Product Security and Telecommunications Infrastructure Bill

Baroness Merron Excerpts

Report stage
Wednesday 12th October 2022 Lords Chamber

[Lord Clement-Jones (LD)]

My Lords, I too welcome the noble Lord, Lord Harlech, to the salt mines. He knows little yet of how much work is involved in being a Whip; that is all that I can say. I would also like to echo what the noble Baroness, Lady Harding, said about the noble Lord, Lord Parkinson, and his service as DCMS Minister. We all appreciated that very much.

I congratulate the noble Baroness, Lady Harding, who made a very powerful case for her amendment in Committee. I thank the Government for having agreed to that. CityFibre said, in its original briefing, before we had Committee, that this would make a huge impact, particularly in rural areas and in urban Scotland. I have just come back from the US and have seen, in some rural areas such as New Hampshire, the impact of being able to put these superfast fibre-optic cables on telegraph poles. It is really an effective way of delivering superfast broadband to those areas. CityFibre estimated that 1 million such poles exist across the UK, so we are not talking about a small issue.

Finally, the noble Baroness, Lady Harding, as ever, put her finger on the key issues in this particular new clause, about what constitutes agreement between operator and main operator, and operator and landowner. The more clarity that the noble Lord can give us, the better we will be.

[Baroness Merron (Lab)]

My Lords, first I also welcome the Minister to his place—long may he continue to be as helpful to your Lordships’ House as he is being today. We welcome this government amendment, in the name of the noble Lord, Lord Kamall, whom again I would like to welcome to his new place on the Front Bench. Again, let us look forward to many other sensible government amendments in response to the points that have been raised. I also thank and pay tribute to the efforts of the noble Lord, Lord Parkinson, who helped get us to this stage.

This is very much an issue, as noble Lords will be aware, that attracted cross-industry support, as well as support from all across the House. I pay tribute to the noble Baroness, Lady Harding, for leading the team. In view of her comments about the select group of us who have an interest in health and telegraph poles, perhaps that is an opportunity for an All-Party Parliamentary Group of some select membership.

This amendment does strike the right balance between speeding up fibre rollout and protecting the rights of landowners when upgrading and sharing pre-2017 poles on private land. It is consistent with the amendment that the noble Baroness, Lady Harding, put forward earlier, which we were very pleased to sign up to when it was tabled at Committee stage. So I do welcome this very much from the Government. I do wonder why, given the considerable cross-party consensus in both Houses, it took so long to bring it before us, but we are here today. I too would welcome the clarity about whether verbal agreement from a landowner is indeed sufficient for operators to then undertake necessary works, but with that, this government amendment is one that finds great favour on these Benches.

[Lord Harlech (Con)]

I thank noble Lords for the opportunity to clarify these points and for their welcome to the Front Bench. If the House could indulge me a little, I have spoken several times in previous debates about the need for better rural connectivity and better broadband, so it is a great pleasure to actually take part in this debate.

In response to my noble friend Lady Harding’s question about proof of permission from a main operator to an additional operator, these new provisions are intended to optimise the use of existing telegraph poles. They explicitly recognise the value for UK connectivity in different operators being able to upgrade and fly wires from each other’s poles as quickly and efficiently as possible. The provision does not require a second operator to secure the main operator’s permission in any particular form. In other words, formality requirements that apply to an agreement under Part 2 of the code do not apply here. We expect the sector to make sensible, efficient administrative arrangements to make clear that the required permission is held. For example, Ofcom’s duct and pole access remedy, which Openreach fulfils through its physical infrastructure access products, requires Openreach to grant other operators access to its ducts and poles. Operators may consider that they can satisfy the condition for the permission of the main operator for paragraph 74 purposes through their usual procedures for securing access through PIA.

I welcome the opportunity to point out that we expect a similarly pragmatic approach to be adopted in relation to new rights relating to underground networks, introduced through Clauses 59 and 60, which are also intended to facilitate faster and more efficient upgrading and sharing. For example, it may be sensible when granting permission for a second operator to share the use of ducts and poles for the main operator to authorise the second operator to carry out the appropriate fixing of notices on its behalf.

Turning to proof of consent, the provision makes clear that the formalities needed for a Part 2 code agreement will not be needed for an operator to secure permission to access land in order to exercise its paragraph 74 rights. A verbal agreement can therefore satisfy the condition, but of course individual operators may wish to have proof of that permission in writing.

Finally, on the occupier giving their consent to a contractor, the occupier of land on which a pole is situated will need to give the operator permission to access the land before the operator exercises its new rights. Industry stakeholders report that obtaining consent to access land to carry out one-off activities can be achieved in significantly less time and at much lower cost than it would take for a formal code agreement to be concluded. Limiting the activities that can be carried out using these rights means there is not the same need for a formal agreement between the operator and the occupier of the land since the terms upon which the rights may be exercised are effectively prescribed by the conditions attached to them. The conditions therefore achieve the dual purpose of protecting the occupier’s interests while removing the need for a formal agreement.

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[Lord Clement-Jones (LD)]

My Lords, on these Benches we strongly support these amendments which support changes to the current valuation basis, the flaws in which were so expertly explained by the noble Earl, Lord Lytton, in Committee, and so clearly today by the noble Earl, Lord Devon, the noble Baroness, Lady McIntosh of Pickering, and the noble Lords, Lord Cromwell and Lord Northbrook. As the noble Earl, Lord Devon, has said, the current provisions are a mistake—astonishing from a Conservative Government, as the noble Lord, Lord Cromwell, said—and the motives of many of us were reflected by what the noble Lord, Lord Northbrook, said: that what we are trying to do is to ensure that the ECC delivers the stated policy of the Government. All of us are behind the 1 gigabit policy, as delayed and slow as it may be, but we want it to be delivered. It appears that the Government, as the noble Lord, Lord Northbrook, also said, are completely ignoring the reports of the IEA, the CEBR and others who have pointed out that precisely these changes in valuation in the 2017 changes to the code have not, and those proposed will not, ensured faster rollout than the original valuation methodology.

Under changes to the code made in 2017, a “no scheme” valuation methodology for valuing land was introduced, as we have heard, and this allowed site providers to recover only the raw value of their land, rather than receiving a market price. As the noble Baroness, Lady McIntosh, has highlighted, operators have been able to use the changes made to the ECC to drive down the rents they pay to site providers, often to peppercorn rents. She also highlighted the impact assessment made by the Government which said that rent reductions should be no more than an absolute maximum of 40%. But of course, we know from the data quoted by operators that reductions have at best averaged 63%, a huge sum for many of the people who rent their land for use for telecoms infrastructure, and in many cases as we have heard today, reductions have been much higher—in the region of 90%. As I mentioned in Committee, the Protect and Connect campaign produced some powerful case studies, such as the Fox Lane Sports & Social Club in Leyland, Lancashire, to support this; and we agree that the right solution to get this market moving again is to reinstate a fair valuation mechanism, such as the one envisaged by the Law Commission.

In addition, in principle we entirely support the amendment spoken to today by the noble Baroness, Lady McIntosh, and the noble Earl, Lord Devon, designed to cap cuts to site provider incomes and prevent retrospective lowering of rents. I really do hope that the Government will give these amendments careful consideration, supported as they are by a very strong cross-party coalition—and indeed a country-wide campaign.

[Baroness Merron (Lab)]

My Lords, the issues addressed in this group of amendments have certainly exercised your Lordships’ House throughout the course of the Bill and have drawn much attention outside this House as well. I am grateful to the noble Earl, Lord Devon, and the noble Baroness, Lady McIntosh, for introducing their amendments with such clarity. I believe that all the amendments in this group seek to bring fairness, balance and efficiency to the task before us. The noble Lords, Lord Cromwell and Lord Northbrook, also spoke to these points, again with great clarity, in illustrating the challenge before us.

As we have outlined at previous stages, we are sympathetic to the concerns around the changes to the valuation of sites that host telecoms infrastructure. A point I have always found somewhat perplexing—I hope the Minister can assist on this—is that industry itself admits that reductions to rents have on average been far above the 40% promised by government, yet the 40% figure continues to be put before us. I would welcome some insight into that from the Minister.

We understand the importance of getting infrastructure rolled out swiftly to improve the availability of 5G and high-speed broadband and, as I have said, we all understand that a balance has to be struck. The amendments in this group would make a number of changes to the current regime to try to redress the loss of landowner rights. I certainly understand the motivation for these changes but suggest to your Lordships’ House that an independent review of the whole system would perhaps offer a more useful way forward. That is something we will return to in a later group of amendments.

Delivery, balance and fairness are key here. I hope that the Minister will take these points on board and find us a way forward, because that is what we are seeking.

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Moved by

[Baroness Merron]

28: After Clause 74, insert the following new Clause—
“Independent review of the electronic communications code
(1) Within the period of three months beginning with the day on which this Act is passed, the Secretary of State must appoint an independent person to undertake a review of the effect of—(a) the electronic communications code, and (b) the Telecommunications Infrastructure (Leasehold Property) Act 2021,on the deployment of 1 gigabit per second broadband and other forms of telecommunications infrastructure.(2) The review under subsection (1) must, in addition to any other matters the Secretary of State deems appropriate, include consideration of—(a) the extent to which revisions to the electronic communications code have secured progress towards His Majesty's Government's targets relating to telecommunications infrastructure,(b) the balance of rights and responsibilities of land- owners and telecommunications operators, and(c) the impact of this Act on the level of competition in the telecommunications sector.(3) The independent person may make recommendations to the Secretary of State on matters including (but not limited to)—(a) potential further revisions to the electronic communications code,(b) potential amendments to—(i) legislation, or(ii) guidance,relating to the valuation of land used to host telecommunications infrastructure, and(c) the potential benefits of imposing a requirement for telecommunications operators to report annually to OFCOM on their investment in new infrastructure.(4) Upon receipt of the report from the independent person, the Secretary of State must—(a) publish the report,(b) prepare a response to the report, and(c) lay a copy of the report and response before Parliament.”Member’s explanatory statement
This amendment would require the Secretary of State to appoint an independent person to conduct a review of recent changes to telecommunications infrastructure legislation and policy. This review would consider what further changes may be required to ensure regulation in this field delivers new infrastructure in a way that also preserves competition in the sector.

[Baroness Merron (Lab)]

My Lords, I am pleased to speak to Amendment 28, which we have tabled in an attempt to find a constructive way forward to perhaps the greatest area of discussion throughout this Bill which has not yet been resolved—how we bring together the balance, the fairness and the efficiency that we all say we are looking for. This amendment is an attempt to amalgamate various others that were debated at Committee stage. I am very grateful to colleagues across your Lordships’ House who have worked with us on the draft or have indicated their support for this approach. In particular, I thank the noble Lord, Lord Fox, for adding his name, and, of course, my noble friend Lord Bassam.

Since taking office, the new Prime Minister has made a lot of her commitment to rolling out high-speed broadband and 5G. We welcome that commitment and would like to see it come into reality, particularly as, regrettably, the former Prime Minister repeatedly watered down the targets. We want to see modern infrastructure installed and want that to happen quickly, but we also want the system to be fair—to operators, yes, but also to the landowners who host equipment and consumers who are in the midst of a cost of living crisis.

The Government, we understand, will say—and I hope the Minister will not be going down this road—that a review as proposed in this amendment would only slow things down. Let me deal with that. This amendment does not prevent any of the Bill’s provisions coming into force. The Government, we understand, are also minded to say that they are confident in their approach in this area and therefore no review is necessary. If that is the case, I suggest that an independent review would give their policies a clean bill of health. However, I suspect an independent review would conclude that all is not as well as has been presented, and its recommendations could therefore be a very helpful resource for the new Secretary of State and the Government.

We see no reason why the Government could not simply accept this amendment and get on with appointing somebody independent to lead a review. If the Government are not willing to do that, we will be minded to test the opinion of the House. I beg to move.

[The Earl of Devon (CB)]

My Lords, I added my name to this amendment at the last minute and I am very pleased to support it. From my earlier contribution, the House will be aware of my concerns about the lack of consultation prior to the passage of this Bill. The contributions of many noble Lords and the Ministers’ responses have only increased those concerns. I did not push for a vote on the prior amendments regarding valuation and ADR because I believe those issues will properly be considered in the context of this independent review.

The Government have suggested in discussions that a review will unduly impact the market and slow the rollout of digital infrastructure. This is not possible. We have established that the market is already broken and the costs of transacting telecoms sites have more than doubled since 2017, as reported in the RICS conference, and the number of cases before the lands tribunal has more than tripled. The ECC is not working and expanding its broken application to historic 1954 Act leases will only increase the challenges. A review is urgently required, and I urge that this be voted on.

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[Lord Kamall (Con)]

The noble Lord makes a reasonable point. I know that noble Lords are keen to see the data, but all that I can do at the moment is undertake to make it available as soon as possible—I did not say “in due course”, by the way. We believe that the prospect of another review will, quite simply, create chaos in the market—I know that noble Lords disagree with that. Site providers would inevitably, and not unreasonably, draw out negotiations as long as possible, in the hope that the “no scheme” valuation regime would be scrapped. It is important to consider that.

Secondly, the amendment seeks to impose a duty to assess, in isolation, the impact of this legislation and the previous reforms made to the code on digital connectivity and on stakeholder relationships. The Government question how feasible it is to quantify the extent to which such progress is attributable to a single piece of legislation, and we all know that the market to which these provisions apply is dynamic. By the time such a review has been commissioned, the research carried out and the findings reported on, the market is likely to have moved on significantly, rendering that report obsolete. In 1996, I wrote a bestseller on EU telecommunications policy—I am sure you have all heard of it—and, by the time it was published, it was already out of date. That shows how quickly this market develops. Funding such a report therefore cannot provide good value to the taxpayer, and the amount could be better spent helping the Government reach their ambitious connectivity targets, to which I will come in a moment. But remember: the report would probably be obsolete by the time it is published.

Finally, this amendment overlooks the substantial review and reporting mechanisms that are already in place. For example, in relation to progress on gigabit-capable broadband, my noble friend Lord Parkinson referred in Committee to Ofcom’s annual Connected Nations report, which is updated twice a year and provides a clear assessment of the progress in both fixed and mobile connectivity. The Government also monitor and report regularly on their connectivity commitments, with quarterly updates published by BDUK. The Government will of course carefully consider the implementation of this legislation to understand how it is working in practice. For these reasons, I believe that the proposals in this amendment, while well-intentioned, could be disproportionate and ultimately unhelpful. I have also written about unintended consequences, and we have to be very careful of these here.

I will respond directly to the question of the noble Lord, Lord Fox, about targets. The levelling-up White Paper set out our mission that, by 2030, the UK will have nationwide gigabit-capable broadband and 4G coverage, with 5G coverage for the majority of the population. The Government are developing a wireless infrastructure strategy to set out the strategic framework for that development, and this will be published later this year.

The existing 5G target, which is for the majority of the population to have access to 5G by 2027, has been met five years early, with basic non-standalone 5G. As part of the wireless infrastructure strategy, we are establishing a new ambition for 5G. The shared rural network will see the Government and industry jointly investing over £1 billion to increase 4G mobile coverage throughout the UK to 95% geographic coverage by the end of the programme, underpinned by licence obligations.

The UK Government’s other target for broadband remains to deliver gigabit-capable broadband to at least 85% of premises by 2025 and to reach over 99% by 2030. To achieve the minimum 85% objective, DCMS is stimulating the market to deliver as much as possible—at least 80% by 2025. It has also invested £5 billion as part of Project Gigabit to ensure that the remaining 5% in the UK receive coverage. If I have not answered the questions of the noble Lord, Lord Fox, I commit to write to him—perhaps he could let me know.

I understand that there was a lot of interest, and there have been very well-made points during the debate, but I am afraid that the Government cannot accept this amendment at this stage.

[Baroness Merron (Lab)]

My Lords, it is disappointing that the Minister has not found a way to respond to the very real, informed and evidenced points raised not just today but at previous stages. I am sure that the Minister knows full well that his response just will not do. This amendment seeks to find a constructive way forward—something that the Government have failed to do—and bring together people who previously were apart. It seeks to address the obstacles to the ambitions that the Government say they have, in a way that the Government have failed to do. It also seeks to bring transparency to assist a process. I have heard the Minister, but I am disappointed, and I therefore feel that I must test the opinion of the House.