Product Security and Telecommunications Infrastructure Bill

Debate between Lord Cromwell and Baroness McIntosh of Pickering

Report stage
Wednesday 12th October 2022 Lords Chamber

[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.