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.
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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.