Telecommunications Infrastructure (Relief from Non-Domestic Rates) Bill

Lord Vaizey of Didcot Excerpts

3rd reading: House of Commons & Committee: 1st sitting: House of Commons & Report stage: House of Commons
Tuesday 5th September 2017 Commons Chamber

[The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Marcus Jones)]

The Government are committed to supporting full-fibre telecommunication infrastructure and the roll-out of 5G. This will deliver a step change in the speed, service quality and reliability of broadband and mobile services. Independent research suggests that increased broadband speed alone could add £17 billion to UK output by 2024, so this is a vital measure for the whole economy. The Bill will provide the powers we need to implement an important part of that strategy.

At the 2016 autumn statement, the Government announced 100% rate relief for new full-fibre infrastructure in England. The clauses in the Bill will allow us to deliver that relief with retrospective effect to 1 April 2017. We have already published draft regulations that illustrate how we will use these powers to implement the relief. The draft regulations have been prepared in consultation with telecoms experts in the Government, Ofcom and telecoms providers. Business rates and telecoms are technical fields so there is considerable scope for complexity where they meet. However, I am glad to say that through our work with the sector, we believe that we have found a clear approach to allow the valuation officer to identify, capture and quantify new fibre.

[Mr Edward Vaizey (Wantage) (Con)]

I refer the Committee to my entry in the Register of Members’ Financial Interests. Is my hon. Friend aware of some concerns in the telecoms sector that the tax relief could be gamed? People could switch off lit fibre and light dark fibre in order to take advantage of the tax relief. Some have suggested that a better way of implementing may be simply to limit the quantum of business rates paid by telecoms companies. Will my hon. Friend comment on those concerns, which I have heard from a number of providers?

[Mr Jones]

I understand the concerns raised by my right hon. Friend, and I have great respect for his considerable knowledge of the matter. I reassure him and the various bodies that hold concerns that the relief is not a measure to support the relighting of fibre that has been turned off. Indeed, it is to support the laying of new fibre in the ground. This technical matter is laid out in the draft regulations and explained in the accompanying consultation document published by my Department last week. Consultation will ensure that the proposal reaches the right audience in the telecoms sector. With business rates experts, we will ensure that the relief will work as planned. The consultation will also allow us to move quickly to implement the relief once the Bill has passed and ensure that support is available for new fibre.

[Mr Jones]

My hon. Friend is right that this is an investment in the infrastructure of the country. Indeed, it is a relief that is time-limited for five years. After that five-year period, that fibre will attract its own income into the business rates pool, whether on the local list or on the central list.

[Mr Vaizey]

I hope the Minister will forgive me for interrupting his eloquent speech, but I was spurred into action by my hon. Friend the Member for North West Hampshire (Kit Malthouse), who is a newly elected member of the Treasury Committee—I congratulate him—and who displays the forensic skill we will see in many hearings in months to come. It behoves me to clarify that it is possible under the current regulations for a telecoms provider simply to lay new fibre in existing ducts, turn it on and take advantage of the tax relief, even though there is already fibre in those ducts. That would be seen as gaming the system—taking advantage of the tax reliefs without building the new infrastructure my hon. Friend the Member for North West Hampshire has campaigned for so vigorously. That is simply the warning light that I put up, and it may be that my hon. Friend will drive future Treasury Committee hearings towards that subject.

[Mr Jones]

By definition, full fibre is fibre that goes all the way from an exchange to the particular business or residential property that it individually serves. Therefore, by definition, even if an existing set of ducting was used, the new fibre would be an expansion of the network, because it would serve a different property from the current fibre. I therefore hope that my right hon. Friend is reassured.

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[Mr Jones]

I thank my hon. Friend for that comment. He is absolutely right that it is extremely important that new housing developments serve well the people who purchase the properties in relation to superfast broadband. He is right that it is a requirement for developments of under 30 dwellings to have a broadband connection and for developments of over 30 properties to have a superfast broadband connection. In bringing forward those requirements, which started this January, the Government had to make a very challenging decision in getting the balance right between making sure that people are properly served with the latest technology and that we build the homes required to deal with the housing shortage in our country.

[Mr Vaizey]

I am very grateful to hear my hon. Friend talk about these issues. In my constituency, the developer Linden Homes built a housing development with houses selling for hundreds of thousands of pounds, and for the mere price of £6,000 to deliver broadband, refused to stump up that money. It is this kind of behaviour by developers that brings them into disrepute. I congratulate the Government on making great progress, because no new home should be built without superfast broadband.

[Mr Jones]

My right hon. Friend is quite right. Developers who are not necessarily compelled to provide superfast broadband should think to themselves how the installation of superfast broadband could become a selling point for the property. The provision of superfast broadband is becoming more and more important, particularly as more and more people work from home.