Digital Economy Bill (Fourth sitting)

Calum Kerr Excerpts

Committee Debate: 4th sitting: House of Commons
Tuesday 18th October 2016 Public Bill Committees

[The Chair]

Thank you. This is not a flying start, colleagues. I am sure we can up our game as we move on. There will be no meeting of the Committee this afternoon. The Committee will next meet on Thursday at 11.30 am.

Clause 1

Universal service broadband obligations

[Calum Kerr (Berwickshire, Roxburgh and Selkirk) (SNP)]

I beg to move amendment 56, in clause 1, page 1, line 14, after “the” insert “upload and download”.

[The Chair]

With this it will be convenient to discuss amendment 83, in clause 1, page 1, line 15, after “services” insert “and mobile network coverage”.

[Calum Kerr]

I welcome the opportunity as a new boy in the Bill Committee process to go first. This is the first time I have spoken in this place with my jacket off.

We support the universal service obligation and think it is a positive move, but one of our concerns is the lack of detail on it. The document put out by the Government last week was welcome and provided more context. However, something that is continually missing when talking about speed is that speed is about not just download but upload. We are trying to make that more explicit. The amendment is a small word change, but it is required as we start to recognise what broadband and connectivity is all about. It is more than just the headline speed at which we can download at certain times of the day.

[Louise Haigh (Sheffield, Heeley) (Lab)]

I rise to support amendment 83, which stands in the name of my hon. Friend the Member for Cardiff West and I, and amendment 56, tabled by the hon. Member for Berwickshire, Roxburgh and Selkirk.

All members of the Committee agree that we must do everything we can to ensure that individuals have access to superfast and, soon, ultrafast broadband. It is not only important but, in an ever more connected age, an absolute necessity for both businesses and residences. That is why we support the Government’s tacit aim to designate broadband effectively as a utility in the same way that water and energy are classed as a must-have in the modern world.

We will speak later about our concerns about the universal service obligation, but broadly we believe that there is coalition of support for a much more ambitious USO. That is why we were pleased to hear that the USO can be amended in secondary legislation later when it becomes outdated. However, I fear that, by the time it is introduced, it will already be becoming seriously outdated and, indeed, by 2020, it may feel like a relic of a bygone age when superfast and ultrafast broadband, even in rural areas, will be readily accessible. That is the subject of our new clause, which we will consider shortly.

On amendment 56, it is absolutely right to specify upload and download in the Bill. As we have seen all too often, businesses and residences see a particular speed advertised with no correlation between what they can download and upload. For someone with a business and working from home, accessing online services and transferring files to them can take a lot of time if the upload speed is not up to scratch. That is an obvious cost to businesses. It is not merely an irritant, but a loss in pounds and pence, and in productivity to the UK economy.

There is no mention in the Bill of upload speeds in the USO. That leads to a broader problem of lack of ambition throughout the Bill. Factors such as distance from the telephone exchange and other considerations such as old household wiring can slow down speed. That is why the USO, although welcome, will seem extraordinarily dated in just half a decade, when the roll-out of the USO will have been completed and there will be little appetite for providers or the Government to return to those hard-to-reach places for some time.

On tackling upload and download speeds, we would have preferred the USO to be under the superfast designations from the beginning. An example of the impact of superfast roll-out on one small business demonstrates this perfectly. Within the first year of having superfast broadband, the business reported a 30% increase in sales. We should be ambitious for our small businesses. Instead, this USO potentially condemns them to distinctly average speeds for a decade.

Amendment 83 is a probing amendment to test the Government’s ambition, which certainly needs to be tested throughout the Bill. It is based on a simple principle. We are at the start of a digital revolution that will transform how we work and how we communicate and interact with one another. Access to water and electricity in the home bookmarked our evolution to a more civilised society, so the essentials of the modern era should be similarly guaranteed. The Bill does that in part for broadband and we strongly believe it should cement further ways to roll out universal or near universal coverage for mobile communication.

We broadly support the changes to clause 2 and the amendments to the electronic communications code. Assisting mobile network operators in some of the challenges facing them is obviously important. That includes access to land and knocking down some of the absurd hurdles they must jump through to make what most people would consider sensible adjustments to infrastructure to update existing technology with little visual impact.

The Bill contains changes to a highly complex piece of legislation, which the industry has been seeking to change for some time. Indeed, the Law Commission commented that the legislation is not one of Parliament’s finest efforts. We recognise that. It clearly is not. However, although simplification and amendments to the code are important, there can be little doubt that mobile network operators will receive a substantial boon. That is why this amendment is so important and it is puzzling that the Government did not include it.

Evidence to the Committee suggested that the Bill could reduce the cost of site rental for mobile network operators, which make up a substantial portion of their costs at 40%. With the operators receiving effectively all they have asked for—no one blames them with such a complex and restrictive code—it is clear that our sights must be set firmly on delivery and the Government should not set their ambitions too low. That is what our probing amendment covers and why it is important that, during the passage of the Bill, we receive at least some commitment to improved targets on mobile network coverage.

We are slightly dismayed that the industry will benefit from such a clearly beneficial piece of legislation and that the Government will impose few or no conditions on them beyond what has already been agreed. We are aware that the £5 billion investment and the statutory target were tied to changes to the code, but we are not convinced that the benefits for consumers are greater than the benefits that are being approved for mobile network operators and we would certainly welcome greater reassurance on that from the Minister.

Let us look quickly at the targets set out in the binding agreement in 2014, signed by the then Culture Secretary, the right hon. Member for Bromsgrove (Sajid Javid). They were: guaranteed voice and text coverage by each operator to 90% of the population and full coverage to 85% by 2017. Currently, only 46% of premises have access to 4G from all mobile network operators and a substantial 7% of the population—1.5 million homes nationwide—do not have basic voice or text coverage across the three networks.

The failed Mobile Infrastructure Project, supposed to reach the final notspots, closed in 2015-16. It had erected only 76 of 100 masts, leaving a substantial number of homes without the prospect of having complete voice and text coverage. Given that 71% of businesses rated mobile network access as “critical” or “very important” to their business we believe that mobile network coverage, as broadband is tacitly designated in this Bill, should also be considered a utility. That is what our probing amendment seeks to test.

Clearly, everyone in the country, if asked, would agree. Businesses that rely on mobile networks, local authorities and individuals that use them to communicate would welcome a right to have mobile network coverage within their place of work or at home. This is extremely achievable but the Opposition are concerned that institutional defensiveness from the major network operators is getting in the way of full or near universal coverage for consumers. More than 99% of residents in the UK have access to 2G or 3G of some kind and 90% have access to 4G of one kind. However, for all operators, the figure drops to just 46%.

The infrastructure is in place and it understandably infuriates people working in an office or at home when their colleagues can get network coverage and access to data services while they cannot. While we recognise the concerns around commercial incentive, surely it is right that, once the current phase of the roll-out is complete and significant gaps in full coverage across all mobile network providers still remain, we at least reconsider the case for national roaming and national infrastructure, as is commonplace on the continent.

We are a relatively small island and it should not be the case that commercial defensiveness makes the aspiration of near universal coverage far from a reality. That is why we will table another new clause relating to this part of the Bill to test it before the whole House. It will establish a review of the roll-out of mobile network coverage, which is a critical piece of infrastructure for businesses, residents, and emergency services. As yet, due to what appears to be institutional wrangling and commercial defensiveness, this coverage is not being extended to the entire population in a way they would expect.

As we know from evidence given to the Committee last week, currently more than 60% of communications towers globally are held in an entity separate from the networks that use them. The review will have to take another look at greater diversity in mobile infrastructure and national roaming in order to deliver a universal service. In countries such as the United States, the figure for independent infrastructure is more like 90%. In the United Kingdom, as the Committee knows, it is more likely that that infrastructure is erected on an economic case for the network and operated for the benefit of the network that makes the investment. That is fine up to a point, in that it undoubtedly encourages competition among network providers in areas where they can receive a substantial return, but it makes universal network coverage more difficult to achieve when there is 90% of coverage for 4G of some kind, but only 46% for all kinds.

Our review will also look at open data and how, by routinely publishing costs, location of masts, service quality and plans for roll-out, consumers, particularly in rural areas, but also in urban “nearly and notspots” can make better decisions about which network operator to use.

Throughout the Bill, Labour Members will look to the Government to turn the £l billion concession, however welcome, for the mobile industry into something approaching a near universal service for the country. We should be ambitious about the kind of mobile network coverage we can deliver and not shy away from the challenge.

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[Calum Kerr]

We welcome anything that increases mobile coverage commitments. The Government have done a deal with mobile operators for increased coverage, but the people who will pay for that increased coverage are the local authorities, the Forestry Commission and the landowners—they will suddenly find their rents drop through the floor to nothing. The Government could have revisited the annual licence fees that they collect from the mobile operators and done a deal on that basis, rather than making someone else pay for the increased coverage.

[Matt Hancock]

The hon. Gentleman leaps ahead to the next clause, and no doubt we will have that debate, but I think it is entirely fair for landowners and those on whose land the infrastructure is provided to get a similar return on the value of the land to them, rather than on the value once the land has this infrastructure. That is the change that we will be making because, ultimately, we have put in place a deal to get better service for customers, to get more geographic coverage and to reduce the costs of rolling that out, which is the right deal for the country.

As the hon. Member for Sheffield, Heeley calls for exactly what is to be delivered and as there are other clauses in the Bill to ensure that that delivery happens, I hope that the hon. Member for Berwickshire, Roxburgh and Selkirk will withdraw his amendment.

[Calum Kerr]

I am willing to withdraw the amendment because the document that came out last week provides a level of clarity. There remains a concern that the Bill is light and passes off the detail, which is both an opportunity and disconcerting. This is an opportunity to do something transformational with broadband, but the Bill is not transformational in itself. It will come down to the detail. We were keen to see more specific clarification in the document, but I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Calum Kerr]

I beg to move amendment 57, in clause 1, page 2, line 4, at end insert—

“(4A) In subsection (4) after “OFCOM” insert “, the devolved administrations in Scotland, Wales and Northern Ireland,”

[The Chair]

With this it will be convenient to discuss new clause 10—Procurement process—

“(1) The Secretary of State must ensure an open procurement process is held in respect of the allocation of the universal service order.

(2) The Secretary of State must appoint a body to undertake an alternative dispute resolution role to arbitrate in instances of disagreement over designation.”

[Calum Kerr]

We have discussed the USO and what it could mean, particularly in last week’s evidence sessions, but there is an opportunity to go further. If the USO is simply passed over to BT because it is willing to provide 10 megabits to everybody by 2020, I am afraid that 10 megabits will be the ceiling rather than the floor. We should be considering how we facilitate a USO that empowers communities and devolved Administrations to go further. The Scottish Government have made a commitment to reach 30 megabits over the course of the Parliament, by 2021, and a flexible USO—particularly a voucher scheme, rather than a monetary or contractual agreement with the likes of BT—could help them to deliver.

Through our amendment we seek to ensure proper consultation and the involvement of not only the Scottish Government but all the devolved Administrations. Previous dialogue has been largely tokenistic, so we need to set it out in the Bill and insist that there is proper consultation that empowers the regions of the UK to take the USO as a platform, as a floor of their ambition, rather than as a ceiling.

[Louise Haigh]

New clause 10 would require the Secretary of State to ensure that there is a completely open procurement process, and an alternative dispute resolution role to arbitrate in instances of disagreement over the designation.

We welcome the Minister’s clarification last Wednesday about the statement of intent in relation to the USO. However, we want to mention—I am sure it will not be the first time in this Committee—how rushed and unsatisfactory the publication of Bill documents has been. Some of the documents that should accompany the Bill are yet to be published. I know from talking to people in the industry that that is their concern as well.

I was pleased to note from the statement of intent that the Minister intends the USO to act as an effective complement to commercial, community and publicly-funded roll-outs of broadband, and that it will not displace any planned roll-out of higher speed broadband. There is an argument that there should be a combination of the USO and Broadband Delivery UK to fulfil the last 5%, given that the work of BDUK is still ongoing.

The industry has raised concerns that a USO could risk distorting the UK’s broadband market and potentially hamper the goal of universally available good quality broadband access, if it is not designed in the right way, with the industry and consumers in mind. I note what the Minister said earlier about Ofcom’s being better situated for future-proofing, and I agree. I will discuss that on clause 1 stand part if that is acceptable, Mr Streeter. It is important that there should be parliamentary scrutiny of Ofcom’s role in the consultation.

The USO should not displace any planned roll-out of higher speed broadband. I mentioned the industry’s concerns that it could distort the UK broadband market. If it is done badly, there is a risk that it will undermine commercial investment, in hard-to-reach areas where industry is able profitably to deliver good quality broadband at competitive prices, or by passing on to existing users any rising costs that come about as a result of the USO.

For example, TechUK has argued that the Government should strictly limit the USO to the most remote areas of the UK. Failure to limit the availability of a USO tightly means there is a risk that commercial investment will be diverted, and that there will be wasteful intervention. It is suggested that urban areas, and any rural areas where there is a prospect of market investment, should be explicitly excluded from the USO. It would be helpful to hear the Minister’s thoughts on that and on how Ofcom will take forward the consultation.

Furthermore, satellite connectivity should be considered in scope for the most remote households. It is already available to virtually all households in the UK, and it can be the most cost-effective route to providing superfast broadband. Essentially, we believe—and I hope that this is the Government’s intention—that the USO should be seen as a safety net to prevent social exclusion, facilitate access to online public services, and encourage social and economic development.

The question is whether we need a more transparent and competitive regime for that to happen. Smaller providers are currently put off, because they do not know whether BT currently has plans for, or is working in, any place at any given time. There are allegations from other players in the industry that when smaller providers move into areas where BT is not investing or working, it swoops in, purely to crowd out the competition.

The Government’s statement of intent cites thinkbroadband estimates that suggest about 4% of premises are unable to receive speeds above 10 megabits per second. That really should be open data available to the public and all service providers. We clearly need to know where the assets are, who can do the work and where the cabinets are. There should be a register that contains all that information and is available to make the market more competitive and efficient.

For the process to be trusted, transparent and fair, all the information should be in the open and part of the procurement process, allowing as many providers as possible to participate to ensure that the playing field is as level as possible. It was therefore also welcome that the Government’s statement of intent included consideration of different types of providers, such as regional providers and smaller ones using innovative technologies.

Clearly, it was less than desirable that the BDUK process ended up with only one contractor. We do not believe that we can lay the blame for that entirely on the design of the contracting process, but we think that much greater care needs to be given in the future to ensuring that a richer diversity of providers is catered for in the process.

We should also ensure that the Government are not effectively blackmailed by providers to protect their market position. The mess-up around the procurement process for the roll-out of the broadband framework in 2012 left BT as the only supplier, after Fujitsu pulled out. That was condemned by the Public Accounts Committee for failing to deliver meaningful competition or value for money.

It is also important that the Government consider different tenders for the different problems we are faced with in the last few per cent. For example, we could have one contractor for the rural areas and another for the inner-city areas, as they obviously present different challenges. We could do with some further clarity from the Minister on that.

The amendment is merely designed to be probing. Does the Minister genuinely envisage that anyone other than BT will implement the universal service obligation? How will the tender process be designed? Given the Government’s commitment to encouraging SMEs and community providers to tender, will the likes of Broadband for the Rural North be considered? If the Minister can provide some clarity on that either now or later in writing, I will not press the new clause to a vote.

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[Matt Hancock]

I think that those lessons were learned about three or four years ago, so I do not think that the new clause is needed. That is why, in the second phase of the BDUK contracts, we managed to succeed in getting six different providers to bid successfully, precisely because we learned the lessons from what I agree was an unsatisfactory outcome of the first contract. So the hon. Lady is right; it is just that I think that that work has been done and so it is not necessary to legislate on it.

The hon. Lady also made the point about open data on where cabinets have been put in place and part-fibre broadband or superfast broadband has been delivered. BT has given me a commitment that it will make those data openly available. I have yet to see them, but I look forward very much to their being made public very soon; I was given that commitment some weeks ago by BT and I am surprised that they are not yet public. I will take that up with BT immediately after this—I wonder whether it might have heard what I have just said.

Given those assurances both on consultation with the devolved Administrations and on delivery of a competitive regime, with distortions to competition taken into account by Ofcom, I hope that hon. Members will withdraw or not press the amendments.

[Calum Kerr]

I thank the Minister for his words and I take on board his comments, but I will not withdraw the amendment. The challenge is the degree to which consultation is effective and actually feeds into the process. I know from personal experience, having met Ofcom and spoken to the Scottish Government, that much of the engagement to date between the Scottish Government and Ofcom on areas such as the USO has been tokenistic. It needs to go much further.

I have myself facilitated a workshop with the Scottish Government, the Scottish Futures Trust and Ofcom. Sharon White has met Fergus Ewing, the Minister responsible for these matters in Scotland. I think that we have to be far more explicit in legislation, because that will ensure not just a tokenistic consultation but proper engagement in the process so that in areas where the Scottish Government have set a higher target—30 megabits, superfast, for 100% of the Scottish population—the USO is designed in a way that supports and helps that. If it is done in a UK-wide, pragmatic sense, that will not help, so I will press the amendment to a vote.

Question put, That the amendment be made.

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[Calum Kerr]

I beg to move amendment 58, in clause 1, page 2, line 13, leave out “The Secretary of State may” and insert—

“Within 12 months of this Act coming into force, the Secretary of State shall”.

[The Chair]

With this, it will be convenient to discuss the following: amendment 59, in clause 1, page 2, line 16, at end insert—

‘(1A) The report shall consider the comparative costs of introducing the universal service order in rural and urban areas, and identify measures to ensure costs in rural areas are not disproportionately higher than in urban areas.”

Amendment 82, in clause 1, page 2, line 21, at end insert—

“72B Universal service order: annual report

(1) The Secretary of State must lay before each House of Parliament an annual report about the implementation of the universal service order for all areas pursuant to the provisions of this Act.

(2) The annual report must include information on—

(a) the number of premises that have been supplied with the minimum download speed as specified in the USO secondary legislation

(b) the number of premises that have been required to cover some of the cost of connection,

(c) of the premises in (b) the average cost of connection per premises covered by residents, disaggregated by local authority area,

(d) the number of premises that have chosen not to be connected via the universal service order after being provided with an estimate, and

(e) the amount of time on average it takes to provide an estimate and connect a premise, disaggregated by local authority area.

(3) The annual report must be laid before each House of Parliament as soon as practicable after 31 March each year.”

New clause 9—Review of broadband delivery UK—

‘(1) The Secretary of State shall commission an independent evaluation of the delivery of superfast broadband by Broadband Delivery UK.

(2) The evaluation under subsection (1) shall consider—

(a) The financial impact on customers of a single provider delivering superfast broadband;

(b) Value-for-money for the taxpayer, and

(c) Competition in the delivery of superfast broadband.

(3) The Secretary of State shall lay the report of the review before each House of Parliament by 1 July 2018.”

[Calum Kerr]

That Division was rather exciting; it woke everybody up and got them away from their iPhones and iPads.

Inevitably, the focus of this first part of the Bill is on the USO, trying to make it fit for purpose and ensuring that we get the outcome that I believe we all want: better connectivity all across the country.

Amendments 58 and 59 would put into the Bill something ensuring a proper evaluation of how this USO is implemented and how it is borne out. There is a real concern that, as I have heard, the USO could follow similar lines to the telephony USO. If we remember what the telephony USO is, people have the right to demand a phone line up to a certain cost; I think it is £3,400, but I stand to be corrected if that is wrong. Thereafter, they pay the difference.

If we really mean universal broadband, what we must not have is a scenario whereby, although there is a USO, people in rural areas still end up paying more for a lesser service, which is what we have today. I am sure that we have all had complaints from constituents that, “I pay the same amount per month as someone else in an urban area for an on-the-surface 10 meg service, but I get only 1.5 or 2 meg.”

Let us accept that that is the reality on the ground—that people pay different amounts for different levels of service—but let us also put something in the Bill that actually means that stock is taken and a review is conducted. It should seek to ensure that in the future such problems do not happen and that people in rural areas—in fact, any people with a poor broadband service—get a fair speed with a fair price and all the other measures that the Government are introducing, as a result of the USO.

I should say at this point that we also support amendment 82, which puts rather more meat on those bones that I have just outlined.

[Louise Haigh]

We have had quite an exciting start to the Committee. The Minister turned up late; one Government Member went astray; and we nearly had a Government rebellion from the new PPS in the voting. [Laughter.] I hope that we continue in this vein. I also hope that the Minister is sensitive with his brand new PPS; I hope that she is not up for the chop this early in their relationship.

I will speak to amendment 82 and new clause 9, which would place a requirement on the Secretary of State to lay an annual report before Parliament on progress of the USO and to commission an independent review of the progress of BDUK respectively. As we have said, we very much welcome the USO. It could be somewhat more ambitious and it should extend to mobile, but we believe that it is an important step in the right direction. The purpose of these amendments is for Parliament to be kept abreast of progress, both on the USO and on the continued roll-out by BDUK.

Clearly, there have been issues with the roll-out of BDUK, not least the fact that, as we have just discussed, BT was the sole beneficiary of the contract in phase 1. If we are to avoid a repeat of that, we need to ensure not only that the procurement process is right but that Parliament takes a proper oversight role in assessing the performance and whether it is on target.

For example, we heard on multiple occasions last week about the problems around the fact that business parks have not been connected to superfast broadband, let alone ultrafast broadband. Similarly, we have heard of issues around local authorities being threatened with legal action should they so much as discuss procurement with a supplier other than the official one.

MPs’ mailbags are full of correspondence on issues about Openreach and about broadband more generally, so it is only right that they should have full disclosure on progress on an annual basis.

The first phase of the procurement process for BDUK included a mandatory requirement for copper local loop access rather than fibre, which meant old and outdated technology was being used and paid for with taxpayers’ money, entrenching the problems with existing infrastructure and holding back the future-proofing of the network.

There was also a requirement in that procurement process for the use of open access networks, which are the slowest option available, as opposed to local access networks which are much faster. It is good to see Ofcom consulting on the design of the USO over the next couple of months, and I am sure that they will learn from these mistakes. It is vital that this process is as transparent as possible, to ensure the best structure and outcome for consumers across the country.

On Second Reading the Minister called on Members to promote the take-up of broadband in areas where BDUK is providing access to broadband, so that local communities could benefit from the gainshare. That is absolutely right, and I am confident that relevant Members will be doing just that, but what are the Government doing to promote this? Are they, for example, paying for advertising and promotional materials? Is the Minister confident that access is the same as capacity, and that there is sufficient capacity in the cabinets in those areas where BDUK has been rolled out to allow take-up?

A very compelling case was put forward on Second Reading by the hon. Member for North Swindon, who described the problems he had with his local council and the lack of availability for his constituents even after BT had ticked all the boxes in that area under the BDUK contract. It seems to us that common sense dictates that BDUK should be measured on take-up rather than simply access to broadband. This is so that areas can be assured of their return from the gainshare, and also so that we can be absolutely sure that residents are able to use the broadband in practice rather than having access to it only in theory.

It is also important that we have a review of the progress of BDUK to consider whether they should be given any further direction or powers in relation to accessing land or infrastructure, for example. The statement of intent published last week references the question of how often, and on what basis, a USO may need to be reviewed. Again, we would have liked to see that in the Bill. I hope we can have clarity from the Minister on that because, as we all know, the minimum speed and quality of access that we all require are travelling in one direction only and at an exponential rate. It is difficult to imagine that 10 megabits will still be considered acceptable in 2020, let alone 2025, given that superfast is now defined as 24 megabits. The European Commission is hoping to set a new target for broadband and mobile coverage, which will aim to ensure that all European households can get a minimum internet download speed of 100 megabits per second by 2025.

The existing digital agenda for Europe programme currently seeks to ensure that every home in the EU can access a 30 megabits-plus capable, next generation access, superfast broadband connection, with 50% subscribed to a 100 megabits-plus service by the year 2020. At present it is widely expected that BT’s commercial G.fast roll-out, which will commence from next summer, and Virgin Media’s ongoing cable network expansion should bring broadband speeds of around 100 to 300 megabits to most of the UK, around 60% to 70%.

[Calum Kerr]

The hon. Lady is making some excellent points. The EU, which has apparently been holding us back for so long, is now leaving us behind as they run off to 100 megabits by 2025 while we set our ambition at 10 megabits by 2020. That is an excellent point. It comes back to the critical importance of how this USO is designed. Simply allowing BT to continue with more of the same, stretching their copper assets further, is not going to hit the long-term vision that is required. That is what this Government need to do. They need to set a target for fibre. I hope that when the Minister speaks tomorrow morning at the broadband convention he will say more about that, because we need to show far more ambition.

[The Chair]

Order. I remind all colleagues that interventions should be short.

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[Christian Matheson]

It is a great pleasure to see you in the chair this morning, Mr Streeter. May I also say what a pleasure it is to see the Minister for Digital and Culture. I think it is the first time we have served together. He is of course a Cheshire man like me, and we are all very proud of him in Cheshire. Indeed, when I met headmaster Chris Ramsay of King’s school recently, he asked me to urge the right hon. Gentleman to come back and visit his alma mater. I encourage him to do so, though he might not want to do any political campaigning while he is there.

I rise in support of amendment 82 in the name of my hon. Friend the Member for Sheffield, Heeley. It is absolutely right that what is becoming a piece of essential national infrastructure, and one which is developing all the time, should come under the purview of Parliament. My view on the roll-out of broadband, which is not shared by all hon. Members, is that BT has done a very good job of getting a decent proportion of the country up to a decent standard fairly quickly, using existing infrastructure. However, as we have seen, the continued reliance on copper local links can hold back the development of that infrastructure. There has been very little scrutiny of that infrastructure development in Parliament. It is good to see my fellow members of the Select Committee on Culture, Media and Sport, the hon. Members for Mid Worcestershire and for Selby and Ainsty, in this Committee. Our Select Committee’s report was one of the few areas where Parliament has been able to scrutinise the development of broadband, and scrutinise we did, strictly and fairly, as I am sure the hon. Gentlemen would agree.

[Calum Kerr]

I feel somewhat left out because the hon. Gentleman does not know where I went to school, but never mind. He is making an excellent speech on this whole area of BT and its contract. I agree with him. It is very easy to kick BT, but it is delivering on its contract and what it has been asked to do. Does he agree with me, though, that as we set a 10 megabits objective, it is important also to consider the future, because if BT continues to sweat copper assets we are going to come unstuck at some point. Simply going for now and not thinking about tomorrow is too short-sighted and it is catching up with us already.

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[Claire Perry (Devizes) (Con)]

I sympathise with many of the things that the hon. Member for the City of Chester has said. I cannot promise that I will not visit during a political campaign, because it is a seat I would like to see returned to the fold, despite his good efforts.

While I understand the spirit in which amendment 82 and new clause 9 have been tabled, I reject their premise. We heard clearly in the evidence sessions what is wrong with the Government—and, indeed, one provider—trying to over-specify and push out a solution. I know from my own constituency that, although there has been decent progress, it has not gone far enough—I absolutely agree with the hon. Gentleman on that. There are specific communities—for instance Shalbourne, a beautiful village—where there are insoluble notspots. These houses seem unable to be connected to the exchange because they connect to a Hampshire exchange, not a Wiltshire one, so all the good work Wiltshire council has done putting in local taxpayers’ money and working with BT Openreach is of no benefit whatsoever to those constituents. In Worton, where we actually had the discussion with BT, there is a dividing line right down a street: some houses are connected and some are not. We all know that that is increasingly very bad for house prices and really does affect people’s mindset when they move into the constituency. In my area, the Lydeway business park, which includes a very fine farm shop and other small businesses, is desperate to get better broadband connectivity, but we cannot seem to get it.

We heard from TalkTalk and other witnesses that the job is not to specify what the solution should look like and have lots of arduous burdens on Government to report back, but to empower consumers to say, “Let’s go out and talk to Gigaclear.” Or we could look at what has been done in a part of Cumbria, represented by one of my hon. Friends, where communities have come together, worked with farmers to waive fees for crossing land and come up with a community-led solution.

Empowering consumers, as the Bill will do, would enable them to demand a legal right to a decent level of broadband connectivity. I accept that 10 megabits per second is an aspiration for many premises already—they do not get anything like it—and I completely accept the point that that may not be enough in future.

We also heard in the witness sessions that technology in terms of compressing more and more data and information down existing fibre or copper is improving all the time. It might actually be sufficient for some families. I have managed to upgrade with the cabinet in Upavon to about 15 down and 10 up. It is nowhere near enough when all the kids are home and they are on Netflix and other things but it is not bad. If I yell at them loudly enough to get off the wi-fi, I can actually get my constituency work done, albeit from home.

I contrast that with what it was like before when, if the hamsters pedalled fast enough, I might have been able to send one email an hour. It is a massive improvement to productivity in the Perry household.

[Calum Kerr]

I hope the hon. Lady would not yell at me to get off the wi-fi. She is making some good points but I would try to draw her back to the substance of the amendments. There is no focus on technology. We want to ensure that the USO is delivering for all our constituents. All we want is a review to monitor progress and ensure that the design is fit for purpose. It is not about technology so I urge the hon. Lady to think again.

[Claire Perry]

I accept the spirit of what the hon. Gentleman is saying, but I did sit until recently on the inter-ministerial Committee looking at how to upgrade the digital services right across the country.

It is clear that Ofcom is taking its responsibilities very seriously, both to report on the number of premises that are connected and to tighten up on some of the issues where broadband companies advertise the maximum speed a customer might ever get if connected rather than the average speed. Ofcom is a very good regulator under Ms White’s chairmanship and it is absolutely stepping up to the plate.

I am afraid that I cannot support the amendment or the new clause because they are stuck in the past, looking at how we push out a good solution rather than empowering consumers to pull through the best solution that works for them. That solution might look very different in my constituency of Devizes from how it might in Cheshire or the highlands of Scotland. We have made decent progress but it is not far enough. I applaud the Government for bringing forward both the USO as an underlying obligation and the flexibility to amend that as technology changes.

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[Matt Hancock]

We have had support of spirit throughout this sitting. The amendments and the new clause are all about reviews of and reports on progress. I have reviewed my broadband this weekend, and I can report that while I was looking at myself discussing the importance of broadband in East Anglia on a local TV programme, I was actually under my desk because my broadband went down. I know how frustrating it is when one’s broadband goes wrong. I am very grateful to the BT engineers who are working to fix it right now. That is my report.

The best comment was made by my hon. Friend the Member for Selby and Ainsty about the Select Committee. Reports and reviews are important, but the Select Committee is there to ensure that Parliament has its say. More than that, as Ofcom carries out its consultations, it will of course report on progress.

I wish to pick up on a few of the comments that were made. The hon. Member for City of Chester, which is a great city and the city of my birth—the Bill is all about connectivity and we have been making all sorts of connections in this sitting—made the argument very strongly for the importance of not only getting better connectivity, but describing it right. I will have no truck with people who say they are providing a fibre solution when, in fact, it is a part-fibre solution. Fibre-to-the-cabinet is not fibre and anybody who says so is taking people for fools. We should talk about fibre when we mean a full fibre connection that goes all the way from the fibre backbone into the premises. Anything short of that is merely part-fibre.

That point demonstrated some of the confusion from Opposition Front Benchers and shows why it is so important to get these things right, instead of just calling for a report when that is already going to happen. The hon. Member for Sheffield, Heeley called for use of G.fast, which is an important interim technology. However, she then said, “and therefore, it is important we have more fibre.” G.fast is not a fibre technology; it is a copper-based technology. While it is important and useful interim technology that will undoubtedly increase speeds, it is not full fibre.

[Calum Kerr]

The Minister is slightly taking liberties there. The reality is that G.fast is distance-constrained to about 300 to 400 metres, so fibre will have to be pushed much further. I am sure that the hon. Member for Sheffield, Heeley is aware of at. It comes ack to the same principles: we need more ambition and we need to push fibre further. Yes, G.fast will have a place, but it will not fix my or my colleagues’ rural challenges.

[Matt Hancock]

Exactly, absolutely right. We are seeing the long-feared Labour-SNP alliance in action. The hon. Gentleman is right that G.fast is a useful technology but it is not a full fibre technology and is, by physics, distance-constrained, although BT continues to do important work on driving as much delivery out of copper as possible.

There is one other point that it is important for the Committee to consider: there was a simultaneous call from the Opposition for the statement of intent to be included in the Bill and for there to be flexibility in the speed of the USO. These two things are inconsistent; it takes time to change primary legislation. It is incredibly important that we can revise the USO potentially—and hopefully—upwards. It is wrong to set a USO speed now for several years hence. I think we agree on that. We should not, therefore, put the speed on the face of the Bill.

The Scottish Government have said they want 30 megabits per second by 2021. We, of course, want the USO before then and we want the speed to reflect the reality of the time. Demands are increasing very quickly, so I would not want to put a figure on it for five years hence, as the Scottish Government have done. That is a mistake and it is far better to do it as we are planning in this Bill.

[Matt Hancock]

I am delighted to have that clarification. I am also glad that the hon. Lady welcomed the fact that Ofcom is doing the consultation, which is necessary before we can put those details in place. The way the provisions are structured in the Bill is the right way to proceed.

In ensuring that we get the best possible broadband connectivity, we must make sure that we have both a vision of the future with high-speed and superfast—and then ultrafast—connectivity, and flexibility to get there in the most cost-efficient way possible. That unites the Committee in purpose, and the Bill as it stands provides for it.

Finally, following the mention of the Labour Government by the Opposition, I will not rise to any partisan points other than to note that in 2003, the then Labour Government legislated to set a USO. They set the USO in stone in legislation and instead of including a review clause, they set it at 28 kilobits per second. Let that be a lesson to anyone who wants to put more on the face of the Bill. It is far better to ensure that we can constantly keep pace with technology, as the Bill does.

[Calum Kerr]

I am enjoying this; the debate is getting a little more spirited. I hope that some Government Committee members will vote the wrong way for their party and the right way for the people of this country and their connectivity. We are not advocating that a figure is put in the Bill. At no point have we suggested that. We have been advocating greater ambition and a desire to ensure that the USO is designed and rolled out to meet the demands of our constituents and the expectations of the country. Unless the Minister or anyone else can tell me that this place is particularly good at doing perfect legislation that always gets the desired outcome, it seems eminently sensible that we put in place a review process. On that basis, I am happy to withdraw the amendment and instead support amendment 82.

[The Chair]

Does the hon. Lady wish to say anything more about the amendments?

[Louise Haigh]

We have heard support for the spirit of the amendment and for the Select Committee to review the progress of the USO. The amendment certainly does not specify to which element of Parliament the report should go. We would be satisfied with progress being reported to the Select Committee. Government Committee members will be interested in, and their mailbags will be full of concerns on the progress of the USO, so they should have the ability to review that. Also, I was not old enough to vote in 2003, so I do not think I can be held responsible for decisions made then.

[Calum Kerr]

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment proposed: 82, in clause 1, page 2, line 21, at end insert—

“72B Universal service order: annual report

(1) The Secretary of State must lay before each House of Parliament an annual report about the implementation of the universal service order for all areas pursuant to the provisions of this Act.

(2) The annual report must include information on—

(a) the number of premises that have been supplied with the minimum download speed as specified in the USO secondary legislation

(b) the number of premises that have been required to cover some of the cost of connection,

(c) of the premises in (b) the average cost of connection per premises covered by residents, disaggregated by local authority area,

(d) the number of premises that have chosen not to be connected via the universal service order after being provided with an estimate, and

(e) the amount of time on average it takes to provide an estimate and connect a premise, disaggregated by local authority area.

(3) The annual report must be laid before each House of Parliament as soon as practicable after 31 March each year.”—(Louise Haigh.)

Question put, That the amendment be made.

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[Rishi Sunak (Richmond (Yorks)) (Con)]

Ninety per cent. of UK households can access superfast broadband this year, and that number is set to improve in the next 12 months. However, many of the households that do not have access are in places such as my constituency in rural North Yorkshire, creating a digital divide between those who have access and those who do not. On behalf of my constituents, I welcome clause 1, which provides a safety net so that on reasonable request and at an affordable price they will have access to some measure of broadband connectivity.

Week in, week out, while I am doing my job, I see the benefits that that will bring, and the problems experienced today. Of course, economic development is important. My area is known for its tourism, but when I speak to the owners of holiday cottages or bed-and-breakfast accommodation, they tell me they must advertise across the world on the internet. When people come to visit the beautiful Yorkshire dales, when they have finished their day’s walking in the beauty and splendour of Swaledale, they want to come home and check their emails. It is important that my owners can provide that service.

I was at a school last weekend talking to a group of young pupils who are embracing a new course on coding. Obviously, we are not blessed with Silicon Valley yet in the Yorkshire dales, but they were accessing the resources of Code Academy online at school and wanted to continue that at home in the evening.

Beyond that, the internet keeps families together—not just grandparents who want to see their new grandchildren living abroad on Skype, but also a father to whom I spoke the other weekend who is unfortunately going through a difficult divorce. He told me that his children, with whom he was desperate to maintain a good relationship, were less keen to spend the weekend at his house because of his poor broadband connection.

The Government are moving to a “digital by default” approach to delivering public services, which is commendable, but it is important that everybody, especially farmers in rural areas, have the means to access those Government services.

For all those reasons—the tangible differences that the Bill will make to people’s lives—I welcome the Government’s delivering on their manifesto commitment to put in place the universal service obligation. The Government have the view that this should be an economy and society that works for everyone. Providing good digital connectivity to everybody is certainly part of making that aspiration a reality. On behalf of my constituents, I wholeheartedly welcome and support the measures in clause 1.

[Calum Kerr]

We also support clause 1. I will not repeat the points I made during the debate, but I want to bring a couple to the fore and ask the Minister one specific question, which I hope he will answer. We should not just be looking at closing the divide in the short term; we should be looking at a longer-term fix. We should consider what a minimum speed is today, but we should also be looking to what that might become in the future.

The hon. Member for Sheffield, Heeley pointed out that the EU target is 100 megabits per second by 2025. While we can aim for 10 megabits per second, if we do not set a horizon of where we want the target to go, we risk putting sticking plasters all over the country and getting solutions that will have no lifespan. We will all be back here in a few years’ time, saying, “I wish we’d listened to the hon. Member for Sheffield, Heeley who wanted an annual review.” We would know that this provision had not been delivered.

Let us try to avoid that scenario and ensure that as the USO goes through the process, what Ofcom designs not only looks at where we are today, but where we want to go in the future. When the Minister gives the main event speech tomorrow at the INCA event, which is advocating a strategy for gigabit Britain, he should set forward a truly ambitious vision of what the UK can offer in this space. Perhaps his response will provide me with some reassurance.

As we have looked at amendments, I have tried to ensure that not only have the Scottish Government and other Administrations been consulted, but they are part of the formulation of the USO. Consultation can be tokenistic or it can be fully engaged and evolved. We need to be fully involved in the design of this process, so that where we set an ambition, a target of 30 megabits per second, the USO supports it—for example, through foundational funding through a voucher scheme. Where any one of the regional councils want to do the same and set an ambitious higher target, the USO should support that, rather than offer a solution that forces them into a corner.

Will the Minister reassure me that the USO designed by his Government with Ofcom will support devolved Administrations and regions and provide foundational funding—not just 10 megabits, take it or leave it?

[Nigel Huddleston]

There is obviously a growing consensus and recognition of the importance to all our constituents of the universal service obligation. As always, the devil is in the detail. I understand that some of those details will be provided or revealed in secondary legislation. I do not buy some of the concerns expressed today about a possible lack of scrutiny in the progress of the USO. As a member of the Culture, Media and Sport Committee, alongside other members of this Committee, I am confident that we will continue to do that job robustly and effectively to raise issues and concerns.

I cannot imagine how many times we have heard issues related to broadband and mobile brought up in the Chamber, in Westminster Hall and elsewhere in this place, so we can scrutinise in multiple ways. We also have to be careful that we do not constrain our ambition by thinking of current technology and current speeds. It is important that we go with the flow and update our ambitions accordingly as technology develops.

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[Matt Hancock]

I repeat what I have just said: the floor of 100 homes has come down to 30 homes for fibre connections, but all new buildings will be required to have access to a superfast connection from 1 January. Those points have been taken on board.

[Calum Kerr]

Will the Minister clarify, especially given his comments earlier about what fibre means, whether that is fibre to the premises or access to superfast over copper?

[Matt Hancock]

To channel the Prime Minister, fibre means fibre. If hon. Members want to know what fibre means, it means fibre.

On the point about measuring BT and BDUK on take-up not access, both BT and BDUK are measured on take-up as well as access. Both are important. In fact, the contracts have take-up embedded in them, because the clawback from higher take-up allows money to be spent on further roll-out. The contracts that are being rolled out at the moment are from that clawback. The hon. Lady is therefore absolutely right that both take-up and access are important, and in the county-by-county figures from BDUK we have both take-up and access.

I also strongly agree with the hon. Lady on advertising. The Advertising Standards Authority has consulted for some time on descriptions of both “up to” speeds and pricing arrangements, both of which can be wholly misleading. I very much hope that the ASA will come out with new rules shortly—it has been working on that for some time. However, advertising is policed on a non-statutory basis and I think it would be a significant step for us to legislate on that matter because we do not want political interference in the rules around advertising. That is a step that I do not want to take. I do want the ASA to come to its conclusions as soon as possible. I hope that that answers all the questions that were asked on that point.

[Matt Hancock]

Of course there will be parliamentary scrutiny, because the Bill provides for the USO details to be put in place via secondary legislation. There will be scrutiny then and, as my hon. Friend the Member for Selby and Ainsty pointed out, there will also be the opportunity for Select Committees to scrutinise in their usual way. I hope that without reading the rest of my speech, which is all about how important and wonderful broadband is, the Committee will accept what I have said as a full response.

[Calum Kerr]

Perhaps the Minister missed my request. Will he reassure me that the schemes put in place will be designed to support national commitments such as the Scottish Government’s 30 megabits and other regional commitments? The issue is all down to how the USO is designed. If it is simply put out as a 10 megabit service—take it or leave it—it will not help, whereas a regional, flexible model such as the voucher scheme that BDUK has done before could provide the foundational funding.

[Matt Hancock]

In short, although the precise design is subject to the Ofcom consultation, my view is that the potential in the Bill for the USO is more ambitious than the Scottish Government’s, because theirs is to be delivered later and has already specified a speed. Instead, we have proposals coming in sooner and with uprating built in from the start.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clause 2

General conditions: switching communications provider

Question proposed, That the clause stand part of the Bill.

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[Calum Kerr]

I beg to move amendment 60, in clause 3, page 2, line 35, at end insert—

“(db) require a communications provider to allow an end-user to terminate a contract on repeatedly failing to meet a specific standard or obligation;”.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 84, in clause 3, page 2, line 35, after “obligation”, insert “within reasonable timescales”.

New clause 2—Ability of end-user to cancel telephone contract in event of lack of signal at residence—

“A telecommunications service provider must allow an end-user to cancel a contract relating to a hand-held mobile telephone if, at any point during the contract term, the mobile telephone is consistently unable to obtain a signal when located at the end-user’s main residence.”.

[Calum Kerr]

The area of compensation is one that we have all probably been hearing about from our constituents for quite some time. Before speaking to the amendments, which are about mobile coverage, let me first welcome the important move in the Bill that not only puts compensation in place but makes it automatic. Telecoms and connectivity can feel like the dark arts to some of our constituents and it is important that whatever is put in place does not depend on their understanding the details of what they are entitled to. However, the point has already been made today that when people sign up for a broadband service, there should be far clearer, granular detail on what they should expect. We have wrestled today with what a USO should be; we have talked about download; we have talked about upload; the Minister rightly mentioned other areas such as latency and data limits; and of course cost comes into it.

In terms of compensation, it is important to recognise that broadband is different from telephony. Telephony is fairly binary—it is on or off. It works or it does not. There might be some interference, but it remains a fairly binary service. Broadband, however, is defined by many different characteristics.

As we look at a compensation regime, we need to look at the speed expectations. When someone signs up for a broadband service, they sign up for a service that is, by definition, contended. It is shared, which is why, as those who have ever been at home when the kids all get home from school, broadband speeds sometimes plummet. That is the reality of the service that is signed up for and that reality has to be accepted on a contended service—those who want a less contended service need to sign up for an appropriate service with BT or another provider—but there should still be levels of expectation. There should be a top-line download speed, an average speed and, in my view, a baseline speed, below which the service does not drop.

As we look at compensation, I would like to see some flexibility. Given the complete lack of information in the Bill—in keeping with the earlier clauses—there is the ability here for Ofcom to show flexibility and design an appropriate system. The telecoms providers all have huge challenges to face on their performance standards—the digital communications review called them out. BT was singled out, but it was not the only one. They all have a way to go in improving their service standards, so a compensation regime should be designed to incentivise them. We have to remember that this is about incentivising good performance, not about penalising bad performance, although the two obviously go side by side. We should design a scheme that is automatic and ensures people are compensated but that, most importantly allows people to get the service that they are promised and the providers are contracted for. That is important.

My hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey instigated work on the areas addressed in amendment 60 and new clause 2 some time ago. There are huge chunks of the country, not least the highlands but also the equally beautiful Scottish borders in my constituency, where there are notspots—in fact, it feels like there are more notspots than onspots most of the time, as I found on my summer tour. My hon. Friend brought forward proposals, which were put to the then Minister and Ofcom, to allow individuals who have signed up for a mobile service and then found that they cannot get proper service at home to be allowed out of their contract. Some providers—I think Vodafone was mentioned in the evidence session—have started to offer that. I hope that—hope is not a strategy, as we always used to say, but sometimes it is all we have—the Government will accept the sense of the amendment and new clause and put it in the legislation, to make it absolutely clear that, if I sign up for a mobile service and cannot use my device in my home, I am entitled to cancel that contract.

[Louise Haigh]

I rise to support the amendment in my name and the name of my hon. Friend the Member for Cardiff West. I also support the amendments tabled in the name of the hon. Member for Berwickshire, Roxburgh and Selkirk. I understand from the debate and the statement of intent that the baseline speed mentioned—10 megabits per second, as the Minister clarified—is the absolute minimum. The Opposition welcome the Government’s proposals to amend the requirements on automatic compensation, which will bring broadband services in line with other essential services such as energy and water. That recognition naturally extends to a form of automatic redress when things go wrong.

[Calum Kerr]

I am sorry to intervene so quickly, but this is an area where we need a bit of clarity. We have said that 10 megabits per second is a minimum, but as I understand it, it is a minimum maximum speed. It does not mean that under the USO, users will always get 10 megabits per second; it means that they sign up for a service where the maximum is 10 megabits per second. I think that is an important point to clarify.

[Louise Haigh]

We look forward to the Minister’s clarification.

More than 13 million households suffer from some form of broadband problem. It is about time that automatic compensation was introduced. As we know, seeking redress and compensation is often difficult for consumers, and brings little reward; many simply give up. Currently, users must lodge a formal complaint with their provider, then escalate that complaint to the ombudsman after eight weeks if they are not happy with the response. The onus certainly should not be on the customer to prove that they have lost service or that the service has not met the standard required. Where possible, automatic compensation should be made when a service provider becomes aware of a possible loss or reduction in service.

However, as has been mentioned, the legislation is not entirely clear on how the provision will be enforced, although we welcome the broad powers given to Ofcom. For example, if the fault is with the service provided to the retailer by Openreach, will the retailer pass on the compensation to the consumer who has been affected? How much will then reach the consumer? What will the level of compensation be? Which? has called for households to get £75 in compensation each time their broadband connection goes down, in line with compensation levels for power cuts. Will there be separate levels of compensation for broadband being slow or not working at all? Will the compensation cover planned network outages? Will the new regime come into effect on Royal Assent? Has Ofcom now completed all necessary consultation work?

Our amendment simply seeks to provide compensation within reasonable timescales. Consumers certainly would not want compensation payouts to drag on and on or broadband providers to drag their feet when there has been a clear outage and they are entitled to compensation. The automatic compensation model for the energy market is that it should be paid within 10 days of the customer claiming, or within 10 days of the end of the power cut if they are being paid automatically. That seems reasonable, but the Minister and Ofcom might have other ideas about what is reasonable.

Either way, we believe that it is important to set a clear timescale to ensure that consumers know exactly what they are entitled to, when they are entitled to it and how to go about claiming it if it is not forthcoming. We welcome the provisions and the recognition that consumers have a right to broadband and therefore a right to compensation if it goes wrong, but we would like assurances written into the Bill that compensation will be paid quickly.