Product Security and Telecommunications Infrastructure Bill
(Limited Text - Ministerial Extracts only)
Read Full debateWednesday 12th October 2022
(2 years, 2 months ago)
Lords ChamberProduct Security and Telecommunications Infrastructure Act 2022 View all Product Security and Telecommunications Infrastructure Act 2022 Debates Read Hansard Text Watch Debate 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.
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 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.
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.
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.
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.
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.
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.
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.