)
My Lords, this was a brief debate. I turn first to Amendment 43. I thank the noble Lord, Lord Bassam, and the noble Baroness, Lady Merron, for raising this important subject.
The Government are committed to delivering policy which helps rollout for everyone, and support the entire telecommunications sector in delivering connectivity. Ensuring that local authorities are ready to facilitate rollout as quickly as possible is a key part of this. It will benefit people across the UK in receiving the best possible service and ensure that all operators are able to compete to provide that service.
Local authorities should have autonomy to serve their communities in the way that they see fit. The difficulties faced by urban communities are likely to be very different from those faced in the highlands, for example. The Government believe that local authorities are best placed to decide how to lead and foster digital rollout in their local area.
Mandating local authorities to designate a particular officer responsible for digital connectivity would be too prescriptive. However, we recognise the considerable benefits of having a dedicated lead on digital infrastructure in local and regional authorities, which is why we strongly recommend this approach in our digital connectivity portal, DCMS’s official guidance for local authorities concerning connectivity. The portal provides a huge amount of practical information for local authorities—for instance, on debunking myths around 5G, making assets available for hosting equipment, and the application of the Electronic Communications Code and planning regulations. The digital connectivity portal is a vital enabler for local authorities to facilitate digital infrastructure deployment.
In May last year, the then Minister for Digital Infrastructure also wrote to all chief executives of local authorities to encourage them to appoint a digital champion and to engage with DCMS. I understand that as many as 80 authorities have responded and officials have been able to offer support to them. We have also provided £4 million of funding for the Digital Connectivity Infrastructure Accelerator programme, designed to foster increased collaboration between local authorities and the telecommunications industry. Local authorities can take advantage of these tools and funds to take the steps most appropriate in their area to encourage and facilitate rollout. I hope that gives reassurance on how seriously the Government take local authority engagement, and that the amendments will not be pressed.
If I might anticipate a possible comeback, it sounds like we very much agree with the noble Lord, so to be consistent about my inconsistency, we are not going further and mandating this because the Government seek to balance the national objective of accelerating digital infrastructure rollout with the need to allow local authorities to make the best choices for their communities. Each local authority will have a different approach to its specific local challenges. We feel that further imposition of rules from central government in these spaces risks disrupting environments that are already encouraging investment in infrastructure rollout.
Amendment 46 asks whether the Government intend to introduce a streamlined subsidy scheme for telecommunications infrastructure to reduce administrative burdens on public authorities. To provide some context, the new Subsidy Control Act, which has not yet fully come into force, gives the Government the ability to create streamlined subsidy schemes for all public authorities to use. The streamlined schemes are intended to provide a way of granting subsidies quickly, with little administrative burden, while also providing legal certainty to both the public authority awarding the subsidy and the beneficiary of the subsidy. The Government intend that these should facilitate the award of low-risk and uncontentious subsidies in areas of policy that are strategically important to the United Kingdom. Streamlined subsidy schemes will be considered for categories of subsidy where they will add clarity for public authorities and make the assessment of compliance simpler.
Although the Government currently have no plans to create a streamlined subsidy scheme for the installation of telecommunications infrastructure, we remain committed to delivering and supporting the rollout of such infrastructure as soon as possible. BDUK’s Project Gigabit is delivering gigabit-capable broadband across the UK, working closely with public authorities, including the devolved Administrations and local authorities, to help refine procurement boundaries, validate the market’s local investment plans and stimulate demand for gigabit vouchers.
The work we have undertaken so far has shown that the model is effective at responding to changing market conditions by refining or combining procurement boundaries to reach efficient scale and secure value for money for public subsidy. DCMS will continue to engage and consider how to support public authorities as best as possible to reduce administrative burdens, including on any considerations on subsidy control or future streamlined subsidy schemes.
I hope that explains why the Government consider that a streamlined subsidy scheme for telecoms infrastructure is not needed at this time. However, this will be kept under review. I ask noble Lords not to press their amendments.
Lord Bassam of Brighton (Lab)
My Lords, local government is always a question of discretion and flexibility versus providing a more rigorous approach to getting local authorities to deliver and perform. I accept the parameters of the argument. There is some merit in central government doing more to encourage local authorities to appoint a specific officer to help manage the rollout of digital. I think we are fairly in agreement on that point; 80 authorities out of 360-odd is not a lot but it is progress. Perhaps the Government could, or should, reinvigorate their drive to get authorities to come up with an identified official, particularly for the planning authorities.
I was very interested in what the Minister had to say about the second amendment. It seems that there is the emergence of a plan. I will read very carefully what the noble Lord had to say in Hansard and we will reflect further, but for now, I am more than happy to withdraw our probing amendment.
Baroness Merron
“Review of 2017 revisions to the electronic communications code
(1) Within the period of three months beginning with the day on which this Act is passed, the Secretary of State must undertake a review of the effect of Schedule 1 to the Digital Economy Act 2017 (the electronic communications code).(2) The review under subsection (1) must, in addition to any other matters the Secretary of State deems appropriate, include consideration of—(a) the extent to which the 2017 revisions have secured progress towards Her Majesty's Government's targets relating to telecommunications infrastructure,(b) the impact of the 2017 revisions on rents under tenancies conferring code rights, and(c) the case for re-evaluating the value of rents under tenancies conferring code rights.(3) Upon completion of the review under subsection (1), the Secretary of State must lay a copy of the findings before Parliament.”Member’s explanatory statement
This amendment would require the Secretary of State to undertake a review of the 2017 revisions to the electronic communications code, with a particular emphasis on the effect(s) of the substantially lower rents paid by operators to landowners hosting telecommunications infrastructure.
Baroness Merron (Lab)
My Lords, when the Electronic Communications Code was revised in 2017, the department committed to keeping track of developments and assessing the impact of those changes. I was grateful to the Minister for holding a meeting about the Bill prior to Second Reading, but when I queried the status of that review the response was that the Government had never explicitly committed to making its findings public. This leads me to Amendment 45.
Amendment 45 would require the Secretary of State to undertake a review and lay the findings before Parliament. This could be a new exercise or a matter of pulling together existing information. The amendment calls for a particular focus on issues around rents, but it also includes a request for a judgment on the extent to which the 2017 revisions have accelerated the rollout. This is a theme touched on by the other amendments in this group. I am sure the Government feel that they have a good story to tell, so I invite the Minister to accept the invitation to tell it.
Amendment 48 brings together a number of topics which were lightly touched on earlier today and calls for a comprehensive strategy for resolving issues around landowner rights, competition within the sector and so on. We believe that the department has a number of working groups which are supposed to deal with these issues. It would be helpful if the Minister could tell us when those working groups last met and when they are next due to meet. There is clearly work to be done to speed up the rollout of telecoms infrastructure and to ensure fairness in the system, which has also been a theme throughout the debate today.
We hope that the Government can clearly signpost how they are addressing the various issues raised in these amendments. If not, they are very likely to be revisited on Report. I beg to move.
Lord Clement-Jones (LD)
I shall speak to Amendments 47, 49 and 50, and I support the amendments in this group to which the noble Baroness, Lady Merron, has just spoken: Amendments 45 and 48.
As regards Amendment 47, as I said at Second Reading, we all seem to be trapped in a time loop on telecoms, with continual consultations and changes to the ECC and continual retreat by the Government on their 1 gigabit per second broadband rollout pledge. In the Explanatory Notes, we were at 85% by 2025; this now seems to have shifted to 2026. There has been much government bravado in this area, but it is clear that the much-trumpeted £5 billion announced last year for project gigabit, to bring gigabit coverage to the hardest-to-reach areas, has not yet been fully allocated and that barely a penny has been spent.
Then, we have all the access and evaluation amendments to the Electronic Communications Code and the Digital Economy Act 2017. Changes to the ECC were meant to do the trick; then, the Electronic Communications and Wireless Telegraphy (Amendment) (European Electronic Communications Code and EU Exit) Regulations were heralded as enabling a stronger emphasis on incentivising investment in very high capacity networks, promoting the efficient use of spectrum, ensuring effective consumer protection and engagement and supporting the Government’s digital ambitions and plans to deliver nationwide gigabit-capable connectivity.
Baroness Stowell of Beeston (Con)
My Lords, before I comment on this group, I have it on good authority that tomorrow is my noble friend the Minister’s birthday, so allow me to be the first to wish him a very happy day. I hope that his evening tomorrow is more enjoyable than this evening.
I want to focus my comments on Amendments 45 and 50. Amendment 45 would, as we have already heard, require the economic impact assessment to be carried out. I understand that it was promised by Ministers in 2017, although I know that my noble friend disputes this, or, rather, has a slight variation on what was promised. Amendment 50 would require reporting by the mobile network operators to achieve much-needed transparency.
By the time I went to add my name to Amendment 50, in the name of the noble Lord, Lord Clement-Jones, it was already fully subscribed, but I will happily add my name to it if he brings it back on Report. As my noble friend the Minister may recall from Second Reading, my concern on behalf of site owners is that they were told that a reduction in rental income would be reinvested by the mobile network operators in delivering the rollout. It seems that there remains a lack of confidence on the part of the site owners—we have heard of this already tonight—because they have insufficient evidence to demonstrate how the new code is working. They are expected to engage in negotiations with commercial entities on trust, while fearing that their loss is someone else’s financial gain. Amendment 50 seems the least the Government could agree to when faced with that situation.
I was torn regarding Amendment 45, in the name of the noble Baroness, Lady Merron, on the economic impact assessment, because I am concerned that carrying out a full economic impact assessment could delay rollout. However, I also know that not doing so is fuelling that distrust and sense of unfairness on the part of the site owners. As we have already heard today, the benefit of rollout relies on the willingness of site owners to participate. When we rely on people to succeed, they deserve to be heard and listened to.
My noble friend the Minister said on Second Reading that it is too soon to carry out a full economic impact assessment. I was going to ask whether the Government have any plans to do one at all and, if so, whether he could tell us when, but I was very interested to hear what the noble Baroness, Lady Merron, said about the conversation she had with him before the Bill was introduced. Unfortunately, it was a briefing I was not at. In light of that, if the Government have already done sufficient work to allow them to produce in public an economic impact assessment without delaying anything, that sounds like a sensible way forward. I will be very interested to hear how my noble friend responds to what the noble Baroness, Lady Merron, said.
I clarify that, specifically, I do not support Amendment 48, which the noble Baroness introduced. As I understand it from the Member’s explanatory statement, it seems to enshrine what I might call the Openreach monopoly in multi-dwelling units. It would therefore limit competition in the way that we discussed earlier, even though we were not able to get into a full debate because my noble friend Lord Vaizey was not in the Chamber to move his amendments—noble Lords will know what I am talking about. I look forward to the Minister’s reply.
Lord Northbrook (Con)
My Lords, I support this group. I was initially rather astonished by the Minister’s lame response at Second Reading that the Government will not make public their investigation into the effect of the Digital Economy Act 2017. Investigating the subject further, I read the respected Centre for Economics and Business Research document on the matter. It says that the Government’s electronic communications changes have not delivered a faster 5G rollout, and that it is slower than the pre-2017 status quo. But for the 2017 reforms, it says, 8.2 million more people would have 5G coverage by now than can currently access it. The CEBR says that the proposed changes to the ECC will cost UK GDP £3.5 billion by 2022. Adoption of an alternative code based on Law Society proposals would reverse the losses imposed by the 2017 reforms—so the Government might not want to do this review after all. Could the Minister comment on the CEBR findings?
Amendment 45 particularly appeals, because the review would have to be done quicker than that under Amendment 49, and it is more detailed in subsection (2). Subsections (2)(a), (b) and (c) mention
“the extent to which the 2017 revisions have secured progress towards Her Majesty’s Government’s targets relating to telecommunications infrastructure … the impact of the 2017 revisions on rents under tenancies conferring code rights, and … the case for re-evaluating the value of rents under tenancies conferring code rights.”
I also give my support to Amendment 50.
Lord Fox (LD)
My Lords, if there is an abiding theme in this group, it is transparent reporting and then using the data within those reports to make sensible decisions.
Notwithstanding the Minister’s special day tomorrow, I am guessing that he is quite a lot younger than me, so he might be able to remember his childhood. I can remember a game that we used to play, of running down hills with our eyes closed. This was tremendous fun, until it stopped—and it usually stopped when you fell over or hit something. The argument advanced by the Government is, “We mustn’t do a review. We can’t have data because it’ll upset the market”—in other words, we cannot open our eyes because it will stop us running down the hill fast enough. That is the nature of what we are doing. In order to make sure that we do not fall over and that we are running in the right direction, we need to have our eyes open. In their different ways, these amendments seek to open our eyes to the effect that the Bill and all of this public and private investment will have on the objective that we all share: putting fibre in every home in this country. Without information, and without transparency in that information, we will not know how fast we are going and in which direction.
I care little about whether the Government accept the words in these amendments, but I do care about a Government who have enough sense to get the information, publish it and then act on it.
The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Lord Parkinson of Whitley Bay) (Con)
My Lords, I am particularly grateful to my noble friend Lady Stowell for her early birthday wishes. Finishing Committee a day ahead of schedule is a delightful early present. There are still to hours to go before tomorrow, and I hope that we will rise before noble Lords have to sing “Happy Birthday”.
Amendments 45, 47 and 49 seek to impose duties on the Government to assess and report on various impacts of the 2017 code reforms and, indeed, of this Bill once brought into force. I certainly appreciate the spirit of these amendments, which are designed to ensure that the Government are held to account; the noble Baroness, Lady Merron, referred to the conversations we had right at the beginning of our discussions on the Bill. Noble Lords will know that there are already ways in which some or all of the effects of these amendments can be achieved. For instance, Ofcom publishes its annual Connected Nations report, which it updates a further two times a year; this provides a clear assessment of the progress in both fixed and mobile connectivity. I hope that noble Lords will agree that the independent regulator is well placed to provide information on the progress of gigabit-capable broadband. Moreover, the Government continue to answer questions and provide clarity on all aspects of their work in this area, both in your Lordships’ House and in another place.
Amendment 45, tabled by the noble Baroness, Lady Merron, and the noble Lords, Lord Bassam of Brighton and Lord Blunkett, seeks an assessment of the legislation passed in 2017 to update the code, and particularly the impact of changes to the valuation regime. When the 2017 reforms were introduced, we recognised that the market would need time to adapt and settle. We have engaged with interested parties since the reforms came into force to identify any emerging issues. In our view, there is not yet enough evidence for a properly robust and comprehensive analysis to be made of the impacts that the 2017 reforms have had, of which the valuation framework was only one aspect. That is particularly the case given the impact of the Covid-19 pandemic, which has caused major shifts both in the demands on telecommunications operators and on their ways of working. However, in light of the feedback we have received through our engagement and our public consultation, the Government believe that the changes we are making in the Bill are needed to ensure that the 2017 reforms have their intended effect. That is not to say that we think the 2017 reforms failed—much progress has been made; we simply think that more can and must be done to maximise their impact. Making these changes now through the Bill will help to meet the Government’s 2025 connectivity target for at least 85% of homes and businesses to have access to gigabit broadband.
The noble Baroness, Lady Merron, asked how often our engagement has taken place. The access to land workshops is one part of it; there are in fact three separate groups which have been going for over a year. They met this month and will meet again in July, so we are undertaking that engagement on a regular basis.
Amendment 47, tabled by the noble Lords, Lord Fox and Lord Clement-Jones, asks the Government to review and report on the impact of Part 2 of the Bill against our gigabit delivery targets. Again, I appreciate that noble Lords will be keen to ensure, as they should, that the Government are on track with their commitments. DCMS currently carries out monitoring, and regular updates are published on a quarterly basis by Building Digital UK. That monitoring and reporting will naturally capture and reflect any accelerations that occur after this Bill comes into force.
The most recent Project Gigabit quarterly update highlighted the progress we are making. This includes reaching a milestone of over 100,000 broadband vouchers issued, worth more than £185 million, with 65,000 claimed to date to support households and businesses with the additional costs of securing gigabit-capable connections; launching two new regional procurements in Norfolk and Suffolk and two local supplier procurements in Cornwall, bringing our total live procurements to 10 and extending gigabit-capable connectivity to up to around 380,000 premises; completing over 20 market engagement exercises across the UK further to inform our future procurement pipeline; and launching as an executive agency of DCMS and publishing our first corporate plan setting out our key strategic objectives for 2022-23 and how Building Digital UK will drive the expansion of gigabit connectivity to all parts of the country.
Lord Fox (LD)
Briefly, if it is going so well, why are the Government changing everything? The Minister has just told us how well it is going, and now they are changing everything.
Lord Parkinson of Whitley Bay (Con)
From our engagement, to which I have referred, we believe it is going well and progress has been made, but our engagement with stakeholders suggests that the reforms that we are putting forward through this Bill are needed. We are extending that progress following consultation.
Lord Clement-Jones (LD)
I am sorry to interrupt the Minister. As he knows, certainty is absolutely crucial for business. What is always created when new legislation supersedes old legislation is uncertainty. What confidence can the Minister possibly have that the impact of this Bill will be beneficial to rollout?
Lord Parkinson of Whitley Bay (Con)
With such an accelerating market, thanks to the pro-investment environment that the Government are creating, it is quite challenging to quantify the extent to which progress is attributable to any single piece of legislation in a market that reflects so many factors. That is one reason why we think it would be of limited value.
My noble friend Lord Northbrook asked me to comment on the Centre for Economics and Business Research report on the 2017 reforms. We believe that the CEBR report does not provide a sufficiently rounded picture in its assessment of how the 2017 reforms have affected the pace of telecommunications delivery. The Government, as I have said, acknowledged in 2017 that reductions in payments could make landowners less keen to enter into agreements to host apparatus on their land. We expected an initial slowdown following the implementation of the 2017 reforms while the market adapted to them, but our understanding, informed by our conversations and consultation, is that both new and renewal agreements are now being successfully concluded. For instance, we were informed in January this year that, since 2017, 900 agreements had been renewed and that 83.5% of those agreements were concluded consensually, to give noble Lords some data.
Lord Fox (LD)
By extension, is the Minister expecting a slowdown again as the market gets used to these changes? Clearly, the Government expected a slowdown when they made the last set of changes; are they anticipating a similar slowdown this time?
Lord Parkinson of Whitley Bay (Con)
These changes build on the changes of 2017, so we do not expect there to be such an impact, because there is not such a change for the market.
We think it is too simplistic to attribute the changes in the market since 2017 solely to the valuation framework. The reforms in 2017 also made it easier for operators to share equipment, which will have reduced the demand for new mast sites to be built. Of course, we all hope that there will not be disruptive effects of a pandemic, as we have seen in the years since 2017.
Amendment 49, tabled by the noble Lords, Lord Clement-Jones and Lord Fox, and the noble Earl, Lord Lytton, asks the Government to conduct an implementation review of the Act after it is brought into force. However, we believe including such a requirement in the legislation is not necessary. The Government will of course monitor the effect of this legislation to understand how it is working in practice. Requiring an assessment at a specific time and which is focused on such specific elements would fetter the Government’s ability to judge when a meaningful review of progress can most sensibly be completed and what information it should include. I am happy to reassure my noble friend Lady Stowell that of course we want to monitor the effect of this legislation and to see and understand how it is working in practice.
Amendment 50, tabled by the noble Lords, Lord Clement-Jones and Lord Fox, the noble Earl, Lord Lytton, and the noble Baroness, Lady Merron, seeks to impose duties on telecommunications operators to provide a variety of annual data to Ofcom. It must be remembered that imposing reporting obligations on the industry necessarily diverts resources away from delivering the very targets that the Government have challenged them to deliver and on which noble Lords are rightly pressing us for progress. Any such obligations must therefore be proportionate.
The Communications Act 2003 already gives Ofcom substantial powers to collect and publish data. Procedures are therefore in place to monitor the progress that is being made and to ensure that details of this progress are published. For example, licence obligations for the shared rural network require mobile network operators to report on coverage and the number of new sites built through the programme. Operators also provide Ofcom with information on the geographic availability of coverage to enable consumers to make informed decisions. This is all data that is, or will be, published in Ofcom’s Connected Nations report.
Baroness Merron (Lab)
My Lords, I thank the Minister for his response and assure him that I will not be speaking so long as to take him into his birthday—I am sure that is a great disappointment.
This has been a very helpful debate. I have listened closely to the Minister’s response and will of course be going through Hansard to consider how we might deal with these matters on Report. I am sure the Minister has heard what noble Lords said about the need for transparency and for reporting, not for reporting’s sake and not for transparency’s sake, but to actually support what we are seeking to do through the Bill.
I understand the point the Minister made about the tension between reporting and getting on with the job, but I do not feel that one needs to be at the expense of the other. In fact, they support each other. That is what we need to consider. Having said that, I will not press these amendments at this stage. I thank the Minister and wish him a happy birthday for tomorrow. I beg leave to withdraw my amendment.
Product Security and Telecommunications Infrastructure Bill
Wednesday 12th October 2022
(1 year, 6 months ago)
Lords ChamberRead Full debate Product Security and Telecommunications Infrastructure Act 2022 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 16-R-I Marshalled list for Report - (10 Oct 2022)
18:41 - Division on Amendment 28 - Ayes: 159 / Noes: 151 - Amendment 28 agreed.
Lord Clement-Jones
“(2A) Regulations under this section must, among other things, include security requirements that—(a) prohibit the setting of universal default passwords and the ability to set weak or easily guessable passwords;(b) require the production and maintenance by manufacturers of regular publicly-available reports of security vulnerabilities; (c) ensure the provision of information to the consumer, before the contract for the sale or supply of a relevant connectable product is made, detailing the minimum length of time for which the consumer will receive software or other relevant updates for that product;(d) introduce appropriate minimum periods for the provision of security updates and support, taking into account factors including the reasonable expectations of consumers, the type and purpose of the connectable products concerned and any other relevant considerations.(2B) Regulations under this section must include provision that all security requirements specified in accordance with this Act are included as essential requirements in statutory conformity assessments and marking procedures under the Radio Equipment Regulations 2017 (S.I. 2017/1206), and in any other such assessments and procedures applicable to relevant connectable products.”Member’s explanatory statement
This amendment expressly sets out on the face of the Bill security requirements, which this bill seeks to establish through future regulations, providing specific legal guidance regarding the individual security requirements and obligations on relevant parties.
Lord Clement-Jones (LD)
My Lords, in moving Amendment 1, I shall speak also to Amendment 13. My noble friend Lord Fox will speak to Amendment 3 in the same group. First, I warmly welcome the noble Lord, Lord Kamall, to his new role in DCMS and join others in that welcome. I am sure he has already found the company of those who speak on DCMS matters very congenial, but he will also note that there are a number of all-purpose vehicles here, so he has probably met quite a number of us already.
In Committee, we called for the three security requirements to be set out expressly in Part 1 of the Bill. At the moment they are promised in secondary legislation without any draft being available, as is, I am afraid, the Government’s consistently bad habit. Customers need absolute clarity on the support period that manufacturers will offer so that they are able to make more informed purchasing decisions. I cannot understand why the Minister’s predecessor insisted in Committee that the minimum security requirements should be stated in secondary, not primary, legislation. He said it was important that technology regulation enables the Government to respond to changes in threat and technology and to the regulatory landscape; surely, these are security principles which should endure.
As for mandating minimum security updates for periods for connectable products, the Minister said that there is no consensus among industry experts on how long security updates ought to last. This is foggy thinking—how can the Government not have taken a view? Contrast the approach of the European Union, which has recently published its own equivalent Cyber Resilience Act. Crucially, the EU has imposed a five-year mandatory minimum period in which products must receive security updates. A rigid five-year period is not necessarily desirable, but the commitment to set out in legislation a mandated period in which products receive security support is very welcome. Before Third Reading the Government really should undertake to look closely at the EU proposals and tighten up the Bill. Why should EU consumers get a better deal than UK ones?
As regards Amendment 13, on computer misuse, the noble Lord, Lord Arbuthnot, introduced this amendment in Committee and this one is exactly the same. Under regulations that will be introduced following the passage of the Bill, manufacturers will be required to provide a public point of contact to report vulnerabilities. However, without a statutory defence in the Computer Misuse Act, it is clear that cybersecurity researchers can still face spurious legal action for reporting a vulnerability to a company which can decide on a whim to ignore its vulnerability disclosure policy—a practice known as “liability dumping”. Amendment 13 seeks to ensure that cybersecurity professionals who act in the public interest in relation to testing relevant connectable products can defend themselves from prosecution by the state and from unjust civil litigation.
In Committee, the noble Lord, Lord Parkinson, seemed to say conflicting things. He said that the key thing is to set professional standards to measure the competence and capability of security testers, and that that is why the Government set up the UK Cyber Security Council last year. On the one hand, he said:
“We should be encouraging this rather than creating a route to allow people to sidestep these important issues.”
On the other, he said that the Government are listening to the concerns expressed by the CyberUp campaign and that the Home Secretary had announced a review of the Computer Misuse Act. The Minister said:
“The evidence which is being submitted to the review is being assessed and considered carefully by the Home Office.”—[Official Report, 21/6/22; col. 212.]
Are the Government positive or negative on this? What approach are they taking? We are past the summer now, in any event. Is there any prospect of change to the Act? I beg to move.
Lord Fox (LD)
My Lords, I too welcome the Minister to his new role. I think DCMS will be at least as busy as his previous engagements, so we look forward to seeing him on his feet at the Dispatch Box quite a lot.
The unifying feature of these three amendments, which in policy terms are different, is that we are seeking some clarity. So, I support my noble friend in Amendments 1 and 13, and I rise to speak to Amendment 3 in my name. Given that online marketplaces represent the single most popular point of sale for connected products, these platforms should have responsibilities for the security of the products they are selling. That is what we are seeking clarity on today. If online marketplaces are not held responsible under the Bill, these insecure products will continue to be sold and, in all likelihood, their sale would become more prolific.
One of the last things the noble Lord, Lord Parkinson, did as Minister was to dispatch a letter to me in response to queries such as this raised in Committee about the status of online marketplaces—the fear being that channels such as listings platforms and auction sites such as eBay, Amazon Marketplace and AliExpress might present a loophole. The problem is the lack of clear definition for the various players that are part of the internet value chain and the fact that these players have different degrees of insight or control over what is happening online.
As the Minister will see from his predecessor’s letter, dated 21 September 2022, the department’s stated position for online marketplaces is that,
“businesses need to comply with the security requirements of the product security regime in relation to all new consumer connectable products offered to customers in the UK, including those sold through online marketplaces”.
I would appreciate it if the Minister could confirm this from the Dispatch Box. It is paramount that online marketplaces are given this obligation in the Bill to ensure this security, regardless of whether the seller is a third party. It would help very much if the Minister set out what the Government’s definition of an online marketplace is.
How does the Minister’s department plan to deal with the retailers, which are far away, possibly with their real identity obscured on the online marketplaces? Will the department go to the online marketplace first and how will that process be marshalled? In other words, when a customer has a problem, who do they contact?
Lord Bassam of Brighton (Lab)
My Lords, before I make any comments on this group, I join noble Lords in welcoming the noble Lord to his new position on the Front Bench. I think this Bill is a gentle introduction, and this afternoon will probably give voice to that sentiment. I do welcome him. We have been delighted by the general response we have had from the department on the Bill and the open way in which the noble Lord’s predecessor approached things. I am sure the noble Lord will continue very much in that vein.
This amendment was resisted when we were discussing these matters in Committee, on the basis that minimum requirements will swiftly be set out in regulations. Regulations are not always swift in coming, so perhaps it would be useful for the Minister to remind us how quick that will be. Is he in a position today to commit to a timescale for the full details to be brought forward? This is, after all, an important piece of protective legislation, as noble Lords around the House today have made clear, and, given that it is about protecting customers and consumers, it is important that we have some assurance on that point.
The questions that our noble friends on the Lib Dem Benches have asked are very important ones and they require to be answered. Although the Minister will no doubt resist these amendments, it would help us if we had some further reassurance, perhaps before we get to Third Reading. However, we are grateful for the written assurances that the Minister’s predecessor offered in relation to online marketplaces, and we hope that the current provisions will prove effective. I ask the Minister to outline how the Government would amend those provisions should that need arise in future. The noble Lord, Lord Parkinson, was always willing to provide us with some written responses, and that would probably suffice for us for today’s debate and deliberations. I look forward to hearing what the Minister has to say on this.
The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Lord Kamall) (Con)
My Lords, I thank those noble Lords who gave me a warm welcome—and indeed those who did not. Many noble Lords will know me from my work in the previous department. In the case of the noble Baroness, Lady Merron, who was one of the first to welcome me, it is just a continuation; we seem to be inextricably linked in some way.
I pay tribute to my predecessor, my noble friend Lord Parkinson, for his work as the DCMS Minister. He was widely praised and I think people appreciated his engagement. Those who have engaged with me on previous legislation know that I tend to have a very open policy as well. I am happy to have as many meetings as we need and to facilitate meetings with officials, so please have no fear about asking for those meetings; I will be happy to do that as much as possible.
I turn to Amendment 1, from the noble Lords, Lord Clement-Jones and Lord Fox. I thank them for retabling this amendment, which first appeared in Committee. I also thank them and other noble Lords for meeting me before today.
We think that the threat landscape is ever-changing. Security requirements that are appropriate today could change and differ in the future. Setting that out in primary legislation would limit our ability to respond to threats in the future, impose barriers to innovation and leave unnecessary regulation still on the statute book or unnecessarily complicate the regulatory framework. The vast complexity of the connectable technology landscape means that the definitions used in our security requirements need to be carefully nuanced and readily updatable to avoid imposing unnecessary or inappropriate burdens on industry as those technologies develop. For example, we set out in our 2020 call for reviews that we do not currently consider it appropriate for our intended passport requirements to apply to API queues. Connectable products may be able to access a large number of API interfaces, many of which do not have a material impact on the security of the product. Compelling the Government to extend this password requirement to all APIs key to the product, as this amendment would entail, is exactly the sort of unnecessary industry burden that we are trying to avoid while making sure that we stick to setting out the requirements in regulations.
The Government are unwavering in our commitment to bringing forward security requirements that ban universal default and easily-guessable passwords, mandate the publication of a vulnerability disclosure policy and mandate transparency concerning security update provision. My officials have been working diligently to develop regulations that realise that commitment, and we hope to engage on the regulations in draft by the end of the year. Something that I often to say to my officials, whichever department I have been in, is that there are two phrases that I do not like to see: “in due course” and “at pace”. I like to give an indicative timeframe, so I hope the timeframe of “by the end of the year” gives some assurance.
That is why we do not believe the amendment is necessary, and I hope the noble Lords will consider withdrawing it. On top of that, I am willing to have meetings in future to clarify anything that noble Lords feel has not been clarified.
I turn to Amendment 3, tabled by the same double act of the noble Lords, Lord Fox and Lord Clement-Jones; I think this is going to be a recurring theme in my time as the Minister here. The proposed amendment aims to define online marketplaces as “distributors” for the purposes of the Bill. I assure noble Lords that the Government are on the side of the consumer. That is why the Bill requires all—I repeat, all—UK consumer connectable products to be secure, including those sold via online marketplaces. The Bill will ensure that where online marketplaces manufacture, import or sell products, they bear responsibility for the security of those products. Where this does not happen, I assure noble Lords that they should make no mistake: the regulator will act promptly to address serious risk from insecure products, and work closely with online marketplaces to ensure effective remedy.
We recognise that as well as bringing benefits to consumers e-commerce brings challenges—the double-edged sword of technology. This is one of the reasons why the Government are reviewing the product safety framework. We will publish a consultation later this year—once again, not “in due course” but later this year —with detailed proposals on tackling the availability of unsafe and non-compliant products sold online. Consumers need clarity and better protection, and this will be a priority for our work in this space.
I hope that the ambition of this Bill, its enforcement plan and the outline of further policy engagement will provide some confidence for noble Lords not to press Amendment 3.
Lord Fox (LD)
In reference to the consultation, does the Minister include product safety and product security in the term “unsafe”?
Lord Kamall
We understand that they are two different things, but I am happy to clarify and come back to the noble Lord—I hope to do so before we come to future amendments.
Amendment 3 aims to define what a “distributor” is for the purposes of the PSTI Bill. The Bill requires all UK consumer connectable products to be secure. Where it does not happen, the regulator will act promptly. For e-commerce, given the double-edged sword of technology, reviewing that framework is important. I hope the ambition of the Bill encourages noble Lords to consider not pressing the amendment, but once again I am happy to engage further for clarification and to address any outstanding concerns.
Let me turn to Amendment 13. The Government are listening to and considering concerns that the Computer Misuse Act is constraining activity that would enhance the UK’s cybersecurity. We understand that if you want to test cybersecurity you have to be able to test its breaking point. We are trying to strike the right balance between providing suitable reassurances for well-meaning individuals who want to identify vulnerabilities and not allowing malicious actors to access devices without consent. There are risks here. It is very nuanced, and the Government do not want to rush into legislative change without clear evidence to justify any such change to existing law. As the noble Lord, Lord Clement-Jones, said, the Home Office has been conducting a review of the Act since 2021, and the proposals for statutory defences have been an integral part of this review. I can confirm that a response that sets out how the Government plan to proceed should be published in the coming weeks, and an update will be provided to this House.
I hope that this will provide sufficient assurances on these three amendments, and the noble Lords will consider withdrawing and not pressing their amendments. I repeat the offer of continued engagement and meetings for clarification and to reassure noble Lords.
Lord Clement-Jones (LD)
My Lords, I thank the Minister for those three sets of assurances. I should have thanked him too for meeting with us prior to today.
I am interested in the Minister’s change of language in the department: we have got “by the end of the year” and “in the coming weeks” rather than “in due course”. I think we are making some progress, which is very helpful.
I notice too his unwavering commitment—that was very firm—to publish the regulations by the end of the year. It is grossly unsatisfactory not to have the secondary legislation in draft when the primary legislation contains virtually nothing of the real meat. I am afraid that this Bill is not alone in that respect; it is one of the common complaints that we have whenever legislation comes forward.
As regards the online marketplaces, I am grateful for those assurances, which are accepted and are very much in line with the letter. The new consultation on a new set of regulations about unsafe products is interesting, and I hope the Minister will clarify and give us further and better particulars, and more specifics about what that actually involves.
As regards the Computer Misuse Act—I notice the noble Lord, Lord Arbuthnot, is in his place—it is satisfactory that the Home Office is going to divulge what it really thinks about this. We wait with trepidation for what it is going to say on the subject, given some of the negative responses that Ministers have given previously. We can wait and look forward to that. In the meantime, I beg leave to withdraw Amendment 1.
Lord Kamall
Member’s explanatory statement
This amendment applies the affirmative resolution procedure to regulations under Clause 3.
Lord Kamall (Con)
My Lords, I turn now to Amendments 2, 4 and 5, which seek to implement recommendations set out in the Delegated Powers and Regulatory Reform Committee’s report. I once again thank the committee for its efforts in scrutinising the Bill.
Amendment 2 will ensure that regulations exercising the power in Clause 3 to deem compliance with security requirements will be subject to the affirmative resolution procedure. Amendments 4 and 5 focus on the power in Clause 9 to exempt manufacturers from needing to draw up a statement of compliance. This will also now be subject to the affirmative resolution procedure.
The powers in these clauses are vital to enabling the Government to take swift action to minimise unnecessary industry burdens, including for small and micro businesses, as the technological and regulatory landscapes change. However, I agree that, considering the necessary breadth of these powers, the affirmative resolution procedure provides a more appropriate degree of parliamentary consideration. The Government accept the recommendations in paragraphs 7 and 11 of the committee’s report.
I turn now to Amendments 6 to 12 and Amendment 14, on the enforcing functions. Once again, the Government agree with the recommendations of the committee that Parliament should have the opportunity to scrutinise any decision by the Secretary of State to authorise a person to exercise an enforcement function. These amendments implement that recommendation and will ensure that the Secretary of State is able to authorise another person to exercise an enforcement function only by making regulations subject to the affirmative resolution procedure.
On enforcement, I shall update the House on the progress of appointing an enforcement authority for Part 1 of the Bill. After extensive engagement with suitable bodies and consideration of the existing regulatory landscape, I can confirm our intention to appoint the Office for Product Safety and Standards, or OPSS, as the regime’s regulator. The OPSS oversees product safety legislation and will enforce cybersecurity requirements for electric vehicle smart charge points. We are confident that it has the expertise and capacity needed to effectively enforce this regime. The OPSS is part of the Department for Business, Energy and Industrial Strategy, so it will not be necessary to exercise the power in Clause 27, given the Carltona doctrine. However, should the threat landscape require other persons to exercise enforcement functions in the future, we will exercise this power as necessary.
I turn now to Amendment 15, which removes Clause 57 from the Bill. Clause 57 was intended to address difficulties that had arisen following Upper Tribunal and Court of Appeal decisions on the meaning of “occupier” in paragraph 9 of the Electronic Communications Code. Paragraph 9 provides that only an occupier of the land can confer code rights. The courts’ interpretation of this meant that an operator already in occupation of the land was treated as the occupier for the purposes of paragraph 9.
However, an operator in this situation clearly could not enter into an agreement with itself. The interpretation resulted in some operators with apparatus on land who were unable to renew their agreement using an existing statutory process being stuck, without a process through which they could acquire new rights under the code. In addition, it meant that any operator in occupation of land was unable to seek additional code rights not referred to in their existing agreement in a new, separate agreement while the existing agreement was running its course.
The aim of Clause 57 was to provide a solution to these issues. It was drafted to ensure that all operators in exclusive occupation of the land, who could not make use of a statutory renewal route, could still obtain code rights. It would also assist operators in occupation of land with an existing, ongoing agreement. Where such operators needed additional code rights not already referred to in their current agreement, Clause 57 provided a mechanism to obtain such rights.
As I am sure many noble Lords will be aware, since your Lordships last considered this Bill, the Supreme Court ruled on this issue and overturned the relevant decisions of the Upper Tribunal and Court of Appeal. The Supreme Court held that, for the purposes of paragraph 9 of the code, an operator’s occupation of land is to be disregarded where that operator is seeking code rights in relation to that land.
In practice, this means that where an operator is not able to make use of a statutory route to renew any type of expired or existing agreement, it will be able to seek new code rights. It also means that, where an operator requires additional code rights during the existing term of its agreement, it will be able to seek them. The effect of the judgment is therefore broad and comprehensive; the Government consider that it will ensure that any operator, whatever the nature of its agreement, will have a means through which it can seek new or additional code rights, as the case may be. As a result, the Government no longer consider it necessary to retain Clause 57 in the Bill. Its removal will, in light of the Supreme Court judgment, ensure clarity and certainty for all users of the code. I beg to move Amendment 2.
Lord Fox (LD)
My Lords, Amendments 2, 4 to 12 and 14 very much reflect amendments that I tabled in Committee, and in that regard, I am very pleased to see them reappearing with the Minister’s name on them.
The Minister was mercifully spared one of my longer speeches in Committee where the full set of concerns raised by the Delegated Powers and Regulatory Reform Committee was discussed. For that, he may be truly grateful. We are pleased that these amendments have come back, but I am disappointed that the Minister feels that the Government still need the breadth of powers claimed in Clauses 11, 18, 19, 24 and 25. These are justified, as usual, by the need for flexibility. However, if our working during the Covid crisis showed nothing else, it demonstrated that Parliament could move swiftly and that we were not an impediment to flexible action. I am sure that in his former role the Minister saw us demonstrate that across the Floor many times in dealing with statutory instruments quickly and clearly. It seems that departments have grown very accustomed to using primary legislation to create generously for themselves the ability to act in wide-ranging ways without further or significant recourse to Parliament, and we have to spend an awful lot of time reining that back.
Without sounding too churlish given that the Minister has conceded on a number of things, I think this is a generally avoidable process. I feel sure that the people drafting legislation and the Ministers know what the DPRRC will say about this almost continuous stream of legislation that seems to take power from Parliament, yet each time we do the same dance between the department, the draft, the DPRRC and your Lordships. This is an avoidable process. That said, I thank the Minister for retabling the amendments.
The removal of Clause 57 via Amendment 15 is of course very sensible given the judgment of the Supreme Court, and we support that.
I am pleased that the Minister has clarified which body will be dealing with this in terms of empowerment. On the OPSS, the Minister talked about capacity. This is a big new job for that body, and it needs not just the capacity that it has but future resources. Can the Minister assure your Lordships’ House that that body will have the resources to be able to do what is a really big job? If you look at what is going out on the internet-enabled markets, this is a huge job. Can that body be assured that it will get the resources it needs to ensure that consumers’ security is not jeopardised?
Lord Bassam of Brighton (Lab)
My Lords, I am reflecting on the points that the noble Lord, Lord Fox, made about statutory instruments. I guess that I have heard those arguments over much of the 25 years that I have been here, and I have a lot of sympathy with them. I had less sympathy when we were in government, but I have more sympathy now.
I too am pleased to see these amendments, which in part reflect the debate we had in Committee and the amendments that were moved by our colleagues on the Liberal Democrat Benches. They in turn were of course a reflection of the comments made by the Delegated Powers and Regulatory Reform Committee, and for that reason we welcome their tabling. It ill behoves any Government to ignore the wise words of the DPRRC. Not all the amendments are in response to its report—Amendments 15 to 17 are not—but they are a sensible response and reaction. We would expect the Government to do no less.
As our colleagues on the Lib Dem Benches have said, the removal of Clause 57 comes as the result of the recent Supreme Court ruling on the same topic. We are aware that operators have very much welcomed the clarity offered by that ruling. We welcome the DCMS withdrawing the clause. If it had not, we would have been left in a very confused position.
We welcome these amendments. We are pleased to see the Government being responsive. We are grateful that they have reflected on our earlier debates. With that, we offer our support for these amendments.
Lord Kamall (Con)
I thank noble Lords who have spoken in this debate. The noble Lord, Lord Fox, asked about the OPSS. When we considered the options, we looked at who had the potential capacity and who could bridge the gap in knowledge as quickly as possible.
The vast majority of products in scope of the Bill, such as mobile smart lightbulbs, wearables, kitchen appliances—the internet of things—are also in scope of the product safety legislation. Given that the OPSS has already introduced the Electric Vehicles (Smart Charge Points) Regulations 2021, which impose some security requirements in relation to these products, based on the same international standard that we felt most appropriate, the OPSS’s published strategy aims to bring these product regulations together to protect people and to enable responsible business to thrive. We feel it is effective and we intend to give it the resources it needs.
The noble Lord, Lord Fox, said that he was disappointed. I heard this a number of times when I was Health Minister in your Lordships’ House. I completely understand. The noble Lord, Lord Bassam, said he was less sympathetic when he was in government. I am sympathetic being in government. I am happy to try to push as much as we can. The noble Baroness, Lady Merron, asks me to remember that point, so no doubt it will be used against me one day. This is the nature of parliamentary democracy. I beg to move.
Lord Kamall
“(8A) Regulations under subsection (7) are subject to the affirmative resolution procedure.”Member’s explanatory statement
This amendment applies the affirmative resolution procedure to regulations under subsection (7) of Clause 9.
Member’s explanatory statement
This amendment is consequential on the other Government amendment to Clause 9.
Lord Kamall
Member’s explanatory statement
This amendment has the effect that the power of the Secretary of State to delegate enforcement functions is to be exercised by regulations.
Member’s explanatory statement
This amendment is consequential on the first Government amendment to Clause 27.
Member’s explanatory statement
This amendment is consequential on the first Government amendment to Clause 27.
Member’s explanatory statement
This amendment is consequential on the first Government amendment to Clause 27.
Member’s explanatory statement
This amendment is consequential on the first Government amendment to Clause 27.
Member’s explanatory statement
This amendment is consequential on the first Government amendment to Clause 27.
“(7) Regulations under this section are subject to the affirmative resolution procedure.”Member’s explanatory statement
This amendment follows on from the first Government amendment to Clause 27 and applies the affirmative resolution procedure to regulations under that Clause.
Lord Kamall
Member’s explanatory statement
This amendment is consequential on the first Government amendment to Clause 27.
Lord Kamall
Member’s explanatory statement
This amendment removes Clause 57.
Lord Kamall
“(4) In paragraph 9 (conferral of code rights)—(a) the existing wording becomes sub-paragraph (1), and(b) after that sub-paragraph insert—”Member’s explanatory statement
This amendment is consequential on the Government amendment to leave out Clause 57.
Member’s explanatory statement
This amendment is consequential on the Government amendment to leave out Clause 57.
Lord Harlech
“Power to fly lines from apparatus kept by another operator
(1) Paragraph 74 of the electronic communications code (power to fly lines) is amended as follows.(2) For sub-paragraph (1) substitute—“(1) This paragraph applies where an operator (“the main operator”) keeps electronic communications apparatus on or over any land for the purposes of the main operator’s network.”(3) In sub-paragraph (2)—(a) before “operator” insert “main”, and(b) in paragraph (a), after “apparatus” insert “mentioned in sub- paragraph (1)”.(4) After sub-paragraph (2) insert—“(2A) With the agreement of the main operator, another operator has the right, for the statutory purposes, to install and keep lines which—(a) pass over other land adjacent to, or in the vicinity of, the land on or over which the apparatus mentioned in sub- paragraph (1) is kept,(b) are connected to that apparatus, and(c) are not, at any point where they pass over the other land, less than three metres above the ground or within two metres of any building over which they pass.”(5) In sub-paragraph (3)—(a) for “Sub-paragraph (2) does” substitute “Sub-paragraphs (2) and (2A) do”, and(b) in paragraph (a), for “sub-paragraph (2)” substitute “either of those sub-paragraphs”.(6) After sub-paragraph (3) insert—“(3A) The main operator has the right to upgrade, or carry out works to, the apparatus mentioned in sub-paragraph (1) for the purposes of, or in connection with—(a) the exercise by the main operator of the right conferred by sub-paragraph (2), or(b) the exercise by another operator of the right conferred by sub-paragraph (2A).(3B) With the agreement of the main operator, another operator has the right to upgrade, or carry out works to, the apparatus mentioned in sub-paragraph (1) for the purposes of, or in connection with, the exercise by the other operator of the right conferred by sub-paragraph (2A).(3C) Sub-paragraphs (3A) and (3B) do not authorise an operator to upgrade, or carry out works to, the apparatus mentioned in sub- paragraph (1) if the upgrade or works would—(a) have more than a minimal adverse impact on the appearance of the apparatus,(b) have more than a minimal adverse impact on the land on or over which the apparatus is kept, or(c) cause loss, damage or expense to any person with an interest in the land on or over which the apparatus is kept. (3D) An operator may not enter the land on or over which the apparatus mentioned in sub-paragraph (1) is kept for the purpose of exercising a right conferred by this paragraph without the agreement of the occupier of the land.”(7) In paragraph 77 (when and by whom a right to object under Part 12 of the code can be exercised), in sub-paragraph (3), for “paragraph 74” substitute “paragraph 74(2) or (2A)”.”Member’s explanatory statement
This amendment confers rights on an operator to fly lines over a person’s land from another operator’s apparatus, and enables either operator to upgrade or carry out works to such apparatus for the purpose of exercising a right under paragraph 74 of the code.
Lord Harlech (Con)
My Lords, before I begin to speak to this group, I declare my interest as a land and business owner in Wales with various wayleaves.
In Committee, several of your Lordships expressed support for an amendment to facilitate the more effective use of telegraph poles situated on private land. My noble friend Lord Parkinson of Whitley Bay explained that the Government were looking into this. Subsequent discussions with stakeholders clarified the significant benefits to which changes in this area can lead and the barriers that currently prevent apparatus such as telegraph poles being used to their best effect.
I also thank my noble friend Lady Harding, whose insightful contributions have been of great assistance. Based on these discussions, I am pleased to bring forward Amendment 18 to improve the existing regime which regulates overhead networks contained in Part 11 of the code.
Before turning to the amendment itself, I will explain how Part 11 operates. Part 11 confers rights on operators to keep apparatus on or over land. I will refer to them as main operators. The apparatus with which this part is concerned is typically telegraph poles.
The rights conferred by Part 11 permit these main operators to install and keep lines connected to their poles, which may also pass over neighbouring land. These rights are automatic but subject to specific height restrictions, a notice requirement and a right to object in certain circumstances. However, while the Part 11 regime allows a main operator to fly lines from these poles, it does not permit them to upgrade or carry out works to the poles that may be needed to deliver gigabit-capable connections—for example, running cable wire from the base of the pole to the top. Similarly, the regime does not permit operators other than the main operator to fly their own lines from the poles, creating an obstacle to apparatus sharing.
Amendment 18 is designed to address both gaps. It extends the right in paragraph 74 of the Electronic Communications Code to install and keep lines to operators other than the main operator, provided that the main operator consents to this, subject to the same height restrictions, notice requirement and right to object already in place for the main operator. Sharing the use of these poles will not only speed up the pace of deployment but reduce the need for additional installations and their associated impacts. In addition, the amendment will confer new rights on either operator to upgrade or carry out any other works to the pole so that the lines flown from them can deliver gigabit-capable connections.
Among other things, this change will ensure that, as my noble friend Lady Harding raised at Second Reading, the benefits of other rights that we are introducing to permit greater sharing of underground ducts will extend to overhead networks, by allowing upgraded fibre from such ducts to be rolled up the pole and subsequently strung between the poles to deliver gigabit connections.
The new rights will be subject to specific conditions, intended to protect the interests of individuals affected by them. First, exercise of these rights cannot have more than a minimal adverse impact on the appearance of the pole. Secondly, exercise of these rights cannot have more than a minimal adverse impact on the land on which the pole is kept. Thirdly, these rights cannot be used to carry out works that will cause loss, damage or expense to any person with an interest in the land on which the pole is kept.
In addition to the above, operators entering land on which a pole is kept, to exercise any Part 11 right, must have the occupier’s permission. This does not need to be a written agreement, but it is important that operators obtain consent before entering private land, a point raised by my noble friend Lady Harding in Committee. For main operators, access rights may already be in place but, where they are not and where other operators wish to exercise their new rights, permission to enter the land must be obtained. I beg to move.
Baroness Harding of Winscombe (Con)
My Lords, I declare a new interest as an adviser on the telecoms market to Octopus Ventures. I congratulate my noble friend Lord Harlech on his new role and welcome my noble friend Lord Kamall to a small, select club of people with a shared passion for healthcare and telegraph poles. One can find a number of us in the Chamber today. I thank both my noble friends, and the staff in DCMS, for the extremely constructive way that they have approached this Bill and thank my noble friend Lord Parkinson of Whitley Bay, the predecessor of my noble friend Lord Kamall, for his excellent work on this Bill and more broadly on the DCMS brief.
I am encouraged by this amendment and very grateful for it. It addresses the specific issue that I and others raised in Committee. With that, I also thank my noble friends Lord Vaizey and Lady Stowell, the noble Lords, Lord Fox and Lord Clement-Jones, and the noble Baroness, Lady Merron, for their work. This might be a small and technical amendment, but it has been a real team effort.
I have two clarifying questions. As we discussed in Committee, the devil is in the detail of this, and we share the same goal of being able to lay the fibre cable up the telegraph pole and from one pole to another. Perhaps your Lordships will humour my two very specific questions. First, the amendment gives operators the right to share the existing pole infrastructure
“with the agreement of the main operator.”
Can the Minister explain what proof of permission from a main operator an operator wishing to avail themselves of these provisions will be required to secure? Also, how easy will it be for them to do so? For example, will the normal provisions of PIA be an acceptable route to do that?
Lord Clement-Jones (LD)
My Lords, I too welcome the noble Lord, Lord Harlech, to the salt mines. He knows little yet of how much work is involved in being a Whip; that is all that I can say. I would also like to echo what the noble Baroness, Lady Harding, said about the noble Lord, Lord Parkinson, and his service as DCMS Minister. We all appreciated that very much.
I congratulate the noble Baroness, Lady Harding, who made a very powerful case for her amendment in Committee. I thank the Government for having agreed to that. CityFibre said, in its original briefing, before we had Committee, that this would make a huge impact, particularly in rural areas and in urban Scotland. I have just come back from the US and have seen, in some rural areas such as New Hampshire, the impact of being able to put these superfast fibre-optic cables on telegraph poles. It is really an effective way of delivering superfast broadband to those areas. CityFibre estimated that 1 million such poles exist across the UK, so we are not talking about a small issue.
Finally, the noble Baroness, Lady Harding, as ever, put her finger on the key issues in this particular new clause, about what constitutes agreement between operator and main operator, and operator and landowner. The more clarity that the noble Lord can give us, the better we will be.
Baroness Merron (Lab)
My Lords, first I also welcome the Minister to his place—long may he continue to be as helpful to your Lordships’ House as he is being today. We welcome this government amendment, in the name of the noble Lord, Lord Kamall, whom again I would like to welcome to his new place on the Front Bench. Again, let us look forward to many other sensible government amendments in response to the points that have been raised. I also thank and pay tribute to the efforts of the noble Lord, Lord Parkinson, who helped get us to this stage.
This is very much an issue, as noble Lords will be aware, that attracted cross-industry support, as well as support from all across the House. I pay tribute to the noble Baroness, Lady Harding, for leading the team. In view of her comments about the select group of us who have an interest in health and telegraph poles, perhaps that is an opportunity for an All-Party Parliamentary Group of some select membership.
This amendment does strike the right balance between speeding up fibre rollout and protecting the rights of landowners when upgrading and sharing pre-2017 poles on private land. It is consistent with the amendment that the noble Baroness, Lady Harding, put forward earlier, which we were very pleased to sign up to when it was tabled at Committee stage. So I do welcome this very much from the Government. I do wonder why, given the considerable cross-party consensus in both Houses, it took so long to bring it before us, but we are here today. I too would welcome the clarity about whether verbal agreement from a landowner is indeed sufficient for operators to then undertake necessary works, but with that, this government amendment is one that finds great favour on these Benches.
Lord Harlech (Con)
I thank noble Lords for the opportunity to clarify these points and for their welcome to the Front Bench. If the House could indulge me a little, I have spoken several times in previous debates about the need for better rural connectivity and better broadband, so it is a great pleasure to actually take part in this debate.
In response to my noble friend Lady Harding’s question about proof of permission from a main operator to an additional operator, these new provisions are intended to optimise the use of existing telegraph poles. They explicitly recognise the value for UK connectivity in different operators being able to upgrade and fly wires from each other’s poles as quickly and efficiently as possible. The provision does not require a second operator to secure the main operator’s permission in any particular form. In other words, formality requirements that apply to an agreement under Part 2 of the code do not apply here. We expect the sector to make sensible, efficient administrative arrangements to make clear that the required permission is held. For example, Ofcom’s duct and pole access remedy, which Openreach fulfils through its physical infrastructure access products, requires Openreach to grant other operators access to its ducts and poles. Operators may consider that they can satisfy the condition for the permission of the main operator for paragraph 74 purposes through their usual procedures for securing access through PIA.
I welcome the opportunity to point out that we expect a similarly pragmatic approach to be adopted in relation to new rights relating to underground networks, introduced through Clauses 59 and 60, which are also intended to facilitate faster and more efficient upgrading and sharing. For example, it may be sensible when granting permission for a second operator to share the use of ducts and poles for the main operator to authorise the second operator to carry out the appropriate fixing of notices on its behalf.
Turning to proof of consent, the provision makes clear that the formalities needed for a Part 2 code agreement will not be needed for an operator to secure permission to access land in order to exercise its paragraph 74 rights. A verbal agreement can therefore satisfy the condition, but of course individual operators may wish to have proof of that permission in writing.
Finally, on the occupier giving their consent to a contractor, the occupier of land on which a pole is situated will need to give the operator permission to access the land before the operator exercises its new rights. Industry stakeholders report that obtaining consent to access land to carry out one-off activities can be achieved in significantly less time and at much lower cost than it would take for a formal code agreement to be concluded. Limiting the activities that can be carried out using these rights means there is not the same need for a formal agreement between the operator and the occupier of the land since the terms upon which the rights may be exercised are effectively prescribed by the conditions attached to them. The conditions therefore achieve the dual purpose of protecting the occupier’s interests while removing the need for a formal agreement.
The Earl of Devon
“(4A) Where the assumptions in subsection (4) cause the market value of a landlord’s agreement to decline, the consideration payable under a new tenancy granted by order of the court under this Part may not decline by more than 50% relative to the previous consideration for the period of five years beginning with the day on which the new tenancy is agreed.(4B) Where subsection (4A) applies, the consideration must be reduced in even increments over the course of five years, from the level of the previous consideration to the level of the new court consideration.”
The Earl of Devon (CB)
My Lords, in the absence of my noble friend Lord Lytton, I rise to move Amendment 19, to which I added my name somewhat late. I shall speak also to Amendments 20, 21, 22 and 24 in this group to which I added my name too late to appear on the Marshalled List.
The valuation provisions of the Electronic Communications Code as extended in 2017 are not working well. I think we are all agreed on that. The number of disputes coming before the lands tribunal has increased from approximately 40 to more than 120 already this year, and we have no idea how many additional disputes are taking place in county courts. This is because we have no record. The Government have not consulted on this issue before proposing this far-reaching, retrospective legislation. Indeed, the Bill has been introduced based upon a cacophony of anecdote, conjecture and vested misinformation. It seeks to address the issue not by improving the damaging “no scheme” valuation provisions but by extending their application to approximately 15,000 long-established and well-settled 1954 Act leases. This is a mistake, and it will have a chilling effect on the rollout of digital infrastructure which we will regret.
My noble friend Lord Lytton is, as I said, unfortunately committed elsewhere today and we are therefore deprived of his wisdom and subject matter expertise. I am by no means an adequate substitute and refer your Lordships to his excellent contributions in Committee.
I also remind the House of my own interests, and particularly note that while formerly a property barrister I now work as a technology litigator for a firm that represents telecoms companies as well as site owners. As a Devon resident with poor mobile coverage, I am desperate to see an increase in rural connectivity, with the social and economic benefits that flow therefrom. As a farmer, I am also a site owner of a 1954 Act telecoms lease granted many years ago. This has been bogged down in renewal due entirely to the uncertainties of this legislation. I see this issue therefore from many sides, both personal and professional.
I too welcome the noble Lords, Lord Kamall and Lord Harlech, to their new roles and thank them and the whole Bill team for their time in discussing these issues. It is not ideal to change Ministers half way through the Bill’s progress, and I am disappointed that between Committee and Report we have not been provided with information that was requested. Despite no formal consultation, I understand the Government are confident that the valuation issue is now settling down and that the provisions in the Bill are largely welcomed by stakeholders. We have not seen the information relied on to reach these conclusions because it is cloaked in confidentiality.
From recent discussions, it appears that this evidence has largely been provided by the telecoms mast operators. It is no surprise that they approve of Clauses 61 and 62, as these will allow them to decrease rents payable on historic leases by over 90%, which is a huge cost saving; yet they provide no concurrent obligation on them to pass those savings on to phone companies and their consumers. The result will be that infrastructure companies benefit financially while owners see dramatic rent decreases and are discouraged from letting sites for telecoms masts, and consumers see no financial benefit and, more importantly, no increased coverage. There is a risk that only the corporate middlemen, who often take their profits overseas, will benefit. Surely this cannot be the Government’s intention.
There are other beneficiaries: the professionals, lawyers and surveyors advising those in dispute. Judges dealing with the Electronic Communications Code have criticised the intensity of these disputes and the Institute of Economic Affairs recently noted that since 2017
“there has been much litigation, apparent ill-will, and consequential delays”.
At the 2021 RICS Telecoms Conference it was shown that, while site payments have indeed reduced since 2017, the costs of transacting for sites have more than doubled in that time, meaning that the decrease in site rents has actually resulted in no savings at all for the market.
The 2017 amendments made parties increasingly antagonistic, and the provisions in this Bill will only add to that. The amendments in this group seek to address this. Amendments 20 and 21 from the noble Baroness, Lady McIntosh, seek to remove Clauses 61 and 62 entirely. Given what I have said, this is my preferred solution. Unless and until a proper consultation is undertaken and the impact of the “no scheme” valuation methodology is properly understood, we should not be extending it to 1954 Act leases and undermining long-established landlord and tenant relations. This is government by diktat, riding roughshod over private contractual interests at the behest of undisclosed and well-funded commercial enterprises. It is not in the public interest.
Amendments 19 and 22 propose alternative remedies to ameliorate the problem of dramatic and sudden decreases in rents payable under telecoms leases. As currently drafted, site owners, many of which are community centres, charities, sports clubs, farmers and small businesses, will see a collapse in rental income that could be very damaging. Amendment 19 proposes that this decrease be limited to 50% of the current rent within the first five years, while Amendment 22 requires that the rent is decreased in even increments during that same period. Neither amendment seeks to prevent the “no scheme” valuation methodology that the Government prefer, they simply soften the impacts to protect the interests of the individual landlord. These are modest and, I suggest, sensible proposals and they should be adopted if Clauses 61 and 62 are to remain.
Meanwhile, Amendment 24 seeks to avoid the invidious prospect of backdated rent decreases which may result in landlords having to pay substantial sums back to telecoms mast operators under interim orders applicable to 1954 Act tenancies. As currently drafted, rent decreases take effect from the date the notice is served, not from the date the new lower rent is determined. A contentious lease renewal can take many years to resolve and, as we have heard, the decreases in rent can be more than 90%. This means that a poor landlord may be obliged to pay back many thousands of pounds in rent previously received, which may not be possible if that money has been budgeted for and spent. This could drive small enterprises and individuals into bankruptcy. Is this what the Government intend? Amendment 24 would ensure that this will not happen, and that the newly decreased rent is not backdated but payable from the date of the court order. Backdating the rent only adds insult to injury.
I urge the House to consider and support these important amendments. If the Bill is unamended, no landowner will welcome telecoms infrastructure and our digital rollout will fail. I beg to move.
Baroness McIntosh of Pickering (Con)
My Lords, I thank the noble Earl, Lord Devon, for moving Amendment 19. I will speak to Amendment 20 in my name and that of the noble Earls, Lord Lytton and Lord Devon, and Amendment 21 in my name and that of the noble Earl, Lord Devon.
At the outset I welcome my noble friends Lord Kamall and Lord Harlech to their new positions. At the same time I thank my noble friend’s predecessor, my noble friend Lord Parkinson, for all his efforts and engagement with us at previous stages of the Bill. I wish him well as a Back-Bencher in this place; I think we probably have more fun.
I remind my noble friend Lord Kamall that in his previous life he was well aware of my interests in rural affairs, which colour my approach to the Bill. I would like to see improvements to broadband and mobile phone connectivity in rural areas, but I cannot take the fact that telephone poles and other infrastructure should be taken for granted, as appears to be the case in the Bill. That is my reason for presenting and speaking to Amendments 20 and 21, with the desired effect that they will remove provisions currently in the Bill that give operators the ability to calculate rent based on land value rather than market value when renewing tenancies to host digital infrastructure on private land. I believe that all interested parties, whether the operators, the landowners or those of us who use these infrastructure facilities, must be treated fairly, in the way that the landowners are currently compensated.
I assure my noble friend that good connectivity is key to increased productivity and growth for farms and the rural economy. I hope he will give a commitment today, just as the Prime Minister has said many times since she took her new position that we are signed up to productivity and growth, that this will apply as much to the rural economy, farms and others who have business in rural areas as it does to more industrial areas.
I confess that I am not a landowner or in receipt of a wayleave for a telegraph pole, although not so long ago I received a small payment, shared with my brother, who is now the sole recipient. I hope that these amendments can achieve a better balance between the rights of the operators, the landowners and those who use the infrastructure.
I regret that the 2017 Electronic Communications Code has changed the way in which the new sites are valued from market value to land value. I make a plea to my noble friend that we proceed under the Landlord and Tenant Act 1954 rather than the 2017 code, given that, as I mentioned earlier—and as the noble Earl, Lord Devon, so eloquently described—fewer new sites have been agreed over the last few years in which we have proceeded under the code.
I echo and strongly associate myself with the remarks of the noble Earl, Lord Devon, about this not being part of the original consultation under the Bill. I hope that my noble friend Lord Kamall will confirm that and say why it was not and yet we now have these two clauses in the Bill, because I have never quite understood why that was the case. If you are not going to give the landowners and other interested parties—or stakeholders, as we now call them—the right to comment, I do not see why they should be presented with a fait accompli. But, even more than that, the Law Commission strongly concluded that it was against the introduction of these provisions into the Bill because it thought that they would lead to fewer sites and fewer renewals of sites, which is precisely the position in which we find ourselves today.
Why is this going against the Government’s previous stated intention of allowing a transition for existing agreements into the ECC, or the code? It also means that the code valuation method will be applied retrospectively. I understood that we normally do not apply legislation retrospectively in this place, and I would like to understand the reasons for seeking to do so in relation to Clauses 61 and 62.
The Government’s own impact assessment of the 2017 reform concluded that rents would drop by 40% over a 20-year period. It was therefore not anticipated that levels would fall by so much and so quickly. However, the noble Earl, Lord Devon, clearly set out that, in some cases, rents have dropped by as much as 90%, which is inexplicable and unacceptable. Clauses 61 and 62 would simply exacerbate the situation and leave some businesses and individuals facing a cliff edge, without any time to adjust in what we understood would be a transition period. I repeat that this was not part of the 2021 consultation, and, in my view, it will no doubt be entirely counterproductive, with the effect of further disruption.
Given that we now know that the 2017 code has resulted in fewer new sites being agreed, due to the much lower rents being paid by operators, I urge the House to remove Clauses 61 and 62. I urge the Government to accept that they should proceed under the previous legislation, the Landlord and Tenant Act 1954. I hope that the House will look favourably on my Amendments 20 and 21.
Lord Cromwell (CB)
My Lords, in his opening remarks, the Minister, the noble Lord, Lord Kamall, said that some of us might not welcome him here. I am sure that that is not correct; I am sure that we all welcome him and his colleague, the noble Lord, Lord Harlech. I certainly do.
First, I apologise to the House for not participating in the earlier stages of the Bill due to circumstances elsewhere—but I have read and watched them. Secondly, I should declare that I am an unpaid director of a small farming company that has a single telecoms mast on its premises. Normally, I would not speak on a subject when I have an interest even as modest as this, and I know that a number of other noble Lords have not participated and remained silent for the same reason. However, having seen how one-sided and damaging this part of the Bill is in so many ways, including to the Government’s own objectives for rollout, and having seen how resistant the Government have apparently been to efforts to address its faults, I feel that I must speak out critically but constructively. I support all the amendments in this group but, to my mind, Amendments 20 and 21, which would leave out Clauses 61 and 62, are the starting point, with the other amendments seeking to achieve damage limitation.
There are two parties to any agreement on a site: the site owners and those who seek to occupy and operate them. Not only is this Bill crudely unjust in its valuation basis but it is already creating a breakdown of trust and co-operation between the parties. It will create and intensify conflict between them, leading to a delay in rollout—the direct opposite of what the Government intend. We, therefore, need to find a better middle ground between these two parties.
As has already been mentioned, Clauses 61and 62 would have land valued as if it were not to be used for a mast site. This is as bizarre as anything in a Gogol short story. Who would, for example, value a building plot, knowing that it is imminently going to be built on, on the basis that it would never be built on? I am sure that HMRC would never countenance that approach for tax purposes.
Amendments 20 and 21 reflect the need to remove these counterproductive and illogical clauses—but how did we get here? We need to be fair about this: previously, some owners, due to the rules of supply and demand, had a bargaining position that may have enabled rents that are higher than they would otherwise have accepted. In seeking to accelerate rollout, the Government have decided to rebalance things—so far so good. However, this Bill would swing the pendulum to completely the opposite extreme. It would strip the site owners of their legally long-established property rights—something I find astonishing from a Conservative Government—and deny small enterprises, sports clubs, hospitals and others of a vital source of income. This was raised by Labour at an earlier Bill stage, and I was astonished when the then Minister—so rightly admired in other respects, as many have said—pretty glibly told them in his reply that they should simply seek other sources of income.
These clauses will take a situation where sites were coming forward voluntarily and replace it with one of zero trust—in either the operating companies or the Government—whereby both potential and actual site owners will seek to avoid, and indeed resist, providing sites for this use. It will enable the operating and mast companies to pay peppercorn rents and thereby enrich themselves and their shareholders—with no evidence of trickle down, or even dribble down, to consumers.
When I see all this, combined with powers elsewhere in the Bill for operators to reclaim rents retrospectively from site owners—tearing up existing contracts freely agreed and entered into by professional commercial companies and site owners—I can only gasp in disbelief. So I have been asking myself how on earth we got into this situation and what could explain it. I have been urged by some of my colleagues to be temperate in my remarks, so I will not indulge in conspiracy theories, but we need to focus on encouraging sites to come forward to achieve faster rollout—something which I think we are all agreed on.
Let me therefore offer a valuation solution that is indeed in the middle ground between the past and the extortionate future foreseen in this Bill. There is a tried and tested middle ground that uses a practical and already widely accepted approach used to set rents and values for other commercial sites. I ask the House’s indulgence in describing this very briefly and simply with an illustration from another commercial activity: mineral quarrying. Where a quarry operator wants to lease land to set up a processing plant, there is a well-established valuation method whereby the database of local industrial rents is assessed and a percentage of that rent—say 70%—is paid to the site owner. There are clear advantages here. First, land agents and valuers on both sides are well accustomed to such discussions, which can therefore be swift. In the very unlikely event that they do not reach agreement, binding expert determination is available as standard. Secondly, it is based on a well-established dataset that reflects regional differences and will adjust over time to reflect the regional economic context. Thirdly, there are suitably qualified practitioners on hand across the country to carry it out.
Crucially, this would produce a balanced result and would get there using a transparent, objective and logical method. To be clear, the resulting rents would be set below what some site owners currently receive, but not as counterproductively or extortionately low as the unjust free hand that the Bill, as currently drafted, would give commercial operators. I therefore urge the Minister and the Government to think again.
Lord Northbrook (Con)
My Lords, I declare my interests as a site owner and NFU member. I agree with every word that the noble Lord, Lord Cromwell, has said. I am astonished by this piece of legislation from a Conservative Government.
Amendments 19 and 22 aim to address the issue of valuation, one of the most significant concerns with the code. As other noble Lords have said, the “no scheme” valuation methodology introduced into the code in 2017 prevents courts taking into account sites’ potential use as provision for an electronic communications network. This allows operators to drive down the rents they pay to site providers, often by over 90%.
I was involved in negotiations for one of the two masts on my land and was lucky that I had only a 70% reduction. It was not so important for me, but this forces small businesses, sports clubs, community groups and hospitals to accept derisory amounts for the use of their land. It also reduces the motivation for operators to pursue consensual deal-making, in turn slowing down rollout as they can get greater discounts through the courts. As noble Lords have said, it also reduces the incentives for landowners to offer sites for masts in the first place—not an advantageous outcome for the Government’s mobile connectivity.
Amendments 20 and 21 are rather more impactful than Amendments 19 and 22, in that they would stop the Government’s “no scheme” valuation regime being extended to cover the roughly 15,000 telecoms sites governed by the Landlord and Tenant Act 1954 and the Business Tenancies (Northern Ireland) Order 1996. This would have the effect of ensuring that the rent on these 15,000 sites would continue to be set at market value, as is the case today. Importantly, this would prevent them being subject to the issues that have plagued sites governed by the code ever since the 2017 reforms.
Although I suspect the Minister will be opposed to these amendments, they are fully aligned with the Government’s repeated claim that this Bill does not address issues of valuation. How can the Government possibly continue to make that claim if, by their own admission, 15,000 new sites will have their rental value slashed from the moment this legislation comes into force? We are simply trying to ensure that the legislation delivers the Government’s stated policy intent. Parties on all sides of the debate have acknowledged the significant challenges created by the 2017 reforms to the code. It is only right that these changes are not imported wholesale into the Landlord and Tenant Act 1954 and the Business Tenancies (Northern Ireland) Order 1996, when there is no evidence whatever that the 2017 reforms have delivered the Government’s intentions.
I was very grateful, together with the noble Earl, Lord Devon, to the Minister for the meeting yesterday, but one problem seems to be that information provided by the operators, for confidentiality reasons maybe, has not been disclosed to us even though we have asked for it; that is a very frustrating thing. I am also very sad that His Majesty’s Government have paid no attention to influential, independent reports from the IEA and the Centre for Economics and Business Research stating the problems with this legislation. The CEBR report says—
“The government’s ECC changes have not delivered a faster 5G rollout, and it is slower than the pre-2017 status quo. The new proposals do not remedy this. But for the 2017 reforms, 8.2m more people would have had 5G coverage by now than currently can access it. This will persist in the long-term: national 5G coverage by 2022 will be worse than if there had been no changes to the ECC at all. The government’s proposed changes to the ECC will cost UK GDP £3.5bn by 2022, and fail to bring 5G coverage to where it would have been pre-2017.”
The Government want more growth; this legislation does not seem a good way to provide it.
Lord Clement-Jones (LD)
My Lords, on these Benches we strongly support these amendments which support changes to the current valuation basis, the flaws in which were so expertly explained by the noble Earl, Lord Lytton, in Committee, and so clearly today by the noble Earl, Lord Devon, the noble Baroness, Lady McIntosh of Pickering, and the noble Lords, Lord Cromwell and Lord Northbrook. As the noble Earl, Lord Devon, has said, the current provisions are a mistake—astonishing from a Conservative Government, as the noble Lord, Lord Cromwell, said—and the motives of many of us were reflected by what the noble Lord, Lord Northbrook, said: that what we are trying to do is to ensure that the ECC delivers the stated policy of the Government. All of us are behind the 1 gigabit policy, as delayed and slow as it may be, but we want it to be delivered. It appears that the Government, as the noble Lord, Lord Northbrook, also said, are completely ignoring the reports of the IEA, the CEBR and others who have pointed out that precisely these changes in valuation in the 2017 changes to the code have not, and those proposed will not, ensured faster rollout than the original valuation methodology.
Under changes to the code made in 2017, a “no scheme” valuation methodology for valuing land was introduced, as we have heard, and this allowed site providers to recover only the raw value of their land, rather than receiving a market price. As the noble Baroness, Lady McIntosh, has highlighted, operators have been able to use the changes made to the ECC to drive down the rents they pay to site providers, often to peppercorn rents. She also highlighted the impact assessment made by the Government which said that rent reductions should be no more than an absolute maximum of 40%. But of course, we know from the data quoted by operators that reductions have at best averaged 63%, a huge sum for many of the people who rent their land for use for telecoms infrastructure, and in many cases as we have heard today, reductions have been much higher—in the region of 90%. As I mentioned in Committee, the Protect and Connect campaign produced some powerful case studies, such as the Fox Lane Sports & Social Club in Leyland, Lancashire, to support this; and we agree that the right solution to get this market moving again is to reinstate a fair valuation mechanism, such as the one envisaged by the Law Commission.
In addition, in principle we entirely support the amendment spoken to today by the noble Baroness, Lady McIntosh, and the noble Earl, Lord Devon, designed to cap cuts to site provider incomes and prevent retrospective lowering of rents. I really do hope that the Government will give these amendments careful consideration, supported as they are by a very strong cross-party coalition—and indeed a country-wide campaign.
Baroness Merron (Lab)
My Lords, the issues addressed in this group of amendments have certainly exercised your Lordships’ House throughout the course of the Bill and have drawn much attention outside this House as well. I am grateful to the noble Earl, Lord Devon, and the noble Baroness, Lady McIntosh, for introducing their amendments with such clarity. I believe that all the amendments in this group seek to bring fairness, balance and efficiency to the task before us. The noble Lords, Lord Cromwell and Lord Northbrook, also spoke to these points, again with great clarity, in illustrating the challenge before us.
As we have outlined at previous stages, we are sympathetic to the concerns around the changes to the valuation of sites that host telecoms infrastructure. A point I have always found somewhat perplexing—I hope the Minister can assist on this—is that industry itself admits that reductions to rents have on average been far above the 40% promised by government, yet the 40% figure continues to be put before us. I would welcome some insight into that from the Minister.
We understand the importance of getting infrastructure rolled out swiftly to improve the availability of 5G and high-speed broadband and, as I have said, we all understand that a balance has to be struck. The amendments in this group would make a number of changes to the current regime to try to redress the loss of landowner rights. I certainly understand the motivation for these changes but suggest to your Lordships’ House that an independent review of the whole system would perhaps offer a more useful way forward. That is something we will return to in a later group of amendments.
Delivery, balance and fairness are key here. I hope that the Minister will take these points on board and find us a way forward, because that is what we are seeking.
Lord Kamall (Con)
I start by thanking the noble Earl, Lord Devon, for introducing some of the amendments, as well as my noble friend Lady McIntosh —indeed, I thank all noble Lords who spoke in this debate. It is quite clear that very strong views are held on this subject, which I know was the subject of much debate when my predecessor was in this role. I will try to address the issues specifically. That may take a bit of time but I hope noble Lords will bear with me.
Amendments 20 and 21 would remove Clauses 61 and 62 from the Bill. These clauses will extend the “no network” valuation model contained in paragraph 24 of the code to the Landlord and Tenant Act 1954 and the Business Tenancies (Northern Ireland) Order 1996. My predecessor, my noble friend Lord Parkinson of Whitley Bay, explained in Committee that some agreements to which the code applies are required to be renewed under these pieces of legislation, rather than under Part 5 of the code. When this occurs, the rent is calculated on a market value basis, rather than using the code’s “no network” valuation. Clauses 61 and 62 will ensure that, where agreements conferring code rights regulated by either of those statutory frameworks come to an end, the rental terms of any renewal agreement will more closely reflect those that apply to new agreements and those agreements renewed using Part 5 of the code.
Whatever view noble Lords take of the valuation framework, it remains the case that the purpose of Clauses 61 and 62 is to ensure that the same approach applies to all agreements conferring code rights throughout the UK. This will reduce disparities in deployment costs in different jurisdictions which could otherwise contribute to a digital divide.
I am afraid the Government cannot accept the noble Baroness’s amendments as they would serve only to entrench the inconsistencies in the different renewal frameworks. In fact, removing Clauses 61 and 62 but leaving Clauses 63 and 64 in place would exacerbate the situation. Clauses 63 and 64 provide that the right to recover compensation contained in paragraph 25 of the code, which is a key element of the overall valuation framework, is also mirrored in the 1954 Act and the 1996 order. Neither the Act nor the order currently makes distinct provision to compensate landowners for loss and damage arising from the exercise of code rights. Compensation for potential loss and damage is normally rolled up in any calculation of market value.
Removing Clauses 61 and 62 while leaving Clauses 63 and 64 in place would enable those landowners to recover additional amounts in compensation, which may have already been accounted for in the amount of rent, as well as higher rents. The Government believe that leaving legislation in place that allows some landowners to receive higher rental payments for longer is fundamentally unfair. It would also mean that network costs remained unacceptably high, penalising swathes of consumers and businesses who may face price increases for digital services or wait longer for the higher-quality reliable connections they want to see, particularly in rural areas, where deployment is frequently simply not cost-effective.
Baroness McIntosh of Pickering (Con)
I am following very carefully what my noble friend has said. He just said that responses to the consultation were received. The offending articles were not part of that consultation, so the Government have not actually heard any responses from the interested parties on that point.
On his point about Clauses 63 and 64 remaining part of the Bill, which is why we cannot remove Clauses 61 and 62, my reading of Clause 63 in particular relates to new tenancies. My noble friend has not responded to the points raised by both the noble Earl, Lord Devon, and me about existing agreements that are going to be renewed, rather than new agreements.
There are two points to which I would like the Minister to respond: first, this issue was not part of the consultation so the Government have not received any responses on it. Secondly, what happens to existing agreements being renewed under Clause 63? Are they to be slashed by 90% without any recourse?
Lord Kamall (Con)
I thank my noble friend Lady McIntosh for those questions. I will come to them—I am sorry, maybe I am not going as fast as noble Lords would hope me to, but I wanted to consider carefully the various points made by noble Lords, and I still have specific responses to come to. If noble Lords will allow me to talk to Amendment 24, I will come back to the contributions made during the debate.
Amendment 24, tabled by the noble Earl, Lord Lytton, but spoken to by the noble Earl, Lord Devon, looks to prevent interim rent being backdated where an agreement is renewed under the 1954 Act, and is similar to the amendment tabled by the noble Earl in Committee. One of the fundamental aims of the Bill is to ensure that the approach to renewing agreements across part 5 of the code, the 1954 Act and the 1996 order is as consistent as possible. As my noble friend Lord Sharpe said in Committee, this form of amendment serves only to increase inconsistency. It would create inconsistency within the 1954 Act itself, preventing backdated payments of interim rent where a site provider gives notice under Section 25 of the Act, yet would allow interim rent to be backdated where an operator serves notice under Section 26 of the Act.
The ability to backdate rent is not a new concept. It is not being introduced into the 1954 Act by this Bill, nor was it introduced in the 2017 reforms. When parties entered into these agreements, there was always a risk that the market could change between the time it was entered into and the time of its renewal and that the amount of rent could decrease. However, the Government have listened to stakeholders representing the interests of site providers and understand the potential consequences of applying the code valuation framework to the 1954 Act and the 1996 order agreements in relation to backdated interim rent. This is something that is being carefully considered in developing an implementation strategy, including such transitional provisions as may be needed to bring the different provisions of the Bill into force in a timely and responsible manner.
Let me now talk to some of the points made by noble Lords. A number of noble Lords said that the evaluation regime is not fair. The Government see the pricing regime as being closely aligned to utilities such as water, electricity and gas. The Government maintain that this the correct position. Landowners should still receive fair payments that take into account, among other things, alternative uses that the land may have and any losses or damages that may be incurred.
It should be noted that, in many of the examples of unfair rent or large percentage reductions that have been raised by campaign groups, reference is made only to the rental payment itself. These examples fail to take into account any compensation payments which the landowner may have received under the agreement. They may also have failed to take into account any capital payment which the landowner may have received upfront as part of the terms of the agreement. There have been some paid studies of raised examples of poor negotiations or rent reductions. It would not be appropriate for me to comment on ongoing negotiations in specific terms, but the Government say generally that rent is often only one part of the overall financial terms agreed, as I said earlier. As regards behaviour during negotiations and the respective bargaining positions of the parties, the Government have recognised site provider concerns and are introducing measures to encourage greater collaboration.
The noble Earl, Lord Devon, and other noble Lords mentioned the reluctance to enter into new agreements. We have been told that the amounts offered by some operators are so drastically reduced that landowners are less willing to come forward and allow their land to be used. However, I have been advised that, so far in 2022, at least 107 agreements have been reached in relation to new sites, with heads of terms agreed on a further 66 sites. This is in addition to 533 renewal agreements which have been concluded this year, along with heads of terms agreed on a further 119 renewals. The Government maintain that the 2017 valuation provision created the right balance, and they are aware that the valuation framework would have resulted in some reductions, as I said earlier.
I think it was the noble Earl, Lord Devon, who talked about middlemen who take profits overseas. The benefits of independent infrastructure provision are globally acknowledged. An Ernst & Young report in February this year, produced by a European-wide infrastructure association, highlighted the many benefits which independent infrastructure providers bring to both the industry and consumers. It talked about sharing towers and costs and enabling cheaper rollout. The report concluded that the scope of independent infrastructure providers overcharging for the use of the infrastructure would be constrained by continued competition between tower companies.
Government policy introduced in the 2017 valuation framework to reflect the public interest in digital infrastructure and encourage investment while driving costs down remained unaltered. That is not to say that we approached our pre-consultation engagement with a closed mind, but that engagement with stakeholders did not indicate that the valuation framework is incapable of delivering both our policy objectives and fairer outcomes for landowners. It did highlight difficulties with communication and negotiations, hindering the framework from working as intended. We hope that the Bill and the non-legislative initiatives we are taking forward will tackle this.
There have been some claims that rents would reduce by more than 40%. In the impact assessments in 2016, the Government specifically said that they did not know what effect the reforms would have on rental payments. There is reference in the impact assessment to independent analysis which predicted a 40% decrease. Some lobby groups have asserted that this figure demonstrates that the Government committed that rent reductions would be no more than 40%. The Government maintain that this was not a government commitment, but it did appear in the impact assessment and we expected the market to adjust.
As I said, rent is only one element and other variations occur in practice. We understand the various things that have been said by various companies. A number of noble Lords reflected on the CEBR research. The Government have problems with the report from the CEBR. First, the picture the report paints of government policy is incomplete and partial. Secondly, the alternative changes the report proposes do not account for key challenges, which in our view means that they would not deliver the results the CEBR suggests. The report focuses excessively on the prospective interests of landowners and we are trying to get the right balance.
On the Institute of Economic Affairs, I should be very clear and have to declare my interests. I am the former academic and research director of the institute, so I would not wish to comment one way or the other on its report, but I know that it used as its source some of the work from the CEBR’s and other reports. My successor, Dr James Forder, is an excellent analyst and economist. Indeed, he is the economics tutor at Balliol College in Oxford—I digress.
I am afraid that, while I completely understand the arguments—I have had conversations with a number of noble Lords and am very grateful to those who have come to meetings and heard the Government’s perspective—we cannot accept these amendments. Perhaps in vain, or in aspiration, I ask noble Lords to consider not pressing them.
Lord Cromwell (CB)
Before the Minister sits down, I make the point that, in my experience, the rent is the key factor, certainly over a period of time. Frequently no or minor payments are made, and it is simply that an agreement is struck for the rent. Trying to diminish the importance of the rent in the way the Minister has is something I find hard to swallow.
The Minister prays in aid consistency. If the valuation method is unfair, what this Bill does is ensure that a consistent unfairness is imposed, so I find that slightly tautologous. Does the Minister accept, agree and support the idea that a valuation based on a site that is known to be imminently the site of a mast should be done as if there was no mast site?
Lord Kamall (Con)
I thank the noble Lord for his question. I am interested in the point he makes about the amount or proportion of rent in the overall agreement. Whatever happens in this debate, I would be very happy to continue that conversation with him and my officials to make sure that we can close any gap in understanding.
The noble Lord will recognise that I have to defend the Government’s position as the Minister, so I continue to say that the Government cannot accept these amendments, but we hope, perhaps vainly, that the noble Lords who tabled them will consider not pressing them.
The Earl of Devon (CB)
I thank noble Lords for the unified support from across the House. It came from all Benches, it seems, other than perhaps one—and even that Bench seemed to be wavering a little at the end there.
I am surprised that a Conservative Government extolling growth want to undermine property rights and cost the economy billions of dollars. There is no explanation given other than the whispers of these undisclosed stakeholders. The Minister kindly explained that he has been listening and that there have been discussions and workshops, but we simply have not seen what those were and what the stakeholders said. I have to ask where they are holding the stake to convince the Government to persevere despite your Lordships’ consistent opposition to these provisions.
I note the Minister’s desire for fairness. As the noble Lord, Lord Cromwell, has just noted, it seems that the Government want this provision to be equally unfair to every single site owner across the country.
The Minister also noted that the Government are trying to avoid costs going up. However, as we have seen, and as the RICS report stated, costs have risen exponentially as a result of the 2017 amendments, and here we are, doubling down on those, therefore only to increase costs further.
I think I heard the Minister accept that it will impact landowners’ desire to provide sites. I think he also noted that when you enter a lease you do so with the knowledge that the market might change and therefore the rent might change. I do not think that anyone entering a 1954 Act lease in 2015 would have expected that the rent would decrease by over 90% by 2022. I am sorry, but if the Minister suggests that that was a real expectation of the parties, it is simply not true.
Lord Sharpe of Epsom
“Refusal of application for code rights on grounds of national security etc
(1) The electronic communications code is amended as follows.(2) After paragraph 27 insert—“Refusal of application on grounds of national security etc27ZZA_(1) This paragraph applies where an operator applies to the court for an order under paragraph 20, 26 or 27 which would impose an agreement between the operator and another person.(2) The court must refuse the application if the Secretary of State gives a certificate to the court certifying that the condition in sub-paragraph (3) is met.(3) The condition is that the Secretary of State is satisfied that the order applied for by the operator would be likely to prejudice national security, defence or law enforcement.(4) If the Secretary of State gives a certificate to the court under sub-paragraph (2) the Secretary of State must give a copy of it to the operator and the other person.(5) In this paragraph, “law enforcement” means the prevention, investigation, detection or prosecution of criminal offences including the safeguarding against and the prevention of threats to public security.”(3) In paragraph 21 (test to be applied by the court in determining whether to make an order under paragraph 20), in sub-paragraph (1), before “, the court may make an order” insert “and paragraph 27ZZA”.(4) In paragraph 26 (power of court to make an order imposing interim code rights), in sub-paragraph (3), at the beginning insert “Subject to paragraph 27ZZA,”.(5) In paragraph 27 (power of court to make an order imposing temporary code rights), in sub-paragraph (2), at the beginning insert “Subject to paragraph 27ZZA,”.”Member’s explanatory statement
This amendment provides that a court must refuse an application by an operator for code rights under paragraph 20, 26 or 27 of the code if the Secretary of State gives a certificate that the order applied for would prejudice national security, defence or law enforcement.
The Parliamentary Under-Secretary of State, Home Office (Lord Sharpe of Epsom) (Con)
My Lords, the Government believe that a change to the Electronic Communications Code—the code—is necessary to protect the autonomy and integrity of our national security, law enforcement and defence sites across the UK.
The code allows telecoms operators to ask landowners, government departments, agencies and other public sector bodies, including those with national security, law enforcement and defence equities, for code rights in relation to land and property. Such code rights include the right to carry out surveys as well as the right to install telecommunications equipment. If a consensual agreement cannot be reached, the telecoms operator can seek a court order to impose an agreement that confers the code rights being sought by the operator subject to whatever terms that the courts deem appropriate. This means that a telecoms provider can be granted access to sensitive national security sites without the landowner’s consent.
The code works in this way to ensure that operators can deliver coverage and connectivity across the UK at pace, and this is absolutely the right approach to delivering the Government’s rollout. However, an extra layer of protection is needed for situations where particularly sensitive sites, such as those with national security, law enforcement and defence equities, are involved. This is needed to protect our national security capabilities and operations and our ability to keep people safe.
There are three types of risk arising from the present position, which our police forces and national security bodies are already grappling with. These are legal, physical security and technical security risks.
In respect of the physical security risk, surveys and the installation and ongoing maintenance of telecommunications equipment could mean access to sensitive sites by non-security cleared personnel, including engineers, site surveyors and others. This poses a risk of compromise to sensitive information and staff who work in these buildings. The police, in particular, often need exclusive rooftop access for operational reasons, especially in cities, and the presence of persons and telecoms equipment on these rooftops can pose a hindrance.
Regarding the technical security risk, the installation of 5G equipment on sensitive government sites would significantly raise communications and information security risks for such sites. Finally, on the legal risk, the current dispute resolutions and court procedures do not allow for closed material proceedings. This means that classified national security concerns cannot be evidenced and may lead to courts granting access to sensitive sites without a full awareness of the risks.
We also need to consider the significant administrative burden of managing those legal risks where national security concerns cannot properly be evidenced, drawing resources away from primary national security work. For example, we have seen a significant increase in survey requests since the 2017 amendment to the code. There have also been increasing threats of litigation when access has been denied for legitimate security reasons.
This amendment, which inserts new paragraph 27ZZA into the code, will confer powers on the Secretary of State to intervene and prevent a court from granting a telecoms operator’s request for code rights, including rights to access and install apparatus on site, where granting the request would
“prejudice national security, defence or law enforcement.”
This certification will be considered only when all other routes to a mutually consensual solution have been exhausted. This is right and proportionate. It is worth emphasising that it will not provide public sector landowners with national security law enforcement and defence equities with a blanket exemption. It is anticipated that it would be employed only rarely, on a case-by-case basis and in extremis, and that only a small number of sites would be eligible. Nevertheless, we will consider how Parliament can be updated on the use of this power so that it can carry out its scrutiny role effectively.
The Government remain committed to being the landlord of choice for telecoms operators, but we believe that the sensitivity of some of these sites will mean that they will simply not be suitable. The aim of this amendment is to address legitimate national security concerns without undermining the Government’s ambitious rollout of gigabit-capable broadband and 5G networks. I beg to move.
The Earl of Devon (CB)
My Lords, I will speak briefly. It is wise for the Government to make this amendment, given the dangers that have been identified to national security infrastructure of unfettered telecoms operator access.
This necessary amendment highlights two key issues. First, it highlights the broad powers conferred by the ECC on mast operators to access to public and private property and undertake works on it. It is not just the national security infrastructure that is threatened by the code provisions but private and public interests of many types. Secondly, the fact that the Government have become aware of this important concern only now, in the final stages of the Bill’s passage, is a compelling illustration of how totally inadequate the consultation process has been and how essential it is to conduct a proper review, an issue that we will come back to.
Lord Fox (LD)
My Lords, the noble Lord, Lord Kamall, has demonstrated a prodigious ability to outsource the responsibility for presenting the government amendments. We welcome the noble Lord, Lord Sharpe, to this Bill.
As the noble Earl, Lord Devon, pointed out, this is late to the party. It is also the first time we have heard the explanation for this Bill, though others may have been lucky in having it. We had a meeting with the noble Lord, Lord Kamall. No one from the Home Office was there to give us the information we have just received, so I am absorbing it for the first time—a relatively unsatisfactory process. That said, this is an important area. I am surprised that the code has somehow been allowed to continue for as long as it has without this issue cropping up. Have there been specific issues which have caused this to happen, or is it still a hypothetical matter that the Government are seeking to deal with?
Everybody can appreciate the problems of sticking a 5G tower on top of GCHQ. No one wants to see it, but I can imagine that the reality is a more subtle set of problems. We on these Benches seek a better sense of the real-life cases which the new clause seeks to stop. The Minister singled out technical risks in particular. Those exist beyond the site itself, on the environs. I am interested to hear from the Minister how the clause deals with a 5G site put adjacent to a security site. What thresholds are the Government going to expect its security services to run when it comes to implementing the clause? It will not just be on the site itself.
I understand that quite a lot of this will be enshrined in a digital toolkit. It would help us all if the process of developing that digital toolkit was one with a collaborative approach. The noble Earl, Lord Devon, also highlighted that this problem of overriding access from the operators extends beyond the security environs. This is not just a security issue; it spreads into other places. Like many other Peers, I received a letter from the fire and rescue service. While this is not a security issue, it falls within the purview of the noble Lord, Lord Sharpe, and the Government should consider it, because it raises the problems of putting network equipment on fire and rescue service land and the fact that it would impede the training and preparation of that service.
This is even later than the Government’s amendment, and I recognise that it is not even part of this amendment, but it is a specific concern, and the Minister would do well to undertake to your Lordships’ House to talk to the fire and rescue service, to understand their problem and, if necessary, I am sure that we would all tolerate a late insertion at Third Reading. I say this without having spoken to the Opposition, but if it was an issue, I think that we would discuss it.
We understand that national security issues must be taken into consideration. We do not understand how this will work, what the thresholds will be, and what sort of cases it is seeking to avoid. More explanation is required.
Lord Bassam of Brighton (Lab)
My Lords, I welcome the noble Lord, Lord Sharpe, to the Dispatch Box on this Bill. We have had to deal with an increasingly large cast of Ministers, but he is a very astute and wise owl and I am sure that he will bring his insights to bear on this. I thank him for the meeting that we were facilitated to have on this issue and thank the officials for their close attention.
We on the Labour Benches entirely understand the need to protect national security and other key sites across the UK. We take the point that we should not allow equipment to be installed in places where it may interfere or enable the interception of sensitive data. However—and it is a big however—it is not desirable to introduce a power such as this at the last substantive stage of a Bill, when the elected House and our own scrutiny committees have already considered the legislation. It is not best practice. I have a bit of sympathy because I too have been a Home Office Minister. In my time I did something like 19 Bills in a two-year period. Home Office officials have a nasty habit of dreaming up late amendments which are absolutely essential for the safety and security of people at the last minute. However, it is not good practice and should not go unremarked on. We hope that the DCMS and the Home Office will acknowledge that and reflect on how this has been brought forward.
We are grateful to Ministers and officials for answering questions over recent days. That has, to a large extent, assured us that this power is not only necessary but is appropriate and will not be widely used. The Minister said “rarely” and “in extremis”, two very important guiding phrases to be used. Under this draft, the power is not subject to any formal checks. We hope that the Minister can make commitments again from the Dispatch Box. There are the possible reporting approaches to Parliament, perhaps to an appropriate Select Committee and maybe to the Intelligence and Security Committee, even if these reports are confidential. We would be grateful if the Minister could repeat, for the record, the various other steps to be exhausted before the Secretary of State would resort to this blunt instrument.
The Lib Dems made an interesting suggestion at the end of their contribution on this. I would be very interested to hear if this power will impact on adjacent sites, and whether those adjacent sites might in themselves be a security risk. It is right to draw attention to the needs of fire and rescue services, and the police service, where their services might be interfered with by adjacent-site issues.
It is not desirable, not good practice, and really not right to introduce something like this in your Lordships’ House, but we understand why and are happy to support this amendment because of its security implications.
Lord Sharpe of Epsom (Con)
I thank all noble Lords who have spoken in this brief debate, particularly the noble Lord, Lord Bassam; I do not think I have ever had the words “astute”, “wise” and “owl” used in the same sentence about me before, and I am very grateful.
I will get on to the specific points that were raised. The noble Earl, Lord Devon, effectively said, “Isn’t this unfair to private landowners?”, but generally speaking the Government are in the same position as any other landowner in relation to the code. Indeed, we intend to continue our proactive work with the telecommunications sector to ensure that the public sector property portfolio is utilised, wherever possible, to support our coverage and connectivity aims. I do not believe that this is a question about fairness; it is a question about national security, law enforcement and the defence sites that I referred to earlier.
All three noble Lords who spoke have queried why this is being introduced at such a late stage. As the noble Lord, Lord Bassam, knows, and for the record, I agree with him: it is certainly not ideal. But before seeking to introduce this exemption, we have rigorously pursued non-legislative solutions to the identified risks, given the Government’s commitment to roll out gigabit-capable broadband and the 5G networks at speed. However, we have concluded that there remain certain situations where non-legislative options cannot be relied on to address our fundamental security risk concerns. This amendment will address that: it provides a mechanism to preserve national security objectives where necessary. But I reiterate the point: I understand where he is coming from on that particular subject.
The noble Lord, Lord Fox, asked if I was able to give some indicative examples of where a Secretary of State may deem it appropriate to issue one of these certificates. I am happy to do so: the power is, as I said earlier, limited in scope, and will be applied on a case-by-case basis. Certification will be considered only when all other routes to a mutually consensual solution have been exhausted, and a telecoms operator applies to the court for the rights to be imposed. That is the last resort or, as I described it yesterday, a red card option. New Scotland Yard, for example, has received repeated requests from operators to access its main building, and operators have threatened litigation. This is an example where we would consider using this power, but other obvious examples include agency headquarters, if an operator were to approach them.
The required threshold will be considered only when all other routes to the mutually consensual solution have been exhausted, as I have just said. The newly restructured cross-government digital infrastructure toolkit will remain the primary route for determining the outcome of survey and installation requests from telecom operators. The working group supporting the implementation of the toolkit will provide a platform for regular engagement with operators. The group will also provide support to operators in assessing a site’s suitability, including a consideration of national security risks and any mitigations therein. I assure noble Lords that certification will be applied for by the Government only when it is considered necessary, and there are no other options or routes to a mutually agreed solution: for example, if the working group advises that a site is unsuitable for survey and installation based on national security grounds which cannot be mitigated, but the operator still commences court proceedings. Even then, certification will not be applied automatically. The Secretary of State will still need to make a final decision on whether a certificate of exemption is appropriate.
The noble Lord, Lord Fox, raised a very good point about digital proximity; I suppose that is the right way to put it. I am not going to get involved in that debate here. As I am sure he will appreciate, there are significant national security concerns about it, and it strays into a number of other areas. Perhaps that is a subject we can pick up in the future, because it will obviously have major implications. Finally, he also asked me about previous Home Office involvement—I remind him that I have been in post for only a week, so could not really help on that one—and the fire service. We have seen the representations of the fire service, but have carefully balanced the risk so as to not undermine legitimate national security risks. We will, of course, continue to engage.
Member’s explanatory statement
This amendment is to ensure that operators engage in the alternative dispute resolution process by making it mandatory.
Baroness McIntosh of Pickering (Con)
My Lords, I am grateful for the opportunity to raise what is quite a difficult situation in Amendments 25, 26, and 27. What I seek to address here is the fact that while it is welcome that there is an alternative dispute resolution process, it would be preferable that this was mandatory. I would also like to raise other issues, such as the imbalance between the funds available to operators bringing such a case and to landowners, who may be of quite modest means and modest size in being able to defend against such actions.
I welcome the inclusion in the Bill of an alternative dispute resolution mechanism. Could my noble friend the Minister take this opportunity to explain why it is merely optional for operators to use it, given—as I referred to a moment ago—the disparity in resources between operators and landowners in many cases? Is he not concerned that the incentive to use such an alternative dispute resolution mechanism for operators is low, given that they have the resources to take potentially multiple landowners to tribunal? Also, while the overall market for new sites for masts has slowed down, some small landowners have been unable to afford the cost of being taken to a tribunal to seek to defend their property rights. They have essentially been forced to agree to host mobile apparatus on unfavourable terms.
I propose Amendments 25, 26 and 27 to make it mandatory for telecoms operators to engage with an alternative dispute resolution mechanism before threatening to take a landowner to court for an agreement to be imposed. I beg to move.
The Earl of Devon (CB)
My Lords, I strongly support these amendments, to which I have added my name. As I have said, I am a litigator, and it is a tremendous help to get parties together in some form of alternative dispute resolution before a matter is litigated. Compelling ADR as step 1 in an escalating dispute is common, and indeed is often to be found within contractual obligations themselves, particularly between parties of disparate size and resource. Given all that has been said about the fractious and broken market, and the huge number of disputes that are occurring, the more that can be done to head these off before litigation costs escalate, the better.
I was referred to a decision this morning of the Lands Tribunal where a lease negotiation had been settled at the door of court: the decision focused only on the issue of costs. The tribunal awarded £5,000 in costs, but the total bill was over £100,000. Litigation costs can be huge and, as the noble Baroness, Lady McIntosh, has indicated, that can keep small site owners out of litigation: they have to just roll over. ADR can occur in the form of mediation, arbitration or simply expert determination on a specific technical or legal issue in contention. It is key to greasing the wheels of these challenging transactions and, given the difference in size and resource between site owners and telecoms operators, it would be most helpful.
Lord Cromwell (CB)
My Lords, I was in two minds about these amendments, but I will support them in the final analysis. ADR is of course a good thing if it avoids lengthy and costly court proceedings. My concern is that it can also become a token activity, backed by the threat of subsequent court action to intimidate site owners, reflected in the inequality of arms between the parties, which others have already referred to.
I would greatly prefer an outcome where disputes can be resolved between the parties, and perhaps their respective agents, where the balance of negotiation is fair. I made a proposal in my earlier remarks on this, to which I have received no response.
The Bill, as drafted, sets site owners and operators needlessly on a collision path. No disputes will be resolved; they will simply be won by brutal compulsion that will lead to delay and protracted proceedings. If the Bill goes ahead as is, ADR should be mandatory as a first step in at least seeking some resolution. I therefore support the amendments in this group.
Lord Clement-Jones (LD)
The view of these Benches is that throughout the passage of the Bill it has been clear that a strong case has been made for better protection for landowners against the power of telecoms operators. However, the ADR process that the Government are providing under Clause 68 is non-binding. Telecoms companies need to show only that they have considered it to avoid costs. This will not make them engage with the spirit of the process, and we expect telecoms companies to take matters to court as quickly as possible instead, with all the consequences that entails of costs on both sides.
As the noble Baroness, Lady McIntosh, stated, to address this the Government should make ADR compulsory for any dispute and issue guidance about reasonable terms. Properly enforced, we believe it would reduce operators’ reliance on litigation through the courts, which sometimes takes the rather oppressive form of threats, and encourage better behaviour by both parties. Given the potential benefits to both parties and the wider public interest, it is difficult to see the case for this process remaining advisory. In principle, we very much support Amendments 25, 26 and 27, so well advocated by the noble Baroness, Lady McIntosh, the noble Lord, Lord Cromwell, and the noble Earl, Lord Devon.
Lord Bassam of Brighton (Lab)
My Lords, this has been an interesting short debate. It was an interesting debate in Committee and I congratulate the noble Baroness on retabling her amendments. I do so because I am not completely convinced by the Government’s arguments here. There are real concerns from some that the tribunal system favours operators due to the experience and size of their legal teams. They are very powerful organisations and we should not overlook that. The legal system is there to protect all from overweening power. I understand that the ADR system is intended to prevent cases going to tribunal and court, with all the costs that come with that, and, given the timescales involved, there is clearly a benefit to reaching agreements under an alternative framework. However, if it is voluntary, where is the incentive for its use?
I shall ask one final question; I think this is the most important point. If ADR as a voluntary means of dispute resolution does not work, what will the Government do? Will they step in again and reconsider this issue? Will they give careful consideration to making it mandatory, because then it would have a more powerful effect?
I do not think this issue will go away. I do not find the Government’s arguments entirely compelling and the noble Baroness has made a very good case. I look forward to hearing what the Minister has to say.
Lord Kamall (Con)
I thank my noble friend Lady McIntosh for this amendment and for explaining making ADR—alternative dispute resolution—compulsory so eloquently. Where there is disagreement, it is always good if there can be a mechanism, but we have to remember that ADR is not one sort of ADR. There are many different types, which I shall go into.
I shall reiterate the Government’s position of not supporting the approach and supply more information that I hope will convince your Lordships that these amendments are not only unnecessary but could be actively counterproductive. As my noble friend Lord Parkinson mentioned in Committee, ADR not being mandatory is a deliberate policy choice, made for the following reasons. First, where ADR is appropriate, mandatory ADR would compel some parties to participate in a process in which they do not want to be involved, which would make them less inclined to engage actively. This would increase the risk of failure and the parties would then have to go to court anyway. It would serve only to add an additional layer of time and cost to landowners.
On this point, I return to my noble friend Lord Parkinson’s previous comments highlighting the counter- productive incentives that mandatory ADR risks creating. There are many types of ADR with different formats, timescales and costs. For example, mediation and arbitration are both types of ADR. In a situation where mandatory ADR has forced a party into ADR against its will, the party may seek an inappropriate form of ADR to frustrate the process and force the matter to proceed to court. This would result in the parties incurring additional time and costs for no practical benefit.
Baroness McIntosh of Pickering (Con)
My Lords, I thank the noble Earl, Lord Devon, and the Benches opposite for their support for these amendments. I have to confess that I am disappointed by both the tone and the content of my noble friend’s reply. I think it goes to the heart of earlier groups where we, I think successfully, set out across the House the fact that there is a serious imbalance in the relations between the parties concerned, which will only become worse, given that the operators are going to have even more means and resources at their disposal.
I hope my noble friend will accept that, even where there is permissive procedural provision to achieve a change in behaviour, it will probably be only through mandatory—or, in the word of the Liberal Democrats opposite, compulsory—arrangements that we shall see a change. I think I have made the point as forcefully as I possibly can. I do not see that my noble friend is going to agree to these amendments, but I hope that he and his department will consider this going forward. I beg to leave to withdraw the amendment.
Baroness Merron
“Independent review of the electronic communications code
(1) Within the period of three months beginning with the day on which this Act is passed, the Secretary of State must appoint an independent person to undertake a review of the effect of—(a) the electronic communications code, and (b) the Telecommunications Infrastructure (Leasehold Property) Act 2021,on the deployment of 1 gigabit per second broadband and other forms of telecommunications infrastructure.(2) The review under subsection (1) must, in addition to any other matters the Secretary of State deems appropriate, include consideration of—(a) the extent to which revisions to the electronic communications code have secured progress towards His Majesty's Government's targets relating to telecommunications infrastructure,(b) the balance of rights and responsibilities of land- owners and telecommunications operators, and(c) the impact of this Act on the level of competition in the telecommunications sector.(3) The independent person may make recommendations to the Secretary of State on matters including (but not limited to)—(a) potential further revisions to the electronic communications code,(b) potential amendments to—(i) legislation, or(ii) guidance,relating to the valuation of land used to host telecommunications infrastructure, and(c) the potential benefits of imposing a requirement for telecommunications operators to report annually to OFCOM on their investment in new infrastructure.(4) Upon receipt of the report from the independent person, the Secretary of State must—(a) publish the report,(b) prepare a response to the report, and(c) lay a copy of the report and response before Parliament.”Member’s explanatory statement
This amendment would require the Secretary of State to appoint an independent person to conduct a review of recent changes to telecommunications infrastructure legislation and policy. This review would consider what further changes may be required to ensure regulation in this field delivers new infrastructure in a way that also preserves competition in the sector.
Baroness Merron (Lab)
My Lords, I am pleased to speak to Amendment 28, which we have tabled in an attempt to find a constructive way forward to perhaps the greatest area of discussion throughout this Bill which has not yet been resolved—how we bring together the balance, the fairness and the efficiency that we all say we are looking for. This amendment is an attempt to amalgamate various others that were debated at Committee stage. I am very grateful to colleagues across your Lordships’ House who have worked with us on the draft or have indicated their support for this approach. In particular, I thank the noble Lord, Lord Fox, for adding his name, and, of course, my noble friend Lord Bassam.
Since taking office, the new Prime Minister has made a lot of her commitment to rolling out high-speed broadband and 5G. We welcome that commitment and would like to see it come into reality, particularly as, regrettably, the former Prime Minister repeatedly watered down the targets. We want to see modern infrastructure installed and want that to happen quickly, but we also want the system to be fair—to operators, yes, but also to the landowners who host equipment and consumers who are in the midst of a cost of living crisis.
The Government, we understand, will say—and I hope the Minister will not be going down this road—that a review as proposed in this amendment would only slow things down. Let me deal with that. This amendment does not prevent any of the Bill’s provisions coming into force. The Government, we understand, are also minded to say that they are confident in their approach in this area and therefore no review is necessary. If that is the case, I suggest that an independent review would give their policies a clean bill of health. However, I suspect an independent review would conclude that all is not as well as has been presented, and its recommendations could therefore be a very helpful resource for the new Secretary of State and the Government.
We see no reason why the Government could not simply accept this amendment and get on with appointing somebody independent to lead a review. If the Government are not willing to do that, we will be minded to test the opinion of the House. I beg to move.
The Earl of Devon (CB)
My Lords, I added my name to this amendment at the last minute and I am very pleased to support it. From my earlier contribution, the House will be aware of my concerns about the lack of consultation prior to the passage of this Bill. The contributions of many noble Lords and the Ministers’ responses have only increased those concerns. I did not push for a vote on the prior amendments regarding valuation and ADR because I believe those issues will properly be considered in the context of this independent review.
The Government have suggested in discussions that a review will unduly impact the market and slow the rollout of digital infrastructure. This is not possible. We have established that the market is already broken and the costs of transacting telecoms sites have more than doubled since 2017, as reported in the RICS conference, and the number of cases before the lands tribunal has more than tripled. The ECC is not working and expanding its broken application to historic 1954 Act leases will only increase the challenges. A review is urgently required, and I urge that this be voted on.
Lord Northbrook (Con)
My Lords, I speak in support of this amendment. The noble Baroness has rightly underlined the importance of ensuring that the code is actually having the impact the Government tell us it is having.
This legislation is controversial because it proposes to erode property rights in the public interest. For this to be a viable proposition for a Government who support individual rights and freedoms, it must be absolutely clear that the public benefits considerably outweigh the private cost and the resulting redistribution is as fair and equitable as it can be. Any such policy must therefore be based on robust evidence.
A recent contentious legal ruling in a case brought by Vodafone has underlined that the Electronic Communications Code does not reach this bar. As a brief summary, the legal judgment has created significant real-world issues for the ability of landowners to develop sites, damaging local economic growth but also disincentivising site owners from agreeing to host telecoms sites at all. This risks stalling the rollout of new telecoms sites, putting in jeopardy the Government’s ambitious 5G targets. The judge said that this ruling identified a “potentially important structural defect” in the code. I am aware that this case has been brought to the attention of the Government, but they have chosen not to act. Issues such as this illustrate precisely why the review proposed by this amendment is vital.
Lord Blunkett (Lab)
My Lords, I would have made a very similar speech to the noble Lord. As he has made my speech for me, I will not keep the House any longer, other than to say that when the big guy is versus the small guy it is beholden on us to support the small guy.
Baroness Stowell of Beeston (Con)
My Lords, just because it is my first opportunity to do so, I congratulate my noble friend on his new role and welcome the noble Lord, Lord Harlech, to his place on the Front Bench.
I do not contribute to this debate with any enthusiasm because, having made my points at all previous stages of this Bill through your Lordships’ House, it disappoints me that we are here where we are. I will repeat some of my points briefly. Like everybody else, I think it is important to emphasise that I, too, wholly endorse fast and full rollout of high-quality broadband to all parts of the UK.
As has been said already by others, my concern is really on behalf of the site owners. It is important for us to keep in mind, particularly if we have not been following this Bill closely, that when we talk about site owners this is not just about wealthy landowners but a whole range of different smallholdings and community property and that sort of thing. A whole manner of different people are involved. They were told that the reduction in rental income would be reinvested by the mobile network operators in delivering the rollout. It seems that there remains a lack of confidence on their part, because there is insufficient evidence to demonstrate how the new code is working. They are expected to engage in negotiations with commercial entities on trust while fearing their loss is at someone else’s gain. We have heard the extent of this in other groups earlier this evening.
As I have said before, the benefit of rollout relies on the willingness of site holders to participate; when we rely on people to succeed, they deserve to be heard and listened to. When their concerns are about fairness, they cannot be ignored. I am concerned about not causing any delay to rollout, but the arguments and evidence we have heard today is that ignoring the concerns of site owners is doing just that.
In Committee, I said I would support an amendment—it was Amendment 50 in Committee—that simply required the mobile network operators to report annually and transparently to Ofcom on a range of performance measures, including their overall investment into mobile networks alongside a range of other things. This amendment, ably moved by the noble Baroness, Lady Merron, goes much further and includes a review, as we have heard, and the potential for the type of reporting requirement I have just described to be an outcome of it.
In my view, the Government have to move from their current position if they are to bring all site owners on side—and we need them on side to get the rollout. In the absence of any willingness on the Government’s part while the Bill is in Parliament, the case for Parliament imposing this independent review is compelling. That said, I hope my noble friend will have given the points made in this debate full consideration, and I will listen carefully to what he has to say.
Lord Fox (LD)
My Lords, I congratulate the noble Baroness, Lady Merron, on her presentation of this amendment. It is an elegant composite of the discussions we had in Committee, and that is why I was very happy to put my name to it. We have heard some compelling speeches and I suggest to the Minister that they have come from 360 degrees in this Chamber, which generally indicates a klaxon for any government Minister. This really is an issue.
Lord Kamall (Con)
I thank noble Lords from all 360 degrees of the House for their contributions to this debate. Before I answer the specific points, I will address some of the points about relationships being broken, as it were, between landowners and operators.
A number of non-legislative steps are taking place to make sure this code works well in practice. For example, the department’s—wait for the name—Barrier Busting Task Force holds monthly workshops with a broad range of stakeholder groups with an interest in the code. These workshops are attended by network operators and landowner representative groups such as the NFU, the Central Association of Agricultural Valuers and the Country Land and Business Association, as well as local authority representatives, legal professionals and surveyors. The workshops aim to encourage greater co-operation and collaboration in relation to the code negotiations and agreements through identifying and implementing better ways of working. The workshops touch on key issues, many of which have been raised by noble Lords. For example, stakeholders are currently working to agree on a standard template wording for common clauses within code agreements and have agreed a pilot communications framework that sets out how both operators and landowners could approach negotiations.
Perhaps one of the most significant developments to come from these workshops—my officials call it exciting—is that a number of stakeholders, including representatives from the CLA, the CAAV and the NFU, alongside operators and infrastructure providers, have come together to form the national connectivity alliance. This alliance will bring together stakeholders from across the industry to discuss issues of mutual interest, improve co-operation and collaboration and, hopefully, share best practice. The Government welcome this development and wish it every success when it launches in November. I use that as an example to address some of the concerns and suggestions in this House that somehow relationships have broken down between landowners and operators.
While having 360-degree support, Amendment 28 would make the changes to the code in 2021 and 2017 subject to specific and independent review. As with similar amendments, I wholly appreciate the House’s determination to ensure that the Government are held accountable for this legislation and for providing updates on progress towards their coverage and connectivity targets, which are at the heart of the Bill, but the Government see three important difficulties with this amendment, which I hope noble Lords will consider.
First, and this is a key concern, having another review of the code on the immediate horizon will not help a market that is starting to settle. Officials have been gathering data throughout the passage of the Bill, and the number of code agreements already concluded this year is extremely positive. I know that noble Lords are keen to see that data—
Lord Fox (LD)
I realise that this is taking some time, but on a number of occasions the Minister has talked about the market “starting to settle”. Can he describe what settling a market is and what data he is using to make that assertion?
Lord Kamall (Con)
The noble Lord makes a reasonable point. I know that noble Lords are keen to see the data, but all that I can do at the moment is undertake to make it available as soon as possible—I did not say “in due course”, by the way. We believe that the prospect of another review will, quite simply, create chaos in the market—I know that noble Lords disagree with that. Site providers would inevitably, and not unreasonably, draw out negotiations as long as possible, in the hope that the “no scheme” valuation regime would be scrapped. It is important to consider that.
Secondly, the amendment seeks to impose a duty to assess, in isolation, the impact of this legislation and the previous reforms made to the code on digital connectivity and on stakeholder relationships. The Government question how feasible it is to quantify the extent to which such progress is attributable to a single piece of legislation, and we all know that the market to which these provisions apply is dynamic. By the time such a review has been commissioned, the research carried out and the findings reported on, the market is likely to have moved on significantly, rendering that report obsolete. In 1996, I wrote a bestseller on EU telecommunications policy—I am sure you have all heard of it—and, by the time it was published, it was already out of date. That shows how quickly this market develops. Funding such a report therefore cannot provide good value to the taxpayer, and the amount could be better spent helping the Government reach their ambitious connectivity targets, to which I will come in a moment. But remember: the report would probably be obsolete by the time it is published.
Finally, this amendment overlooks the substantial review and reporting mechanisms that are already in place. For example, in relation to progress on gigabit-capable broadband, my noble friend Lord Parkinson referred in Committee to Ofcom’s annual Connected Nations report, which is updated twice a year and provides a clear assessment of the progress in both fixed and mobile connectivity. The Government also monitor and report regularly on their connectivity commitments, with quarterly updates published by BDUK. The Government will of course carefully consider the implementation of this legislation to understand how it is working in practice. For these reasons, I believe that the proposals in this amendment, while well-intentioned, could be disproportionate and ultimately unhelpful. I have also written about unintended consequences, and we have to be very careful of these here.
I will respond directly to the question of the noble Lord, Lord Fox, about targets. The levelling-up White Paper set out our mission that, by 2030, the UK will have nationwide gigabit-capable broadband and 4G coverage, with 5G coverage for the majority of the population. The Government are developing a wireless infrastructure strategy to set out the strategic framework for that development, and this will be published later this year.
The existing 5G target, which is for the majority of the population to have access to 5G by 2027, has been met five years early, with basic non-standalone 5G. As part of the wireless infrastructure strategy, we are establishing a new ambition for 5G. The shared rural network will see the Government and industry jointly investing over £1 billion to increase 4G mobile coverage throughout the UK to 95% geographic coverage by the end of the programme, underpinned by licence obligations.
The UK Government’s other target for broadband remains to deliver gigabit-capable broadband to at least 85% of premises by 2025 and to reach over 99% by 2030. To achieve the minimum 85% objective, DCMS is stimulating the market to deliver as much as possible—at least 80% by 2025. It has also invested £5 billion as part of Project Gigabit to ensure that the remaining 5% in the UK receive coverage. If I have not answered the questions of the noble Lord, Lord Fox, I commit to write to him—perhaps he could let me know.
I understand that there was a lot of interest, and there have been very well-made points during the debate, but I am afraid that the Government cannot accept this amendment at this stage.
Baroness Merron (Lab)
My Lords, it is disappointing that the Minister has not found a way to respond to the very real, informed and evidenced points raised not just today but at previous stages. I am sure that the Minister knows full well that his response just will not do. This amendment seeks to find a constructive way forward—something that the Government have failed to do—and bring together people who previously were apart. It seeks to address the obstacles to the ambitions that the Government say they have, in a way that the Government have failed to do. It also seeks to bring transparency to assist a process. I have heard the Minister, but I am disappointed, and I therefore feel that I must test the opinion of the House.
Product Security and Telecommunications Infrastructure Bill
Wednesday 19th October 2022
(1 year, 6 months ago)
Lords ChamberRead Full debate Product Security and Telecommunications Infrastructure Act 2022 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 16-R-I Marshalled list for Report - (10 Oct 2022)
The Lord Privy Seal (Lord True) (Con)
My Lords, I have it in command from His Majesty the King to acquaint the House that His Majesty, having been informed of the purport of the Product Security and Telecommunications Infrastructure Bill, has consented to place his interest, so far as it is affected by the Bill, at the disposal of Parliament for the purposes of the Bill.
The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Lord Kamall) (Con)
My Lords, I beg to move that this Bill do now pass. I thank noble Lords on all Benches—noble friends behind me and noble Lords across the House—for their co-operation on this Bill. We saw it as vital for the UK to remain at the forefront of the global economy. It is important that we see fast, reliable but secure connections, for they are the cornerstone of a modern, thriving knowledge economy and society.
It is important that families, communities and individuals as well as state and non-state organisations have reliable tech that works in every part of the country, however remote. That is why the Government have made huge investments in digital infrastructure and have ambitions to become a global cyber power.
We have spent £5 billion on Project Gigabit to get lightning-fast, reliable broadband to hard-to-reach places, and legislated to address absent or unresponsive landowners holding up the deployment of gigabit-capable broadband in blocks of flats. It is also why the Government have a £2.6 billion National Cyber Strategy to protect and promote the UK. This year, we completed a consultation on new laws to strengthen UK cyber resilience.
However, we want to do more; we want to go even further and tackle the challenge that the country is facing. Throughout this Bill’s passage, Ministers and officials have listened carefully to industry, to noble Lords and to the other place, to address concerns and improve the legislation.
We included updates to give telecoms operators further rights in respect of telegraph poles, supporting the delivery of gigabit-capable broadband. We listened carefully to the Delegated Powers and Regulatory Reform Committee to subject the provisions in Part 1 of the Bill to appropriate scrutiny. The product security provisions have been backed by industry, and other countries are following suit. As a global leader in the cybersecurity landscape, this Bill is the first domestic legislation in the world to establish a framework that will introduce security requirements for these products. We now have a Bill that is equipped to deal with the changing landscape of cybersecurity as new threats emerge and evolve in future years. Once it comes into force, the measures in it will improve connectivity and resilience against cyberattacks in the UK.
Let me end by once again thanking noble Lords and Members in the other place for their contributions. I thank the Front Benches and my noble friends here for their wisdom and commitment. I thank noble Lords across the House and the parliamentary clerks, without whom we would not be attending this debate today. I should also pay tribute to my predecessor, my noble friend Lord Parkinson of Whitley Bay—I say “I should” but I want to—for so expertly taking the Bill through Committee stage in this House.
I also hope all noble Lords will join me in thanking the Bill team for their engagement, in particular Lindsey Cox, Colum McGuire and Anna Kerby. I thank Thomas Stukings and Poppy Woodcock in my private office—they wrote the speech, not me. They deserve praise. I also thank everyone in the policy and legal teams who worked tirelessly to get this Bill to where it is. Before I break into an Oscar awards-type speech, I also recognise that there may be a need for further conversations on one or two issues. I reassure noble Lords that I remain open to further meetings with them to deliver this important legislation.
Baroness Merron (Lab)
My Lords, on the face of it, this Bill might have looked purely technical, but it will affect the day-to-day lives of millions up and down the country. It improves security for smart devices—products which are now second nature to so many of us. We know there will be regulations to follow and that the devil will be in the detail; we look forward to examining that detail. The Bill will also assist the installation of infrastructure and support greater connectivity, whether through wired broadband or wireless 5G networks.
From these Benches, I thank the ministerial team, who have been courteous, professional and ever willing to engage in meetings and discussions. To refer to the ministerial team of three on this occasion, I would like to say how grateful I am to the noble Lord, Lord Kamall, who cut his DCMS teeth on this Bill. My thanks also go to the noble Lord, Lord Harlech, who recently joined the Government Front Bench, and the noble Lord, Lord Sharpe, who bought his Home Office experience to bear. I also associate with myself with the comments of the noble Lord, Lord Kamall, in expressing my particular thanks to the former Minister, the noble Lord, Lord Parkinson.
From these Benches, we are also grateful to the Bill team, the ministerial office team, the clerks, the staff of the House—indeed, all those who worked front of house as well as behind the scenes to make this Bill possible. As ever, it has been my pleasure to work with my noble friend Lord Bassam, who has brought his valuable experience and knowledge to bear. We were very fortunate to have the highly professional support of Dan Stevens, our excellent adviser who has guided and advised us throughout, to whom we express our thanks. Of course, my thanks are also due to all noble Peers who have worked in a cross-party and constructive fashion on this Bill.
I am very glad that the Government listened to a number of noble Lords regarding the delegated powers in the Bill, and that a particular amendment was brought forward to enhance operators’ rights in respect of telegraph poles. I thank the noble Baroness, Lady Harding, for her work on this issue.
Finally, I hope that the Minister will recognise that the amendment passed by your Lordships’ House, which requires an independent review of the Electronic Communications Code, offers a sensible and important way forward on a number of outstanding and key issues, including access to multiple-dwelling units and land valuation. These matters need resolution, and I therefore hope that the Government will take this amendment seriously ahead of the Bill’s return to the other place.
Lord Clement-Jones (LD)
My Lords, I add my thanks to the Minister, the noble Lord, Lord Kamall, the noble Lord, Lord Sharpe, and their team, and of course to the Minister’s predecessor, the noble Lord, Lord Parkinson. I would describe him as “urbane”— I can flatter him now that he is no longer a Minister.
I also thank the noble Baroness, Lady Merron, and the noble Lord, Lord Bassam, on the Labour Front Bench for making common cause on so many issues, and quite a number of Cross-Benchers and Conservative Back-Benchers who have played such a prominent role in trying to improve the Bill with their expertise alongside external organisations—such as Which?, Protect and Connect, ISPA and CityFibre—which have been so helpful in their briefings. However, my particular thanks are due to my fellow in arms, my noble friend Lord Fox—who has borne at least half the burden of this Bill with me and was described rightly in Committee as a “supersub” by the noble Lord, Lord Bassam—and, very importantly, to the very expert Sarah Pughe in our whips’ office. I thank in particular the noble Lord, Lord Kamall, for his efforts; this was his first DCMS Bill, but I am sure it will get worse.
I am pleased that the Government have made some concessions and given assurances during the course of the Bill, particularly about the regulations to follow. However, on the central aspects of not specifying enough in primary legislation in terms of security requirements for IoT devices and the retention of unfair valuation and ADR provisions, the Bill is ultimately disappointing. I hope that the Minister will ensure that the review mechanism is retained and does not return to this House.
In general, the objectives on all sides of the House are not very different, but I must say that the Government’s one gigabit strategy really has seemed to mutate throughout the course of this Bill, so I do not believe that there is a great deal of clarity yet on when the Government’s strategy is actually going to be accomplished. In general, as regards retaining the review mechanism, a little willingness to accept this might earn this Government just a few, badly needed friends out there—they might find that quite useful at the current time.
The Earl of Lytton (CB)
My Lords, first, I apologise for my unavoidable absence at Report last week, but I add my belated welcome to the Minister on his appointment and thank him for writing today, as well as my appreciation to his predecessor, the noble Lord, Lord Parkinson. On product security, I certainly wish this Bill well. I am somewhat less enthusiastic about its telecommunications infrastructure measures, particularly on the matter of valuation.
I express my thanks to the clerks and the wonderful co-ordination run from the Liberal Democrat offices. I thank colleagues who spoke in favour of the valuation amendments that I tabled at earlier stages, particularly the noble Earl, Lord Devon, who cannot be here today, and the noble Lord, Lord Cromwell, who I am glad to see is in his place. I also thank noble Lords across the House—I am extremely grateful, particularly for the Labour amendment of last Wednesday, so ably pressed by the noble Baroness, Lady Merron, which really remains the only man standing on the measures that might ultimately address market concerns on telecoms sites. I thank the noble Baroness warmly for that and pledge my support going forward. I pay tribute to the CLA, of which I am a member, the NFU, and other bodies such as Protect and Connect, which we have heard about, for their support and persistence.
Whatever the economic and political rationale, impressions matter and govern transaction analysis—and market confidence also, as we have seen recently in grand style. So I regret that, despite the Minister’s letter of today, a reasoned justification and clear evidence for further interventions into landlord and tenant practice are not apparent to me, especially looking at contractual terms beyond rent. Although as a property practitioner and fellow of the RICS, I believe that these measures are in that sense regrettable, divisive, avoidable and likely to cause the supply of mast sites to shrivel, I appreciate that the Minister demurs and disputes the evidence that has been put forward of lessor reticence, increased legal disputes and slower market process. So we will just have to see. Site providers in the market, their advisers and so on will have to take note, and they may become increasingly wary, not only for what this means in terms of mast rentals but for the wider implications for property rights going forward.
Baroness McIntosh of Pickering (Con)
I rise briefly to support the noble Earl, Lord Lytton, and to thank him and his Cross-Bench colleagues, the noble Earl, Lord Devon, and the noble Lord, Lord Cromwell, for the Cross-Bench support that we have enjoyed, together with that from the opposition Benches. My noble friend Lord Northbrook has also fought a valiant fight.
I thought it important from these Benches to place my regret that the 2017 electronic communications code has been harsher in its effects than had previously been anticipated. This was an opportunity to review that. So, while I did not support the Labour Front-Bench amendment, this is a good opportunity next door to consider whether there is cause, as I believe there is, to review the legislation at this stage.
I regret the imbalance in relationship that the Bill will expedite between the operators and landowners, many of whom are not private landlords but are sports clubs and others that will find the loss of income quite substantial and very difficult to replace at this time, in particular with the cost of living crisis and the inflation that we have seen. I regret that the alternative dispute resolution mechanism will not be mandatory; perhaps that is something the Government might like to consider when they look at this next door.
I will end on a local note. This is something that potentially could impact very positively in north Yorkshire. However, there are two issues that the Minister may not be aware of, as he is relatively new to this brief. One is that there are a number of existing masts owned by a specific telecoms operator that have not been operational. You have to ask the question, since the permissions have been given and the masts are in place, why on earth are they not being operated, in a place with one of the poorest levels of connectivity in the country. The other is looking at alternatives such as piggybacking on the back of the telecommunications masts that were put in place at public expense for the North Yorkshire Police service. I can see absolutely no reason why we cannot piggyback on the back of those.
With those few words, I wish the Bill well, particularly its Part 1—we will gloss over some of the later parts—as it proceeds in its passage through Parliament.
Lord Kamall (Con)
My Lords, I apologise as, in my quest to be concise, I did not name specific noble Lords and I think it is right that I do that. I thank the noble Baroness, Lady Merron, and the noble Lord, Lord Bassam, for their warm welcome. Indeed, it is a re-welcome from the noble Baroness, Lady Merron; many noble Lords will know that she and I have worked together before—we are inextricably linked. I also thank their adviser, Dan Stevens. I thank the noble Lords, Lord Clement-Jones and Lord Fox, and of course their adviser, Sarah Pughe. We take the credit for it, but these advisers work incredibly hard.
I acknowledge the continuing concerns of the noble Earl, Lord Lytton, and of other noble Lords who spoke on this issue. As I have said, I remain open to further meetings and am very happy to discuss these things. I commend the Bill to the House.
Product Security and Telecommunications Infrastructure Bill
Monday 31st October 2022
(1 year, 5 months ago)
Commons ChamberRead Full debate Product Security and Telecommunications Infrastructure Act 2022 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Commons Consideration of Lords Amendments as at 31 October 2022 - (31 Oct 2022)
22:01 - The House divided: - Ayes: 268 / Noes: 132 - Question accordingly agreed to.
Mr Deputy Speaker (Mr Nigel Evans)
I must draw the House’s attention to the fact that financial privilege is engaged by Lords amendment 17. If Lords amendment 17 is agreed to, I will cause the customary entry waiving Commons financial privilege to be entered into the Journal.
After Clause 74
Independent review of the electronic communications code
The Minister of State, Department for Digital, Culture, Media and Sport (Julia Lopez)
I beg to move, That this House disagrees with Lords amendment 17.
Mr Deputy Speaker
With this it will be convenient to discuss Lords amendments 1 to 16.
Julia Lopez
I am pleased to see the progress that the Bill has made since it left this House before the summer, and I am grateful to Members in the other place for their scrutiny of it. Fast, reliable and secure digital connections are the cornerstone of a competitive economy and thriving society, and the sooner the legislation comes into force, the better. As hon. Members will recall from earlier stages of the Bill, its objective is twofold: first, to speed up the roll-out of 5G and gigabit-capable broadband; and secondly, to protect and enhance the security of consumer connectable products, such as monitors, doorbells, connected kitchen appliances and so on, so that users can get their benefits without being exposed to risk. I am confident that the Bill will do just that.
I will start by explaining the need for the relatively straightforward Government amendments tabled by my now former colleague, Lord Kamall, whom I thank and pay tribute to. I will then move on to Lords amendment 17, with which I hope the House will disagree.
Lords amendments 1 to 11 seek to implement recommendations made by the Delegated Powers and Regulatory Reform Committee. Those recommendations relate only to part 1, on product security. The amendments change the parliamentary procedure for two delegated powers from the negative resolution procedure to the affirmative resolution procedure. Those are the powers in clause 3, the power to deem compliance with security requirements, and clause 9, the power to exempt manufacturers from needing to draw up a statement of compliance. The amendments will also ensure that the Secretary of State is able to authorise another person to exercise enforcement functions only by making regulations rather than by agreement. Those regulations will also be subject to the affirmative resolution procedure. We have carefully considered the Committee’s regulations and we are happy to accept those three.
On part 2 of the Bill, on telecoms infrastructure, Lords amendments 12 to 14 would remove the clause formerly known as clause 57 and make relevant consequential amendments to the version of the Bill that this House sent to the other place. That clause was intended to address difficulties that had arisen following upper tribunal and Court of Appeal decisions on the meaning of “occupier”. However, a judgment of the Supreme Court on this very issue was made during the Bill’s journey through the other place, and the judgment resolves the policy concerns that clause 57 was designed to address. As a result, we think it is no longer necessary to retain that clause, and its removal will ensure clarity and certainty for all users of the code.
Lords amendment 15 was made by the Government following a lot of debate and work by my team of officials, and I expect hon. Members on all sides will be pleased to see it realised in the Bill. It gives operators the rights to facilitate two things. First, the amendment makes it easier for a telegraph pole to be shared that is used by an operator other than the operator that owns the pole. Secondly, it makes it easier for the equipment on a pole to be upgraded—for example, by replacing an old copper line with a fibre-optic one.
This amendment is something that many of my hon. Friends and hon. Members, and indeed the telecoms industry, were asking for. Overhead lines are used to provide a substantial proportion of network delivery across the country, and we think the amendment will therefore play a very important role in delivering better services to our constituents. We have listened carefully to stakeholders, and as well as meeting the needs of operators, I can assure hon. Members that we have included safeguards to protect the interests of private landowners and occupiers. For example, the legislation will not provide operators with an automatic right of entry on to private land. I hope that this amendment will therefore be welcomed.
The final Government amendment, Lords amendment 16, concerns an issue that has not yet been discussed in this House, so I should spend a little more time explaining its rationale. The amendment is intended to protect the autonomy and integrity of our national security, defence and law enforcement sites across the country. As it stands, the electronic communications code allows telecoms operators to seek consensual agreements with landowners to install and maintain telecoms equipment on private and public land, including sensitive national security, defence and law enforcement sites. If an agreement cannot be reached, a telecoms operator may seek a court order imposing such an agreement, potentially giving the operator access to those sensitive sites without consent. The code works in this way to make sure that operators can deliver the 5G and gigabit-capable broadband roll-out at pace.
However, this process does raise some national security concerns, including physical security, technical security and legal risks, which I shall go into a little further. On physical security, the presence of engineers and site surveyors on particularly sensitive sites, potentially without proper security clearance, could pose a national security risk. On technical security, the installation of 5G equipment on particularly sensitive Government sites could pose communications and information security risks.
Finally, on legal risks, the courts that consider proceedings under the code are not able to undertake closed material proceedings. That means that classified national security concerns cannot be evidenced properly, which might lead to courts granting access to sensitive sites without a full awareness of the risks. Lords amendment 16 seeks to address those particular national security risks without undermining our ambitious gigabit-capable broadband and 5G roll-out plans. It will confer powers on the relevant Secretary of State to intervene and prevent a court from imposing an agreement sought by an operator.
Jim Shannon (Strangford) (DUP)
I thank the Minister very much for her presentation. In relation to personal data—my constituents contact me about it all the time, and probably hers do as well—can we be assured that, through this Bill, personal data will not be available to people who do not have the right to access it?
Julia Lopez
I think that is probably for other legislation, but if the hon. Member would like to discuss further with me, perhaps in relation to the Data Protection and Digital Information Bill, I would be very happy to do so.
Turning back to Lords amendment 16, I have to emphasise that it is not a blanket national security exemption. It is a very specific power that will be deployed only rarely, on a case-by-case basis and only when all other routes to a mutually consensual solution have been exhausted.
Finally, turning to the last amendment in the group, I hope the House will disagree with Lords amendment 17. The amendment adds a new clause to the Bill requiring the Secretary of State to commission an independent review of the effect of the electronic communications code and of the Telecommunications Infrastructure (Leasehold Property) Act 2021.
Sir Desmond Swayne (New Forest West) (Con)
It is the Minister’s belief that the Bill will be a remedy for the problems in the market. She will acknowledge that, while there are only a few of us in the House who do so, there is a rather larger number out there who believe that it will make a bad situation significantly worse. The Lords amendment at least gives the opportunity of finding out who is right about this—whether it is her belief that the situation will be better or mine that it will be worse. It will put some proof into the pudding. Why must she resist it?
Julia Lopez
I shall set out my reasons for resisting now, but I am afraid I am not of the same opinion as my right hon. Friend on this issue. I have looked at it at length: I have looked at casework and the numbers of renewals, and I believe a review would simply cause a great deal of delay, which would further stymie roll-out.
Selaine Saxby (North Devon) (Con)
I thank the Minister for her intervention on this. Does she agree with me, as chair of the all-party group on broadband and digital communication, that the industry is desperately concerned that this review amendment will wreck the intentions of the Bill, and in constituencies like mine in North Devon will simply slow down the roll-out of this vital infrastructure further?
Julia Lopez
I agree and I thank my hon. Friend for making the point. It seems sensible and benign, but it would significantly delay roll-out and create a great deal of uncertainty.
I understand why Members in the other place tabled this amendment. Its aims are noble, but it is impractical and unnecessary and would have a disastrous effect on investment in telecoms infrastructure, leading to a slow-down in getting great connectivity to the places that most need it, particularly rural constituencies. The Government and Ofcom already produce regular reports on coverage targets and competition, and to that extent the amendment is unnecessary and would duplicate effort.
On the subject of coverage and targets, we are making great progress. We have listened at length to the concerns in both Houses and among stakeholders, and we of course understand that there are tensions between landowners and operators that must be resolved, albeit a lot of progress has been made since 2017. This Bill tries to resolve some of the challenges, particularly by introducing more collaborative negotiations and a greater use of alternative dispute resolutions.
The prospect of another full-scale review of the code framework would have the opposite effect, exacerbating existing tensions by prolonging that debate about valuation. The result would be a cooling effect on the market, with landowners and operators reluctant to conclude agreements until the review was completed. That would seriously delay the delivery of digital services, including gigabit-capable connections and 5G coverage, which so many of our constituents tell us they need and which hon. Members hold me to account for every day because those things are important to economic growth and social wellbeing in their constituencies, particularly rural ones. I urge hon. Members not to stitch further delays into the process through the uncertainty created by a review. For these reasons, although amendment 17 is well-intentioned, it is disproportionate and unhelpful, and I hope the House will disagree to it.
I am nearly at the end of my speech, but I want to thank all Members who have contributed to debates on this Bill, especially the hon. Member for Barnsley East (Stephanie Peacock) and her predecessor the hon. Member for Ogmore (Chris Elmore). Parliamentary scrutiny here and in the other place has provided the Government with much food for thought, allowing us to refine and improve the legislation, and I am pleased that Members on both sides of the House support the objectives of this much-needed Bill in recognition of the importance of digital connectivity to the people and communities we serve and the security of the products that will be increasingly present in their lives.
Stephanie Peacock (Barnsley East) (Lab)
Labour has always broadly welcomed the principles of this Bill and has supported amendments, whether Government or Opposition-led, that strike a sensible balance. That remains the case today, and as such I welcome the Government amendments before us. I will instead focus my remarks on amendment 17 on a review of the electronic communications code.
Labour stands firmly behind the aim of improving roll-out. Digital connectivity is a necessity, not a luxury in this day and age. In order to participate in society—from banking to shopping, to education and using public services—access to the digital world is crucial for people of all ages and in every corner of the country. As such, it is vital that we facilitate the building, maintaining and upgrading of digital infrastructure that allows for this connectivity.
The last Labour Government delivered on this belief, ensuring the creation of infrastructure that brought first-generation broadband to around 13 million households by 2009, but unfortunately over the last 12 years roll-out simply has not gone as far or as fast as we would like. Both broadband and 5G roll-out have been woefully slow, and the Government have repeatedly reduced their targets. We therefore support the aim of part 2 of this Bill, to speed up roll-out to the levels needed. The amendment that calls for a review of the electronic communication code is proposed with the firm intention of boosting rather than jeopardising roll-out. It would ensure that a balanced evidence base is built surrounding the changes made to regulation in the last five years so that concerns held by both landowners and operators can be addressed objectively and in the public interest.
Selaine Saxby
Will the hon. Member explain why the entire industry has asked me to speak this evening to say that the amendment would slow down the roll-out and do literally nothing to speed it up?
Stephanie Peacock
I understand that there are concerns in the industry, but there are also concerns on the other side of the argument among landowners. Indeed, in the consultation for the legislation, the most contentious parts of the 2017 regulations were considered, and that is why we are considering the amendment.
Indeed, the electronic communications code, as hon. Members will be aware, is the legislation that underpins the use of land for mobile telecommunications infrastructure. It was reformed in 2017 and further changes are being made to it through the Bill. After a period of initial adjustment, many operators now cite the 2017 ECC reform as a welcome set of changes that has in time helped them to act quicker and invest more in the roll-out.
Those who host masts, however, have seen their rents decrease by 63% on average as a result of those same changes and report that they have only caused them further problems, reducing their agency and disincentivising their involvement in facilitating the roll-out. That is a particular concern for smaller landowners—the likes of churches, sports clubs and community groups—whose rental income has been cut at a time when they are already suffering as a result of the cost of living, but whose land and involvement is vital for connecting hard-to-reach areas, some of which do not have 3G yet, let alone 5G.
Ultimately, roll-out is dependent both on those who build and operate masts and on the willingness of site owners to host them. Where we rely on both to succeed, the needs of both must be taken into account, striking the right balance so that roll-out is not impeded at either end. At the moment, however, the objective information on whether the ECC strikes the right balance is simply not available. Will the Minister share any objective evidence held by the Department on the impact that changes to the ECC have had and will have on roll-out, particularly as its consultation, as I mentioned, did not include the most controversial elements of the code. A review would help fill the evidence gap. Put simply, it would seek to measure in a balanced way whether the ECC is increasing roll-out as it was intended to.
To be clear, the amendment would not prevent the measures in the Bill from coming into force. It is designed to ensure that all the provisions that we hope make improvements to roll-out can still be enacted as soon as the Bill receives Royal Assent. Compliance would still be expected from both providers and landowners. The amendment has no agenda for reversing any hard-fought changes in particular. It is a neutral amendment that seeks to put an end to years of constant disputes between providers and landowners and bring focus back to roll-out. The review would make recommendations only in areas that show clear evidential need for change and are currently stopping targets for connectivity from being met. If instead we choose to ignore the ways in which the ECC has been controversial, such disputes will only continue.
I take this opportunity to put on record Labour’s thanks to all those who host digital infrastructure on their land or buildings and are helping to connect their neighbours and communities to our modern world. It is clear that hosting masts can be difficult at times, but we must remember how vital it is for our country’s future that we get the widest possible connectivity. We want more groups to step forward to host infrastructure, not less.
Ultimately, Labour wants to see a fair settlement that supports small landowners in hosting digital infrastructure but allows providers to maximise roll-out. The amendment, which received cross-party support in the other place, provides an opportunity to ensure that the ECC is compatible with those aims and is supported by balanced evidence. All sides should be able to get behind that. We must be united behind the goal of boosting connectivity for those who need it so that our country can get on with harnessing the power of technology for good.
John Nicolson (Ochil and South Perthshire) (SNP)
Witnesses at the Digital, Culture, Media and Sport Committee have offered me, a history graduate and not the most technical of parliamentarians, a window into the world and advantages of connected tech. It is sometimes referred to as the “internet of things”: a world of possibilities and advantages for companies and consumers. The possibilities are wide-reaching and seemingly never-ending, but it is a brave new world that is already introducing us in Parliament, as well as those in the police service, healthcare and many workplaces, to new and unforeseen issues around our security.
The Bill does much good work in improving the culture of security from the inception of the product right from the design stage. Improved security will be integral, and as customers we will have the benefit of security information provided at the point of sale. All of that, surely, is advantageous. We on these crowded SNP Benches behind me recognise the value of the Bill. It is, however, well past time for speedier legislative progress. The world of connected tech is already well developed and established in healthcare, courier services and a multiplicity of industries around the world. We should have had legislation in place long before now.
As long ago as 2016 we saw a weaponised interconnection of connected tech devices used in a botnet to take down online titans such as Netflix, Amazon and others—2016. Countless Tory Prime Ministers and Chancellors have come and gone and, in one case, almost come again since then. Yet the Bill only hurtles into view as 2022 winds to a close. In that time, we have seen attacks on connected tech devices rising by hundreds of per cent. year on year.
Sir Desmond Swayne
On a point of order, Mr Deputy Speaker. I hate to interrupt this poetry, and it is indeed poetry, but what has it got to do with the amendments before us tonight?
Mr Deputy Speaker (Mr Nigel Evans)
I am sure Mr Nicolson will be getting to Lords amendment 17, and to Lords amendments 1 to 16 as well, but I am being generous because it is almost Christmas and I know he does not have many pages in front of him.
John Nicolson
Thank you, Mr Deputy Speaker. Indeed, I always stand in awe of the brevity of the right hon. Member for New Forest West (Sir Desmond Swayne) on these matters. I will try to emulate it.
Homes and industries across these islands are riddled with insecure technology because this House and the Conservative Government have been too slow to act. On the SNP Benches, we recognise that part 2 of the Bill sets out welcome changes that will be made to reduce bottlenecks and barriers to the roll-out of 4G and 5G masts. Let me highlight in particular Lords amendment 17, which has been opposed by the UK Government and by certain pressure groups and companies. The amendment requires that a review of the functioning of the code be started three months after the passage of the Bill into law. The amendment simply provides greater independent oversight on the efficacy of legislation and ensures that we as parliamentarians have access to more reliable information. The Government’s opposition to Lords amendment 17 is, I believe, misjudged. The amendment reinforces the principles of independent oversight and accountability. The Government should concede on the amendment. It improves the Bill.
Although the Bill is overdue, it is far from polished or complete. On the SNP Benches, we have been keen to work with the Government on a cross-party basis to resolve the deficiencies in the Bill highlighted by stakeholders and in expert evidence. It is imperative that these shortcomings are resolved as the Bill continues its passage. We will not oppose the Bill. Both here and as a Government in Holyrood, we will continue to push for co-operative engagement to produce a more polished and complete piece of legislation. We have waited this long, we had better get it right, Mr Deputy Speaker—and happy Christmas!
Jim Shannon
I just want to make a couple of quick comments on Lords amendment 17—I can confirm to the right hon. Member for New Forest West (Sir Desmond Swayne) that that is exactly what I am going to speak to—and on telecommunications infrastructure, which was referred to by the shadow Minister, the hon. Member for Barnsley East (Stephanie Peacock).
Many landowners back home in my constituency have put in a telecommunications mast, which is an integral part of the infrastructure. They find that their rental contracts have changed from what was potentially an income over a 10-year period to an income that has dropped down to about £200 or £300. The value for the landowners of having that infrastructure on their land is no longer a financial equation to their advantage.
If the telecommunication giants, or whatever they may be, try to retract and change the agreement with the landowners, do the landowners have any rights? Can they put an end to the infrastructure that is on the land? Can they seek recompense from the telecommunication companies, and can telecommunication companies proceed without the consent of the landowners? It is important for my constituents back home, who are faced with these predicaments, to get answers on such matters. I seek guidance from the Minister and hope that she can give me those answers.
Julia Lopez
I thank hon. Members for their contributions and for the wide-reaching support for the Bill, as that shows recognition of its importance.
The 2017 reforms were introduced to drive roll-out and were designed to make rents more akin to those for a key utility. There were, no doubt, issues after 2017 that led to protracted negotiations and examples of poor practice by operators, some of which we heard in Committee, but I am confident that we are now reaching market equilibrium, and renewal numbers are increasing year on year.
We believe that the Bill will lead to further progress, and we are making great progress on the roll-out. Our national gigabit coverage was 6% in 2019 and it is now more than 70%; 4G coverage is at 92%; and we met our 5G target five years early. We review the situation. We have monthly stakeholder meetings that have led to a new national connectivity alliance between operators and landlords. I assure the House that I am not on the side of either operators or landlords in the negotiations; I am on the side of people with poor connectivity. That is the lens through which I view the amendments and such people are our motivation, plain and simple.
I thank the Bill team and all the officials across many Departments who have worked hard over the past couple of years to reach this stage. The Bill will help people up and down the country to access the digital services that they need, and to do so securely. If the hon. Member for Strangford (Jim Shannon) would like me to, I shall take up the issues in his constituency. Beyond that, I commend the Bill to the House.
Question put, That this House disagrees with Lords amendment 17.
Product Security and Telecommunications Infrastructure Bill
Tuesday 22nd November 2022
(1 year, 4 months ago)
Lords ChamberRead Full debate Product Security and Telecommunications Infrastructure Act 2022 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 65-I Motion for Consideration of Commons Reason - (21 Nov 2022)
Lord Parkinson of Whitley Bay
That this House do not insist on its Amendment 17, to which the Commons have disagreed for their Reason 17A.
The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Lord Parkinson of Whitley Bay) (Con)
My Lords, it is a great pleasure to be back at the Dispatch Box to take this Bill, I hope, through its final stages in Parliament. I am very pleased to see how much progress has been made, and I take this opportunity to pay tribute and extend my thanks to my noble friend Lord Kamall, who carefully steered the Bill through Report and Third Reading in your Lordships’ House.
The Government have listened carefully to the points raised in scrutiny on this Bill, both in this House and in another place. We have taken on board recommendations made in both Houses of Parliament and have tabled amendments where those recommendations have strengthened the legislation. I am confident that the Bill is now in a form that will meet its objectives. Importantly for the debate before us today, that includes preserving a balance between landowners’ rights and the wider public interest in delivering telecommunications networks.
As I shall set out now, I hope that your Lordships will agree with Members in another place that Amendment 17 should not remain part of the Bill. The amendment in the name of the noble Baroness, Lady Merron, would add a new clause to the Bill requiring the Secretary of State to commission an independent review of the effect of the Electronic Communications Code, and of the Telecommunications Infrastructure (Leasehold Property) Act 2021, on the deployment of telecommunications infrastructure. Her amendment understandably aims to provide transparency, accountability and ongoing evaluation of the legislative framework that underpins digital deployment in the UK. As the noble Baroness knows, I fully appreciate the sentiment behind it, and I commend noble Lords in all parts of the House for their efforts to improve connectivity. I am grateful for the time given by the noble Baroness and others yesterday to discuss this ahead of our debate today. It is clear that we share the same goal, although our opinions in some instances differ about how to achieve it.
Lord Northbrook (Con)
My Lords, I welcome Amendment 17, which had not even made it to the internet section of the Bill when I looked an hour ago. I also welcome the Minister’s mention of the national connectivity alliance as a good co-operation between site providers and operators.
The reforms in the Digital Economy Act 2017 have resulted in lengthy legal disputes, causing significant delays to rollout. Small businesses and local sports clubs, many of which host telecoms infrastructure on their land, have lost thousands of pounds in income, with no commensurate boost to digital connectivity. This was foreseen by the current Prime Minister during the debate on the Digital Economy Bill in 2016, when he warned:
“Interfering with property rights, as the code does, is a major step for this House to endorse. I therefore urge the Government to ensure that the Bill benefits not just the network operators’ balance sheets, but the public interest.”—[Official Report, Commons, 13/9/16; col. 828.]
Overall, I am disappointed at the lack of compromise elsewhere by the Government and the absence of rigorous evidence for the Bill. It appears that its policy development has been entirely reliant on the telecoms operators. It is vital that the Government use all the tools still at their disposal to limit the most egregious effects of this legislation, including through the use of transitional arrangements.
On preventing backdated payments, the Bill as drafted will allow the courts to impose lower rents on site providers—I meant to declare an interest as a site provider—and this can be dated to years before the court issues its order. This will have the effect of courts imposing backdated payments of thousands of pounds on site providers, despite those rent levels having been agreed between partners in good faith. The Government have promised to consider addressing this issue through transitional provisions, and it is vital that they do so and consult properly with affected parties to ensure that their measures are effective.
The Government have not heeded the significant disquiet on transitional relief on valuation throughout the Bill’s passage through Parliament. I would like to put on the record the significant damage that will be caused to the market by extending the “no scheme” valuation into the Landlord and Tenant Act 1954. If the Government are set on not revisiting them, the changes to the regulatory framework and expansion of the 2017 reforms proposed by the PSTI Bill should be brought in gradually to avoid significant financial shocks for site providers.
I turn to the government evidence base. The impact assessment for the legislation at the time showed that the Government anticipated a reduction in rents of 40%. I have heard stories from site providers who have seen rent reductions of more than 90%, but even the operators accept that the rent reductions have been 63%. Although this is an unsourced and untested figure, it is still a huge reduction.
It is also concerning that the Government have refused to accept other sources of evidence. Last week, following a very useful meeting with the Minister, I received a document from DCMS expressing its concerns over a report produced by the CEBR, an independent and well-respected economic analysis organisation. It made a number of assertions which I believe are incorrect. First, it states that the CEBR report over-emphasises the interests of landowners. This is not borne out by the evidence cited in the Government’s report, which includes research funded or written directly by operators themselves. Secondly, it states that the CEBR report assumes that HMG’s policy will not reduce the number of delayed negotiations. This misses the point of the CEBR critique: the Government’s purpose should not be to expedite disputes but to prevent them arising. The view of the CEBR and the Law Society is that the PSTI Bill does not address this.
Thirdly, the document states that the CEBR assumes that reverting to the pre-2017 regime will not impact operator behaviour. This is based on the false assumption that the CEBR recommended a reversion to the pre-2017 status quo. It does not. Instead, it suggests an alternative code based on the Law Commission’s 2013 report. Finally, it states that delays to code reform will slow the shared rural network rollout. The post-2017 code reforms were already available to operators on all existing sites, and money saved from reduced rents has not been reinvested into the rural rollout. There is no reason to think that the savings from the PSTI Bill will be reinvested, and therefore rent reductions—or their absence—are not linked to the pace of rollout.
I am concerned that the Government are willing to dismiss independent evidence on spurious grounds simply because it does not align with what appears to be a pre-cooked policy direction. It is even more concerning that the Government describe their evidence as uncontested when there has been such widespread and cross-party opposition to this policy. During its consultation on the reforms that would become the PSTI Bill, the Government received over 1,000 responses, and later admitted that the vast majority related to the valuation regime. It is therefore highly inaccurate to suggest that their evidence has not been challenged, or that their position is widely accepted.
Ministers have also disputed factual evidence of the sheer scale of cases being taken to court, asserting instead that, as the Minister has just said, the market is settling and consensual renewal numbers are increasing. It is concerning that the Government see hundreds of court cases each year as the market settling; certainly, in my dealings with the operators, it was not a very calm operation. The lack of proper evidence has created unnecessary risks for the future of this market. I hope that, through Amendment 17, the Government will be open-minded and display more responsiveness to all available evidence in future.
Lord Cromwell (CB)
First, I thank the Minister and his officials for corresponding and meeting with me to discuss the Bill. That said, it is a shame that the Government in Motion A have set their face against Amendment 17, which is seeking a review of the Bill within three months, particularly as the festering problem at the heart of the Bill is the valuation method, which was not even a subject of consultation in preparing the Bill.
This legislation legalises extortion. It allows operators to strip site owners of their property rights and to confiscate their incomes, in some cases even retrospectively clawing back site rents paid under legally binding agreements. The Digital Economy Act 2017 has not led to the market being “settled down”, as the Government claim; it has, in fact, produced a steep rise in long and expensive tribunal cases. That rise would be far steeper but for the inequality of rights and resources between telecoms companies and the site owners, meaning that very few can afford to fight their cases. The Government’s claims that agreements are consensual, or can be solved by voluntary alternative dispute resolution, ring hollow when the law is so one-sided and the site owner is threatened by operators throughout any so-called negotiation with expensive court action. The fact is that the pendulum of power has swung way too far in favour of the operators.
The Earl of Lytton (CB)
My Lords, I greatly support this amendment, as I did at an earlier stage of the Bill. Therefore, I have to say that I do not agree with the Motion in the name of the noble Lord, Lord Parkinson.
I detect in the brevity of the reasons given for why the Government were not able to accept any of the matters put forward—and mentioned just now by my noble friend Lord Cromwell—the same endeavour to deny due process. Blocking the evidential basis in what has been brought before this Bill will then affect the process of getting a fair deal at the end. Exactly the same process will be relied on in any tribunal case or in any alternative dispute resolution forum. This is why proper access to an independent adjudicator is, in my estimation, already prejudiced by the processes in this Bill.
Seen in the context of the transfer of private rights from individuals and small property owners to an influential and well publicly funded band of corporate middlemen, the site companies, this, I am afraid, bodes ill. Certainly, I as a property professional and valuer can see this very much in the economic context—of course, valuers do not make the rules; they simply interpret what others are doing outside. This is why I have consistently said that this is something that will adversely move the goalposts, if not the whole playing field.
The measure in this Bill rolls back 60 years of compulsory acquisition and compensation practice. I am not clear that the subsequent need, as will occur as a result of the Bill, to claim damage occurring at a later date does anything other than reverse the burden of proof in favour of the state—or, in this case, the operatives of the state, and against the individual. I think that alters the parameters of fair compensation.
I wish the proposed alliance that the Minister referred to every good fortune, but I do not believe that it will do anything to improve on what has been nothing short of a land rights grab. I predict that a great number of the claims made in support of this will not be borne out by the facts when we look back in due course. On the delivery of the demonstrable public interest benefits, also referred to by the noble Lord, Lord Cromwell, where is the objective evidence? I predict that it will not even be visible in the corporate operation of the telecoms industry. So it is no good looking for that particular needle in that particular haystack.
What about the public utility performance by those not subject to public utility oversight and objectives? That was a point mentioned by the noble Lord, Lord Fox, at an earlier stage in our deliberations. If there is an impression of site providers being turned over, to use the cant of the trade, I am equally certain there will be a similar attempt to turn over the public interest in due course, which will be equally devoid of any evidence base or provable cause and effect. From a valuation standpoint, the absence of evidence, cloaked as it is often in confidentiality, forms a useful basis neither for the processes of this Bill nor for ADR or before a tribunal.
The basic premise of altering the valuation principle from market value to, effectively, land value—or, to put it in my terms, existing use value—is undefined as a concept. It is haphazard in practice, because it will relate simply to the actual use at any given time, so there will be very little consistency involved there. It is a basic denial of core transactional philosophies that sit behind all valuation and all transactions in the marketplace, and all confidence in the handshake that I have mentioned before in this House that is between the parties. The consideration is always—has to be, by definition—worth more to the recipient than the asset itself. It cannot be otherwise. I see this as a denial of that principle.
This has significance. Although outside people may think this is a wonderful idea, when it comes to the individual deals that needs to be done, it will have a chilling effect—I think it can be no other than that. I believe that sentiment is already actively moving against it. I do not know, because the Minister has not come up with it, where the evidence of the deals being successfully done has come from. For all I know, it may be generated by housebuilders keen to get good 4G coverage for their latest new housing development. That is fine, but it does not make the daisy chain of 5G connectivity across the country successful, and I think we really have to consider that.
I would still be very supportive of a review. If anything, I would like it to start a bit later and be more searching. That is essential, because we are sleepwalking into the unknown in terms of valuation technology, market sentiment and, above all, the evidential base. I would not be doing my duty in this House if I did not say that that fills me with considerable concern. This is no way to produce results that command universal buy-in, bearing in mind that everybody agrees that 5G and the better rollout of 4G are desirable in their own right. If what is happening before us is not snatching defeat from the jaws of victory, dissent and disillusionment from what should be a common purpose, I do not know what is.
The Earl of Devon (CB)
My Lords, I will briefly add my disappointment to that voiced by a number of other noble Lords. I note, as previously, my various interests relevant to this legislation. I also welcome the noble Lord, Lord Parkinson, back to his seat and thank him for the time he took to meet me and the noble Lord, Lord Cromwell, last week.
I asked in Committee, as long ago as June, for the data on which the Government were basing their approach to valuations in this legislation. I was promised it nearly six months ago. We finally received it last week—two pages of rather thin A4 paper which say that the Speed Up Britain campaign presented evidence to the House of Commons committee that average rent reductions are in the region of 63%. That is it—the evidence on which the entirety of this valuations issue is based. It is incredibly disappointing that it took so many months to get it and that there is really no evidence whatever.
I note also, as the noble Earl, Lord Lytton, just stated, that we are given numbers of 39 agreements in 2018 and 1,015 in 2021. To what extent do those agreements fulfil the Government’s connectivity and Project Gigabit ambitions? Where are they taking place? Are they rural or urban agreements? It is of no use simply to give us bare numbers.
The noble Lord, Lord Parkinson, undertook from the Dispatch Box that the Government would provide regular updates to relevant committees. I would like a bit more specificity, if he can, on exactly which committees the Government will provide updates to, how regularly they will be provided, what their content will be and whether they will be published to the whole House, as I imagine they should be. Just undertaking to provide updates is simply not sufficient.
Lord Clement-Jones (LD)
My Lords, I am grateful to the Minister for his earlier engagement on the issues represented by this amendment and for outlining why the Government will not accept it. It was rather fuller, I am glad to say, than the embarrassingly short set of reasons set out, as he almost admitted himself.
The noble Lords, Lord Northbrook and Lord Cromwell, and the noble Earls, Lord Lytton and Lord Devon, have very cogently explained why they believe—as we do on these Benches—that an independent review of the Electronic Communications Code is needed to get our telecoms legislation to the right place. Indeed, the noble Baroness, Lady Stowell of Beeston, said on Report that
“the case for Parliament imposing this independent review is compelling.”—[Official Report, 12/10/22; col. 834.]
I absolutely agree. We have heard powerfully today why there is such a strong view that this Bill is unfairly skewed against site owners, many of which are small societies and clubs. We must get the balance right for the Electronic Communications Code between operator and landowner and ensure that it is fit for purpose in delivering broadband and 5G rollout targets.
These targets have changed markedly over time. There has been a continual shifting of the Government’s gigabit target, which it seems has now shifted from over 99% to 85% of premises by 2025. There is a continuing rural/urban divide, and real problems with latency in rural areas.
Baroness Merron (Lab)
My Lords, I am sure the Minister has picked up on the mood of your Lordships’ House today, as I know he will have done in previous debates. I am grateful to him for outlining the Government’s approach on infrastructure rollout and the concerns regarding a review. However, like other noble Lords who have spoken today, I feel that the department is still missing the point. It is appreciated that the Minister acknowledged the sentiments behind the original amendment. In common with other noble Lords, I am also grateful for the time that he and his officials have given to the discussion and consideration of the points that have been raised.
However, the original amendment before this House, which we are looking at again today, was intended to help the Government—something I emphasised in the meeting with the Minister—not least because it is an attempt to bring together balance, fairness and efficiency and to take a rather different approach from the one we have seen thus far, which the noble Lord, Lord Clement-Jones, has just referred to, of a trajectory of continually watering down ambitions because the regime is simply not delivering at the required pace. It would be better to tackle the root problems to find a way forward than moving the goalposts, which is what has been happening so far.
The creation of new stakeholder bodies could prove to be a positive step, but we need to acknowledge that this is not the first time we have seen such an initiative. DCMS already runs a number of working groups, and the discussions within them have rarely led to any significant breakthroughs. It would be of interest to hear why the working groups in this setting will be any different. While wishing the national connectivity alliance well in its efforts, establishing new groups or structures will be of little use if they become—as other noble Lords have said—talking shops, or, very significantly, if underlying regulation becomes ineffective.
We welcome both sides of the rent debate getting around the table, but it is important to say that our concerns about rollout go beyond issues around the valuation of land. In any event, as the Minister has said, Parliament will not have a full role in the upcoming discussions. As the noble Earl, Lord Devon, has indicated, we could do with some more detail about the reference the Minister made to the way in which Parliament will be referred to in the deliberation. I would also appreciate the level of detail that has been requested.
These problems are not going away—if anything, the situation is likely to get worse before it gets better, particularly given the increased volume of tribunal cases and the Government’s refusal to make their new arbitration process mandatory. It seems that the Government hide behind existing processes, claiming that an independent review would unnecessarily duplicate Ofcom’s role, but the fact remains that the current system is not working, and that is what we have to address. The disputes and regulatory ambiguity mean that we are not delivering the upgrades that millions across our country so badly need.
I am sure we all agree that better connectivity is crucial to future economic growth—which is supposed to be the Government’s priority—but with every delay to our rollout and every problem that is being faced, we are losing ground to international partners. Yes, the Bill will deliver progress in some areas, which is why we will not delay its passage any further, but without concerted efforts, we are likely to simply rerun these very same debates again and again in the years to come. There was a window of constructive opportunity here, and I put on record my great disappointment that the Government have not recognised this.
Lord Parkinson of Whitley Bay (Con)
My Lords, I am grateful to noble Lords for the points they raised in the debate today. I will try to respond to the questions that they have asked. I understand your Lordships’ desire to ensure that the Government are held accountable, as we should be, for the legislation that we enact, and that we are taking appropriate steps to monitor its impact. I would certainly not disagree with that sentiment.
I will start with the comments on the valuation regime, raised particularly by the noble Lord, Lord Cromwell. This, of course, has been debated at length throughout the passage of the Bill, both in your Lordships’ House and in another place. I am grateful to the noble Lord and others for their time to discuss this in more detail, but we are now reaching the point where we are at risk of repeating ourselves. There are no new points to be added at length. I ask noble Lords to bear in mind that the valuation regime was introduced through the Digital Economy Act 2017. In the intervening period, the public interest in access to digital services has only increased—a fact underlined, of course, by our reliance on those services during the Covid-19 pandemic. The case for a framework which encourages investment has, therefore, never been stronger, and we think the statutory valuation regime is an important part of that framework.
My noble friend Lord Northbrook and others mentioned our scepticism about the CEBR report. This is not to denigrate the CEBR itself, and I will not expand on the points contained in the note that he and other noble Lords have seen, to which he referred. I underline, however, that it was commissioned by the campaign group Protect and Connect, as the noble Lord, Lord Clement-Jones, acknowledged, and there are certain campaigning groups that have been, throughout the passage of this Bill, seeking to influence the debate, which have vested interests in the matter. They are perfectly at liberty to make their points in the way that they wish, but it should be borne in mind that the organisation funding this campaign stands to make significant financial gains if the changes to the 2017 valuation framework are reversed.
I hope I can give greater reassurance to my noble friend Lord Northbrook on the point he raised about transitional measures. The Government are considering the implementation strategy for this Bill very carefully, including possible transitional provisions. I reassure noble Lords that the implementation of the Bill will be discussed with all interested parties, including those representing the interests of landowners. The Government are committed to ensuring that the Bill is brought into force not only in a timely manner but in a sympathetic and responsible way, taking into account the range of impacts that different approaches may have on different groups.
The noble Earls, Lord Lytton and Lord Devon, the noble Lord, Lord Cromwell, and others flagged the evidence base on which the Government’s conclusions are based. The Government’s position is based on a wide range of information. That includes data on coverage and connectivity, which is collated by Ofcom and which demonstrates that substantial progress has been made since 2017. I repeat my apology to the noble Earl for the delay in sending him the data during our debates on this Bill, partly because of the interruption in service on my part. It is true that we have taken into account data provided by the industry on the number of agreements completed since 2017, but these are data that can be supplied only by the industry. If the valuation framework had stalled the market or slowed down deployment, it would not be in the sector’s interests to try to maintain that framework.
A number of noble Lords talked about the reduction in rent, which we have seen since the 2017 reforms. It sounds as though we might not come to an agreement on the precise figure, but rent is only one element of the financial package that operators may offer to landowners. Within the legislative framework, separate sums can be offered as compensation to cover potential loss and damage; other variations might occur in practice within the market. For example, as part of the financial package, operators might choose to offer an early completion incentive payment. I am concerned that some of the case studies that have been drawn to noble Lords’ attention may ignore the overall package offered to landowners or fail to acknowledge that figures presented might have been an opening offer, when ultimately very different terms might have been agreed once proper negotiations have taken place. The amount of rent received will, in practice, often depend on the much wider circumstances in which financial offers are made and final terms are agreed.
Royal Assent
Tuesday 6th December 2022
(1 year, 4 months ago)
Lords ChamberRead Full debate Read Hansard Text Amendment Paper: Committee of the whole House Amendments as at 26 October 2022 - (26 Oct 2022)