Consideration of Lords amendments
I must draw the House’s attention to the fact that financial privilege is engaged by Lords amendments 1 to 13. If any Lords amendment is agreed to, Mr Speaker will cause the customary entry waiving Commons financial privilege to be entered in the Journal.
I also remind the House that certain of the motions relating to the Lords amendments will be certified as relating exclusively to England and Wales, as set out on the selection list. If the House divides on any certified motion, a double majority will be required for the motion to be passed.
Relief from local non-domestic rates: occupied hereditaments
I beg to move, That this House agrees with Lords amendment 1.
It is an honour to begin my first Bill as a Minister. The Government have been and remain relentless in our pursuit of seeing every home in Britain provided with a decent broadband connection. My right hon. Friend the Member for Wantage (Mr Vaizey) is not in his place, which is a first for a broadband debate in this Chamber in recent times, but thanks to the good work he started, by the end of last year around 95% of premises had superfast broadband.
Under the universal service obligation introduced by this Government, every home in Britain will gain access to a high-speed connection within the next three years. That goal is indispensable to creating a cohesive, modern and economically vibrant Britain, and this Bill is another important step in ensuring we achieve just that.
At the autumn statement in 2016 the Chancellor announced a rate relief scheme for new telecom fibre. The relief will apply for five years, retrospectively from 1 April 2017, and it forms part of a wider package of support for digital infrastructure worth £1.1 billion.
The Bill provides us with the powers needed to introduce the relief scheme, and the relief itself will be introduced by technical regulations. In September 2017 we published detailed draft regulations for consultation. My Department is now considering responses to that consultation and is holding further discussions with stakeholders on the details. I am pleased to report to the House that the responses have been very positive, and I can therefore confirm that we will be ready to introduce the relief scheme shortly after the Bill receives Royal Assent.
As hon. Members will recall, the Bill received wide- spread support when it was considered by the House last year, and that support continued through the debates in the Lords. The Lords amendments make a helpful improvement by ensuring the five-year relief period appears in the Bill, as Opposition parties called for and as welcomed by my ministerial colleague Lord Bourne of Aberystwyth. The amendments will give telecom operators the added assurance that the relief scheme will operate for five years.
The amendments will still allow us to extend the period of the rate relief beyond five years, if we wish, through secondary legislation. Stakeholders wished to see that ability retained in the Bill, and it means that if the Chancellor wants to repeat or extend the relief scheme, we can do so quickly without a further Bill but still with the approval of Parliament. As a tax measure, it will of course be for the Chancellor to decide in the future if such a repetition or extension is desirable.
I commend the amendments to the House.
I congratulate the new Minister on his promotion. I look forward to working with him on matters of common interest such as local government finance, which is a niche subject that does not always attract wide attention, but it is important, and it is important that we see reform. I made that offer to his predecessor, and most of the issues are not partisan at all. They are technocratic but essential, and if there is room for us to work together, we should seek to do so.
I am pleased to see the Bill return having been amended in the Lords, and I am pleased that the Government have received the amendments in the way they have. As we have seen in our debates, this is not necessarily a subject that gets Members excited or that results in mass attendance, but the people who do attend understand how important it is. This financial relief is intended to ensure that as many parts of England and Wales as possible benefit from high-speed fibre broadband. A financial incentive is an important mechanism for achieving some of that.
We were very probing in Committee and, unsurprisingly, we will be looking to see how the Bill works in practice. In particular, can we ensure that this is not just a tax relief for the big providers and that it gets to the smaller providers, too? Can we ensure it has a net effect on the extension of fibre broadband, or will it basically provide a subsidy for installations that would have happened regardless? Have we been able to reach a position where the providers themselves are satisfied that the Bill goes some way towards balancing the revaluation that they met with a degree of concern? I read recently in the Financial Times that BT and Virgin had hinted at the possibility of considering legal action against the revaluation, and I am interested to know the outcome.
Fundamentally, the Bill does two things. First, it rescues an element of the Finance Bill that fell when the election was called. The Bill contained many important reforms that were not contentious or party political but would have allowed local government finance to catch up with the changing times. I encourage the Minister to look at other provisions in the Bill to see what else could be brought forward to benefit local government.
Secondly, the measure proves that the Government can look at financial incentives for business growth, but business rates, of course, cover a wide range of business activity. It has been a long-standing criticism that we have not yet managed to address the impact of the treatment of plant and machinery, for instance, on business investment in new technologies and in new plant and machinery in those premises.
That has also been a concern on our high streets. When banks and building societies close, they are often the only provider of a cash machine in town. When a local convenience store agrees to take on the cash machine, it generally finds itself in a worse position at the end, despite providing a community service, because the turnover at the cashpoint will count towards its rateable value.
I raise those two points because I think there is a demand in industry and the community to ensure that business rates add value to our communities, rather than detract from them. As we embark on Brexit, we need to ensure that our country is in the most robust position possible to attract investment and ensure that we have strong infrastructure.
Finally, I pay tribute to Members in the other place, particularly Lord Kennedy, who spent a great deal of time on the issue and was involved in amendment 2. Let us see whether it makes a difference on the ground, because we pass legislation here not for the sake of it, but to make a material difference to public policy and the community. I will be waiting with interest to see whether this has a net effect on infrastructure investment.
I thank the hon. Member for Oldham West and Royton (Jim McMahon) for his kind words of welcome. He has a long and distinguished track record in local government, and I very much look forward to working with him in the constructive manner he outlined. He made a couple of points that I would like to address briefly. The first point was about who is eligible for the relief. As he knows, it is available for any company deploying new fibre. One of the expectations and hopes for the relief is that it will bring more alternative and smaller providers into the market. We will be watching that closely, as I know he will, because we would all welcome a broader diversity of suppliers.
The hon. Gentleman made a good point about the relief being gamed, and ensuring that it is targeted specifically at new fibre deployments. That was raised in the Commons stages by my right hon. Friend the Member for Wantage (Mr Vaizey), and indeed in the other place by Baroness Harding of Winscombe. I am pleased to tell the hon. Gentleman that, following those exchanges, my Department worked extensively with Gamma Telecom and Ofcom to conduct a detailed study of the potential for the relief to be gamed. The results of that analysis clearly support the conclusion that, based on the evidence available to date, neither the Government nor Ofcom expect the rate relief for new fibre to give rise to gaming in the system. Without going into the details, simply the cost of deploying new fibre, withdrawing dark fibre, opening up the ducts and then reconnecting everything would in almost all cases be more expensive that the saving from business rates.
The hon. Gentleman mentioned other measures in the Local Government Finance Bill and the importance of ensuring that we have a business rates system that supports economic growth. I wholeheartedly agree with him and am keen to use the opportunity for the business rates reset, the revaluation and the fair funding formula to ensure that our financial system does indeed support local authorities in their aspirations to grow their local economies.
I put on record my thanks to Members in the other place and, of course, the officials who brought me up to speed on the legislation incredibly quickly. I also thank my predecessor in this role, my hon. Friend the Member for Nuneaton (Mr Jones), who did so much to get the Bill to the point at which we are in a position to approve it. As I have said, demands on broadband are doubling every couple of years. It is vital that we stay ahead of that need and move quickly to implement the relief scheme that has been promised. I am delighted that we are making good progress on the draft regulations, which will be implemented swiftly. I am grateful to Members in this House and in the other place for the swift progress we have made. This is only one small part of the Government’s strategy, but it is an important one called for by all stakeholders.
Lords amendment 1 agreed to, with Commons financial privilege waived.
Lords amendments 2 to 13 agreed to, with Commons financial privilege waived.