Telecommunications Infrastructure (Relief from Non-Domestic Rates) Bill

Lord Bourne of Aberystwyth Excerpts

2nd reading (Hansard): House of Lords
Monday 9th October 2017 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Communities and Local Government and Northern Ireland Office (Lord Bourne of Aberystwyth) (Con)]

My Lords, I thank my noble friend Lord Ashton for introducing this Second Reading debate and all noble Lords who have participated in it. I am grateful for their contributions and for the welcome—so far as it went. This was, predictably, a wholehearted welcome but with regret for some things which the legislation did not contain. I can understand that, and I will deal with it shortly.

I will focus first on what the Bill does contain. The noble Lord, Lord Kennedy, is absolutely right: it is an important facet of the legislation that it helps the residential sector as well as business and provides assistance for the 5G mobile connectivity element, as referred to by the noble Baroness. The objective of this measure is to support and reward companies which invest in the telecoms network. As such, it is important to appreciate that this is actually buying something. This dates from April 2017 so we therefore do not propose to compensate any fibre which was already in the ground in February 2017. This is for new fibre put down for a five-year, fixed-term period. This brings me to the gaming aspect: I too was keen to know whether this was likely to be gamed. On consultation and inquiry it looks unlikely but we are watching this like hawks. If noble Lords think there is some means by which it could be gamed I invite them to let us know because we are, obviously, seeking to make sure it is not. I am pretty convinced that it could not be, because the financial incentive would be zero.

As we have heard in the debate, this is a technical area in respect of both telecommunications networks and how they are treated in business rates. We will, no doubt, return to the detail in Committee, but I reassure the House that we intend to develop the proposals for this measure in collaboration with the sector and only after consultation. The draft regulations are out for consultation at the moment and that will go on until 21 November. There is still an opportunity for everybody to participate in that and I encourage experts and politicians—do not take that the wrong way—to do so, particularly those who understand it in detail and politicians who represent those who do. My noble friend Lady Harding clearly understands this area very well, as does the noble Earl, Lord Erroll. I am very grateful for their participation and for giving the House the benefit of their expertise.

Broadband speeds and connectivity impact on the everyday lives not just of businesses but of households. Investment in new fibre will make a real change to people’s lives and is part of a package worth over £1 billion to the sector, as my noble friend Lord Ashton outlined. Providing rate relief for new fibre will give a welcome boost to investment. My noble friend Lady Harding asked about access to BT lines. They are consulting on that at the moment and we regard it as important. In terms of the rates relief offered, there will be a level playing field for participants in the system. No fear or favour is given to any provider: they are all treated in the same way.

It is important and fair to all ratepayers that telecoms operators pay business rates in the normal way, outside this five-year period where there is relief. We will not therefore seek to provide relief in relation to dark fibre, which would clearly be wrong. However, we have heard concerns about business rates deterring investment in new fibre, and providing this temporary relief from business rates just for new fibre investment would send a clear message to operators. If you invest in new fibre after 1 April 2017 you will not pay rates on it until 2022. For that new investment, you can remove business rates from the spreadsheet. As my noble friend Lady Harding indicated, that is important for getting investment going in this area where we lag behind. This legislation has some important provisions.

The noble Lord, Lord Kennedy, raised the issue of the Henry VIII clause. As he will know, consistent with my approach to legislation I am very keen to bear down on this, so I have looked at it to make sure that it is as confined as it can be. I well remember the noble and learned Lord, Lord Judge, participating in our proceedings and rightly being tough on Henry VIII clauses. This has not yet gone to the Delegated Powers and Regulatory Reform Committee but it will do so. As I say, we seek to confine it as much as is sensibly possible and, of course, it will be subject to affirmative resolution. I hope that both those points reassure the noble Lord.

Such is the technical and fast-moving nature of the sector that I do not think it would be prudent to try to put on the face of the Bill the detailed arrangements of the scheme. These will be done in the detailed regulation through consultation and discussion. I know that noble Lords will understand that. However, we want to ensure that the House is fully aware of how we intend to operate this measure. As I have said, we have published draft regulations and are continuing discussions with the sector, and the Committee stage will give us the opportunity to consider these matters in more depth.

The noble Lord, Lord Kennedy, sought, somewhat mischievously, as is his wont, to try to open this issue of rate relief on a much broader front all over the place. I have indicated previously that we remain very much wedded to the retention of business rates. I have also indicated that we will want to look at the broader issue of the high street versus the internet in the context of the G8—I think I am right in saying that—in which we participate, and take a lead on that. I think that is due next spring, so I can give the noble Lord that reassurance.

As I said, draft regulations will come forward. I reassure those who have a close connection with local government—the noble Baroness, Lady Pinnock, raised this issue—that local authorities will not be financially disadvantaged as a result of the relief. We will, through grant payments, compensate local authorities for the loss of the rates income that they suffer through the rates retention scheme as a result of this relief. This is a commitment that I am happy to restate and it is also given in the consultation document.

I thank all Members who have participated for the support that they have shown, at least in terms of the central core of this legislation. The commitment to provide rate relief on new fibre was given by the Chancellor in the Autumn Statement 2016. To maximise the benefit of this policy, telecoms operators need to be confident that the relief will be applied retrospectively to April 2017. I confirm that that will be the case. That is why we have brought forward the Bill as quickly as we have, with the support of the Opposition Benches, certainly in the other place and here too, to send a clear signal to the sector that this relief is on its way. With that, I commend this legislation to the House.

Bill read a second time and committed to a Grand Committee.