Select Committee on Agriculture Minutes of Evidence

Examination of witnesses (Questions 80 - 99)



  80. You are slugging it out and in saying you want to provide a one-stop shop for catering you are really trying to grab a section of their business, are you not, because it is not the destination of the food to the catering industry you want to supply, it is the kind of food that determines which market?
  (Mr Mills) That is a fair point.

  81. You are trying to grab a large chunk of theirs.
  (Mr Mills) That is a fair point but if you look at it from the point of view of the individual trader, the trader wants to set up where he can sell better than anywhere else in terms of access, location, his supply, where his customers come from, where he is delivering to. This Corporation evidence seems to say they spent all this money on refurbishing the markets, which they have, and the traders have spent all this money on their premises, perfectly true, but if a trader wants to come to us I fail to see why the Corporation of London should try and stop him.

  82. Fair point. In the interests of overall economic efficiency and rationale should you not be merged and the numbers of markets reduced to make the whole business more efficient? Instead you are all sitting there defending your cushy little numbers?
  (Mr Mills) That is a fair point. I am sure Mr Jack will remember the Strathclyde Food Report of 1994 which made the very valid point that there were too many markets. We have to be careful on this. It is not a question that the market for food is declining, quite the contrary, the market for food is expanding overall and particularly for the different types of food from overseas and all that. So we are not all fighting for a share of a diminishing total market. What we are trying to do is to rationalise where you can buy and sell all different types of food. That is why we are into the one-stop food shop. Yes, there are too many markets. If you ask me about what should happen to the Corporation of London Markets I have got my own views, which are worth no more or less than anybody else's I suppose, but in terms of our Market we have the unique advantage of being bang in the centre of London and a major part of the catering trade is in the West End of London.

  83. Which of course adds to economic pressures and congestion. Is not Spitalfields which you objected to the expansion of in 1990, the more logical place for such a market?
  (Mr Mills) No, it is not because it is stuck out at Hackney Marshes. We are bang on the door of the West End. Billingsgate is out at Canary Wharf. We have had a couple of enquiries from people who wanted to set up shop in Billingsgate and there was no space for them and the people at Billingsgate referred them to us and then the Corporation steps in and says no. You cannot defend that really, in my view.

  84. There is intensified competition. Individual MPs have had complaints about food being sold from lorry parks. You have talked to the "Flying Dutchman", no doubt if you get into the catering trade you will get the "Flying Frenchman" coming in as well, and the supermarkets have taken a huge slice of business away from all of you. Amidst those pressures who in the competitive situation stands to suffer most, you or the Corporation's markets?
  (Mr Mills) We could all suffer if we do not behave sensibly.

  85. Who is going to be hardest hit?
  (Mr Mills) I am not trying to dodge it, it depends how much the total market expands. If you push me I think with the changes in food distribution, more eaten outside the home than inside the home, the development of the catering trade and all that, we are better placed than any other market in London. One other thing, if I may Mr Mitchell, the supermarkets have had a huge impact on the retail greengrocer, there is no doubt they have, but the supermarkets themselves are affected by the increase in consumption of food outside the home. That is why they are developing into things like home delivery, new types of things to maintain their customers to make it easier, pre-packed meals delivered to the home and all that stuff, so it is a competitive business all round, but I think we are in the best position to meet those future challenges.

  86. Can I move on to your relationship with MAFF. You are a public corporation within MAFF's responsibility. How closely does MAFF supervise your activity and plans for diversification into this market or that market?
  (Mr Mills) They do not supervise as such. We have to, and we are quite pleased to, give MAFF copies of all our board minutes. We write to them each time a non-horticultural possibility opens up. We keep in formal contact with the horticultural officials at MAFF and I think we have a good relationship, but they do not supervise us as such. We have restrictions on investment monies. For example, if we want to spend anything more than a quarter of a million in a year on capital investment we would have to get MAFF approval really. In relation to Mr Jack I said we have got this big issue we are trying to grapple with where we need about £21 million over the next few years in terms of basic infrastructure. Obviously we are discussing that with MAFF but in day-to-day terms they let us get on with it.

  87. You are essentially a quango rather than a commercial operation?
  (Mr Mills) I do not think we are a quango as such. We are a public statutory corporation. We are not an NDPB, either Crown or non-Crown—

  88. But MAFF appoints the members?
  (Mr Mills) MAFF appoints myself and the other members of the board.

  89. Does that mean in 18 years of Tory administration they were appointing thrusting, dynamic entrepreneurial types to be members of the Authority?
  (Mr Mills) Pass!

  90. What kind of person gets appointed?
  (Mr Mills) To be fair, my predecessor who I met—unfortunately he died shortly after he left—seemed to me to do an excellent job and his predecessors include Sir Henry Hardman, who died the other day, and Sir Ian Jacob was the first one, the former DG of the BBC. To be fair, the Authority has been very well-served both by the previous Chairmen and also by the individual members of the board, very well-served.

  91. The Department does not seek to influence the Authority by the nature of its appointments?
  (Mr Mills) No, I do not think so. They appoint largely through different backgrounds. On the current board we have somebody from the City, somebody from the property world, somebody from transport, somebody from the trade union, it is mixed.

  92. What restrictions do your legal obligations to MAFF impose on your activities and your plans?
  (Mr Mills) There are the financial restrictions about capital monies. There are also restrictions about investment, I think I am right, in terms that we cannot play the equity market so there are restrictions there. But in day-to-day operational terms, particularly outside the non-horticultural stuff, we have got a free hand but obviously there are all sorts of other factors limiting us—health and safety legislation, and all that sort of stuff we have to take account of.

  93. We have agreed that there is intense competition between you and the other wholesale markets and you have said you think your prospects in that competition are probably better than that of the others.
  (Mr Mills) Yes.

  94. Does the fact that your surpluses are paid to MAFF mean that MAFF has a vested interest in supporting your development and prospects as against theirs?
  (Mr Mills) No, I do not think so. Obviously that is a question for MAFF rather than us but I do not think so. MAFF, in my view, if you could start from square one, would not want to own a wholesale market, but you know the reason why they do own a wholesale market? It used to be the Monks of Westminster Abbey in the 13th Century. Charles II gave a Charter to the Duke of Bedford and his family to run the Market and the Bedfords ran it for ages, but in the 20th Century the owners prior to ourselves were the Beecham Group and when the decision was taken that the old site, a lovely old site but it was not really suitable in the transport arrangements for the Market, had to move the Beecham Group did not want to organise the move and lost interest and so Harold Macmillan's Government in a sense nationalised the Market. And this goes back to your earlier point, that we are a nationalised industry that has not got a penny of taxpayers' money in it, we have got no public debt and make a profit.

  95. In terms of instructions, the current monks are Trappists! How is the share of your surplus that goes to MAFF determined and how much of last year's profit will accrue to MAFF?
  (Mr Mills) I will ask the General Manager, if I may, to explain the detail of this. It is a complicated formula of MAFF which is a bit esoteric.

  96. This is your chance to break from the Trappist Order!
  (Mr Liggins) It is a formula which was worked out many years ago and essentially we start with the pre-tax profit, we deduct from that the monies that we have previously discussed related to Market Towers, the earnings on the contingent liability fund. We deduct obviously the Corporation Tax we have separately paid on the Market account profits and we also add to that the depreciation shown in our accounts on plant, for the simple reason that we fund the purchase of capital for plant from revenue and profits and therefore the depreciation should return to the Government as and when it is made and that gives a figure at the end of the day which is deemed to be the surplus payable to the Ministry.

Dr Turner

  97. Can I ask why has there not been any provision for the sort of capital investment you are now saying you desperately need? It does not sound as if you have been been doing that.
  (Mr Liggins) It is something that we have considered from time to time but it has always been implied and made clear to us that the payment over of the surplus was deemed to be rather important.

  98. Is it an issue you raise regularly that you should be making provision for capital investment?
  (Mr Mills) It is an issue that we have raised a number of times in the last few years, yes.

  99. In the last few years only?
  (Mr Mills) About the retention of the monies for investment purposes and also other possibilities?

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