Product Security and Telecommunications Infrastructure Bill

Lord Cromwell Excerpts

Consideration of Commons amendments
Tuesday 22nd November 2022 Lords Chamber

[Lord Northbrook (Con)]

My Lords, I welcome Amendment 17, which had not even made it to the internet section of the Bill when I looked an hour ago. I also welcome the Minister’s mention of the national connectivity alliance as a good co-operation between site providers and operators.

The reforms in the Digital Economy Act 2017 have resulted in lengthy legal disputes, causing significant delays to rollout. Small businesses and local sports clubs, many of which host telecoms infrastructure on their land, have lost thousands of pounds in income, with no commensurate boost to digital connectivity. This was foreseen by the current Prime Minister during the debate on the Digital Economy Bill in 2016, when he warned:

“Interfering with property rights, as the code does, is a major step for this House to endorse. I therefore urge the Government to ensure that the Bill benefits not just the network operators’ balance sheets, but the public interest.”—[Official Report, Commons, 13/9/16; col. 828.]


Overall, I am disappointed at the lack of compromise elsewhere by the Government and the absence of rigorous evidence for the Bill. It appears that its policy development has been entirely reliant on the telecoms operators. It is vital that the Government use all the tools still at their disposal to limit the most egregious effects of this legislation, including through the use of transitional arrangements.

On preventing backdated payments, the Bill as drafted will allow the courts to impose lower rents on site providers—I meant to declare an interest as a site provider—and this can be dated to years before the court issues its order. This will have the effect of courts imposing backdated payments of thousands of pounds on site providers, despite those rent levels having been agreed between partners in good faith. The Government have promised to consider addressing this issue through transitional provisions, and it is vital that they do so and consult properly with affected parties to ensure that their measures are effective.

The Government have not heeded the significant disquiet on transitional relief on valuation throughout the Bill’s passage through Parliament. I would like to put on the record the significant damage that will be caused to the market by extending the “no scheme” valuation into the Landlord and Tenant Act 1954. If the Government are set on not revisiting them, the changes to the regulatory framework and expansion of the 2017 reforms proposed by the PSTI Bill should be brought in gradually to avoid significant financial shocks for site providers.

I turn to the government evidence base. The impact assessment for the legislation at the time showed that the Government anticipated a reduction in rents of 40%. I have heard stories from site providers who have seen rent reductions of more than 90%, but even the operators accept that the rent reductions have been 63%. Although this is an unsourced and untested figure, it is still a huge reduction.

It is also concerning that the Government have refused to accept other sources of evidence. Last week, following a very useful meeting with the Minister, I received a document from DCMS expressing its concerns over a report produced by the CEBR, an independent and well-respected economic analysis organisation. It made a number of assertions which I believe are incorrect. First, it states that the CEBR report over-emphasises the interests of landowners. This is not borne out by the evidence cited in the Government’s report, which includes research funded or written directly by operators themselves. Secondly, it states that the CEBR report assumes that HMG’s policy will not reduce the number of delayed negotiations. This misses the point of the CEBR critique: the Government’s purpose should not be to expedite disputes but to prevent them arising. The view of the CEBR and the Law Society is that the PSTI Bill does not address this.

Thirdly, the document states that the CEBR assumes that reverting to the pre-2017 regime will not impact operator behaviour. This is based on the false assumption that the CEBR recommended a reversion to the pre-2017 status quo. It does not. Instead, it suggests an alternative code based on the Law Commission’s 2013 report. Finally, it states that delays to code reform will slow the shared rural network rollout. The post-2017 code reforms were already available to operators on all existing sites, and money saved from reduced rents has not been reinvested into the rural rollout. There is no reason to think that the savings from the PSTI Bill will be reinvested, and therefore rent reductions—or their absence—are not linked to the pace of rollout.

I am concerned that the Government are willing to dismiss independent evidence on spurious grounds simply because it does not align with what appears to be a pre-cooked policy direction. It is even more concerning that the Government describe their evidence as uncontested when there has been such widespread and cross-party opposition to this policy. During its consultation on the reforms that would become the PSTI Bill, the Government received over 1,000 responses, and later admitted that the vast majority related to the valuation regime. It is therefore highly inaccurate to suggest that their evidence has not been challenged, or that their position is widely accepted.

Ministers have also disputed factual evidence of the sheer scale of cases being taken to court, asserting instead that, as the Minister has just said, the market is settling and consensual renewal numbers are increasing. It is concerning that the Government see hundreds of court cases each year as the market settling; certainly, in my dealings with the operators, it was not a very calm operation. The lack of proper evidence has created unnecessary risks for the future of this market. I hope that, through Amendment 17, the Government will be open-minded and display more responsiveness to all available evidence in future.

[Lord Cromwell (CB)]

First, I thank the Minister and his officials for corresponding and meeting with me to discuss the Bill. That said, it is a shame that the Government in Motion A have set their face against Amendment 17, which is seeking a review of the Bill within three months, particularly as the festering problem at the heart of the Bill is the valuation method, which was not even a subject of consultation in preparing the Bill.

This legislation legalises extortion. It allows operators to strip site owners of their property rights and to confiscate their incomes, in some cases even retrospectively clawing back site rents paid under legally binding agreements. The Digital Economy Act 2017 has not led to the market being “settled down”, as the Government claim; it has, in fact, produced a steep rise in long and expensive tribunal cases. That rise would be far steeper but for the inequality of rights and resources between telecoms companies and the site owners, meaning that very few can afford to fight their cases. The Government’s claims that agreements are consensual, or can be solved by voluntary alternative dispute resolution, ring hollow when the law is so one-sided and the site owner is threatened by operators throughout any so-called negotiation with expensive court action. The fact is that the pendulum of power has swung way too far in favour of the operators.