Amendment 20

Telecommunications Infrastructure (Leasehold Property) Bill - Virtual Committee (2nd Day) – in the House of Lords at 2:34 pm on 2 June 2020.

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Lord Clement-Jones:

Moved by Lord Clement-Jones

20: Clause 1, page 6, line 12, after “any” insert “direct”Member’s explanatory statementThis amendment would probe the type of damage for which compensation will be paid under this sub-paragraph.

Photo of Lord Clement-Jones Lord Clement-Jones Liberal Democrat Lords Spokesperson (Digital)

My Lords, I will be extremely brief. I hope that the Minister will understand entirely the reason for this probing amendment. It arises from the way in which the compensation clause—new paragraph 27H—is worded. It seems to give enormous licence to award compensation under the terms of the Electronic Communications Code where a court has made a Part 4A order. That has been imposed, of course, but new paragraph 27H(2) states that:

“The court may, on the application of the required grantor, order the operator to pay compensation to the required grantor for any loss or damage that has been sustained or will be sustained by the required grantor as a result of the exercise by the operator of the Part 4A code right.”

I am concerned that these compensation requirements are drawn so widely so they could be a disincentive to an operator to lay fibre to a home or MDU as envisaged by this new section of the Electronic Communications Code.

What kind of compensation is contemplated in these circumstances? I have inserted “direct” because in law it is perfectly respectable to claim damages for foreseeable loss. That could mean economic loss—for instance, where a Part 4A agreement has been imposed and somebody loses two days’ worth of business or finds that they have to close unexpectedly a particular facility that is part of the building to which the order relates. Then there is ancillary land, where the landlord has some other kind of business next door to the MDU and it is necessary for the fibre to cross it or be laid across it by the operator, meaning closure and so on. What is contemplated? It seems extraordinarily wide-ranging. Of course, it provides for arbitration and agreement to be reached, but I want very much to hear from the Minister exactly what is contemplated by this clause. As I say, it is so widely drawn that it could be seen as a disincentive to the operators, which we all wish to see move pretty swiftly to ensure that the Government’s target for full fibre rollout is met. I beg to move.

Photo of Lord Fox Lord Fox Liberal Democrat Lords Spokesperson (Business, Energy and Industrial Strategy)

I thank my noble friend Lord Clement- Jones for setting out this amendment so effectively. He promised to be brief; I will be even briefer. Is this not symptomatic of the whole Bill, where the balance is against things happening rather than for making things happen? What was in the Government’s mind when they wrote this clause and put this Bill together? Is this an enabling Bill or a sort of grudging Bill that somehow lets a few things happen but ends up stopping a lot of other things? Why did the Government take this kind of attitude, which is symptomatic of the whole Bill?

Photo of Lord Adonis Lord Adonis Labour

Am I coming through loud and clear? I suddenly have the Throne as my picture on the screen. Should I be worried?

A noble Lord:

We would prefer the Throne, actually.

Photo of Lord Adonis Lord Adonis Labour

As long as everyone has the Throne, that is fine.

The noble Lord, Lord Clement-Jones, made the correct argument for the Bill: having the right balance between the providers and those who lose out in terms of infringements to their property. His point about direct compensation seems sensible.

There is a further concern on this issue: on an owner not being prepared to allow a telecoms company to access their land, in many cases, part of the reason why they might play hardball in terms of compensation is that they are not the ones primarily affected by the loss. The people primarily affected by the failure to lay the cable will be their tenants. That is a real issue in this case. We should not allow owners to disadvantage their tenants because they cannot get what they regard as a satisfactory level of compensation out of a provider.

I hope that the Minister will be able to allay our concerns and tell us that this is not just an open invitation to owners who are not going to benefit from the fibre being laid to those premises, because all the benefit will accrue to tenants, to try to get the best compensation they can. Going through a compensation route not only might mean the fibre is not laid at all but could lead to delays. The Bill does not seek only to enhance fibre coverage but to do so swiftly. Anything that encourages delays and haggles over compensation, where there is good reason for owners to expect that they might be able to extract more than they are offered, is very much against the public interest.

Photo of Lord Lea of Crondall Lord Lea of Crondall Non-affiliated

I follow a couple of points made by the noble Lord, Lord Adonis. I am chairman of the residents’ association of a block of flats in Camden, London, and I mentioned all this to a meeting of the residents. Of course, on these occasions one gets a lot of relevant feedback and a lot of feed- back that is not relevant, but there is quite a lot of concern about whether HMG have had the time, or will make available the time, to check with the National Organisation of Residents Associations or to understand the nature of a typical tenant on a lease of, let us say, 99 or 125 years. There is a ground landlord, a managing agent, a leaseholder and an attempt to liaise between the tenants, all of whom may have broadly the same interest, but they are—to say the least—very confused indeed when it comes to compensation and how things get held up. It is a bit of a nightmare.

Can the Minister give an assurance that, although we are at this stage of the Bill, the Government can give Parliament a more comprehensive account of the feedback they have got and the degree to which they have buy-in from these various interests?

Photo of Lord Livermore Lord Livermore Opposition Whip (Lords)

My Lords, we support this attempt to probe the Government on the practical implications of the compensation provisions laid out in new paragraph 27H. Not qualifying the types of losses or damages that are subject to compensation seems a curious choice when amendments to simplify processes are frequently resisted on the basis that, while often cumbersome, legislation needs to set clear parameters for the processes it establishes. This is not a concern that has been raised directly with us, but it seems a recipe for potential bad blood between lessees and operators. While there will inevitably be some scrapes along the way, we need to ensure as harmonious a relationship as possible.

I hope the Minister will be able to point to provisions elsewhere in the parent Act, or to established precedents, to assure us and the noble Lord, Lord Clement-Jones, that this has been fully considered and is not likely to become an issue once the new measures are operational.

Photo of Baroness Barran Baroness Barran The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport

My Lords, I thank the noble Lords, Lord Clement-Jones and Lord Fox, for tabling this amendment. As your Lordships have heard, this amendment seeks to test our thinking on the types of damage for which compensation will be paid and for which operators will be held liable and—as the noble Lord, Lord Clement-Jones, mentioned— to establish whether this could lead to any delays in implementation on the part of operators.

This amendment would mean that the courts would be able to award compensation only in situations in which a landowner is able to demonstrate a direct loss. I understand that the amendment aims to limit the scope, and in turn the extent, of compensation that may be paid by an operator in respect of loss or damage sustained by them. I understand that intention and the concerns that underlie it. However, I do not think that those concerns are founded in this case, and I will try to set out the reasons for that.

The noble Lord, Lord Livermore, asked me to point to where in the underlying legislation this language about any loss or damage comes from. The Electronic Communications Code uses exactly the language we have replicated in this Bill. New paragraph 27H—to which the noble Lord, Lord Clement-Jones, referred—mirrors the language of the code exactly. In response to his question about types of compensation, disputes under the code are heard by the courts and are a matter for their discretion to respond to. The courts hearing compensation claims made under the code are absolute experts in these matters and have a wealth of experience in reaching decisions about compensation.

Our concern is that it would therefore be counter- productive to bring in the notion of “direct loss”, which, as I have said, can be found nowhere else in the legal regime relating to adjudications on the code and would limit the discretion of the courts in determining loss or damage. Doing so may—and, in our opinion, almost certainly would—lead to confusion and inconsistency in how those same courts would determine all other code disputes. It would make the level of discretion available to judges lower for adjudications under new Part 4A than for all other adjudications under the code.

Furthermore, the addition to the Bill of “direct loss or damage” might also increase litigation, with both landowners and operators employing lawyers to make their case as to whether loss or damage was direct or indirect. I am sure that your Lordships can more than foresee that the addition of “direct loss”, and the increase in legal wrangling that that could bring, could potentially put a landowner at a considerable disadvantage in the court when competing against a large multinational corporation with considerably deeper pockets.

Furthermore, the landowner who has been subject to a Part 4A order over their property would then be treated differently from every other landowner in the code, which may be considered unfair. These issues would likely have a negative implication for the cost, duration and complexity of Part 4A proceedings—as raised by the noble Lord, Lord Adonis—and undermine the key policy driver of a low-cost and uncomplicated process to address the issues faced by operators.

The noble Lord, Lord Lea of Crondall, asked about the balance of different interests. That is something we have worked very hard to assure in this Bill, although—as many of the amendments in Committee have high- lighted—these are often delicate balances that we are trying to strike.

We believe that it is important to trust in the expertise of the courts to determine the compensation due when damage occurs, and to ensure that new Part 4A is and remains consistent with the rest of the Electronic Communications Code. With that reassurance and clarification, I hope that the noble Lords will agree to withdraw their amendment.

Photo of Lord Haskel Lord Haskel Deputy Chairman of Committees, Deputy Speaker (Lords) 2:45, 2 June 2020

No noble Lord has asked to speak after the Minister, so I now call the noble Lord, Lord Clement-Jones.

Photo of Lord Clement-Jones Lord Clement-Jones Liberal Democrat Lords Spokesperson (Digital)

I thank the Minister for that reply. It was a reply of some ingenuity, pulling together quite a number of different negative arguments against the amendment. I will briefly go through why I do not think that it holds a great deal of water.

I am grateful to my noble friend for pointing out that this remains a grudging Bill as opposed to an enabling Bill. It certainly feels very much like that to those of us who have been working on this and hoping that there was going to be a great deal more opening up of operators’ ability to lay fibre than purely the MDUs, the subject of this Bill. I am also grateful to the noble Lords, Lord Adonis and Lord Lea, for pointing out that it is important that tenants and lessees get the benefit from these new powers, not the landowners in that sense. I entirely agree that it would be quite possible for the lessor—the landlord—to have entirely different interests from the tenants, and it is tenants and lessees who we want to see get the benefit of fibre and the ability to have proper communications. This has been the frustration of operators. The reason for these new powers is precisely that landlords have been holding up progress in this respect. As the noble Lord, Lord Livermore, said, there is a danger of bad blood being created not just between the operator and the landlord—hence the reasons for orders under new Part 4A—but between tenants and lessees and the landlord.

The Minister’s main argument was that the language in new paragraph 27H mirrors the remainder of the Electronic Communications Code, but just because the rest of the code is written in a very pro-landlord way should not mean that these important powers should not be written in a different way. The argument is that it mirrors the language and that courts are experienced in dealing with it, but these are new provisions. Any lawyer will say that if there is a limitation on the definition of damage and the compensation that is available, it is much more helpful than having to decide at large the damage that has been suffered. The Minister’s case is that more lawyers will be required. Perish the thought!—I am lawyer. Her belief that more lawyers would be required with the new definition using the word “direct” is not entirely correct, I am afraid to say, because lawyers dealing with things such as indirect damage are going to dance on the heads of many more pins than they would if this wording were added.

I believe that the balance is wrong, not just in this clause but across this amendment to the code. I hope we do not all live to regret it by finding that operators are unwilling to go forward because of the threat of compensation hanging over their heads to the detriment of tenants and lessees, as the noble Lords, Lord Adonis and Lord Lea, said. Clearly I am not going to make much further progress today, so I beg leave to withdraw the amendment.

Amendment 20 withdrawn.

Clause 1 agreed.

Clause 2 agreed.

Photo of Baroness Henig Baroness Henig Deputy Chairman of Committees, Deputy Speaker (Lords)

We now come to the group beginning with Amendment 21. I remind noble Lords that anyone wishing to speak after the Minister should email the clerk during the debate. It would be helpful if anyone intending to say “Not content” if the Question is put made that clear in the debate. It takes unanimity to amend the Bill in this Committee; this Committee cannot divide.