A briefing on the Telecommunications Infrastructure (Relief from Non-Domestic Rates) Bill 2017-19.Jump to full report >>
The Telecommunications Infrastructure (Relief from Non-Domestic Rates) Bill 2017-19 had its first reading in the House of Commons on 4 July 2017. Second Reading took place on Monday 10 July 2017. Committee stage (on the floor of the House), Report Stage, and Third Reading took place on Tuesday 5 September 2017.
The Bill was not amended during its passage through the House of Commons. It has passed through the House of Lords with a single substantive amendment (see below). Consideration of Amendments in the House of Commons is expected to take place on 23 January 2018.
The Bill, explanatory notes and a Delegated Powers memorandum can be found on the Bill pages on the Parliamentary website.
The Bill provides powers for the Secretary of State and the Welsh Ministers to award relief from business rates to providers of telecommunications infrastructure.
Many of the provisions of the Bill were previously found in section 8 and schedule 3 of the Local Government Finance Bill 2016-17. This Bill had completed its Committee Stage in the House of Commons when the 2017 General Election was called.
The provisions of the 2016-17 Bill applied to England only, whereas this Bill extends the power to give discounts on telecommunications infrastructure to the Welsh Ministers in respect of Wales. Thus the Bill extends to England and Wales, but not to Scotland and Northern Ireland.
The Speaker certified clauses 1, 2 and 5 of the Bill as falling within the provisions of Standing Order 83J (i.e. the English Votes for English Laws provisions). The certified provisions received assent from an England and Wales Legislative Grand Committee before Third Reading.
As the Bill concerns business rates, a matter that is devolved to Wales, the Bill would require a legislative consent motion to be passed by the National Assembly for Wales.
Few substantive matters were raised in the debates on the Bill in the House of Commons. At Second Reading, Matt Hancock, Minister for Digital (DCMS) spoke for the Government, but the other stages of the Bill were handled by Marcus Jones (DCLG).
Andrew Gwynne MP, for the Opposition, broadly welcomed the Bill, whilst asking what future plans the Government had for local government finance as a result of the ‘indefinite suspension’ of 100% business rates retention (which had been due to take effect from April 2019). At Second Reading, Mr Gwynne also said:
“Labour advocates introducing statutory annual revaluations to stop businesses facing periodic and unmanageable hikes, and guarantees a fair and transparent appeals process. We will reform business rates, scrap quarterly reporting and end the scourge of late payments, because it is Labour which is the party of business.”
Application of the Bill's provisions to business rates relief for 'new fibre' was a key topic of discussion in the debates. The Bill provides the powers necessary to implement the Government's existing commitment to 100% business rates relief for full, new fibre infrastructure for 5 years, retrospectively from 1 April 2017. This is to support and incentivise the roll-out of broadband and 5G services. The Government intends to grant the relief only in respect of 'new fibre' that has not yet been laid. Ed Vaizey MP was concerned that the system could be 'gamed' with service providers able to obtain relief in respect of new fibre laid in existing ducts whilst not investing in new infrastructure. However, Marcus Jones MP, for the Government, assured him that this would not be permitted and was accounted for in the draft Regulations, based on advice from the industry and Valuation Office Agency (VOA).
The relief will be granted by means of a section 31 grant to billing authorities (district and unitary councils in England), reimbursing them for revenue foregone by providing the relief. This will generate ‘Barnett consequentials’, leading to a small amount of additional funding for the Scottish Parliament, National Assembly for Wales and Northern Ireland Assembly.
Jim McMahon, for the Opposition, tabled one new clause at Committee stage, but did not move it. The clause would have required a Government report on the operation of the relief following the 2017-18 financial year.
The Government published a consultation and draft regulations, which would apply only to England, on 29 August 2017. The consultation stated that the Government’s policy preferences were as follows:
The Government introduced an amendment at Third Reading in the House of Lords to limit the availability of relief to five years, ending it on 1 April 2022. This was always the Government’s policy intention, but the five-year requirement is now on the face of the Bill, in clauses 2 and 3. A provision in the Schedule also permits Parliament (for England) and the National Assembly for Wales (for Wales) to extend the date beyond April 2022 via regulations.
A similar amendment at Report Stage, from Lord Kennedy of Southwark, was withdrawn after the Government agreed to place the five-year period on the face of the Bill. Lord Bourne of Aberystwyth said:
"…the noble Lord, Lord Kennedy, has made a very strong argument for why the five years should appear in the Bill. We have been clear that the purpose of the Bill is to implement the Chancellor’s commitment to offer five years of relief, and we now accept that such a fundamental aspect of the policy should appear in the Bill. But I am grateful that the noble Lord also recognises the value of retaining the ability to extend or repeat the relief scheme without another Bill. Therefore, we also agree that we should take a power to change the period of the relief and that this power should be subject to the affirmative resolution procedure, as the noble Lord set out….we intend to move our own amendment at Third Reading" [HLDeb 28 Nov 2017 c621]
Lord Kennedy, and Baroness Pinnock, also raised the possibility that the relief could be ‘gamed’ by ratepayers substituting new fibre for existing fibre – thereby claiming the relief in a location where fibre had already been in place [see HLDeb 24 Oct 2017 c25-28GC]. The Government wrote to them on 23 November 2017 claiming that any attempt at such ‘gaming’ was unlikely to be cost-effective for operators.
Commons Briefing papers CBP-8035
Authors: Mark Sandford; Sara Priestley; Emma Downing