The Earl of Devon:

Moved by The Earl of Devon

19: Clause 61, page 46, line 14, at end insert—“(4A) Where the assumptions in subsection (4) cause the market value of a landlord’s agreement to decline, the consideration payable under a new tenancy granted by order of the court under this Part may not decline by more than 50% relative to the previous consideration for the period of five years beginning with the day on which the new tenancy is agreed.(4B) Where subsection (4A) applies, the consideration must be reduced in even increments over the course of five years, from the level of the previous consideration to the level of the new court consideration.”

My Lords, in the absence of my noble friend Lord Lytton, I rise to move Amendment 19, to which I added my name somewhat late. I shall speak also to Amendments 20, 21, 22 and 24 in this group to which I added my name too late to appear on the Marshalled List.

The valuation provisions of the Electronic Communications Code as extended in 2017 are not working well. I think we are all agreed on that. The number of disputes coming before the lands tribunal has increased from approximately 40 to more than 120 already this year, and we have no idea how many additional disputes are taking place in county courts. This is because we have no record. The Government have not consulted on this issue before proposing this far-reaching, retrospective legislation. Indeed, the Bill has been introduced based upon a cacophony of anecdote, conjecture and vested misinformation. It seeks to address the issue not by improving the damaging “no scheme” valuation provisions but by extending their application to approximately 15,000 long-established and well-settled 1954 Act leases. This is a mistake, and it will have a chilling effect on the rollout of digital infrastructure which we will regret.

My noble friend Lord Lytton is, as I said, unfortunately committed elsewhere today and we are therefore deprived of his wisdom and subject matter expertise. I am by no means an adequate substitute and refer your Lordships to his excellent contributions in Committee.

I also remind the House of my own interests, and particularly note that while formerly a property barrister I now work as a technology litigator for a firm that represents telecoms companies as well as site owners. As a Devon resident with poor mobile coverage, I am desperate to see an increase in rural connectivity, with the social and economic benefits that flow therefrom. As a farmer, I am also a site owner of a 1954 Act telecoms lease granted many years ago. This has been bogged down in renewal due entirely to the uncertainties of this legislation. I see this issue therefore from many sides, both personal and professional.

I too welcome the noble Lords, Lord Kamall and Lord Harlech, to their new roles and thank them and the whole Bill team for their time in discussing these issues. It is not ideal to change Ministers half way through the Bill’s progress, and I am disappointed that between Committee and Report we have not been provided with information that was requested. Despite no formal consultation, I understand the Government are confident that the valuation issue is now settling down and that the provisions in the Bill are largely welcomed by stakeholders. We have not seen the information relied on to reach these conclusions because it is cloaked in confidentiality.

From recent discussions, it appears that this evidence has largely been provided by the telecoms mast operators. It is no surprise that they approve of Clauses 61 and 62, as these will allow them to decrease rents payable on historic leases by over 90%, which is a huge cost saving; yet they provide no concurrent obligation on them to pass those savings on to phone companies and their consumers. The result will be that infrastructure companies benefit financially while owners see dramatic rent decreases and are discouraged from letting sites for telecoms masts, and consumers see no financial benefit and, more importantly, no increased coverage. There is a risk that only the corporate middlemen, who often take their profits overseas, will benefit. Surely this cannot be the Government’s intention.

There are other beneficiaries: the professionals, lawyers and surveyors advising those in dispute. Judges dealing with the Electronic Communications Code have criticised the intensity of these disputes and the Institute of Economic Affairs recently noted that since 2017

“there has been much litigation, apparent ill-will, and consequential delays”.

At the 2021 RICS Telecoms Conference it was shown that, while site payments have indeed reduced since 2017, the costs of transacting for sites have more than doubled in that time, meaning that the decrease in site rents has actually resulted in no savings at all for the market.

The 2017 amendments made parties increasingly antagonistic, and the provisions in this Bill will only add to that. The amendments in this group seek to address this. Amendments 20 and 21 from the noble Baroness, Lady McIntosh, seek to remove Clauses 61 and 62 entirely. Given what I have said, this is my preferred solution. Unless and until a proper consultation is undertaken and the impact of the “no scheme” valuation methodology is properly understood, we should not be extending it to 1954 Act leases and undermining long-established landlord and tenant relations. This is government by diktat, riding roughshod over private contractual interests at the behest of undisclosed and well-funded commercial enterprises. It is not in the public interest.

Amendments 19 and 22 propose alternative remedies to ameliorate the problem of dramatic and sudden decreases in rents payable under telecoms leases. As currently drafted, site owners, many of which are community centres, charities, sports clubs, farmers and small businesses, will see a collapse in rental income that could be very damaging. Amendment 19 proposes that this decrease be limited to 50% of the current rent within the first five years, while Amendment 22 requires that the rent is decreased in even increments during that same period. Neither amendment seeks to prevent the “no scheme” valuation methodology that the Government prefer, they simply soften the impacts to protect the interests of the individual landlord. These are modest and, I suggest, sensible proposals and they should be adopted if Clauses 61 and 62 are to remain.

Meanwhile, Amendment 24 seeks to avoid the invidious prospect of backdated rent decreases which may result in landlords having to pay substantial sums back to telecoms mast operators under interim orders applicable to 1954 Act tenancies. As currently drafted, rent decreases take effect from the date the notice is served, not from the date the new lower rent is determined. A contentious lease renewal can take many years to resolve and, as we have heard, the decreases in rent can be more than 90%. This means that a poor landlord may be obliged to pay back many thousands of pounds in rent previously received, which may not be possible if that money has been budgeted for and spent. This could drive small enterprises and individuals into bankruptcy. Is this what the Government intend? Amendment 24 would ensure that this will not happen, and that the newly decreased rent is not backdated but payable from the date of the court order. Backdating the rent only adds insult to injury.

I urge the House to consider and support these important amendments. If the Bill is unamended, no landowner will welcome telecoms infrastructure and our digital rollout will fail. I beg to move.

My Lords, I thank the noble Earl, Lord Devon, for moving Amendment 19. I will speak to Amendment 20 in my name and that of the noble Earls, Lord Lytton and Lord Devon, and Amendment 21 in my name and that of the noble Earl, Lord Devon.

At the outset I welcome my noble friends Lord Kamall and Lord Harlech to their new positions. At the same time I thank my noble friend’s predecessor, my noble friend Lord Parkinson, for all his efforts and engagement with us at previous stages of the Bill. I wish him well as a Back-Bencher in this place; I think we probably have more fun.

I remind my noble friend Lord Kamall that in his previous life he was well aware of my interests in rural affairs, which colour my approach to the Bill. I would like to see improvements to broadband and mobile phone connectivity in rural areas, but I cannot take the fact that telephone poles and other infrastructure should be taken for granted, as appears to be the case in the Bill. That is my reason for presenting and speaking to Amendments 20 and 21, with the desired effect that they will remove provisions currently in the Bill that give 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 believe that all interested parties, whether the operators, the landowners or those of us who use these infrastructure facilities, must be treated fairly, in the way that the landowners are currently compensated.

I assure my noble friend that good connectivity is key to increased productivity and growth for farms and the rural economy. I hope he will give a commitment today, just as the Prime Minister has said many times since she took her new position that we are signed up to productivity and growth, that this will apply as much to the rural economy, farms and others who have business in rural areas as it does to more industrial areas.

I confess that I am not a landowner or in receipt of a wayleave for a telegraph pole, although not so long ago I received a small payment, shared with my brother, who is now the sole recipient. I hope that these amendments can achieve a better balance between the rights of the operators, the landowners and those who use the infrastructure.

I regret that the 2017 Electronic Communications Code has changed the way in which the new sites are valued from market value to land value. I make a plea to my noble friend that we proceed under the Landlord and Tenant Act 1954 rather than the 2017 code, given that, as I mentioned earlier—and as the noble Earl, Lord Devon, so eloquently described—fewer new sites have been agreed over the last few years in which we have proceeded under the code.

I echo and strongly associate myself with the remarks of the noble Earl, Lord Devon, about this not being part of the original consultation under the Bill. I hope that my noble friend Lord Kamall will confirm that and say why it was not and yet we now have these two clauses in the Bill, because I have never quite understood why that was the case. If you are not going to give the landowners and other interested parties—or stakeholders, as we now call them—the right to comment, I do not see why they should be presented with a fait accompli. But, even more than that, the Law Commission strongly concluded that it was against the introduction of these provisions into the Bill because it thought that they would lead to fewer sites and fewer renewals of sites, which is precisely the position in which we find ourselves today.

Why is this going against the Government’s previous stated intention of allowing a transition for existing agreements into the ECC, or the code? It also means that the code valuation method will be applied retrospectively. I understood that we normally do not apply legislation retrospectively in this place, and I would like to understand the reasons for seeking to do so in relation to Clauses 61 and 62.

The Government’s own impact assessment of the 2017 reform concluded that rents would drop by 40% over a 20-year period. It was therefore not anticipated that levels would fall by so much and so quickly. However, the noble Earl, Lord Devon, clearly set out that, in some cases, rents have dropped by as much as 90%, which is inexplicable and unacceptable. Clauses 61 and 62 would simply exacerbate the situation and leave some businesses and individuals facing a cliff edge, without any time to adjust in what we understood would be a transition period. I repeat that this was not part of the 2021 consultation, and, in my view, it will no doubt be entirely counterproductive, with the effect of further disruption.

Given that we now know that the 2017 code has resulted in fewer new sites being agreed, due to the much lower rents being paid by operators, I urge the House to remove Clauses 61 and 62. I urge the Government to accept that they should proceed under the previous legislation, the Landlord and Tenant Act 1954. I hope that the House will look favourably on my Amendments 20 and 21.

My Lords, in his opening remarks, the Minister, the noble Lord, Lord Kamall, said that some of us might not welcome him here. I am sure that that is not correct; I am sure that we all welcome him and his colleague, the noble Lord, Lord Harlech. I certainly do.

First, I apologise to the House for not participating in the earlier stages of the Bill due to circumstances elsewhere—but I have read and watched them. Secondly, I should declare that I am an unpaid director of a small farming company that has a single telecoms mast on its premises. Normally, I would not speak on a subject when I have an interest even as modest as this, and I know that a number of other noble Lords have not participated and remained silent for the same reason. However, having seen how one-sided and damaging this part of the Bill is in so many ways, including to the Government’s own objectives for rollout, and having seen how resistant the Government have apparently been to efforts to address its faults, I feel that I must speak out critically but constructively. I support all the amendments in this group but, to my mind, Amendments 20 and 21, which would leave out Clauses 61 and 62, are the starting point, with the other amendments seeking to achieve damage limitation.

There are two parties to any agreement on a site: the site owners and those who seek to occupy and operate them. Not only is this Bill crudely unjust in its valuation basis but it is already creating a breakdown of trust and co-operation between the parties. It will create and intensify conflict between them, leading to a delay in rollout—the direct opposite of what the Government intend. We, therefore, need to find a better middle ground between these two parties.

As has already been mentioned, Clauses 61and 62 would have land valued as if it were not to be used for a mast site. This is as bizarre as anything in a Gogol short story. Who would, for example, value a building plot, knowing that it is imminently going to be built on, on the basis that it would never be built on? I am sure that HMRC would never countenance that approach for tax purposes.

Amendments 20 and 21 reflect the need to remove these counterproductive and illogical clauses—but how did we get here? We need to be fair about this: previously, some owners, due to the rules of supply and demand, had a bargaining position that may have enabled rents that are higher than they would otherwise have accepted. In seeking to accelerate rollout, the Government have decided to rebalance things—so far so good. However, this Bill would swing the pendulum to completely the opposite extreme. It would strip the site owners of their legally long-established property rights—something I find astonishing from a Conservative Government—and deny small enterprises, sports clubs, hospitals and others of a vital source of income. This was raised by Labour at an earlier Bill stage, and I was astonished when the then Minister—so rightly admired in other respects, as many have said—pretty glibly told them in his reply that they should simply seek other sources of income.

These clauses will take a situation where sites were coming forward voluntarily and replace it with one of zero trust—in either the operating companies or the Government—whereby both potential and actual site owners will seek to avoid, and indeed resist, providing sites for this use. It will enable the operating and mast companies to pay peppercorn rents and thereby enrich themselves and their shareholders—with no evidence of trickle down, or even dribble down, to consumers.

When I see all this, combined with powers elsewhere in the Bill for operators to reclaim rents retrospectively from site owners—tearing up existing contracts freely agreed and entered into by professional commercial companies and site owners—I can only gasp in disbelief. So I have been asking myself how on earth we got into this situation and what could explain it. I have been urged by some of my colleagues to be temperate in my remarks, so I will not indulge in conspiracy theories, but we need to focus on encouraging sites to come forward to achieve faster rollout—something which I think we are all agreed on.

Let me therefore offer a valuation solution that is indeed in the middle ground between the past and the extortionate future foreseen in this Bill. There is a tried and tested middle ground that uses a practical and already widely accepted approach used to set rents and values for other commercial sites. I ask the House’s indulgence in describing this very briefly and simply with an illustration from another commercial activity: mineral quarrying. Where a quarry operator wants to lease land to set up a processing plant, there is a well-established valuation method whereby the database of local industrial rents is assessed and a percentage of that rent—say 70%—is paid to the site owner. There are clear advantages here. First, land agents and valuers on both sides are well accustomed to such discussions, which can therefore be swift. In the very unlikely event that they do not reach agreement, binding expert determination is available as standard. Secondly, it is based on a well-established dataset that reflects regional differences and will adjust over time to reflect the regional economic context. Thirdly, there are suitably qualified practitioners on hand across the country to carry it out.

Crucially, this would produce a balanced result and would get there using a transparent, objective and logical method. To be clear, the resulting rents would be set below what some site owners currently receive, but not as counterproductively or extortionately low as the unjust free hand that the Bill, as currently drafted, would give commercial operators. I therefore urge the Minister and the Government to think again.

I appreciate that lobbyists working for the operator companies have been telling the Minister that all is lovely in the garden and urging him to press ahead with the Bill as drafted. One could not expect anything else from them when we reflect on what the operators would gain, but they are offering a wholly unbalanced view. It is not too late for the Government to stand back, reflect and seek a middle ground. It can easily be achieved and would, by enabling swift and more equitable outcomes, address far more effectively the Bill’s important objective of encouraging sites to come forward and be negotiated by willing parties within a sensible framework. Failure to grasp this and bulldozing ahead, egged on vociferously by operators seeking enhanced profits for themselves, will achieve precisely the opposite.

Clauses 61 and 62 amount to legalising a land grab by large commercial companies, stripping site owners of both their rights and incomes. This is already devastating trust and co-operation, and these clauses will clog up rather than free up the much-desired rollout. I therefore support these amendments.

My Lords, I declare my interests as a site owner and NFU member. I agree with every word that the noble Lord, Lord Cromwell, has said. I am astonished by this piece of legislation from a Conservative Government.

Amendments 19 and 22 aim to address the issue of valuation, one of the most significant concerns with the code. As other noble Lords have said, the “no scheme” valuation methodology introduced into the code in 2017 prevents courts taking into account sites’ potential use as provision for an electronic communications network. This allows operators to drive down the rents they pay to site providers, often by over 90%.

I was involved in negotiations for one of the two masts on my land and was lucky that I had only a 70% reduction. It was not so important for me, but this forces small businesses, sports clubs, community groups and hospitals to accept derisory amounts for the use of their land. It also reduces the motivation for operators to pursue consensual deal-making, in turn slowing down rollout as they can get greater discounts through the courts. As noble Lords have said, it also reduces the incentives for landowners to offer sites for masts in the first place—not an advantageous outcome for the Government’s mobile connectivity.

Amendments 20 and 21 are rather more impactful than Amendments 19 and 22, in that they would stop the Government’s “no scheme” valuation regime being extended to cover the roughly 15,000 telecoms sites governed by the Landlord and Tenant Act 1954 and the Business Tenancies (Northern Ireland) Order 1996. This would have the effect of ensuring that the rent on these 15,000 sites would continue to be set at market value, as is the case today. Importantly, this would prevent them being subject to the issues that have plagued sites governed by the code ever since the 2017 reforms.

Although I suspect the Minister will be opposed to these amendments, they are fully aligned with the Government’s repeated claim that this Bill does not address issues of valuation. How can the Government possibly continue to make that claim if, by their own admission, 15,000 new sites will have their rental value slashed from the moment this legislation comes into force? We are simply trying to ensure that the legislation delivers the Government’s stated policy intent. Parties on all sides of the debate have acknowledged the significant challenges created by the 2017 reforms to the code. It is only right that these changes are not imported wholesale into the Landlord and Tenant Act 1954 and the Business Tenancies (Northern Ireland) Order 1996, when there is no evidence whatever that the 2017 reforms have delivered the Government’s intentions.

I was very grateful, together with the noble Earl, Lord Devon, to the Minister for the meeting yesterday, but one problem seems to be that information provided by the operators, for confidentiality reasons maybe, has not been disclosed to us even though we have asked for it; that is a very frustrating thing. I am also very sad that His Majesty’s Government have paid no attention to influential, independent reports from the IEA and the Centre for Economics and Business Research stating the problems with this legislation. The CEBR report says—

“The government’s ECC changes have not delivered a faster 5G rollout, and it is slower than the pre-2017 status quo. The new proposals do not remedy this. But for the 2017 reforms, 8.2m more people would have had 5G coverage by now than currently can access it. This will persist in the long-term: national 5G coverage by 2022 will be worse than if there had been no changes to the ECC at all. The government’s proposed changes to the ECC will cost UK GDP £3.5bn by 2022, and fail to bring 5G coverage to where it would have been pre-2017.”

The Government want more growth; this legislation does not seem a good way to provide it.

My Lords, on these Benches we strongly support these amendments which support changes to the current valuation basis, the flaws in which were so expertly explained by the noble Earl, Lord Lytton, in Committee, and so clearly today by the noble Earl, Lord Devon, the noble Baroness, Lady McIntosh of Pickering, and the noble Lords, Lord Cromwell and Lord Northbrook. As the noble Earl, Lord Devon, has said, the current provisions are a mistake—astonishing from a Conservative Government, as the noble Lord, Lord Cromwell, said—and the motives of many of us were reflected by what the noble Lord, Lord Northbrook, said: that what we are trying to do is to ensure that the ECC delivers the stated policy of the Government. All of us are behind the 1 gigabit policy, as delayed and slow as it may be, but we want it to be delivered. It appears that the Government, as the noble Lord, Lord Northbrook, also said, are completely ignoring the reports of the IEA, the CEBR and others who have pointed out that precisely these changes in valuation in the 2017 changes to the code have not, and those proposed will not, ensured faster rollout than the original valuation methodology.

Under changes to the code made in 2017, a “no scheme” valuation methodology for valuing land was introduced, as we have heard, and this allowed site providers to recover only the raw value of their land, rather than receiving a market price. As the noble Baroness, Lady McIntosh, has highlighted, operators have been able to use the changes made to the ECC to drive down the rents they pay to site providers, often to peppercorn rents. She also highlighted the impact assessment made by the Government which said that rent reductions should be no more than an absolute maximum of 40%. But of course, we know from the data quoted by operators that reductions have at best averaged 63%, a huge sum for many of the people who rent their land for use for telecoms infrastructure, and in many cases as we have heard today, reductions have been much higher—in the region of 90%. As I mentioned in Committee, the Protect and Connect campaign produced some powerful case studies, such as the Fox Lane Sports & Social Club in Leyland, Lancashire, to support this; and we agree that the right solution to get this market moving again is to reinstate a fair valuation mechanism, such as the one envisaged by the Law Commission.

In addition, in principle we entirely support the amendment spoken to today by the noble Baroness, Lady McIntosh, and the noble Earl, Lord Devon, designed to cap cuts to site provider incomes and prevent retrospective lowering of rents. I really do hope that the Government will give these amendments careful consideration, supported as they are by a very strong cross-party coalition—and indeed a country-wide campaign.

My Lords, the issues addressed in this group of amendments have certainly exercised your Lordships’ House throughout the course of the Bill and have drawn much attention outside this House as well. I am grateful to the noble Earl, Lord Devon, and the noble Baroness, Lady McIntosh, for introducing their amendments with such clarity. I believe that all the amendments in this group seek to bring fairness, balance and efficiency to the task before us. The noble Lords, Lord Cromwell and Lord Northbrook, also spoke to these points, again with great clarity, in illustrating the challenge before us.

As we have outlined at previous stages, we are sympathetic to the concerns around the changes to the valuation of sites that host telecoms infrastructure. A point I have always found somewhat perplexing—I hope the Minister can assist on this—is that industry itself admits that reductions to rents have on average been far above the 40% promised by government, yet the 40% figure continues to be put before us. I would welcome some insight into that from the Minister.

We understand the importance of getting infrastructure rolled out swiftly to improve the availability of 5G and high-speed broadband and, as I have said, we all understand that a balance has to be struck. The amendments in this group would make a number of changes to the current regime to try to redress the loss of landowner rights. I certainly understand the motivation for these changes but suggest to your Lordships’ House that an independent review of the whole system would perhaps offer a more useful way forward. That is something we will return to in a later group of amendments.

Delivery, balance and fairness are key here. I hope that the Minister will take these points on board and find us a way forward, because that is what we are seeking.

I start by thanking the noble Earl, Lord Devon, for introducing some of the amendments, as well as my noble friend Lady McIntosh —indeed, I thank all noble Lords who spoke in this debate. It is quite clear that very strong views are held on this subject, which I know was the subject of much debate when my predecessor was in this role. I will try to address the issues specifically. That may take a bit of time but I hope noble Lords will bear with me.

Amendments 20 and 21 would remove Clauses 61 and 62 from the Bill. These clauses will extend the “no network” valuation model contained in paragraph 24 of the code to the Landlord and Tenant Act 1954 and the Business Tenancies (Northern Ireland) Order 1996. My predecessor, my noble friend Lord Parkinson of Whitley Bay, explained in Committee that some agreements to which the code applies are required to be renewed under these pieces of legislation, rather than under Part 5 of the code. When this occurs, the rent is calculated on a market value basis, rather than using the code’s “no network” valuation. Clauses 61 and 62 will ensure that, where agreements conferring code rights regulated by either of those statutory frameworks come to an end, the rental terms of any renewal agreement will more closely reflect those that apply to new agreements and those agreements renewed using Part 5 of the code.

Whatever view noble Lords take of the valuation framework, it remains the case that the purpose of Clauses 61 and 62 is to ensure that the same approach applies to all agreements conferring code rights throughout the UK. This will reduce disparities in deployment costs in different jurisdictions which could otherwise contribute to a digital divide.

I am afraid the Government cannot accept the noble Baroness’s amendments as they would serve only to entrench the inconsistencies in the different renewal frameworks. In fact, removing Clauses 61 and 62 but leaving Clauses 63 and 64 in place would exacerbate the situation. Clauses 63 and 64 provide that the right to recover compensation contained in paragraph 25 of the code, which is a key element of the overall valuation framework, is also mirrored in the 1954 Act and the 1996 order. Neither the Act nor the order currently makes distinct provision to compensate landowners for loss and damage arising from the exercise of code rights. Compensation for potential loss and damage is normally rolled up in any calculation of market value.

Removing Clauses 61 and 62 while leaving Clauses 63 and 64 in place would enable those landowners to recover additional amounts in compensation, which may have already been accounted for in the amount of rent, as well as higher rents. The Government believe that leaving legislation in place that allows some landowners to receive higher rental payments for longer is fundamentally unfair. It would also mean that network costs remained unacceptably high, penalising swathes of consumers and businesses who may face price increases for digital services or wait longer for the higher-quality reliable connections they want to see, particularly in rural areas, where deployment is frequently simply not cost-effective.

I turn to Amendments 19 and 22, which seek to reduce the impact of any reduction in rent during the first five years of a tenancy renewed under either the 1954 Act or Part 5 of the code. The aim of the Bill is to ensure that the process of renewing a code agreement is consistent throughout the UK. However, Amendment 19 would apply only in England and Wales, leading to further inconsistency.

The no-network valuation framework was introduced at the end of 2017, as noble Lords have recognised, and the framework’s effect on the sums received by landowners has received significant publicity. In a number of instances, especially where an agreement is to be renewed under Part 5 of the code, it will have been clear for some time that the market has significantly changed and that consequently, when a current agreement is renewed, the amount of rent may decrease. Therefore, while the Government are not unsympathetic to site providers in this position, the amendments would keep operational costs higher for longer, which the Government believe—as others have said—could adversely affect the rollout and deprive homes and businesses of access to the latest technologies.

It has been said several times during the passage of the Bill that not only did the Government fail adequately to review the impact of the 2017 reforms before carrying out the consultation that led to the legislation but also that the Government were at fault in not consulting again on the valuation regime introduced through the reforms. The Government strongly disagree with those assertions. DCMS engagement with stakeholders on the impact of the code reforms began shortly after the legislation came into force. A number of meetings were held with stakeholders representing site providers as well as operators. This engagement has continued through the access-to-land workshops that DCMS has hosted for the last 18 months. A wide variety of stakeholders participated in these workshops, including landowner representatives. As well as looking to agree best practice on various issues, the workshops improved relationships across the industry.

DCMS Ministers and officials have listened carefully to the feedback that they have received, and the Government acknowledge that reduced rents received by site providers may have made them less willing to host telecommunications apparatus. However, this was recognised as a probable outcome in 2017. It remains the case that the Government think that the valuation regime is the right one, and the feedback that we have received from stakeholders prior to and during the consultation strongly suggests that measures in the Bill will help to ensure the aim and ambition of the 2017 reforms.

I am following very carefully what my noble friend has said. He just said that responses to the consultation were received. The offending articles were not part of that consultation, so the Government have not actually heard any responses from the interested parties on that point.

On his point about Clauses 63 and 64 remaining part of the Bill, which is why we cannot remove Clauses 61 and 62, my reading of Clause 63 in particular relates to new tenancies. My noble friend has not responded to the points raised by both the noble Earl, Lord Devon, and me about existing agreements that are going to be renewed, rather than new agreements.

There are two points to which I would like the Minister to respond: first, this issue was not part of the consultation so the Government have not received any responses on it. Secondly, what happens to existing agreements being renewed under Clause 63? Are they to be slashed by 90% without any recourse?

I thank my noble friend Lady McIntosh for those questions. I will come to them—I am sorry, maybe I am not going as fast as noble Lords would hope me to, but I wanted to consider carefully the various points made by noble Lords, and I still have specific responses to come to. If noble Lords will allow me to talk to Amendment 24, I will come back to the contributions made during the debate.

Amendment 24, tabled by the noble Earl, Lord Lytton, but spoken to by the noble Earl, Lord Devon, looks to prevent interim rent being backdated where an agreement is renewed under the 1954 Act, and is similar to the amendment tabled by the noble Earl in Committee. One of the fundamental aims of the Bill is to ensure that the approach to renewing agreements across part 5 of the code, the 1954 Act and the 1996 order is as consistent as possible. As my noble friend Lord Sharpe said in Committee, this form of amendment serves only to increase inconsistency. It would create inconsistency within the 1954 Act itself, preventing backdated payments of interim rent where a site provider gives notice under Section 25 of the Act, yet would allow interim rent to be backdated where an operator serves notice under Section 26 of the Act.

The ability to backdate rent is not a new concept. It is not being introduced into the 1954 Act by this Bill, nor was it introduced in the 2017 reforms. When parties entered into these agreements, there was always a risk that the market could change between the time it was entered into and the time of its renewal and that the amount of rent could decrease. However, the Government have listened to stakeholders representing the interests of site providers and understand the potential consequences of applying the code valuation framework to the 1954 Act and the 1996 order agreements in relation to backdated interim rent. This is something that is being carefully considered in developing an implementation strategy, including such transitional provisions as may be needed to bring the different provisions of the Bill into force in a timely and responsible manner.

Let me now talk to some of the points made by noble Lords. A number of noble Lords said that the evaluation regime is not fair. The Government see the pricing regime as being closely aligned to utilities such as water, electricity and gas. The Government maintain that this the correct position. Landowners should still receive fair payments that take into account, among other things, alternative uses that the land may have and any losses or damages that may be incurred.

It should be noted that, in many of the examples of unfair rent or large percentage reductions that have been raised by campaign groups, reference is made only to the rental payment itself. These examples fail to take into account any compensation payments which the landowner may have received under the agreement. They may also have failed to take into account any capital payment which the landowner may have received upfront as part of the terms of the agreement. There have been some paid studies of raised examples of poor negotiations or rent reductions. It would not be appropriate for me to comment on ongoing negotiations in specific terms, but the Government say generally that rent is often only one part of the overall financial terms agreed, as I said earlier. As regards 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.

The noble Earl, Lord Devon, and other noble Lords mentioned the reluctance to enter into new agreements. We have been told that the amounts offered by some operators are so drastically reduced that landowners are less willing to come forward and allow their land to be used. However, I have been advised that, so far in 2022, at least 107 agreements have been reached in relation to new sites, with heads of terms agreed on a further 66 sites. This is in addition to 533 renewal agreements which have been concluded this year, along with heads of terms agreed on a further 119 renewals. The Government maintain that the 2017 valuation provision created the right balance, and they are aware that the valuation framework would have resulted in some reductions, as I said earlier.

I think it was the noble Earl, Lord Devon, who talked about middlemen who take profits overseas. The benefits of independent infrastructure provision are globally acknowledged. An Ernst & Young report in February this year, produced by a European-wide infrastructure association, highlighted the many benefits which independent infrastructure providers bring to both the industry and consumers. It talked about sharing towers and costs and enabling cheaper rollout. The report concluded that the scope of independent infrastructure providers overcharging for the use of the infrastructure would be constrained by continued competition between tower companies.

Government policy introduced in the 2017 valuation framework to reflect the public interest in digital infrastructure and encourage investment while driving costs down remained unaltered. That is not to say that we approached our pre-consultation engagement with a closed mind, but that engagement with stakeholders did not indicate that the valuation framework is incapable of delivering both our policy objectives and fairer outcomes for landowners. It did highlight difficulties with communication and negotiations, hindering the framework from working as intended. We hope that the Bill and the non-legislative initiatives we are taking forward will tackle this.

There have been some claims that rents would reduce by more than 40%. In the impact assessments in 2016, the Government specifically said that they did not know what effect the reforms would have on rental payments. There is reference in the impact assessment to independent analysis which predicted a 40% decrease. Some lobby groups have asserted that this figure demonstrates that the Government committed that rent reductions would be no more than 40%. The Government maintain that this was not a government commitment, but it did appear in the impact assessment and we expected the market to adjust.

As I said, rent is only one element and other variations occur in practice. We understand the various things that have been said by various companies. A number of noble Lords reflected on the CEBR research. The Government have problems with the report from the CEBR. First, the picture the report paints of government policy is incomplete and partial. Secondly, the alternative changes the report proposes do not account for key challenges, which in our view means that they would not deliver the results the CEBR suggests. The report focuses excessively on the prospective interests of landowners and we are trying to get the right balance.

On the Institute of Economic Affairs, I should be very clear and have to declare my interests. I am the former academic and research director of the institute, so I would not wish to comment one way or the other on its report, but I know that it used as its source some of the work from the CEBR’s and other reports. My successor, Dr James Forder, is an excellent analyst and economist. Indeed, he is the economics tutor at Balliol College in Oxford—I digress.

I am afraid that, while I completely understand the arguments—I have had conversations with a number of noble Lords and am very grateful to those who have come to meetings and heard the Government’s perspective—we cannot accept these amendments. Perhaps in vain, or in aspiration, I ask noble Lords to consider not pressing them.

Before the Minister sits down, I make the point that, in my experience, the rent is the key factor, certainly over a period of time. Frequently no or minor payments are made, and it is simply that an agreement is struck for the rent. Trying to diminish the importance of the rent in the way the Minister has is something I find hard to swallow.

The Minister prays in aid consistency. If the valuation method is unfair, what this Bill does is ensure that a consistent unfairness is imposed, so I find that slightly tautologous. Does the Minister accept, agree and support the idea that a valuation based on a site that is known to be imminently the site of a mast should be done as if there was no mast site?

I thank the noble Lord for his question. I am interested in the point he makes about the amount or proportion of rent in the overall agreement. Whatever happens in this debate, I would be very happy to continue that conversation with him and my officials to make sure that we can close any gap in understanding.

The noble Lord will recognise that I have to defend the Government’s position as the Minister, so I continue to say that the Government cannot accept these amendments, but we hope, perhaps vainly, that the noble Lords who tabled them will consider not pressing them.

I thank noble Lords for the unified support from across the House. It came from all Benches, it seems, other than perhaps one—and even that Bench seemed to be wavering a little at the end there.

I am surprised that a Conservative Government extolling growth want to undermine property rights and cost the economy billions of dollars. There is no explanation given other than the whispers of these undisclosed stakeholders. The Minister kindly explained that he has been listening and that there have been discussions and workshops, but we simply have not seen what those were and what the stakeholders said. I have to ask where they are holding the stake to convince the Government to persevere despite your Lordships’ consistent opposition to these provisions.

I note the Minister’s desire for fairness. As the noble Lord, Lord Cromwell, has just noted, it seems that the Government want this provision to be equally unfair to every single site owner across the country.

The Minister also noted that the Government are trying to avoid costs going up. However, as we have seen, and as the RICS report stated, costs have risen exponentially as a result of the 2017 amendments, and here we are, doubling down on those, therefore only to increase costs further.

I think I heard the Minister accept that it will impact landowners’ desire to provide sites. I think he also noted that when you enter a lease you do so with the knowledge that the market might change and therefore the rent might change. I do not think that anyone entering a 1954 Act lease in 2015 would have expected that the rent would decrease by over 90% by 2022. I am sorry, but if the Minister suggests that that was a real expectation of the parties, it is simply not true.

The Minister said that the telecoms companies should be treated like public utilities, which is why this legislation is being passed. If they are being treated like public utilities, can we please regulate them like public utilities and ensure that they do not abuse the position as they currently are doing?

The Minister noted that 107 new mast sites have been agreed this year, and negotiations have opened for 66. Is that the Government’s ambition, that we get 100 new masts a year? I am not sure that that will achieve the gigabit rollout that we all need.

Despite that, and in light of the fact that there are amendments to be debated later that may well address the issue of the review of these provisions, I beg leave to withdraw the amendment.

Amendment 19 withdrawn.

Amendment 20 not moved.

Clause 62: Rent under tenancies conferring code rights: Northern Ireland

Amendments 21 and 22 not moved.