Telecommunications Infrastructure (Relief from Non-Domestic Rates) Bill

Lord Vaizey of Didcot Excerpts

2nd reading: House of Commons
Monday 10th July 2017 Commons Chamber

[Mr Edward Vaizey (Wantage) (Con)]

I am grateful for the chance to speak under your chairmanship for the second time, Madam Deputy Speaker. I refer hon. Members to my entries in the Register of Members’ Financial Interests.

It is a great pleasure to take part in this debate. I thought it might be narrowly-focused, but I have judged, from the interventions on the Minister, that this is clearly going to be yet another talk-fest about the quality of broadband in individual Members’ constituencies. That means I will have to stay for the whole debate to ensure that hon. Members are not too rude about me. I know that they are unswerving in their support of the Minister, but they always liked to have a go at me when I did his job.

It was quite good to hear the Opposition spokesman, the hon. Member for Denton and Reddish (Andrew Gwynne), as he spent very little time actually talking about broadband, which shows how well the job has been done. He finessed his speech to talk widely about the important issue of business rates, but only mentioned broadband briefly. I understand why and respect his reasons because, under the stewardship of the Minister, we have of course seen the most successful rural broadband programme ever devised anywhere in the world. There was meant to be a cheer there. [Hon. Members: “Hear, hear!”] I will give hon. Members their cue points as I go through my speech.

This incredibly successful programme has delivered superfast broadband to 4.5 million premises for a few hundred million pounds. Most of that money, if not all of it, will come back to the Government because the way in which the contracts were constructed means that the money starts to be paid back once take-up passes a certain threshold. I echo the words of my hon. Friend the Member for Faversham and Mid Kent (Helen Whately). She talked about the 20% of premises in her constituency that have superfast broadband. It is very important that we see our cup as half full. The Opposition Chief Whip spends his time thinking his cup is half full at the moment—[Interruption.] Oh, he is the Deputy Chief Whip; well, for me, he is really the Chief Whip. I digress. We hear from people who do not have broadband and are waiting for superfast broadband, and it is absolutely understandable that they are irritated. Those voices obviously grow louder as superfast broadband spreads, and as more people have access to this fantastic technology.

I got involved in the debate about business rates for broadband many years ago. In fact, when I was in opposition, I used to tease the then telecoms Minister, the right hon. Member for East Ham (Stephen Timms). I came up with an Opposition policy to reduce or eliminate business rates on telecoms infrastructure because every provider I went to told me that business rates were a big impediment to investment. I challenged the then Minister, asking him what on earth he was going to do about that, because the Valuation Office Agency was in charge of the business rates and it was the Minister’s job to take the agency by the scruff of the neck and sort the situation out. Of course, when I got into office, I realised that there was absolutely nothing I could do about it. The Valuation Office Agency is independent. It decides the level of business rates and it certainly sees off any Minister who tries to alter its independence or affect its judgment—quite right too.

The other row we had was about the fact that BT apparently gets a better deal on its business rates compared with some of the smaller providers. My understanding is that that is because of a long-standing court case brought by BT. BT also has much more infrastructure in the ground, so it is able to cut a wholesale deal with the Valuation Office Agency, but it is much more difficult for small providers that are getting under way. It is one of those unfortunate things. The point that I am trying to make, in my own rambling fashion, is that the impact of business rates on investment in broadband infrastructure is real. It is one of the factors that people take into account when they are trying to build infrastructure. The Bill is a very welcome measure to address that problem.

Madam Deputy Speaker, I do not know if you have actually read the Bill, but it is the most boring and technical Bill that I have ever read. There are only six clauses. I saw six officials sitting in the Box and wondered whether each had been given a clause, because the chance of making it to the end of drafting even one clause is almost impossible. I do not know whether any of my hon. Friends suffer from insomnia under the stress of doing this job. If so, I strongly recommend that they take the Bill home; they will be sound asleep by halfway through clause 1. However, I understand the thrust of the Bill, which aims to encourage new investment in broadband infrastructure by suspending the levying of business rates. That is the best way to do it, and the Government have calculated that something like £60 million of savings could be made.

I echo what the Minister said at the Dispatch Box. I hope that all new infrastructure providers—people have mentioned companies such as Gigaclear and CityFibre—will take advantage of this. The Bill is aimed squarely at them to remove a financial barrier to further investment. The Government are trying to move to the next phase of broadband roll-out. The key task of the previous Parliament was to get workable broadband with speeds of about 24 megabits to as many people as possible. That has pretty much been completed. I understand that, under the universal service obligation, people in the last 5% of premises might get lower, but still workable, speeds. We are starting to build the future-proofed infrastructure to deliver fast and reliable broadband at speeds of above 30 megabits. Those are the kinds of broadband speeds that we will be able to dial up as more people make use of the technology. We all know—this does not need to be rehearsed—how much technology and data are now used, and the kind of bandwidth needed for the average home with two teenagers and parents watching 4K content, let alone for somewhere with business needs.

Planning is a much bigger impediment than business rates. A lot of people forget that. They think it is easy to build this infrastructure, but it is not at all. One comes across far too many cases of councils not being co-ordinated. There are cases of broadband providers having to go to five different council departments to get permission for way leaves, to dig up the highway and all the other permissions they need to build this infrastructure. We really need to get to grips with this in some shape or fashion.

In the spirit of co-operation that the Prime Minister announced this morning, let me suggest that the Labour Front Benchers talk to the Mayor of London. There must be an opportunity for him to set up a broadband taskforce to get all the London boroughs to co-ordinate their planning. I have heard of councils—it does not really matter what political colour they are—not granting way leaves to providers who wanted to provide broadband for social housing in London. I have heard of councils that did not want the green boxes on their pavements because they did not like the design. I have come across councils that refused to let broadband providers go ahead with future work, because they did not clear up after their previous work. Now, I understand councils’ irritation, but they are still holding things back. It is an incredibly dull point, but there must be an opportunity to co-ordinate the planning functions of the London boroughs, as well as of councils across the country.

[Michael Tomlinson]

May I disagree vigorously with my right hon. Friend by saying that it is not a boring point? It is actually very important that these companies clear up after themselves, because it causes reputational damage when they try to deliver superfast broadband and leave a mess behind. That does cause concern to residents, and it has caused concern in my constituency. He may say that it is a bit of a dull point, but it is important for companies to get things right so that they can be encouraged to do more in future.

[Mr Vaizey]

I thank my hon. Friend for that point. In fact, although I welcome Virgin Media’s investment in cable in Didcot, the company has irritated quite a few of my constituents on the Ladygrove estate, so he is right that companies should clear up after themselves. I suppose I did not make myself entirely clear; my point was that, while councils should hold companies to account, their retribution should not be, “You can’t do any more work,” because they would be punishing constituents for companies’ past transgression.

Clearly, the Government want to encourage full fibre—fibre to the premises. It is true that we are falling behind some other countries. Spain, for example, is well advanced, but that is an historical advantage, because the infrastructure was put in 30 years ago, with extraordinary foresight. One also has to remember the topography of the built environment, because the more apartment blocks—as opposed to spread-out domestic homes—there are, the easier it is to deliver broadband quickly.

One should also not necessarily be seduced by statistics. Members might see, for example, that France is ahead of us in terms of fibre to the premises, but that fibre is in the same place as fibre to the cabinet, so very few people take it up, and a lot of people would say that it is wasted investment. The incremental approach taken in the UK so far—of getting universal coverage for superfast broadband and then moving on to fibre to the premises—is the right approach, because it keeps pace with customer demand. That is what has to happen.

The good news about fibre to the premises is that the cost of investment is coming down rapidly. TalkTalk has conducted trials in York, and what has happened is telling. The company has got the cost of connecting each home down to a few hundred pounds—£200, £300 or £400, I think. Also, people now talk about the impact on the community—about whether their house is in the green zone, which is where the fibre to the premises is, and people want to be there. Interestingly, customers do not actually care whether they can access 1 gigabit; what they get by having fibre to the premises is an absolutely 100% reliable service, whereas even those of us who have signed up to superfast broadband know that the service can drop out.

This is a very important and welcome Bill. I would simply ask the Minister when he sums up—I do not know whether it will be the Secretary of State or my right hon. Friend the Minister for Digital—to talk a little about whether the Government have considered how this relief impacts on mobile infrastructure. The roll-out of 4G in this country has been very successful, and we should not forget that it has all been done through private investment. When we rail against the mobile operators, we have to remember that they pay us—the taxpayers—by paying in to the Treasury coffers for spectrum, and they then build out their networks, effectively with their own capital. However, they come across the most bizarre planning issues all the time, and although the Minister talked about the electronic communications code, which will help to make mobile planning easier, we could perhaps hear about whether the Bill will apply to the fibre that goes from the masts back to the cabinets, or whether it could be amended so that mobile masts were free from whatever business rates these companies pay.

I would also like to hear how the Bill will encourage the roll-out of 5G, which will potentially transform everything. What we need are small cells dotted throughout the urban environment. The company Arqiva is already trialling a 5G network with its own spectrum. Again, we potentially need a rethink on planning to make it much easier for mobile companies to roll out these small cells. Given the dense coverage companies need, requiring them to get planning permission for these small cells will be a real hindrance to the fast roll-out of 5G.

As I made my remarks, I could tell that I had the full attention of the House. I noticed one or two yawns and a few slightly irritated looks as people thought, “When is this guy going to finish so that I can make my speech about our rotten broadband and get it in my brilliant local paper?” Well, the time is now, because I have finished.

--- Later in debate ---

[Simon Hoare (North Dorset) (Con)]

I suppose I should apologise to the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Nuneaton (Mr Jones) because the last time I was called to speak in a debate with no time limit, the subject was the local government finance settlement in 2016; I think that his scars have only just about healed. I was starting to take it a bit personally: every time I got called to speak, a new time limit was suddenly imposed, usually shorter than that which had gone before. My neighbour, my hon. Friend the Member for Mid Dorset and North Poole (Michael Tomlinson), has suggested that one is imposed pre-emptively on my getting up to speak, but I hope, Madam Deputy Speaker, that you will resist his cri de coeur.

I am not going to talk with the authority of my right hon. Friend the Member for Wantage (Mr Vaizey), because he speaks with great experience about these matters, but I want to make some points. First, I very much welcome this Bill, particularly the fact that it appears to be the result of a collaboration between three important Government Departments—the Department for Communities and Local Government, the Department for Digital, Culture, Media and Sport, and the Treasury. That sort of joined-up working of three Departments coming together to identify a problem and create a solution is to be welcomed, and it signposts a very-likely-successful governmental modus operandi for the five years of a Conservative Government that we have ahead of us.

I find myself almost reaching for the smelling salts and some form of remedial medication in agreeing with the Labour Front Bench spokesman, the hon. Member for Denton and Reddish (Andrew Gwynne), although I would probably approach this in a slightly different way. I welcome the proposals in the Bill to help speed up and underscore the importance of the delivery of broadband. In relation to local government, particularly in small shire districts that are always seeking to be more efficient, I hope—indeed, I know—that my hon. Friend the DCLG Minister will be taking the reduction in the funding stream of non-domestic rates to a local authority into consideration as he evolves the new funding settlement for our local councils, which do so much good work to deliver these services. I thought that the hon. Member for Denton and Reddish made that point well, and I am sure it will have been heard on both sides of the House. The delivery of broadband and the delivery of those local council services are important, very often, to exactly the same constituents who need both.

I hope that this Bill and the proposed financial incentive, if that is the correct word, will act as a spur to existing providers to deliver on the notspots that are very prevalent, particularly, though not exclusively, in our rural areas, where the economic case for delivery is either non-existent or marginal, or where, as a result of further economic investigation, it has fallen outwith the confines and constraints of the initial contract usually agreed between a county council—in the case of Dorset, as with so many—and British Telecom.

My right hon. Friend the Member for Wantage spoke with huge authority and experience, and I do not demur from anything that he said. My right hon. Friend the Minister for Digital talked about the evolving technologies that mean that this will not just be about wire, copper, fibre and so on, as fixed wireless and satellite are playing a part. This has been a long-running debate. I look to my hon. Friend the Member for Boston and Skegness (Matt Warman)—he does not look to me, but I look to him—who has done so much to promote the delivery of rural broadband: so much, in fact, that he has been rewarded by being made a PPS in the Department, which means that he can no longer speak on the subject. This is clearly the route to promotion: talk with authority and knowledge on a subject and then get zipped up and silenced for many years to come. Perhaps that is why I got moved from DEFRA to the Home Office—I do not know.

This subject has knocked around in public and political debate and in the media for a long time, so it is worth while, with your indulgence, Madam Deputy Speaker, pausing for a few moments to remind ourselves of the most enormous strides made in broadband provision for all our constituents and constituencies, urban and rural. Yesterday afternoon, I ordered something online—I am going to tease the House by not saying what the object was—to be delivered to my house tomorrow morning. The sketch writers, and indeed anybody else, may wish to run some sort of book on what it was. All I will say is that it is not something I would have guessed one could have ordered online even three or four years ago. My hon. Friend the Member for Witney (Robert Courts) is looking even more perplexed than usual. I was struck by the huge change that this technology has made, and this Bill helps to underpin its delivery.

From a rural point of view—and what could be more rural than North Dorset?—it is worth re-amplifying the benefits that are derived from fast and superfast broadband and that will be further helped by the contents of this Bill. It was a pleasure to follow the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), who was right to point out, as I do, the huge unlocking of tourism potential in the promotion of hotel rooms, rooms in pubs, visitor attractions and the like, and in interactive tourist information centres in areas where local authorities may have withdrawn from face-to-face, over-the-counter visitor services. It will be absolutely crucial for the farmer in my constituency who is trying to buy or sell stock or make their submission to the Rural Payments Agency to have fast, reliable broadband of a speed and a regularity of service that no longer drops off just as they reach that crucial moment of hitting “send” or loading up that large map.

The issue is also crucial for small and medium-sized businesses. I am thinking of two in my constituency, both of which happen to be based in a small market town called Sturminster Newton: one is Crowdcomms and the other is Harts. Crowdcomms provides online and interactive platforms for large international conferences. It has offices based in Seattle, Sydney, and Sturminster Newton—it is there because the town has 4G.

Harts of Sturminster is one of those wonderful shops, Madam Deputy Speaker, that I know you will cherish and love as I do. It is the sort of shop that you walk into and do not say, “Do you sell?”, but merely ask, “Where can I find?”, because it sells absolutely everything, from powdered egg, to blackout curtains, to knicker elastic and sock gaiters—it is all there. You require none of those things, Madam Deputy Speaker. [Interruption.] My right hon. Friend the Member for Wantage says that he now knows what I was ordering, but he would be wrong on all counts.

The shop makes its largest sales from its cookware department online. This is in a small market town that, until a few years ago, had as its main centre of industry the largest calf and livestock—particularly cattle—market in the whole of the south-west. Broadband is transforming local rural economies, creating good-quality, high-tech jobs. It also helps—we forget this at our peril—with the delivery of a whole raft of other things in rural social life, including for small villages that are geographically disconnected and not particularly well served by rural public transport.

We now have faster broadband service provision than has hitherto been the case, which helps with promoting charitable and fundraising events. I remember the frustration on my wife’s face as she tried to download posters for events she was organising for the St Gregory’s parents, teachers and friends association, but that has been transformed by the faster speed. Everybody in North Dorset now knows—as does everybody who reads the Official Report—that St Gregory’s summer sizzler event will take place in Marnhull this Friday. Everybody is invited. It is a huge fundraising event for our local school, the promotion of which is better enabled by broadband.

[Mr Vaizey]

I know more about my hon. Friend’s life now than I did five minutes ago. The entire House still wants him to reveal what he ordered online last week that he could not have ordered four years ago. That is a terrible omission from the tour of his domestic online arrangements.

[Simon Hoare]

I am going to tantalise the House still further by telling my right hon. Friend that it was inflatable and made of rubber. Before you rule me out of order, Madam Deputy Speaker, I will explain that it is a small, two-man dingy for my elder daughter and me to do a little bit of rowing and mackerel fishing during our summer holidays. Right hon. and hon. Friends may be pleased, disappointed, depressed or made despondent by that explanation.

Telecommunications Infrastructure (Relief from Non-Domestic Rates) Bill

Lord Vaizey of Didcot Excerpts

3rd reading: House of Commons & Committee: 1st sitting: House of Commons & Report stage: House of Commons
Tuesday 5th September 2017 Commons Chamber

[The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Marcus Jones)]

The Government are committed to supporting full-fibre telecommunication infrastructure and the roll-out of 5G. This will deliver a step change in the speed, service quality and reliability of broadband and mobile services. Independent research suggests that increased broadband speed alone could add £17 billion to UK output by 2024, so this is a vital measure for the whole economy. The Bill will provide the powers we need to implement an important part of that strategy.

At the 2016 autumn statement, the Government announced 100% rate relief for new full-fibre infrastructure in England. The clauses in the Bill will allow us to deliver that relief with retrospective effect to 1 April 2017. We have already published draft regulations that illustrate how we will use these powers to implement the relief. The draft regulations have been prepared in consultation with telecoms experts in the Government, Ofcom and telecoms providers. Business rates and telecoms are technical fields so there is considerable scope for complexity where they meet. However, I am glad to say that through our work with the sector, we believe that we have found a clear approach to allow the valuation officer to identify, capture and quantify new fibre.

[Mr Edward Vaizey (Wantage) (Con)]

I refer the Committee to my entry in the Register of Members’ Financial Interests. Is my hon. Friend aware of some concerns in the telecoms sector that the tax relief could be gamed? People could switch off lit fibre and light dark fibre in order to take advantage of the tax relief. Some have suggested that a better way of implementing may be simply to limit the quantum of business rates paid by telecoms companies. Will my hon. Friend comment on those concerns, which I have heard from a number of providers?

[Mr Jones]

I understand the concerns raised by my right hon. Friend, and I have great respect for his considerable knowledge of the matter. I reassure him and the various bodies that hold concerns that the relief is not a measure to support the relighting of fibre that has been turned off. Indeed, it is to support the laying of new fibre in the ground. This technical matter is laid out in the draft regulations and explained in the accompanying consultation document published by my Department last week. Consultation will ensure that the proposal reaches the right audience in the telecoms sector. With business rates experts, we will ensure that the relief will work as planned. The consultation will also allow us to move quickly to implement the relief once the Bill has passed and ensure that support is available for new fibre.

[Mr Jones]

My hon. Friend is right that this is an investment in the infrastructure of the country. Indeed, it is a relief that is time-limited for five years. After that five-year period, that fibre will attract its own income into the business rates pool, whether on the local list or on the central list.

[Mr Vaizey]

I hope the Minister will forgive me for interrupting his eloquent speech, but I was spurred into action by my hon. Friend the Member for North West Hampshire (Kit Malthouse), who is a newly elected member of the Treasury Committee—I congratulate him—and who displays the forensic skill we will see in many hearings in months to come. It behoves me to clarify that it is possible under the current regulations for a telecoms provider simply to lay new fibre in existing ducts, turn it on and take advantage of the tax relief, even though there is already fibre in those ducts. That would be seen as gaming the system—taking advantage of the tax reliefs without building the new infrastructure my hon. Friend the Member for North West Hampshire has campaigned for so vigorously. That is simply the warning light that I put up, and it may be that my hon. Friend will drive future Treasury Committee hearings towards that subject.

[Mr Jones]

By definition, full fibre is fibre that goes all the way from an exchange to the particular business or residential property that it individually serves. Therefore, by definition, even if an existing set of ducting was used, the new fibre would be an expansion of the network, because it would serve a different property from the current fibre. I therefore hope that my right hon. Friend is reassured.

--- Later in debate ---

[Mr Jones]

I thank my hon. Friend for that comment. He is absolutely right that it is extremely important that new housing developments serve well the people who purchase the properties in relation to superfast broadband. He is right that it is a requirement for developments of under 30 dwellings to have a broadband connection and for developments of over 30 properties to have a superfast broadband connection. In bringing forward those requirements, which started this January, the Government had to make a very challenging decision in getting the balance right between making sure that people are properly served with the latest technology and that we build the homes required to deal with the housing shortage in our country.

[Mr Vaizey]

I am very grateful to hear my hon. Friend talk about these issues. In my constituency, the developer Linden Homes built a housing development with houses selling for hundreds of thousands of pounds, and for the mere price of £6,000 to deliver broadband, refused to stump up that money. It is this kind of behaviour by developers that brings them into disrepute. I congratulate the Government on making great progress, because no new home should be built without superfast broadband.

[Mr Jones]

My right hon. Friend is quite right. Developers who are not necessarily compelled to provide superfast broadband should think to themselves how the installation of superfast broadband could become a selling point for the property. The provision of superfast broadband is becoming more and more important, particularly as more and more people work from home.