Committee (2nd Day)
Relevant document: 4th Report from the Delegated Powers Committee
Clause 60: Upgrading and sharing of apparatus installed before 29 December 2003
Amendments 17A and 17B not moved.
18: Clause 60, page 45, line 22, at end insert—
“(5) In paragraph 74 (power to fly lines), after sub-paragraph (4) insert—“(5) References in this paragraph to installing lines include carrying out works to install, maintain and keep such lines and other reasonably associated apparatus.””
My Lords, if my noble friend Lady Harding is not in the Chamber—I was not expecting to do this—I will move the amendment on her behalf. I look to other noble Lords whose names are on this amendment to introduce it more comprehensively than I can. I just want to get this debate going, because I know that there is broad support across the Chamber for Amendment 18. Noble Lords may remember that I expressed my support on this matter when it was referred to at Second Reading, because it is of benefit to all telecoms operators. With that, I beg to move.
My Lords, I apologise. I rise to speak to Amendment 18 in my name, and I thank my noble friend Lord Vaizey, the noble Baroness, Lady Merron, and the noble Lord, Lord Fox, for putting their names to it. I apologise—I am slightly breathless, as the noble Lord, Lord Fox, gave us a little bit of disinformation about today’s Order Paper.
Many apologies. I also thank my noble friend Lady Stowell, who I was not expecting to see, but who has been extremely helpful already this afternoon. I promise I will be brief. The aim of this amendment is to address an issue that other noble Lords and I raised on Second Reading: ensuring that the Bill enables the sharing of pre-2017 poles on private land without requiring an additional wayleave, just as it does for ducts on private land. This may sound very detailed—it is—but will substantially speed up the rollout of full-fibre broadband, on which we are all agreed.
There are an estimated 1 million-plus telegraph poles on private land. Access to them is particularly important in accelerating fibre rollout in rural England and urban Scotland. As with ducts, these poles are regulated under Ofcom’s PIA mechanism. That means that any operator is able to access those poles, so extending the provision to pre-2017 poles on private land would allow all operators to speed up their rollout equally. Without this, operators will have to dig up streets or put up new poles, which will slow down the rollout in the very parts of the country that suffer some of the slowest broadband speeds, based on copper.
There is clear consensus across the industry that the Bill needs to make this possible. I understand that the Digital Infrastructure Minister recently received a letter from all the major operators and trade bodies, asking that this issue be resolved and clearly stating the public benefit that doing so would bring. There is cross-party support for the amendment, and at Second Reading my noble friend the Minister was clear that he was keen to look into the matter very closely. However, as drafted, the Bill does not actually solve the problem. There is no explicit right in the Bill to access the pole or install equipment on it. My amendment is relatively simple and seeks to set that straight. It is limited in scope.
By extending the rights granted under the existing paragraph 74 of the code, these powers would be a code right and therefore apply equally to all operators. That is a really important principle in maintaining the Government’s pro-competition policy. By explicitly including the right to carry out
“works to install, maintain and keep such lines and other reasonably associated apparatus”,
this amendment ensures that there is a right for limited works only and apparatus that is associated only with flying lines between poles. It will not allow large, unsightly or unassociated apparatus to be put on the poles, so there would be very limited visual impact. In fact, it is important to remember that technology is getting smaller all the time; a number of these telegraph poles already have equipment on them, so this would most probably reduce the visual impact rather than increase it.
This amendment also protects the rights of landowners. It grants limited additional rights for operators on how they use the poles. It does not give operators additional rights to get to the pole in people’s back gardens. Landowners would still need to give their consent—that could be a simple verbal agreement—to allow an engineer to enter the property. This amendment does not intend to change that.
With over 1 million poles on private land today, this small and straightforward amendment would significantly increase the rollout of full fibre, on which we all agree. I ask my noble friend to tell us that he agrees that the Bill must be amended to do this. I am not precious about the specific wording or the exact amendment. I understand that DCMS lawyers have some concerns about whether the wording achieves our aim of going up the pole and putting the necessary equipment on it, but I have not seen any alternative proposals. I hope my noble friend will take this amendment in the constructive way in which it is intended. If he has concerns about the specific wording, I hope we will be able to work together between Committee and Report to bring back an amendment that delivers the outcome that I believe we all agree on.
My Lords, a cup of tea lies gently cooling in the tea room, unpaid for as I sprinted to move my amendment—and failed to arrive in time. It would never do for me to blame the Liberal Democrats for the mess that I find myself in; I take entire responsibility for not following with due care the moving of the Statement on the Metropolitan Police. Although the finely crafted Amendments 17A and 17B will not be debated, I have the chance to address at least some of the issues they raise in my response to my noble friend Lady Harding’s excellent exposition of Amendment 18.
We are talking about the ability to upgrade telecoms infrastructure. It is worth taking a step back to think about what the Bill is about in its focus on telecoms infrastructure and reform of the Electronic Communications Code. As I pointed out at Second Reading, when I was a Minister I had the opportunity to change the Electronic Communications Code, and I freely admit that I did so after extensive representations from infrastructure providers of all kinds who made the point that the rents that they were being charged by landowners, both in the countryside and on buildings, were extremely high and were affecting their ability to invest in infrastructure. The time had come to redress the balance so that the rents charged were proportionate to the investment being made in infrastructure. However, in the Bill we are trying to revise it further so that the infrastructure can be upgraded much more easily. We find ourselves in a slightly invidious position where, every time a telecoms provider wants to upgrade the existing infrastructure, in theory it has to start all over again on how it negotiates the rents.
Amendment 18, and, had they been moved, Amendments 17A and 17B, address essentially the same issue, which is existing infrastructure and the ability to upgrade it with as little fuss as possible. All of us in this House know that telecoms infrastructure is constantly being modernised and changed. Indeed, sometimes political issues come into play: for example, the decision to remove Huawei from our telecoms infrastructure will require a great deal of changes to existing infrastructure.
It is quite clear that all the infrastructure providers and indeed the Government support some kind of amendment that will allow infrastructure providers to upgrade infrastructure on telegraph poles. That is without dispute. The question we face is whether we can craft a suitable amendment that balances the rights of landowners and infrastructure providers to allow that to happen as smoothly as possible. What I find strange is the fact that multi-dwelling units do not attract the same support. However, I think I understand why telegraph poles are uncontroversial and multi-dwelling units controversial. That is because of a perceived monopoly of Openreach in multi-dwelling units but not telegraph poles. As my noble friend pointed out, telegraph poles fall under the public interest infrastructure access regulations, which means that a telegraph pole that is, as it were, owned by Openreach but on somebody’s land can still be accessed by a competitor, whereas a multi-dwelling unit cannot be accessed where Openreach has its infrastructure.
I ask the Minister again to take a step back and think about the purpose of the Bill and what he and his colleagues are trying to achieve in terms of the £5 billion subsidy to support the upgrading of infrastructure to full fibre, particularly in rural areas. As I said on Second Reading, this is all about planning, not about technology. It is trying to remove as far as possible all the obstacles that exist when it comes to planning. The Minister must ask himself: what is the reality on the ground? It is that Openreach is indeed present in many premises where its competitors are not. There are something like 1.5 million multi-dwelling units in this country that are at risk of not being upgraded because people cannot get access. Openreach tells me that there are something like 620,000 flats to which it has not been able to gain access and 165,000 flats where it has had no response from landlords at all for six months. Those flats will be left out if we do not consider the position of multi-dwelling units. That is not the subject of this amendment but I posit that it is exactly a parallel case.
I find the position of altnets—the alternative networks and competitors to Openreach—difficult to understand. I know many of them pretty well. I have worked with some of them, such as Hyperoptic, and I know CityFibre and Community Fibre. Anyone who lives in London knows that these altnets are already investing in areas where Openreach is present because they know it is a potentially lucrative area for them. They are likely to continue to invest in multi-dwelling units where Openreach is already present, and they are likely, in years to come, to benefit from any amendments that allow them to upgrade their apparatus with the minimum interference and fuss, yet they are standing in the way because they perceive that, if they can put an obstacle in front of Openreach, they can somehow benefit commercially. In doing that, I respectfully submit, they are damaging the overall project, which is to bring full fibre to as many residences as possible in the United Kingdom. Frankly, they will not be the ones going to small multi-dwelling units in small, rural towns up and down the country to upgrade or install apparatus; Openreach will be doing that.
Anyone who says that there is a wealth of difference between giving the same powers to an operator to go in to upgrade infrastructure to a multi-dwelling unit and powers to upgrade a pole is wrong. We should be looking at this in the round to make it as simple as possible.
I want to again apologise to the noble Lord, Lord Vaizey, for causing him not to be here—and I will of course pick up the cost of his cup of tea.
He brought up the changed landscape of altnets, and we need to remind ourselves as we talk through the amendments that the old picture, as we looked at the telecoms market as it was—the copper world of a huge company and nothing much else—has passed. The fibre sector is a different sort of market. The fixed and full-fibre network infrastructure supplied by the independents, the altnets, reaches about 11.5 million premises with, at the end of 2022, an estimated 1.5 million live connections. That is separate to Openreach and Virgin, so there really is a big change in that market supply, to which I think the noble Lord was alluding. Had the noble Lord finished, by the way, or did he give way to me?
The whole Committee stage debate has already become surreal, and we are only about 20 minutes into it.
If I can take noble Lords back to the tea room, where I was this morning, we were discussing the lack of intervention in debates in the House of Lords, which is apparently seen as a Commons trait and discouraged in your Lordship’s House. In fact, I was told by a very senior chair of a committee—who is in the Chamber—that on no account was one to take an intervention at Committee stage. But I felt that as the noble Lord, Lord Fox, had already transgressed so badly in detaining two eminent Conservative Peers in the tea room, I would simply allow him to continue to flout convention and break the rules. I also felt that my speech was going so badly that, just as I used to do in the other place, giving way at an opportune moment to gather one’s thoughts was sensible.
I am very grateful to my noble friend for giving way. I shall make just two points to him and the rest of the Committee. Of course it is permissible—indeed, it is encouraged—for us to engage in interventions during debate, but they should be brief and to the point. I take this opportunity to also remind my noble friend that his amendments have not been moved and we are in danger of debating his amendments, instead of the amendment which another noble friend moved—or indeed, which I moved on her behalf, and she then expanded on my introduction.
I take the comments from the chair of my own committee in good heart. Clearly, I am on a learning curve in a very public way.
I simply reiterate that this Bill is about making planning as simple as possible, balancing the interests of landowners and infrastructure providers. The mood of this House is that we support Amendment 18, to allow the upgrade of telegraph poles. We understand that the Government will also support such an amendment if it is appropriately drafted. We look forward to the Minister’s comments on why this is a sensible way forward.
I merely add as an aside that the purpose of the Government’s funding and broadband rollout is to bring broadband to as many premises as possible. We all know from our own experience where the altnets are going. Quite understandably, they want a return on their investment, so they are going to cities and laying fibres in areas where Openreach is already present, where they know that they can get a return. There will be many other areas of the country where, understandably, they will not be able to afford to put in infrastructure. For the Government simply to turn their back on thinking hard about how to upgrade the many multi-dwelling units in different parts of the country simply because it is perceived to be an Openreach problem and not a problem for all telecoms providers is a missed opportunity.
My Lords, I cannot follow the amusement factor of the noble Lord, Lord Vaizey. As this is my first contribution on the Bill, due to force of circumstances, not least because on our first day in Committee I could not attend due to disruption on the rail system, I declare my interest as a chartered surveyor—still practising, just—with about 47 years’ experience in the public and private sectors. I hope that I can bring some of that to the debate.
As I understood it, in addition to being able to attach things to existing telephone poles, Amendment 18 would provide a right to create new overhead facilities of one sort or another. As a person who, from time to time, has occupied heritage property, I have a particular aversion to overheard telephone lines and to generations of cables being stuck to the outside of buildings—new ones are added but nobody ever removes the old ones. That is the first point that I would question.
The second point goes beyond this amendment but begins to address some of the points mentioned by the noble Lord, Lord Vaizey, on the use of existing facilities. These might be underground ducts. There is a bit of a problem when you get to blocks of flats, because there is a cut-off point at which the rights of, for instance, BT or Openreach end, at which point the wayleave or easement does not pertain. When you get into blocks of flats, there are other criteria. There are many instances of cables being run up, willy-nilly, through communal service risers, with firestopping material being removed and not put back correctly, and so on. No building manager in a block of flats will willingly allow someone from Openreach, who comes with a quite different set of instructions for what they are doing, to just get in there, willy-nilly, as of right. There must be safeguards somewhere along the line.
Further explanation is needed on other things. On numerous occasions I have come across situations where overhead cables have been put underground, perhaps because they were in the way or because it was convenient for visual or other reasons. But you then find that there is no easement or wayleave in relation to the underground bit—the easement or wayleave stops at the last pole, where it goes into the ground. That has certain disadvantages because every time somebody from Openreach wants to do some reconnection or give somebody a better service, they have no drawings of the underground system. I am told that this is an issue where new developments take place and the roads and common areas do not get adopted; they are retained not by the developer but are passed on to some management entity. We have all heard of the fleecehold, where the maintenance of that common realm is then jacked up and recharged through a rent charge.
I absolutely take the point that is being made, but if I am correct a raft of other issues needs to be resolved, including powers to take possession and use of things that are not currently within the existing wayleave horizon. I just flag up the difficulties associated with that.
My Lords, I remind the noble Earl that Amendment 44 deals explicitly with the safety issues. He might want to reconfigure those points when we get there.
Taking the point from the noble Baroness, Lady Stowell, that we are focusing on Amendment 18, I will not seek to embellish the comprehensive and excellent speech from the noble Baroness, Lady Harding, but we should remind ourselves that the Bill allows for the sharing of historic wayleaves to share BT infrastructure under private land. It does not currently explicitly allow operators to use telegraph pole infrastructure on private land above ground. For places such as Herefordshire, where I come from, pole access is absolutely central to the rollout of fibre and a huge proportion of those poles sit on private land, so this matters quite a lot. I think 50% of premises in Scotland are connected by poles on private land.
As we have heard, the Bill as drafted would allow operators to use existing ducts to reach the base of such a pole, while existing provisions in the code allow for the flying of lines between poles, but no explicit right exists to access the pole itself or place apparatus such as small boxes—in practice, smaller than what is already there—on it. This amendment seeks to remove any ambiguity and make sure that what we believe to be the Government’s objective is fully written into the Bill, and that is why I am a co-signatory.
My Lords, I will take advantage of the flexibility of debate outlined by the former Leader of the House to say that, although we are debating the amendment moved by the noble Baroness, Lady Harding, I for one would be interested to know whether the amendments that were to be debated, but for this very unfortunate cup of tea, will be moved on Report. It would help my fuller understanding of how debate on the Bill might progress.
My Lords, following that very provocative statement from the noble Lord, Lord Vaizey, I will not go into great detail about Amendments 17A and 17B because they have not been moved, although by a side wind the noble Lord mentioned MDUs and various other aspects. All I can say is that if they are moved on Report they will be very firmly opposed from these Benches. There are many reasons for that, which I will not go into, but we look forward to the debate on Report. In the meantime, we will keep our powder dry.
The noble Baroness, Lady Harding, made an extremely good case for her Amendment 18, as has my noble friend. I do not think that the noble Earl, Lord Lytton, is a great fan of poles, but we will just have to live with that. Amendments such as this would ensure that an explicit right exists to access the pole itself or place apparatus on it. That amendment is supported by all operators. It is good that we have one amendment that is almost unanimously supported by the operators.
For example, CityFibre says:
“Extending the wayleave sharing rights to both ducts and poles for fixed networks will have a huge impact, particularly in urban Scotland and rural England where there is a much higher proportion of poles situated on private land”.
It estimates that 1 million such poles exist across the UK. That is an impressive number. On the other side of the equation, Openreach, which we do not always agree with, estimates that 1 billion metres of fibre are currently laid over poles in the UK.
We fully support this amendment and if the Minister cannot agree to it, as the noble Baroness, Lady Harding, says, we look forward to him tabling the necessary amendment on Report. After all, this amendment would achieve a consistent application of paragraph 17 of the ECC by extending permissions to reasonably associated apparatus without the risk of also including the apparatus within the premises, which is the bone of contention on the earlier amendments.
My Lords, I was very pleased to put my name to the amendment tabled by the noble Baroness, Lady Harding. As she says, this is simple, limited in scope and extremely practical. It is a clarification of and an improvement to this aspect of the Bill, which works for all parties. I hope the Minister will agree, even if what we end up with is not the exact wording that we start with today.
As the noble Baroness, Lady Harding, explained, poles, like ducts, are regulated under Ofcom’s PIA mechanism, so extending this provision to pre-2017 poles on private land would allow all operators to speed up their rollout equally. That is the essence of what we are talking about in the Bill: extending provision and allowing fair access. This amendment will greatly assist us, not least because if the reforms in the Bill do not work properly we will see more streets being dug up, which is never popular, and in this case might perhaps require the installation of new poles—again, something we could do without.
I hope that when the Bill is amended we will drastically contain the time, cost and disruption caused by the rollout. Although people want to see the rollout, the practical effects in communities create unwelcome disruption. This amendment is needed to confirm that sharing pre-2017 poles on private land needs to be included in the Bill. It will speed up the deliver of rollout and it is welcomed by all across the industry.
I shall briefly refer to the comments by the noble Lord, Lord Vaizey. I do not want at this stage to dwell on the amendments we did not have the benefit of discussing properly, but perhaps the noble Lord can look forward to Amendment 48, which we have tabled. It takes a different tack from the noble Lord’s amendments and puts the onus on government and the industry to find a way forward. I hope that when we get to that amendment the Minister will be open to detailed, cross-party discussion before Report on how we resolve the issue that we were not able to attend to earlier in the debate. I support this amendment and hope the Minister will feel similarly.
My Lords, I think the whole House is grateful to its former Leader, my noble friend Lady Stowell, for moving Amendment 18 and keeping us on the right procedural track. Amendment 18, spoken to by my noble friends Lady Harding of Winscombe and Lord Vaizey of Didcot, the noble Lord, Lord Fox, and the noble Baroness, Lady Merron, who signed it, concerns rights to upgrade and share telegraph poles.
Clauses 59 and 60 will help to optimise use of the UK’s extensive duct networks through greater upgrading and sharing, but ducts and cables under land do not represent our entire digital network, as noble Lords have reminded us today. Telecommunications lines flown over land play a substantial role too. These lines are dependent on the telegraph poles that support them. Over 1 million such poles are installed across the UK, as noble Lords have noted, providing coverage and connectivity to entire communities, particularly in rural parts of England such as Herefordshire, as the noble Lord, Lord Fox, will know, and urban areas of Scotland.
Since the Bill’s introduction, the Government have been called on to introduce measures to facilitate the upgrading and sharing of poles. We understand that there are substantial public benefits in coverage, connectivity and consumer choice, so we welcome the attention that this amendment has drawn to the significance of poles and lines in network delivery, but as I anticipated at Second Reading, we have concerns as to whether the amendment would deliver material change.
I take on board fully my noble friend Lady Harding of Winscombe’s point about the constructive spirit in which the amendments are brought forward and agree that we must look beyond the drafting of this specific amendment, but as the noble Earl, Lord Lytton, says, this is a legally complex matter. For example, it is not clear whether this amendment would permit pole sharing or allow operators to carry out works beyond those needed for a line to be flown. That might exclude upgrade works that would allow a pole to be used for fibre rather than copper lines.
It is important to note that paragraph 74, to which this amendment refers, deals with land adjacent to or in the vicinity of that on which poles are situated. We need to think about works that might involve the land on which that pole is placed. The Government are looking closely at ways to optimise the use of telegraph poles, but we must ensure that if changes are made in this area, they not only deliver public benefits but include sufficient protections for individuals with poles situated on their land. We will continue to look closely at this issue, but I am not able to accept this amendment today. I repeat the assurance I made at Second Reading that we are actively looking at this issue, and we will continue to consider it ahead of Report.
In response to some general points about requests from the industry, we certainly agree that operators should be able to obtain the rights they need to install and maintain the apparatus needed for robust network coverage throughout the UK. The department undertakes regular engagement with the industry and, if we receive compelling evidence that the Bill can be improved, we are happy to consider whether there is a good case for going further. When doing so, however, the Government will always consider the effect that any potential changes could have on landowners.
My noble friend Lord Vaizey inventively asked why telegraph poles were less contentious than multiple dwelling units, the subject of the amendments lost to today’s debate. We must also bear in mind that a good regulatory framework encourages competition and investment, which are both crucial in delivering consumer choice and supporting deployment to hard-to-reach areas. Measures beneficial to one operator may not always encourage the market competition needed to deliver better outcomes for customers. Indeed, it is important to stress that there is no consensus from the industry on this issue. In fact, many operators have opposed the proposal on the grounds that it would create an unfair advantage for operators that already have equipment inside buildings, and so could potentially have anti-competitive effects.
Now that I am in the swing of things, does my noble friend genuinely believe that outside the main metropolitan areas there is genuine competition between telecoms providers? Is it his view that he should support measures from the competitors of Openreach to prevent the rollout of broadband in rural areas, simply to protect their interests in the main metropolitan areas?
As I am explaining, we think that the views from other operators point out that my noble friend’s amendment, which was not moved, would create an unfair advantage for operators who already have equipment; that would itself be anti-competitive. Given that the amendment was not put and, as I hope he has heard, would have been resisted in any case—certainly from the Liberal Democrat Benches—perhaps it may be best if he and I discuss it over a cup of tea, which he can add to his tab, between now and Report. I hope that he will not feel it necessary to bring these amendments back on Report.
On Amendment 18 regarding telegraph poles, while reassuring noble Lords that we will continue to look at this actively, I hope that my noble friend Lady Harding —or my noble friend Lady Stowell, who moved it—will be happy to withdraw that amendment for now.
I rise, somewhat hesitantly, having consulted the oracle that is the former Leader of this House, to respond. I thank my noble friend for that response. As a brief aside, I am pleased to hear his conviction and belief in competition before we come back on Report, if we do, to the amendments that have not been debated.
I am cautiously optimistic that we will find a solution to this. I was slightly worried when I heard my noble friend say “if” we bring something back, rather than when. I would feel considerably more optimistic about solving this problem if I had heard him say “when”. I would also feel a bit more optimistic if I had heard him say that he and the department will be considering alternatives, rather than observing and watching. We have been observing and watching since Second Reading, and the department has proposed no alternatives to my amendment. I look forward to some more active discussions about alternatives to the amendment but, on that basis, I am happy to withdraw it.
Amendment 18 withdrawn.
Clause 60 agreed.
19: After Clause 60, insert the following new Clause—
“Requirement for operators to notify emergency service sites prior to upgrading or sharing apparatus
(1) The electronic communications code is amended as follows.(2) In paragraph 17, in sub-paragraph (1), for the words “sub-paragraphs (2) and (3)” substitute “sub-paragraphs (2), (3) and (4A)”.(3) After sub-paragraph (4) insert—“(4A) The third condition is that, where a site is provided by an emergency service, before the beginning of the period of 21 days, ending with the day on which the main operator begins to upgrade the electronic communications apparatus or (as the case may be) share its use, the main operator provides written notice to the site provider.””Member’s explanatory statement
This new Clause would require operators with agreements under the code that are not subsisting agreements to provide written notice to site providers that are an emergency service in advance of apparatus being upgraded or shared. This would allow relevant emergency services to plan around service outages or other forms of disruption.
My Lords, I speak on behalf of my noble friend Lady Merron, who has tabled this amendment. The proposed new clause in Amendment 19 would
“require operators with agreements under the code that are not subsisting agreements to provide written notice to site providers that are an emergency service in advance of apparatus being upgraded or shared”.
This would obviously allow “relevant emergency services” to plan better around things such as
“service outages or other forms of disruption.”
We have tabled this amendment because some hospitals have reported instances where telecoms engineers have arrived to inspect or upgrade equipment, having provided little or no notice of their visit or the need to turn broadband and other data connections off for its duration. As I am sure the Minister will be aware, this amendment was tabled in the Commons and, at that point, the Government insisted that the clarification was unnecessary. The Minister, Julia Lopez, said that paragraph 17 rights authorise a visit only where there is no adverse impact, which probably brings us back to earlier debates.
For visits that go beyond paragraph 17 rights, the Government insist that operators need to obtain permission in advance or potentially face legal repercussions. However, hospitals and other emergency services have far more important things to do than pursue complaints and court orders while they are running important services. The Minister also claimed that introducing this clarification
“would undermine the policy intention of the rights”.—[Official Report, Commons, Product Security and Telecommunications Infrastructure Bill Committee, 22/3/22; col. 121.]
Perhaps the Minister can outline exactly how.
Should we take from this that the Government’s policy is to prioritise operator rights over the ability of hospitals, police or fire or ambulance services to have reliable access to crucial IT systems? The current drafting of the amendment, I willingly confess, might not be the best way of achieving this important protection for emergency service sites, but I hope we can find a way to mutually agree. The number of cases may even be low, but unexpected switch-offs could—I am sure the Minister would accept—have quite disastrous impacts and effects on the way in which services operate.
This is an amendment moved with a good spirit behind it and I think there is some need for clarification. I hope the Minister will give this a positive response because it certainly needs one.
I do not have any comments on the clauses stand part, because I am not quite sure exactly what is motivating them, but I shall be interested to hear what the proposers have to say. I beg to move.
My Lords, I am delighted to speak to the amendments in my name and that of the noble Earl, Lord Devon. I thank him for his support. We are having a short debate on why Clauses 66 and 72 should stand part of this Bill. I will briefly take each in turn.
As the noble Lord set out in moving Amendment 19 from the other Benches, the problem we are dealing with is getting on to land where people have possibly not had notification that their land is going to be entered. It also raises the possible cost of applying to the court in such circumstances, which begs the question: if, eventually, those who own the land are made aware, would the alternative dispute resolution procedure apply? I am not sure which of my noble friends is replying, but if my noble friend Lord Sharpe could kindly take that and give me a response, I would be most grateful.
The powers that we are allowing to the department and the Government in Clauses 66 and 72 are very wide ranging. Will Parliament have the right to scrutinise these regulations and at what stage? Do the Government intend that the regulations will be widely consulted on? At what stage would we have the right to scrutinise regulations under both clauses, as the devil will be in their detail?
Regarding Clause 66, I am most grateful to the noble Earl, Lord Lytton, for sharing the briefing we received from the Central Association of Agricultural Valuers, which has been extremely helpful in helping us prepare for today’s debate. In relation to Clause 66 and the issue of unresponsive occupiers, it sets out:
“Understanding the point of this Clause, it should require the operator to have taken particular efforts to establish direct contact with the proposed grantor rather than allow this to be a convenient route to impose on off-lying land by the use of a succession of notices.”
It hopes that discretion is provided to the court by new paragraph 27ZE of the code inserted by Clause 66. That would allow it to regulate the use of this power appropriately and recognise what might be particular personal circumstances. It refers in particular to the 2020 case of EE v Cooper and notes that the tribunal felt that it had to deny an operator’s application for “interim rights” when it pleaded an unresponsive occupier, as it considered that the operator needed to show that
“far more had been done to contact the occupier than has been done in this case, where there has not even been an attempt to knock on the respondents’ door”.
It appreciates the compensation provisions set out in new paragraph 27ZG of the code.
In sum, I felt that it was necessary to ask why it is right that Clauses 66 and 72 should form part of the Bill primarily because we are granting the Government extensive powers that are not set out in the Bill, so we should reserve the right to consider them when they are set out in regulations. I would like confirmation that that is the case. Even more substantially and significantly, I am concerned about the lengths that an operator will be forced to go to before it is deemed to call an occupier an “unresponsive occupier”. I look forward to my noble friend the Minister’s response.
My Lords, I will speak briefly in support of the two proposals from the noble Baroness, Lady McIntosh, to which I have added my name, that Clauses 66 and 72 do not stand part of the Bill. As I noted at Second Reading, I am a landlord to a telecommunications mast, granted by my father under the 1954 Act. The renewal of this has been complicated considerably by the 2017 reforms and the huge uncertainty that has followed.
Just last week, the Supreme Court ruled on a group of three cases involving the last set of amendments to the Electronic Communications Code. The lead case was Cornerstone Telecommunications v Compton Beauchamp. The court ruled that, among other things, a landlord under a “subsisting agreement” is entitled to insist on renewal under the 1954 Act and the operator cannot insist on a code renewal by application to the Upper Tribunal. It seems ironic timing that, just as the highest court in the land has finally got to grips with those 2017 amendments and provided a little clarity, we are seeking to make yet further changes and further confuse the issue.
Since Second Reading, I have been in contact with a number of groups representing site owners, and all have reported incidents of unprecedented dispute and considerably challenging renewals. As I said at Second Reading, this cannot have been the intention of the 2017 amendments and should not be the result of this legislation either, which is why I put my name to the proposals that Clauses 66 and 72 do not stand part.
I think that we all agreed at Second Reading that we wish Project Gigabit to succeed, and my intention is to ensure that landlords and site owners are encouraged to grant leases to telecoms masts and other infrastructure. The recent soundings of the market suggest that this is not currently the case and that the granting of new leases has slowed considerably since the 2017 amendments and the decrease in rents and increase in disputes that have resulted.
On these clauses, the draconian access provisions for unresponsive occupiers and the rights of network providers in relation to infrastructure are simply too broad and uncertain and, as the noble Baroness, Lady McIntosh, stated, they will serve only to discourage the granting of leases for further network infrastructure. I do not think that that is in anyone’s interest.
Specifically on Clause 72, the noble Baroness, Lady McIntosh, raised the regulations. I note that new subsection (7) says:
“Before making regulations under subsection (1) the Secretary of State must consult … OFCOM”
“such other persons as the Secretary of State considers appropriate.”
In responding, can the Minister clarify who that would be, because surely representatives of the site providers should be consulted? We should get an opportunity to understand exactly what these regulations will entail; otherwise, we seem to be providing Ofcom carte blanche to do whatever it likes. As we have seen, whatever it likes has not resulted in a satisfactory outcome for connectivity.
My Lords, I want to mainly talk about Amendment 19 put forward by the noble Lord, Lord Bassam. Before doing so, I say that I have some considerable sympathy for the noble Baroness, Lady McIntosh, and the noble Earl, Lord Devon, because one of the themes we are very much going to come to with the coming amendments is this steady shift in the bargaining power away from site providers towards the operators over a period of years, which started in 2017 and culminates in the current Bill. We had a number of debates on unresponsive occupiers when we last debated this on the then Telecommunications Infrastructure (Leasehold Property) Bill. As the noble Earl said, it is ironic that the cornerstone case has decided what it has, yet here we are changing the legislation away from that decision. I hope the Minister will be able to answer some of the questions that have been put to him.
On these Benches, we support Amendment 19. As the noble Lord, Lord Bassam, said, it would mandate operators with agreements under the code that are not subsisting agreements—namely, agreements that came into force before the code was agreed—to give advanced notice to sites that provide and deliver emergency services, such as hospitals, fire stations and ambulance stations. It is clearly important for providers of emergency services to be given advance notice of when work is going to be undertaken, so that they can take appropriate action to ensure that they are not affected.
The noble Lord, Lord Bassam, mentioned the Minister’s response in the Commons; she prayed in aid the rights under paragraph 17 of the ECC,
“which authorise only activity that will have no more than a minimal adverse impact on the appearance of the apparatus”.
However, this takes no account of the fact that, while the works may involve minimal adverse impact, it may actually involve disconnection at the time of installation. The Minister said that she was,
“not aware of any instances in which an operator has relied on its paragraph 17 rights to carry out upgrading and sharing activities that have gone beyond the scope of what that paragraph allows”.—[Official Report, Commons, Product Security and Telecommunications Infrastructure Bill Committee, 22/3/22; col. 120.]
However, that is not the right question. The right question is: what kind of resilience and risk planning do the emergency services have in those circumstances? If they do not know that there is a risk of disconnection, how can they plan for it? This seems an extremely sensible amendment which will allow the emergency services to have notice and to be able to plan for circumstances when they may be disconnected.
My Lords, this is an interesting debate on these proposals, which are potentially linked and will develop into a theme which perhaps redresses the balance.
When commenting on the amendment to notify emergency services, it must be acknowledged—by those of us who regard our telecom infrastructure providers as providing an extremely important service to the country, doing difficult, tedious and time-consuming work with private investment—that they do not always get it right. I again remember—this will become a theme of my speeches—that, in my time as Minister, one would have local authorities refusing to give permission to broadband providers to put in place infrastructure because of the mess they had left behind from their previous work. The most notorious and, I thought, slightly irritating resistance came from Kensington and Chelsea Council, which did not like the design of the green cabinets—perhaps it wanted them designed by David Linley or someone like that. Both the noble Earl, Lord Lytton, and this emergency services amendment highlight the fact that, too often, when infrastructure providers are allowed in to upgrade their apparatus, they do not take account of the knock-on effects of their work, either by not taking into account building safety regulations or by not notifying the occupiers that there might be disruption. The amendment is well placed to raise these points and for this House to remind infrastructure providers that they must continue to improve on this.
What I find interesting, from the perspective of landowners, is the balance between wanting, obviously, a reasonable rent for the disruption and visual intrusion that telecoms equipment can bring when it is placed on one’s land—certainly one’s property rights should be sacrosanct and no one should be allowed simply to arrive without notice and put infrastructure where they please—and the point about bringing huge benefit to a local community where one’s land is situated, and indeed to one’s own operations when infrastructure provides the connectivity. I can never get my head around that.
When we introduced the mobile infrastructure plan—the forerunner of the shared rural network—I found it completely bizarre that there were communities that had no mobile coverage at all, yet the local population literally rose up, sometimes putting concrete blocks in the way to prevent telecoms operators putting in a mast that would have given them the essential coverage for which they had been campaigning for so many years. Again, the theme of the Bill and of the revision of the code is about balancing those rights, but weighing on those scales is the immeasurable improvement that good mobile and fibre coverage can bring to a rural community.
My Lords, I thank all noble Lords who have spoken in the short debate on this group, particularly the noble Lord, Lord Bassam, for introducing Amendment 19, also signed by the noble Baroness, Lady Merron, and the noble Lord, Lord Clement-Jones. The amendment proposes the introduction of a 21-day notice requirement for operators who want to exercise code rights where apparatus is situated on, under or over a site provided by an emergency service provider. It is of course important that emergency service providers are aware of work on their sites which may have an impact on their day-to-day activities, as all noble Lords have noted. In this context, it is crucial to look at the scope of the paragraph 17 rights. They authorise activity that will have
“no more than a minimal adverse impact”
on the appearance of the apparatus, and impose
“no additional burden on the other party to the agreement.”
Given the limited activities that paragraph 17 permits, we do not consider a notice regime necessary. To put one in place would undermine the policy intention of these rights, which is to enable limited upgrading and sharing works to be carried out quickly and efficiently. Operators may need to upgrade and share apparatus that will have a greater impact on a site provider than paragraph 17 permits. We think that they should be able to do so but, in those circumstances, they must obtain the site provider’s agreement or seek to have the required rights imposed by the tribunal.
In contrast, the paragraph 17 conditions exclude activities that would impose an additional burden on a site provider. Activities that disrupted a site provider’s day-to-day business, or created new health and safety risks, would be unlikely to satisfy this requirement. I am not aware of any instances where an operator exercising their rights under paragraph 17 has caused any issue in relation to an emergency service site. I note, however, that the noble Lord, Lord Bassam, mentioned one example and I am very happy to discuss that further; perhaps we could join the group cup of tea.
My Lords, the Minister is making exactly the same case as the Commons Minister, Julia Lopez, made on this there. What about the circumstances that I mentioned, where you might be within paragraph 17, but where it may involve minimal adverse damage but nevertheless involves switching off the service for a period, however short or long that may be? Surely that is something that the emergency services involved on site should have notice of.
My Lords, I think that they should have notice, but the point is that the paragraph 17 conditions exclude activities that would impose an additional burden on a site provider, as I have just said, and activities that disrupted their day-to-day business or create new health and safety risks would not satisfy the requirement. I honestly think that answers the point.
I think that I have answered most of the questions; I will obviously check Hansard and, if I have not, I will come back. In the meantime, I hope that the noble Lord, Lord Bassam, is prepared to withdraw this amendment.
I move on to Clause 66, as probed by my noble friend, Lady McIntosh of Pickering, with the support of the noble Earl, Lord Devon. It creates a bespoke process for the court to impose an agreement where an operator needs a person, to whom I shall refer as “the landowner”, to confer or be bound by code rights and that person fails to respond to repeated requests for such rights.
The provisions require an operator to have sent an initial request notice and two warning notices, followed by a final notice, to the landowner. There must be a period of 14 days between the giving of each notice, meaning that the landowner will have been given a minimum of 56 days in which to respond to the operator. For the landowner to fall out of scope of Part 4ZA, all that is required of them is to respond to any of the above notices in writing before the operator applies to the court. If granted, a Part 4ZA order will impose an agreement on the landowner and operator. The terms of that agreement are to be specified in regulations made following stakeholder consultation.
My noble friend asked about situations where landowners are non-responsive. If they are unwilling to engage, for example, in alternative dispute resolution processes, it will remain open to the operator to apply to a court under Part 4 of the code to seek an order to impose an agreement granting code rights. These provisions impose a six-year maximum time limit on the period for which rights conferred under a Part 4ZA order may last. I emphasise this detail because it forms an important part of the Bill’s safeguards on landowners’ property rights. This clause provides a much-needed process that will play a large part in ensuring that homes and businesses benefit from the national gigabit broadband upgrade and are not left behind. I therefore commend Clause 66.
I think both the noble Earl, Lord Devon, and I asked whom, following court rulings in this regard, but also in terms of regulations, do the Government or the department intend to consult? Will they ensure that the occupiers are on that list? It is not clear from the drafting of the Bill that they will be included.
If my noble friend will permit, I will come to the points she raises on consultation shortly.
Clause 72 will allow the Secretary of State to amend the Communications (Access to Infrastructure) Regulations 2016. Sharing infrastructure in the concentration of gigabit-capable networks can greatly reduce the cost and increase the pace of deploying networks, and can reduce the need to dig up streets, preventing unnecessary disruption to the local population and reducing carbon emissions. The 2016 regulations enable sharing of information about access to physical infrastructure across the utility, transport and communications sectors. They also include the right to access that infrastructure on fair and reasonable commercial terms and conditions. The Government published our response to the call for evidence on a review of these regulations last year. We set out that there may be some areas where they could be made easier to use and to understand.
In addition, we said we would legislate to allow future changes to the regulations via secondary legislation rather than relying on primary legislation. That legislation would be subject to further consultation with Ofcom and other appropriate parties. To expand on that a little, Clause 72 makes clear that
“the Secretary of State must consult … OFCOM; … such other persons as the Secretary of State considers appropriate”
before making such regulations. I cannot conceive of a set of circumstances where the landowner would not be one of the other persons that the Secretary of State considers appropriate—obviously, if I have that wrong I will write to noble Lords. In addition, any regulations made using this power will still be scrutinised as part of the affirmative resolution procedure. Clause 72 therefore grants to the Secretary of State a narrow power to make provision, through regulations, conferring rights on network providers in relation to infrastructure for the purpose of developing communications networks. These provisions include the power to amend, revoke or replace the 2016 regulations.
Finally, my noble friend Lord Vaizey raised some useful points about operator behaviour, which I think we may discuss in more detail in later amendments in group 6 on the Ofcom code of practice. I will leave it till then to address those, if that is acceptable.
My Lords, I am somewhat reluctant to let this go, I must confess. The emergency services in this country have a very difficult job to do, and I think they require better treatment than this.
I am not satisfied with the noble Lord’s explanation. I can envisage a time when an engineer turns up on the basic premise that the task they have to complete is smallish, but it turns out to be a rather larger problem—a bit like when you get a plumber in and they suddenly discover that there is something more fundamentally wrong with your boiler than the dial not working properly, and that it needs repressurising and a part needs to be brought up. This is a practical consideration, as it could cause considerable disruption to a service.
I was thinking of something that recently happened quite close to where I live. The road immediately in front of the local fire station was dug up; I cannot believe that the highways authority was not in contact with the fire station concerned, but I am not entirely sure that it was. I know that the people working in the fire station were put out for the period of time in which their ability freely to come and go in an emergency situation was seriously impacted.
For the purposes of Committee, I will withdraw this amendment, but the Government need to give this further thought. These behaviours can be highly disruptive. They can impact quite adversely on people’s personal security and safety; obviously, we want to make sure that there is a reasonably sensible way for providers to exercise their rights to repair, renew and so on, but we need to get the balance right and the Government need to think about this again. I beg leave to withdraw Amendment 19.
Amendment 19 withdrawn.
Clause 61: Rent under tenancies conferring code rights: England and Wales
20: Clause 61, page 46, leave out lines 6 and 7 and insert—
“(a) having regard to the terms of the agreement (other than those relating to the payment of consideration), that the holding might reasonably be expected to be let in the open market by a willing lessor,” Member’s explanatory statement
This amendment, along with the amendment to page 47, line 36 in the name of the Earl of Lytton, would ensure that the value of a consideration imposed by the court should take into account the land’s value if it were used for the provision or use of an electronic communications network (and other uses), if the consideration is governed by the Landlord and Tenant Act 1954 or the Business Tenancies (Northern Ireland) Order 1996. The disregards for assignment and sharing, brought in in 2017, would however be preserved.
My Lords, in moving this amendment I will also speak to the other amendments in my name in this group. I must first admit that I am a landowner, although I have not had any telecoms masts since 2017, when I sold a farm not very far from an area known to the noble Earl, Lord Devon—the uplands of Exmoor—on which I had three masts. One was a conventional commercial telecoms mast, one was an Airwave emergency services mast and the other was a community Airband mast under construction. I see this across the spectrum of what is necessary, what delivers something to the community—and to me—and is therefore of value and part of the incentive, and what fundamentally does none of the above.
The one that did none of the above was the commercial operator. I was encouraged to give consent on a piece of land because it had trees on it; an upland area was needed and the national park did not want the mast stuck in the middle of a piece of open moorland. That was fair enough, as the idea was that this would improve mobile communications in the area. It did nothing of the sort. Having set off with hope in one’s heart that that would happen, it was something of a delusion. Indeed, I used to have to walk up to the middle of a 30-acre field to pick up mobile phone signal from a different network—probably from south Wales on the other side of the Bristol Channel.
I thank a number of noble Lords from across the House who have been very helpful in formulating my views, as well as a number of external consultants whom I have spoken to. I thank the Protect and Connect campaign for its input and Jeremy Moody of the CAAV, which has already been mentioned, for his invaluable assistance. I also acknowledge the efforts and briefings of Speed Up Britain, although I do not agree with its explanations relating to site value or on matters of fairness and balance. I also ought to say that I am an ordinary subscribing member of the CLA, although I have not communicated with it directly on this Bill. So much for the declarations of interest and so forth.
For all the training and experience one has as a valuer—I am a registered valuer with the RICS—it is acknowledged to be an art, not a science. It is based on many constructs, including market sentiment, risk and a host of other internal and external factors, from which the valuer is seeking to interpret an end-result. They are interpreting what the market is doing and trying to codify and make sense of what is happening in what are sometimes quite random situations.
In other words, it is the market that leads the process, regardless of how valuation theorists may try to analyse it. It is very important to bear that in mind. One of the greatest influences on markets is government activity and the resultant expectation. It is a pity that government does not always seek the advice of its own internal expertise or, for that matter, that of independent bodies. Legislative history is sadly littered with the skeletons of failed initiatives.
One of the greatest impediments of government is the periodic belief in a limitless ability to control and direct markets, when, in fact, markets that function well are usually those that have the least interference and the greatest commitment by government to their operational proficiency. But like everything else, markets are overwhelmingly a voluntary undertaking. We all have choices. The Government intervene for reasons of overriding public interest, and traditionally for the benefit of public agencies, but this has morphed more recently because we now have private utility companies, and the working assumption here is that the big telecoms companies want to have the rights—particularly certain rights of compulsion—that have been accrued by the utility companies. However, I fear they wish to acquire them shorn of many of the protections of compulsory purchase in the Land Compensation Act, and other statutory provisions.
We have had a relatively free market in telecoms mast sites for about the last 30 years, up to 2017. Then the Government changed all that, and I admit that I had not anticipated the outcome of that change. The noble Earl, Lord Devon, explained to us, and we also heard on the first day in Committee, the results of that: namely, that market sentiment among site owners has to a material degree collapsed and there is a sense of disengagement. That can be measured by the number of deals concluded, and by the fact that disputes have escalated sharply in a manner never experienced in the pre-2017 period. If you look at who is taking who to a tribunal, you will see that it is seemingly driven by site operators taking cases as a means, one supposes, of driving home their version of a bargain.
The balloon has gone up, in that mast site operators and network operators are seen as having resorted to a slightly crafty inversion of law and practice. I think it is regrettable that there is a sentiment that suggests that site owners are a type of greedy usurer. I am unconvinced by this business of site rentals being too high. In many instances, it is no more than one would expect to pay for a handful of lock-up garages in a suburban location or a relatively smallish area of open storage land. The aggressive tactics that have been complained about arose because people can get away with it, and it is no longer seen as a good sector for the lessor. If you want good relationships, you do not resort to such tactics, particularly if you wish them to be long-term.
Is the noble Lord aware of the American import of site aggregators—companies which, I think, finance the Protect and Connect campaign? I should say I used to work for Speed Up Britain, so goose for the gander and all that. This American import of site aggregators is effectively buying up sites on land, and then negotiating with the mobile operators to extract valuable rents and increase the value of their companies.
I am indeed. I believe that one of the firms is based in San Diego, in California. One cannot help supposing—I think this is the sentiment in the market—that the driving down of rental figures has been part and parcel of what is actually a very substantial land deal to sell a package based on the profit rent that can be derived. But the crucial thing here is that there does not appear to be any reason why these aggregators—or for that matter the site companies or mast companies—should pass on any of the savings to the network operator and make it cheaper or more competitive for those of us who actually use the service. That is one area where there is a significant disconnect. These things are noted by those who are acting for owners or by the owners themselves.
The intention really is to get some sort of fairness. I understand that, and do not dispute the question of getting a fair balance. However, I am worried that this is beginning to put things into the hands of commercial entities—the aggregators are no different—that may be benefiting from code rights but do not necessarily have the code obligations to deliver for society. I wonder whether these entities are going to end up doing some sort of site-squatting operation, where they tie up as many of the sites as they possibly can, rather in the same fashion as residential property developers might option up bits of land on the outskirts of villages. That would worry me, because it would mean that a cadre of middlemen would effectively be holding things to ransom. I will get on to why that matters in valuation terms in a minute.
The land valuation solution espoused by the communications code and strengthened in this Bill, in terms of having changed from market value to something that looks and feels a bit like existing use value, is, I am afraid to say, the philosophical equivalent of two cans of beans connected by a bit of slack string. It is a very unsophisticated approach for dealing with the land issue which underpins the whole of what we are talking about in the rollout of better 4G and of 5G—both of which I support for the reasons I made clear earlier.
I will move to an overview of the amendments. Amendments 20 and 22 to 27 aim to address the issues of valuation, pure and simple, which is one of the most significant concerns with the Electronic Communications Code. Under the changes the code made in 2017 was the introduction of the no-network valuation methodology for valuing land, which allowed site providers to recover only the raw value of the land rather than receiving a market price. A new line was inserted into the code so that, when setting a site value, the court was prevented from taking into account a site’s potential use for the provision of an electronic communications network. This is notwithstanding that the Electronic Communications Code itself has a reference to market value at paragraphs 24(1) and (2) and sets out in sub-paragraph (2) the criteria—which I understand, as somebody dealing with valuations in terms of the standard RICS specification; the wording is familiar—but then inserts at sub-paragraph (3) a provision relating to the court’s jurisdiction which negates this.
Market value has an internationally recognised definition: it is the price one might reasonably expect in an arm’s-length transaction, following proper marketing, between a willing buyer and willing seller, in which the participants act
“knowledgeably, prudently and without compulsion”.
To include this definition in one part of the code but then to say in the bit that immediately follows that the court must disregard significant parts of it is, in linguistic and market terms—even if not in valuation practice statements—simply incoherent. There is no conceivable middle ground here. It is one thing or the other: remove one leg of the definition and the entire proposition unravels. Effectively, we are left with existing use value, which is not a useful or defined metric so much as a state and condition of land, normally only ever used in taxation and accounting for certain local authority assets.
At the same time, another change was made to the code’s valuation provisions to ensure that site owners could not charge ransom rents. Any valuation must assume that there is another site available to operators so that there is no monopoly in land provision around any site. This change was recommended to the Government by the Law Commission. It is quite an important one. It may be that legal minds can conceive of free markets in which the economics of supply and demand are simultaneously applied and negated, but you cannot then leave the free market to sort it out. It does not happen. It cannot happen, because you have just trashed the open market system.
I thank the Minister for the online meeting we had before Committee. Some mechanism for pegging rents, which I meant to mention, or else some other surrogate comparator, seems to me to be necessary. In the Rent Acts, when there was rent control and security of tenure, there was a person called the rent officer who was supposed to fix the rents on the basis that it was devoid of scarcity. To a degree, that worked. However, as the situation arose, the market, following the introduction of the Rent Acts in 1965, effectively imploded and collapsed. The law can state that one thing means another—that “chair” shall mean “table” and vice versa—but no lawyer in the land is going to alter their respective functional characteristics, nor in the real world of furniture sales will a buyer looking for a traditional chair be satisfied with getting a table instead. So we really need to sort it out.
In the other place, the Minister recognised that rent reductions have been much greater than expected—I do not know whether he admitted that this was the fault of aggressive behaviour by operators. This affects a wide variety of small businesses and others that we heard about at Second Reading and in the previous Committee debate. On the situation today, it seems to me that the Bill will make it easier to go to court while preserving the same valuation regime. As the Law Society said, this appears to be addressing the symptoms rather than the causes.
Plus, it skews the negotiations. If you make it easier for somebody to go to court and that becomes the default, what happens? The more powerful economic party rules it over the less powerful. You do not get equality before the law; you depart even further from a fair market position. Although provisions exist for alternative dispute resolution, there is in fact little or no compulsion for operators to use this, so they default to more costly alternatives, which are of course naturally seen as preferable to anybody aggressive and well-funded. The whole question of ADR can always be sidestepped on the basis that some point of law is at stake or the lessor has jibbed at the “take it or leave it” proposal put to them. It is very easy to avoid ADR in the majority of circumstances.
The Government said they were not going to revisit the valuation regime introduced in the 2017 reforms, but the Bill actually expands the no-network valuation regime into approximately 15,000 agreements governed by the Landlord and Tenant Act 1954 and the Business Tenancies (Northern Ireland) Order 1996. This will allow existing contractual agreements entered into in good faith to be dramatically changed. Bear in mind that rent is merely the financial end-product of a deal involving many covenants, conditions, undertakings and other criteria. The filleting out of consideration on the one hand from compensation on the other, demanding as it does the quantification of many interrelated, non-priced elements, is, I am afraid to say, a very suspect practice.
The Minister may say that these amendments are outside the scope of the Bill but I do not believe they are, because of Clauses 61 and 62, which contain the very same no-network valuation clauses first included in the code. In any event, were they out of scope, I think it unlikely that the clerks in your Lordships’ Public Bill Office would have accepted them without demur. However, whether they are or are not within the intended scope of the government proposals, and the laws of unforeseen consequences apart, I re-emphasise that they have a material bearing on the immutable world of market economics that prevails notwithstanding. Therefore, we in this House are entitled to question the measures for which the likely outcomes will be anything other—and appear to be unfolding as anything other—than those originally claimed by the Government.
I make it clear that my amendments would not return us to the situation before 2017. However, I am trying to introduce some stability and certainty here and to provide a real and meaningful incentive for better practice and some sort of collaboration, because I fear that collaboration has been the sufferer in all this.
On Amendments 20, 22 and 23, the goal here is simply to reverse the imposition of the no-network valuation regime while retaining the Law Commission’s recommendation to stop ransom rents. The idea is to ensure that site providers will receive a rent closer to the market rent, while ensuring that operators cannot be slowed down by excessive rent demands. The amendments would encourage consensual deal-making, ensure that operators receive significant reductions under court-imposed agreements compared with the old code, and provide a fairer settlement for site owners who are today accepting significant burdens on their land for now very little return. One has to say that many of them are asking, “Why would anybody bother with this?” It is not just those who are already in the system, but those who might be in the system in future for sites not yet operational or indeed identified.
Therefore, Amendments 20 and 22 together stop the no-network valuation regime being extended to telecoms sites governed by the Landlord and Tenant Act 1954. The Landlord and Tenant Act provision is delivered by Amendment 20, and the Business Tenancies (Northern Ireland) Order 1996 provision is delivered by Amendment 22. That would prevent the no-network valuation regime forcing down rents. The amendment retains the carve-out that obliges the court to disregard the site’s potential use for assignment, upgrading and sharing, in turn ensuring that operators still receive significant rent reductions or rent benefit under a court-proposed agreement.
Amendment 23 would remove the no-network valuation scheme that was inserted in the code in 2017 by ensuring that when proposing an agreement under the terms of paragraph 23, the courts would take into account the site’s land value as if it were used for the provision of an electronic communications network. At the end of the day, to have no regard to the proposed use of a piece of land is contrary to how land is transacted in the real world, whether it is a piece of garden land, industrial land or anything else. This would ensure that we would no longer see egregious examples of operators using their code rights to drive down rents. As I say, the amendment would give effect to the Law Commission’s original recommendation and take us somewhere near to the construct—I recommend it to the Minister—of fair value, which again has a definition in which equity and the proper balance between competing interests come into play.
Amendments 24 and 27 are predicated on a no-network valuation—
I am so sorry to interrupt the noble Earl, who is clearly giving us a sense of this important and wide-ranging matter. However, he will know that the Member introducing a group of amendments is asked to stick to 20 minutes maximum—and we are now over 22 minutes.
My Lords, I have a group of amendments here, all of them covering very technical bits and pieces and, rather than trying to deal with one at a time, disaggregate them and give an individual explanation for each, I felt it would be helpful for the Committee if I put them in context and dealt with in this way. I assure the noble Baroness that I shall be as speedy as I can, but I crave the Committee’s indulgence in that respect, and I should like to continue with what will be my principal contribution on the Bill.
I was talking about the question of fair value and had got to Amendment 24. This amendment would ensure that, where a site agreement is first renewed using part 5 of the code, the courts are unable to impose a rent reduction of more than 40% on the rents that fall under the existing consideration. This would ensure that the Government’s original expectation that rates would fall by no more than a maximum of 40% was delivered by legislation, and would prevent what I described to the Minister as the cliff edge that has occurred in the arrangements. Subsequent renewals under the code would then be made on a no-network valuation. It would also enable consideration of the effects of the policy on rollout and upgrade of sites and whether the objectives were being met.
Amendment 25 would require the Secretary of State to publish guidelines on the level of factors influencing the expected value of the imposed considerations. This would ensure some clarity about the Government’s expected policy. Amendment 26 would phase in the application of a newly fixed rental consideration imposed by the courts. The intention would be for the new consideration to become payable only, if it was a reduction, after 24 months from the date of the court order. Prior to that point, the operator would continue to pay the previous rent. Amendment 27 is similar to Amendment 26. This amendment would create a tiered phase-in period for the application of a new consideration imposed by the court.
The amendments fall under two options. The first tries, as far as possible, to remedy the effects that have occurred under the 2017 code. The second lot gives a sort of halfway house to build in what the Government say they are trying to do but, at the same time, ameliorate the effects with the same long-term result. I apologise for dealing with this at length. I beg to move.
My Lords, on these Benches, we support the amendments introduced by the noble Earl, Lord Lytton, with his expertise both as a valuer and surveyor and as a site provider. I well understand why he has taken the trouble to take us through the amendments in the way he has, because they lie absolutely at the core of the Bill, of the relationship between site providers and operators over a long period, and of Protect and Connect’s campaign. It is quite reasonable to unpack the valuation system that has been in place and explain in some detail his proposals by way of the amendments for a new valuation system, or at least an alternative way to deal with the current one.
I start by quoting the Central Association of Agricultural Valuers:
“The tragedy of the 2017 Code is that, far from encouraging collaboration over sites assisting roll-out, some leading operators have made heavy handed, confrontational and attritional use of the powers and privileges they were given by it, very largely to reduce the cost of renewing existing agreements rather than winning new ones or make themselves attractive as tenants. The irony is that, as reported to November’s RICS Telecoms Conference, even if rents may now be much reduced, the overall cost of securing a site has doubled and timescales lengthened.”
That seems very paradoxical. This refers to the fact that, as the noble Earl said, under changes made to the code in 2017, a no-scheme or no-network valuation methodology for valuing land was introduced. As he also explained, this allowed site providers to recover only the raw value of their land, rather than receiving a market price. It did this by inserting a new line into the code that, when setting the value of a site, prevents courts from taking into account a site’s potential use for the provision or use of an electronic communications network.
At the same time, as the noble Earl has also explained, another change was made to the code’s valuation provisions to ensure that site owners cannot charge ransom rents. Any valuation must assume that there is another site available to operators so there is no monopoly in land provision around any site. As he also mentioned, this was recommended to the Government by the Law Commission. Operators have been able to use these changes to drive down the rents that they pay to site providers, often to peppercorn rents. In 2017, the Government said that they expected that rent reductions should be no more than an absolute maximum of 40%, and that has been cited at Second Reading and on many other occasions. However, we know from data cited by the operators that reductions have at best averaged at 63%, a huge sum for many of the people who rent their land to be used for telecoms infrastructure, and in many cases, as we have also heard, reductions have been much higher—in the region of 90%.
The Minister will be aware of the Protect & Connect campaign, and many Members around the House will have had communication with it. It cites the Fox Lane Sports & Social Club, which had a mast on its land for 12 years owned first by Orange and now by EE. The club was getting £7,800 a year but it has now been told that it will get only £794 a year from 2023. Billericay Rugby Football Club had a mast for over 20 years and allowed Vodafone—now Cornerstone—to attach infrastructure to the mast. It paid the volunteer-run club £8,500 a year. However, with the changes to the code, EE says that it will cut the rent by more than 90% to £750 a year. There are many such case histories worth looking into. The evidence is there.
Surely the noble Lord agrees that a mast on a community sports building, although it provides a generous rent, should not be regarded as some kind of lottery win. I return to my point that the benefit of that mast—the connectivity it gives to not only the sports club but the community around it—is to be considered, as well as the vast rent that was charged until the code revision.
My Lords, I cannot believe that the noble Lord believes that it is reasonable to reduce the rent by 90%. There may be community benefits. However, I will come on to whether the consumer has had the benefit of these reductions, which is a very important point, and to the point about aggregators versus mast operators, which seems to be the battle of the behemoths. That is not a very happy situation but, in a sense, one caused by the changes that have been made to the ECC.
Protect and Connect estimates that providers have lost more than £200 million a year in income, including £60.5 million of lost local authority income, £44 million of lost agricultural rural site-owner income and, as the noble Earl, Lord Lytton, says, the Government’s legislation expands the no-scheme valuation regime into approximately 15,000 agreements governed by the Landlord and Tenant Act 1954 and the Business Tenancies (Northern Ireland) Order 1996. This would allow operators to ignore contractual agreements entered into in good faith, leading to more incomes being dramatically reduced.
I come on to the question of consumers. The noble Lord, Lord Vaizey, talked about the aggregators but my noble friend Lord Fox and I have brought up throughout the passage of the Bill the question of what is in the interests of the consumer. The benefit appears not to be coming down to the consumer. In fact, a great deal of money is being made in other parts of the forest. The Times yesterday reported that Digital 9 Infrastructure has bought 48% of Arqiva Group Ltd from the Canada Pension Plan Investment Board, using £300 million in cash and a loan note. Clearly there is money to be made, but is any benefit flowing through to the consumer? If the site providers are being heavily reduced in income, that is clearly not going through to the consumer.
As the noble Earl, Lord Lytton, said, Amendments 20, 22 and 23 would reverse the imposition of a “no scheme” valuation regime while retaining the Law Commission’s recommendation to stop ransom rents. Infinitely reasonably, the noble Earl has put forward an alternative in the form of Amendments 24 to 27, which are predicated on the “no scheme” valuation regime effectively remaining in place. We agree that this is not the best solution, but as he said, the changes serve to illustrate that a Government who really wanted to strike a balance between different interests could find a way of doing so. As he said, we need stability and certainty, and they are not there at present. It is certainly not facilitating speedy rollout, whatever the operators might say. I hope the Government will very carefully consider these very reasonable amendments.
My Lords, I congratulate the noble Earl, Lord Lytton, on his Amendments 20 and 22 to 27. I am delighted to support them. I hope the Government will look favourably on them for the reasons he gave so eloquently.
I will briefly address the reasons why I have asked whether Clauses 61 and 62 should stand part of the Bill. In my view, it would be better if they were not part of it. As has been said, we seek a balance with the Bill, but, as I see it, the balance is shifting further away from the occupiers in favour of the operators. I have no particular interest in this other than as a consumer, although for a period I was the co-owner with my brother of two fields in the Pennines on which a mast was placed, so I presume I would have been in receipt of a modest fee for that infrastructure to be in place. Sadly, my brother bought me out and I no longer can claim that benefit or disbenefit.
My concerns are reflected in the amendments so ably spoken to by the noble Earl. The Bill proposes to change the way that land is valued so that it can be applied retrospectively to the renewal of some sites that were in existence prior to 2017. Secondly, the Bill includes provisions for an alternative dispute resolution mechanism, which I support, although, as I stated earlier, operators should not feel the need to engage with this mechanism if their resources marginalise the opportunity for a fair and equitable resolution for many landowners who simply do not have the confidence or means to contest them.
I will make a general point not dissimilar to that made by my noble friend Lord Vaizey and the noble Earl, Lord Devon, on the previous group. All of us who live predominantly in the countryside are providing a service for the rest of the community, especially those who live in country districts, by hosting on the land infrastructure owned by the occupier. That has to be recognised, and that is why I have great difficulty, considering the way the code has been applied since 2017 and under the terms of the Act, with the fact that the code will be applied more strictly.
I want to add a comment that my noble friend Lord Parkinson is familiar with, because I wrote to him about it. I am most grateful to him for his reply. Why can civilian use not be made of the emergency services network? He is aware that a number of masts have been placed and erected across North Yorkshire, particularly in the hills and the moors, where we have a very poor mobile phone frequency and very poor connectivity with broadband and wi-fi. If there is any possibility of us piggybacking on the emergency services masts for civilian use, that would be to the huge benefit of the wider community.
I go back to the time in 1997 when I was first elected to the other place as the Member for the Vale of York. We had a situation where the emergency services and the police could not be reached, which is why the emergency masts were put in place at some considerable expense to the taxpayer. I am sure there can be no security aspects that could not be dealt with to allow us to use them. I appreciate that that is a separate point.
I entirely agreed with the noble Earl, Lord Devon, when at Second Reading he set out, as did I, that we are moving to the situation which existed before 2017, with a regrettable consequence of potentially fewer landowners and occupiers permitting the infrastructure to be placed, or to continue to be placed, on their land.
I have given notice of my intention to oppose the question that Clause 61 stands part of the Bill, which gives operators the ability to calculate rent based on land value rather than market value when renewing tenancies to host digital infrastructure on private land. I think that is fairly self-explanatory. I have given notice of my intention to oppose the question that Clause 62 stand part of the Bill, as it gives operators the ability to calculate rent based on land value rather than market value when renewing tenancies to host digital infrastructure on private land in Northern Ireland.
The noble Lord, Lord Clement-Jones, quoted the useful briefing we have had from the Central Association of Agricultural Valuers, or CAAV. It states quite specifically that its understanding in relation to the renewal of business tenancies conferring code rights in Clauses 61 and 62 was that:
“The changes here were not understood to be part of the consultation”,
which we have heard about.
“The Government was understood to have made it clear in the 2021 consultation that it did not intend to revisit the valuation framework. Indeed, the government’s response to the consultation stated: … ‘the government does not intend to revisit the statutory valuation framework. This issue was therefore not within the scope of the consultation.’”
If that is indeed the case, I regret that we have perhaps not heard all that we should have heard from occupiers and landowners in regard to these provisions.
In relation to Clause 61, the CAAV concludes that
“Lord Lytton’s proposed amendments to both clauses would also in principle retain the market value basis for these first renewals but disregard the operator’s qualified Code powers to upgrade and share apparatus. If these clauses are retained, we support these amendments.”
I share the reasoning behind that, which is why I support those amendments. With those few remarks, I look forward to hearing what my noble friend makes of my proposals to delete Clauses 60 and 61.
My Lords, I apologise for not being able to take part at Second Reading and in the first day of Committee. Like the noble Earl, Lord Devon, we all want Project Gigabit to succeed. I support my noble friend Lady McIntosh and the noble Earl, Lord Devon, in their proposals to delete Clauses 61 and 62. If they do not find favour, I would support cross-party Amendments 20 and 22.
I must first declare an interest as an NFU member and the landlord of two telecom masts. One rent review has already taken place. The original offer was a 95% rent reduction. I could probably have got rid of the mast, but as it borders the M3 I did not think that it was in the public interest. Having negotiated for 21 months, I got the reduction down to only 73%, but my legal fees in doing that exceeded my first year’s new rent, and it was quite stressful.
That is quite unimportant compared with the huge loss of income to community projects, clubs, churches, social clubs, hill farmers and others. As other noble Lords have mentioned, the organisation Protect and Connect, set up last year to give a voice to property owners in rural and urban communities who rent their land for mobile phone masts, has highlighted this real problem for these categories of landlords.
It is not just individual landowners who are affected. I quote a March 2022 cutting from the Daily Express, “Mobile masts firms branded ‘Goliath bullies’”:
“Thousands of churches, charities, hospitals and sports clubs face reductions in mast rents—and a social club popular with pensioners has had rent slashed from £3,500 to around £550 a year, an 85 per cent cut.”
The Daily Mail online said:
“Hundreds of sports clubs, farmers, charities, churches … and community groups with mobile phone masts on their property … have seen a drop in rents of … 90 per cent”.
In January 2022, the Sun said that thousands of churches, charities and social clubs face a cut of up to 90%. The headline in the Edinburgh Evening News was: “Edinburgh pastor fears for church’s future after ‘bullyish’ EE slashes mast rent by 96 per cent”. In Property Week it was: “Telecoms Bill set to enforce huge rent cuts for landlords”.
For these reasons, I believe that the amendments I have mentioned give a fairer outcome to the balance between landlords and tenants. As noble Lords have already heard, it is not only me who believes this. The respected Centre for Business & Economic Research has calculated that the 2017 reforms have not delivered a faster 5G rollout. As the noble Lord, Lord Clement-Jones, stated, providers have lost £200 million of income, including £60 million of lost local authority income and £44.2 million of lost agricultural or rural site income.
The Government’s proposed reforms would cause rents to fall by a further 41% from their post-2017 levels. On a 10-year basis, this is equivalent to a cut in local authority funding of £645 million and a cut to sports centres, social hubs and hospitality of £158 million. The CEBR says that site rental was not unfair before 2017 and that mobile operators have not used savings to invest in communications networks; nor do rent costs impact their profitability materially.
The noble Earl, Lord Devon, emphasised at Second Reading that a “broad array of stakeholders” oppose this legislation,
“from the NFU and CLA, to the CAAV, the BPF and the Law Society … By these provisions, the Government will be intervening in long-standing existing leases, freely negotiated between willing participants, to dramatically decrease rental values, often years after the fact.”—[Official Report, 6/6/22; cols. 1053-54.]
It is another blow to farmers’ diversified income and, in my experience, will further delay mast development. I will not want to go through 21 months of tortuous negotiation again for a new mast, particularly having just heard about the access issues in Clause 66. That is why I support a fairer method of rent calculation, as proposed in the amendments.
I am disappointed that a Conservative Government reject an amendment on market value and wish to proceed with extending the unfair 2017 Act to the Landlord and Tenant Act 1954 and the Business Tenancies (Northern Ireland) Order 1996.
My Lords, I support the amendments from the noble Earl, Lord Lytton, and much appreciate his extensive exposition of them. I have also put my name to the stand part notices from the noble Baroness, Lady McIntosh.
I am grateful to the noble Lord, Lord Parkinson, for meeting me and the noble Earl, Lord Lytton, since Second Reading. I note from that discussion that DCMS was largely unaware of the impact of the 2017 amendments on the negotiation of lease renewals. I wonder whether that is, as the noble Baroness, Lady McIntosh, indicated, because no consultation was undertaken on them. It really is important for such considerable and important amendments to be consulted on.
I also noted earlier, in response to Amendment 18, as proposed by the noble Baroness, Lady Harding, that the noble Lord, Lord Parkinson, resisted it on the basis that he wanted to ensure sufficient protection for those with poles on their land. If this were the Government’s justification for resisting Amendment 18, why do they not have the same concern of providing sufficient protection for those with masts on their land, which are so considerably more impactful and damaging? Can the Government explain why they refused to consult on this?
I am not a valuer, as the noble Earl, Lord Lytton, is; I am a litigator and will therefore defer to him on the wonderful art of valuation and agree that the markets should be left to their own devices. The Government’s intervention only bogs down market forces and, as a litigator, I agree entirely that market intervention by government has only handed the aggregators and their lawyers more work and more benefit.
I also reiterate that our focus here should be on increasing connectivity. Why would a landowner let a stretch of land to a mast operator when the rent recovered would simply be equivalent to the value of the land when undeveloped or from its existing use? That is a poorly defined concept but also, in this brave new world of ecosystem services, all of that undeveloped land now has potential to provide biodiversity net gain and to earn ELMS payments et cetera. It would appear that none of that development in the use and potential value of land will be baked into these rental negotiations. Can the Minister, in responding to these amendments, explain how payments for biodiversity, water retention et cetera will be baked into the negotiations under these new provisions?
My Lords, having followed this debate quite closely, I thought I would make a brief intervention. I want simply to put the case for the operators, since they have been hammered pretty much from all sides—surprisingly, from the Liberal Democrat Benches as well; they have now rediscovered their landed gentry roots and gone in to bat for them.
It strikes me that the mobile operators, in particular, are not charities. Much as it is a good thing that they were able to pay generous rents to local community rugby clubs, and much as I would not wish to stand in the way of such clubs receiving generous rents, those operators are commercial organisations. It is important to emphasise that the country benefits, as they have paid enormous amounts of money for the radio spectrum that they use. Famously, they massively overpaid for 3G but certainly paid substantial amounts for 4G and for the 5G spectrum that is now being rolled out. All that goes into the Treasury coffers and no doubt finds its way to various rugby clubs as well.
It is also a mistake to believe that the mobile phone companies in this country are particularly profitable. As I understand it, their margins are pretty low at between 1% and 2%. I always joke that that is entirely the fault of my noble friend Lady Harding, because of course it was TalkTalk that, as a company, got the British consumer used to paying low prices for mobile phones. The large cost of a monthly mobile phone bill often relates to the cost of the smartphone that the consumer is determined to have. I emphasise again to your Lordships that there is a balance to be struck between charging a reasonable rent and the benefits one gets—
We ought to remember that Vodafone is a global company and a great British success story. I congratulate the noble Lord, Lord Northbrook, on reading out the successful efforts of the Protect and Connect PR campaign in picking individual stories that appear to show rapacious mobile operators riding roughshod over small community organisations.
The key point is that, if you put a mobile mast in a rural area, it is not going to be a significant generator of revenue for you as a company because it will be used by only a few people. If the market is left entirely to its own devices, most of the masts—as with most of the fibre that is going into the ground—will go into our main metropolitan areas. That is why if you walk down Oxford Street, you will see a mast pretty much every 10 or 15 metres because that is where the revenue is generated. If one insists on charging very high rents in rural areas, we will slow down the connectivity and build-up of rural networks. I simply want to make the point that mobile operators do not exist, much as one would wish them to, to supplement the income of community sports clubs, much as I love and admire the work that they do.
In saying that mobile operators are very large and substantial companies, does the noble Lord accept that only part of what they do fulfils the same sort of social benefit commonly associated with a traditional utility company? A very large amount of what they do and propose to do is the selling of very large amounts of bulk data for all sorts of commercial purposes, not least streaming information to parts of the entertainment business. Why is the claim made that they should be treated in the same way as a utility, when a data centre, battery storage facility or even a wind or solar farm would not qualify in the same way? I put it to him that some of the arguments put forward, and which appear to have influenced government, do not stand up to scrutiny.
I do not want to be sidetracked into a debate on the classification of wind or solar farms, but I would describe mobile phones as an essential utility. The noble Earl himself pointed out what pleasure he got from having an emergency services Airwave mast on his land and how important that is. Rural connectivity is becoming absolutely essential, which is why the Government have put £5 billion into supporting the shared rural network.
My noble friend Lord Northbrook spoke about his row about the mast on the M3. What he should also have pointed out about the reduction in rents perhaps reducing the opportunities for farmers to diversify is that it is a complete red herring. The opportunities for farmers to diversify are provided by giving better mobile connectivity. Anyone who knows Jeremy Clarkson and has watched his incredible programme “Clarkson’s Farm”—maybe he is one of the 50 rumoured Peers who will be coming into this House shortly and will give us the benefit of his views personally—will know that what is really holding back diversification are small, conservative, small-minded district councils that will not give planning permission for much needed restaurants, car parks and farm shops.
My Lords, I shall not enter the zero-sum game debate we appear to be having. However, the really salient point I ask your Lordships, particularly the Minister, to focus on is the one made by the noble Earl, Lord Devon: if there is no financial incentive to landowners to take masts, there will not be masts and we need those masts. Whatever happens, the formula has to deliver an incentive to the landowners. The evidence is clear; that incentive is vanishing to the point where it ceases to be viable. That is the point your Lordships should focus on in this debate, and the one I hope the Minister brings to bear in his response.
My Lords, may I make one additional comment? Despite my noble friend Lord Vaizey thinking I am personally responsible for mobile investment and pricing, I should like to put on the record that TalkTalk did not do anything to mobile pricing; it is a fixed-line broadband provider, not a mobile provider.
Regardless, I should like to make a serious point about competition. The noble Earl made the point that we should believe in a free market, which I definitely do. I firmly believe that competition will get to the right answer, but completely unfettered, unregulated infrastructure markets do not drive competition—they drive the opposite. That is one reason I am really concerned about the multi-dwelling unit amendment that we did not debate, because that risks the absence of competition.
In the same way, I support my noble friend Lord Vaizey because if we do not have a regulated approach to the valuation, we will find not the domination of big mobile companies but the monopoly control of individual landowners, particularly when there is already a mobile mast on their site, as they have a complete monopoly control of that site. It is important that we find a balance because there is power on both sides of this relationship. Big is not always the most powerful. I say that having learned that myself at TalkTalk. I support the comments of my noble friend Lord Vaizey. This is not as one-sided as this debate has perhaps felt.
My Lords, the issue of valuation, as we have heard clearly today, generates one of the most significant ranges of concerns. Noble Lords have been extremely helpful in unpacking the issues, whichever side they may be on in this debate. I will focus on Amendment 21, which I am pleased to have tabled. It seeks to guide courts in relation to the appropriate reduction in rents paid by operators to landowners. The amendment seeks to ensure consistency with the Government’s previous indication that losses would be confined to something in the order of 40% maximum. I will confine my comments to that point.
When the Government reformed the code in 2017, Ministers indicated that, although landowners would lose out overall, they could expect to receive some 60% of the sum to which they had become accustomed. As we have heard in this debate, losing 40% of proceeds, despite exactly the same access rights being granted to operators, is quite a situation to contend with. As discussed at Second Reading, cases have been cited where reductions reached some 90%.
I am aware that the campaign group Speed Up Britain has objected to the quoted figure of 90%, citing industry figures that show an average rental reduction of 63%. However, even that is substantially higher than the 40% promised by the Government, which has led to many churches, village halls, sports clubs, farmers and even hospitals scratching their heads, trying to make sense of the situation.
We all know that we need the infrastructure; that was made clear by the noble Earl, Lord Devon. We want that infrastructure quickly, but we also want an appropriate balance of the rights and responsibilities of both telecoms operators and landowners. It is not a convincing argument that lower rents automatically mean higher investment in infrastructure. I am sure that is a discussion we will return to during the eighth group for debate today.
Our Amendment 21 is but one suggestion and the noble Earl, Lord Lytton, has brought forward a number of his own. I am grateful to the noble Earl for bringing his expertise to bear in addressing these issues. I certainly hope the Minister will engage in his usual considerate way with all the propositions put before the Committee. I also appreciate the amendments brought forward by the noble Baroness, Lady McIntosh, who is also seeking to ensure fairness and balance between the parties.
So I hope the Minister will address a point that he made at Second Reading and that is relevant today. He suggested that rent reductions were likely to be compensated for—not directly but as a matter of degree —by funds allocated under other DCMS schemes. It would be helpful if he could provide the figures to back that up; I realise that that requires considerable detail, so he could perhaps respond not today but subsequently, in writing.
The list of case studies grows day by day and, given this, many people are asking why the Government did not stand by their original commitment to a maximum reduction of 40%. I hope that the Minister will consider the amendments and respond to that question.
My Lords, as we expected, we have had a lively and somewhat polarised debate on this group, which goes to the heart of quite a lot of what the Bill seeks to do. A number of amendments in it relate to the valuation regime, and they all seek to do slightly different things. I will certainly try to address all of them, although not in numerical order.
However, it might be helpful if I first set out some details about the current position. In England and Wales, agreements can be renewed in two different statutory ways: one is contained in part 5 of the code and the other is in the Landlord and Tenant Act 1954. The position in Northern Ireland is similar: agreements can be renewed using either part 5 or the Business Tenancies (Northern Ireland) Order 1996.
The main difference between the procedures at present is that they have different frameworks against which the financial terms of a renewal agreement are calculated. In the code, the consideration paid to a landowner is calculated on a no-network basis, as was helpfully explained by the noble Earl, Lord Lytton. But this framework does not currently apply to agreements renewed under the 1954 Act or the 1996 order, where rents are calculated on a different basis. The Government do not believe that maintaining this difference is right.
Clauses 61 and 62 will ensure that the approach taken to rent calculation for renewals under the 1954 Act or the 1996 order is consistent with the approach in the code. This means that the same approach will be applied throughout the United Kingdom, reducing disparities in deployment costs in different jurisdictions which could otherwise contribute to a digital divide.
Before turning to the specific amendments, I will pick up a few points raised by noble Lords. The noble Earl, Lord Lytton, mentioned the Central Association of Agricultural Valuers—CAAV—with which DCMS has engaged closely, both in developing the 2017 reforms and in our subsequent discussions regarding their implementation. We welcome the CAAV’s input on these and the wider initiatives aimed at embedding better working practices in the negotiation and completion of code agreements. I am grateful to the noble Earl for sending on further points from the CAAV; these were rather lengthy and detailed, and I do not think that it would be helpful, or do them justice, to discuss them in detail today, but I would be happy to write to him on those matters and copy other noble Lords in.
I welcome the noble Earl’s comments on the code valuation framework and ordinary market valuation principles, and I bow to his expertise in this field. I confirm that DCMS engaged closely with the Royal Institution of Chartered Surveyors in developing the 2017 reforms to the code. In 2019, it produced a specific guidance note for surveyors working in this field, and I understand that this makes clear the relationship between the code valuation framework and the red book global standards of valuation.
The noble Earl referred to independent infrastructure providers, which have a key role to play in the delivery of robust and resilient networks. They invest substantially in the deployment of new apparatus, which can then be shared by multiple operators, expanding coverage and extending choice for consumers. Their role was lauded during the passage of the 2017 reforms, both in another place and in your Lordships’ House, where the noble Lord, Lord Foster of Bath, referred to them having
“some of the most productive telecommunications facilities in the country”.— [Official Report, 31/1/17; col. 1181.]
So I was a little surprised to hear concerns expressed today about the possible disadvantages of this important part of the sector, but I would certainly be happy to discuss those concerns further if noble Lords would like to.
On whether independent infrastructure providers are passing on savings, we are not aware of situations where such providers who have secured new arrangements following the 2017 reforms have failed to pass on any decrease in costs to operators using their installations. It must be remembered that many independent infrastructure sites will still be subject to pre-2017 agreements and, as such, there may not yet be any consequential savings to pass on.
It has been suggested, including by my noble friend Lord Vaizey in his intervention on the noble Earl, Lord Lytton, that the code creates the potential for intermediaries to acquire sites cheaply, using the code valuation framework, and then to charge operators excessive sums to use them. It is important to note that, if such an intermediary has not installed apparatus on the land but is the occupier of the land for the purpose of the code, it would be open to a code operator to seek code rights to do so from that party. However, if the intermediary invests in infrastructure on the land, we think it right that they can agree commercial terms for the use of it with the operators. Naturally, if competitive terms are not offered, operators will go elsewhere.
My noble friend Lord Northbrook and the noble Lord, Lord Clement-Jones, referred to the report by the Centre for Economics and Business Research. I am conscious that we have much to cover, so I do not intend to discuss this in detail, but I will say that, generally, DCMS is aware of it and its findings. We note that it was commissioned by the Protect and Connect campaign, and our understanding is that it focused primarily on the valuation regime, rather than providing a broader view of how the code is working in practice, which is what DCMS aims to do in its engagement with interested parties and through the consultation that has informed the development of the Bill.
Turning to the amendments, I will first address those tabled by the noble Earl, Lord Lytton, the noble Lords, Lord Clement-Jones and Lord Thurlow, and my noble friend Lady McIntosh of Pickering, which relate to paragraph 24 of the code. These go to the crux of the argument regarding the valuation framework. Before the 2017 reforms, the amount of rent payable reflected the value of the site to the operator. Site providers were therefore potentially able to charge an operator thousands of pounds a year to house apparatus on small pieces of land that were otherwise of low or nominal value.
The 2017 reforms were intended to rebalance the relationship: operators would pay a fair rent that reflected the true value of the land, and site providers would remain able to receive additional sums to cover any loss or damage incurred as a result of the operator exercising code rights, or that may be incurred in future, including professional fees. To address a point made by my noble friend Lady McIntosh, those payments should take into account any alternative uses that the land may have and any losses that may be incurred, among other things.
As we have said throughout, and even following the helpful conversations that I have had with a number of noble Lords so far on the Bill, we continue to believe that this balance is right to ensure the cost-effective and efficient delivery of robust digital services. As was noted today, these are becoming ever more necessary in our daily lives, as was thrown into sharp relief during the pandemic.
In his admirably pithy contribution, the noble Lord, Lord Fox, asked whether we believe that incentives still exist for site providers and landowners to enter into agreements. We think that they do. We have been told that the amounts offered by some operators are now so drastically reduced that landowners are less willing to let their land be used, but we maintain that the 2017 valuation provisions created the right balance between the public need for digital communications and landowner rights. We were aware that the valuation framework would result in reductions to rental payments but, in our view, prices being paid for rights to install communications apparatus before 2017 were too high. With digital communications becoming increasingly important, that needed to be addressed.
The code still makes separate provision for landowners to recover compensation for loss or damages. We think that, taken together, the provisions on consideration and compensation mean that landowners should receive a fair payment for allowing their land to be used, despite the fact that overall amounts will normally be lower than they were before the 2017 reforms—but we believe that the incentive remains.
Amendment 23 seeks to amend the valuation framework, moving away from the no-network approach that was introduced in 2017. The amendment appears to us to be a retrograde step, taking the market away from the clear approach established by the 2017 reforms and moving back towards the status quo ante. This could reintroduce some of the problems that were addressed by those reforms, including a return of payments that were unfairly too high, and leave us with a dual approach to valuation on the renewal of agreements, potentially causing confusion for operators, site providers and courts. The Government, therefore, cannot accept this amendment.
Amendments 26 and 27 both relate to agreements renewed under Part 5 of the code. Amendment 26 seeks to phase in rent reductions in these cases through a two-year grace period during which site providers would continue to receive consideration at the previous level. Amendment 27 looks to introduce a tiered phase-in period that would last for three years. The code valuation framework was introduced in 2017 and there has been much publicity on how this has affected payments to landowners for hosting telecommunications apparatus on their land. I believe it has been relatively clear to interested parties for a substantial period that the market has changed significantly, and that, in most cases, reductions in rental payments are to be expected. For this reason, the Government do not think that it is necessary for additional time periods to be given, when the effect will be to increase operational costs and to slow down the rollout of 4G and 5G coverage that the population rightly wants and expects.
Amendment 25 would require the Secretary of State to issue guidance on how paragraph 24 of the code should be interpreted and the maximum permitted reduction in consideration. Statutory guidance can certainly play an important part in ensuring legislative measures achieve their intended aims, but this must be considered on a case-by-case basis. We have concluded that guidance in this area would not be appropriate; code agreements cover a hugely diverse range of circumstances, and the code sets out a clear framework approved by Parliament, which establishes valuation principles which can be applied across different scenarios. We think it is right that, when disputes arise, further interpretation of these principles should rest with the courts. Indeed, the courts have been doing this since the reforms were introduced in 2017 and a body of case law is now well established. We believe that introducing statutory guidance on valuation at this stage would undermine the progress that has been made in that respect, introducing uncertainty and confusion, not least because the status of the proposed guidance from the Secretary of State, and the degree of influence it would have on the courts, is unclear.
Instead, we consider it much better for a court to be able fully to consider all the circumstances of a particular given case and all the relevant evidence before it, and then to act in accordance with the statutory framework set by Parliament. For the same reason, we do not think a statutory cap on rent reductions is appropriate; this would fetter the parties and, ultimately, the courts from proper consideration of all the relevant circumstances. It is also important perhaps to consider non-legislative action that can be taken to promote better relationships: as well as the steps taken in this legislation, there are non-legislative steps the Government are taking to ensure that the code works well in practice. For example, the department’s Barrier Busting Task Force is holding monthly workshops with a broad range of groups with an interest in the code. Those workshops are attended by network operators, landowner representative groups and local authority representatives, as well as professionals and surveyors. The workshops aim to encourage greater collaboration in relation to code negotiations and agreements through identifying and implementing better ways of working. They touch on key issues which parties have raised with us; for example, stakeholders are currently working to agree on standard template wording for common clauses within code agreements.
Amendments 20 and 22 seek to disapply much of the valuation framework to agreements renewed under the 1954 Act and the 1996 order. The Government cannot accept those amendments, as they serve only to entrench the inconsistencies in the different renewal frameworks, which I mentioned at the outset. Were Amendments 20 and 22 to be accepted, some landowners would receive higher rental payments for longer. However, this would allow network costs to remain unacceptably high, penalising swathes of consumers and businesses who may face price increases for digital services, or may have to wait longer for the high-quality, reliable connections they need.
Amendment 24 deals with pre-2017 agreements renewed under Part 5 of the code when they expire and seeks to cap any reduction in the subsequent rent imposed by a court at 40%. That is also what Amendment 21, tabled by the noble Baroness, Lady Merron, and the noble Lord, Lord Bassam of Brighton, would do. Generally, the Government’s preference is for parties to have the ability freely to negotiate the amount payable for rights to install and keep apparatus on land. We have, therefore, specifically resisted arbitrarily limiting the amount of rent or consideration which is payable under these agreements. We think that the current scheme makes it clear that what is an appropriate amount may vary significantly from case to case, depending on the circumstances in play. Even where parties are unable to agree this figure consensually and a court imposes financial terms, the court has discretion to reach its own conclusions within the framework set out by the code, rather than being impeded by statutory rent controls. If the financial terms of these agreements were controlled in this way, we would have a regime that did not take into account the broader range of relevant circumstances which the court is able to consider. I suspect that this is something that site providers, operators and, indeed, noble Lords would all be keen to avoid.
As the noble Baroness and the noble Lord, Lord Clement-Jones, said, the amendment is based on the claim that the Government committed in 2017 that rent reductions under the code valuation framework would be no more than 40%. That has been promoted as a fact by lobby groups which wish to reverse the 2017 reforms. In reality, the Government made it clear in 2017 that the potential impact of those reforms was difficult to predict, given the essentially consensual nature of the market. Independent analysis referred to in the impact assessment which accompanied the 2017 legislation estimated that reductions could be in the region of 40%. However, this was by no means a government commitment, or even a target reduction, as has sometimes been suggested. If the amount by which rents can reduce on renewal is capped in the way proposed by this amendment, a dual market would potentially be created, with landowners hosting apparatus before 2017 able to seek higher sums than entirely new site providers. One can easily imagine operators vacating existing sites to seek new ones, purely to secure lower rents, with the consequential risks of disruption to services or reduced coverage while new sites are established.
The noble Baroness, Lady Merron, asked me to set out a bit more about the other sources of funding for community groups, youth groups, sports clubs and others which have benefited in recent years from rent, and I am happy to give her some non-exhaustive examples. Through the Youth Investment Fund, over the next three years, we will be constructing or refurbishing up to 300 youth facilities in parts of England which require levelling up, thereby extending opportunity for the next generation. To kick-start that programme, an additional £10 million will be spent this year in key levelling-up areas. In relation to sports clubs, the Government very much agree that sports and physical activity are crucial for our mental and physical health. We have provided an unprecedented £1 billion of financial support to such organisations during the pandemic. Since 2015, Sport England has allocated more than £1.5 billion to nearly 5,000 organisations across the UK. Furthermore, in the recent spending review, we announced £205 million to build or transform up to 8,000 state-of-the-art community football pitches and multi-use sports facilities across the UK. Earlier this month, we announced £30 million for PE teacher training and to open up school facilities to provide access to the wider community. That was in addition to a £30 million package to renovate 4,500 park tennis courts across the country.
My noble friend Lord Northbrook cited some case studies which, as with my noble friend Lord Vaizey, I suspect were prompted by the Protect and Connect campaign. It would not be appropriate for me to comment on ongoing negotiations or on the specific terms of an agreement that has been negotiated between two parties. However, what I would say in general is that rent is often only one part of any overall financial terms agreed. It is not unusual—indeed, it has been the department’s experience—that case studies citing rent reductions may present a somewhat partial picture. Regarding behaviour during negotiations and the respective bargaining positions of the parties, the Government have recognised site provider concerns and are introducing measures to encourage greater collaboration.
I have spoken at some length on valuation, but I want also to say a few words on the state of the market at the moment, which a number of noble Lords alluded to. It has been said repeatedly that the 2017 reforms have stalled the market, making landowners unwilling to enter into new or renewed agreements and reducing the pace of deployment. We expected an initial slowdown when the code valuation framework was introduced and while the market adapted, but we think that it is too simplistic to attribute changes in the market since 2017 solely to the valuation framework. The reforms in 2017 also made it easier for operators to share equipment, which will have reduced the demand for new mast sites to be built. The Covid-19 pandemic is also likely to have had an impact on the number of new sites commissioned, as telecommunications operators faced the challenges of unprecedented demand.
As we have heard in some of the contributions today, noble Lords have been contacted by a number of lobby groups and organisations that want to reverse the changes that were made to valuation. I know that the picture painted by some of those groups is of a market that is broken, stalled or in need of assistance and of a landscape full of litigation between operators and site providers with barely any consensual deals being agreed. I have to say that the information received by my officials from interested parties on both sides of the fence—operators and site providers—is remarkably different. They are told of a market that has settled down, where relations between operators and site providers are much improved and where consensual deals are the norm. As has been the case so far on the Bill, I am always happy to hear from noble Lords with examples to the contrary. We believe that the measures in this Bill will build on the situation that we are hearing about from interested parties—
My letter that was sent just before Committee outlined some of the engagement that the department has had and listed some of the groups with which we have spoken. That goes some way towards that, but I will certainly see whether there is anything further that I am able to share with noble Lords in addition to that table, which was appended to the letter I sent yesterday.
As I say, we believe that the measures in the Bill will address the complex areas that have led to protracted litigation and emphasise the value of collaborative relationships between operators and site providers. I therefore invite noble Lords to withdraw or not to press their amendments in this group.
My Lords, I thank the Minister for that detailed reply. I will obviously not try to cover everything he said, but just touch on one or two points.
The Minister referred to the RICS, and it is true that the RICS produced a guidance note in relation to code changes. It was of course produced in the light of those changes, rather than in an attempt to influence them, and it points out the strong likelihood of very low rents resulting from those changes. Of course, being a guidance note, it does not predict or advise on what the market outcomes are likely to be in practice. I have not had a moment to check, but it is my belief that the manual of valuation and appraisal—otherwise known as the Red Book—produced by the RICS and Institute of Revenues, Rating and Valuation, has made the valuation of mast sites an exception to the market value criteria within the Red Book. It is, if you like, a derogation from that market value principle.
I go back to the point that I made: you cannot have market value in the terms that I described it and the internationally recognised specification and then say that you disregard it and the matter gets to court. So what does that mean? You go to court because you can get it disregarded. Is that the way that the world functions? I am sorry, but I just do not get it—this is an oxymoron of a principle.
That apart, there still remains the fact that reducing rents to around about £750 or so per annum—if that is indeed what will happen, because all these things are hemmed in by confidentiality clauses so that the information does not get out, thus preventing any sort of transparency that would give rise to a market in those terms—calls into question the existence of willing participants, regardless of the valuation assumptions to the contrary. You can make all the assumptions you like, but the market will tell you what it is going to do. If you have people who are disengaged, then that is it.
The Minister is in denial that the market is moving towards, or is effectively at, a point at which it is bust. I hope that he will be able to produce some statistics to back what he says. While he says that, on one hand, the comments from organisations such as the CAAV may be regarded as apocryphal, I have difficulty in understanding that what he says his department is receiving is of any better or worse quality than that. We are in a land of the unknown, with people saying one thing and meaning another. We are effectively relying on a lack of evidence. That really is not good enough.
If we are getting to a stage where the market is not functioning, what then? How long will the Government wait before they decide that something needs to be done? And what will they do—more compulsion, more work for the law courts and legal profession, more time spent getting these masts in place and rolled out? I do not see it. I would really love to know what the greater vision is. The Minister referred to “greater collaboration”; I am sorry, but I do not see it. I see anything other than greater collaboration coming out of this. It takes two to tango—the old business about taking a horse to water may well apply.
I will not press these amendments and will withdraw them at this juncture; they can be resisted, but the real world outside will continue notwithstanding. It does not matter what sort of bubble you live in and what sort of vision you create—whether the commercial vision of code operators or the vision of what is happening from the point of view of the department that wishes to defend the policy that it has had in place since 2017—the situation on the ground will work out the way that it will work out. There is no changing that any more than one can change the basic DNA of transactional analysis in property markets. I beg leave to withdraw Amendment 20.
Amendment 20 withdrawn.
Amendment 21 not moved.
Clause 61 agreed.
Clause 62: Rent under tenancies conferring code rights: Northern Ireland
Amendment 22 not moved.
Clause 62 agreed.
Amendments 23 to 27 not moved.
Clause 63: Compensation relating to code rights: England and Wales
Debate on whether Clause 63 should stand part of the Bill.
My Lords, I will speak to the stand part notice in my name, on which I am delighted to have the support of the noble Earl, Lord Devon, opposing that Clause 63 should stand part of the Bill.
The new sections inserted by Clauses 63 and 64 make provision for all code agreements, when renewed by court order, including those made prior to 2017, to be made on land valuation terms consistent with the 2017 code. The new sections will apply to England and Wales or to Northern Ireland only. These measures, I understand, were a response to the consequence of the 2017 ECC reforms on the treatment of certain expired code agreements that are up for renewal, as had been set out in the previous consultation.
Again, Clauses 61 to 63 expand the agreements covered by the Digital Economy Act 2017 to extend to areas previously exempted from the renewal procedures of the 2017 Act, specifically those covered by Business Tenancies (Northern Ireland) Order 1996 and the Landlord and Tenant Act 1954. The clauses also insert the valuation provisions of the code directly into the older legislation so that consideration of compensation for site owners under these agreements is calculated in a similar way to that under the code, as we have heard, leading to lower rents.
I should like to strengthen the earlier argument of my noble friend Lord Parkinson by producing evidence that the rates are not being reduced. I have a copy of a letter from as recently as April this year from a member of the NFU to the NFU in, I understand, the north-east of England, from which I quote:
“Having ongoing first-hand experience of a Code renewal, I strongly support the NFU’s effort to oppose certain changes put forward by the recent Product Security and Telecommunications Infrastructure (PSTI) Bill—to advocate for a greater balance of power between landowners and operators, and for the topic of land valuation to be urgently reviewed. Otherwise the PSTI Bill, which is effectively a cranking up of rights for operators but without a review of how telecoms sites are now valued, will simply serve to harm the market further as it weakens the already limited protections that site providers have under the existing legislation.”
I think that directly shows that even as recently as two or three months ago, a member of the NFU lamented the fact that rents are, as my noble friend Lord Northbrook said, radically reduced to a level not previously anticipated, I believe, by the Government, to the Minister’s certain admission. I therefore press my noble friend, as I believe Clause 63 goes to the heart of the change imposed since 2017 and how radical the reduction will be. I understand that the tribunal to which the application for the order will be made will now be an upper-tier tribunal—I should like that confirmed—but new subsection (2) states:
“The court may order the tenant to pay compensation to the landlord for any damage or loss that has been sustained or will be sustained by the landlord as a result of the exercise of any of the code rights conferred by the new tenancy.”
I just want to be clear about precisely what the extent of that compensation will be. Can we assume that it will be radically less than was previously the case? Does the Minister accept that, rather than increase the ability for faster speeds—greater connectivity for broadband and wi-fi, and a better signal for mobile connections—it will have the perverse effect of achieving the complete opposite? I press my noble friend on what exactly the extent of the compensation will be. In the event that the compensation is radically reduced to that previously intended, do my noble friend and his department envisage revisiting this clause at a later stage?
My Lords, I shall speak to Amendments 28, 29, 30, 31, 32, 33 and 34. This may well be another part of the Bill where we have differing views about the balance to be struck between site providers and operators, and whether the Bill’s provisions will actually hamper the rollout of 1-gigabit connectivity.
In the consultation response that accompanies the Bill, the Government stated explicitly that agreements could not be changed by court order during the course of a contract, but changing the definition of a person able to grant code rights to an operator is likely to allow the cancellation or modification of agreements that were agreed in good faith and still have years to run and impact every single relationship between site owners and operators. This is because of the changes made by Clause 67, which do not limit an application to a situation where the existing agreement has expired. Telecoms companies, the operators, will now be able to choose which method of renewal or modification they wish to use. Moreover, site owners are unable to remove operators from their land if negotiations break down. Given this, it is likely that operators will seek to review all contracts they have on their books, allowing for retrospective application of the changes.
Site owners and operators should have certainty of contract. If an agreement has been reached, the terms of this should be settled and respected until the end of the agreement. If they are to be changed, it should be by mutual consent and commercial negotiation rather than by this type of intervention. Rents should be changed only from the point at which courts have made a decision, respecting existing contracts. Site providers are routinely being taken to court by operators to reduce the prices they pay, using, as we have heard, the changes made in 2017 that inserted a no-scheme or no-network valuation methodology into the code. This tactic is used to drive down rents to the lowest possible level.
The Bill gives operators sweeping new powers, which would mean that when the parties to an expired agreement are unable to agree on the terms of any renewal agreement, operators can seek modified terms to code agreements on an interim basis, including reducing the level of rent they pay. This change is likely to lead to a substantial number of claims by operators as a matter of course, regardless of the state of negotiations in individual cases. If an operator is able to fast track a no-scheme reduction, there is little incentive to reach a consensual deal at a potentially higher level. What is more, when a case does get to court and a renewal agreement is subsequently imposed, the court will be able to retrospectively backdate any new financial terms of that code agreement to the date that an initial notice was made, not the date of a court judgment. Some of these notices could have been served years ago, leading to sudden, huge repayments from site providers to operators. This retrospective application of court-ordered rent reductions cuts against legal norms and a common understanding of fairness.
Many site providers already face severe financial pressure as a result of the 2017 reforms, as we have heard. This could lead to unnecessary financial difficulties or even bankruptcies, given the huge disparity between the market-based rent they have been receiving and the rent obtained through the courts. These amendments, however, are not intended to prevent courts imposing rent reductions in line with the workings of the code. In all situations, operators would still be able to obtain savings on rent payments. These are merely trying to ensure that these savings are not imposed retrospectively on contracts entered into in good faith by site providers.
Amendments 28, 29 and 32 to 34 aim to address in its entirety the issue of backdated payments made on the basis of interim orders. Amendment 28 would prevent courts retrospectively imposing rent reductions made on the basis of no-scheme valuation. Amendment 29 would mirror the impact of Amendment 28 of removing the risk of backdated payments being imposed on site providers by ensuring that operators are unable to seek interim orders simply to agree a lower rent. Amendment 34 is intended to apply to sites governed by the Landlord and Tenant Act 1954.
Amendment 30 would ensure that where interim orders are made and a consideration is imposed on the basis of the code, the retrospective application of the reduction in rent achieved does not automatically go back to the time at which the initial notice was made. Instead, it would go back to that point or a maximum of 12 months, whichever is the shorter.
Finally, Amendment 31 would ensure that where interim orders are made and a consideration is imposed on the basis of the code, the cumulative total of the retrospective application of the reduction in rent achieved is limited to £l,000.
These amendments are all designed, as I mentioned in opening, to redress the balance and make sure that this kind of retrospectivity is not taken advantage of by the operators against the site providers. I hope they commend themselves to the Committee.
My Lords, I rise briefly to support the noble Baroness, Lady McIntosh, once more, and the noble Lord, Lord Clement-Jones. I note in response to the Minister on the last group of amendments that I am not parroting the words of lobby groups; I am reporting personal experience to your Lordships, and that of people personally known to me. I am not a mouthpiece of some body.
On the prevalence of litigation, the Minister pointed out in his last summation that it may be for the courts to provide definition. The Supreme Court ruled on three separate cases last week; clearly, there is far too much of this renewal debate going on in the courts system—that is coming from a litigator. The Supreme Court should not be ruling on three cases in one go. It should be possible to handle this in the marketplace, as the noble Earl, Lord Lytton, said. It is indicative of a broken system.
I reiterate in the context of this further valuation group a question I posed before that has not yet had an answer. Given that landowners have such a plethora of tradeable ecosystem services to provide from their landscape, why on earth would they commit these days to a telecoms lease, with all the nefarious impacts of these amendments—the access rights that have been given and the heavy burden of renewal requirements—when they have so many other options to consider? I would like an answer to that point.
My Lords, I support Amendments 28, 30, 31 and 34, to which I have added my name. I also express my support for the clause stand part amendment spoken to by the noble Baroness, Lady McIntosh. I have very little to add to the reasons the noble Lord, Lord Clement-Jones, so ably set out. The outcome of the Electronic Communications Code 2017, especially its retrospectivity, as he outlined, is to destabilise relationships. There is no question about that. These commercial relationships are important, as I set out earlier, because they relate to the rollout, consistency and security of site provision for these masts on which 4G and 5G will ultimately rest.
With a level of, say, £750 per annum—I believe that figure has been much put about—the other provisions of the lease may be the only things of real value left to the provider. The money, relatively speaking, may be a row of beans. If those provisions are set aside, the provider does not even have a reduced rent which the Government or code operators discern as being fair because that is the only use of the land—it completely annihilates the rest of any benefit in the deal. At these levels, that marginal element will be significant. I said earlier that the balloon has gone up; I suspect the message is being received loud and clear.
There have been instances where contracts of all sorts have been interfered with by government—for example, the Landlord and Tenant Act 1954. There have been instances where rent control came in, nearly always for social reasons. I always like to compare the Rent Acts and rent control and security of tenure, which caused the collapse of the private rented sector for about 25 years, and the Landlord and Tenant Act 1954, where the contracts were largely left in place and statutorily continued, but at a market rent and the market was not interfered with. By and large, it worked and investment continued. Contrast and compare those two situations.
There are instances, but I cannot think of another previous instance where large, successful companies—in which, admittedly, the Government have made a substantial investment and which are not primarily constituted for the purpose of providing an essential good to the public in the same way as gas, water, electricity and drainage, but do provide the bulk of data for ongoing commercial purposes—have had a Government step in to interfere with their arrangements. In these circumstances, the Government have very much done so at their peril, convinced, I fear, by the representations of the big telecom giants.
My Lords, I will briefly support the clause stand part amendment and the amendments in the name of the noble Lord, Lord Clement-Jones. They appear entirely sensible, especially the restricting of rent reductions to the date on which a court order is made, rather than being retrospective. Like the noble Earl, Lord Devon, I am not a lackey of APWireless and have done my own negotiations with my solicitors on my contract, which were far from amicable.
My Lords, I shall be very brief. In general, I support the arguments of the noble Lord, Lord Clement-Jones. The arguments on retrospectivity, which the noble Earl, Lord Lytton, addressed, are sound; it surely cannot be right that we have a change that will penalise landlords in the way this does. A reform could lead to a sudden and significant sum of money being owed to telecoms operators by site providers. Some of those who provide sites could even end up in a form of bankruptcy, particularly if courts make a decision that goes back to a point at which the notice was served. Large sums of money will be involved.
Amendment 34, which we have signed, would ensure that interim rent payments could not be backdated to that point, prior to a court order being obtained. That would mitigate the risks of backdated payments causing site providers severe or significant financial difficulties. That is a reasonable and fair principle which should find its way into this legislation. We support the other amendments from the noble Lord, Lord Clement-Jones, in generality as well.
My Lords, even more briefly, the Minister said in responding to the last group that the Government are clear that the cost of rent is too high and the purpose is to drive it down. In different comments, he stated that he felt these costs will eventually find their way to the consumer—I doubt that, but time will tell. What is the purpose of the retrospectivity and who will benefit? When will I receive my refund on my mobile phone bill for the retrospective repayment of this money? The answer is that I will not, so who will benefit from this and why are the Government causing it to happen?
I thank all noble Lords who have spoken to this group, which concerns both compensation and backdated payment. I shall start with the former. One of the main aims of the Bill is to ensure that where an agreement to which the code applies is renewed, there is a consistent approach in calculating the financial aspects and terms of that agreement.
Before I get on to the details, I will answer my noble friend Lady McIntosh, who strayed back into the general valuation principles. I note that my noble friend Lord Parkinson has committed to see what else can be distributed in terms of the evidence that she seeks. I reassure her that we have had extensive engagement with the NFU, but I will write to her with details of that.
The last group dealt with how Clause 61 does what I have just described in England and Wales, through changes to the 1954 Act that replicate the code valuation regime. This means that, when agreements are renewed under the 1954 Act, the new rent will be calculated in the same way as agreements renewed under the code. However, the 1954 Act deals solely with the rent that a landowner should receive from an operator. Under the code, this is not the only sum landowners can receive. The code also allows landowners to receive compensation from an operator. This compensation stands separately to the “rent” or consideration payable, and should cover any loss or damage resulting from the code operator exercising the rights that have been agreed or imposed.
There is no equivalent right to recover compensation within the 1954 Act. Clause 63 therefore inserts provisions into the 1954 Act that reflect the code provisions on compensation. This clause ensures that the amounts that landowners receive in compensation will be calculated in the same way, regardless of which statutory renewal mechanism is used and where in the UK that agreement was entered. Although the compensation provisions we are introducing will directly apply only if a renewal agreement is imposed by the court, it is inevitable that consensual negotiations can—and should—be influenced by the terms that might be imposed in those circumstances. This will influence consensual negotiations for agreements regulated under the 1954 Act, through which the parties can make adequate provision for compensation.
It was always the policy intention that the compensation provisions in the code should inform consensual negotiations for compensation in this way, and the same principle should apply to compensation provisions for the 1954 Act. We therefore want Clause 63 to stand part of the Bill.
Before I get on to the various amendments, I should say that the noble Earl, Lord Devon, referred to case law, on which I will expand a little. The courts have dealt with various points in connection with the Electronic Communications Code and the Landlord and Tenant Act 1954 and the matters we are discussing, and I do not think it would be necessarily helpful to discuss them in detail. We are happy to write to noble Lords or arrange a meeting if there are particular matters relating to case law that they would find useful to discuss, including in respect of the key judgment that was recently handed down by the Supreme Court, which is being considered carefully by department officials and legal advisers at the moment.
I ask the Minister to consider what happens if a contract under the 1954 Act contains a provision in relation to not increasing the height of a mast, or to an area where a mast operator is allowed to control the growth of vegetation—trees in particular—but then the operator demands rights to raise the mast, thus presenting a degree of visual intrusion to the farmhouse or whatever it happens to be. In a case I encountered, after 20 years of trying to establish a shelter belt at 1,400 feet up on Exmoor, the contractors for EE demanded to cut a swathe through the middle of this to get line of sight with another mast which was not in contemplation at the time the agreement was entered into. How would such an inconvenience be quantified in market terms? I suggest that there is no way of dealing with those sorts of situations under the code. The operator would simply turn round and say, “You’ve suffered no mercantile loss, and if your trees blow down we’ll give you a contribution towards re-planting them—and you’ve no right to a view anyway, so tough.” Could the Minister explain how he thinks those non-market aspects are going to be dealt with?
The noble Earl, Lord Lytton, raises some very specific and technical points, if I may say so. I am afraid I am going to have to write to him.
I turn to Amendments 28 to 33, tabled by the noble Lords, Lord Clement-Jones, Lord Fox and Lord Blunkett, and the noble Earl, Lord Lytton. These seek to amend Clause 67, which relates to interim orders where an agreement is being renewed under part 5 of the code. Paragraph 35 of the code covers situations where an agreement to which part 5 of the code applies has expired or is about to expire, and the parties are unable to agree whether that agreement should be terminated or what the terms of any new agreement should be. In those circumstances, proceedings may be issued so that a court can decide what terms should be imposed.
Such disputes can take time to be determined. The provisions in Clause 67 which amend paragraph 35 of the code enable either party to ask for an interim order in relation to any term of the current agreement. The benefit of this is that specific issues can be dealt with at a much earlier stage of the proceedings. The clause gives the court more flexibility than currently contained in paragraph 35 of the code, enabling it to look at situations where a party needs an urgent change to any term of their agreement. An example of this is where an operator needs amended terms to allow it to upgrade an existing site, to improve capacity and coverage for consumers. It also allows an operator to ask for the financial terms of the agreement to be reviewed at this interim stage. This ensures that the code valuation framework can be applied at an early stage in the proceedings, which may speed up negotiations on other areas in dispute.
It is the financial terms that the court could impose that have prompted the proposed amendments to Clause 67. These amendments seek to restrict an operator’s ability to apply for interim financial terms to be imposed, and fetter the discretion of the court when deciding them. The Government think it right that an operator can make an application for interim financial terms to be imposed, irrespective of whether other interim terms are sought. Allowing this to happen means that an operator can benefit from the code valuation framework at an earlier stage. This should give operators more capital to invest in the expansion and upgrade of their digital networks, which is of huge benefit—
I am about to get on to the various backdating aspects of this, so I hope that will answer some of these more specific questions.
I think I got to this being of huge benefit to both business and consumers. There are concerns about the backdating of the consideration which the court may impose at this interim stage, and that this may cause site providers financial hardship. Clause 67 provides that the court may backdate the interim terms only from the date of the application. It is anticipated that these applications will be dealt with quickly by the courts. The Government intend to make changes that will assist in the resourcing of code disputes, particularly in light of other changes made by the Bill. For example, the Government intend to amend regulations so that, in England and Wales, court proceedings on code disputes can be commenced in either the Upper Tribunal Lands Chamber or the First-tier Tribunal. Currently, proceedings can be commenced only in the former, which has only two regular judges, while the First-tier Tribunal has over 100 who consider a range of property law disputes. This will lend much more flexibility to the Courts & Tribunals Service in its handling of code disputes.
My Lords, I am sorry to intervene again, but of course I will not be responding at the end of the group. The Minister is saying that the whole idea is to get these hearings as quick as possible, so that the site provider is prejudiced as quickly as possible, but it all depends on the availability of lawyers by the sound of it, which is a somewhat tenuous argument.
As my noble friend the Minister has pointed out, lawyers do well whatever happens. I am coming on to expand a little more on the protections for site providers, if the noble Lord will please bear with me.
The time between the making of the application and it being determined should be relatively short. Officials will be working closely with Ministry of Justice counterparts and members of the judiciary to ensure that the right processes and so on are in place to support this. The landowner will be on notice from the date of the application that some of the amounts received from the operator may have to be repaid at a later date and will be able to plan accordingly. We hope that this will alleviate concerns.
Finally, Clause 67 gives the court discretion as to the date from which the interim order may have effect, providing that the court may provide for the order to have effect from the date of the application for the order. We do not believe there is the need to impose limits on what the court can decide, as it is already able to take into account what the effect would be on the site provider if consideration payments were backdated. Interim applications are usually heard quickly, and therefore the likelihood is that rent will be backdated only for a small amount of time.
The impact is potentially much greater in cases where the agreement is renewed under the 1954 Act, where interim rent can be backdated to the earliest date on which the tenancy could have been terminated where the landlord serves notice, and the earliest date on which the new tenancy could have begun where the tenant serves notice asking for a new tenancy. We have heard from stakeholders that, under the 1954 Act regime, some landowners have faced large claims from operators in respect of overpayment of rent where a lower rent has been backdated. We are listening to those concerns, and we will consider this carefully before the measures in the Bill are brought into force. Should we consider that something specific is required, this can be taken into account when developing any transitional provisions in respect of the Bill.
Sorry to labour the point, but the Minister just introduced the concept of transitional provisions. Where are these transitional provisions made clear? How will we know what they are going to be? Where will they be planned? Are they coming through by statutory instrument, or are they just going to be sprung on us by the department?
I read my brief very carefully, and I said “any transitional provisions in respect of the Bill”—I did not say that there will be transitional provisions—after listening to the various concerns I just outlined.
I now turn to Amendment 34 tabled by the noble Lords, Lord Clement-Jones and Lord Fox, the noble Earl, Lord Lytton, and the noble Baroness, Lady Merron. This is an amendment to the 1954 Act which seeks to prevent interim rent being backdated where an agreement is renewed under that statute. As we have discussed when talking about Clauses 61 and 62, it is the Government’s intention that the various statutory mechanisms for the renewal of agreements to which the code applies is as consistent as possible, and this amendment would increase inconsistency.
First, the amendment would create inconsistency within the 1954 Act itself. The ability to seek backdated payments of interim rent would be prevented only where the site provider had given notice to the operator under Section 25 of the Act. Where an operator had served notice under Section 26 of the Act, the ability to seek backdated rental payments would remain. Secondly, it would create inconsistency between the 1954 Act and the code. Clause 67 will allow payment of a modified rate of consideration to be backdated to the date of the application, whereas I understand that the noble Lords’ intention is to prevent rent from being payable at the backdated interim rent rate. It is difficult to justify such inconsistency.
Finally, the ability to seek an interim rent which is backdated is not a new concept. The parties would have been aware of this when entering into those agreements to which the 1954 Act applies. There is always a risk that the market will have adversely changed between the date on which the agreement was entered into and the time when the agreement is ready for renewal, and that the interim rent will be less than the amount currently paid. I appreciate that this may be exacerbated by the imposition of the code valuation framework on these agreements, but the Government will look at this impact when drafting any transitional provisions.
Absolutely finally, the point made by the noble Lord, Lord Clement-Jones, about picking and choosing, was covered by my noble friend Lord Parkinson on the first day of Committee in relation to Amendment 17, but if there are any outstanding questions on that, we would be very happy to discuss them separately. In answer to the question from the noble Earl, Lord Devon, about general valuations, my noble friend will deal with that in the next group. Under the circumstances, I hope that noble Lords will not press their amendments.
I am most grateful for the debate we have had, and I hope that my noble friend will look warmly on the amendments that were so ably spoken to by the noble Lord, Lord Clement-Jones. I have to say that it was rather amusing, being a lawyer, to hear that this would be a good opportunity for lawyers. I would not have thought that would be something the noble Lord would pass down. I look forward to continuing the debate.
Clause 63 agreed.
Clauses 64 and 65 agreed.
Clause 66 agreed.
Clause 67: Arrangements pending determination of certain applications under code
Amendments 28 to 33 not moved.
Clause 67 agreed.
Amendment 34 not moved.
Clause 68: Use of alternative dispute resolution
35: Clause 68, page 58, line 38, leave out from “must” to “use” in line 39 and insert “attempt to make”
Member’s explanatory statement
This amendment would mandate the use of Alternative Dispute Resolution schemes to resolve disagreements before either party could ask for a consideration to be imposed by the court.
My Lords, I should just say that it is not my role to make friends among my colleagues in the legal profession; it is to try to get the right result out of the Bill.
I have just one observation on the previous group. It is interesting to note that the Government have some wonderful ways of resisting amendments. They say that it would be inconsistent with the Bill, but they are perfectly capable of passing amendments of their own which are not fully consistent, because that is what exceptions are—they are there because there would otherwise be an injustice.
The site providers are making and have made a very strong case that they need better protection against abuse by operators. Throughout this Bill, we are of course very mindful of the balance between site providers and operators. The Government believe that the provisions of the Bill are putting this in order, but many of us believe that they are putting it in disorder as a result. The Protect and Connect campaign has come up a number of times already during the course of debates on the Bill. It surveyed 116 site owners that host mobile telecoms masts and found that 23% have suffered damage to their property; 35% have had their sites upgraded without permission; 46% have found telecoms companies on their land without warning; and 50% have been threatened with legal action. That does not sound like very good behaviour on the part of the operators. In this context, Clause 68, on the alternative dispute resolution, is of great importance. It sets out the process by which an operator can request rights to land from an occupier, which will now include information about alternative dispute resolution.
The clause however requires operators only to “consider” the use of ADR for resolving disputes with site owners where “reasonably practicable”. It also permits courts to take an operator’s “unreasonable” refusal to consider ADR into consideration when deciding on remedies during a dispute. The ADR process that the Government are providing is therefore non-binding. Telecoms companies need only show that they have considered it in order to avoid costs.
To address this point, the Government should make ADR compulsory for any dispute and issue guidance about reasonable terms. Properly enforced, it would reduce the operators’ reliance on litigation through the courts and encourage better behaviour by both parties. It is important that there is greater onus on the operators to make use of this process, because the terms of the code are so heavily weighted in their favour and their ability to use the courts in general is far greater, befitting their corporate size compared to the average site owner. Given the potential benefits for both parties and the wider public interest, it is difficult to see the case for this process remaining purely advisory.
As regards Ofcom’s guidance, Ofcom has long provided guidance on the ECC, but to date it has not provided any real support for site owners experiencing problems. Amendment 39 is intended to force operators to give greater weight to Ofcom’s code of practice, which it is currently obliged to prepare under paragraph 103(1) of the ECC. Tribunals would be obliged to take into account an operator’s compliance, or lack thereof, when making costs awards. The purpose of this is to render Ofcom’s code of practice meaningful, rather than just optional guidance that is all too easily disregarded.
Amendments 40, 41 and 42 aim to address the issue of non-compliance with Ofcom’s code of practice. It is right that operators are held to standards in how they treat site providers, including measures such as the provision of information or the conduct of negotiations. However, there is a significant body of evidence that, despite the code of practice, site providers are not being treated fairly or with respect by the operators from whom they rent their land. The solution to the problem of non-compliance with the code of practice is to strengthen these measures, yet Ofcom has failed to invest adequately in this area and the Government have spent too long asking the industry to solve its own problems through stakeholder workshops, rather than showing direct leadership. These amendments will collectively place obligations on both operators and site providers. The intention here is not to place an asymmetrical set of requirements on either party in these negotiations or to these agreements.
Amendment 40 would create an obligation to follow the code of practice. It would create a maximum financial penalty for non-compliance of £1 million and require Ofcom to have regard to prior history of non-compliance when assessing the size of any penalty imposed. This amendment would provide a strong incentive for adherence to the code of practice. Moreover, it would require a previous history of poor behaviour to be taken into account. This means that operators or site providers would not be able to disregard the code of practice just because they think they can pay the fine, and poor behaviour would have increasingly impactful consequences. Amendment 42 requires that Ofcom include in its code of practice guidelines on when operators must pay compensation to those affected by a failure by the operator to adhere to the code of practice.
If the Government are serious about promoting consensus-based agreements and getting this market working again, having clear and enforceable guidance on the standards expected by the parties is essential. This is what these amendments try to achieve. I very much hope that the Minister will take all the amendments and their intention on board.
My Lords, I shall speak to Amendments 36, 37, 38 and 39, and the proposal that Clauses 68 and 69 do not stand part of the Bill. I am delighted to have the support of the noble Earl, Lord Devon.
I am slightly stung by something my noble friend the Minister said earlier: that perhaps we are all paying too much heed to lobbyists. I think my noble friend knows me well enough now to know that I am of particular independence of mind. However, when an allegation is made by those seeking to brief us on the Bill that the Bill has swung too heavily against the interests of the landowners—of which I am not one; I have no particular interest in this other than as a consumer, as I said—and too heavily in favour of the operators and networks, that is something that I think he would expect us to explore. It is something we are encouraged to do when we are introduced. The Reading Clerk reads out that we are given a seat, place and voice in the councils, assemblies and Parliaments to enable us so to do. I take those responsibilities very seriously indeed.
Clause 68, as it stands—this is something that I support, and it seems to be welcomed generally—puts forward a voluntary alternative dispute resolution mechanism to assist in negotiations between operators and site providers. That is generally supported by many of the landowners and farm organisations, such as the CLA and NFU—I am not a member of either. They support the principles, but there is a call for the resolution mechanism to be made mandatory rather than voluntary. Briefly, that is the purpose of the amendments I have put forward with the support of the noble Earl, Lord Devon—Amendments 36, 37 and 38. If those amendments are carried, that would make Clause 68 much more agreeable and acceptable. The use of an alternative dispute resolution mechanism is generally very welcome, but it is not deemed to be working properly if it is not made mandatory.
I urge my noble friend to look favourably on these amendments. If he is not able to adopt them today, perhaps he would come forward with similar amendments on Report. We are all trying to seek a proper balance and ensure that there is an amicable resolution. My noble friend Lord Northbrook said that in his personal experience it was not always amicable; I think he used a different term. What we are hoping to do here is support what the Government are seeking to achieve, so in my view, my noble friend the Minister should look very favourably on that as well.
I turn now to Clause 69, which concerns complaints relating to the conduct of operators. I will quote again from the Central Association of Agricultural Valuers, which says—and this is very forceful:
“It is astonishing that there are no provisions in a regulated sector expecting an operator with a Code licence to have a complaints procedure. While this clause remedies that, it does not do so in any way that gives confidence that matters will be improved. It needs to give much more detail of what the complaints procedure should look like, including frameworks for such matters as compensation for poor behaviour, such as unauthorised access or damage.”
My noble friend must appreciate that if damage is incurred during a visit to set up, repair or maintain infrastructure, a complaints procedure must be set up in this regard. Apparently, there are no penalties for breaching the code of practice and perhaps even commercial incentives to do so. At the very least, there should be penalties.
I hope the department and my noble friend will look very favourably on the suggestion in relation to Clause 69, as well as the others I have referred to with the amendments I have spoken to. It will only strengthen the Bill if these small changes are adopted.
My Lords, I have an amendment in this group but I will also briefly voice my support for the other amendments to which my name has been added. The noble Lord, Lord Clement-Jones, referred to ADR. As I see it, ADR is highly desirable but easily avoidable in the commercial world of disputes. I believe that the application of ADR under the code as it stands is asymmetric in its treatment of site providers as against operators, which is entirely regrettable. Therefore, there ought to be mandatory ADR, and the avoidance of ADR in litigation generally is sufficiently common to make it clear that that needs to be dealt with.
I very much support the comments made by the noble Baroness, Lady McIntosh. She referred to lack of confidence, which goes back to a key theme here. I agree, although I would use the term “overt mistrust” as being much nearer the mark to describe what is happening here.
I have put my name to Amendments 39, 40 and 41. The concern here is that Ofcom is a weak regulator in this field and the entire environment of regulation is not consonant with the changed balance between site providers and operators. That needs to be tightened up.
My Amendment 42A is a “see no evil” removal clause. The idea behind it is to mandate: the operator collating and reporting complaints and actions taken in consequence to Ofcom; that Ofcom has to consider this and have regard to it when dealing with its other functions as regards the operator; and that Ofcom must then publicise annually the outcome of that process. The purpose of this is to demystify this whole question of whether there are complaints and, if so, how many, where they come from and who is to blame for what. Let us get the facts. Let Ofcom, which is supposed to be regulating the sector, deal with the matter. It is one thing that would aid transparency. It was put to me that it might stir Ofcom out of its lethargy; I would not quite use those words myself but the sentiment would probably be well understood across the House. We need tough regulators to deal with quite a difficult emerging situation.
My Lords, briefly, I support the amendments in the name of the noble Lord, Lord Clement-Jones, the noble Baroness, Lady McIntosh, and the noble Earl, Lord Devon, which would make ADR mandatory, noting the lack of confidence in the current situation and the overt distrust, as mentioned by the noble Earl, Lord Lytton. I hope this process might also speed up the whole 5G rollout.
My Lords, while we were debating the previous group, the Government seemed to be getting ready to embrace an influx of court cases by going from two judges to 100. The intention of the large number of amendments here is to avoid that eventuality. If the Government Front Bench is not happy with the words, it should be happy with the spirit of driving the alternative dispute resolution process. It would be good to have some acknowledgement from the Government, when we get to their response, that this ADR process will be central to avoiding the sort of things we were talking about in the previous group.
Amendment 39 is intended to force operators to give greater weight to Ofcom’s code of practice, which it is currently obliged to prepare under paragraph 103(1) of the ECC. Amendments 40, 41 and 42 aim to address non-compliance with Ofcom’s code of practice, and Amendment 44 deals with building safety. That could have been separated out into another group. I will speak specifically just to Amendments 42 and 44, because they are in my name.
Amendment 42 requires that Ofcom include in its code of practice guidelines on when operators must pay compensation to those affected by the operator’s failure to adhere to the code of practice. This compensation is limited to 100% of the total value of the contract to which the dispute relates. We do not expect that this would be the standard award and we have intentionally left it to Ofcom to draft guidelines on this issue. In fact, as my noble friend Lord Clement-Jones set out, Amendments 40, 41 and 42 work together with the aim of promoting consensus-based agreements, and to have a market that works effectively and is not stuffed up with disputes—which comes back to my first point.
In a gear change, Amendment 44 focuses on building safety, raised by the noble Earl opposite in the context of a previous group. The amendment would place a duty on network providers to ensure that any work done on communications infrastructure does not compromise building safety. Specifically, we are concerned about the interaction of digital infrastructure installation with the findings of the Hackitt report into building regulations and fire safety, which followed the dreadful Grenfell Tower tragedy.
As the Minister will be aware, in her report on the Grenfell disaster Dame Judith Hackitt recommends that the
“creation, maintenance and handover of relevant information”
“an integral part of the legal responsibilities on Clients, Principal Designers and Principal Contractors undertaking … work on”
high-rise residential blocks. This matters because when a telecoms operator runs internal cabling in blocks, each hole is potentially a breach of a firewall. It seems to us that installation of gigabit-capable cabling is one of the most likely modifications a multi-residence high-rise block could face, and operators need to be obligated to meet safety requirements. If the Bill remains in its current form, digital contractors will have access rights that exceed those of the blue-light services, so where do they sit regarding their obligations to the Building Safety Act and in fulfilling the aims of the Hackitt report?
The purpose of Amendment 44 is to probe where telecoms and broadband contractors sit in the new environment of the Building Safety Act. I understand that, as a consequence of that Act, statutory instruments would be brought forward to compel certain actions from utilities contractors. My understanding is that the Government do not regard digital infrastructure as a pure-play utility function. Therefore, will there be a statutory instrument specifically to target digital infrastructure? In responding to this, the Minister may want to explain what statutory instruments are expected, with reference to which bits of which Act.
My Lords, my noble friend the Minister will remember from my remarks at Second Reading that my main concern is about the sense of unfairness that exists between the site owners and the mobile network operators. Because of that, I hope the Government will agree to look at making some changes to the legislation. We will come to the economic impact assessment later this evening. I have some sympathy with the suggestion of a mandatory alternative dispute resolution in the way it is described in Amendment 35. As I say, this is just a general gentle expression of warmth towards that as a way of signalling to people who at the moment feel a sense of some unwillingness on the part of the Government to recognise that there needs to be some change. I look forward to hearing what my noble friend has to say.
My Lords, the debate on this group raises a number of interesting points, but they are all on the same theme. They are about what happens should disputes arise. No one wants to be in dispute, but when one arises, it is crucial that everybody knows what the rules are and that the resolution creates an environment and practice which means that the same issues do not continually arise. The contributions from noble Lords today have talked a lot about fairness, respect and calling to heel those who need to be called to heel for fairness and respect to occur. It is about getting the balance of rights and responsibilities between the parties right. I hope the Minister will consider the valid points raised by this group.
In particular, it would be helpful to hear how the Minister feels about the present situation, where the operator must only consider the use of the dispute resolution system—and even then, only if it deems it is reasonably practicable to do so. Has that been satisfactory, because this set of amendments clearly suggests not? I was particularly struck by the words of the noble Earl, Lord Lytton, who spoke about such resolution being easily avoidable. That does not give us confidence. I therefore hope that the Minister will reflect on the spirit and intent and, perhaps, come to us with some practical measures to improve the current situation.
My Lords, I shall first address points made by the noble Earl, Lord Devon, as well as my noble friends Lord Northbrook and Lady McIntosh, about some of the case studies. I certainly agree entirely with the noble Earl, who speaks from personal experience and makes the point that some of the lobby groups which have been vocal on the Bill are painting a very different picture to those directly involved, and with whom we have had extensive discussion. Your Lordships’ House benefits from having people such as the noble Earl and my noble friends who can speak from personal experience.
In particular, at Second Reading, the noble Earl showed how he speaks not just as a landowner and the litigator but as a consumer who shares the objective of wanting better connectivity. I am very happy to make absolutely clear that I understand that his point and those of other noble Lords are made in that spirit. I hope he can see that, for my part, we have been willing to listen and continue to be receptive to hearing contrary points; it is just that, in our discussions with the industry, we have had a clear picture painted.
The noble Earl asked a general but important question: why should site providers bother, given the other ways they could use their land? Without wishing to reopen the debate on valuation, we believe that the 2017 provisions created the right balance between the public need for digital communications and landowners’ rights. The code makes separate provision for landowners to recover compensation for loss or damages and, taken together, we think the provisions on consideration and compensation mean that landowners can still receive a fair payment for allowing their land to be used.
The new pricing regime is more closely aligned to those for other utilities, such as water, electricity and gas. We do not think it is less attractive than other comparable uses. As I said on a previous group in relation to a point raised by my noble friend Lady McIntosh, landowners should still receive their payments—which, among other things, take into account any alternative uses that the land may have and any loss or damage that may be incurred.
Turning to the amendments in this group, the purpose of Clause 68, as probed by my noble friend Lady McIntosh of Pickering and the noble Earl, Lord Lytton, is to encourage more collaborative discussions between landowners and operators and to ensure that litigation is only used as a last resort. We know that code negotiations can be difficult—my noble friend Lord Northbrook referred to that from his experience—and that, in some cases, landowners have felt pressured to accept any terms offered to avoid the risk of being taken to court. To address this, Clause 68 encourages the use of alternative dispute resolution to minimise the risk of landowners feeling pressured and to facilitate co-operative discussions.
At Second Reading, my noble friend Lady McIntosh suggested that alternative dispute resolution is optional for operators. I hope I can give her and other noble Lords some assurance on this matter, given the requirements for parties to consider use of ADR and for the courts to consider unreasonable refusal to engage in ADR when awarding costs.
ADR not being mandatory is a deliberate feature of this policy. That choice was made for two reasons. First, ADR may not be suitable in certain cases. For example, where a disagreement is based on differing interpretations of the law, this may have to be determined by a court. Mandatory ADR would add cost and time to this process without any benefit. Secondly, where ADR is appropriate, mandatory ADR would compel some parties to participate in a process they do not want to be involved in, making them less inclined to actively engage. This would increase the risk of failure, and the parties would then have to go to court anyway—only adding further time and costs for landowners. The clear majority of groups—including the Country Land and Business Association—opposed compulsory ADR when we consulted them.
I turn to Amendment 39, tabled by the noble Lords, Lord Clement-Jones and Lord Fox, and the noble Earl, Lord Lytton. This amendment would require evidence of a breach of Ofcom’s code of practice to be taken into account in ADR judgments. It should be noted that not all forms of ADR have judgments. Mediation is one such alternative. Furthermore, the Ofcom code of practice gives guidance on best practice; it does not set out specific requirements to be adhered to. As such, using the code of practice to underpin or effect decisions made in alternative dispute resolution risks creating further disagreements and disputes, rather than resolving them.
Finally, and most crucially, the amendment would undermine the open and collaborative approach on which successful ADR relies by forcing operators to enter any ADR process on a defensive footing. The outcome would be simply to blunt the effectiveness of alternative dispute resolutions and add to the administrative and cost burden for all parties. It is on this basis that I invite noble Lords not to press their amendments.
I turn to the Ofcom code of practice. We know that, in some cases, landowners are reluctant to enter into code agreements because they are concerned about how the operator or their contractors will behave when they carry out their works. Clause 69 addresses this issue by requiring guidance to be prepared by Ofcom, following consultation, regarding operators’ handling of complaints about their conduct. This guidance will be added to Ofcom’s code of practice. To complement this, the Government also intend to bring forward secondary legislation—in consultation with Ofcom and others where appropriate—to make regulations to achieve three things: first, to create a requirement on operators to have a complaints procedure in place to handle complaints relating to their conduct; secondly, to set out minimum standards which this process must meet; and, thirdly, to oblige operators to have regard for the Ofcom code of practice when handling complaints.
Amendment 40, tabled by the noble Lords, Lord Clement-Jones, Lord Fox and Lord Blunkett, and the noble Earl, Lord Lytton, would make adherence to Ofcom’s code of practice obligatory and make breaches of that code punishable by a fine of £1 million. As I mentioned in relation to Amendment 39, the Ofcom code of practice is intended to set out guidance. Deciding whether a particular course of action is a breach would be very subjective. The code of practice applies to both operators and landowners, and this amendment does the same. While some operators may have the resources to sustain such fines, very few landowners would.
We all want network rollout to proceed as quickly as possible. However, making compliance with the Ofcom code of practice mandatory and failure to do so subject to a heavy fine means that operators and landowners would be disincentivised from seeking to reach agreements at all. For those who might proceed, one can imagine them doing so as slowly and gingerly as possible to avoid the risk of breaching a code of practice that was never designed to be used in such a way.
Amendment 41, tabled by the noble Lords, Lord Clement-Jones and Lord Fox, and the noble Earl, Lord Lytton, and Amendment 42, tabled by the noble Lord, Lord Fox, set certain requirements regarding complaints handling, such as time limits for responding and compensation payable. As I noted earlier, Clause 69 will require Ofcom to amend its code of practice to include guidance on complaints handling. The Government also intend to make regulations to set out minimum standards for operators’ complaints processes. Both of these could feasibly include elements similar to those proposed in the amendments, and both will be developed through consultation. The Government firmly believe that this is the best way to encourage all parts of the sector to welcome and comply with the new procedure.
Also related to the code of practice is Amendment 42A, tabled by the noble Earl, Lord Lytton. Currently, for a private organisation to seek and exercise rights under the Electronic Communications Code, it must be the subject of a direction from Ofcom that the code applies to it. The first part of the noble Earl’s Amendment 42A would require Ofcom to reconsider each operator’s status as an operator for these purposes every five years, taking into consideration, among other things, complaints made against it for breaches of the code of practice. His amendment would make an operator’s rights to install, maintain and upgrade infrastructure potentially subject to adherence to a code of practice which, as I described just now, would serve only to disincentivise operators from extending their networks swiftly.
The second part of his amendment concerns obligations for operators to report to Ofcom about complaints that they receive, and for Ofcom to publish an annual summary of these reports. These are also the sorts of matters that will be considered when the Government make their regulations to set minimum standards for operators’ codes of practice, and when Ofcom amends its own code of practice.
Amendment 44, tabled by the noble Lords, Lord Fox and Lord Clement-Jones, concerns building safety. The importance of building safety is self-evident, and the Government are committed to doing everything possible to ensure that it is maintained at all times. None the less, the amendment is unnecessary since the code already contains ample protections to ensure that building safety is maintained. Paragraph 23(5) of the code requires that when a court imposes an agreement under part 4, that agreement must include terms for ensuring that the least possible loss and damage is caused in exercise of the rights. Such terms will provide significant building safety protections.
Paragraph 99 of the code makes it clear that the code does not authorise the contravention of laws passed before the code came into force. This means that legislation that was in place before the code came into force, including that on building safety, would not be superseded by measures in the code. Regulation 10 of the Electronic Communications Code (Conditions and Restrictions) Regulations 2003 requires that if an operator receives a report that its apparatus is in a dangerous state, it shall investigate and, if necessary, make the apparatus safe. Therefore, together these provisions already provide robust protections to ensure that building safety is maintained.
The noble Lord, Lord Fox, rightly mentioned Dame Judith Hackitt’s report, which places great importance on the clarity and simplicity of systems to ensure building safety. The Government believe that this amendment would add further unnecessary complexity to the robust protections that already exist in this area. Therefore, Amendment 44 is not needed.
As I explained earlier, it is a probing amendment designed not to go into legislation but to get an answer, and the answer was not forthcoming.
First, the code is designed to comply with building safety that has come before it. The Building Safety Act is subsequent to the code so in this respect, that is not a helpful answer. Secondly, there are specific statutory instruments, as a result of the Building Safety Act, which deal with utilities. I asked a very clear question: will the Government be considering this function of digital infrastructure to be a utility? Also, will there be statutory instruments as a result of that Act which cover this issue, or does it need to be covered in another way? It is not covered in the answer the Minister has just given, so this must be specifically opted into the process that the Building Safety Act has ushered in as a result of the Hackitt review.
The Building Safety Act received Royal Assent on 28 April, as the noble Lord knows. It will strengthen oversight and protections for residents in high-rise buildings, it will give a greater say to residents of tall buildings and it will toughen sanctions against those who threaten their safety. Its focus will help owners to manage their buildings in a better way while giving the housebuilding industry the clear and proportionate framework it needs to deliver more and better-quality homes.
Building regulations to be made under the new powers inserted by that Act will provide for more stringent requirements, separate from the Electronic Communications Code, regarding building work on high-rise buildings. People undertaking such work as employees or contractors of companies, including network operators, will have duties to ensure that their work complies with all the relevant building regulations. That will include the provision of information as part of the golden thread which will be handed over to accountable persons on completion of the building work.
I note also that the building regulations already include requirements to install infrastructure to support high-speed electronic communications networks in new buildings. DCMS has consulted on plans further to amend the building regulations to mandate gigabit-ready infrastructure and gigabit-capable connections to new homes. When such work is carried out it is required to meet all relevant requirements of the building regulations, include those for fire safety, so we do think that this is provided for already. I understand that it is a probing amendment; none the less—
Without labouring the point tonight, the Minister can perhaps pander to my curiosity and come back with the specific statutory instruments that are expected to implement this. As I understand it, statutory instruments were laid and then withdrawn, and I do not think that they included digital infrastructure in the initial wording. I have a specific concern that there is a slight falling between the cracks. Perhaps the Minister can reassure me with some specifics in a letter.
I am very happy to consult my colleagues at the Department for Levelling Up, Housing and Communities and to provide the letter the noble Lord requires. I invite him now to withdraw his probing amendment, and other noble Lords not to move theirs.
Did I hear my noble friend correctly regarding the Country Land and Business Association? If so, I can put his mind at rest. It is most definitely in favour of the alternative dispute resolution being made mandatory. He should be aware of a briefing that was sent to us at a much earlier stage. This dates back to January, so I hope it is not still the case:
“Throughout the Government’s consultation on the Bill, the Department of Digital, Culture, Media and Sport has repeatedly refused to meet with our organisations”,
including the CLA and others,
“to hear the views of our members. The Bill was subsequently published without any economic impact assessment.”
I am slightly concerned that my noble friend appears to be unaware of something as fundamental as the difference between a mandatory and a voluntary ADR, and I wanted to correct him on that.
I am sorry to disagree with my noble friend, but the CLA’s response to the consultation opposed compulsory ADR. I would be very happy to speak to her and triple check that with officials afterwards, but we clearly have different understandings of its position. I would be happy to speak to her afterwards to make sure that we can clarify that.
My Lords, we clearly have some clearing up to do between Committee and Report on who said what and who supports what. I too was quite surprised to hear that the CLA would be opposed to compulsory ADR in these circumstances.
I thank noble Lords for their support for the amendments and the Minister for his very detailed reply. I do not think there is any dispute between us. We all want greater connectivity and to see 1-gigabit rollout. The whole question is whether we want greater trust—the word that I think the noble Earl, Lord Lytton, used. Quite frankly, across the Committee there is a view, on the valuation questions, on retrospectivity in the previous group and on the lack of compulsory ADR, that this will lead to more disputes. The Government seem to be going down this track where they plan for there to be more disputes so that more tribunals can be brought into effect and more lawyers will be employed, no doubt with rejoicing in various parts of the City. Everything in these amendments was designed to minimise the number of disputes, and to make sure that we had compulsory ADR and that Ofcom’s code actually bites.
It was very disappointing to hear what the Minister had to say. I hope that, between Committee and Report, he will reflect on some of the points made in this respect and that we can check to see whether landowners are unanimous on this, because using ADR as a filter would be a perfectly acceptable way of doing things. Once certain aspects are established as a matter of law then a dispute can of course be referred, but a mediator can, by agreement of the parties, refer it to a court to be determined. There is no impediment to using ADR as that initial filter, which would mean that there would be many fewer disputes. We would actually have faster rollout as a result and the Bill’s purposes would be entirely achieved.
I am sure that this will be a candidate for Report as well. In the meantime, I beg leave to withdraw the amendment.
Amendment 35 withdrawn.
Amendments 36 to 39 not moved.
Clause 68 agreed.
Amendment 40 not moved.
Clause 69: Complaints relating to the conduct of operators
Amendments 41 and 42 not moved.
Clause 69 agreed.
42A: After Clause 69, insert the following new Clause—
“Reporting process for complaints
(1) The Communications Act 2003 is amended as follows.(2) In section 106 (application of the electronic communications code), after subsection (6) insert—“(6A) A direction has effect for five years, after which any renewal must take into account—(a) the extent to which the operator has complied with the terms of the direction,(b) the number and nature of complaints made against the operator for breaches of the OFCOM code of practice reported under paragraph 103 of the electronic communications code,(c) such other matters as OFCOM deems appropriate in determining whether that operator should benefit from a renewal of that direction, including the general conduct and ethical performance of the operator.”(3) In the electronic communications code, after paragraph 103 insert— “103A_(1) Each operator must report to OFCOM all complaints made to it in respect of alleged breaches of the code of practice under paragraph 103 in sufficient detail to make clear the nature of the complaint.(2) The report must contain an account of the actions taken by the operator in response to those complaints.(3) Reports must be made in each calendar year before 31 January following the end of the reference year or such other annually recurring date as may be determined by OFCOM in any given instance and to like effect.(4) OFCOM must publish an annual summary no later than six months following the end of the reference year setting out the performance in terms of—(a) complaints received,(b) actions taken, and(c) directions considered but not made,in pursuance of the reports from operators.””Member’s explanatory statement
The purpose of this amendment is to ensure that instances of poor behaviour insofar as they exist have a properly formulated reporting process and would thus serve to provide a factual basis; to make Ofcom the relevant repository of the complaints regime; and to ensure that Ofcom draws on this as part of its regulatory functions as well as publishing the relevant information.
My Lords, I shall be very brief. I was rather disappointed with the Minister’s response on Ofcom. This looks like minimal regulation—guidance only, no teeth. It is asymmetric with the rights and duties that will now be exercised against site providers. It is effective open season for coercive tactics. There is no government willingness to consider principles of balance or equity. The message that goes out on that will come home to roost later if the Government do not reconsider.
Amendment 42A not moved.
Clauses 70 to 72 agreed.
House resumed. Committee to begin again not before 9.05 pm.