Product Security and Telecommunications Infrastructure Bill

Lord Parkinson of Whitley Bay Excerpts

2nd reading
Monday 6th June 2022 Lords Chamber

Moved by

[Lord Parkinson of Whitley Bay]

That the Bill be now read a second time.

[The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Lord Parkinson of Whitley Bay) (Con)]

My Lords, Her Majesty’s Government want the UK to be a science superpower. Two key planks in achieving this are security and digital connectivity. The UK already influences and shapes global cyber standards and we have committed huge investment to counter cyber threats and to meet our digital infrastructure targets. Back in 2016, we invested £1.9 billion to bolster our cybersecurity, setting up the National Cyber Security Centre and investing in economic resilience, innovation and skills. Now we have gone further, with an additional £2.6 billion being invested over the next three years. The National Cyber Security Centre has stopped 2.7 million online scams in the past year alone, and the new National Cyber Force will proactively counter cyber threats that we face.

Our investment in innovation has seen more than 40 tech unicorns—that is, start-up businesses now valued at over $1 billion—grow outside London, with 100 more in the pipeline. We have invested significantly in superfast broadband, bringing it to 97% of premises, and are now driving investment in gigabit broadband, with over 68% of premises now able to access this technology. But we need to keep investing in emerging technologies to secure ourselves against future threats and realise the opportunities of a digital economy. Monthly broadband use has doubled in four years and continues to rise every year. Cyber threats are proliferating and technology is not always secure by design. That is why we have introduced this Bill.

We want to fulfil our commitment to delivering faster digital connectivity and to ensure that, as we grow, our technology is secure. The Bill will facilitate the extension of futureproofed gigabit-capable broadband and 5G networks, and improve the protection of people, networks and infrastructure from the harms caused by insecure consumer-connectable products. I will start with the telecommunications measures, explaining why they are necessary and what their intended effect is. Following this, I will turn to the product security measures and outline why it is important to consider digital infrastructure and cybersecurity in conjunction.

The Government are committed to delivering digital growth by building a stronger, more connected and more secure UK. This is even more vital as we build back from the pandemic. We have seen rapid growth in the availability of gigabit broadband, from less than 11% of homes and businesses at the end of 2019 to more than 68% today, but, to deliver much-needed connectivity, we must have a legal framework which encourages and enables the deployment of digital networks.

To that end, we are making good progress through a package of measures. Last year we passed the Telecommunications Infrastructure (Leasehold Property) Act to address one of the key barriers to the deployment of gigabit-capable broadband in blocks of flats. We have also committed to legislate to mandate gigabit connectivity in new-build homes. These regulations will be laid as soon as parliamentary time allows. We continue to work closely with the Department for Transport to ensure that street works support deployment of broadband while protecting the road network.

We are working with industry to support its investment and have committed £5 billion of public funding to ensure that no part of the United Kingdom is left behind. We aim to reach a minimum of 85% gigabit-capable broadband coverage by 2025 and to get as close to 100% as soon as possible. We have also agreed a £1 billion deal with the industry to deliver the shared rural network, which is already delivering improved 4G coverage across the UK. The operators and the rest of the industry remain confident that their combined coverage is expected to be delivered to 95% by the end of 2025. We also aim for the majority of the population to have 5G coverage by 2027.

To improve connectivity, in 2017 we implemented reforms to the Electronic Communications Code, which regulates installation agreements between landowners and telecommunications operators. Some noble Lords here today will have been involved in the scrutiny of that legislation. The aim was to make it easier and more cost effective for digital networks to be installed, maintained and upgraded. However, there is still more to be done. We need to go further to realise the Government’s ambitions for digital connectivity and levelling up.

The Bill before us will update the Electronic Communications Code, among other pieces of connected legislation, to deliver these ambitions. Specifically, the Bill aims to optimise the use of existing infrastructure. It encourages collaborative relationships between telecommunications operators and site providers. It gives operators the ability to obtain new rights, which will enable them to take advantage of new technologies and pass the benefits on to customers. It builds on previous measures to tackle the issue of unresponsive landowners and ensures that the price paid to host telecoms apparatus is calculated in a consistent way across the country, preventing a digital divide.

Making optimum use of existing cable and fibre networks has a key role to play in upgrading services and increasing competition. The Bill introduces a new automatic right for operators to upgrade or share apparatus installed before the 2017 reforms. This will be subject to specific conditions to ensure that it will not adversely affect landowners. The measures have been considered carefully to deliver significant benefits to the public while ensuring that there will be little impact on landowners.

Furthermore, the Bill rationalises the way in which expired code agreements are renewed. Currently, an operator has to use one of three different statutory renewal routes. The Bill ensures that, whichever route an operator uses, the terms of the renewed agreement will more closely align with the code as it was reformed in 2017. As a result, there will be greater consistency in how agreements are renewed across the UK.

Making better use of existing infrastructure through upgrading and sharing, and a more consistent and efficient renewal process, will not only improve digital services but reduce the need for new installations. This means less disruption from street works and fewer mast installations in both rural and urban settings, which I am sure will be welcomed in all parts of your Lordships’ House.

We are also introducing measures to facilitate greater use of alternative dispute resolution when parties are negotiating the terms of an agreement to install telecommunications apparatus. This is to ensure that disputes are resolved more quickly and cost-effectively, and that litigation is used only where absolutely necessary. We anticipate that this will encourage constructive dialogue between network operators and potential and existing site providers. It will address situations where landowners may feel compelled to accept terms offered by operators by giving them alternative means of resolving disputes without the need for lengthy and costly litigation.

Finally, in situations where landowners are not responsive, we are creating a new court process. This process will provide a quick and inexpensive route for operators to gain time-limited rights to access certain types of land. Again, these measures have been developed to strike the balance between protecting landowners and ensuring that everyone across the UK has access to reliable and quick digital infrastructure.

I turn now to the product security provisions in the Bill, since the demand for faster broadband is driven by the increasing number of devices we are all installing in our homes. Increasingly, we are streaming more programmes on smart televisions and using telephones and tablets for video calling; half of all homes have a smart speaker, smart watches continue to rise in popularity and smart doorbells and cameras are appearing on every street. The average UK household now has nine internet-connected devices, and over 50% of all UK households purchased an additional consumer connectable product during the pandemic.

With this increased ownership and use of consumer connectable products, there comes a heightened risk of cyberattacks. Cybercriminals have taken advantage of consumer vulnerability during the pandemic, and increasingly target consumer connectable products. In the first half of last year alone, we saw 1.5 billion attacks on connectable products—double the figure of the year before. Thousands of people in the UK have been victims of cyberattacks, leaving many with significant losses of money or private data. As we have seen recently, cybercriminals can now use compromised connectable products to attack large infrastructure. In 2016, the Mirai attack disabled internet access across much of the east coast of the United States of America; we still see variants of Mirai-using botnets attacking businesses and infrastructure today. We have made significant progress to develop the UK’s cybersecurity to tackle threats such as these. In 2018, the Government published a code of practice for manufacturers to improve the security of consumer devices. The UK is a world leader in this area, and our code has since been used by Australia and India, among other countries.

Of course, this progress needs to keep up with the ever-evolving cyber landscape—hence the need to legislate now to ensure that our people and networks are better protected. Taken together, the telecoms and product security measures in the Bill work to create a reliable fast broadband network, and to support the growth of more secure consumer connectable products. The Bill will enable the Government to specify mandatory security requirements to ensure that manufacturers, importers and distributors of smart devices work harder to protect consumers from cyber risks. These requirements will be set out in regulations and are supported by experts, industry and our international partners, with whom we continue to work closely to ensure that everyone is well aware of the initial three requirements.

The first is a ban on universal default passwords. Too often, consumer connectable products come with an easy-to-guess password; this makes them vulnerable and risks compromising a user’s privacy and security. The second is that a manufacturer of consumer connectable products must have and maintain an accessible vulnerability policy, obliging them, as a minimum, to receive and respond to reports of security issues in their products. This is important to ensure that manufacturers can be made aware of, and quickly address, any shortcomings in their products, and to foster good practice to protect society as a whole. Finally, manufacturers will be required to be transparent about the minimum length of time for which a product will receive security updates. This should enhance consumers’ awareness, enabling them to consider the security of products before they purchase them and, in so doing, foster market competition towards enhanced security update periods. Where those three security requirements have not been complied with, businesses will not be allowed to make these products available in the UK. We will be able to monitor, investigate and take enforcement action where necessary.

These are the first steps towards a change in the security landscape for consumer connectable products. We have created this Bill to reflect the need for resilient and adaptive measures to protect consumers and our vital infrastructure. Both the product security and telecoms infrastructure measures in the Bill will be of benefit to the public. We have brought the Bill forward to ensure that, as our digital infrastructure evolves and as we become more connected to the internet, we protect consumers from the dangers which come with this. I hope that noble Lords from across your Lordships’ House will support the Bill, and I look forward to discussing it in detail as we scrutinise it.

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[Lord Parkinson of Whitley Bay (Con)]

My Lords, I am very grateful to all noble Lords for their contributions to what I agree has been a very enjoyable debate this afternoon. I am sure these contributions will form a prelude to some further interesting and enjoyable debates in Committee and later stages of the Bill. I am grateful, too, for the excessively generous compliments from my noble friends behind me, which I am sure are an illustration of the great harmony and mutual affection for which the Conservative Party is, today of all days, renowned.

As my noble friend Lady Harding of Winscombe rightly said, this is a technical but important Bill, and I am pleased that all noble Lords from all parts of your Lordships’ House are in agreement that people from across the country should be able to benefit from faster digital connectivity and the assurance that their technology is secure. The Bill therefore comes at an opportune time, when cyberattacks are on the rise and when digital connectivity is increasingly important for all the reasons that my noble friend Lady Hodgson of Abinger and other noble Lords set out. We have heard examples in today’s debate of the benefits which will accrue to communities, urban and rural, right across the country.

I am conscious that in Committee we will go into greater detail in some of the areas which noble Lords have alluded to, but I want to respond to some of the points which they have raised in today’s debate. The noble Lord, Lord Fox, began in general terms by asking whether we ought to set out a clear explanation in the Bill of what consumers can expect in terms of product security. The fundamental purpose of the Bill, as set out in its first clause, is to embed security requirements to protect and enhance the security of connectable products and their users. That is the measuring stick against which the impact of the Bill and future regulations will be assessed.

As I alluded to in my opening remarks, there are no silver bullets in cybersecurity. Thousands of people in the UK have been victims of cyberattacks, and cybercriminals are using connectable products to attack large infrastructure as well. Our approach to connectable products lies in both the UK and wider international expertise. Our own 2018 code of practice is the foundation of the first international standard for consumer security and there is an international consensus behind this standard. We are also, through the Bill, the first to embed these protections in legislation. At the moment, some security-conscious manufacturers address these threats, but through the Bill we will now make sure that all manufacturers follow best practice in future.

The noble Earl, Lord Devon, rightly spoke of our international standing. The UK has established global leadership in this area. We have worked closely with our international partners and have seen evidence of other countries and organisations embedding the approach that we have taken in their own codes. In my opening remarks I mentioned Australia and India, which have published codes of practice with the same 13 principles which we published in 2018, but Singapore, Germany and Finland among others have made their own domestic interventions which also align with the UK’s code of practice. The European Commission has also published its intention to explore regulation for connected devices through the cyber resilience Act.

On Part 2, the noble Lord, Lord Fox, in general terms asked why we were revisiting and changing the code again. As noble Lords noted, it was substantially reformed in 2017, following the important and substantial work undertaken by my noble friend Lord Vaizey of Didcot when he was the responsible Minister. A key aim of those reforms was to make it cheaper and easier for digital infrastructure to be deployed, maintained and upgraded. The Government recognised that this would mean telecommunications site providers receiving lower payments than had previously been the case. However, those changes were introduced only following an extensive period of consultation and research and were considered necessary to reduce operator costs and to encourage the industry investment required for the UK to get the digital communications infrastructure that it needs.

The Government intended that the 2017 reforms would speed up deployment and reduce operator costs, and indeed the changes have borne fruit. However, since the changes have come into force we have also received feedback about how they have worked in practice and about some of the ongoing challenges which people face. The Bill aims to tackle those problems and to ensure that the aim and the ambition of the 2017 reforms is realised. To give an example, both operators and landowners have pointed to problems regarding negotiations, with operators saying that they take too long and landowners saying that they face too much pressure to accept certain terms. This is one of the areas we will address through the Bill.

A number of noble Lords spoke about the valuation work which came from the 2017 reforms. The new pricing regime is more closely aligned to those for utilities such as water, electricity and gas, and we think that is the correct position. Landowners should still receive fair payments which, among other things, take into account any alternative uses that the land may have and any losses or damages that may be incurred. We think that the measures in the Bill will support greater collaboration between operators and landowners and help agreements to be completed more swiftly.

The prices being paid for rights to install communications apparatus before 2017 were too high and reflected the rapid explosion that was taking place in demand for digital services; it was right that they were addressed. The 2017 reforms were intended to strike a balance between ensuring that individual landowners are not left out of pocket and making network deployment and maintenance more cost-effective.

The noble Earl, Lord Devon, and others asked about reviewing the impact of the reforms made in 2017. We recognised when the 2017 reforms were introduced that the market would need time to adapt and settle, and it would be premature to carry out a full assessment of the 2017 reforms at this time. There is not enough evidence about agreements which were completed after they came into force for a properly robust and comprehensive analysis to be made—not least, of course, because of the impact of the pandemic. However, the evidence and feedback we have received provides a compelling case that the changes we are making in this Bill will ensure that the 2017 reforms have their intended effect. Making these changes now will help to deliver the Government’s 2025 connectivity target of at least 85% of homes and businesses having access to gigabit broadband. That is not to say that we think the 2017 reforms failed. Much progress has been made. We simply think that more can and must be done to maximise their impact.

The noble Lord, Lord Clement-Jones, and the noble Baroness, Lady Merron, asked about impact assessments. The impact assessments which accompanied the 2017 reforms did not state that the Government would undertake a full economic review of the code’s impact on rents, but in that document the Government committed to reviewing the 2017 reforms as a whole by June 2022—this month. The Government have met this commitment through their continuing engagement with interested parties, including holding monthly access to land workshops. This engagement and the issues which have been highlighted through it prompted the 2021 consultation and the measures in the Bill, which we think are needed for the aims of the 2017 reforms to be fully realised.

[Lord Clement-Jones (LD)]

That sounds a bit feeble. DCMS has had workshops but has not produced a review. That does not sound like any sort of review.

[Lord Parkinson of Whitley Bay (Con)]

The noble Lord perhaps thinks we committed to more in 2017 than we did. We have met the commitments we made in 2017 through our engagement with the industry. The points it made have informed the Bill before us. I am sure we will debate—

[Lord Clement-Jones (LD)]

May I suggest that if the passage of the Bill is to be smooth, any information the Minister is able to provide about the impact, past or expected, would be extremely helpful? Otherwise, we are all going to be arguing about suppositions.

[Lord Parkinson of Whitley Bay (Con)]

Certainly. I pointed out that the time that has elapsed since 2017 has perhaps not given us as much real data as we would have had, were it not for the pandemic, but of course we will be influenced by what have seen as we scrutinise the Bill in Committee and later.

We have heard a range of views on multiple dwelling units. The Government are aware of calls from parts of the industry for greater automatic rights to upgrade existing infrastructure in multiple dwelling units. The Government are not convinced that granting those rights is proportionate, because we must strike the right balance between private property rights and public benefits. There are other ways that operators can arrange to upgrade equipment in multiple dwelling units. They can ask for those rights and if landlords fail to reply, they will be able to use the process created through the Telecoms Infrastructure (Leasehold Property) Act 2021. If landlords refuse, operators can ask the courts to impose additional rights to upgrade existing equipment if their agreement with the landlord does not already provide them with those rights.

Other measures in the Bill encourage the use of alternative dispute resolution to support more collaborative negotiations. The Government are also considering further changes through regulations to help code disputes be dealt with more quickly. Finally, it is important to stress that there is no consensus from the industry on this issue, just as there was no consensus in our debate today. In fact, many operators have opposed the proposal on the grounds that it would create an unfair advantage for operators who already have equipment inside buildings and could therefore have anti-competitive effects.

My noble friend Lady Harding of Winscombe asked about telegraph poles. It is important that any automatic rights in relation to apparatus on, under or over private land strike a fair balance between any interference with private property rights and any public benefits that can be delivered. We think that the measures in this Bill on rights to upgrade and share apparatus under land achieve that balance. However, we have seen some evidence that further public benefits might be achieved if telecommunications poles sited on private land could be upgraded and shared more easily. Operators already have statutory rights to fly wires between these poles and it is obviously important that the legislative framework supports the effective use of these rights; we are looking into this matter closely.

A number of noble Lords touched on what is and is not in scope of Part 1 of the Bill. The Bill sets out what types of products should be treated as “consumer connectable”. This includes products that can be connected to the internet, such as routers, smart TVs, smart home products and connectable toys. I can tell my noble friend Lord Arbuthnot of Edrom that toasters are indeed in scope, although the idea of an internet-connected toaster makes me think of Wallace and Gromit. I share his bafflement at why people might want to do it, but they are in scope.

The powers in the Bill will allow the Government to update products that are in scope where changes to the wider regulatory, technological or threat landscape render this appropriate. The Government also intend to remove some products from scope where their inclusion would subject them to double regulation or where that would be disproportionate to the level of security risk. An example of such an exception is automotive vehicles, which I can tell my noble friend Lord Vaizey of Didcot include e-scooters; other examples are medical devices and smart charging points.

My noble friend Lord Arbuthnot talked about the vulnerability disclosure process. Of course, manufacturers will not see every vulnerability in their own products. Increasingly, the people best placed to spot them are everyday users and designated security researchers; but the potential point of failure here is the process for reporting those vulnerabilities to the manufacturer, which is often difficult to navigate. The security requirement will mandate a clear point of contact and the policy for the manufacturer to receive such reports and take meaningful action to address them. That is an important step forward, which, I am pleased to say, has widespread industry and expert support.

The noble Lords, Lord Clement-Jones and Lord Bassam of Brighton, the noble Baroness, Lady Merron, and others asked about future-proofing. There is a common notion that Governments are behind the curve when it comes to regulating technology, but not in this case. As well as setting the stage to introduce the regulations to which we have already committed, this Bill establishes a flexible and future-proof regulatory framework so the Government can be agile and proactive in amending and introducing security requirements in step with technological innovation. That is exactly why we have not included the three security requirements on the face of the Bill. By design, the Bill not only addresses the current problem but looks beyond it to ensure that UK consumers can be protected no matter how technologies and threats change and emerge.

My noble friend Lord Holmes of Richmond asked about the Computer Misuse Act. Colleagues at the Home Office are currently taking forward work to identify whether the proposals made in response to the review of that Act, which was launched in May last year, will assist in helping to protect the UK from cybercrime, or whether they are addressed under other programmes of work. We will provide an update to your Lordships’ House in due course, but this Bill will enhance protection for consumers and networks from the range of harms associated with cyberattacks. It equips the Government with the necessary powers to set and update security requirements within a fast-growing area of emerging technologies.

[Lord Clement-Jones (LD)]

I am sorry to interrupt the Minister again, but I am frightened that he is not going to tell us who the regulator will be, explain why we are covering only three of the many principles covered in legislation in other territories, or provide us with a glimpse of the secondary legislation.

[Lord Parkinson of Whitley Bay (Con)]

The noble Lord is eager to hear answers to questions to which I may yet turn; on some of them I will write. Work has been done to identify the regulator, but it would not be right to refer to that person at this stage and ahead of Royal Assent. I will write to the noble Lord on the other points he mentioned. I talked just now about our approach, through secondary legislation, to future-proofing and the reasons for not setting out the first three principles in the Bill. We have set out what those standards will be up front.

My noble friend Lord Holmes of Richmond spoke about the important issue of digital inclusion and skills. We run programmes to give young people the opportunity to learn digital skills and to improve their cybersecurity. More than 100,000 young people have participated in these programmes. We have expanded that with a new online training platform, Cyber Explorers, which aims to engage 30,000 young people, and DCMS funded the creation of the UK Cyber Security Council to create professional standards and pathways for cybersecurity.

The noble Lord, Lord Fox, asked about Huawei equipment in our infrastructure. The Government have undertaken a consultation with the industry on the designation of Huawei as a high-risk vendor and proposed directions relating to Huawei goods and services. The responses we receive will inform any final post-consultation decision on whether to issue the designation notice and direction. The Government have also undertaken a public consultation on a set of draft electronic communications security measures regulations and a draft code of practice, the outcome of which will be published in due course.

[Lord Fox (LD)]

It was the “in due course” bit that I was interested in. In other words, what is “in due course” in this case—months, weeks, days, years?

[Lord Parkinson of Whitley Bay (Con)]

I am afraid I am not able to elaborate further than “in due course” at this point, but if I am able to before Committee I will come back with more particulars. The final regulations and code of practice will be laid in Parliament later this year using the negative procedure, as required by the Telecommunications (Security) Act.

The noble Baroness, Lady Merron, asked about the knock-on effect of telecoms operators’ reduced rental payments on the funding of community organisations. It is important to note that the funding for such organisations should not be reliant on telecommunications. There are many funding streams, not least from the Government, to support them and their important work. The National Lottery Community Fund is the largest non-government funder of community activity in the UK and one of the largest arm’s-length bodies that DCMS sponsors. Officials at the department work closely with the National Lottery Community Fund to ensure that it continues to support the evolving needs of civil society organisations. Over the last five years, the fund has distributed £3.4 billion.

The noble Baroness talked particularly about sports clubs. The Government very much agree that sports and physical activity are critical for our mental and physical health, which is why we provided an unprecedented £1 billion of financial support to sport and leisure organisations during the pandemic. We will ensure that community groups continue to get the support they need.

I shall write to the noble Lord, Lord Clement-Jones, on the points that he highlighted that I have not addressed today. I would, of course, be very happy to speak to any noble Lords who would like to talk about any of the issues in the Bill in further detail. I am very grateful to my noble friend Lord Hunt of Wirral and to the noble Baroness, Lady Merron, and the noble Lord, Lord Bassam of Brighton, as well as the noble Lords, Lord Fox and Lord Clement-Jones, for the engagement that we have had in detail already. I would be more than happy to hold further discussions and talk in greater detail between now and Committee.

My noble friend Lady McIntosh of Pickering offered to furnish me with the details of some of the unused masts in North Yorkshire, and I would be very glad to receive them and take them forward to discuss with officials.

Bill read a second time and committed to a Committee of the Whole House.

Product Security and Telecommunications Infrastructure Bill

Lord Parkinson of Whitley Bay Excerpts

Lords Hansard - Part 1 & Committee stage
Tuesday 21st June 2022 Lords Chamber

[The Earl of Erroll (CB)]

My Lords, I want to say just a couple of words because, having read this and listened, I think the amendment has a very good point. I like the concept of a duty of care, because if we do not have that, who are we worrying about? In fact, Clause 7, on “Relevant persons”, is all about the manufacturers, importers, distributors, et cetera, with nothing about the customer, the poor person who is going to get hit by it. It is a very good idea to put that in at the beginning, setting down some principles and duties, because the other trouble is that by the time that we have done all these bits and pieces, made the regulations and the provisions, we are always acting after the event. What we need is a bit of proactivity, and we get that in this suggested new clause, because manufacturers, importers and distributors would have to make sure that products met certain minimum requirements. They would need to understand what “emerging security threats” there were; in other words, thinking ahead to the next stage and not just saying, “Oh, well, it complied with those things last year”, by which time the horse has bolted and we are far too late. So, I like it.

[The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Lord Parkinson of Whitley Bay) (Con)]

I am grateful to the noble Lord, Lord Fox, and, in his absence, the noble Lord, Lord Clement-Jones, for their Amendment 1 and for the wholly positive intention with which it has been tabled. I was grateful to have had the opportunity to talk to them about it before Second Reading as well. As the noble Lord set out today, he has argued that customers deserve some high-level principles setting out the security protections they should expect when purchasing consumer-connectable technology. In fact, Amendment 1 goes further, as noble Lords have noted, and would require manufacturers to owe their customers a “duty of care” to protect them. We are not as keen as the noble Earl, Lord Erroll, on that.

The first problem we have with a duty of care is that it could give consumers a false sense of security. If consumers buy well-designed technology products which meet the best standards, it considerably lowers risk, but with cybersecurity there is no such thing as zero risk: the most aggressive and well-resourced hacker will find a way. Somebody may have a quality product, but have they secured their wi-fi router? Do they have some legacy technology on their network? Manufacturers of a single device do not control the whole range of apparatus which constitutes the attack surface so cannot always provide an absolute security warranty, and they cannot always predict the next attack vector.

The second problem we have is that we have learned that the security of devices is best served by standards rather than principles. If one sets standards, one can send a device to a laboratory and assure oneself that those standards have been met. If one sets principles, that does not apply. That is why the Bill is designed to give force to standards. Those standards, developed here in the UK and now adopted by Governments and jurisdictions across the globe as well as by international standards bodies, are widely recognised significantly to lower risk for consumers.

Of course, we believe that the responsibility for the security of connectable products most effectively lies with the manufacturer. We expect manufacturers to take security seriously, to implement measures to develop and maintain an awareness of the security of their products, and to be up front with customers about the security support they can expect. We have tried voluntary compliance, with our code of practice which was published in 2018. We now need mandatory requirements, and that needs specific security requirements that can be independently assessed. The legislation must enable the Government to keep pace with market dynamics and the changing technological landscape—as the noble Baroness, Lady Merron, said, it is important that we move with the times. The flexibility to be able to set different security requirements for manufacturers, for importers and for distributors is key to this.

Amendment 1 in the form drafted would place an equal weight on the duties of each of these three groups to secure products. Compelling the Secretary of State to have regard to this general duty could constrain the Government’s ability to set specific security requirements in the future. Crucially, these principles could restrict the use of powers in this part of the Bill, working against the Government’s ability to bring this regime into force and impeding our ability to keep that regime future-proof. I should also say to noble Lords that industry and consumer groups have not raised the need for general principles such as this. Our efforts to engage and communicate our intentions have been clear, and the requirements we have set out for the relevant persons have been widely understood and are in line with international standards.

The noble Lord, Lord Fox, asked why the Government have chosen these three specific security requirements rather than others. During the consultation in 2019, we explored a number of options including mandating that all consumer-connectable products meet all 13 guide- lines in the code of practice. They are all important, but the majority of respondents supported the option that the top three security requirements represented the most appropriate baseline, by balancing the important requirements that are testable, being applicable across a range of devices and creating the right incentives to improve security in these products. That is why the Government are initially mandating the implementation of security requirements that will make the most fundamental impact on the risks posed by insecure consumer-connectable products for consumers, businesses and the wider economy.

The noble Lord also asked about where products end and apps begin. The powers in Part 1 allow Ministers to set out requirements that include products and software. The proposals in the consultation he mentioned relate to those who operate app stores. So, while I acknowledge the good intentions behind it, I hope I have been able to set out why the Government feel that this amendment—

[Lord Fox (LD)]

I thank the Minister for giving way. That does not answer the question of where an app starts. If I am downloading Nest for my heating system, I am getting it from an app store, so where is the regulation coming? Is it the app that is coming from the app store, or is it the connectable device law that is coming through here? In which case, I think some explicit connectivity between the apps that run the connected devices needs to be written into the Bill.

[Lord Parkinson of Whitley Bay (Con)]

Perhaps, if the noble Lord is happy, we can explore this. The example he gives, as he knows, includes software and technology. Perhaps we can have a detailed discussion where we can work through some of those examples. I would be very happy to talk to him about them because on the question he poses the line is drawn in a different place depending on the product and its nature.

[The Earl of Erroll (CB)]

The Minister talked about standards a moment ago. If we are going to rely on standards, who is writing them? I presume that he is talking about British standards; to write a standard will take a year or two. I hope that the Government are going to fund it. We got no help from them in trying to fund stuff around age verification, even though that was core to the Digital Economy Act. If we are going to elevate it to an international standard, that will take another year or two, so we will not see any action for a long time if we are going to rely on externally written standards. I have chaired two BSI standards so far, and it does not happen just like that.

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[Lord Parkinson of Whitley Bay (Con)]

Some of the standards in this area have been set in the UK and have already been adopted by other jurisdictions, so I hope that we can give the noble Earl some reassurances. While I acknowledge his point about the time it takes for these to be adopted internationally, in some areas the UK is setting the way, and these are being picked up across the globe.

As I said, while I note the good intentions behind Amendment 1, these are the reasons why the Government are unable to support it. However, I am very happy to pick up the questions about apps and products with the noble Lord and others who wish to join that conversation. I hope that, for now, the noble Lord will be content to withdraw his amendment.

[Lord Fox (LD)]

My Lords, while that was a relatively disappointing response, I am pleased that we can have the discussion about apps. I thank noble Baroness, Lady Merron, and the noble Earl, Lord Erroll. I think he put his finger on it. If we are to keep pace with the speed of change only through a standards regime without making the companies delivering these products in some way responsible—whether through a code of practice or a duty of care, I am not quibbling—there is no way that a standards regime can keep pace with the innovative speed that international crime is running at on cybercrime.

The idea that we can chase this down the road is wholly wrong. I ask the Minister to sit down with the department and perhaps we can come up with a different way of doing it. I am totally agnostic about how we go about it, but some sense that we are not just chasing this needs to be in this Bill, otherwise it is going to be after the fact. That said, I am happy to beg leave to withdraw Amendment 1.

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[Lord Fox (LD)]

My Lords, I will speak to Amendments 3 and 5 and in support of the other two amendments in this group. All these amendments refer to Clause 1 and seek to add some specificity to its general nature. The first amendment in my name and that of my noble friend Lord Clement-Jones is Amendment 3. This inserts a new paragraph (c) into Clause 1(1), adding the text

“children where they are not primary users of products but are subjects of product use”.

Why is this necessary? Here I am indebted to a report on cybersecurity, the UK Code of Practice for Consumer IoT Security produced by the PETRAS National Centre of Excellence for IoT Systems Cybersecurity. Noble Lords may be aware of this group; it has a very strong record in this area. It is a consortium of leading UK universities dedicated to understanding the critical issues of the privacy, ethics, trust, reliability, acceptability and security of IoT. I commend this organisation to the small number of noble Lords in this Chamber interested in this area.

This report highlighted, among other things, the importance of children’s connected toys receiving the necessary scrutiny, due to the implications of embedded cameras and microphones, with the aim of ensuring the child’s and the parents’ protection and right to privacy. Such devices include a wide range of everyday artefacts with internet connectivity intended for use by children or in caring for them, such as interactive toys, learning development devices and baby or child monitors.

These connected toys and tools have the potential for misuse and unauthorised contact with vulnerable minors. The British Toy & Hobby Association has responded by offering a range of guidance notes and by interpreting the code of practice, but with SMEs manufacturing most of these devices, there is much more to be done to ensure that those organisations are sufficiently informed and equipped to produce and market toys that are secure.

Security is not straightforward, as the Minister has already pointed out. While these devices offer a range of advantages through their connectivity, they also potentially expose children and their families to risks that have not yet been fully articulated to many of the consumers who are buying these toys.

A real-life example is that the toy giant Mattel launched Hello Barbie. The Minister may be familiar with it—I do not know. This was as far back as 2015. It was a very innovative toy which it launched with a start-up business called ToyTalk. The principle of this toy was that it could converse using internet connectivity with speech recognition, so as well as talking it could listen. Hello Barbie also allowed parents to log in later and eavesdrop on their children’s conversations with their toys. I will leave your Lordships to decide the ethics of that.

But this connectivity raised some concerns, primarily around who could listen in and record these devices and store conversations and behavioural and location data, and for what purpose this data could be used. Toys like these are now prevalent and they raise significant questions about the appropriate support and guidance for the toy manufacturers, which understand an awful lot about conventional safety—they know how to make physically safe toys—but do not have a track record on developing informationally and data-safe toys because they have never been asked to do that before. This is a new venture for them, and it requires a totally new set of skills and standards, as the Minister might say.

As technology evolves hacking is increasing in sophistication, so it is necessary to keep moving forward. The challenge for cybersecurity in remaining ahead of the risks is inevitably a technological one, and the Minister may remember that the Hello Barbie toy, having been launched and lauded for its security, was ultimately found at some point to have serious security issues. Even that toy, from a very large manufacturer, fell foul of the progress of information crime.

Nevertheless, it is clear that today some toy manufacturers are releasing connected toys without adequate safety and security features. This is a competitive and dynamic marketplace—a lot of it is to do with price—and first movers are rewarded. In addition, the skillset and knowledge base, as I have just said, for conventional toy safety is mismatched with these new toys and we need to find a way of addressing that divergence. This is going to require investment and new learning and will not happen unless the toy manufacturers are required to do it.

Secure software development and cybersecurity are novel demands on this sector. However, the fact remains that these toy manufacturers are potentially placing consumer safety and privacy at risk. It does not matter whether this occurs due to the immaturity of the sector, market pressures or the lack of sectoral attention to the problem.

In the view of the Petras report,

“there are no indications that this will be addressed through market forces. Instead, the certainty of legislation to maintain standards would level the playing field and make clear for SMEs where they need to invest to make their toys market ready.”

Thus, more than the technological challenge of staying ahead of hackers, what is salient here are the challenges to the implementation of basic security features in manufacturing such as basic authentication and encryption, without which children’s safety and security is at risk.

This amendment explicitly places child security front and centre in this Bill. In other legislation involving the internet and digital issues, such as the Online Safety Bill, the Government have imposed more onerous duties on those delivering services to children than to adults. This amendment would be entirely consistent with that approach—very much in the spirit of understanding that our children and young people are more vulnerable and therefore need more protection from harms.

I turn next to Amendment 5. The eagle-eyed among your Lordships will spot that it is very similar to Amendment 4, proposed by the noble Baroness, Lady Merron, and set out very elegantly by the noble Lord, Lord Bassam. In fact, I would suggest that, largely, its construction is better than ours because they managed to do the same thing in fewer words. I will speak to Amendment 5 but my comments apply to Amendment 4 as well.

Amendment 5 seeks to ensure that:

“Regulations under this section must include provision that all security requirements specified in accordance with this Act are included as essential requirements in statutory conformity assessments and marking procedures under the Radio Equipment Regulations 2017 … and in any other such assessments and procedures applicable to relevant connectable products.”


I am speaking to the spirit of both these amendments. Amendment 5—similar to that of the noble Lord, Lord Bassam—follows on from the advice and help of Which? I thank that organisation, which has really been at the forefront of the consumer issues involved. In essence, the amendment picks up on three of the issues that the Minister tells us will be dealt with in SIs as soon as the Bill becomes an Act, but it takes the rather stronger approach of placing them in the Bill.

Paragraph (a) of proposed new subsection (2A) goes further than the general principle in specifying that passwords are not to be weak. As Which? explains, many smart products push the user to create a password themselves, rather than use a default password. However, they then allow weak and easily guessable passwords to be created, meaning that the risk of compromise stays high.

One of the outcomes of this amendment would be the introduction of a requirement for responsible password policy guidance to be adopted by the industry to ensure that security liability is not simply passed from the device manufacturer to the consumer. The Bill and associated guidance should be amended to clarify that every individual device must have a unique or user-set password that meets effective complexity requirements.

Paragraph (b) of proposed new subsection (2A) seeks to avoid the risk of disclosures going into a black hole or taking many years to fix. The Bill and associated guidance should be amended to make clear what is required of manufacturers, importers and distributors on provision of disclosure policy information, particularly around vulnerabilities. The appointed regulator should also clearly define and distribute a risk assessment framework for vulnerabilities that removes any sense of subjectivity and ensures that the response is effectively mandated.

Paragraphs (c) and (d) of our proposed new subsection concern the length of time a product is supported. The Government should introduce mandatory minimum support periods for smart products and consider whether these periods should reflect how long consumers, on average, continue to use such products. There is a precedent here. New ecodesign and energy labelling requirements came into force in England, Scotland and Wales in 2021. They include a requirement for electronic display items, including televisions, to be provided with firmware and security update support for a minimum of eight years after the last unit of a model has been placed on the market. A consistent approach to support periods for a range of products therefore needs to be considered, and it has already been considered in this other legislation.

Customers need absolute clarity on the support period manufacturers will offer, so that they are able to make more informed purchasing decisions. There must be a clear definition of what the “point of sale” means and how this relates to the definitions of “supply” in Clause 55. Without clearer specifications on what form the transparency requirements will take, there is a risk that this information could be hidden, obfuscated or even mislead. This amendment is designed to probe the Government’s thinking on these very important issues.

Finally, and very briefly, as a signatory to Amendment 2, I give it my full support.

[Lord Parkinson of Whitley Bay (Con)]

I am very grateful to noble Lords for setting out the cases for Amendments 2, 4 and 5. Since January 2020 the Government have been clear on introducing security requirements based on the three guidelines to which I referred in the previous group.

The commitment to set requirements has been made in response to consultations, published strategies and indeed to the Explanatory Notes to this Bill. Our notification to the World Trade Organization also contained reference to some of these documents. We have put manufacturers, trade bodies and industry representatives on notice. Supply chains are long and surprises unwelcome, so the Government have been very clear on whither we are heading.

Amendment 2 would remove any discretion the Secretary of State has to make regulations. I appreciate that the intention behind tabling it is to explore this issue, and I hope I can assure noble Lords that it is not needed. The regulations will be made, and swiftly. Indeed, we have already consulted on them, in 2020, which I hope gives noble Lords some reassurance that we intend to move swiftly in this area.

Amendments 4 and 5 would insert specific security requirements into the Bill. As several noble Lords mentioned at Second Reading, it is important that technology regulation enables the Government to respond to changes in threat and technology, and to the regulatory landscape. That is precisely why the Bill does not contain details of the requirements that the Government have assured industry they will set out.

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[Lord Fox (LD)]

Perhaps the Minister should consult whoever drew up the legislation that managed to mandate that televisions should be updated for firmware and software for up to eight years after they have stopped being manufactured. Clearly, those people managed to find consensus among the industry—or decided to ignore consensus—and deliver something. If it can be done for electrical display devices, such as televisions, I do not see why it cannot be done here if there is a will to do it. However, I think the Minister is telling us that there is no will to do it.

[Lord Parkinson of Whitley Bay (Con)]

The noble Lord referred to mandatory minimum support periods for electronic display items and the Ecodesign for Energy-Related Products and Energy Information Regulations 2021. It is not quite correct to say that those requirements are applicable. They ensure that the last available security update continues to be available for at least eight years after the last unit of a product has been placed on the market but the requirement does not ensure that manufacturers continue to provide new security updates over that period to ensure that the product remains secure in response to changing threats.

[Lord Fox (LD)]

I did not say that those requirements are applicable; I implied that they are analogous. Frankly, the fact that there is some mandating of security support after the product has stopped being manufactured is a heck of a lot better than the situation for all the connectable devices we are currently talking about, where there is no requirement at the moment.

[Lord Parkinson of Whitley Bay (Con)]

I do not think that they are quite analogous. As I say, it is about the requirement to keep the last available updates available to consumers for eight years rather than evolving them. We do not yet consider that there is sufficient evidence to justify minimum security update periods for connectable products, including display equipment—certainly not before the impact of the initial security requirements is known.

It is important to stress that, as consumers learn more, they will expect more. This will drive industry to respond to market pressure. If the market does not respond to this effectively, the Government have been clear that they will consider the case for further action at that point, but we think that consumer expectation will drive the action we want to see in this area.

Amendment 3, tabled by the noble Lords, Lord Clement-Jones and Lord Fox, refers to children. All noble Lords will agree, I am sure, that protecting children from the risks associated with connectable products is vital. I assure noble Lords that the security requirements we will introduce are designed with consideration for the security of all users, including children, alongside businesses and infrastructure. The Bill already gives the Government the flexibility to introduce further measures to protect children, whether they are the users of the products or subject to other people’s use of a product. We therefore do not think that this amendment is necessary as this issue is already covered in the Bill.

The Bill, and forthcoming secondary legislation, will cover products specifically designed to be used by or around children, such as baby monitors and connectable toys; they include Hello Barbie, which I was not familiar with but on which I will certainly brief myself further. However, we recognise that the cyber risks to children are not limited to the connectable products in the scope of this Bill; indeed, a lot of the issues referred to by the noble Lord, Lord Fox, were about the data captured by some of the technology, rather than the security of the products themselves. That is precisely why the Government have implemented a broader strategy to offer more comprehensive protection to children—including through the Online Safety Bill, to which the noble Lord, Lord Bassam, referred.

I hope noble Lords will agree that Amendment 3 is not needed to make a difference to the Bill’s ability to protect children from the risks associated with insecure connectable products—this is already provided for—and will be willing either to withdraw their amendments or not move them.

[Lord Bassam of Brighton (Lab)]

My Lords, this has been a useful and interesting exchange.

In my lordly world, “may” and “must” are sort of interchangeable; they were a useful peg on which to hang our discussion about the statutory instrument nature of this piece of legislation. I am somewhat reassured by what the Minister had to say about that, and acknowledge that some of the regulations were brought forward and consulted on at an earlier stage. However, we on this side of the House—I am sure that I speak for the noble Lord, Lord Fox, as well—want to see increased transparency throughout this process. So much of what is in front of us will be in secondary legislation; it is essential that we, the industry and the sector are properly consulted so that we understand exactly what we are dealing with. I make that plea at the outset.

I was pleased to hear what the Minister said about children as the primary users of particular products. I am glad that we have got beyond the “Peppa Pig” world that the Prime Minister occasionally occupies and are giving this issue proper, serious consideration. It certainly needs to be that way.

I am not entirely convinced by what the Minister said on Amendment 4. I look at our amendment; it is pretty basic, actually. It is hard to argue against setting out a particular prohibition in legislation. The ones that we have picked out for prohibition and restriction are quite important and essential. Of course, the Minister is right that those subjects will change and technology will overtake the words we use. We understand that point but we are trying to secure some basic minimum standards and protections here. Clearly, we will retreat with our amendment and give it some further thought before Report, but we may need some further persuasion on this. That said, I am quite happy to withdraw Amendment 2 and not move Amendment 4.

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[Lord Parkinson of Whitley Bay (Con)]

The feast of amendments in this group aim to implement the recommendations of your Lordships’ Delegated Powers and Regulatory Reform Committee. We welcome the committee’s report and are considering its recommendations, as we always do. It will infuriate the noble Lords who have asked detailed questions when I say that, ahead of setting out our response to the committee, I will not be able to cover all the issues they have pressed the Government on today. I am happy to say that we will set out our response in writing ahead of Report. Perhaps once we have done that, and noble Lords have seen the Government’s full thinking in their response to the committee, it might be helpful for us to speak in detail.

The legislation has been designed to protect people, networks and infrastructure from the harms of insecure consumer connectable products, while minimising the unnecessary regulatory burden on businesses. It does so in the context of rapid technological and regulatory change, evolving cybercriminal activities and a growing impact on people in businesses, all of which require us to ensure that the legislation can evolve quickly and effectively. The UK, as I have noted, is leading the world with its approach to regulating connectable products. As other jurisdictions increasingly turn their attention to this important issue, we will use this flexibility to achieve alignment with equivalent regulatory regimes, avoiding unnecessary duplication. These powers, and the others conferred by the Bill to make delegated legislation, are crucial for it to remain effective. We have carefully considered the number, scope and necessity of these powers, and believe we have struck the right balance between the need for that flexibility and the importance of Parliamentary scrutiny, which noble Lords rightly stressed again today.

We welcome the report of your Lordships’ committee and are considering its recommendations. I am afraid I cannot, at this stage, pre-empt our response, which has to be made while considering the recommendations’ impact on the broader framework. We will return to these matters on Report, and I am very happy to have a detailed conversation with the noble Lords about our response after we have responded to the DPRRC.

The noble Lord, Lord Fox, focused on Clauses 9 and 11. I am happy to confirm that nothing about how the powers are drawn in Clause 9 is inadvertent; this was our intent. Clause 9 contains four delegated powers; they will be used predominantly to provide administrative detail deemed too technical for primary legislation. For example, they will explain what must be included as a minimum in a statement of compliance, what steps must be taken to determine compliance, where appropriate, and for how long a manufacturer should keep a statement of compliance. They will also provide flexibility to respond swiftly to changes in the market. In addition, the delegated powers in this clause may be used in the future to provide that the statement of compliance is equivalent to certain product markings, or external conformity assessments, such that a manufacturer may be deemed to have provided a statement of compliance where such markings or assessments have been made or completed. This is dependent on regulatory changes to product markings and on the development of the assurance sector for product security.

At this stage, and awaiting our response to your Lordships’ committee, I hope noble Lords will agree that it goes without saying that the Government feel these clauses should stand part of the Bill.

[Lord Fox (LD)]

I sort of thank the Minister for his response, which is really no response at all. He did say that it would infuriate me and he is fairly accurate about that.

As correctly noted, I am merely a cipher for the DPRRC, a very serious committee that does not produce these reports lightly. The point it is making, particularly on Clause 27, is front and centre to this Bill. Who is going to enforce it? Who decides who will enforce the Bill, and how will Parliament know if the Secretary of State decides not to tell it, under the current regulations? These are very serious matters and not ones that your Lordships’ House should step back from. I am sure that the Minister will, on reflection, understand that the DPRRC has a very important point to make. The others are important points, particularly around Clause 3, but the Clause 27 piece is absolutely central to the future of this Bill. That said, I beg leave to withdraw Amendment 6.

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[Lord Fox (LD)]

My Lords, I rise to speak to Amendment 8 in my name and that of my noble friend Lord Clement-Jones. These are two ways of doing the same thing so I support the spirit of Amendment 7, about which we have just heard from the noble Lord, Lord Bassam.

This amendment adds the following wording to Clause 7:

“Any person who is a provider of an internet service that allows or facilitates the making by consumers of distance contracts with traders or other consumers for the sale or supply of a relevant connectable product is to be regarded as a distributor for the purposes of this Act, if not a manufacturer or an importer of the product.”


This amends the language that defines a distributor in the scope of the Bill. Online marketplaces are a mainstream form of today’s retail. Which? research in 2019 found that more than 90% of the UK population had shopped through an online marketplace within the month it was polling. That has increased during the pandemic. However, its research also consistently highlighted how online marketplaces are flooded with insecure products. It has previously demonstrated issues with the lack of legal responsibility of online marketplaces for the security and safety of products sold through their platforms.

The Government have recognised the problem, in their response to the call for evidence on product safety, that current safety rules were designed to fit supply chains as they operated before the world of internet shopping. In the realm of product safety, the Government have acknowledged that this can result in the peculiar situation where no actor is responsible for ensuring product safety. This has resulted in organisations such as Electrical Safety First repeatedly finding unsafe and non-compliant products listed on online marketplaces. Therefore, the traditional conception of actors in the supply chain is now outdated.

The Bill defines “distributor” as

“any person who … makes the product available in the United Kingdom, and … is not a manufacturer or an importer of the product.”

At present, it seems unlikely that certain online marketplaces, including eBay, Amazon Marketplace and Wish.com, will be included within the scope of that definition of distributors in the Bill. This will leave, without overstating it, a sizeable gap in the regulatory scope of this market.

Given the amount of insecure tech readily available on online marketplaces, it is paramount that these platforms are given obligations in the Bill to ensure the safety and security of the products sold on their sites, regardless of whether the seller is a third party. However, the Clause 7(5) definition of “distributor” in terms of making products available on the market is in line with existing product safety law, so we know that certain marketplaces are not classed as distributors and hence not obligated to take action. Amazon Marketplace, Wish.com and eBay are marketplaces where other people are selling; this is the issue.

This amendment seeks to expand the definition of distributors in Clause 7 to include appropriate online retailers, such as listings platforms and auction sites, including eBay, Amazon Marketplace and AliExpress. I feel sure that the Minister did not intend for the legislation to miss these marketplaces out; rather than risk this loophole going any further, we will work with the Minister and Her Majesty’s loyal Opposition to come up with some wording that absolutely iron-clads the Bill to ensure that these sorts of marketplaces are also included.

[Lord Parkinson of Whitley Bay (Con)]

I am grateful to noble Lords for speaking to their amendments in this group, both of which seek to make online marketplaces a “distributor”. It is vital that all products offered to consumers are secure, including those listed through online marketplaces, and we want to ensure that this is achieved in the most efficient way.

The explanatory statement for Amendment 7 suggests that products listed on online marketplaces might not be protected by the security requirements set out in the Bill. I reassure noble Lords, particularly those who tabled Amendment 7, that the security requirements will need to be met for all new connectable products offered to consumers in the UK, including those offered through online marketplaces. These marketplaces often act as a manufacturer, importer or distributor and, in those cases, they are subject to the same duties and security requirements as those three types of economic actor. If, however, the online marketplace does not fall into one of these three categories, the manufacturers, importers and distributors of those products are all still fully responsible for complying with security requirements.

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[Lord Fox (LD)]

This has piqued my interest; how does this exercise relate to the Bill? This process of dealing with the online acquisition of unsafe products would seem to be what the Bill is doing front and centre, so what is that process? How do the two connect?

[Lord Parkinson of Whitley Bay (Con)]

They are complementary; the new product security framework sits alongside existing legislation on product safety, which is why we want to conduct a review of the safety framework and publish the consultation. I am certainly happy to write and endeavour to explain.

The noble Lord asked whether products sold through online marketplaces fall into a gap in the Bill. The Bill requires in-scope products offered for sale through online marketplaces to customers in the UK to be as secure as in-scope products sold, for example, in physical stores. We are mindful of the variety of services offered by different online marketplaces. Some act only as advertising platforms, while others facilitate transactions and store and ship products on behalf of the seller. As noble Lords have noted, this changes all the time. This must be carefully considered to ensure that businesses can comply with their legal obligations and that any regulation is necessary, appropriate and proportionate to provide the best protection to consumers.

[Lord Fox (LD)]

I am sorry to keep popping up; being a practical person, I will try to give the Minister a scenario and, if he cannot answer straightaway, he can write. I have bought a product through an online auction that turns out to be unsafe; I go back to the auction site, which tells me, “Not my problem. You have to return to the international manufacturer which made this product”, which turns out to be a brick wall and nothing comes back. First, is that online auction site correct in handing me over to the international manufacturer, which turns out to be a dead end? Secondly, if that site is correct, to whom do I go? Do I go to my local council trading officer or to the person who, under Clause 27, has been mysteriously made the enforcer for the Bill? I may or may not know who they are. How do I seek redress, and from whom?

[Lord Parkinson of Whitley Bay (Con)]

I will try answer the noble Lord’s question, and I am happy to write with further detail. Products sold on online marketplaces are covered by the Bill. All products sold to customers in the UK will have to comply with the security requirements set out under this framework. Where a product is sold on a third-party online marketplace, the seller will be responsible for ensuring that it is compliant. Third-party sellers who sell new products directly to customers on those platforms will also be covered under the “distributor” definition. I will happily write to the noble Lord with further detail ahead of Report but I hope that, for now, that goes some way towards addressing his question.

[Lord Lucas (Con)]

My Lords, I would be grateful if my noble friend included me in his replies and letters. Is he aware of the lamentable performance of Her Majesty’s Revenue and Customs when it comes to trying to enforce VAT in similar circumstances, and the enormous difficulty it has had with third-party sellers operating out of the Far East in particular? It is extremely difficult, and the volume of VAT lost runs into the billions. This is a large-scale enterprise and it will easily channel a large volume of unsatisfactory products into the UK if we do not take effective action.

I hope that the Government, in their new consultation, which I look forward to learning about, will be taking a robust attitude towards the platforms. For instance, it is entirely unsatisfactory that there should be a way in which unsafe toys can get into the hands of children at Christmas, and for which there is no effective means of prevention or redress. In other jurisdictions, these online marketplaces have proved amenable to a forceful approach by government. I very much hope that we will be joining in with that.

[Lord Parkinson of Whitley Bay (Con)]

I am happy to include my noble friend in the replies and the letter I send. This touches on work which falls under the Department for Business, Energy and Industrial Strategy, and the points he raised, of course, fall to Her Majesty’s Revenue and Customs. We will make sure that, having consulted officials there, we provide some details of the work those departments are doing as well.

[Lord Bassam of Brighton (Lab)]

My Lords, I am looking forward to the correspondence on this; I fancy that the noble Lord’s civil servants will have a tricky job on their hands. I do not think I quite got a response to what the nature of “being kept under review” really meant, but I await word in the future.

I have been reading the Explanatory Notes, as the Minister will probably be unhappy to hear, and I can see the difficulties. In trying to ensure that the legislation is focused, rightly, on the producers, manufacturers, importers and distributors, it is hard to work round that and not capture people who are simply installers of a product. On the other hand, there are circumstances where installers are primarily responsible for the effectiveness and working of the product, and if it was not for the way they install it, it would not be effective. The terms of the contract are such that it makes that difficult.

I can see the difficulty here, but for now I am happy to withdraw our amendment. In doing so, we are equally supportive of the amendment in the name of the noble Lord, Lord Fox, because the two are contiguous in their formulation.

Product Security and Telecommunications Infrastructure Bill

Lord Parkinson of Whitley Bay Excerpts

Lords Hansard - Part 2 & Committee stage
Tuesday 21st June 2022 Lords Chamber

[Baroness Merron (Lab)]

My Lords, I am grateful to the noble Lords, Lord Clement-Jones and Lord Fox, for tabling these amendments, which seek to clarify how the new measures in the Bill will interact with existing consumer legislation. In a practical sense, they are about how comfort can be given to the consumer and redress made available where necessary.

We in your Lordships’ House know that consumers have had to fight hard over many years to secure important statutory protections, including rights of redress when products do not live up to the standards that people rightly expect of them. I say to the Minister that the new measures in the Bill are certainly welcome and will improve certain aspects of the consumer experience, but it is also right to probe how this new regulatory regime interacts with consumer rights and protections enshrined elsewhere.

I feel that Amendment 14 seeks to update the state of play to refer to compliance with security requirements, but that needs to be an area where consumer protection is enshrined in legislation. To me, it goes with the sweep of the Bill, which is to bring us into today’s world and able to cope with the new and constantly evolving situation. Amendment 14A is also interesting, in that it seeks to maintain the right of individual consumers to seek redress in relation to defective connectable products rather than leaving these matters to a particular enforcement body or to collective legal action.

We would appreciate it if the Minister could clarify some of these matters in the Bill itself. If that does not prove possible, this is another area where we would very much like rather more information to be made available by the department so that we can seek to protect the rights and interests of consumers.

[The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Lord Parkinson of Whitley Bay) (Con)]

I am grateful to the noble Lord and the noble Baroness for probing through Amendments 14 and 14A as tabled by the noble Lords, Lord Clement-Jones and Lord Fox. The amendments seek respectively to amend consumer protection legislation and clarify the relationship between this Bill and consumer protection legislation.

The Consumer Rights Act 2015 requires goods and services to be of a satisfactory quality, and the Consumer Protection Act 1987 imposes liability for defective products. Breaches of this Bill that meet the criteria of these Acts already entitle consumers to the protections they provide. This Bill focuses on the supply chain and what it needs to do to protect and enhance the security of products and their users. The security requirements will relate to processes and services, not just to the hardware of a product as the product safety framework does. It is not appropriate to retrofit the security requirements of this Bill’s regime into the existing framework of consumer protection legislation, which was generally designed to ensure that consumers have rights when products are unsafe—although, as I said, I appreciate the probing nature of these amendments.

Some security requirements will require ongoing action from manufacturers after they make a product available. It would be inappropriate to require traders to confirm one-off compliance with such requirements before contracts become binding. I acknowledge that existing consumer rights legislation will not always enable consumers to seek redress for breaches of the security requirements. I reassure noble Lords that this is not a gap. The evolving technological landscape means that the threats to consumers change, and we need flexibility to protect and compensate customers where that is necessary. The Bill, together with existing consumer rights legislation, already offers this.

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[The Earl of Erroll (CB)]

The Minister said earlier that the whole point of the Consumer Rights Act was about unsafe goods. I think that he means “unsafe” as referring to physical harm. Actually, a major security breach could render serious physical harm to someone because having all their money removed from their bank account could affect their mental state and result in the breakdown of their marriage, suicide, failure of business, all sorts of things. Therefore, it may have just as damaging physical effects on someone, though not immediately apparent. Although they are different they are equally unsafe, so this has more merit than he is suggesting.

[Lord Parkinson of Whitley Bay (Con)]

At the risk of a philosophical debate on the nature of security versus safety, I accept some of the points that the noble Earl makes. There are distinct differences between our approach to product security and existing product safety as set out in consumer legislation, but I will address myself to that philosophical point in the letter, if I may. For now, I ask the noble Lord to withdraw Amendment 14.

[Lord Fox (LD)]

I hope that the Minister will take some time to read my speech in Hansard and address the issues that I have raised, because there are some specific points that have not been touched.

A lot of this has come from Which? whom I thank for its help. Which? is an extraordinarily experienced organisation, with some of the country’s most experienced consumer lawyers dealing with the sharp end of customer consumer problems. The fact that it has gone to the trouble of raising these issues should raise a red flag. It is not doing it out of mischief or political intrigue, but because it cares about the future of consumers. For that reason, the department needs to take this seriously.

If the Minister requires a meeting with Which? I am sure that I, the noble Lord, Lord Bassam, or the noble Baroness, Lady Merron, will be very happy to broker one. We could then go through some of these consumer issues. This is an organisation dedicated to protecting the needs of consumers. It has gone to the trouble of flagging up this and several other issues. For that reason, for the future of this Bill, it would be very sensible to take Which? seriously.

That said, I beg leave to withdraw Amendment 14.

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[Lord Bassam of Brighton (Lab)]

No, I give credit where it is due. I congratulate the noble Lord, Lord Arbuthnot, on his amendment because the issues that he raised and the questions posed by the noble Lord, Lord Fox, in particular, are legitimate ones.

Although this is not the place to amend or change the Computer Misuse Act 1990, as the noble Lord, Lord Fox, said, it certainly is the place to raise concerns. After all, we are talking about product security and safety. It is vital that we have appropriate safeguards in place to prevent and, if need be, punish cyberattacks and other forms of hostile behaviour online.

However, as we seek to make smart devices safer, clearly there is a role for researchers and others to play in identifying and reporting on security flaws. They need to be able to do this within the safe zone of concern, knowing that they are not themselves going to be captured by those who are responsible for cybersecurity. As I understand it, exemptions exist in similar legislation to ensure that academics and other legitimately interested parties can access material relating to topics such as terrorism. The amendment before us today raises the prospect of granting a similar exemption and defence in this particular field.

I am conscious that the noble Lord, Lord Fox, raised the spectre of auras in the form of the noble Lords, Lord Vaizey, Lord Clement-Jones and Lord Holmes of Richmond—as well as the intent of the noble Baroness, Lady Neville-Jones, who is of course very knowledgeable about the business of security and has had both professional and political responsibility in that field. However, I think that, when those auras and his own say that this is an issue of concern, we as the Official Opposition reflect that concern.

I hope that the noble Lord will engage with the noble Lord, Lord Arbuthnot, and others following Committee on this—I am sure he will—because it is a very important subject. A campaign backed by such an esteemed cross-party group of colleagues in the Committee and in another place cannot be entirely wrong. The Computer Misuse Act 1990 is the framework we have got, but it is right that it is reviewed and that something fresh is brought before us to protect us from cyberattacks in the future.

[Lord Parkinson of Whitley Bay (Con)]

I am very grateful to my noble friend Lord Arbuthnot of Edrom for representing the other three signatories to this amendment. I was glad to meet him and the noble Lord, Lord Clement-Jones, to discuss this yesterday.

The role of security researchers in identifying and reporting vulnerabilities to manufacturers is vital for enhancing the security of connectable products. The good news is that many manufacturers already embrace this principle, but there are also some products on the market, often repackaged white label goods, where it is not always possible to identify the manufacturer or who has the wherewithal to fix a fault. The Bill will correct that.

As noble Lords have noted, there are legal complexities to navigate when conducting security research. The need to stop, pause and consider the law when doing research is no bad thing. The Government and industry agree that the cybersecurity profession needs to be better organised. We need professional standards to measure the competence and capabilities of security testers, as well as the other 15 cybersecurity specialisms. All of these specialists need to live by a code of professional ethics.

That is why we set up the UK Cyber Security Council last year as the new professional body for the sector. Now armed with a royal charter, the council is building the necessary professional framework and standards for the industry. Good cybersecurity research and security testing will operate in an environment where careful legal and regulatory considerations are built into the operating mode of the profession. We should be encouraging this rather than creating a route to allow people to sidestep these important issues.

As noble Lords have rightly noted, the issues here are complex, and any legislative changes to protect security researchers acting in good faith run the risk of preventing law enforcement agencies and prosecutors being able to take action against criminals and hostile state actors—the goodies and baddies as the noble Earl, Lord Erroll, referred to them. I know my noble friend’s amendment is to draw attention to this important issue. As drafted, it proposes not requiring persons to obtain consent to test systems where they believe that consent would be given. That conflicts with the provisions of the Computer Misuse Act, which requires authorisation to be given by the person entitled to control access. As the products that would be covered by this defence include products in use in people’s homes or offices, we believe that such authorisation is essential. The current provisions in the Computer Misuse Act make it clear that such access is illegal, and we should maintain that clarity to ensure that law enforcement agencies do not have to work with conflicting legislation.

The amendment would also limit the use of such a defence as testers would still be subject to the legal constraints that noble Lords have described when reporting any vulnerability that the Government have not banned through a security requirement. If a new attack vector was identified that was not catered for by the security requirements, the proposed defences would have no effect. The amendment would not protect those testing products outside the scope of this regime, from desktop computers to smart vehicles. If we consider there to be a case for action on this issue, the scope of that action should not be limited to the products that happen to be regulated through this Bill. None the less, the Government are listening to the concerns expressed by the CyberUp Campaign, which have been repeated and extended in this evening’s debate.

The Home Secretary announced a review of the Computer Misuse Act last year. As my noble friend noted, the Act dates back to 1990. I do not want to stress too much its antiquity as I am conscious that he served on the Bill Committee for it in another place. His insight into the debates that went into the Bill at the time and the changes that have taken place are well heard. The evidence which is being submitted to the review is being assessed and considered carefully by the Home Office. It is being actively worked on and the Home Office hopes to provide an update in the summer.

I hope, in that context, that noble Lords will agree that it would be inappropriate for us to pre-empt that work before the review is concluded and this complex issue is properly considered. With that, I hope my noble friend will be content to withdraw his amendment.

[Lord Arbuthnot of Edrom (Con)]

My Lords, I was six at the time. It has been a useful debate and I thank all those who have taken part. I am particularly grateful to my noble friend Lady Neville-Jones, who made it quite plain that we understand the problems in the way of the Government in legislating on this but we are getting impatient. With everything that is going on in the world, out-of-date cybersecurity legislation is becoming more dangerous day by day. That said, I beg leave to withdraw the amendment.

--- Later in debate ---

[Baroness Merron (Lab)]

My Lords, this is of course the first of a number of amendments that deal with Part 2 of the Bill. The amendment refers to telecoms infrastructure. This is far from the only debate that we will have on broad issues around property rights, operators, access to land and so on but, as a general point, it is worth restating our belief that this country needs access to better digital infrastructure. Our concern is that the Government have not been hitting their targets for the rollout of gigabyte-capable broadband. There have also been issues around the rollout of 5G technology. Although we want to see decent infrastructure, we also want to see fairness in the system, and that is what this amendment speaks to. It seeks to ensure a degree of continuity and fairness as new agreements are made to replace existing ones.

The principles cited by the noble Lord, Lord Fox, and in the amendments tabled by the noble Lord, Lord Clement-Jones, are reasonable. Again, they are principles that I am absolutely sure we will return to next week, as we have ever-more detailed discussions about rents, dispute resolution and so on.

As has been outlined in this debate, the court is not currently bound to consider the terms of an existing agreement. This feels like a significant oversight. Perhaps the Minister can inform us about what actually happens in practice and what will happen in practice. Both operators and landowners have, or should have, certain rights and responsibilities within this process. I look forward to the Minister’s response to Amendment 17 and to moving some of our own amendments during day two of Committee.

[Lord Parkinson of Whitley Bay (Con)]

As the noble Baroness says, this begins to anticipate some issues to which I know we will return on the second day of Committee, but it is useful to begin them tonight.

Amendment 17 seeks to insert a new clause after Clause 57 of the Bill. Its purpose is to add an extra element to the test at paragraph 21 of the code, where an operator enters into a new agreement because of the provisions in Clause 57. This is likely to be in circumstances where an operator in occupation of the land on which its apparatus is installed has an existing agreement but wishes to seek an additional code right. The code currently provides that operators in exclusive occupation of land are unable to obtain additional code rights until their existing agreement is about to end or has ended. This is because the code currently provides that only an occupier can grant code rights, and the operator clearly cannot enter into an agreement with itself.

Clause 57 remedies this position and allows an operator to obtain code rights where it is in exclusive occupation of the land. The test at paragraph 21 of the code is often referred to as the public interest test and sets out what a court must consider when deciding whether to impose a code right on a landowner. Paragraph 23 then sets out how the court should determine the remaining terms of the code agreement. Clause 57 simply gives an operator the ability to obtain a new code right or rights that they do not already have. The clause does not allow an operator to force changes to its existing code agreement or to compel the other party to modify any of its terms—for instance, to attempt to reduce the amount of rental payments. Furthermore, the clause does not enable an operator to bring an existing agreement to a premature end in order to take advantage of more favourable terms. Any existing code agreement that the operator has will be expected to continue and operate alongside the agreement relating to the new code right.

Amendment 17 seeks to expand the test at paragraph 21 so that the court also has to consider the terms of any existing agreement and any other method of statutory renewal available. We are, however, of the view that the court can already take such matters into consideration when deciding whether to make an order under paragraph 20 of the code, and again when applying the test at paragraph 23 to determine what terms the code agreement should contain.

This is a topical issue. Clause 57 rectifies an issue in the code that currently prevents operators who are in exclusive occupation of the land being able to obtain new code rights. As I said, three cases have touched on this issue, all of which were heard in the Supreme Court earlier this year, and the Supreme Court is due to hand down its judgment tomorrow.

At present we believe that Clause 57, as drafted, achieves its intended objective, but we recognise that this is a complex and technical area, on which the noble Lord, Lord Fox, valiantly conveyed the expert view of the noble Earl, Lord Lytton, and it is imperative that any unintended consequences are avoided. We will of course look closely at the Supreme Court’s judgment and carefully consider whether further amendments are needed, engaging with interested parties as required to ensure that the aim of the clause is fully realised.

I too am very conscious that the noble Earl, Lord Lytton, with whom we have already had some discussions on this and broader aspects of the Bill, will want to join those discussions, so I am sure he will be following the official record. But I am very happy to meet the noble Lords who have spoken, as well as the noble Earl, to discuss this issue in further detail, particularly once we have seen the judgment. For now, I urge the noble Lord to withdraw the amendment.

[Lord Fox (LD)]

I thank the Minister for his response, during which he said that the department is of a view. When I was speaking for my part, rather than for the noble Earl, I made it clear that there were quite strong opinions that that view might not be correct. Three cases are to be judged tomorrow, before this Bill is enacted, so although it may have some relevance, it will potentially —and in the views of the people we have spoken to, almost certainly will—end up back in the courts.

We share the objective of the noble Baroness, Lady Merron, that the rollout be accelerated, not inhibited. We also share the view, as expressed in the not very veiled threat in the part of my speech on behalf of the noble Earl, Lord Lytton, about what the 1963 rent Act did, which was clog up the system. We do not want to do that—we cannot afford to clog up the rollout. There are strong suspicions that, without giving the legal certainty we need to avoid getting tangled up in the courts, we will be back there again, notwithstanding the judgments of tomorrow. That said, I beg leave to withdraw Amendment 17.

Product Security and Telecommunications Infrastructure Bill

Lord Parkinson of Whitley Bay Excerpts

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

[Baroness Merron (Lab)]

My Lords, I was very pleased to put my name to the amendment tabled by the noble Baroness, Lady Harding. As she says, this is simple, limited in scope and extremely practical. It is a clarification of and an improvement to this aspect of the Bill, which works for all parties. I hope the Minister will agree, even if what we end up with is not the exact wording that we start with today.

As the noble Baroness, Lady Harding, explained, poles, like ducts, are regulated under Ofcom’s PIA mechanism, so extending this provision to pre-2017 poles on private land would allow all operators to speed up their rollout equally. That is the essence of what we are talking about in the Bill: extending provision and allowing fair access. This amendment will greatly assist us, not least because if the reforms in the Bill do not work properly we will see more streets being dug up, which is never popular, and in this case might perhaps require the installation of new poles—again, something we could do without.

I hope that when the Bill is amended we will drastically contain the time, cost and disruption caused by the rollout. Although people want to see the rollout, the practical effects in communities create unwelcome disruption. This amendment is needed to confirm that sharing pre-2017 poles on private land needs to be included in the Bill. It will speed up the deliver of rollout and it is welcomed by all across the industry.

I shall briefly refer to the comments by the noble Lord, Lord Vaizey. I do not want at this stage to dwell on the amendments we did not have the benefit of discussing properly, but perhaps the noble Lord can look forward to Amendment 48, which we have tabled. It takes a different tack from the noble Lord’s amendments and puts the onus on government and the industry to find a way forward. I hope that when we get to that amendment the Minister will be open to detailed, cross-party discussion before Report on how we resolve the issue that we were not able to attend to earlier in the debate. I support this amendment and hope the Minister will feel similarly.

[The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Lord Parkinson of Whitley Bay) (Con)]

My Lords, I think the whole House is grateful to its former Leader, my noble friend Lady Stowell, for moving Amendment 18 and keeping us on the right procedural track. Amendment 18, spoken to by my noble friends Lady Harding of Winscombe and Lord Vaizey of Didcot, the noble Lord, Lord Fox, and the noble Baroness, Lady Merron, who signed it, concerns rights to upgrade and share telegraph poles.

Clauses 59 and 60 will help to optimise use of the UK’s extensive duct networks through greater upgrading and sharing, but ducts and cables under land do not represent our entire digital network, as noble Lords have reminded us today. Telecommunications lines flown over land play a substantial role too. These lines are dependent on the telegraph poles that support them. Over 1 million such poles are installed across the UK, as noble Lords have noted, providing coverage and connectivity to entire communities, particularly in rural parts of England such as Herefordshire, as the noble Lord, Lord Fox, will know, and urban areas of Scotland.

Since the Bill’s introduction, the Government have been called on to introduce measures to facilitate the upgrading and sharing of poles. We understand that there are substantial public benefits in coverage, connectivity and consumer choice, so we welcome the attention that this amendment has drawn to the significance of poles and lines in network delivery, but as I anticipated at Second Reading, we have concerns as to whether the amendment would deliver material change.

I take on board fully my noble friend Lady Harding of Winscombe’s point about the constructive spirit in which the amendments are brought forward and agree that we must look beyond the drafting of this specific amendment, but as the noble Earl, Lord Lytton, says, this is a legally complex matter. For example, it is not clear whether this amendment would permit pole sharing or allow operators to carry out works beyond those needed for a line to be flown. That might exclude upgrade works that would allow a pole to be used for fibre rather than copper lines.

It is important to note that paragraph 74, to which this amendment refers, deals with land adjacent to or in the vicinity of that on which poles are situated. We need to think about works that might involve the land on which that pole is placed. The Government are looking closely at ways to optimise the use of telegraph poles, but we must ensure that if changes are made in this area, they not only deliver public benefits but include sufficient protections for individuals with poles situated on their land. We will continue to look closely at this issue, but I am not able to accept this amendment today. I repeat the assurance I made at Second Reading that we are actively looking at this issue, and we will continue to consider it ahead of Report.

In response to some general points about requests from the industry, we certainly agree that operators should be able to obtain the rights they need to install and maintain the apparatus needed for robust network coverage throughout the UK. The department undertakes regular engagement with the industry and, if we receive compelling evidence that the Bill can be improved, we are happy to consider whether there is a good case for going further. When doing so, however, the Government will always consider the effect that any potential changes could have on landowners.

My noble friend Lord Vaizey inventively asked why telegraph poles were less contentious than multiple dwelling units, the subject of the amendments lost to today’s debate. We must also bear in mind that a good regulatory framework encourages competition and investment, which are both crucial in delivering consumer choice and supporting deployment to hard-to-reach areas. Measures beneficial to one operator may not always encourage the market competition needed to deliver better outcomes for customers. Indeed, it is important to stress that there is no consensus from the industry on this issue. In fact, many operators have opposed the proposal on the grounds that it would create an unfair advantage for operators that already have equipment inside buildings, and so could potentially have anti-competitive effects.

[Lord Vaizey of Didcot (Con)]

Now that I am in the swing of things, does my noble friend genuinely believe that outside the main metropolitan areas there is genuine competition between telecoms providers? Is it his view that he should support measures from the competitors of Openreach to prevent the rollout of broadband in rural areas, simply to protect their interests in the main metropolitan areas?

[Lord Parkinson of Whitley Bay (Con)]

As I am explaining, we think that the views from other operators point out that my noble friend’s amendment, which was not moved, would create an unfair advantage for operators who already have equipment; that would itself be anti-competitive. Given that the amendment was not put and, as I hope he has heard, would have been resisted in any case—certainly from the Liberal Democrat Benches—perhaps it may be best if he and I discuss it over a cup of tea, which he can add to his tab, between now and Report. I hope that he will not feel it necessary to bring these amendments back on Report.

On Amendment 18 regarding telegraph poles, while reassuring noble Lords that we will continue to look at this actively, I hope that my noble friend Lady Harding —or my noble friend Lady Stowell, who moved it—will be happy to withdraw that amendment for now.

[Baroness Harding of Winscombe (Con)]

 I rise, somewhat hesitantly, having consulted the oracle that is the former Leader of this House, to respond. I thank my noble friend for that response. As a brief aside, I am pleased to hear his conviction and belief in competition before we come back on Report, if we do, to the amendments that have not been debated.

I am cautiously optimistic that we will find a solution to this. I was slightly worried when I heard my noble friend say “if” we bring something back, rather than when. I would feel considerably more optimistic about solving this problem if I had heard him say “when”. I would also feel a bit more optimistic if I had heard him say that he and the department will be considering alternatives, rather than observing and watching. We have been observing and watching since Second Reading, and the department has proposed no alternatives to my amendment. I look forward to some more active discussions about alternatives to the amendment but, on that basis, I am happy to withdraw it.

--- Later in debate ---

[Lord Parkinson of Whitley Bay (Con)]

My Lords, as we expected, we have had a lively and somewhat polarised debate on this group, which goes to the heart of quite a lot of what the Bill seeks to do. A number of amendments in it relate to the valuation regime, and they all seek to do slightly different things. I will certainly try to address all of them, although not in numerical order.

However, it might be helpful if I first set out some details about the current position. In England and Wales, agreements can be renewed in two different statutory ways: one is contained in part 5 of the code and the other is in the Landlord and Tenant Act 1954. The position in Northern Ireland is similar: agreements can be renewed using either part 5 or the Business Tenancies (Northern Ireland) Order 1996.

The main difference between the procedures at present is that they have different frameworks against which the financial terms of a renewal agreement are calculated. In the code, the consideration paid to a landowner is calculated on a no-network basis, as was helpfully explained by the noble Earl, Lord Lytton. But this framework does not currently apply to agreements renewed under the 1954 Act or the 1996 order, where rents are calculated on a different basis. The Government do not believe that maintaining this difference is right.

Clauses 61 and 62 will ensure that the approach taken to rent calculation for renewals under the 1954 Act or the 1996 order is consistent with the approach in the code. This means that the same approach will be applied throughout the United Kingdom, reducing disparities in deployment costs in different jurisdictions which could otherwise contribute to a digital divide.

Before turning to the specific amendments, I will pick up a few points raised by noble Lords. The noble Earl, Lord Lytton, mentioned the Central Association of Agricultural Valuers—CAAV—with which DCMS has engaged closely, both in developing the 2017 reforms and in our subsequent discussions regarding their implementation. We welcome the CAAV’s input on these and the wider initiatives aimed at embedding better working practices in the negotiation and completion of code agreements. I am grateful to the noble Earl for sending on further points from the CAAV; these were rather lengthy and detailed, and I do not think that it would be helpful, or do them justice, to discuss them in detail today, but I would be happy to write to him on those matters and copy other noble Lords in.

I welcome the noble Earl’s comments on the code valuation framework and ordinary market valuation principles, and I bow to his expertise in this field. I confirm that DCMS engaged closely with the Royal Institution of Chartered Surveyors in developing the 2017 reforms to the code. In 2019, it produced a specific guidance note for surveyors working in this field, and I understand that this makes clear the relationship between the code valuation framework and the red book global standards of valuation.

The noble Earl referred to independent infrastructure providers, which have a key role to play in the delivery of robust and resilient networks. They invest substantially in the deployment of new apparatus, which can then be shared by multiple operators, expanding coverage and extending choice for consumers. Their role was lauded during the passage of the 2017 reforms, both in another place and in your Lordships’ House, where the noble Lord, Lord Foster of Bath, referred to them having

“some of the most productive telecommunications facilities in the country”.— [Official Report, 31/1/17; col. 1181.]

So I was a little surprised to hear concerns expressed today about the possible disadvantages of this important part of the sector, but I would certainly be happy to discuss those concerns further if noble Lords would like to.

On whether independent infrastructure providers are passing on savings, we are not aware of situations where such providers who have secured new arrangements following the 2017 reforms have failed to pass on any decrease in costs to operators using their installations. It must be remembered that many independent infrastructure sites will still be subject to pre-2017 agreements and, as such, there may not yet be any consequential savings to pass on.

It has been suggested, including by my noble friend Lord Vaizey in his intervention on the noble Earl, Lord Lytton, that the code creates the potential for intermediaries to acquire sites cheaply, using the code valuation framework, and then to charge operators excessive sums to use them. It is important to note that, if such an intermediary has not installed apparatus on the land but is the occupier of the land for the purpose of the code, it would be open to a code operator to seek code rights to do so from that party. However, if the intermediary invests in infrastructure on the land, we think it right that they can agree commercial terms for the use of it with the operators. Naturally, if competitive terms are not offered, operators will go elsewhere.

My noble friend Lord Northbrook and the noble Lord, Lord Clement-Jones, referred to the report by the Centre for Economics and Business Research. I am conscious that we have much to cover, so I do not intend to discuss this in detail, but I will say that, generally, DCMS is aware of it and its findings. We note that it was commissioned by the Protect and Connect campaign, and our understanding is that it focused primarily on the valuation regime, rather than providing a broader view of how the code is working in practice, which is what DCMS aims to do in its engagement with interested parties and through the consultation that has informed the development of the Bill.

Turning to the amendments, I will first address those tabled by the noble Earl, Lord Lytton, the noble Lords, Lord Clement-Jones and Lord Thurlow, and my noble friend Lady McIntosh of Pickering, which relate to paragraph 24 of the code. These go to the crux of the argument regarding the valuation framework. Before the 2017 reforms, the amount of rent payable reflected the value of the site to the operator. Site providers were therefore potentially able to charge an operator thousands of pounds a year to house apparatus on small pieces of land that were otherwise of low or nominal value.

The 2017 reforms were intended to rebalance the relationship: operators would pay a fair rent that reflected the true value of the land, and site providers would remain able to receive additional sums to cover any loss or damage incurred as a result of the operator exercising code rights, or that may be incurred in future, including professional fees. To address a point made by my noble friend Lady McIntosh, those payments should take into account any alternative uses that the land may have and any losses that may be incurred, among other things.

As we have said throughout, and even following the helpful conversations that I have had with a number of noble Lords so far on the Bill, we continue to believe that this balance is right to ensure the cost-effective and efficient delivery of robust digital services. As was noted today, these are becoming ever more necessary in our daily lives, as was thrown into sharp relief during the pandemic.

In his admirably pithy contribution, the noble Lord, Lord Fox, asked whether we believe that incentives still exist for site providers and landowners to enter into agreements. We think that they do. We have been told that the amounts offered by some operators are now so drastically reduced that landowners are less willing to let their land be used, but we maintain that the 2017 valuation provisions created the right balance between the public need for digital communications and landowner rights. We were aware that the valuation framework would result in reductions to rental payments but, in our view, prices being paid for rights to install communications apparatus before 2017 were too high. With digital communications becoming increasingly important, that needed to be addressed.

The code still makes separate provision for landowners to recover compensation for loss or damages. We think that, taken together, the provisions on consideration and compensation mean that landowners should receive a fair payment for allowing their land to be used, despite the fact that overall amounts will normally be lower than they were before the 2017 reforms—but we believe that the incentive remains.

Amendment 23 seeks to amend the valuation framework, moving away from the no-network approach that was introduced in 2017. The amendment appears to us to be a retrograde step, taking the market away from the clear approach established by the 2017 reforms and moving back towards the status quo ante. This could reintroduce some of the problems that were addressed by those reforms, including a return of payments that were unfairly too high, and leave us with a dual approach to valuation on the renewal of agreements, potentially causing confusion for operators, site providers and courts. The Government, therefore, cannot accept this amendment.

Amendments 26 and 27 both relate to agreements renewed under Part 5 of the code. Amendment 26 seeks to phase in rent reductions in these cases through a two-year grace period during which site providers would continue to receive consideration at the previous level. Amendment 27 looks to introduce a tiered phase-in period that would last for three years. The code valuation framework was introduced in 2017 and there has been much publicity on how this has affected payments to landowners for hosting telecommunications apparatus on their land. I believe it has been relatively clear to interested parties for a substantial period that the market has changed significantly, and that, in most cases, reductions in rental payments are to be expected. For this reason, the Government do not think that it is necessary for additional time periods to be given, when the effect will be to increase operational costs and to slow down the rollout of 4G and 5G coverage that the population rightly wants and expects.

Amendment 25 would require the Secretary of State to issue guidance on how paragraph 24 of the code should be interpreted and the maximum permitted reduction in consideration. Statutory guidance can certainly play an important part in ensuring legislative measures achieve their intended aims, but this must be considered on a case-by-case basis. We have concluded that guidance in this area would not be appropriate; code agreements cover a hugely diverse range of circumstances, and the code sets out a clear framework approved by Parliament, which establishes valuation principles which can be applied across different scenarios. We think it is right that, when disputes arise, further interpretation of these principles should rest with the courts. Indeed, the courts have been doing this since the reforms were introduced in 2017 and a body of case law is now well established. We believe that introducing statutory guidance on valuation at this stage would undermine the progress that has been made in that respect, introducing uncertainty and confusion, not least because the status of the proposed guidance from the Secretary of State, and the degree of influence it would have on the courts, is unclear.

Instead, we consider it much better for a court to be able fully to consider all the circumstances of a particular given case and all the relevant evidence before it, and then to act in accordance with the statutory framework set by Parliament. For the same reason, we do not think a statutory cap on rent reductions is appropriate; this would fetter the parties and, ultimately, the courts from proper consideration of all the relevant circumstances. It is also important perhaps to consider non-legislative action that can be taken to promote better relationships: as well as the steps taken in this legislation, there are non-legislative steps the Government are taking to ensure that the code works well in practice. For example, the department’s Barrier Busting Task Force is holding monthly workshops with a broad range of groups with an interest in the code. Those workshops are attended by network operators, landowner representative groups and local authority representatives, as well as professionals and surveyors. The workshops aim to encourage greater collaboration in relation to code negotiations and agreements through identifying and implementing better ways of working. They touch on key issues which parties have raised with us; for example, stakeholders are currently working to agree on standard template wording for common clauses within code agreements.

Amendments 20 and 22 seek to disapply much of the valuation framework to agreements renewed under the 1954 Act and the 1996 order. The Government cannot accept those amendments, as they serve only to entrench the inconsistencies in the different renewal frameworks, which I mentioned at the outset. Were Amendments 20 and 22 to be accepted, some landowners would receive higher rental payments for longer. However, this would allow network costs to remain unacceptably high, penalising swathes of consumers and businesses who may face price increases for digital services, or may have to wait longer for the high-quality, reliable connections they need.

--- Later in debate ---

[Lord Northbrook (Con)]

I am sorry to interrupt the Minister. Would he be able to produce any written evidence of these improved relationships between landlords and operators for the Committee?

[Lord Parkinson of Whitley Bay (Con)]

My letter that was sent just before Committee outlined some of the engagement that the department has had and listed some of the groups with which we have spoken. That goes some way towards that, but I will certainly see whether there is anything further that I am able to share with noble Lords in addition to that table, which was appended to the letter I sent yesterday.

As I say, we believe that the measures in the Bill will address the complex areas that have led to protracted litigation and emphasise the value of collaborative relationships between operators and site providers. I therefore invite noble Lords to withdraw or not to press their amendments in this group.

[The Earl of Lytton (CB)]

My Lords, I thank the Minister for that detailed reply. I will obviously not try to cover everything he said, but just touch on one or two points.

The Minister referred to the RICS, and it is true that the RICS produced a guidance note in relation to code changes. It was of course produced in the light of those changes, rather than in an attempt to influence them, and it points out the strong likelihood of very low rents resulting from those changes. Of course, being a guidance note, it does not predict or advise on what the market outcomes are likely to be in practice. I have not had a moment to check, but it is my belief that the manual of valuation and appraisal—otherwise known as the Red Book—produced by the RICS and Institute of Revenues, Rating and Valuation, has made the valuation of mast sites an exception to the market value criteria within the Red Book. It is, if you like, a derogation from that market value principle.

I go back to the point that I made: you cannot have market value in the terms that I described it and the internationally recognised specification and then say that you disregard it and the matter gets to court. So what does that mean? You go to court because you can get it disregarded. Is that the way that the world functions? I am sorry, but I just do not get it—this is an oxymoron of a principle.

That apart, there still remains the fact that reducing rents to around about £750 or so per annum—if that is indeed what will happen, because all these things are hemmed in by confidentiality clauses so that the information does not get out, thus preventing any sort of transparency that would give rise to a market in those terms—calls into question the existence of willing participants, regardless of the valuation assumptions to the contrary. You can make all the assumptions you like, but the market will tell you what it is going to do. If you have people who are disengaged, then that is it.

The Minister is in denial that the market is moving towards, or is effectively at, a point at which it is bust. I hope that he will be able to produce some statistics to back what he says. While he says that, on one hand, the comments from organisations such as the CAAV may be regarded as apocryphal, I have difficulty in understanding that what he says his department is receiving is of any better or worse quality than that. We are in a land of the unknown, with people saying one thing and meaning another. We are effectively relying on a lack of evidence. That really is not good enough.

If we are getting to a stage where the market is not functioning, what then? How long will the Government wait before they decide that something needs to be done? And what will they do—more compulsion, more work for the law courts and legal profession, more time spent getting these masts in place and rolled out? I do not see it. I would really love to know what the greater vision is. The Minister referred to “greater collaboration”; I am sorry, but I do not see it. I see anything other than greater collaboration coming out of this. It takes two to tango—the old business about taking a horse to water may well apply.

I will not press these amendments and will withdraw them at this juncture; they can be resisted, but the real world outside will continue notwithstanding. It does not matter what sort of bubble you live in and what sort of vision you create—whether the commercial vision of code operators or the vision of what is happening from the point of view of the department that wishes to defend the policy that it has had in place since 2017—the situation on the ground will work out the way that it will work out. There is no changing that any more than one can change the basic DNA of transactional analysis in property markets. I beg leave to withdraw Amendment 20.

--- Later in debate ---

[Baroness Merron (Lab)]

My Lords, the debate on this group raises a number of interesting points, but they are all on the same theme. They are about what happens should disputes arise. No one wants to be in dispute, but when one arises, it is crucial that everybody knows what the rules are and that the resolution creates an environment and practice which means that the same issues do not continually arise. The contributions from noble Lords today have talked a lot about fairness, respect and calling to heel those who need to be called to heel for fairness and respect to occur. It is about getting the balance of rights and responsibilities between the parties right. I hope the Minister will consider the valid points raised by this group.

In particular, it would be helpful to hear how the Minister feels about the present situation, where the operator must only consider the use of the dispute resolution system—and even then, only if it deems it is reasonably practicable to do so. Has that been satisfactory, because this set of amendments clearly suggests not? I was particularly struck by the words of the noble Earl, Lord Lytton, who spoke about such resolution being easily avoidable. That does not give us confidence. I therefore hope that the Minister will reflect on the spirit and intent and, perhaps, come to us with some practical measures to improve the current situation.

[Lord Parkinson of Whitley Bay (Con)]

My Lords, I shall first address points made by the noble Earl, Lord Devon, as well as my noble friends Lord Northbrook and Lady McIntosh, about some of the case studies. I certainly agree entirely with the noble Earl, who speaks from personal experience and makes the point that some of the lobby groups which have been vocal on the Bill are painting a very different picture to those directly involved, and with whom we have had extensive discussion. Your Lordships’ House benefits from having people such as the noble Earl and my noble friends who can speak from personal experience.

In particular, at Second Reading, the noble Earl showed how he speaks not just as a landowner and the litigator but as a consumer who shares the objective of wanting better connectivity. I am very happy to make absolutely clear that I understand that his point and those of other noble Lords are made in that spirit. I hope he can see that, for my part, we have been willing to listen and continue to be receptive to hearing contrary points; it is just that, in our discussions with the industry, we have had a clear picture painted.

The noble Earl asked a general but important question: why should site providers bother, given the other ways they could use their land? Without wishing to reopen the debate on valuation, we believe that the 2017 provisions created the right balance between the public need for digital communications and landowners’ rights. The code makes separate provision for landowners to recover compensation for loss or damages and, taken together, we think the provisions on consideration and compensation mean that landowners can still receive a fair payment for allowing their land to be used.

The new pricing regime is more closely aligned to those for other utilities, such as water, electricity and gas. We do not think it is less attractive than other comparable uses. As I said on a previous group in relation to a point raised by my noble friend Lady McIntosh, landowners should still receive their payments—which, among other things, take into account any alternative uses that the land may have and any loss or damage that may be incurred.

Turning to the amendments in this group, the purpose of Clause 68, as probed by my noble friend Lady McIntosh of Pickering and the noble Earl, Lord Lytton, is to encourage more collaborative discussions between landowners and operators and to ensure that litigation is only used as a last resort. We know that code negotiations can be difficult—my noble friend Lord Northbrook referred to that from his experience—and that, in some cases, landowners have felt pressured to accept any terms offered to avoid the risk of being taken to court. To address this, Clause 68 encourages the use of alternative dispute resolution to minimise the risk of landowners feeling pressured and to facilitate co-operative discussions.

At Second Reading, my noble friend Lady McIntosh suggested that alternative dispute resolution is optional for operators. I hope I can give her and other noble Lords some assurance on this matter, given the requirements for parties to consider use of ADR and for the courts to consider unreasonable refusal to engage in ADR when awarding costs.

ADR not being mandatory is a deliberate feature of this policy. That choice was made for two reasons. First, ADR may not be suitable in certain cases. For example, where a disagreement is based on differing interpretations of the law, this may have to be determined by a court. Mandatory ADR would add cost and time to this process without any benefit. Secondly, where ADR is appropriate, mandatory ADR would compel some parties to participate in a process they do not want to be involved in, making them less inclined to actively engage. This would increase the risk of failure, and the parties would then have to go to court anyway—only adding further time and costs for landowners. The clear majority of groups—including the Country Land and Business Association—opposed compulsory ADR when we consulted them.

I turn to Amendment 39, tabled by the noble Lords, Lord Clement-Jones and Lord Fox, and the noble Earl, Lord Lytton. This amendment would require evidence of a breach of Ofcom’s code of practice to be taken into account in ADR judgments. It should be noted that not all forms of ADR have judgments. Mediation is one such alternative. Furthermore, the Ofcom code of practice gives guidance on best practice; it does not set out specific requirements to be adhered to. As such, using the code of practice to underpin or effect decisions made in alternative dispute resolution risks creating further disagreements and disputes, rather than resolving them.

Finally, and most crucially, the amendment would undermine the open and collaborative approach on which successful ADR relies by forcing operators to enter any ADR process on a defensive footing. The outcome would be simply to blunt the effectiveness of alternative dispute resolutions and add to the administrative and cost burden for all parties. It is on this basis that I invite noble Lords not to press their amendments.

I turn to the Ofcom code of practice. We know that, in some cases, landowners are reluctant to enter into code agreements because they are concerned about how the operator or their contractors will behave when they carry out their works. Clause 69 addresses this issue by requiring guidance to be prepared by Ofcom, following consultation, regarding operators’ handling of complaints about their conduct. This guidance will be added to Ofcom’s code of practice. To complement this, the Government also intend to bring forward secondary legislation—in consultation with Ofcom and others where appropriate—to make regulations to achieve three things: first, to create a requirement on operators to have a complaints procedure in place to handle complaints relating to their conduct; secondly, to set out minimum standards which this process must meet; and, thirdly, to oblige operators to have regard for the Ofcom code of practice when handling complaints.

Amendment 40, tabled by the noble Lords, Lord Clement-Jones, Lord Fox and Lord Blunkett, and the noble Earl, Lord Lytton, would make adherence to Ofcom’s code of practice obligatory and make breaches of that code punishable by a fine of £1 million. As I mentioned in relation to Amendment 39, the Ofcom code of practice is intended to set out guidance. Deciding whether a particular course of action is a breach would be very subjective. The code of practice applies to both operators and landowners, and this amendment does the same. While some operators may have the resources to sustain such fines, very few landowners would.

We all want network rollout to proceed as quickly as possible. However, making compliance with the Ofcom code of practice mandatory and failure to do so subject to a heavy fine means that operators and landowners would be disincentivised from seeking to reach agreements at all. For those who might proceed, one can imagine them doing so as slowly and gingerly as possible to avoid the risk of breaching a code of practice that was never designed to be used in such a way.

Amendment 41, tabled by the noble Lords, Lord Clement-Jones and Lord Fox, and the noble Earl, Lord Lytton, and Amendment 42, tabled by the noble Lord, Lord Fox, set certain requirements regarding complaints handling, such as time limits for responding and compensation payable. As I noted earlier, Clause 69 will require Ofcom to amend its code of practice to include guidance on complaints handling. The Government also intend to make regulations to set out minimum standards for operators’ complaints processes. Both of these could feasibly include elements similar to those proposed in the amendments, and both will be developed through consultation. The Government firmly believe that this is the best way to encourage all parts of the sector to welcome and comply with the new procedure.

Also related to the code of practice is Amendment 42A, tabled by the noble Earl, Lord Lytton. Currently, for a private organisation to seek and exercise rights under the Electronic Communications Code, it must be the subject of a direction from Ofcom that the code applies to it. The first part of the noble Earl’s Amendment 42A would require Ofcom to reconsider each operator’s status as an operator for these purposes every five years, taking into consideration, among other things, complaints made against it for breaches of the code of practice. His amendment would make an operator’s rights to install, maintain and upgrade infrastructure potentially subject to adherence to a code of practice which, as I described just now, would serve only to disincentivise operators from extending their networks swiftly.

The second part of his amendment concerns obligations for operators to report to Ofcom about complaints that they receive, and for Ofcom to publish an annual summary of these reports. These are also the sorts of matters that will be considered when the Government make their regulations to set minimum standards for operators’ codes of practice, and when Ofcom amends its own code of practice.

Amendment 44, tabled by the noble Lords, Lord Fox and Lord Clement-Jones, concerns building safety. The importance of building safety is self-evident, and the Government are committed to doing everything possible to ensure that it is maintained at all times. None the less, the amendment is unnecessary since the code already contains ample protections to ensure that building safety is maintained. Paragraph 23(5) of the code requires that when a court imposes an agreement under part 4, that agreement must include terms for ensuring that the least possible loss and damage is caused in exercise of the rights. Such terms will provide significant building safety protections.

Paragraph 99 of the code makes it clear that the code does not authorise the contravention of laws passed before the code came into force. This means that legislation that was in place before the code came into force, including that on building safety, would not be superseded by measures in the code. Regulation 10 of the Electronic Communications Code (Conditions and Restrictions) Regulations 2003 requires that if an operator receives a report that its apparatus is in a dangerous state, it shall investigate and, if necessary, make the apparatus safe. Therefore, together these provisions already provide robust protections to ensure that building safety is maintained.

The noble Lord, Lord Fox, rightly mentioned Dame Judith Hackitt’s report, which places great importance on the clarity and simplicity of systems to ensure building safety. The Government believe that this amendment would add further unnecessary complexity to the robust protections that already exist in this area. Therefore, Amendment 44 is not needed.

[Lord Fox (LD)]

As I explained earlier, it is a probing amendment designed not to go into legislation but to get an answer, and the answer was not forthcoming.

First, the code is designed to comply with building safety that has come before it. The Building Safety Act is subsequent to the code so in this respect, that is not a helpful answer. Secondly, there are specific statutory instruments, as a result of the Building Safety Act, which deal with utilities. I asked a very clear question: will the Government be considering this function of digital infrastructure to be a utility? Also, will there be statutory instruments as a result of that Act which cover this issue, or does it need to be covered in another way? It is not covered in the answer the Minister has just given, so this must be specifically opted into the process that the Building Safety Act has ushered in as a result of the Hackitt review.

[Lord Parkinson of Whitley Bay (Con)]

The Building Safety Act received Royal Assent on 28 April, as the noble Lord knows. It will strengthen oversight and protections for residents in high-rise buildings, it will give a greater say to residents of tall buildings and it will toughen sanctions against those who threaten their safety. Its focus will help owners to manage their buildings in a better way while giving the housebuilding industry the clear and proportionate framework it needs to deliver more and better-quality homes.

Building regulations to be made under the new powers inserted by that Act will provide for more stringent requirements, separate from the Electronic Communications Code, regarding building work on high-rise buildings. People undertaking such work as employees or contractors of companies, including network operators, will have duties to ensure that their work complies with all the relevant building regulations. That will include the provision of information as part of the golden thread which will be handed over to accountable persons on completion of the building work.

I note also that the building regulations already include requirements to install infrastructure to support high-speed electronic communications networks in new buildings. DCMS has consulted on plans further to amend the building regulations to mandate gigabit-ready infrastructure and gigabit-capable connections to new homes. When such work is carried out it is required to meet all relevant requirements of the building regulations, include those for fire safety, so we do think that this is provided for already. I understand that it is a probing amendment; none the less—

[Lord Fox (LD)]

Without labouring the point tonight, the Minister can perhaps pander to my curiosity and come back with the specific statutory instruments that are expected to implement this. As I understand it, statutory instruments were laid and then withdrawn, and I do not think that they included digital infrastructure in the initial wording. I have a specific concern that there is a slight falling between the cracks. Perhaps the Minister can reassure me with some specifics in a letter.

[Lord Parkinson of Whitley Bay (Con)]

I am very happy to consult my colleagues at the Department for Levelling Up, Housing and Communities and to provide the letter the noble Lord requires. I invite him now to withdraw his probing amendment, and other noble Lords not to move theirs.

[Baroness McIntosh of Pickering (Con)]

Did I hear my noble friend correctly regarding the Country Land and Business Association? If so, I can put his mind at rest. It is most definitely in favour of the alternative dispute resolution being made mandatory. He should be aware of a briefing that was sent to us at a much earlier stage. This dates back to January, so I hope it is not still the case:

“Throughout the Government’s consultation on the Bill, the Department of Digital, Culture, Media and Sport has repeatedly refused to meet with our organisations”,


including the CLA and others,

“to hear the views of our members. The Bill was subsequently published without any economic impact assessment.”

I am slightly concerned that my noble friend appears to be unaware of something as fundamental as the difference between a mandatory and a voluntary ADR, and I wanted to correct him on that.

[Lord Parkinson of Whitley Bay (Con)]

I am sorry to disagree with my noble friend, but the CLA’s response to the consultation opposed compulsory ADR. I would be very happy to speak to her and triple check that with officials afterwards, but we clearly have different understandings of its position. I would be happy to speak to her afterwards to make sure that we can clarify that.

[Lord Clement-Jones (LD)]

My Lords, we clearly have some clearing up to do between Committee and Report on who said what and who supports what. I too was quite surprised to hear that the CLA would be opposed to compulsory ADR in these circumstances.

I thank noble Lords for their support for the amendments and the Minister for his very detailed reply. I do not think there is any dispute between us. We all want greater connectivity and to see 1-gigabit rollout. The whole question is whether we want greater trust—the word that I think the noble Earl, Lord Lytton, used. Quite frankly, across the Committee there is a view, on the valuation questions, on retrospectivity in the previous group and on the lack of compulsory ADR, that this will lead to more disputes. The Government seem to be going down this track where they plan for there to be more disputes so that more tribunals can be brought into effect and more lawyers will be employed, no doubt with rejoicing in various parts of the City. Everything in these amendments was designed to minimise the number of disputes, and to make sure that we had compulsory ADR and that Ofcom’s code actually bites.

It was very disappointing to hear what the Minister had to say. I hope that, between Committee and Report, he will reflect on some of the points made in this respect and that we can check to see whether landowners are unanimous on this, because using ADR as a filter would be a perfectly acceptable way of doing things. Once certain aspects are established as a matter of law then a dispute can of course be referred, but a mediator can, by agreement of the parties, refer it to a court to be determined. There is no impediment to using ADR as that initial filter, which would mean that there would be many fewer disputes. We would actually have faster rollout as a result and the Bill’s purposes would be entirely achieved.

I am sure that this will be a candidate for Report as well. In the meantime, I beg leave to withdraw the amendment.

Product Security and Telecommunications Infrastructure Bill

Lord Parkinson of Whitley Bay Excerpts

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

[Lord Fox (LD)]

My Lords, if there is an abiding theme in this group, it is transparent reporting and then using the data within those reports to make sensible decisions.

Notwithstanding the Minister’s special day tomorrow, I am guessing that he is quite a lot younger than me, so he might be able to remember his childhood. I can remember a game that we used to play, of running down hills with our eyes closed. This was tremendous fun, until it stopped—and it usually stopped when you fell over or hit something. The argument advanced by the Government is, “We mustn’t do a review. We can’t have data because it’ll upset the market”—in other words, we cannot open our eyes because it will stop us running down the hill fast enough. That is the nature of what we are doing. In order to make sure that we do not fall over and that we are running in the right direction, we need to have our eyes open. In their different ways, these amendments seek to open our eyes to the effect that the Bill and all of this public and private investment will have on the objective that we all share: putting fibre in every home in this country. Without information, and without transparency in that information, we will not know how fast we are going and in which direction.

I care little about whether the Government accept the words in these amendments, but I do care about a Government who have enough sense to get the information, publish it and then act on it.

[The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Lord Parkinson of Whitley Bay) (Con)]

My Lords, I am particularly grateful to my noble friend Lady Stowell for her early birthday wishes. Finishing Committee a day ahead of schedule is a delightful early present. There are still to hours to go before tomorrow, and I hope that we will rise before noble Lords have to sing “Happy Birthday”.

Amendments 45, 47 and 49 seek to impose duties on the Government to assess and report on various impacts of the 2017 code reforms and, indeed, of this Bill once brought into force. I certainly appreciate the spirit of these amendments, which are designed to ensure that the Government are held to account; the noble Baroness, Lady Merron, referred to the conversations we had right at the beginning of our discussions on the Bill. Noble Lords will know that there are already ways in which some or all of the effects of these amendments can be achieved. For instance, Ofcom publishes its annual Connected Nations report, which it updates a further two times a year; this provides a clear assessment of the progress in both fixed and mobile connectivity. I hope that noble Lords will agree that the independent regulator is well placed to provide information on the progress of gigabit-capable broadband. Moreover, the Government continue to answer questions and provide clarity on all aspects of their work in this area, both in your Lordships’ House and in another place.

Amendment 45, tabled by the noble Baroness, Lady Merron, and the noble Lords, Lord Bassam of Brighton and Lord Blunkett, seeks an assessment of the legislation passed in 2017 to update the code, and particularly the impact of changes to the valuation regime. When the 2017 reforms were introduced, we recognised that the market would need time to adapt and settle. We have engaged with interested parties since the reforms came into force to identify any emerging issues. In our view, there is not yet enough evidence for a properly robust and comprehensive analysis to be made of the impacts that the 2017 reforms have had, of which the valuation framework was only one aspect. That is particularly the case given the impact of the Covid-19 pandemic, which has caused major shifts both in the demands on telecommunications operators and on their ways of working. However, in light of the feedback we have received through our engagement and our public consultation, the Government believe that the changes we are making in the Bill are needed to ensure that the 2017 reforms have their intended effect. That is not to say that we think the 2017 reforms failed—much progress has been made; we simply think that more can and must be done to maximise their impact. Making these changes now through the Bill will help to meet the Government’s 2025 connectivity target for at least 85% of homes and businesses to have access to gigabit broadband.

The noble Baroness, Lady Merron, asked how often our engagement has taken place. The access to land workshops is one part of it; there are in fact three separate groups which have been going for over a year. They met this month and will meet again in July, so we are undertaking that engagement on a regular basis.

Amendment 47, tabled by the noble Lords, Lord Fox and Lord Clement-Jones, asks the Government to review and report on the impact of Part 2 of the Bill against our gigabit delivery targets. Again, I appreciate that noble Lords will be keen to ensure, as they should, that the Government are on track with their commitments. DCMS currently carries out monitoring, and regular updates are published on a quarterly basis by Building Digital UK. That monitoring and reporting will naturally capture and reflect any accelerations that occur after this Bill comes into force.

The most recent Project Gigabit quarterly update highlighted the progress we are making. This includes reaching a milestone of over 100,000 broadband vouchers issued, worth more than £185 million, with 65,000 claimed to date to support households and businesses with the additional costs of securing gigabit-capable connections; launching two new regional procurements in Norfolk and Suffolk and two local supplier procurements in Cornwall, bringing our total live procurements to 10 and extending gigabit-capable connectivity to up to around 380,000 premises; completing over 20 market engagement exercises across the UK further to inform our future procurement pipeline; and launching as an executive agency of DCMS and publishing our first corporate plan setting out our key strategic objectives for 2022-23 and how Building Digital UK will drive the expansion of gigabit connectivity to all parts of the country.

[Lord Fox (LD)]

Briefly, if it is going so well, why are the Government changing everything? The Minister has just told us how well it is going, and now they are changing everything.

[Lord Parkinson of Whitley Bay (Con)]

From our engagement, to which I have referred, we believe it is going well and progress has been made, but our engagement with stakeholders suggests that the reforms that we are putting forward through this Bill are needed. We are extending that progress following consultation.

[Lord Clement-Jones (LD)]

I am sorry to interrupt the Minister. As he knows, certainty is absolutely crucial for business. What is always created when new legislation supersedes old legislation is uncertainty. What confidence can the Minister possibly have that the impact of this Bill will be beneficial to rollout?

[Lord Parkinson of Whitley Bay (Con)]

With such an accelerating market, thanks to the pro-investment environment that the Government are creating, it is quite challenging to quantify the extent to which progress is attributable to any single piece of legislation in a market that reflects so many factors. That is one reason why we think it would be of limited value.

My noble friend Lord Northbrook asked me to comment on the Centre for Economics and Business Research report on the 2017 reforms. We believe that the CEBR report does not provide a sufficiently rounded picture in its assessment of how the 2017 reforms have affected the pace of telecommunications delivery. The Government, as I have said, acknowledged in 2017 that reductions in payments could make landowners less keen to enter into agreements to host apparatus on their land. We expected an initial slowdown following the implementation of the 2017 reforms while the market adapted to them, but our understanding, informed by our conversations and consultation, is that both new and renewal agreements are now being successfully concluded. For instance, we were informed in January this year that, since 2017, 900 agreements had been renewed and that 83.5% of those agreements were concluded consensually, to give noble Lords some data.

[Lord Fox (LD)]

By extension, is the Minister expecting a slowdown again as the market gets used to these changes? Clearly, the Government expected a slowdown when they made the last set of changes; are they anticipating a similar slowdown this time?

[Lord Parkinson of Whitley Bay (Con)]

These changes build on the changes of 2017, so we do not expect there to be such an impact, because there is not such a change for the market.

We think it is too simplistic to attribute the changes in the market since 2017 solely to the valuation framework. The reforms in 2017 also made it easier for operators to share equipment, which will have reduced the demand for new mast sites to be built. Of course, we all hope that there will not be disruptive effects of a pandemic, as we have seen in the years since 2017.

Amendment 49, tabled by the noble Lords, Lord Clement-Jones and Lord Fox, and the noble Earl, Lord Lytton, asks the Government to conduct an implementation review of the Act after it is brought into force. However, we believe including such a requirement in the legislation is not necessary. The Government will of course monitor the effect of this legislation to understand how it is working in practice. Requiring an assessment at a specific time and which is focused on such specific elements would fetter the Government’s ability to judge when a meaningful review of progress can most sensibly be completed and what information it should include. I am happy to reassure my noble friend Lady Stowell that of course we want to monitor the effect of this legislation and to see and understand how it is working in practice.

Amendment 50, tabled by the noble Lords, Lord Clement-Jones and Lord Fox, the noble Earl, Lord Lytton, and the noble Baroness, Lady Merron, seeks to impose duties on telecommunications operators to provide a variety of annual data to Ofcom. It must be remembered that imposing reporting obligations on the industry necessarily diverts resources away from delivering the very targets that the Government have challenged them to deliver and on which noble Lords are rightly pressing us for progress. Any such obligations must therefore be proportionate.

The Communications Act 2003 already gives Ofcom substantial powers to collect and publish data. Procedures are therefore in place to monitor the progress that is being made and to ensure that details of this progress are published. For example, licence obligations for the shared rural network require mobile network operators to report on coverage and the number of new sites built through the programme. Operators also provide Ofcom with information on the geographic availability of coverage to enable consumers to make informed decisions. This is all data that is, or will be, published in Ofcom’s Connected Nations report.

Product Security and Telecommunications Infrastructure Bill

Lord Parkinson of Whitley Bay Excerpts

Consideration of Commons amendments
Tuesday 22nd November 2022 Lords Chamber

Moved by

[Lord Parkinson of Whitley Bay]

That this House do not insist on its Amendment 17, to which the Commons have disagreed for their Reason 17A.

17A: Because it would give rise to a new head of public expenditure, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

[The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Lord Parkinson of Whitley Bay) (Con)]

My Lords, it is a great pleasure to be back at the Dispatch Box to take this Bill, I hope, through its final stages in Parliament. I am very pleased to see how much progress has been made, and I take this opportunity to pay tribute and extend my thanks to my noble friend Lord Kamall, who carefully steered the Bill through Report and Third Reading in your Lordships’ House.

The Government have listened carefully to the points raised in scrutiny on this Bill, both in this House and in another place. We have taken on board recommendations made in both Houses of Parliament and have tabled amendments where those recommendations have strengthened the legislation. I am confident that the Bill is now in a form that will meet its objectives. Importantly for the debate before us today, that includes preserving a balance between landowners’ rights and the wider public interest in delivering telecommunications networks.

As I shall set out now, I hope that your Lordships will agree with Members in another place that Amendment 17 should not remain part of the Bill. The amendment in the name of the noble Baroness, Lady Merron, would add a new clause to the Bill requiring the Secretary of State to commission an independent review of the effect of the Electronic Communications Code, and of the Telecommunications Infrastructure (Leasehold Property) Act 2021, on the deployment of telecommunications infrastructure. Her amendment understandably aims to provide transparency, accountability and ongoing evaluation of the legislative framework that underpins digital deployment in the UK. As the noble Baroness knows, I fully appreciate the sentiment behind it, and I commend noble Lords in all parts of the House for their efforts to improve connectivity. I am grateful for the time given by the noble Baroness and others yesterday to discuss this ahead of our debate today. It is clear that we share the same goal, although our opinions in some instances differ about how to achieve it.

--- Later in debate ---

[Baroness Merron (Lab)]

My Lords, I am sure the Minister has picked up on the mood of your Lordships’ House today, as I know he will have done in previous debates. I am grateful to him for outlining the Government’s approach on infrastructure rollout and the concerns regarding a review. However, like other noble Lords who have spoken today, I feel that the department is still missing the point. It is appreciated that the Minister acknowledged the sentiments behind the original amendment. In common with other noble Lords, I am also grateful for the time that he and his officials have given to the discussion and consideration of the points that have been raised.

However, the original amendment before this House, which we are looking at again today, was intended to help the Government—something I emphasised in the meeting with the Minister—not least because it is an attempt to bring together balance, fairness and efficiency and to take a rather different approach from the one we have seen thus far, which the noble Lord, Lord Clement-Jones, has just referred to, of a trajectory of continually watering down ambitions because the regime is simply not delivering at the required pace. It would be better to tackle the root problems to find a way forward than moving the goalposts, which is what has been happening so far.

The creation of new stakeholder bodies could prove to be a positive step, but we need to acknowledge that this is not the first time we have seen such an initiative. DCMS already runs a number of working groups, and the discussions within them have rarely led to any significant breakthroughs. It would be of interest to hear why the working groups in this setting will be any different. While wishing the national connectivity alliance well in its efforts, establishing new groups or structures will be of little use if they become—as other noble Lords have said—talking shops, or, very significantly, if underlying regulation becomes ineffective.

We welcome both sides of the rent debate getting around the table, but it is important to say that our concerns about rollout go beyond issues around the valuation of land. In any event, as the Minister has said, Parliament will not have a full role in the upcoming discussions. As the noble Earl, Lord Devon, has indicated, we could do with some more detail about the reference the Minister made to the way in which Parliament will be referred to in the deliberation. I would also appreciate the level of detail that has been requested.

These problems are not going away—if anything, the situation is likely to get worse before it gets better, particularly given the increased volume of tribunal cases and the Government’s refusal to make their new arbitration process mandatory. It seems that the Government hide behind existing processes, claiming that an independent review would unnecessarily duplicate Ofcom’s role, but the fact remains that the current system is not working, and that is what we have to address. The disputes and regulatory ambiguity mean that we are not delivering the upgrades that millions across our country so badly need.

I am sure we all agree that better connectivity is crucial to future economic growth—which is supposed to be the Government’s priority—but with every delay to our rollout and every problem that is being faced, we are losing ground to international partners. Yes, the Bill will deliver progress in some areas, which is why we will not delay its passage any further, but without concerted efforts, we are likely to simply rerun these very same debates again and again in the years to come. There was a window of constructive opportunity here, and I put on record my great disappointment that the Government have not recognised this.

[Lord Parkinson of Whitley Bay (Con)]

My Lords, I am grateful to noble Lords for the points they raised in the debate today. I will try to respond to the questions that they have asked. I understand your Lordships’ desire to ensure that the Government are held accountable, as we should be, for the legislation that we enact, and that we are taking appropriate steps to monitor its impact. I would certainly not disagree with that sentiment.

I will start with the comments on the valuation regime, raised particularly by the noble Lord, Lord Cromwell. This, of course, has been debated at length throughout the passage of the Bill, both in your Lordships’ House and in another place. I am grateful to the noble Lord and others for their time to discuss this in more detail, but we are now reaching the point where we are at risk of repeating ourselves. There are no new points to be added at length. I ask noble Lords to bear in mind that the valuation regime was introduced through the Digital Economy Act 2017. In the intervening period, the public interest in access to digital services has only increased—a fact underlined, of course, by our reliance on those services during the Covid-19 pandemic. The case for a framework which encourages investment has, therefore, never been stronger, and we think the statutory valuation regime is an important part of that framework.

My noble friend Lord Northbrook and others mentioned our scepticism about the CEBR report. This is not to denigrate the CEBR itself, and I will not expand on the points contained in the note that he and other noble Lords have seen, to which he referred. I underline, however, that it was commissioned by the campaign group Protect and Connect, as the noble Lord, Lord Clement-Jones, acknowledged, and there are certain campaigning groups that have been, throughout the passage of this Bill, seeking to influence the debate, which have vested interests in the matter. They are perfectly at liberty to make their points in the way that they wish, but it should be borne in mind that the organisation funding this campaign stands to make significant financial gains if the changes to the 2017 valuation framework are reversed.

I hope I can give greater reassurance to my noble friend Lord Northbrook on the point he raised about transitional measures. The Government are considering the implementation strategy for this Bill very carefully, including possible transitional provisions. I reassure noble Lords that the implementation of the Bill will be discussed with all interested parties, including those representing the interests of landowners. The Government are committed to ensuring that the Bill is brought into force not only in a timely manner but in a sympathetic and responsible way, taking into account the range of impacts that different approaches may have on different groups.

The noble Earls, Lord Lytton and Lord Devon, the noble Lord, Lord Cromwell, and others flagged the evidence base on which the Government’s conclusions are based. The Government’s position is based on a wide range of information. That includes data on coverage and connectivity, which is collated by Ofcom and which demonstrates that substantial progress has been made since 2017. I repeat my apology to the noble Earl for the delay in sending him the data during our debates on this Bill, partly because of the interruption in service on my part. It is true that we have taken into account data provided by the industry on the number of agreements completed since 2017, but these are data that can be supplied only by the industry. If the valuation framework had stalled the market or slowed down deployment, it would not be in the sector’s interests to try to maintain that framework.

A number of noble Lords talked about the reduction in rent, which we have seen since the 2017 reforms. It sounds as though we might not come to an agreement on the precise figure, but rent is only one element of the financial package that operators may offer to landowners. Within the legislative framework, separate sums can be offered as compensation to cover potential loss and damage; other variations might occur in practice within the market. For example, as part of the financial package, operators might choose to offer an early completion incentive payment. I am concerned that some of the case studies that have been drawn to noble Lords’ attention may ignore the overall package offered to landowners or fail to acknowledge that figures presented might have been an opening offer, when ultimately very different terms might have been agreed once proper negotiations have taken place. The amount of rent received will, in practice, often depend on the much wider circumstances in which financial offers are made and final terms are agreed.