Product Security and Telecommunications Infrastructure Bill

Lord Fox Excerpts

Lords Hansard - Part 2 & Committee stage
Wednesday 29th June 2022 Lords Chamber

Although the new regime will not require pre-notification of subsidies, individual authorities having to create their own schemes and judge them against the Act’s subsidy principles could require significant time and expertise while bringing legal risk, so what are the Government’s plans for this? Will they establish a streamlined scheme to support infrastructure rollout, or will we see an inconsistent, piecemeal approach across the country? We know that the Government do not like inconsistency; we heard that from the Minister earlier. I am looking to be convinced here. I beg to move.

[Lord Fox (LD)]

Incredibly briefly, I will speak to Amendment 46, which I have signed. The Government’s aim, Her Majesty’s loyal Opposition’s aim, and our aim is to speed up the rollout of infrastructure. This amendment as crafted by the noble Baroness, Lady Merron, and the noble Lord, Lord Bassam, which I was pleased to sign, is a very simple measure to help in that objective. If the Government have not already thought of it, they should embrace it. Whether it requires primary legislation or otherwise, an undertaking from the Dispatch Box that this will be done would be a very good way of speeding up infrastructure implementation.

[Lord Sharpe of Epsom (Con)]

My Lords, this was a brief debate. I turn first to Amendment 43. I thank the noble Lord, Lord Bassam, and the noble Baroness, Lady Merron, for raising this important subject.

The Government are committed to delivering policy which helps rollout for everyone, and support the entire telecommunications sector in delivering connectivity. Ensuring that local authorities are ready to facilitate rollout as quickly as possible is a key part of this. It will benefit people across the UK in receiving the best possible service and ensure that all operators are able to compete to provide that service.

Local authorities should have autonomy to serve their communities in the way that they see fit. The difficulties faced by urban communities are likely to be very different from those faced in the highlands, for example. The Government believe that local authorities are best placed to decide how to lead and foster digital rollout in their local area.

Mandating local authorities to designate a particular officer responsible for digital connectivity would be too prescriptive. However, we recognise the considerable benefits of having a dedicated lead on digital infrastructure in local and regional authorities, which is why we strongly recommend this approach in our digital connectivity portal, DCMS’s official guidance for local authorities concerning connectivity. The portal provides a huge amount of practical information for local authorities—for instance, on debunking myths around 5G, making assets available for hosting equipment, and the application of the Electronic Communications Code and planning regulations. The digital connectivity portal is a vital enabler for local authorities to facilitate digital infrastructure deployment.

In May last year, the then Minister for Digital Infrastructure also wrote to all chief executives of local authorities to encourage them to appoint a digital champion and to engage with DCMS. I understand that as many as 80 authorities have responded and officials have been able to offer support to them. We have also provided £4 million of funding for the Digital Connectivity Infrastructure Accelerator programme, designed to foster increased collaboration between local authorities and the telecommunications industry. Local authorities can take advantage of these tools and funds to take the steps most appropriate in their area to encourage and facilitate rollout. I hope that gives reassurance on how seriously the Government take local authority engagement, and that the amendments will not be pressed.

If I might anticipate a possible comeback, it sounds like we very much agree with the noble Lord, so to be consistent about my inconsistency, we are not going further and mandating this because the Government seek to balance the national objective of accelerating digital infrastructure rollout with the need to allow local authorities to make the best choices for their communities. Each local authority will have a different approach to its specific local challenges. We feel that further imposition of rules from central government in these spaces risks disrupting environments that are already encouraging investment in infrastructure rollout.

Amendment 46 asks whether the Government intend to introduce a streamlined subsidy scheme for telecommunications infrastructure to reduce administrative burdens on public authorities. To provide some context, the new Subsidy Control Act, which has not yet fully come into force, gives the Government the ability to create streamlined subsidy schemes for all public authorities to use. The streamlined schemes are intended to provide a way of granting subsidies quickly, with little administrative burden, while also providing legal certainty to both the public authority awarding the subsidy and the beneficiary of the subsidy. The Government intend that these should facilitate the award of low-risk and uncontentious subsidies in areas of policy that are strategically important to the United Kingdom. Streamlined subsidy schemes will be considered for categories of subsidy where they will add clarity for public authorities and make the assessment of compliance simpler.

Although the Government currently have no plans to create a streamlined subsidy scheme for the installation of telecommunications infrastructure, we remain committed to delivering and supporting the rollout of such infrastructure as soon as possible. BDUK’s Project Gigabit is delivering gigabit-capable broadband across the UK, working closely with public authorities, including the devolved Administrations and local authorities, to help refine procurement boundaries, validate the market’s local investment plans and stimulate demand for gigabit vouchers.

The work we have undertaken so far has shown that the model is effective at responding to changing market conditions by refining or combining procurement boundaries to reach efficient scale and secure value for money for public subsidy. DCMS will continue to engage and consider how to support public authorities as best as possible to reduce administrative burdens, including on any considerations on subsidy control or future streamlined subsidy schemes.

I hope that explains why the Government consider that a streamlined subsidy scheme for telecoms infrastructure is not needed at this time. However, this will be kept under review. I ask noble Lords not to press their amendments.

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[Lord Northbrook (Con)]

My Lords, I support this group. I was initially rather astonished by the Minister’s lame response at Second Reading that the Government will not make public their investigation into the effect of the Digital Economy Act 2017. Investigating the subject further, I read the respected Centre for Economics and Business Research document on the matter. It says that the Government’s electronic communications changes have not delivered a faster 5G rollout, and that it is slower than the pre-2017 status quo. But for the 2017 reforms, it says, 8.2 million more people would have 5G coverage by now than can currently access it. The CEBR says that the proposed changes to the ECC will cost UK GDP £3.5 billion by 2022. Adoption of an alternative code based on Law Society proposals would reverse the losses imposed by the 2017 reforms—so the Government might not want to do this review after all. Could the Minister comment on the CEBR findings?

Amendment 45 particularly appeals, because the review would have to be done quicker than that under Amendment 49, and it is more detailed in subsection (2). Subsections (2)(a), (b) and (c) mention

“the extent to which the 2017 revisions have secured progress towards Her Majesty’s Government’s targets relating to telecommunications infrastructure … the impact of the 2017 revisions on rents under tenancies conferring code rights, and … the case for re-evaluating the value of rents under tenancies conferring code rights.”

I also give my support to Amendment 50.

[Lord Fox (LD)]

My Lords, if there is an abiding theme in this group, it is transparent reporting and then using the data within those reports to make sensible decisions.

Notwithstanding the Minister’s special day tomorrow, I am guessing that he is quite a lot younger than me, so he might be able to remember his childhood. I can remember a game that we used to play, of running down hills with our eyes closed. This was tremendous fun, until it stopped—and it usually stopped when you fell over or hit something. The argument advanced by the Government is, “We mustn’t do a review. We can’t have data because it’ll upset the market”—in other words, we cannot open our eyes because it will stop us running down the hill fast enough. That is the nature of what we are doing. In order to make sure that we do not fall over and that we are running in the right direction, we need to have our eyes open. In their different ways, these amendments seek to open our eyes to the effect that the Bill and all of this public and private investment will have on the objective that we all share: putting fibre in every home in this country. Without information, and without transparency in that information, we will not know how fast we are going and in which direction.

I care little about whether the Government accept the words in these amendments, but I do care about a Government who have enough sense to get the information, publish it and then act on it.

[The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Lord Parkinson of Whitley Bay) (Con)]

My Lords, I am particularly grateful to my noble friend Lady Stowell for her early birthday wishes. Finishing Committee a day ahead of schedule is a delightful early present. There are still to hours to go before tomorrow, and I hope that we will rise before noble Lords have to sing “Happy Birthday”.

Amendments 45, 47 and 49 seek to impose duties on the Government to assess and report on various impacts of the 2017 code reforms and, indeed, of this Bill once brought into force. I certainly appreciate the spirit of these amendments, which are designed to ensure that the Government are held to account; the noble Baroness, Lady Merron, referred to the conversations we had right at the beginning of our discussions on the Bill. Noble Lords will know that there are already ways in which some or all of the effects of these amendments can be achieved. For instance, Ofcom publishes its annual Connected Nations report, which it updates a further two times a year; this provides a clear assessment of the progress in both fixed and mobile connectivity. I hope that noble Lords will agree that the independent regulator is well placed to provide information on the progress of gigabit-capable broadband. Moreover, the Government continue to answer questions and provide clarity on all aspects of their work in this area, both in your Lordships’ House and in another place.

Amendment 45, tabled by the noble Baroness, Lady Merron, and the noble Lords, Lord Bassam of Brighton and Lord Blunkett, seeks an assessment of the legislation passed in 2017 to update the code, and particularly the impact of changes to the valuation regime. When the 2017 reforms were introduced, we recognised that the market would need time to adapt and settle. We have engaged with interested parties since the reforms came into force to identify any emerging issues. In our view, there is not yet enough evidence for a properly robust and comprehensive analysis to be made of the impacts that the 2017 reforms have had, of which the valuation framework was only one aspect. That is particularly the case given the impact of the Covid-19 pandemic, which has caused major shifts both in the demands on telecommunications operators and on their ways of working. However, in light of the feedback we have received through our engagement and our public consultation, the Government believe that the changes we are making in the Bill are needed to ensure that the 2017 reforms have their intended effect. That is not to say that we think the 2017 reforms failed—much progress has been made; we simply think that more can and must be done to maximise their impact. Making these changes now through the Bill will help to meet the Government’s 2025 connectivity target for at least 85% of homes and businesses to have access to gigabit broadband.

The noble Baroness, Lady Merron, asked how often our engagement has taken place. The access to land workshops is one part of it; there are in fact three separate groups which have been going for over a year. They met this month and will meet again in July, so we are undertaking that engagement on a regular basis.

Amendment 47, tabled by the noble Lords, Lord Fox and Lord Clement-Jones, asks the Government to review and report on the impact of Part 2 of the Bill against our gigabit delivery targets. Again, I appreciate that noble Lords will be keen to ensure, as they should, that the Government are on track with their commitments. DCMS currently carries out monitoring, and regular updates are published on a quarterly basis by Building Digital UK. That monitoring and reporting will naturally capture and reflect any accelerations that occur after this Bill comes into force.

The most recent Project Gigabit quarterly update highlighted the progress we are making. This includes reaching a milestone of over 100,000 broadband vouchers issued, worth more than £185 million, with 65,000 claimed to date to support households and businesses with the additional costs of securing gigabit-capable connections; launching two new regional procurements in Norfolk and Suffolk and two local supplier procurements in Cornwall, bringing our total live procurements to 10 and extending gigabit-capable connectivity to up to around 380,000 premises; completing over 20 market engagement exercises across the UK further to inform our future procurement pipeline; and launching as an executive agency of DCMS and publishing our first corporate plan setting out our key strategic objectives for 2022-23 and how Building Digital UK will drive the expansion of gigabit connectivity to all parts of the country.

[Lord Fox (LD)]

Briefly, if it is going so well, why are the Government changing everything? The Minister has just told us how well it is going, and now they are changing everything.

[Lord Parkinson of Whitley Bay (Con)]

From our engagement, to which I have referred, we believe it is going well and progress has been made, but our engagement with stakeholders suggests that the reforms that we are putting forward through this Bill are needed. We are extending that progress following consultation.

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[Lord Parkinson of Whitley Bay (Con)]

With such an accelerating market, thanks to the pro-investment environment that the Government are creating, it is quite challenging to quantify the extent to which progress is attributable to any single piece of legislation in a market that reflects so many factors. That is one reason why we think it would be of limited value.

My noble friend Lord Northbrook asked me to comment on the Centre for Economics and Business Research report on the 2017 reforms. We believe that the CEBR report does not provide a sufficiently rounded picture in its assessment of how the 2017 reforms have affected the pace of telecommunications delivery. The Government, as I have said, acknowledged in 2017 that reductions in payments could make landowners less keen to enter into agreements to host apparatus on their land. We expected an initial slowdown following the implementation of the 2017 reforms while the market adapted to them, but our understanding, informed by our conversations and consultation, is that both new and renewal agreements are now being successfully concluded. For instance, we were informed in January this year that, since 2017, 900 agreements had been renewed and that 83.5% of those agreements were concluded consensually, to give noble Lords some data.

[Lord Fox (LD)]

By extension, is the Minister expecting a slowdown again as the market gets used to these changes? Clearly, the Government expected a slowdown when they made the last set of changes; are they anticipating a similar slowdown this time?

[Lord Parkinson of Whitley Bay (Con)]

These changes build on the changes of 2017, so we do not expect there to be such an impact, because there is not such a change for the market.

We think it is too simplistic to attribute the changes in the market since 2017 solely to the valuation framework. The reforms in 2017 also made it easier for operators to share equipment, which will have reduced the demand for new mast sites to be built. Of course, we all hope that there will not be disruptive effects of a pandemic, as we have seen in the years since 2017.

Amendment 49, tabled by the noble Lords, Lord Clement-Jones and Lord Fox, and the noble Earl, Lord Lytton, asks the Government to conduct an implementation review of the Act after it is brought into force. However, we believe including such a requirement in the legislation is not necessary. The Government will of course monitor the effect of this legislation to understand how it is working in practice. Requiring an assessment at a specific time and which is focused on such specific elements would fetter the Government’s ability to judge when a meaningful review of progress can most sensibly be completed and what information it should include. I am happy to reassure my noble friend Lady Stowell that of course we want to monitor the effect of this legislation and to see and understand how it is working in practice.

Amendment 50, tabled by the noble Lords, Lord Clement-Jones and Lord Fox, the noble Earl, Lord Lytton, and the noble Baroness, Lady Merron, seeks to impose duties on telecommunications operators to provide a variety of annual data to Ofcom. It must be remembered that imposing reporting obligations on the industry necessarily diverts resources away from delivering the very targets that the Government have challenged them to deliver and on which noble Lords are rightly pressing us for progress. Any such obligations must therefore be proportionate.

The Communications Act 2003 already gives Ofcom substantial powers to collect and publish data. Procedures are therefore in place to monitor the progress that is being made and to ensure that details of this progress are published. For example, licence obligations for the shared rural network require mobile network operators to report on coverage and the number of new sites built through the programme. Operators also provide Ofcom with information on the geographic availability of coverage to enable consumers to make informed decisions. This is all data that is, or will be, published in Ofcom’s Connected Nations report.