Product Security and Telecommunications Infrastructure Bill

Lord Northbrook Excerpts

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

[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?

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[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.

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As we have heard in some of the contributions today, noble Lords have been contacted by a number of lobby groups and organisations that want to reverse the changes that were made to valuation. I know that the picture painted by some of those groups is of a market that is broken, stalled or in need of assistance and of a landscape full of litigation between operators and site providers with barely any consensual deals being agreed. I have to say that the information received by my officials from interested parties on both sides of the fence—operators and site providers—is remarkably different. They are told of a market that has settled down, where relations between operators and site providers are much improved and where consensual deals are the norm. As has been the case so far on the Bill, I am always happy to hear from noble Lords with examples to the contrary. We believe that the measures in this Bill will build on the situation that we are hearing about from interested parties—

[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.

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[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?

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There are instances, but I cannot think of another previous instance where large, successful companies—in which, admittedly, the Government have made a substantial investment and which are not primarily constituted for the purpose of providing an essential good to the public in the same way as gas, water, electricity and drainage, but do provide the bulk of data for ongoing commercial purposes—have had a Government step in to interfere with their arrangements. In these circumstances, the Government have very much done so at their peril, convinced, I fear, by the representations of the big telecom giants.

[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.

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[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.

Product Security and Telecommunications Infrastructure Bill

Lord Northbrook Excerpts

Lords Hansard - Part 2 & Committee stage
Wednesday 29th June 2022 Lords Chamber

[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.

Product Security and Telecommunications Infrastructure Bill

Lord Northbrook Excerpts

Report stage
Wednesday 12th October 2022 Lords Chamber

Clauses 61 and 62 amount to legalising a land grab by large commercial companies, stripping site owners of both their rights and incomes. This is already devastating trust and co-operation, and these clauses will clog up rather than free up the much-desired rollout. I therefore support these amendments.

[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.

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[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.

Product Security and Telecommunications Infrastructure Bill

Lord Northbrook Excerpts

Consideration of Commons amendments
Tuesday 22nd November 2022 Lords Chamber

For the reasons I have set out, therefore, the Government firmly believe that the proposals contained in this amendment, although undoubtedly well-intentioned, are unnecessary and risk being a hindrance to the better connectivity and delivery that I know the noble Baroness wants to see. I therefore hope that your Lordships will agree that it should not remain in the Bill.

[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.