Product Security and Telecommunications Infrastructure Bill

Debate between Lord Clement-Jones and Earl of Lytton

3rd reading
Wednesday 19th October 2022 Lords Chamber

[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.

Product Security and Telecommunications Infrastructure Bill

Debate between Lord Clement-Jones and Earl of Lytton

Lords Hansard - Part 1 & Committee stage
Wednesday 29th June 2022 Lords Chamber

[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.