Product Security and Telecommunications Infrastructure Bill

Earl of Devon Excerpts

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

[Baroness McIntosh of Pickering (Con)]

My Lords, I am delighted to speak to the amendments in my name and that of the noble Earl, Lord Devon. I thank him for his support. We are having a short debate on why Clauses 66 and 72 should stand part of this Bill. I will briefly take each in turn.

As the noble Lord set out in moving Amendment 19 from the other Benches, the problem we are dealing with is getting on to land where people have possibly not had notification that their land is going to be entered. It also raises the possible cost of applying to the court in such circumstances, which begs the question: if, eventually, those who own the land are made aware, would the alternative dispute resolution procedure apply? I am not sure which of my noble friends is replying, but if my noble friend Lord Sharpe could kindly take that and give me a response, I would be most grateful.

The powers that we are allowing to the department and the Government in Clauses 66 and 72 are very wide ranging. Will Parliament have the right to scrutinise these regulations and at what stage? Do the Government intend that the regulations will be widely consulted on? At what stage would we have the right to scrutinise regulations under both clauses, as the devil will be in their detail?

Regarding Clause 66, I am most grateful to the noble Earl, Lord Lytton, for sharing the briefing we received from the Central Association of Agricultural Valuers, which has been extremely helpful in helping us prepare for today’s debate. In relation to Clause 66 and the issue of unresponsive occupiers, it sets out:

“Understanding the point of this Clause, it should require the operator to have taken particular efforts to establish direct contact with the proposed grantor rather than allow this to be a convenient route to impose on off-lying land by the use of a succession of notices.”


It hopes that discretion is provided to the court by new paragraph 27ZE of the code inserted by Clause 66. That would allow it to regulate the use of this power appropriately and recognise what might be particular personal circumstances. It refers in particular to the 2020 case of EE v Cooper and notes that the tribunal felt that it had to deny an operator’s application for “interim rights” when it pleaded an unresponsive occupier, as it considered that the operator needed to show that

“far more had been done to contact the occupier than has been done in this case, where there has not even been an attempt to knock on the respondents’ door”.

It appreciates the compensation provisions set out in new paragraph 27ZG of the code.

In sum, I felt that it was necessary to ask why it is right that Clauses 66 and 72 should form part of the Bill primarily because we are granting the Government extensive powers that are not set out in the Bill, so we should reserve the right to consider them when they are set out in regulations. I would like confirmation that that is the case. Even more substantially and significantly, I am concerned about the lengths that an operator will be forced to go to before it is deemed to call an occupier an “unresponsive occupier”. I look forward to my noble friend the Minister’s response.

[The Earl of Devon (CB)]

My Lords, I will speak briefly in support of the two proposals from the noble Baroness, Lady McIntosh, to which I have added my name, that Clauses 66 and 72 do not stand part of the Bill. As I noted at Second Reading, I am a landlord to a telecommunications mast, granted by my father under the 1954 Act. The renewal of this has been complicated considerably by the 2017 reforms and the huge uncertainty that has followed.

Just last week, the Supreme Court ruled on a group of three cases involving the last set of amendments to the Electronic Communications Code. The lead case was Cornerstone Telecommunications v Compton Beauchamp. The court ruled that, among other things, a landlord under a “subsisting agreement” is entitled to insist on renewal under the 1954 Act and the operator cannot insist on a code renewal by application to the Upper Tribunal. It seems ironic timing that, just as the highest court in the land has finally got to grips with those 2017 amendments and provided a little clarity, we are seeking to make yet further changes and further confuse the issue.

Since Second Reading, I have been in contact with a number of groups representing site owners, and all have reported incidents of unprecedented dispute and considerably challenging renewals. As I said at Second Reading, this cannot have been the intention of the 2017 amendments and should not be the result of this legislation either, which is why I put my name to the proposals that Clauses 66 and 72 do not stand part.

I think that we all agreed at Second Reading that we wish Project Gigabit to succeed, and my intention is to ensure that landlords and site owners are encouraged to grant leases to telecoms masts and other infrastructure. The recent soundings of the market suggest that this is not currently the case and that the granting of new leases has slowed considerably since the 2017 amendments and the decrease in rents and increase in disputes that have resulted.

On these clauses, the draconian access provisions for unresponsive occupiers and the rights of network providers in relation to infrastructure are simply too broad and uncertain and, as the noble Baroness, Lady McIntosh, stated, they will serve only to discourage the granting of leases for further network infrastructure. I do not think that that is in anyone’s interest.

Specifically on Clause 72, the noble Baroness, Lady McIntosh, raised the regulations. I note that new subsection (7) says:

“Before making regulations under subsection (1) the Secretary of State must consult … OFCOM”


and

“such other persons as the Secretary of State considers appropriate.”

In responding, can the Minister clarify who that would be, because surely representatives of the site providers should be consulted? We should get an opportunity to understand exactly what these regulations will entail; otherwise, we seem to be providing Ofcom carte blanche to do whatever it likes. As we have seen, whatever it likes has not resulted in a satisfactory outcome for connectivity.

[Lord Clement-Jones (LD)]

My Lords, I want to mainly talk about Amendment 19 put forward by the noble Lord, Lord Bassam. Before doing so, I say that I have some considerable sympathy for the noble Baroness, Lady McIntosh, and the noble Earl, Lord Devon, because one of the themes we are very much going to come to with the coming amendments is this steady shift in the bargaining power away from site providers towards the operators over a period of years, which started in 2017 and culminates in the current Bill. We had a number of debates on unresponsive occupiers when we last debated this on the then Telecommunications Infrastructure (Leasehold Property) Bill. As the noble Earl said, it is ironic that the cornerstone case has decided what it has, yet here we are changing the legislation away from that decision. I hope the Minister will be able to answer some of the questions that have been put to him.

On these Benches, we support Amendment 19. As the noble Lord, Lord Bassam, said, it would mandate operators with agreements under the code that are not subsisting agreements—namely, agreements that came into force before the code was agreed—to give advanced notice to sites that provide and deliver emergency services, such as hospitals, fire stations and ambulance stations. It is clearly important for providers of emergency services to be given advance notice of when work is going to be undertaken, so that they can take appropriate action to ensure that they are not affected.

The noble Lord, Lord Bassam, mentioned the Minister’s response in the Commons; she prayed in aid the rights under paragraph 17 of the ECC,

“which authorise only activity that will have no more than a minimal adverse impact on the appearance of the apparatus”.

However, this takes no account of the fact that, while the works may involve minimal adverse impact, it may actually involve disconnection at the time of installation. The Minister said that she was,

“not aware of any instances in which an operator has relied on its paragraph 17 rights to carry out upgrading and sharing activities that have gone beyond the scope of what that paragraph allows”.—[Official Report, Commons, Product Security and Telecommunications Infrastructure Bill Committee, 22/3/22; col. 120.]

However, that is not the right question. The right question is: what kind of resilience and risk planning do the emergency services have in those circumstances? If they do not know that there is a risk of disconnection, how can they plan for it? This seems an extremely sensible amendment which will allow the emergency services to have notice and to be able to plan for circumstances when they may be disconnected.

--- Later in debate ---

[Lord Northbrook (Con)]

My Lords, I apologise for not being able to take part at Second Reading and in the first day of Committee. Like the noble Earl, Lord Devon, we all want Project Gigabit to succeed. I support my noble friend Lady McIntosh and the noble Earl, Lord Devon, in their proposals to delete Clauses 61 and 62. If they do not find favour, I would support cross-party Amendments 20 and 22.

I must first declare an interest as an NFU member and the landlord of two telecom masts. One rent review has already taken place. The original offer was a 95% rent reduction. I could probably have got rid of the mast, but as it borders the M3 I did not think that it was in the public interest. Having negotiated for 21 months, I got the reduction down to only 73%, but my legal fees in doing that exceeded my first year’s new rent, and it was quite stressful.

That is quite unimportant compared with the huge loss of income to community projects, clubs, churches, social clubs, hill farmers and others. As other noble Lords have mentioned, the organisation Protect and Connect, set up last year to give a voice to property owners in rural and urban communities who rent their land for mobile phone masts, has highlighted this real problem for these categories of landlords.

It is not just individual landowners who are affected. I quote a March 2022 cutting from the Daily Express, “Mobile masts firms branded ‘Goliath bullies’”:

“Thousands of churches, charities, hospitals and sports clubs face reductions in mast rents—and a social club popular with pensioners has had rent slashed from £3,500 to around £550 a year, an 85 per cent cut.”


The Daily Mail online said:

“Hundreds of sports clubs, farmers, charities, churches … and community groups with mobile phone masts on their property … have seen a drop in rents of … 90 per cent”.


In January 2022, the Sun said that thousands of churches, charities and social clubs face a cut of up to 90%. The headline in the Edinburgh Evening News was: “Edinburgh pastor fears for church’s future after ‘bullyish’ EE slashes mast rent by 96 per cent”. In Property Week it was: “Telecoms Bill set to enforce huge rent cuts for landlords”.

For these reasons, I believe that the amendments I have mentioned give a fairer outcome to the balance between landlords and tenants. As noble Lords have already heard, it is not only me who believes this. The respected Centre for Business & Economic Research has calculated that the 2017 reforms have not delivered a faster 5G rollout. As the noble Lord, Lord Clement-Jones, stated, providers have lost £200 million of income, including £60 million of lost local authority income and £44.2 million of lost agricultural or rural site income.

The Government’s proposed reforms would cause rents to fall by a further 41% from their post-2017 levels. On a 10-year basis, this is equivalent to a cut in local authority funding of £645 million and a cut to sports centres, social hubs and hospitality of £158 million. The CEBR says that site rental was not unfair before 2017 and that mobile operators have not used savings to invest in communications networks; nor do rent costs impact their profitability materially.

The noble Earl, Lord Devon, emphasised at Second Reading that a “broad array of stakeholders” oppose this legislation,

“from the NFU and CLA, to the CAAV, the BPF and the Law Society … By these provisions, the Government will be intervening in long-standing existing leases, freely negotiated between willing participants, to dramatically decrease rental values, often years after the fact.”—[Official Report, 6/6/22; cols. 1053-54.]

It is another blow to farmers’ diversified income and, in my experience, will further delay mast development. I will not want to go through 21 months of tortuous negotiation again for a new mast, particularly having just heard about the access issues in Clause 66. That is why I support a fairer method of rent calculation, as proposed in the amendments.

I am disappointed that a Conservative Government reject an amendment on market value and wish to proceed with extending the unfair 2017 Act to the Landlord and Tenant Act 1954 and the Business Tenancies (Northern Ireland) Order 1996.

[The Earl of Devon (CB)]

My Lords, I support the amendments from the noble Earl, Lord Lytton, and much appreciate his extensive exposition of them. I have also put my name to the stand part notices from the noble Baroness, Lady McIntosh.

I am grateful to the noble Lord, Lord Parkinson, for meeting me and the noble Earl, Lord Lytton, since Second Reading. I note from that discussion that DCMS was largely unaware of the impact of the 2017 amendments on the negotiation of lease renewals. I wonder whether that is, as the noble Baroness, Lady McIntosh, indicated, because no consultation was undertaken on them. It really is important for such considerable and important amendments to be consulted on.

I also noted earlier, in response to Amendment 18, as proposed by the noble Baroness, Lady Harding, that the noble Lord, Lord Parkinson, resisted it on the basis that he wanted to ensure sufficient protection for those with poles on their land. If this were the Government’s justification for resisting Amendment 18, why do they not have the same concern of providing sufficient protection for those with masts on their land, which are so considerably more impactful and damaging? Can the Government explain why they refused to consult on this?

--- Later in debate ---

[Lord Clement-Jones (LD)]

My Lords, I shall speak to Amendments 28, 29, 30, 31, 32, 33 and 34. This may well be another part of the Bill where we have differing views about the balance to be struck between site providers and operators, and whether the Bill’s provisions will actually hamper the rollout of 1-gigabit connectivity.

In the consultation response that accompanies the Bill, the Government stated explicitly that agreements could not be changed by court order during the course of a contract, but changing the definition of a person able to grant code rights to an operator is likely to allow the cancellation or modification of agreements that were agreed in good faith and still have years to run and impact every single relationship between site owners and operators. This is because of the changes made by Clause 67, which do not limit an application to a situation where the existing agreement has expired. Telecoms companies, the operators, will now be able to choose which method of renewal or modification they wish to use. Moreover, site owners are unable to remove operators from their land if negotiations break down. Given this, it is likely that operators will seek to review all contracts they have on their books, allowing for retrospective application of the changes.

Site owners and operators should have certainty of contract. If an agreement has been reached, the terms of this should be settled and respected until the end of the agreement. If they are to be changed, it should be by mutual consent and commercial negotiation rather than by this type of intervention. Rents should be changed only from the point at which courts have made a decision, respecting existing contracts. Site providers are routinely being taken to court by operators to reduce the prices they pay, using, as we have heard, the changes made in 2017 that inserted a no-scheme or no-network valuation methodology into the code. This tactic is used to drive down rents to the lowest possible level.

The Bill gives operators sweeping new powers, which would mean that when the parties to an expired agreement are unable to agree on the terms of any renewal agreement, operators can seek modified terms to code agreements on an interim basis, including reducing the level of rent they pay. This change is likely to lead to a substantial number of claims by operators as a matter of course, regardless of the state of negotiations in individual cases. If an operator is able to fast track a no-scheme reduction, there is little incentive to reach a consensual deal at a potentially higher level. What is more, when a case does get to court and a renewal agreement is subsequently imposed, the court will be able to retrospectively backdate any new financial terms of that code agreement to the date that an initial notice was made, not the date of a court judgment. Some of these notices could have been served years ago, leading to sudden, huge repayments from site providers to operators. This retrospective application of court-ordered rent reductions cuts against legal norms and a common understanding of fairness.

Many site providers already face severe financial pressure as a result of the 2017 reforms, as we have heard. This could lead to unnecessary financial difficulties or even bankruptcies, given the huge disparity between the market-based rent they have been receiving and the rent obtained through the courts. These amendments, however, are not intended to prevent courts imposing rent reductions in line with the workings of the code. In all situations, operators would still be able to obtain savings on rent payments. These are merely trying to ensure that these savings are not imposed retrospectively on contracts entered into in good faith by site providers.

Amendments 28, 29 and 32 to 34 aim to address in its entirety the issue of backdated payments made on the basis of interim orders. Amendment 28 would prevent courts retrospectively imposing rent reductions made on the basis of no-scheme valuation. Amendment 29 would mirror the impact of Amendment 28 of removing the risk of backdated payments being imposed on site providers by ensuring that operators are unable to seek interim orders simply to agree a lower rent. Amendment 34 is intended to apply to sites governed by the Landlord and Tenant Act 1954.

Amendment 30 would ensure that where interim orders are made and a consideration is imposed on the basis of the code, the retrospective application of the reduction in rent achieved does not automatically go back to the time at which the initial notice was made. Instead, it would go back to that point or a maximum of 12 months, whichever is the shorter.

Finally, Amendment 31 would ensure that where interim orders are made and a consideration is imposed on the basis of the code, the cumulative total of the retrospective application of the reduction in rent achieved is limited to £l,000.

These amendments are all designed, as I mentioned in opening, to redress the balance and make sure that this kind of retrospectivity is not taken advantage of by the operators against the site providers. I hope they commend themselves to the Committee.

[The Earl of Devon (CB)]

My Lords, I rise briefly to support the noble Baroness, Lady McIntosh, once more, and the noble Lord, Lord Clement-Jones. I note in response to the Minister on the last group of amendments that I am not parroting the words of lobby groups; I am reporting personal experience to your Lordships, and that of people personally known to me. I am not a mouthpiece of some body.

On the prevalence of litigation, the Minister pointed out in his last summation that it may be for the courts to provide definition. The Supreme Court ruled on three separate cases last week; clearly, there is far too much of this renewal debate going on in the courts system—that is coming from a litigator. The Supreme Court should not be ruling on three cases in one go. It should be possible to handle this in the marketplace, as the noble Earl, Lord Lytton, said. It is indicative of a broken system.

I reiterate in the context of this further valuation group a question I posed before that has not yet had an answer. Given that landowners have such a plethora of tradeable ecosystem services to provide from their landscape, why on earth would they commit these days to a telecoms lease, with all the nefarious impacts of these amendments—the access rights that have been given and the heavy burden of renewal requirements—when they have so many other options to consider? I would like an answer to that point.

[The Earl of Lytton (CB)]

My Lords, I support Amendments 28, 30, 31 and 34, to which I have added my name. I also express my support for the clause stand part amendment spoken to by the noble Baroness, Lady McIntosh. I have very little to add to the reasons the noble Lord, Lord Clement-Jones, so ably set out. The outcome of the Electronic Communications Code 2017, especially its retrospectivity, as he outlined, is to destabilise relationships. There is no question about that. These commercial relationships are important, as I set out earlier, because they relate to the rollout, consistency and security of site provision for these masts on which 4G and 5G will ultimately rest.

With a level of, say, £750 per annum—I believe that figure has been much put about—the other provisions of the lease may be the only things of real value left to the provider. The money, relatively speaking, may be a row of beans. If those provisions are set aside, the provider does not even have a reduced rent which the Government or code operators discern as being fair because that is the only use of the land—it completely annihilates the rest of any benefit in the deal. At these levels, that marginal element will be significant. I said earlier that the balloon has gone up; I suspect the message is being received loud and clear.