Telecommunications Infrastructure (Relief from Non-Domestic Rates) Bill

Debate between Michael Tomlinson and Ranil Jayawardena

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

[Mr Ranil Jayawardena (North East Hampshire) (Con)]

It is a pleasure to follow my hon. Friend the Member for Aldridge-Brownhills (Wendy Morton), who addressed the substance of this important Bill with her customary attention to detail and her personal reflections on the progress that the internet has made. The change it has made to all our lives has been enormously valuable.

I will address the core of the Bill first, before explaining why it is so important. It is excellent that the Bill will provide for 100% business rates relief for full fibre infrastructure for a five-year period from 1 April 2017, and it is important that that is backdated so that it truly supports telecommunications companies that invest in their fibre network. It is also important that the Government will cover the full costs of that relief. As a former councillor, I know the impact that Government reliefs can have on local government, and it is important to note that the Government have said here that, because of the measure’s importance, they will meet the full cost of the relief.

I am grateful to my hon. Friends the Members for Aldridge-Brownhills and for Ochil and South Perthshire (Luke Graham) for mentioning the impact on Scotland. The Bill, of course, has territorial extent to England and Wales, but the Barnett formula applies, so it is important that we recognise how it affects the whole United Kingdom.

As we have heard, constituencies vary across the UK, from tightly packed urban settings to sparser rural settings. Superfast broadband, based on part-fibre, part-copper technology as today, is now available to 93% of premises, which is good progress. My hon. Friend the Member for Aldridge-Brownhills spoke about the progress of the internet, and I recall having a dial-up modem that would beep away before connecting at perhaps 28 kilobits per second—FaceTime or Skype would have been inconceivable in those days. We have made huge progress, and 93% of premises being able to access the part-copper, part-fibre service is good news, but the proposed relief provides—the Minister will correct me if I am wrong—£60 million-worth of support to telecoms companies that invest in their fibre network by installing new fibre lines.

Virgin Media is now part of Liberty Global, which, to deviate slightly, shows the importance of having a competitive corporation tax regime. As has already been noted, a competitive corporation tax regime means a company such as Liberty has invested in Britain and bought Virgin Media, and is now taking it forward. I would have thought that the Bill will boost Virgin Media’s £3 billion “project lightning” network expansion, as well as plans by Openreach, a subsidiary of BT, to increase its investment in fibre optic. The Bill will also help smaller alternative players, which my hon. Friend the Member for North West Hampshire (Kit Malthouse) said were priced out of the market in the past due to the impact of business rates and other competitive and regulatory pressures.

I welcome the Government’s aim, through this and other measures, to provide superfast broadband speeds of 24 megabits per second, or more, for at least 95% of the United Kingdom, which is progress beyond what we have achieved to date, but we should go further. That is why I am pleased that the Digital Economy Act 2017 provides for every household to have a legal right to request a fast broadband connection.

[Michael Tomlinson]

I do not apologise for reinforcing the important point, in case Opposition Members say it has already been made, that 95% coverage still means that 5% of our constituents are left out, so will my hon. Friend join me in pressing the Government to ensure that the service is truly universal? Although we welcome the measures set out in the Bill, we are still speaking up for our constituents, the remaining 5%, who are waiting.

[Mr Jayawardena]

As ever, my hon. Friend makes an important and cogent point. He is right to champion the interests of all the United Kingdom, which is why the universal service obligation is so important. The obligation, I am sure the Minister will agree, is only the first step towards ensuring that Britain is the most competitive country and is the place where businesses based elsewhere in the world want to do business. As my hon. Friend the Member for Aldridge-Brownhills also noted, that is even more important in a post-Brexit world. We must ensure that we are absolutely match fit and ready to go in the next century, which is why it is important that every household has a legal right to request a fast broadband connection.

As has become customary in our Wednesday exchanges, I will reference points raised by my constituents. This is not a maiden speech, but Hazeley Lea, a lovely part of my constituency, gets less than half a megabit per second, which is totally unacceptable. Worse, residents say that they have too much downtime because the current connection—part-copper, part-fibre—is unreliable. It is not just homes, individuals and families but diversified rural businesses that are affected. One constituent says:

“Just yesterday, I saw a third visit this week by Openreach to my immediate neighbour. I took the opportunity to talk to the engineer on site who confirmed there was a major problem perhaps with old underground cabling to the area simply giving up. He also confirmed that none of the line managers are likely to take this further because of the costs to BT to supply new cabling.”

That demonstrates that what the Government are trying to do is right. Not only are they addressing the old underground cabling that is simply giving up—the cabling was introduced many, many years ago for technologies that are now old-fashioned, as my hon. Friend the Member for Faversham and Mid Kent (Helen Whately) said—but they are tackling the costs that apply to businesses through business rates and other regulatory matters. The costs, particularly business rates, have been prohibitive in helping businesses to invest.

I was on a British-American Parliamentary Group visit to Chattanooga, Tennessee, where the weather was almost as good as it has been here recently. Importantly, I found out that a £70 million grant had got local people—the Chattanooga area has a population of just over 500,000—not 24 megabits per second, which is the UK Government’s measure of success in this phase of superfast broadband, but 1 gigabit per second through providing fibre to the premises, not just fibre to the cabinet. That is what the Government are trying to do, and it is the way forward.

Coming back across the pond to Stratfield Saye, the seat of the Duke of Wellington, the exchange there is a problem because, at present, the broadband connection given to my constituents, and undoubtedly to the Duke of Wellington, comes from Mortimer across the county boundary in Berkshire, instead of from Bramley in my constituency and the county of Hampshire. Naturally, Bramley is much closer to Stratfield Saye than Mortimer will ever be. Indeed, the length of cabling required from the exchange to the home would be cut in half if the connection were provided from Bramley. That shows the lack of flexibility in the system. We need to ensure that there is the right technology in the right places to serve people in the 21st century, not the convenience of telecommunications operators from the 20th century.

Some people in Bramley are nearer Chineham in the constituency of my right hon. Friend the Member for Basingstoke (Mrs Miller), but none the less they are connected by cables from Bramley. Those cables are actually steel, not copper, because apparently when the cables were installed by BT, then state-owned—I do not know whether the Labour party plans to renationalise BT, too—[Interruption.] The hon. Member for Oldham West and Royton (Jim McMahon) says it is a possibility, so perhaps he would like to clarify the matter at the Dispatch Box. The point I was making was that BT simply said, “It is all right, we don’t have to face any competition. We’ll just shove some steel cabling in there and it doesn’t matter what happens to local people.” Of course when we were talking about telephone and analogue technology, that was fine, but we are in this new digital age now and we need to make sure people have the right technology to their doorstep. That is why we must tackle this head-on.

I do not want to be totally critical of BT, as it has done a lot of good work in enabling a lot of cabinets and coming up with flexibility in the way those things are delivered. For example, in the parish of Ellisfield in my constituency BT came up with a match funding scheme that said, “If the community can raise some of the money, we will put in the other half.” That is a very innovative scheme for a community so rural that it made this commercially unviable to deliver. But therein lies the problem: no one should be penalised for accessing what is now a utility, as my hon. Friend the Member for Cannock Chase (Amanda Milling) rightly said—people should be able to expect this. Charging people £558 per dwelling not only is on the cusp of what BT might ordinarily provide as a commercial arrangement, but it was penalising residents in rural areas for living where they do.

[Michael Tomlinson]

May I take my hon. Friend from Hampshire to Dorset and endorse what he is saying? He is advocating greater flexibility within BT and saying that although some good work is being done, more could and should be done. Does he agree that we need flexibility across the piece, not just in Hampshire and his beautiful constituency, so that where difficult rural issues arise, sensible solutions are found?

[Mr Jayawardena]

My hon. Friend makes an important further contribution to this debate and is right in what he says. Let me take him back to the further remarks from my neighbour, my hon. Friend the Member for North West Hampshire, who pointed out that Brexit provides an opportunity, because EU state aid legislation got in the way of allowing local communities to come up with solutions. When I was a local councillor, we introduced CITI—the communications improvement and technology infrastructure fund—which was a new way of providing match funding from the borough council, but it was then ruled out of order because it was deemed “state aid”. Not only had we, through careful management, kept council tax down and not increased it, by using the excellent initiatives from this Government on match funding and helping local councils keep council tax down, but the money that we had saved and that we wanted to put to good use for the residents of Basingstoke and Deane in north Hampshire could not be used because of state aid rules. So we must tackle these things and we must deliver those solutions for local people.

[Mr Jayawardena]

I thank my hon. Friend for that point. He is right: this is all part of the competitive nature that we need to try to ensure is supported. We need to provide local solutions to local problems. Mr Deputy Speaker, I am sure you are aware that Hampshire County Council has been working to go beyond 96% connectivity—[Interruption.] If you were not aware before, you are now. That could be met if we allowed local firms to meet that 4% shortfall. If we allowed local firms to bid for further funding from the state, unhindered by EU state aid rules—indeed, instead, further supported by these business rates initiatives—we would close that 4% gap without a shadow of a doubt.

Let me turn from BT, which has had a great benefit from the current business rate arrangements, to Virgin Media, which should benefit from this. I outlined that earlier, but it is important to talk a little more about it to outline the importance of the issue to a British company based in my constituency; it has its corporate headquarters in Hook. It has run a competition, through its own commercial judgment, to supercharge local communities. Although the company has not yet supercharged Hook, which is where it is based—I hope it is listening and will do so shortly—it has agreed to supercharge Hartley Wintney and Phoenix Green, just down the road. That means that those places will have ultrafast fibre to the premises very shortly, which is good news because residents there will get a head start on what the Government aspire for the whole of the country to receive. Those residents will receive fibre to the premises, which means they will be eligible to get the 1 gigabit per second telecommunications connectivity that is critical for the future.

Businesses will benefit as well—this is not confined to households. In Yateley in my constituency, Samsung has its European quality control centre. If we want those technical businesses to be based in constituencies such as mine, we need to ensure they have the connectivity to match. Samsung being the technical giant that it is, it needs that more than perhaps anyone else. It is therefore brilliant news to hear that these business rates initiatives will be introduced.

This is not just about the giants; it is also about the smaller businesses. Fleet, the biggest town in my constituency, has a business called CV-Library. It was set up in 2000, in the dotcom boom era. Although that was a very different internet era, that remains an internet business and it is very successful. It was set up by a young carpet fitter who was looking for work and it is now the UK’s third biggest jobs board. Of course it has thrived on the great number of new jobs created under the economic management of this Government, and it is one of the top 500 most visited websites in the UK. So we are talking about a well reputed website.

That small business has come a long way, with Resume-Library allowing it to operate in the United States, and it is now thriving as an international business. Again, as with Samsung, if we want such businesses to be based outside the main towns and cities—outside London and across the country, ensuring that we create an economy of the nations and regions, not just of London —we need connectivity that serves businesses such as CV-Library and allows them to thrive and to connect with the world, as CV-Library has done with Resume-Library and will, I am sure, do in future. Incidentally, it was the first jobs website to allow people to apply for jobs on a mobile phone. I shall come back to that important point in a moment.

One resident in Bramley told me that he found it

“incredible that we are surrounded by much better services and yet it appears that we are unable to access these.”

People such as that resident from Bramley are used to going on their mobile phone and connecting to 4G, yet in their house they cannot connect to a decent fixed-broadband service. He also said:

“I have been told by BT that it is not possible to switch exchanges”

from one to another

“as this is ‘too difficult’”.

In the mobile age, when people can go about their daily business while they walk to work, it is not acceptable for something to be simply too difficult for a monopoly provider. We must do better, and the Government are.

It is important that the 100% business rates relief is focused on encouraging the full-fibre initiative and getting that to the premises. Indeed, the digital infrastructure investment fund has also been designed as an incentive. Traditionally, it has been difficult to finance digital infrastructure investment in Britain because the industry has been relatively young. The lack of certainty about future demand has made investment difficult to secure. I hope that the digital infrastructure investment fund, along with business rates initiatives such as the one in the Bill, will ignite interest, so that private finance will invest in this important sector. Digital infrastructure is a critical part of our infrastructure, like roads and rail, so I hope that the private interest we really need will be drawn in. As my hon. Friend the Member for Witney (Robert Courts) mentioned, the drawing in of private finance will make the market more competitive and allow local solutions to rise up and meet local people’s needs.

Full-fibre networks are so much more resilient than the traditional copper-wire networks. I referred to my constituent in Hazeley Lea who told me that the copper cabling was failing. That is a problem not only for Hazeley Lea and North East Hampshire, but for the whole country, because the internet is delivered to most homes in Britain by underground copper cables. My hon. Friend the Member for Aldridge-Brownhills referred to the green cabinets that people see springing up, and from which bushes are cut away so that they can be enabled for fibre, but the final part of the service is still delivered by copper. The wires can be degraded by distance, as has been the case for my constituents in Stratfield Saye and Hazeley Lea; indeed, the constituents in Bramley who live near Chineham have the problem of the long distance from the exchange in Bramley.

Full-fibre networks seek to run the fibre connections straight to the doors of homes or businesses. I make one plea to the Government, because there is still no capability in planning legislation and the national planning policy framework for local councils to mandate fibre to the premises, which would solve the problem referred to by my hon. Friend the Member for Cannock Chase. They can request it, but the only requirement they can make is that there be a telephone connection to a home. I have been told that, if it is done at scale, particularly on larger developments, the cost difference is marginal, if existent at all. The Government could easily remove that difficulty for councils to mandate fibre, and it would be transformational in the new homes that the Government aspire to build throughout the whole United Kingdom.

[Michael Tomlinson]

My hon. Friend mentioned the fact that copper wires can be degraded by age and distance, but volume of traffic is also a problem. Does he agree that when, on a Saturday night, for example, a popular programme is on or more people want to be streaming or gaming, the whole system slows down and grinds to a halt? That is also part of the degradation process.

[Mr Jayawardena]

My hon. Friend is absolutely right that copper’s capacity is insufficient for today’s challenges. We must make sure that we deal with not only today’s challenges but tomorrow’s, so we must ensure that there is more fibre than we even need today. We do not want to end up, perhaps in five or 10 years—not a million miles away—with the fibre we install today not being good enough for the challenges of tomorrow.

In turning to the challenges of tomorrow, it is important to consider mobile communication, which is enabled by the fibre broadband that links the mobile masts. Fibre provides the connectivity, via the masts, to users who perhaps want to do their banking on their phones, as several Members have said. Deploying mobile infrastructure remains challenging at times, particularly in remote locations or among difficult topography. It is important for us to consider the viability of such initiatives as we move from 4G to 5G, and as we do so, perhaps we could find a remedy for those communities that have not even moved to 3G or 4G. We must ensure that those initiatives are viable, so that no one is left behind. Mobile telecommunications can be an excellent way of providing mobile broadband—fast broadband—to rural communities, instead of running fibre to those rural homes. It could be that part of the solution, part of dealing with the final 4%, is to ensure that fibre is run to mobile masts, which are then accessible to those rural communities.

Reducing operating costs is critical to ensure that the potential economic viability of these sites is considered properly. I am sure that the Government will consider that in the deliberation that they will doubtless have in the time ahead. Targeted business rates relief to enable fibre cabling to be rolled out to those hard-to-reach areas would be particularly helpful in notspots that have been badly served by telecoms to date and could be much better served by telecoms in future.

It is important to prioritise sites such as railways and motorways, as mentioned by my hon. Friends the Members for Faversham and Mid Kent (Helen Whately) and for Chelmsford (Vicky Ford). They demonstrated that to have connected commuters, which was the term used by my hon. Friend the Member for Chelmsford, we need fibre to be run alongside railways.