Telecommunications Infrastructure (Relief from Non-Domestic Rates) Bill

Lord Kennedy of Southwark Excerpts

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

[Lord Kennedy of Southwark (Lab)]

My Lords, I refer the House to my entry in the register of interests as a councillor in the London Borough of Lewisham and a vice-president of the Local Government Association.

On behalf of the Opposition, I welcome the Bill as far as it goes. It is a positive step in boosting investment in fibre broadband infrastructure and the development of 5G. The Bill will encourage new fibre rollout, and that will boost connectivity for both residential and business users. That will have knock-on effects for improved economic growth. It has been estimated that 5G infrastructure will outstrip the economic benefits of fibre broadband by 2026, when that technology will have become outdated. It is important to ensure that we have the right infrastructure and connectivity speeds to deliver improved economic growth, boost businesses and create the new jobs of the future that we will all need.

There have been suggestions that the boost to economic growth with the new 5G network will be worth billions of pounds to the UK economy, so it is imperative that we place ourselves at the top in delivering the speed and connectivity for business and residential users, so that we have the tools to compete with anyone in the world. However, we were expecting a much larger Bill, dealing with a wider variety of local government finance issues, and it is disappointing that the Government have decided to come forward with only this one small part. Lack of parliamentary time really is not a good enough excuse for this and, if that is what the noble Lord, Lord Bourne of Aberystwyth, is going to tell the House shortly, it would be useful if he could update us on when we can expect the wider issues to come back to Parliament that were contained in the Local Government Finance Bill lost due to the Prime Minister calling the general election.

Local authorities need certainty and stability in these very challenging times, as does business. The lack of clarity on business rates, the shambles of the business rate revaluations and the hastily pulled together packages go nowhere near enough, while our high streets are in crisis. It is no way for the Government to behave. We have been exceedingly quiet in respect of legislation since the general election; we have just come back from another break, and we are away again next month—the lack of parliamentary time argument is difficult to accept. There may be a lack of will on behalf of the Government or, dare I suggest it, something of a crisis in the Government at the moment.

In subsections (4) and (5) of Clause 4, the Government appear to be taking Henry VIII powers. I have not seen a report from the Delegated Powers Committee, but I have seen the note issued by the department. It would be helpful if the Minister could reassure the House as to the limited nature of these powers, because Clause 4(4)(b) appears to contain a very wide power indeed.

The omission from the Bill of anything meaningful in respect of improving the rural broadband offering is most disappointing. Many noble Lords on all sides of the House speak up for rural areas and the threat to both their viability and sustainability across a wide variety of issues. I can recall debates about housing provision for working families, rural bus services, train services, shops, pubs and many other issues. Delivering proper broadband services, let alone anything close to 5G, is vital to ensure that our rural areas prosper. Without firm action from the Government on this matter, we risk leaving numbers of our fellow citizens further behind, which is not acceptable for them or the communities in which they live, which seek to remain sustainable. I shall table an amendment on that issue for debate in Committee.

Another issue that I want to explore further in Committee is the definition of “new fibre”, which the noble Earl, Lord Erroll, referred to in his remarks. The regulations propose that this is to be fibre that was,

“not laid, flown, affixed or attached before 1st April 2017”,

with those operators which light dark fibre already in the ground not eligible for relief. I want to explore the potential that that has for distortion and the risk to companies that have already invested in fibre networks, which may be at a competitive disadvantage to another company that comes along and lays new fibre that is exactly the same as the fibre already in the ground but not yet lit. The noble Baroness, Lady Harding of Winscombe, made reference to that issue, which we need to discuss much further in Committee.

In Committee in the other place, my honourable friend Mr Jim McMahon tabled an amendment to require the Secretary of State to provide an assessment to Parliament on how the business rates relief system was working. I would, again, like to bring that back for consideration by your Lordships.

In conclusion, we give a cautious welcome to the Bill as it stands, although there is disappointment that some of the wider issues that I have outlined have not been brought forward. I have a couple of issues that I intend to raise as amendments to this Bill in Committee, and I have posed a couple of questions to which I hope the Minister can respond.

Telecommunications Infrastructure (Relief from Non-Domestic Rates) Bill

Lord Kennedy of Southwark Excerpts

Committee: 1st sitting (Hansard): House of Lords
Tuesday 24th October 2017 Grand Committee

[Baroness Pinnock (LD)]

My Lords, I have wondered from the outset of the Bill’s proceedings why companies with billion-pound turnovers require business rate relief, as stated in the Explanatory Notes, of £60 million over a five-year period to provide an incentive for laying fibre to provide fast broadband. My amendment relates to concerns about the lack of focus for the expenditure of public funds. When, as is the case, resources are extremely limited, it is important that they are spent in the most effective way. In this instance, the focus should be on providing incentives where broadband speeds are already poor.

At the last Budget in 2016, the Chancellor emphasised the importance of fibre-to-property broadband to meet future needs, especially of businesses, where improving broadband speeds is probably the single, and simplest, change that will improve this country’s lagging productivity. A report in August of this year assessed that the UK was behind 30 other countries in accessibility to fast broadband. The Government’s current assessment is that 90% of properties have access to fast broadband; however, this figure includes properties that are 1 kilometre distant from the cabinet—not the Cabinet but the street cabinet—and consequently have barely a connection at all.

The Bill simply gives an incentive for broadband providers, both large and small, to lay fibre. The major companies have billion-pound turnovers, so the question has to be asked whether an incentive at the level provided for in the Bill will be significant. Obviously, it will make a difference for smaller providers but the Bill does not distinguish between large and small providers. The Bill makes no requirement for companies to focus on laying new fibre where broadband speeds are currently below the Government’s standard of 10 megabits per second, where the need is greatest.

Hence the amendment, which will limit the business rate relief to laying fibre where broadband speeds are already poor. I have deliberately not made the distinction between rural and urban, as some rural areas such as Cornwall have already benefited from EU investment in improved broadband access, while some urban areas have very poor broadband speeds. Even in London, some areas such as parts of Southwark suffer from having below 10 megabits per second.

I should like to explore further a concern that the largest provider of fibre, BT, has a business plan based on laying cable to the cabinet in the street and not to the premises. From there to the premises the link will be by copper, which in itself degenerates the speed. The further the premises are from the cabinet, the worse the broadband speed. At 300 metres distant, the broadband speed is not much improved from the old copper connections. As I said earlier, at 1 kilometre the connection is barely accessible. A further factor that results in broadband speeds reducing, even with fibre, is the number of properties connected to the cabinet. None of these issues is addressed in the Bill.

My final concern, which is admittedly outwith the Bill, is the cost to families and individuals of accessing broadband. Fibre cable can be laid to provide access but if the cost is prohibitive, some families will not be able to access the better-quality broadband. Since it is becoming, in my view, one of the utilities—like water, electricity and fuel provision—it is really important that we start thinking about how all families are able to afford broadband. I put this into the equation to ask the Government whether they will, at some point, be willing to address that increasingly significant concern. My amendment would encourage the Government to focus public funds on incentives that will make areas with poor connectivity see significant improvements. I beg to move.

[Lord Kennedy of Southwark (Lab)]

My Lords, I refer the Committee to my registered interests as a local councillor and a vice-president of the Local Government Association. I support Amendments 1, 5 and 11 in this group, tabled by the noble Baroness, Lady Pinnock. They highlight some real problems for communities—be they urban or rural—which suffer from poor connectivity, and there has been no real incentive to improve the situation for them by improving speeds. The amendments add the condition that, for the relief to apply, it has to be focused on areas within a local authority where the average broadband speed is 10 megabits per second or less. I think I am right when I say that about 93% of homes and businesses in the UK are able to receive superfast broadband, but it is the copper version. The Bill is generally welcomed.

The noble Baroness is right to focus her amendments on areas with poor connectivity. There is a good argument for this as reliefs provide an incentive to do something that a business might otherwise not want to or be keen to do. The view may be taken that it is not economically beneficial, or something else could be more beneficial. The noble Baroness raises the important issue of how to ensure that those parts of England and Wales, urban and rural, which suffer from poor connectivity can benefit from the relief provided to companies. Otherwise, such areas run the risk of falling further behind. We can all agree that the benefits that fibre can bring could be enormous for all parts of the UK.

Can the noble Lord, Lord Bourne, respond to the concern expressed by the noble Baroness, as we do not want to see parts of the country falling further behind? How can we ensure that this relief, welcome though it is, actually benefits those areas with the worst connectivity?

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

My Lords, my noble friend Lord Bourne has left this one to me. I thank the noble Baroness and the noble Lord for their contributions. I realise the point that some of these issues raise. I will make some general comments on the points made by the noble Baroness, Lady Pinnock, and then come to the substance of the amendment.

The noble Baroness referred to billion-dollar companies—I presume she meant BT. The relief applies to all companies, large or small, because fibre-optic cable is the way of the future. We regard laying fibre-optic cable as a good thing, regardless of where it is and who lays it, so we leave it up to the market. This Bill is a fairly blunt instrument—merely an enabling measure; it was announced by the Chancellor and it is merely to allow the relief to take place. On the very understandable issue of where it should be directed, we have carried out a number of measures to effect that. We understand the issue about rural and hard-to-reach areas—and, indeed, some of the areas in our cities that do not have adequate broadband. The specific amendments do not necessarily address the broad thrust of some of the remarks made by noble Lords, and I will explain why we do not think the amendments are particularly helpful. They would mean that the reliefs provided for in the Bill on new fibre applied only to those areas that currently receive an average speed of less than 10 megabits per second. They would undermine a fundamental part of what we seek to achieve through the Bill. We want to ensure that businesses and households throughout the country, including rural areas and cities, have access to faster broadband. In fact, by the end of this year, 19 out of 20 premises will have access to superfast broadband.

The universal service obligation will provide a digital safety net by giving everyone in the country the legal right to request a connection to broadband speeds of at least 10 megabits per second by 2020. As noble Lords will know, we are also considering a voluntary proposal from BT in that respect. I stress that the 10 megabits per second is a safety net; we want as many people as possible to have access to superfast broadband or better, which is why we have set a target of 95% superfast coverage by the end of 2017, which will continue to be extended beyond that to at least 97% of premises.

We have delivered a series of measures to ensure that all areas can and do have access to the broadband speeds that they need. For example, Defra has just made available £30 million of funding under the rural development programme for England, targeted at supporting rural businesses and growth for broadband services in those areas with speeds of 30 megabits per second or faster where that is not currently available or planned. In the 2016 Autumn Statement, the Government announced more than £1 billion to support digital infrastructure, targeted at supporting the rollout of full fibre connections for future 5G communications. The first wave of projects for our local full fibre networks programme has been launched, and includes a mixture of urban and rural areas. We are soon to launch a challenge fund for local bodies to bid for access to £200 million, with all parts of the UK free to participate, and we anticipate a significant number of applications from predominantly rural areas. We think that those projects will encourage further commercial interventions to build and extend fibre networks.

We support better broadband in all areas, but we believe that the amendment would limit the rate relief to only those local authority areas with an average of less than 10 megabits per second, which would damage the rollout of faster broadband across the UK. First, it would mean that much of the new fibre to be installed to the premises—FTTP—would be excluded from the relief. To deliver a network that is fit for the future, we need more fibre everywhere, including in areas that currently get more than 10 megabits. This amendment could deter significant investment and have the perverse result that less full fibre—the gold standard of broadband technology—was actually deployed.

Secondly, the amendment would exclude from the rate relief new fibre in those villages and rural areas that do not currently have high-speed broadband but happen to fall within a local authority area which does on average have high speed broadband. It would mean excluding from the relief whole areas where support is needed and where the measures provided for in the Bill would make a difference. At the moment, less than 3% of premises across the UK receives under 10 megabits per second, so the amendment potentially excludes up to 97% of premises from the relief.

Therefore, I hope that the Committee will recognise that the amendments should not be included in the Bill. However, we agree that improving broadband in those areas with less than 10 megabits is a priority, which is why we have put in place the universal service obligation. The new fibre rate relief as proposed through the Bill will support that objective. I hope that, with this in mind, the noble Baroness will withdraw her amendment.

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Moved by

[Lord Kennedy of Southwark]

2: Clause 1, page 1, line 16, at end insert—
“(4FA) Conditions prescribed by the appropriate national authority by regulations under subsection (4F)(b) must include the condition that new fibre is part of the hereditament under subsection (4F)(a).”

[Lord Kennedy of Southwark]

My Lords, Amendments 2, 3, 6, 7, 9, 10 and 12 are all in my name and form group two in our deliberations. This group seeks to address one of the principal concerns expressed by people and smaller companies in the industry: that the way the Bill is written does not provide enough protection from companies ripping out old fibre and laying new fibre solely to benefit from the relief, which would pay for itself in less than two years. I think that was one of the points the noble Baroness, Lady Harding of Winscombe, made at Second Reading after her discussion with colleagues and people in the industry. I am convinced that there is a real risk of this happening, which would be absolute madness and not what the relief was intended for. It would, in effect, become a subsidy for old networks. Can the Minister address this particular point: how will we ensure this does not happen?

My amendments seek to prevent this in three ways. They would put in the Bill the words,

“must include the condition that new fibre is part of the hereditament”.

They would add a subsection that would put in the Bill the meaning of “new fibre” and what would not be covered by this relief. They would go further to address the point that laying, affixing, flying or attaching should not be solely to gain relief. Amendment 9 makes the specific point that the relief should not be there just to “replicate existing” telecoms structures. The Bill is about providing business relief to encourage and to speed up additional fibre telecommunications infrastructure.

There may be other ways to do what I seek here, but the Bill as drafted has people in the industry concerned. They are unhappy with the protections that the Bill affords at present, or fails to afford. The purpose of these amendments is to raise the issue with the Minister, and to get a response and, I hope, a commitment from the Government that these issues will be looked at seriously. Further, would he be prepared to meet me and representatives of the industry between now and Report? That would be helpful, because it is a serious problem. Somehow the Government, either with these amendments or by regulation, have to address these points further. I beg to move.

[Baroness Pinnock]

My Lords, I support the amendments tabled by the noble Lord, Lord Kennedy, because he, like I did in previous amendments, seeks to focus the relief provided in the Bill on those places and areas that need it most. He is asking to put in safeguards to prevent some companies deliberately laying cable with no purpose and to ensure that what is done on rate relief achieves the outcome the Government seek, which is to provide more domestic premises and businesses with fast broadband connectivity. I look forward to the response from the Minister—I am not sure which one, perhaps it will be a double act. The questions that the noble Lord, Lord Kennedy, has raised are important and need an answer.

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

My Lords, on this occasion I am genuinely grateful to the noble Lord, Lord Kennedy, for raising this matter. I am not always grateful to him for raising matters but I am today. I am grateful also to the noble Baroness, Lady Pinnock, for her comments. We have a shared interest here, in that I cannot believe that anybody wants to see gaming in the system.

Concerns about gaming in the proposed rate relief for new fibre were raised by a small number of operators in August, when we first shared with them our proposals for the draft regulations. As the noble Lord has said, my noble friend Lady Harding raised this issue at Second Reading. I think she went on to say that she was not by any means convinced that there would be gaming but she raised it as a concern, so we share an interest in ensuring that there is not gaming.

Other operators have told us that they do not believe there is scope for gaming and support the proposed scheme. Nevertheless, we take this matter seriously and have been investigating these claims. Overall, our initial view is that it is unlikely gaming will be used in this tax relief. As I have said, we continue to discuss this with the sector and we are still gathering evidence.

However, if it will help the Committee, I will explain in a little detail why concerns as to gaming have arisen, why we believe such gaming is unlikely, in practice, and how I propose to deal with the matter between now and Report. What is being seen as the potential risk of gaming comes from the line we propose to draw in regulations as to when the relief should apply. New fibre installed after 1 April 2017 will receive the relief. However, some operators will choose instead to use existing fibre optic cable which was installed prior to 1 April 2017 but has not yet been activated. This is known as dark fibre. The objective of the measure in the Bill is to support investment in new fibre broadband infrastructure. Therefore, previous investment in existing fibre, including dark fibre, is not considered to be new fibre, has not been incentivised by this measure and will be outside the relief.

We have heard concerns that the proposed different treatment in the relief scheme of new fibre, which gets the relief, and dark fibre, which does not, could lead to some gaming in the system. It has been suggested that telecom operators may replace or duplicate existing dark fibre with new fibre merely to secure the rate relief. It has also been suggested that some operators may install new fibre in existing locations to gain a competitive advantage over existing operators in that location, merely because of the rate relief.

To understand this better we are investigating the costs and operational implications of installing new fibre into existing infrastructure, such as ducts. By comparing these costs to the potential saving on business rates from the new fibre relief we can identify where, in principle, the scope for gaming exists. To help us with that work we have held discussions with telecom companies regarding this matter and are now considering evidence provided by one operator, Gamma Telecom, which I mentioned at Second Reading. The consultation on the draft regulations runs until 21 November, and during this time we would like to hear views from other operators regarding the risk of gaming. This work is at an early stage and noble Lords will understand that some of the data we are using in this study is commercially confidential.

Our initial findings are that in the vast majority of cases—perhaps covering more than 99% of the telecom network—it will not be financially viable for operators to install new fibre merely to gain the relief. In those cases, the cost of purchasing the fibre and the labour costs associated with opening existing ducts—putting the fibre through those ducts and then connecting the fibre—exceeds the saving from business rates. In those situations it will be cheaper to use existing dark fibre, so gaming would not occur. Our focus, therefore, is on smaller networks where the business rates paid in respect of each kilometre of network are higher than for larger networks. The potential for making a saving in business rates is therefore also higher.

We are looking closely at the circumstances in which new fibre may be installed in existing smaller networks and exploring more of the costs associated with accessing existing ducts. These circumstances account for a very small fraction of the telecoms network—probably less than 1%. That said, I cannot see why 1% should be ignored and if there is evidence of the possibility of gaming, I would want to ensure that we act. But even if there are circumstances where, in principle, the rates saving exceeds the costs, it does not necessarily follow that, in practice, gaming is viable. For example, it may not be possible to add new fibre to ducts which are already in use, while switching from one fibre to another may cause interruption or disruption to the customer, which may be especially unacceptable for business customers and unattractive to the operator. But, as I have said, we agree with the noble Lord and the noble Baroness that we do not want a tax system that is open to gaming in the way that has been suggested. If from our work with the sector we conclude that gaming is likely, I assure the noble Lord and the noble Baroness that we would consider how to amend the draft regulations to prevent it.

The amendments we are considering would move the definition of new fibre into the Bill. This would in fact significantly limit our ability to tackle any gaming. The approach in the Bill of defining in regulations the meaning of new fibre gives us the scope to first identify the circumstances in which gaming might arise before we devise the solution. It allows us to ensure that any solution is practical and to respond quickly to any future circumstances where gaming might arise.

Moving on to the practical points put by the noble Lord and echoed by the noble Baroness about meeting the sector, as I have indicated, I intend to meet Gamma between now and Report, which will probably be towards the end of November. I will certainly keep the House—including the noble Lord and the noble Baroness—informed about how the discussions are going. I would be happy to include them in the thrust of what is happening, and expect to act on any concerns about gaming which indicate that this issue needs addressing. As I say, we are as keen as they are to tackle any potential gaming. I hope with that assurance and the guarantee that I will keep the noble Lord and the noble Baroness involved with what is happening, that the noble Lord will feel able to withdraw his amendment.

[Lord Kennedy of Southwark]

My Lords, I thank the Minister for that helpful response. I am happy to withdraw my amendment at this stage. I am delighted that the Minister is meeting representative of the industry, particularly Gamma. That is very good.

I hope the Minister is right on all these things and that there is no issue with gaming at all. My only concern is that we should pass the legislation in a way that eliminates it. We are often told by the Government that parliamentary time is precious. It would be a shame to get the Bill through and then find, in a year’s time, that there was a problem after all and people are doing the things which we do not think they will now. I like the idea of putting something in regulations as a good way forward. They can be amended a bit more easily. I was at a meeting this morning on a completely different subject: a very good initiative that the Government had come forward with many years ago, when I first joined the House, but now there are some concerns about how it is operating. To get that initiative changed, we have to go back and get the law changed. That is not always easy. I thank the Minister for his response and look forward to further discussions. I beg leave to withdraw the amendment.

Amendment 2 withdrawn.

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Moved by

[Lord Kennedy of Southwark]

4: Clause 1, page 1, line 16, at end insert—
“(4FC) Providers of telecommunications benefiting from the relief under subsections (4E) and (4F) must give due consideration to providing high quality telecommunications services to rural and hard to reach areas.”

[Lord Kennedy of Southwark]

Amendments 4, 8 and 13 in my name and Amendment 15 in the name of the noble Baroness, Lady Pinnock, concern how we help rural areas and communities benefit from improved connectivity with fibre, to address the concerns that rural and other hard-to-reach areas have.

Amendments 4, 8 and 13 are in effect the same amendment placed in three different parts of the Bill. They would place a requirement on those companies benefiting from the business rates relief to give due consideration to providing high-quality telecoms services to such areas. These are very reasonable amendments—I always table reasonable amendments in your Lordships’ House—and they would place a duty only to give due consideration. There is nothing onerous or anything that would put the viability of a business at risk, but they propose that connectivity must be given proper consideration and significance.

If a particular area is benefiting from an upgrade to fibre, the company doing the work should give proper weight to the proposition that, as a beneficiary of the rates relief, it should also look at whether the work in the village down the road could be done at the same time—the risk being that if it is not done then, it will never be done at all. The community would then be as disadvantaged, as it was previously.

I fully support the amendment in the name of the noble Baroness, Lady Pinnock. It asks that a report be laid before Parliament 12 months after the Act comes into force, to look at various issues, which I am sure she will refer to in her contribution. I beg to move.

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[Lord Ashton of Hyde]

My Lords, I am grateful to noble Lords for laying out their amendments clearly. As the noble Lord, Lord Kennedy, said, these amendments are very much linked to the last group on which I answered—the first group today.

Amendment 4, which was moved by the noble Lord, Lord Kennedy, seeks to ensure that there is a requirement for recipients of the relief to,

“give due consideration … to rural and hard to reach areas”.

In a similar vein, the noble Baroness, Lady Pinnock, proposes an amendment to require a report on the impact of these measures on rural connectivity. Although I might support the spirit of these apparently reasonable amendments, I do not believe that they are necessary. I share the concerns of many noble Lords that rural and remote areas should not be left behind in the drive to improve and extend high-quality broadband connectivity. I declare an interest: I live in a rural area and am absolutely aware of the problems to which noble Lords have alluded.

The relief provided for in the Bill is available across England and Wales. No area is excluded or exempted, and we have engaged with the Welsh Government to support the application of the measure in Wales. Providers deploying fibre connectivity in the countryside will receive the same rates relief as those deploying in the hearts of our great cities. That is important because the problems of slow speeds are the same, regardless of where the household is located. When we talk about social deprivation, for example, it is still a problem in an inner city as well as a rural area.

Providers are free to deliver connectivity wherever the market allows. However, to ensure that people living and working in rural and remote areas can and do have access to the broadband speeds that they need, the Government have delivered a series of measures, which I mentioned in my previous answer—but I shall remind noble Lords of them just briefly. There is the superfast rollout programme, which is worth about £1.7 billion of public money. We are currently consulting on the broadband universal service obligation, which will apply across the United Kingdom, with at least 10 megabits per second. Then there is the local full fibre networks programme, worth £200 million, and the rural development programme for England at £30 million for broadband. Those measures have been a great success, with 45% of households with superfast in 2010 rising to 95% by the end of this year.

It is clear that the relief will be alongside a package of measures put in place by the Government to help spread to those living and working in rural and remote areas the benefits of economic growth and access to services that better broadband connectivity will bring. Together, they will also lay the foundations needed for the next generation of mobile technology, known as 5G, to which the noble Baroness, Lady Pinnock, referred.

The noble Baroness’s proposed new clause in Amendment 15 would require a report on the impact of the measure on rural connectivity. I support the outcome—that is, an understanding of the impact of Government’s action in this area—but my concern is that requiring a report on the impact on rural connectivity may have an adverse effect. Telecoms networks take time to plan and build, and investors rely on certainty. A report on the relief after 12 months is premature, given the time taken to deploy networks. My noble friend Lord Bourne will cover reporting arrangements in greater detail later, but my concern is that if the Government are required to report so soon, it could create uncertainty over whether the relief will continue, and lead to unintended consequences.

On subsection (2)(c) of the noble Baroness’s proposed new clause, on mobile coverage, I note that the main benefit of the measure to mobile will be in aiding the deployment of 5G. It will take longer than 12 months for the next generation of mobile technology to appear; we do not quite know what it is yet.

Of course, we will monitor the effectiveness of the scheme in providing new fibre, which will include rural areas, but we need to allow the sector appropriate time to build networks in all areas. Ofcom reports on infrastructure deployment every year, and we should see the impact of all the Government’s measures in this field in due course. In view of those explanations, I hope that the noble Lord will withdraw his amendment.

[Lord Kennedy of Southwark]

The Minister made the point, with regard to the amendment of the noble Baroness, Lady Pinnock, that 12 months may be too soon. After what period of time does he think a report would be useful? Would it be 12 months, 24 months or 36 months?

[Lord Ashton of Hyde]

Ofcom reports every year, so I do not think it would matter whether it is 12 months or 24. My point was specifically on mobile coverage for which the 12 months would not be appropriate, because 5G has not really been invented yet, so there certainly will not be any visible signs on mobile coverage. Essentially, we are saying that we want fibre-optic cable to be laid over all areas of the country to improve future mobile reception and also fibre to the premises, which is what the future gold standard is. We need it everywhere, not just in rural areas. While we accept that rural and hard-to-reach areas have a problem, I have laid down a series of other measures to deal with those areas specifically.

[Lord Kennedy of Southwark]

I thank the Minister for that response and for his response to my other question. I am happy at this stage to withdraw my amendment.

Amendment 4 withdrawn.

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Moved by

[Lord Kennedy of Southwark]

14: After Clause 3, insert the following new Clause—
“Assessment of rate relief: reporting
(1) The Secretary of State must, within the period of 12 months beginning with the day on which this Act has effect, lay a report before both Houses of Parliament containing an assessment of the operation of the relief provided under this Act in the 2017-18 financial year.(2) The report must include an account of—(a) the impact of the relief upon the level of local authority income raised through non-domestic rating;(b) the level of investment likely to have been stimulated by the relief, and the scope for extending the relief to other forms of investment;(c) whether the duration of the relief is appropriate;(d) the views of those subject to the charges of non-domestic rates on the relief; and(e) the efficacy of the mechanism for the distribution of the relief.”

[Lord Kennedy of Southwark]

My Lords, I will be brief, as we have rehearsed some of the points made earlier. Amendment 14 in my name and that of the noble Baroness, Lady Pinnock, puts a requirement on the Secretary of State to lay a report before both Houses of Parliament. A similar amendment was tabled in the other place to get the Government to make an assessment of the operation of the relief proposed under this Bill. The amendments list, in paragraphs (a) to (e) in subsection (2) of the proposed new clause, the areas that the report should cover. I hope that the Minister can address the concerns raised by the amendment. It seeks to ensure, among other things, that the issues we have been discussing today and in previous debates do not arise. It would be a major disappointment if we failed to address these concerns and also failed to take any measures to keep ourselves informed about the effect of the relief and how it is working.

I like to base my decisions on evidence. As I said, I was at a meeting today on a completely different matter, where, after many years down the line, we have not got a mechanism to change things. I hope we can get a positive response. I do not accept that having a report to Parliament, whether next year or in 24 months’ time, in itself creates great problems for business in terms of uncertainty. We are in very uncertain times on a whole range of issues, and I am sure businesses would be much happier with other things. I am sure the point can be made for the moment, but I do not accept the inference made. I beg to move.

[Baroness Pinnock]

As I have put my name to this amendment, clearly I support it. The specific parts of this amendment that I would like the Government to consider are paragraphs (a) and (e) of subsection (2). The first is the impact of the relief upon the level of local authority income raised and the second is, importantly, the mechanism for the distribution of the relief, whether it is going to be a speedy one and how carefully it can be calculated. I can see quite a lot of room for dispute about the cabling, such as which part of local authority boundaries it crosses and so on. What we would like is an assurance that there will be an appeal mechanism for local authorities if the distribution of the relief is not what they anticipate. The reporting would enable that to happen.

[Lord Bourne of Aberystwyth]

My Lords, I thank the noble Lord and the noble Baroness for their contributions on this amendment dealing with the possibility of a review. I welcome the opportunity to return to this proposed new clause, which, as the noble Lord rightly says, was discussed in Committee in the other place.

We have said throughout the passage of the Bill that we intend to work with the sector and the Valuation Office Agency to ensure the smooth implementation of this relief. I happily restate that. We have published draft regulations for consultation; they are up for consultation until 21 November. I hope that noble Lords will see from the debate that we have just had in relation to gaming that my department and the Government as a whole are looking very closely at the detailed operation of the scheme. We all share the objective of wishing to see this scheme implemented effectively and quickly from the outset. This in turn will lead to new fibre growth and improved broadband. That is the aim, which I know that noble Lords share.

However, I fear that the proposed new clause would not achieve that aim and, if included in the Bill, could threaten the success of this scheme. I note what the noble Lord says about business uncertainty elsewhere, but that hardly means that a bit more uncertainty is a good thing or something that we should not be concerned about. Sending a clear signal to investors in the telecoms sector is critical to the success of this measure, which is why we have moved quickly to bring forward the Bill and why we are consulting early on the draft regulations. Investors need to see a clear intention on the part of the Government to deliver relief from 1 April 2017 for five years up to 2022.

One suggestion is about the length of the relief being provided. Any suggestion that it might not last the full five years is not desirable. Those sorts of signals can make the difference to decision-makers in telecoms companies in deciding whether to proceed with an investment. Businesses thrive on certainty. Decisions in telecoms companies are being made now on the basis of the promise made by the Chancellor that new fibre will have relief until 2022.

I understand the objective of the amendment, but it would create uncertainty in the sector and damage the prospects for success of the measure. By providing for, in effect, a review of the rate relief after only one year, we will sow the seeds of doubt in the sector. The sector may fear that the Government might cancel or otherwise negate the relief after a year—especially when, as the amendment clearly states, the review should consider the duration of the relief. We could expect telecoms companies to react in only one way to the prospect of such a review: they will be less likely to invest, which would damage the rollout of broadband. Therefore, I am afraid that the Government cannot accept the amendment.

We will, of course, continue to monitor the effective operation of the scheme to ensure that it is indeed providing relief on new fibre. We will work with the sector and the Valuation Office Agency to do that. The powers in the Act will allow us to adjust the scheme where necessary such as to reflect changing and new technologies. Any suggestion that the relief might last less than five years is something that we cannot subscribe to.

The amendment would also require the Government to assess the impact of the relief on local government. In fact, that is information which we already plan to collect and publish. I can give that undertaking. Each year, the department publishes non-domestic rating returns containing the information about the business rates income and relief in each local authority area, which this seems to ask for. I can ensure access to that; we can provide the link so that that information is readily available. Those returns are based on information provided to us by local government, and they can be found in full on our website. As I say, I am very happy to provide guidance on how that can be accessed. Those returns will in future include information about the level of new fibre relief. We expect the first returns to include this information to be the outturns for 2017-18, published in autumn next year. I am happy to provide that information and, indeed, to meet the noble Lord and the noble Baroness, with officials, to explain how a lot of the information that has been requested is already available.

Throughout the passage of the Bill through this House and the other place, we have been clear that we would compensate local government for the cost of its share of the relief, and I give that assurance again today. In view of these assurances, I hope the noble Lord will feel able to withdraw his amendment, with the undertaking that I am happy to meet him and the noble Baroness to go through this, perhaps to explain how at least some of this information is available at the moment.

[Lord Kennedy of Southwark]

I thank the Minister for his helpful response. I am happy to withdraw my amendment. I think that brings us to the end.

Amendment 14 withdrawn.

Telecommunications Infrastructure (Relief from Non-Domestic Rates) Bill

Lord Kennedy of Southwark Excerpts

Report stage (Hansard): House of Lords
Tuesday 28th November 2017 Lords Chamber

Moved by

[Lord Kennedy of Southwark]

4: After Clause 3, insert the following new Clause—
“Time period for the availability of the relief under this Act
(1) Subject to the provisions under section 6(2), the amendments made by this Act will have effect for the period of five financial years after 1 April 2017.(2) The appropriate national authority may by regulations made by statutory instrument extend the time period for which the relief is to be made available.(3) A statutory instrument containing regulations made by the Secretary of State under subsection (2) may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.(4) A statutory instrument containing regulations made by the Welsh Ministers under subsection (2) may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, the National Assembly for Wales.(5) For the purposes of this section, “appropriate national authority” is(a) in relation to England, the Secretary of State;(b) in relation to Wales, the Welsh Ministers.”

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, first, I draw the attention of the House to my registered interests: namely, as a councillor in the London Borough of Lewisham and a vice-president of the Local Government Association.

As we have heard, the Bill is not controversial. It seeks to help with the boosting of the switchover to fibre from our old copper broadband network. This is important as we need to increase the take-up of fibre at a faster pace, and it is recognised that an exemption from business rates could prove an incentive to speed up the process and get more of our outdated network on to a fibre network in a shorter period of time.

Amendment 4 in my name adds a new clause which puts into the Bill the time from which the relief from business rates will operate; namely, five years from 1 April 2017. I considered the issues at Second Reading and in Committee and my amendment seeks to give an additional power to the Secretary of State in England and to Welsh Ministers in Wales: that is, the ability to seek approval to extend the period for which the business rate relief is available to those companies that are installing new fibre beyond the initial period of five years.

The extension would have to be approved by both Houses of Parliament using the affirmative procedure. There will be parliamentary oversight of the process as it enables the Government to have the power to extend the scheme without the need for primary legislation. I think it is proportionate in the circumstances. It is a simple measure and will be an effective way of continuing the scheme if it has been deemed successful in helping roll out the network faster. Of course, if it has not been successful, the scheme will be ended and the option will not be taken up. I beg to move.

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

My Lords, I am grateful to the noble Lord, Lord Kennedy, for moving this amendment. As noble Lords will know, the matter of whether the five years of the rate relief scheme should appear in the Bill was also raised by the Delegated Powers and Regulatory Reform Committee.

As currently drafted, the Bill would allow the relief to apply indefinitely. The draft regulations that we published for consultation would provide that the relief is limited to five years from 1 April 2017—so the five-year period of the scheme appears in secondary legislation rather than in the Bill. We have taken this approach to retain the ability to repeat the scheme for later years without the need to return for more primary legislation. This will allow us to consider the success of the scheme in a timely manner as 2022 approaches.

Nevertheless, the noble Lord, Lord Kennedy, has made a very strong argument for why the five years should appear in the Bill. We have been clear that the purpose of the Bill is to implement the Chancellor’s commitment to offer five years of relief, and we now accept that such a fundamental aspect of the policy should appear in the Bill. But I am grateful that the noble Lord also recognises the value of retaining the ability to extend or repeat the relief scheme without another Bill. Therefore, we also agree that we should take a power to change the period of the relief and that this power should be subject to the affirmative resolution procedure, as the noble Lord set out.

As I have discussed with the noble Lord—and I appreciate the opportunity to do so—we intend to move our own amendment at Third Reading, achieving the noble Lord’s aim but ironing out one or two drafting defects just to ensure that we can make these changes. We will table the amendment tomorrow. Once more I thank the noble Lord for his constructive and helpful approach. I hope that, with these assurances, he will feel able to withdraw the amendment.

[Lord Kennedy of Southwark]

I thank the noble Lord, Lord Bourne, very much. As he said, we had a very useful meeting a few days ago. I am very pleased that the Government have accepted the main thrust of what I am suggesting to the House. I am happy to withdraw the amendment at this stage and look forward to seeing the Minister’s amendment when he tables it tomorrow.

Amendment 4 withdrawn.

Telecommunications Infrastructure (Relief from Non-Domestic Rates) Bill

Lord Kennedy of Southwark Excerpts

3rd reading (Hansard): House of Lords
Wednesday 6th December 2017 Lords Chamber

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

My Lords, this amendment will place in the Bill the five-year duration for the rate relief scheme for new fibre. The scheme will apply retrospectively from 1 April 2017 to 31 March 2022. The need to have the five years on the face of the Bill was discussed at Report. I am most grateful to the noble Lord, Lord Kennedy, for raising this matter and agreeing to withdraw his amendment at that stage so that we could bring forward these changes.

The amendments will also allow for the period of the rate relief scheme to be extended by regulation using the affirmative resolution procedure. This will ensure that, if the Chancellor wants to repeat or extend the rate relief scheme, that can happen quickly without the need for another Bill but still with the approval of Parliament. I trust that noble Lords will agree that the amendment meets the commitment I gave on Report. I beg to move.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, I am very grateful to the noble Lord, Lord Bourne of Aberystwyth. I draw the House’s attention to my interests as a local councillor in Lewisham and vice-president of the Local Government Association. As he said, we had a very fruitful meeting after I tabled my amendment at Report. I was very happy to withdraw that, and I am very pleased with what the Minister has brought back today. As he says, it has enabled the Government to put the dates in the Bill. If they want at some future point to extend the scheme, they can, without the need for primary legislation. It is a very sensible move.

[Baroness Pinnock (LD)]

My Lords, I draw the House’s attention to my register of interests as a councillor in Kirklees and as another vice-president of the Local Government Association. As we discussed on Report, we agree with and support the amendments proposed by the noble Lord, Lord Bourne, and initiated by the noble Lord, Lord Kennedy. We thank the Minister for his very helpful meetings on the Bill. I have certainly explored a number of issues, although I have not got very far, and I do not intend to let them go. There is a growing need to think about the accessibility and affordability of broadband and mobile networks for people less well off than the majority, when they are going to rely on them for access to public services and other important aspects of their lives. That issue will not go away, and I hope Ministers will take that point away and think about it.

As for the amendments, we will obviously support them.

--- Later in debate ---

[Lord Bourne of Aberystwyth]

That the Bill do now pass.

[Lord Kennedy of Southwark]

My Lords, briefly, I want again to thank the noble Lord for handling this Bill in his usual courteous manner. It has broad support across the House and I have been very happy to work with the noble Lord and his colleagues on it. I also thank his Bill team—all the names that he mentioned. I have met a number of his officials and they have been helpful and courteous at all times.

Bill passed and returned to the Commons with amendments.